Dependency theory

Louis Proyect lnp3 at
Wed May 23 08:15:37 MDT 2001

While on a whirlwind tour of Ulster and Dutchess County this last weekend,
I dropped in at Bard College, my alma mater, where I was fortunate to pick
up a copy of "Development Theory in Transition: The Dependency Debate &
Beyond, Third World Responses" by Magnus Blomström and Björn Hettne (Zed
Press, 1984). It is indispensable for those trying to make sense of the
assault on "dependency theory" which began in the early 1970s.

Although Robert Brenner was perhaps the best known "orthodox" Marxist who
tried to overturn the analyses of A.G. Frank et al, there were others. In
Latin America, where "dependency theory" first arose, some of the key names
in the counter-offensive are probably known to you: Ernesto Laclau, an
Argentinian who after defending "orthodox Marxism" against the MR theorists
soon dumped Marxism altogether in favor of radical democracy; Fernando
Cardoso, who began as a dependency theorist but who eventually discovered
that its claim that local bourgeoisies are not a revolutionary force was
false. Perhaps this theoretical adjustment explains his decision as
President to rule Brazil today according to conventional neoliberal

While Brenner--typically--did not mention Laclau and company, his
criticisms are identical. In essence, the reaction to the MR theorists was
linked to a turn away from the colonial revolution and the Cuban model in
particular. It represents a renewal, albeit in academic cap and gown, of
Kautskyism. It puts forward the notion that countries such as Brazil and
Guatemala were suffering not from capitalism, but from a lack thereof.
Implicit is the idea that capitalist development is required before
socialism. The notion of going from a plantation economy, such as Cuba's,
to socialism based on campesino armies and parties was foolish. Such
'autarky', to use Brenner's term, would only lead to disaster. This is
exactly the argument Kautsky used against Lenin in identical circumstances.

Where did the idea of "stages" come from? Most of us assume that Marx and
Engels invented the concept and that works such as the "Communist
Manifesto" and "Origins of the Family, Private Property and the State"
introduced it to a Europe that had never heard of such a thing. In reality,
Marx and Engels, as they themselves admitted, had merely adapted the notion
of stages from bourgeois social scientists.

The "4 stage" theory of history was widely accepted in 17th and 18th
century Europe. For the whole story, I recommend Ronald L. Meek's "Social
Science and the Ignoble Savage" (Cambidge, 1976). Meek might be known to
many of you for his book on the labor theory of value published by Monthly
Review press. "Social Science and the Ignoble Savage" is essential reading
for those who are trying to come to grips with the Eurocentric character of
much of Marx and Engels' writings.

Meek makes a very important point. Central to the writings of 17th and 18th
century social science was a belief that American Indians were the prime
example of the 'first' or 'earliest' stage of human social development.
Unlike those like Rousseau who made the case for a 'noble savage,' these
historians and philosophers thought that American Indians represented the
worst humanity had to offer. Since American Indian society was on the
lowest stage of human development, its disappearance would represent
progress. John Locke was one such thinker and his justifications for
British colonialism are well-known.

Adam Smith gave lectures at the University of Glasgow that described a
stages version of history, including 1) the Age of Hunters, 2) the Age of
Shepherds, 3) the Age of Agriculture, 4) the Age of Commerce. He described
stage one:

"If we should suppose 10 or 12 persons of different sexes settled in an
uninhabited island, the first method they would fall upon for their
sustenance would be to support themselves by the wild fruits and wild
animals which the country afforded. Their sole business would be hunting
the wild beasts or catching the fishes. The pulling of a wild fruit can
hardly be called an employment. The only thing among them which deserved
the appellation of a business would be the chase. This is the age of hunters."

All that Marx and Engels did was attach some new stages to this kind of
schema, namely socialism and communism. Within bourgeois social science,
stagism without the socialist phase continued to enjoy a long and
illustrious career. Perhaps the best known stagist of recent times was Walt
Rostow, architect of the destruction of Vietnam, who posited 5 stages:

1. The traditional society; 2. the pre take-off stage; 3. take-off; 4. the
road to maturity; 5. the society of mass consumption.

It would be a mistake to try to generalize too much about the role of
capitalism in the third world from Marx and Engels's writings. They offer a
contradictory picture. On one hand you have their writings on Ireland which
depict a country victimized by capitalism. On the other hand you have
frequent endorsements of capitalist penetration, especially in the earlier
writings. For example, with respect to the 1847 war between the USA and
Mexico, Engels wrote, "for such a country [Mexico] to be dragged into
historical activity by force is indeed a step forward. It is in the
interest of its own development that henceforth Mexico should be placed
under the tutelage of the United States." When you add to this the rather
misinformed notion of the Asiatic Mode of Production, you do not have a
very emancipatory vision. Marx did move away from these positions during
the last years of his life when he was corresponding with the Russian
populists. In letters to Zasulich, he endorsed the idea that peasant
communes could provide the basis for a new revolutionary society without
passing through capitalism. Unfortunately he died before he could give
these ideas a full elaboration.

