Neo-Marxist Dependency TheoriesDependency and underdevelopment in Third World countries
Many reasons have been proposed for the current world situation where the vast majority of countries are underdeveloped and a small portion, the Western countries, are relatively rich. In this essay I discuss the contributions made to the debate by the Neo-Marxist theorists on reasons why this division exist, more specifically, on the dependency of Third World countries on Western nations. In the second section I look at Cuba as an example of how a nation has been capable of ending a situation of dependency, and why it may, or may not, give hope to other underdeveloped nations.
2. Neo-Marxist dependency theories
The end of the World War II introduced an era of economic expansion and polarization in the world (emergence of the Cold War), and it was in that light that American social scientists were encouraged to study the Third World nation-states with the intention to promote economic development and political stability in the Third World (So, 1990:17)1. However, scholars from countries targeted by this Modernization School of development started to develop their own theories, partly as a result of 'sub-optimal' results of policies based on the modernization theories, as well as concluding that imperialism in general "has actively underdeveloped the peripheral societies" (Martinussen, 1997:86) they are living in. Critique on the Modernization School first arose in Latin America as a response to the bankruptcy of the program of the United Nations Economic Commission for Latin America (ECLA). In short, the ECLA promoted protectionist policies together with industrialization through import subsidies, which, in practice, resulted in a brief economic expansion in the 1950s followed by economic stagnation (unemployment, inflation, declining terms of trade, etc.). (So, 1990:91).
Overall, the failure of the ECLA and the resulting decline of the Modernization School theories, together with the crisis of orthodox Marxism2, gave rise to what is now referred to as Neo-Marxist Dependency Theories.
2.1 Classical Neo-Marxist dependency theories
First, influential, attempts to redefine underdevelopment and dependency theory from a Third World perspective were carried out by Paul Baran and Andre Gunder Frank.
Baran argued that the 'backward' countries were characterized by dual economies: a large agricultural sector and a small industrialized sector (Martinussen, 1997:86). Profit margins and the potential to generate economic surplus from agricultural produce are still minimal, where as of today roughly 1.4 billion peasants in the Third World amount to a less than 13% of the world trade (Keet, 2002). Baran emphasized class relations and their impact upon the utilization of economic surplus3 and its distribution of power as primary barriers preventing development, thus the crucial point being internal conditions of the Third World country. He advocated as solution (escape from dependency) implementation of extensive state intervention to promote nationally controlled industrialization as a precondition for evolution of other industrial sectors (Martinussen, 1997:87).
In contrast with Baran, Frank's main thesis in identifying the causes of underdevelopment, or: the development of underdevelopment, is the notion of metropoles and satellites, where metropoles are the target of merchant capital and the satellites' existence purely for 'feeding' the requirements of the metropoles. The crucial mechanism for the extraction of economic surplus was trade and other kinds of exchange of goods and services, including both international exchange and internally in the peripheral societies. Frank's proposed solution to the problem of dependency was the requirement for the Third World countries to effectively de-link from the world market, to allow a country to develop. (Martinussen, 1997:88-89). Thereby directly blaming external factors (like their history of colonialism), whereas the Modernization School had assumed that causes were to be found inside the Third World countries, such as culture, overpopulation, little investment or just a general lack of motivation of the people to do anything 'really constructive' towards progress of the nation. Moreover, Frank argues that the very same process of development in the Western metropoles simultaneously perpetuates underdevelopment in Third World satellites (So, 1990). This essential distinction between external motive forces as opposed to internal ones is further elaborated on more philosophically by Cowen and Shenton (1996:60-115).
