Do new dependency theories overcome the weaknesses of classical dependency theories?

Last Updated: 17 Jun 2020
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Over the century’s, economic development theorist have put forward various models for explaining the “underdeveloped-ness” of countries in the Third World. However, with sociological theory comes criticisms and despite lasting a great deal of time in the framework of the international sphere, classical dependency has been subjected to a barrage of criticism on theoretical, empirical, methodological, and stylistic grounds. In this essay, it is my aim to analyse the criticism put forwards while simultaneously determining whether or not the modification by new dependency theorists have overcome these flaws.

Before doing so we must firstly acquaint ourselves with the origins of the dependency theory, first formulated in the late 1950s under the guidance of the Director of the United Nations Economic Commission for Latin America, Raul Prebisch. The second part of this essay will provide an analytic account of Paul Baran and Andre Gunder Frank’s classical studies of dependency theory, looking at their general perspectives and adaptation to Marxism.

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Once this has been achieve, the third and final part of this essay aims to draw out the criticism that have been put forward on classical dependency studies while looking at new dependency theorist; Fernando Henrique Cardoso, Stephan M. Haggard and Thomas B. Gold perspectives. This will allow me to conclude how sophisticated new dependency studies are in overcoming the flaws of the classical dependency studies. Origins of Dependency Theories Given the many interpretations given to dependency, how can one capture the concept of dependency in a concise manner?

Dos Santos, defines it as "a historical condition that shapes a certain structure of the world economy such that it favours some countries to the detriment of others, and limits the development possibilities of the subordinate economies". (SO, A, Y. 1990: 99) Whereas liberals (mainstream economists) define underdevelopment as a condition in which countries find themselves in, depedentistas see it as a process in which less developed nations are trapped because of the relationship between the developed and underdeveloped countries in the world economy. (SANCHEZ, O. 2003)

However, it can be agreed that dependency theory is not a socioeconomic relation that just “occurs”, it is developed historically through capitalism’s power-relations between the first world and the third world. In order to understand dependency theory, we first need to place the model in historical context by examining its origins. Emerging in the late 1940’s against the development theory of modernization which examined development from the point of view of the United States and other Western Countries, The Dependency Theory took the approach of viewing development from a Third World perspective.

According to Blomsorm and Hettne, the dependency theory represents the “voices from the periphery”. (Blomsorm, M, Hettne, B. 1984) Dependency theory arose out of central and south America in the 1960s and 1970s, but was part of a larger movement that was asking a lot of questions about international relations at the time. One of those questions was “why are so many countries not developing? ” The traditional answer to this question was that these countries are not perusing the right economic policies or the governments are authoritarian or corrupt.

However, dependency theorists wanted to find out if that was all there was to it, which lead them to argue that countries were not developing around the world due to international division of labour, class distinction and global capitalism. The diagram above (Wikimedia commons, 2008) is a clear example of what dependency theorist meant when they argue that there are a number of different kinds of states in the world which all form a different funtion in the world’s economy. First you have the core states are the most richest and powerful (e.g Europe and North America).

These states dominate in terms of industry and technology and as a result the semi-periphey and periphery states (e. g Latin America and South Africa), who are characterised by resource extraction economy, argiculture production and providing cheap labour, serve the economic intrest of the richest countires. Dependency theory became popular as a criticism of modernization theory (also known as development theory) which seemed to be failing due to the continued widespread poverty of large parts of the world.

This may be because modernisation theory only offers an “internal” explanation of Third world development. For example, it assumes that there is something wrong inside Third world countries- such as traditional culture, overpopulation, little investment, or lack of achievement motivation- and this is why Third world countries are backward and stagnant. (So, A, Y. 1990: 92) The theory believes in order for third world countries to reach modernity they need to look up to western countries as mentors and follow western paths of development.

However, dependency theorists argue that this is impossible to do so because of colonialism. “The colonial experience has totally restructured Third world countries and has drastically altered their paths of development” (So, A, Y. 1990. :96) Looking back at liberal reformer Prebisch and the ECLA strategy of protectionism and industrialization, he believed, in order to put an end to all problems of development, poorer countries should embark on programs of import substitution so that they need not purchase the manufactured products from the richer countries.

