11th April 2013
This one’s far shorter than I’d have liked it to be, since I had to trim it down for a 2,500 postgrad essay - but let me know what you think of it anyway! :)
Dependency Theory: A Critical Defense
Arising from critiques of the Economic Commission for Latin America (ECLA), theories of dependency remain the most misunderstood and caricatured of all theories pertaining to the development of the Third World. For any kind of meaningful assessment of the usefulness or validity of theories of dependency it is imperative that we shift from the notion of an homogenous dependency theory to a complex paradigm of dependency, the various constituents of which have roots in multiple theories and methodologies. It is patently absurd that one should tar the works of writers as diverse as Frank, Amin and Cardoso with the same brush merely because they all use the concept of a set of unequal relationships between nations within a polarised international economy. This shift in understanding allows us to retain the baby whilst removing the bathwater - separating flawed methods and concepts from sound ones and giving us a far more realistic and fair picture of dependency theories as a synthesised whole. To do otherwise is to fall into the trap of stereotyping, and stunts the ability to make critical remarks which may improve our understanding of the functioning of dependency.
A great deal more service can be done to a set of theories with honest appraisal, the suggestion of new directions of travel, and the exposure and correction of past mistakes, than with either complete dismissal or blind praise. Hence, whilst I offer criticisms of individual authors from the point of view of a modern Marxist, particularly those of the ‘world systems’ school, I believe dependency theories to be an indispensable addition, not only to historical-materialist conceptions of international capitalist relationships, but also to the search for practical solutions to the alleviation of the great social evils which exist outside of the developed world.
The ECLA: Breaking New Ground
Formed by the United Nations in 1948 as a body to explore regional development, the ECLA (also known by its Spanish acronym CEPAL) operated under its director Raul Prebisch. By 1949, Prebisch and the Commission had already written an extensive report into the condition of Latin American capitalism, and therein took a radically different stance to the mainstream of modernisation development theorists, typified by those such as Rostow. Whilst Rostow and his colleagues proscribed the supposed extension of ‘modern’ economic and social values over the ‘traditional’ through Ricardian specialisation, increased exposure to international markets and the abolition of barriers to trade, the ECLA drew a blunt but powerful distinction in international markets – the centre and the periphery. Far from the sharing of technological benefits amongst all capitalist nations, and the increasing of raw material prices to the benefit of primary producer nations, the ECLA demonstrated widening gaps between rich and poor nations, industrial profits at the centre booming with the levels of trade, whilst peripheral nations were broadly excluded from sharing in prosperity. As Prebisch puts it, the key flaw in modernisationist thinking is that when it talks of the process of the sharing of industrial benefits, ‘it attributes general character to what of itself is very circumscribed.’
The ECLA’s key contributions lie in two areas:
1. An imbalance in income elasticities between central and peripheral consumers, stemming from the fact that industrial goods are produced primarily in the capitalist centre and imported to Latin American countries, leads to worsening terms of trade for Latin American countries if monoculture and primary-export-led growth policies continued.
2. The mass of available labour and lack of strong trade unions across Latin America means that wages could be kept low – hence, the prices of food and raw materials remained low, whilst the prices of central capitalist industrial exports increase (due to strong trade unions and comparative scarcity of labour).
When taken together, these laid the foundation for what would become known as the ‘theory of unequal exchange’, built upon by later writers. It created a perfect storm for Latin American nations – the more they exported, the more they contributed to their own subjugation to central capitalist nations. But paradoxically, the ECLA failed to extrapolate the logical international conclusions of its theory, and focused almost entirely on endogenous obstacles to development: a reactionary and entrenched landlord class, and an inefficient latifundio system of land ownership which stunted development of internal markets. The ECLA recommended a programme of import-substitution industrialisation (ISI) to be undertaken by the state, with strong powers of planning, economic coordination and protection of domestic industry, in order to delink from exploitative global markets.
In practical terms, ISI was a flop - it merely changed the form of economic dependency which countries faced. Import dependence shifted from industrial goods to capital goods, attempts to escape monoculture status were fraught with difficulties, and tariff barriers were circumvented by foreign capital investment. Though the ECLA was groping in the right direction, asking all of the correct questions, it was methodologically flawed and lacking the mechanics to explain the surplus drain from periphery to centre. Reflecting a deeper sense of pessimism as the Fordian boom of the postwar years reached its impasse in the 1970s, Cardoso remarked that industrialisation was no longer in contradiction to imperialism, but had become subsumed as another of its many vehicles.
Typology of Dependency Theories
Against this background of disappointment, a host of theoretical alternatives grew upon the foundation of the ECLA’s conception of dependency. As I have remarked before, failure to distinguish between the strands of thought is an intellectual crime – hence, how we group and distinguish between these strands deserves some consideration.