Last, I would like to mention Samir Amin and Arghiri Emmanuel. Amin, because he moved from the agriculture-industry or metropole-sattelite to the concept of centre and periphery, where the centre has an autocentric reproduction structure, which is generally self-reliant, and a peripheral economy, characterized by an 'overdeveloped' (read: exploited) export sector (Martinussen, 1990:90), producing goods for luxury consumption generating surplus and foreign currency instead of peasants producing for themselves and stimulating regional development. A simple example is the neatly packed mange-tout in your supermarket, produced in Mozambique or Kenya; whereas 'we' in Ireland don't really need these vegetables, but they could have used their fertile soil to produce food for themselves instead. In line with the overdeveloped export sector and the related dependent-ness of the peripheral economies, is the problem of unequal exchange of goods between the centre and peripheral countries, as theorized by Emmanuel (1972). Emmanuel saw problems in that workers were (still are) paid differently depending on the location they perform their activities (i.e. in the centre or periphery), and the unequal exchange related to the amount of labour for agricultural produce (export) and imported goods (technology, machines) into the peripheral countries4. Senghaas (2001) attributes the idea of unequal exchange from Emmanuel to Amin, who incorporated Emmanuel's ideas in his later works, referring to it instead as the systematic 'disturbed' dynamics of accumulation between centre and periphery, resulting in asymmetric interdependence that would need to be resolved by active state intervention, via an associative-dissociative mixed strategy5, to stimulate indigenous development independent of the world system.
Although there are differences between the leading scholars in the classical dependency theories, the most important to remember is that these theories attempt to describe underdevelopment and dependency from a Third World point of perspective, most of them tried to identify external factors to explain the backward economies, think unequal exchange imposed from 'other' countries, and their polar theoretical structure is core versus periphery. Proposed solutions include a socialist revolution together with a partial or complete de-linking from the international system.
2.2 Broadening and deepening of the theories
Based on the 'classical' dependency theories outlined in §2.1 above, more empirical data was gathered from the periphery point of perspective, not only form Latin America, but also to compare dependency theories with African and Asian countries. It appeared that not all observations could be explained by existing theory alone: the actual changes in the less developed countries implied greater and greater differentiation between the underdeveloped countries (Martinussen, 1997:93). In other words, Third World nations could not be categorized as one homogenous group and, at least, their individual (colonial) heritage and social structure ought to be taken into account, therefore elaboration on and expansion of the relatively closed concepts of the classical Neo-Marxists was required. The most important contributors to the debate of the 'new dependency' studies are F.H. Cardoso, and Immanuel Wallerstein during his early publications (though his later works have been categorized as 'world-system school'6). Similarities and differences between these new ideas and the 'classical' dependency school are summarized in Table 1.
Table 1. Comparison of old and new versions of dependency theories.
Cardoso claimed that the external factors would have very different impacts, depending on the dissimilar internal conditions (history, social structures etc.). In contrast to Frank, he regarded the national bourgeoisies of the dependent societies as potentially powerful and capable of shaping development, with a result not Amin's autocentric reproduction but a development in dependency, also referred to as dependent, associated development. (Martinussen, 1997:93-96). A striking example of such dependent development is the establishment and 'permanent' character of the Lomé conventions7.
Although Wallerstein's later work is categorized as World-System Perspective, his ideas do include many concepts of the Dependency School, such as unequal exchange and the core-periphery exploitation8 (So, 1990:171), but approaches dependency and underdevelopment from a world-wide overview down to individual states and their positions within the system (Martinussen, 1997:97), as opposed to from national to international level as other dependency theorists tried to explain the observed problems.
What about the current status of dependency theories? Much has changed since the 1960s, especially the globalisation of political structures, the increased presence and power of transnational corporations and neo-liberalism as an, if not the most, important factor shaping these times. Recent works by Amin (2001; Farag, 2002) and Surin (1998) indicate a mixture of Dependency School theory as well as acknowledging the importance of the world-system, most notably the unsustainable, destructive forces of financial markets on Third World countries (i.e. about the generation of 'surplus' money not via labour and capital, but from money; and its volatility). However, the theoretical structure is still bimodal (core-periphery) and deterministic development (see Appendix A), though Amin has introduced the definition of a 'Fourth World' of countries on the African continent lagging even further behind, i.e. relatively more deprived, than 20 or 30 years ago (Farag, 2002; Surin, 1998), which can be interpreted as the Third World being the 'semiperiphery' and the Fourth World as periphery, although Amin does not mention this classification. On the other hand, Wallerstein fully follows the World-System theories, but in a recent publication (2002) he also did address class structures and societies on national level.
3. Case study: Cuba
The reason why I decided to use Cuba as a case study in relation to aforementioned dependency theories is that Cuba managed to defy most, of not all, conventional ideas around development and dependency during the last 10 years. First, I will discuss the situation leading up to the end of the Cold War, then changes in the agricultural sector and Cuban society in general, and will finish with a brief analysis on the example Cuba may be for other nations still caught in the dependency trap.