The poorer countries would still sell their primary products on the world market, but their foreign exchange reserves would not be used to purchase their manufactures from abroad. (Larrain, J, 1989:110) However, this was not as straight forward as anticipated, because if a poorer nation makes any attempt to resist against the power of the rich nations they may have to face military force or economic sanctions.

“Developed nations actively keep developing nations in a subservient position, often through economic force by instituting sanctions, or by proscribing free trade policies attached to loans granted by the World Bank or International Monetary Fund”. (WiseGeek, 2003) Despite the failure of Prebisch international trade theory, it is undoubtable that it provided the dependency theory with the support that it needed, and showed some semblance of what dependence means in this type of economic system. (Moses, D, 2012)

In a nutshell, Development and Underdevelopment are two sides of the same coin. Wealthy nations of the world need a peripheral group of poorer states in order to remain wealthy. Using a variety of political economic interventions as well as media, education systems and interventional sporting events wealthy nations control poorer nations, making them dependent. And it is in their best interest to keep the poorer nations poor by using Ha-Joon Chang metaphor “kicking the developing ladder away” so that they can continue to steal the poor’s natural wealth and exploit their workers.

Latin America was asked to produce food, raw materials for the great industrial center, and in return, Latin America would receive industrial goods from these centers. (So, A, Y. 1990:93) Classical Dependency Theory In this next section we will examine Neo-Marxist theorist’s Paul Baran (1910–1964) and Andre Gunder Frank’s (1929–2005) who developed dependency theory from Marxian analysis.

“The dependency theory is rooted in a Marxism analysis of the global economy and as a direct challenge to the free market economic policies of the post-War era” (Ferraro, V, 2008) In The Communist Manifesto, Marx argued within the capitalist economy the bourgeoisie mercilessly exploited the proletariat. He recognised that the work carried out by the proletariat created great wealth for the capitalist. The products created in the factory (the material outcome of the workers' labour) were sold for more than the value of the labour itself i. e. more than the workers' wages.

Like Karl Marx (1818–1883), Baran and Frank argued a similar exploitative system of stratification between countries. Usage of Marxist ideology can be seen as strength of the dependency theory as led the way to other neo-Marxist investigations of the linkage and possible reconciliation between Dependency Theory and Marxism. Paul A Baran Baran is the first author within the theory of imperialism who studies the class structures and economic processes of underdeveloped countries, but more importantly, he was the first Marxist author who puts in doubt the homogeneous conception of world capitalism. (Larrain, J, 1989:80)

Baran believed imperialism had penetrated underdeveloped countries, destroying earlier social formations and distorting their subsequent development, creating lasting conditions of dependency. Underdeveloped countries were systematically subordinated to the developed countries in the international division of labour. However, Baran was not the first to make such arguments. Traces of such views of imperialism can be found in Marxism.

“if it were not for the distorting effects of imperialism, the country that is more developed industrially would have shown to the less developed the image of its own future” (Foster, J, 2007) Baran’s Political Economy of Growth argued that Third world countries were characterized by small industrial sectors and large agricultural sectors, which was not immensely profitable on world a scale. He emphasized class relations and their impact on utilization of economic surplus, as well as the distribution of power as primary barriers which prevented development.

He espoused that internal conditions were the source of the major problems in underdeveloped countries, and recommended state intervention to promote nationally controlled industrialization as a precondition for evolution of other industrial sectors. (TheDevelopmentStudent, 2010) Baran’s uses his study of India as an example of a country which would have developed much better had it not been for the surplus torn from it by Britain. In his study he traced how British colonialism contributed to the underdevelopment of India through plundering, deindustrialisation, and the uprooting of the local society. (So, A, Y. 1990:111)

Although, Baran agrees with Marx that one should not idealise India’s pre-Britain past, he maintains that ‘at the same time, I should not be overlooked that India, if left to herself, might have found in the course of time a shorter and surely less tortuous road towards a better and richer society’ (Larrain, J, 1989:86) This study can be highlighted as a powerful insight of the classical dependency theories which has directed researchers to examine the process by which foreign domination had shaped the development of Third World countries. (So, A, Y. 1990:129)

Overall, the work of Paul Baran can be considered a very important landmark in the refurbishing of the theory of imperialism after the Second World War. He introduced such crucial changes to it that it is possible to argue that his contribution is the hinge which joins or articulate the theory of imperialism with, and marks the beginning of dependency theory. (Larrain, J, 1989:115) Andre Gunder Frank Andre Gunder Frank was one of the key figures under the Dependency Theory as well as the first to write in English.