Palma’s three divisions are elucidating – first, ‘theories of underdevelopment’, which start from the point that internal Latin American conditions are directly derived from their external relationships, typified by Frank and Baran. Second, thinkers who attempted to reformulate the ECLA’s propositions, but shy away from any wider theory: Sunkel and Furtardo fit in here. Finally is the ‘concrete situations of dependency’ school, which rejects formal attempts to create an overarching externality upon which to pin all internal problems in Latin America, and stresses the mediatory effects of class formations and struggle – Cardoso, Faletto and Palma himself can be categorised thusly. This schema gives the false impression that Cardoso and Faletto are superior to Frank because of their anti-theoretical empiricism. This is not the case, since all three are highly theoretical; it simply happens that Frank is wildly flawed. Thus, I am convinced by Larrain’s broader but more methodologically sound schema of two schools:
1. A ‘world system’ school, within which we can locate Frank, Wallerstein, Emmanuel and Amin. This school sees dependency as an encompassing global system, characterised by a duality between centre and periphery, between which there is unequal exchange of resources and value to the benefit of the centre. Underdevelopment is therefore a function of development, and vice versa.
2. An ‘associated dependent development’ school, which sees dependency as a condition for specific social and economic circumstances within given concrete institutional formations and national boundaries. International exchange is given less attention, and the focus shifts to the historically, politically and culturally contingent class struggles which take place within underdeveloped nations. This school is somewhat heterodox, coming in humanitarian developmentalist forms (Pinto, Sunkel, Furtado), and Marxist forms which integrate international situations and internal class struggles (Cardoso, Faletto).
Frank’s writings posit a non-Marxist chain of exploitation through a network of metropolises and satellites – each metropolis being a satellite of the next rung up the ladder. However, as Booth points out, Frank makes a fatal mistake at this most basic level – he conflates the spatial exploitation of one nation by another with the social exploitation of one class or individual by another. The relationship between a peasant and his landlord is precisely comparable to that between a central capitalist nation and a peripheral satellite. Through the conflation of these two relationships under one notion of surplus, he hamstrings his analysis in the concrete by abstracting to a series of analogous but vague exploitative relationships – as Roxborough says, to explain dependency in reality, only concepts of the exploitation of labour and the transfer of surplus-value through unequal exchange are sufficient since they describe demonstrably different economic and social relationships. Furthermore, Frank’s analysis has grave implications for the examination and interpretation of class struggles. Within Frank’s schema, nationally-based processes of class formation are ignored – Frank slides from a level of analysis appropriate to explaining concrete struggles and social formations (generally, individual nations) to the level of analysis appropriate to capitalism as a world economic system (global).
Wallerstein’s method of dealing with the problem of units-of-analysis is radical: he abolishes the national, stating that ‘the relations of production that define a system are the relations of production of the whole system’, and goes on to point out that capitalism cannot be conceived of without a duality between free labour in the centre, and coerced labour in the periphery. This is a perceptive point, certainly, but fails to get us beyond the problems with units-of-analysis, since international capitalism is far more complex than a homogenous system with an identical set of productive relations everywhere – take, for example, pre-Chavez Venezuela: a largely agrarian export economy with a small enclave of highly industrialised foreign-owned industries around the PDVSA.
It is clear that as dependentistas, Frank and Wallerstein fail to provide a convincing articulation. But our two next analysts are much more enlightening: Emmanuel and Amin. Both were interested in the concrete operation of processes of unequal exchange between nations, and hence contributed significantly to a more fleshed-out conception of dependency.
Dependent countries, says Emmanuel, are those which are trapped in a cycle –constantly exchanging a larger quantity of domestic labour for a smaller amount of foreign labour. The tendencies towards constant degradation in terms of trade picked out by Prebisch and the ECLA, he says, are an illusion: higher wages in the centre necessarily mean a smaller amount of socially-necessary labour time is contained within industrial exports from the centre, in exchange for cheap raw materials with more socially-necessary labour time invested in them – hence surplus drains towards the centre.
Implicit in this formulation is that exchange itself is an arena for exploitation – meaning that workers at the centre benefit directly from the exploitation of their counterparts in the periphery. Emmanuel describes this succinctly: ‘A de facto united front of the workers and capitalists of the well-to-do countries, directed against poor nations, coexists with an internal trade-union struggle over the sharing of the loot.’ Predictably, Emmanuel has been roundly criticised for these ideas, which smack of a Third-Worldist perspective to the exclusion of reason or history. Most incisive is Charles Bettelheim, who attacks the fundamental logic of Emmanuel: ‘we do not treat wages as an ‘independent variable’, we are led to relate the low wages in the poor countries to both the low level of development of their productive forces and to the production relations that have hindered and continue to hinder the growth of these forces’.