3.1 The Alternative Model
Despite the fact that Cuba had its socialist revolution, which was set as a prerequisite by the classical dependency school as a means to be able to end the dependency, the international relations did not change in the way envisaged. Partly because of the, now 40-year long, U.S. embargo9 imposed on Cuba, it moved more strongly towards the Soviet Bloc to become a player in the COMECON: the consequence was continued export of sugar cane and increased import of industrial equipment, petroleum, agrochemicals and staple food (Rosset and Benjamin, 1994, Enríquez, 2000), thereby carrying on the Classical Model of agriculture (Wallerstein, 2002; Enríquez, 2000) as advocated by the Modernization School. Moreover, the Soviets paid 5.4 times more for Cuban sugar cane than the world market price (Rosset, 2002), providing slightly more that 80% of Cuba's foreign exchange (Enríquez, 2000), thereby fostering dependent development of Cuban society. Its advantages were internal investment in the establishment of an excellent education system and a relatively good health care system, suggesting a classification of 'semiperiphery', but the end of the Cold War resulted in an abrupt end of Cuba's dependent links with the Soviet Bloc:
"Suddenly $8 billion a year disappeared from Cuban trade, imports were reduced by 75 percent, including most foodstuffs, spare parts, agrochemicals, and industrial equipment," (Dr. Funes quoted in Parker, 2002)
Other sources claim it to have been cuts of 82% (Rosset, 2002) of its pesticides or over 90% of Cuba's fertilizer and pesticide use (Rosset and Benjamin, 1994:3). Even more seriously,
"Estimates of the weight of the population's caloric intake that was derived from imported goods ranged from 44 to 57 percent." (Enríquez, 2000)
indicating a potential disaster in food shortages for the population. Thus Cuba, still under U.S. embargo and virtually overnight left with no trading partner, was faced with the challenge to find alternatives to the highly mechanized and industrialized, mostly state-owned, large farms and to become self-reliant in its food production to prevent widespread famine of its citizens.
Here Cuba's unique social structure has proven to be of great advantage: the highly educated population together with state regulation and planning resulted in an amazing 'greening of the socialist revolution', what has become to be known as The Alternative Model. The major overhaul of the agricultural sector included the following:
3.2 A survival kit for eliminating dependency?
"We are told that small countries cannot feed themselves, that they need imports to cover the deficiency of their local agriculture. We hear that a country can't feed its people without synthetic farm chemicals, yet Cuba is virtually doing so. We are told that we need the efficiency of large-scale corporate or state farms in order to produce enough food, yet we find small farmers and gardeners in the vanguard of Cuba's recovery from a food crisis. We hear time and again that international food aid is the answer to food shortages-yet Cuba has found an alternative in local production." (Rosset, 2000)
Acknowledged, Cuba has faced real hardship in the 1990s, but it is also an example that the so-called 'de-linking' as outlined by the Dependency School is possible. Proof of the viability of organic agriculture is the other great windfall (Parker, 2002). The next thought is: can this Alternative Model be a blueprint for other dependent countries? World System dependency theorists might claim Cuba was already in the semiperiphery, especially because they have a highly educated population who were vital in its policies for survival. But Neo-Marxists can highlight the advantages of the present socialist structure that was already in place. Enríquez (2000) points out the analogous, albeit slower, process that is happening in China and Vietnam, and adds that former Soviet Bloc countries do not experience a similar change because they do not have the socialist planning structure in place anymore. She even goes a step further, claiming that the U.S. embargo might have contributed positively to the change, because it did not allow industrial and capital investments in Cuba, thus preventing swapping one form of dependency into another (neo-liberal) one and thus ending the unequal exchange.
Whereas other Latin American nations have lost more liberties of their authority to manage their own economy (Anon 2, 2002), Cuba has proved it is possible for a so-called (semi)peripheral country to stand on its own feet. However, the majority of dependent, Third World, nations do not have a socialist structure with highly educated people in place at the time of writing, nor a U.S. embargo imposed on them to prevent neo-liberal influences, therefore it may not be the blueprint for change towards independent development, but it certainly does give hope that by employing original, inventive measures there might be a way out of the dependency trap.