In his most influential writings ‘The Development of Underdevelopment (1969)’ Frank drew inspiration from Paul Baran, focusing upon the dependent character of peripheral Latin American economies, and was able to conceptualise Baran’s notions in terms of a capitalist world system of metropolitan and satellite areas. Metropolitans are countries that are considered as the colonizers or developed countries and the satellites on the other hand are the colonies and considered underdeveloped countries.

Satellites supply cheap primary commodities to the rich countries that then use the raw materials to produce specialized good, and then send them back to the satellites for profit. Frank argues that this metropolished-satellite relationship is only in existence to serve the “interests of the metropoles which take advantage of this global, national, and local structure to promote their own development and the enrichment of their ruling classes” (Moses, D, 2012.)

He argues that the reason why LDCs are getting poorer is because the exploitation it experiences from the DCs such as extracting raw materials from the LDCs while the DCs manufacture, deliver and sell the final product to LDCs with a price hitting the ceiling. In his famous writing entitled as Dependency theory claims that the relation of imperialism and domination trapped poor nations at the bottom of the global economy. (Larrain, J, 1989:115)

Frank purposed four hypotheses, one being “the satellites experience their greatest economic development and especially their most classically capitalist industrial development if and when their ties to their metropolis are weakest” (So, A, Y. 1990:98) Therefore, his solution to the problem was that Third world countries “de-link” themselves from the world market, allowing them the opportunity to develop instead of distributing their own resources to the metropoles.

However, as stated previous, due to military force or economic sanctions this may not be possible. By escalating Baran’s views and adapting them to the analysis of the Latin American situation, Frank’s idea that capitalism expanded from Europe and managed to incorporate the whole world in a single international system, quickly became well known all over the academic world and gave intellectual currency to dependency theory.

Critique of classical dependency studies and modification by new dependency theorist The dependency perspective seems to have been particularly popular during the 1960s, but based on the classical dependency theories outlined above, it has since lost some of its attraction and has been the subject of a great deal of criticism since the 1970s. Firstly, it can be claimed that dependency theory itself was betrayed by the very formulation of its name. Many critics argue that it is not a theory, but can more accurately be conceived of as an approach to the study of underdevelopment.

In fact, new dependency theorists such as Cardoso objected to the term 'theory' to describe it. He believed it is an overarching framework within which one might formulate specific hypotheses/theories, a 'methodology for the analysis of concrete situations of dependency. ' It did not predict determinate, discrete outcomes. Rather, it sought to provide a new perspective from which to examine the problematique of economic backwardness. (Cardoso, F, H. 1977:15) For many social scientists the methodological faults of the approach were too obvious to ignore.

As stated earlier, the dependency theory arose as a critique of the modernisation theory. However, the modernisation school fought back, characterising the dependency perspective as a propaganda fragment of Marxist revolutionary ideology. Instead of providing a scientific analysis of what has actually happened in third world countries, the concept of dependency has become an all-purpose explanation for everything that is wrong with third world countries (So, A, Y. 1990:131) Another methodological criticism was that classical theorist Baran and Frank committed a major error of treating all peripheral areas as if they were the same.

Fernando, H, Cardoso is usually singled out as the key figure of the new dependency studies. Unlike the general analysis of the classical dependency school, Cardosos methodology is “historical-structural”. (So, A, Y. 1990:135) Therefore, he paid more attention to historically specific situations of dependency than classical theorist Baran and Frank. In this work, Cardoso pointed out that the shift from the Brazilian populist regime to military regime was represented as the pursuing of a new model of “associated-dependent development” in Brazil.