Rightly, Amin blasts Emmanuel’s mechanistic proclamation of wages as ‘the independent variable’ – and goes on to examine how productivity functions within international exchange. Most Third World exporters, he notices, use modern productive techniques, but with much lower wages than the central capitalist nations. Though not all Third World commodities are produced through capitalist property relations, this doesn’t matter – unequal exchange can easily take place between different modes of production. Thus he arrives at his neat summary of unequal exchange: ‘the exchange of products whose production involves greater wage differentials than those of productivity’. This is a gigantic improvement on any of the other theorists in this school.
Yet all of the above writers fall into the same trap: in seeking to create an all-encompassing system which explains development purely in terms of exchange rather than production, they create a stagnationistmodel, which is inflexible and pessimistic, and gives little agency to the vast majority of working people, trapped as they are within a monolithic structure of exploitation. Dealing with this problem is the invaluable contribution of our second group of theorists.
Associated Dependent Development
Central to the second school of development is the re-centring of the analysis of development on the processes of class struggle. Though Sunkel and Furtado failed to progress far beyond the analyses of the ECLA, their examinations of concrete situations of development in Chile and Brazil respectively meld traditional ideas of dependency with serious investigation of political and social institutions, and their mediation through class struggles. Both authors pay particular attention to how national discourses are integrated into political action – some would say that this marks a retreat from proletarian internationalism, but surely they are attempting to examine real-world phenomena and processes, rather than engage in abstract dreaming about an international working-class which cannot be said to have the vital qualities of a class in any real sense.
Faletto and Cardoso, former President of Brazil, present by far the most well-rounded account of dependency – one which deserves the most vehement case of support. Their analysis begins with the rejection of the conception of dependency as an external ‘cause’, and progresses onto emphasizing ‘the historic transformation of structures by conflict, social movements and class struggles.’ Dependency expresses itself through the mediating and historically conditioned factors of class, state policy and direct local interests. Though dependent economies are characterised by the fact that capital accumulation cannot be effectively sustained by internal forces within the domestic economy, they reject out of hand as obviously incorrect that development and dependency are always incompatible – one only need to look at a host of economies which could be considered to be both dependent and developing. They make a raft of criticisms of the previous school of dependentistas too long to enumerate here – fortunately, Larrain has done so for us. Broadly, they attack the stagnationist idea that capitalist development is impossible at the periphery, and counter effectively Frank et al’s assertion that classes at the periphery act as zombies under the influence of dependency. They conclude their excellent analysis with a thorough examination of the broad sweep of Latin American dependent history. In this ‘thick’ historical description, one can see all of the elements of their dependency theory working together – the conditioning effect of central capitalism, the contingent historical struggle over surplus within Latin American nations, the differing ways in which institutions and social structures form in different national and historical contexts, and the development of Brazil, Chile and Argentina in the 1970s and ‘80s.
It would be remiss to spare this final school from criticism, though they avoid the vast majority of the pitfalls associated with Frankian dependency. Again, Larrain has helpfully summarised a list of fifteen separate criticisms of dependency theories, stemming mostly from Marxist critiques. But very few of these criticisms apply to Cardoso and Faletto, having been directed against the caricatured stagnationist version of dependency championed by Frank. Even Warren, one of dependency theories’ most strident Marxist critics, admits that ‘Cardoso stands somewhat apart from other theorists’.
As an independent theory, dependency is flawed, pessimistic and rigid – taking its heritage from Marxism, but stripping from it all dynamism and flexibility. But with conscious reintegration into Marxist ideas of productive relationships, class struggle and real-world analyses, such as the project undertaken by Cardoso and Faletto, dependency can become an extremely useful adjunct for the analysis of global economic systems. ‘Men’, wrote Marx, ‘make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.’ This short passage from the Eighteenth Brumaire illustrates perfectly why one must support dependency with Marxism – without ‘men making their own history’, we have merely rigid circumstances transmitted from the past. This is not a case of support for dependency as a whole – as I have shown that it is a diverse if not heterogeneous theory – it is a case of support for the most clear-thinking of dependentistas.
Word count: 2,650.
Bettelheim, C., ‘Theoretical Comments’ in A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1975)
Cardoso, F. H. and Faletto, E., Dependency and Development in Latin America (Berkley: University of California Press, 1979).
Emmanuel, A,. Unequal Exchange (New York: Monthly Review, 1972).
Frank, A. G., Capitalism and Underdevelopment in Latin America (New York: Monthly Review, 1967).
Furtado, C., Subdesarrollo y estancamiento en America Latina (Buenos Aires: EUDEBA, 1966).