The first systematic attack on stagist theory was mounted by Leon Trotsky.
He analyzed Russian class formation and came to the conclusion that the
bourgeoisie was too beholden to foreign imperialist powers and to the
landed gentry to make a full-scale assault on backward social institutions.
This task would devolve upon the industrial proletariat whose strength was
a byproduct of foreign investment in huge industrial plants. This
development--the creation of a special kind of gravedigger--was the only
thing capitalism had to offer Russia, certainly not progress in the terms
defined by Marx's Herald Tribune articles on India.

Trotsky's ideas remained in a distinct minority for obvious reasons.
"Official" Marxism in the USSR retreated to Kautskyism. Communist Parties
everywhere in the world, especially during the Popular Front period, looked
everywhere for local bourgeois elements who could lead the fight against
"feudalism". For example, they supported Batista in Cuba. Most of the great
socialist or revolutionary movements of Latin and Central America in the
20th century drew upon non-Communist sources for inspiration. Sandino was
sympathetic to anarchism. The Nicaraguan and Cuban revolutions looked to
Mariategui, whose Marxism drew upon indigenous themes almost identical to
those found in Marx's letters to Zasulich. Mariategui was ostracized by the
Comintern who viewed him--falsely--as some kind of Trotskyist.

Ironically one of the first challenges to stagism in Latin America that
gained any kind of mass acceptance originated within the UN through the
auspices of staff economists organized in the Economic Commission on Latin
America (ECLA). In the late 1940s they decided that the free trade export
model that prevailed in Latin America put their countries at a
disadvantage. Raul Prebisch, an Argentinian, was a key ECLA figure. He
argued that import substitution and rapid industrialization was necessary.
(Eventually the CP's of Latin America fell in line with the ECLA model.)

After some initial successes, the ECLA model failed to deliver the goods.
Although they were probably not capable of developing a full analysis
without Marxism, we would certainly understand that industrialization in
itself was insufficient. As long as imperialism was supplying the capital
goods necessary for factories and mines, national inequality would persist.

Some of the ECLA economists began shifting to the left during this period,
especially Celso Furtado, a Brazilian. Furtado theorized that the problem
was social structure. Imperialism had a vested interest in keeping large
sectors of the population marginalized. Although not a Marxist, he had
stumbled upon the phenomenon of the "reserve army of the unemployed" which
above all else guarantees super-profits in the periphery.

On a parallel track, another ECLA economist named Andé Gunder Frank decided
that Latin America was subject to the structural problems identified by
Monthly Review author Paul Baran in "Political Economy of Growth".
According to Baran, early colonization by Europe had left Asia (except for
Japan), Africa and Latin America in a disadvantageous position. Stagnation
rather than the kind of explosive growth depicted in Marx's early writings
was typical. Since the third world bourgeoisie was parasitic in nature, it
was left to workers and peasants to break with imperialism and move the
nation toward social equality and progress. It was no accident that the MR
became strongly identified with the Cuban and Chinese revolutions, which
put these theories to the test and seemed to confirm them.

Around the time that Robert Brenner began constructing his rebuttal to
Baran and company, Ernesto Laclau was also busily trying to refute Frank's
theories, which while certainly in need of correcting were at least hostile
to the notion of capitalist "development".

Laclau criticized Frank for blurring over distinctions between capitalist
and precapitalist modes of production. For Laclau, it made no sense to talk
about capitalism if unfree labor was involved. Since Latin America was
typified by unfree labor--ranging from slavery to the feudal-like
'mita'--Laclau seemed to be making a valid point. He wrote in 1971, "If
Cortez, Pizarro, Clive and Cecil Rhodes are all and the same there is no
way of tracing the nature and origins of economic dependence in relation of

Laclau makes two fundamental errors. First of all, in identifying 16th
century Peru and Bolivia as "feudal", he is superimposing a socio-economic
category that had scarce connection to what Marx and even bourgeois social
scientists understood by the term. Precapitalist Europe, particularly
during the high middle ages, was typified by static, tributary social
relations in which peasants exchanged surpluses for protection by the lord
of the manor. In fact, Incan Peru was a similar kind of society. When the
conquistadors overran the country, they might have retained superficial
features of feudalism (the encomienda and the mita), but the primary
feature was exploitation of labor in order to supply commodities for the
world market. Silver extracted in Potosi ended up in China and India. This
was not feudalism, but the earliest phase of capitalism without which the
industrial revolution and the "pure" form of the capitalist mode of
production would not be possible.

