Development Theory I:
Modernisation and
Dependency
Structure of the Lecture
• Section One: Brief Historical
Introduction
• Section Two: Modernisation Theory
• Section Three: Dependency Theory
• Section Four: Capitalist Structuralism
Historical Introduction
• For ideas of development economics or
development theory to make sense it
necessary to recognise difference
between developing and developed
societies
• In many respects both Marxists and
liberals did not recognize differences in
C19th and early C20th
• For Marx Imperialism was about the
export of capital
• The expansion of capitalism led to
uniformity
• Not that different from liberal political
economy
• Even critics of Imperialism (Hobson)
saw it as ‘developmental’
• Modern Development Economics was
born in Latin America in the 1930s in
response to world depression
• The main early contributions of
Development economics come under
heading of the ‘structuralist’ school
• The work of these early scholars was
quickly dwarfed by contributions of US
based liberal scholars in the early postwar period who sought to frame a
comprehensive theory of development
(Modernisation theory)
• Explicit ant-communist political agenda
• 1960s (in wake of the Cuban revolution)
formation of a radical explanation of
underdevelopment
Modernisation Theory
• Has cultural, political and economic
component
• Different authors stress different
aspects of the argument
• Evolutionary Theory of Human History:
Third World Societies are less ‘evolved’
than first world societies
• Policy framework to fight communism
• Parsons overtly uses biological
metaphor
• A number of levels of the analyse
• First and third world ‘man’ are seen as
different physiologically (Oscar Lewis and
David McClelland ).
• First world ‘man’ is individualist, rational and
goal orientated.
• Third world ‘man’ is collective, irrational and
fatalist
• Second, first and third world social
systems are fundamentally different in
terms of levels of evolution:
• Parsons Ideas of evolutionary
‘universals that all societies need to
evolve beyond a particular level’.
Basic: Social stratification, Cultural
Legitimating
Advanced: Bureaucratic Organisation,
Money and the Market Complex,
Generalised Universalistic Norms, and
finally Democracy
• Politically modernisation theorists did
not simply promote liberal democracy
• Concerned with problems of transition
(the confluence of the modern and the
underdeveloped)
• Need mechanism of integration,
depersonalisation, mediation and
moderation to make democracy work
• Order (anti-communism) most important
• Army appeared as a rational modern
institution. A medium term political
solution
• Pye, "Armies in the Process of Political
Modernization”
• Democracy ideal in long-term
• Economic Theory of Modernisation
• Rostow and Stages (Traditional Society,
Preconditions for take-off, Take off,
Drive to Maturity, Mass Consumption)
• Values and ideas of traditional society
are a problem
• After this rates of investment. . Invest
10-20 per cent of national income.
• Lewis. Dual Economy and Expanding
Capitalist nucleus
• Two economies in underdeveloped
state (capitalist and traditional)
• The key to achieving growth is expand
capitalist sector
• It is necessary to channel additional
resources to the sector.
• Squeeze the peasantry
• Importantly there is no serious
consideration of external constraints
• Criticisms of Modernisation:
• Tradition simply becomes a residual
characteristic (not seriously analysed)
• Theory of evolution is crude
• You cannot simply ignore the structures
of the global economy
• You cannot simply ignore the structures of the
global economy
• The economic solutions it proposes will
exasperate poverty in the medium term
• Political solutions questionable?
• Does not properly delineate between different
societies
• All cultural explanations of growth pose
problem of hitting the target (Catholicism,
Confucianism etc )
Dependency Theory
• Marx turned on his head
• Focus on exchange than production
• Underdevelopment and development two
sides of the same coin
• The idea of a traditional sector is nonsense
• The problem is how third world is integrated
into the global economy
• Frank
• Unequal Exchange: All trade is monopolist an
controlled by the centre for its over benefit
(source of control changes). Same systems
work internally (Major cities exploit the
countryside)
• Lumpenbourgoise:
• All development is simply the development of
underdevelopment
• The entire economy is thoroughly
penetrated by global capital
• Although capital may lose interest in
regions and periods of passive and
active involution (Sub Saharan Africa
example of passive involution)
• For Frank active involution has limits
• The Amin variation
• Different explanation of Unequal
Exchange: Wages and Dynamic
Advantage
• Excepts that there is pre-capitalist
elements in the third world
• However, these elements are penetrated by
and their development is shaped by
capitalism
• Some development is possible but only
extraverted development auto centric
development is impossible
• Thus for Amin (1973: 292) there no direct
correlation between underdevelopment and
GDP.
• Criticisms of Dependency:
• Hopelessly ridged (particularly Frank)
• Insensitive to variations within the Third World
(corrected by Cardoso)
• Degrees of dependency. It is not Black and
White
• Belittles the real achievements of the third
world (development of underdevelopment or
extraverted development)
• What is equal exchange?
• Economic Theory of Modernisation
• Lewis. Dual Economy and Expanding
Capitalist nucleus
• Two economies in underdeveloped
state (capitalist and traditional)
• The key to achieving growth is expand
capitalist sector
• It is necessary to channel additional
resources to the sector.
• Squeeze the peasantry
• Importantly there is no serious
consideration of external constraints
Capitalist Structuralism
• We deal with this last because it
represents a ‘middle ground’
understanding of third world states
interactions with the world economy
(Furtado).
• It primarily theory devised by
economists and is not necessarily a
comprehensive theory of development
• Some parallels with Lewis but differences
• More sensitivity to external (fact you are
developing in relation to the developed)
• Terms of Trade
• Emphasis on the domestic market and third
world common markets
• Primary focus on balance of payments rather
than savings constraint
•
•
•
•
Policy Instruments:
Capitalist planning
Trade barriers
Moderate Wage Increases (expand
markets and drive productivity)
• Tax the Rich not the peasants (the rich
have a bad pattern of consumption)
Conclusion
Questions for You:
What do these two approaches agree
upon?
What can be salvaged?
Class Exercise:
• Election Fever
• There is a election in a middle income state
(say Brazil).
• Divided into 3 groups (one representing
modernisation, one dependency, one
capitalist structuralism). Put forward a
manifesto with main policies (and rational for
these policies). Nominate a candidate who
gave a brief election address.