Larrain, J., Theories of Development (Cambridge: Polity, 1989).
Rostow, W. W., The Stages of Economic Growth, a Non-Communist Manifesto (Cambridge: Cambridge University Press, 1985).
Roxborough, I., Theories of Underdevelopment (Basingstoke: MacMillan, 1979).
Prebisch, R., The Economic Development of Latin America and its Principal Problems (New York: United Nations, 1950).
Wallerstein, I., The Modern World System (New York: Academic Press, 1974),
Warren, B., Imperialism: Pioneer of Capitalism (London: Verson, 1980), F. H. Cardoso, ‘Dependency and Development in Latin America’, New Left Review, no. 74 (June-July 1972).
Works in edited collections
Amin, S., ‘The End of a Debate’, in Imperialism and Unequal Development (Brighton: Harvester, 1977),
Booth, D., ‘Andre Gunder Frank, an Introduction and Appreciation’ in Oxaal et al, Beyond the Sociology of Development (London: Routledge and Kegan Paul, 1975).
Palma, G., ‘Dependency and Development: A Critical Overview’ in D. Seers (ed.), Dependency Theory: a Critical Reassessment (London: Frances Pinter, 1981).
Prebisch, R., ‘El desarrollo economico de la America Latina y algunos de sus principals problemas’ in ECLA El Pensamiento de la CEPAL (Santiago: Editorial Univeritaria, 1969).
Sunkel, O., ‘Cambio social e frustracion en Chile’ in H. Godoy (ed.), Structura Social de Chile (Santiago: Editorial Univeritaria, 1971).
Marx, K., The Eighteenth Brumaire of Louis Bonaparte (New York: Die Revolution 1952) (http://www.marxists.org/archive/marx/works/1852/18th-brumaire/index.htm, accessed 11/4/13)
 I. Roxborough, Theories of Underdevelopment (Basingstoke: MacMillan, 1979), p. 43.
 R. Prebisch, The Economic Development of Latin America and its Principal Problems (New York: United Nations, 1950).
 Rostow, The Stages of Economic Growth, a Non-Communist Manifesto (Cambridge: Cambridge University Press, 1985).
 R. Prebisch, ‘El desarrollo economico de la America Latina y algunos de sus principals problemas’ in ECLA El Pensamiento de la CEPAL (Santiago: Editorial Univeritaria, 1969), p. 49.
 Roxborough, Underdevelopment (1979), pp. 30-31.
 Cuba immediately after the 1959 Revolution provides a remarkable example of the failure of ISI within a framework of international markets – by 1963, after a disastrous attempt to diversify agricultural exports, the Cuban government returned wholesale to sugar production for the Soviet Union.
 J. Larrain, Theories of Development (Cambridge: Polity, 1989), p. 108-110.
 F. H. Cardoso, ‘Dependency and Development in Latin America’, New Left Review, no. 74 (June-July 1972).
 G. Palma, ‘Dependency and Development: A Critical Overview’ in D. Seers (ed.), Dependency Theory: a Critical Reassessment (London: Frances Pinter, 1981).
 Larrain, Development (1989), p. 114.
 A. G. Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review, 1967).
 D. Booth, ‘Andre Gunder Frank, an Introduction and Appreciation’ in Oxaal et al, Beyond the Sociology of Development (London: Routledge and Kegan Paul, 1975), p. 78.
 Roxborough, Underdevelopment (1979), p. 46.
 I. Wallerstein, The Modern World System (New York: Academic Press, 1974), p. 127.
 A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1972).
 Ibid., p. 180.
 C. Bettelheim, ‘Theoretical Comments’ in A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1975), pp. 228-9, emphasis in original.
 S. Amin, ‘The End of a Debate’, in Imperialism and Unequal Development (Brighton: Harvester, 1977), p. 181.
 O. Sunkel, ‘Cambio social e frustracion en Chile’ in H. Godoy (ed.), Structura Social de Chile (Santiago: Editorial Univeritaria, 1971).
 C. Furtado, Subdesarrollo y estancamiento en America Latina (Buenos Aires: EUDEBA, 1966).
 F. H. Cardoso and E. Faletto, Dependency and Development in Latin America (Berkley: University of California Press, 1979), p. x.
 Ibid., p. 94.
 Larrain, Development (1989), pp. 162-3.
 Ibid.„ pp. 188-193.
 B. Warren, Imperialism: Pioneer of Capitalism (London: Verson, 1980), p. 161.
 K. Marx, The Eighteenth Brumaire of Louis Bonaparte (New York: Die Revolution 1952), Ch. 1. (http://www.marxists.org/archive/marx/works/1852/18th-brumaire/index.htm)