The other problem in Laclau is his diagnosis of contemporary Latin America,
which involves a sort of oddball version of Trotsky's "combined and uneven"
development. For Laclau, feudalism and capitalism exist side-by-side in
countries such as Peru in the 20th century. In the countryside, where
peasants are subject to forms of debt peonage, feudalism would seem to be
the problem. This is obviously an ahistoric approach since it fails to see
the implicitly capitalist nature of the plantation economy. Debt peonage
exists not as a social bond between aristocrat and commoner the way it did
in the 12th century, but as a means of exploiting what Marx called
"toilers", the non-proletarian masses whose only recourse is socialist
revolution rather than capitalist progress. In fact Laclau argued that the
problem was not capitalism, but INSUFFICIENT CAPITALISM. In other words, he
defended a form of Kautskyism.

Cardoso, another ECLA economist, turned his back on dependency theory in
the mid 1970s. In a 1976 article ("The Consumption of Dependency Theory in
the USA"), he made a number of counter-arguments against the MR school:

1. Capitalist development at the periphery is viable. 2. Underpaying labor
in the periphery is not essential. 3. The local bourgeoisie is capable of
leading dynamic growth. 4. The penetration by multinational firms does not
have political consequences. 5. The only alternatives in Latin America are
socialism or fascism (I leave aside whether this was actually the MR

In any case, after Cardoso "saw the light", he decided to enter the
bourgeois political arena. Here are quotes from his earlier dependency
phase and his new, more sophisticated understanding:

"It is not realistic to imagine that capitalist development will solve
basic problems for the majority of the population. In the end, what has to
be discussed as an alternative is not the consolidation of the state and
the fulfillment of 'autonomous capitalism,' but how to supersede them. The
important question, then, is how to construct paths toward socialism."
("Dependency and Development in Latin America")

"I am in favor of deregulating the economy. To put an end to inflation
means to deregulate the economy, right? The economists invented indexation
of the economy to correct the devaluation of the currency. When inflation
disappears, indexation will disappear. As we want to defeat inflation, we
will deregulate the economy."
(Oct. 6, 1994, news conference.)

"A real process of dependent development does exist in some Latin American
countries. By development, in this context, we mean 'capitalist
development.' This form of development, in the periphery as well as in the
center, produces as it evolves, in a cyclical way, wealth and poverty,
accumulation and shortage of capital, employment for some and unemployment
for others. So, we do not mean by the notion of 'development' the
achievement of a more egalitarian or more just society. These are not the
consequences expected from capitalist development, especially in peripheral
("Dependency and Development in Latin America")

"I am certain we must continue to fight inflation, because inflation is
what impoverishes Brazil and the Brazilian people. Inflation causes an
unfair distribution of income, it prevents calculations from being made and
it prevents domestic and foreign investments."
(Oct. 6 news conference.)

"Of course, imperialist penetration is a result of external social forces
(multinational enterprises, foreign technology, international financial
systems, embassies, foreign states and armies, etc.). What we affirm simply
means that the system of domination reappears as an 'internal' force,
through the social practices of local groups and classes which try to
enforce foreign interests, not precisely because they are foreign, but
because they may coincide with values and interests that these groups
pretend are their own."
("Dependency and Development in Latin America")

"The international system is a field of opportunities, of resources, that
must be sought naturally. We are a great country, with a clear vocation for
an active and responsible participation in world affairs."
("Let's Work, Brazil", Cardoso campaign manifesto)

"It has been assumed that the peripheral countries would have to repeat the
evolution of the economies of the central countries in order to achieve
development. But it is clear that from its beginning the capitalist process
implied an unequal relation between the central and the peripheral
economies. Many 'underdeveloped' economies -- as is the case of the Latin
American -- were incorporated into the capitalist system as colonies and
later as national states, and they have stayed in the capitalist system
throughout their history. They remain, however, peripheral economies with
particular historical paths when compared with central capitalist economies."
("Dependency and Development in Latin America")

"The process of liberalization of the economy and opening toward the
outside world will continue, not an objective in and of itself, but as a
strategic element in the modernization of our economy."
("Let's Work, Brazil")

"We stress the socio-political nature of the economic relations of
production, thus following the 19th-century tradition of treating economy
as political economy. This methodological approach, which found its highest
expression in Marx, assumes that the hierarchy that exists in society is
the result of established ways of organizing the production of material and
spiritual life. This hierarchy also serves to assure the unequal
appropriation of nature and of the results of human work by social classes
and groups. So we attempt to analyze domination in its connections with
economic expansion." ("Dependency and Development in Latin America")

"Privatization cannot be proposed or carried out under ideological banners.
Privatization imposes itself in order to increase society's investment
capacity, to increase competitiveness and, where it is the case, improve
("Let's Work, Brazil")

Louis Proyect
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