As a result of the dissatisfaction of the development policies advocated by the Modernization School, new theories emerged based on the point of view of the developing countries. These Dependency Studies focused on the division of the world into core and periphery, where the level of analysis was the Third World nations involved. Early dependency theorists focused on the general pattern of dependency as an economical phenomenon due to colonization and unequal exchange, whereas later scholars of the Dependency School investigated the historical-structural nature of dependency of peripheral countries, emphasizing the state and class conflicts (hence a socio-political phenomenon) and asserting that dependency and development can co-exist by so-called 'associated-dependent development'.
During the Cold War, Cuba was following the dependent development path in a socialist setting, the agricultural sector following the Classical Method, however investing the generated surplus in its people and maintaining socialist planning policies, which were most likely the main contributing factors in the successful de-linking form its dependency on the Soviet Bloc after the end of the Cold War.
1. So (1990) discusses the Modernization School with its imperialistic line of thought for expanding the economic arena form the United States and Europe into Third World countries in greater detail.
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2. Discussing the then identified problems with orthodox Marxism is beyond the scope of this essay. The main differences between Marxist and Neo-Marxists are: Neo-Marxists approach imperialism from the 'periphery' (as opposed form the 'centre'), they believed that the present (late 1950s) situation in the Third World was ripe for socialist revolution, that ought to be carried out by the peasants and guerrilla warfare by the people's army (So, 1990:95).
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3. With regards to 'producing economic surplus': under monopoly capitalism (as opposed to competitive capitalism) as Baran identified the situation, there is a need for an external source of demand and profitable outlets for investment. This makes monopoly capitalism more aggressively outwardly looking than competitive capitalism (Anon 1), hence the emphasis of generating economic surplus in a system where 'monopoly capitalism' prevails, becomes much more important.
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4. Emmanuel's book Unequal Exchange (1972) is very interesting, going into great depth with regards to 'world equilibriums' in prices for goods during colonialism, capitalism, internal and external, including wages, as well as concluding that, overall, the use of resources (wide definition) is highly under-utilised. Thirty years onwards, the latter is still a valid point, though one has to mention that, world wide, sufficient food is produced to feed the world population, but there are not sufficient materials to create a standard of living for everybody equal to that of the Western countries (the latter is also referred to as limits on the 'carrying capacity' of the earth).
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5. Original text in Senghaas (2001): "Eine so definierte Strategie "autozentrierter Entwicklung" mit dem Hilfsmittel der Abkopplung ist nicht vorstellbar ohne eine aktive Intervention des Staates. Zusammen mit interessierten gesellschaftlichen Kräften besteht dessen Aufgabe darin, jene assoziativ-dissoziative Mischstrategie zu finden, deren Ziel es sein muss, selektiv die Chancen des Weltmarktes - sofern mit dem eigenen Projekt kompatibel - zur Dynamisierung einer breitgefächerten internen Entwicklung zu nutzen"
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6. Immanuel Wallerstein's essays in The Capitalist World-Economy (1979) and later publications are considered to encompass the 'world-system view' on dependency (see also Appendix A and Part III in So, 1990:169-260). A principal discussion about the 'problems' of the New Dependency School's thoughts is given in chapter 3 in Wallerstein (1979:49-65).
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7. The Lomé conventions are the trade agreements between the EU and 'developing countries', former colonies of mainly the United Kingdom, France and the Netherlands. The economic effects are discussed by Grynberg (1998), among others.
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8. Extending the latter into core - semiperiphery - periphery, allowing countries upwards and downwards mobility in their development (So, 1990; Wallerstein, 1979), but the further in the direction of periphery, the smaller the options for development (Martinussen, 1997:98), hence the more difficult for a nation-state to move 'up' into the stage of semiperiphery.
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9. The embargo on Cuba means that the U.S. law prohibits the sale of food and medicines to Cuba (medical donations must have a license form the U.S. Treasury Department) (Rosset and Benjamin, 1994:82), and limits tourism of U.S. citizens to Cuba.
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10. Extensive coverage of the bacteria, fungi, nematodes, crop rotation and other soil management measures employed is discussed in Rosset and Benjamin (1994).
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Table A-1. Comparison of Dependency Perspective and World-System Perspective.
This is an essay written as part of the course PS5111 - Development issues and conflict transformation in emerging societies, Department of Government & Society, University of Limerick, Ireland. Because a word limit was set, certain aspects did not get the attention they deserved; I intend to write more at a later date.