He added that there were many new activities, which has been done by military regime in Brazil. Goertzel (1999) suggests that Cardoso’s success: ‘... has come not because he has had a better theory but because he has always kept one question at the center of his thinking: What will happen if society selects one course of action over another? To answer this question, he has focused on the sociology of the historical conjuncture rather than on general theory... ’ (Goertzel, T. 1999:182)

However, Cardoso work too received much criticism for his esoteric style of writing. One scholar, assessing Cardoso and Faletto's Dependency and Development, decries the authors' "ornately Hegelian style" which is held to be partly responsible for the "confusing and even contradictory" message of dependency theory (Staniland, M. 1985:134). However, Cardoso himself admitted that "if there have been so many distortions in the consumption [of dependency theory], it is because the original production was not clear regarding several points" (Cardoso, F, H.1977, 17).

Dependency theorist overemphasised the factor of external conditions, and neglected the role of internal dynamics such as class conflicts and the state. Petra’s (1982) indicated that “to conceptualise the issues of the Third World in terms of dependency is to lose sight of the most decisive processes class formation and social relations which beget change and the particular configurations of social forces which emerge on a world scale”. (Petras, J. 1982:148)

New dependency theorist Cardoso overcame this weakness by focusing on the internal structures of dependency. According to Alvin Y. So “Cardoso is more interested in analysing the socio-political aspect of dependency, especially class struggles, group conflict, and political movements” (So, A, Y. 1990:136) Classical dependency theorists have become subject to criticised on policy implication. The dependency perspective emphasizes the harmful effects of colonialism and international division of labor.

But in fact, the success of countries such as India, south Korea and Taiwan have proven this idea wrong, especially Baran’s study on colonialism who once believed India moved backwards, from a relatively advanced industrial nation to a backward agricultural nation with the belief that it would never escape the British rule and develop again. Dependency may not lead to underdevelopment and as such periphery countries move from “underdevelopment” to becoming serious economic heavyweights it can be used to argue against the theory.

Unlike classical dependency theorist (e. g. Landberg) who portray the miracle of East Asian development as “manufacturing imperialism” New dependency theorist Thomas B Gold (1986) uses the concept of “dynamic dependency” in his study of Taiwan’s development. Taiwan’s starting point of development was in most ways very similar of that of Latin American countries. Like other colonial governments, the Japanese implanted a structure of dependent capitalism in Taiwan and skewed the economy to the production of two primary good (rice and sugar). Gold believed that Taiwan was undeniably restructured by Japan, it was not underdeveloped.

Soon after World War 2 Taiwan broke free from the Japanese colonial rule and have attained rapid economic development. (So, A, Y. 1990:158) Therefore this rejects classical dependent theorist’s assumption that this is impossible for a country to develop if it has experienced colonialism. Furthermore, determinism also burdens dependency with what Stephan Haggard has called the 'structuralist paradox'. "The model was outlined to help identify the international constraints associated with certain development paths in order to overcome them."

However, dependency does not allow for the possibility that particular state strategies may act to reduce those international constraints. (Haggard, S. 1990: 21) In response to this new dependency theorist such as Cardoso view dependency as an open-ended process. Unlike classical predictions of unidirectional trend of underdevelopment in Third World countries He argues “that there can be development and dependency and that there exist more dynamic forms of dependence than those characterising enclave or quasi-colonial situations” (So, A, Y. 1990:137)

Even though the new dependency perspective has modified some of the classical dependency perspective, they still share the same concept such as focus research is Third world countries, national level of analysis, and center – periphery dependency. According to Larrain “Dependency analyses share similar interests in studying the situation of peripheral capitalist countries from the point of view of the conditioning effects which external forces and structures produce on the internal structures of these countries” (Larrain, J. 1989; 112) Conclusion

In conclusion this essay has demonstrated an overall understanding of dependency theory, by originating back into the 1940s where it all began, following up to its relevance in today world. As well as the strengths of the theory, the essay has discussed the ways in which dependency has been subjected to a barrage of criticism on theoretical, empirical, methodological, and stylistic grounds. Furthermore it has researched and demonstrated how new dependency theorists have modified classical dependency studies in order to overcome their weaknesses.

Overall I feel that Cardoso’s analysis in more sophisticated than the classical dependency studies. His work has added the lack of explanation in the classical work; it has improved on many of its criticisms and emphasizes broader explanation on what happen in the third world. I also believe that Cardoso’s research, along with Gold’s study of Taiwan’s, has shaped the direction of empirical studies in the dependency school and started a whole new investigation on dependent development in the third world.

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