Sie sind auf Seite 1von 29


Theory in
The Dependency
Debate and Beyond:
Third World
Magnus Blomstrom
and Bjorn Hettne

f!..:'.C~O - e:::iot~c(t

@ i . -~ ~.

Zed Books Ltd., 57 Caledonian Road, London Nl 9BU


Drvvlo p ment T11l'"r.\' in Transition was first published by

Zed Books Ltd .. <'7 Caledonian Road. London N1 ~BU. UK.
and l7l First Avenue. Atlantic Highlands, New Jersey 077l!>.
USA. in I<JS..l.
Preface vii
Co!') right © I\!<Jgnus Hlomstr om and Bjorn Hcttue , 191'4.
Cover de.Slgned hy Walter Castro.
Purpose or the Study
Printed and hound in the United Kingdom at the
Hath Press, Avnn . Sociology of Paradigm Change ::
Outline of the Study 4
All rights reserved

1. The Emergence of Modern Developmen t Theory 8

Second impression, 1985
Third impression. 1987 The Marxist Tradition 8
Fourth impression. 1988 The Nco-classical and the Keynesian Contribution 1::
Early Structuralism 17
The Modernization Paradigm 19
nricio,;h Library Cataloguing in I'ublicatiun Data
Development theory in tran . . Irion : the 2. Background to the Dependency Approach 27
dependency debate and beyond' Third World
Marxism versus Nco-Marx ism ::8
1 l ievcloping coururics-c-Economic conditions ECLA Development Thinking 38
.:!. l.cunomic dcv clopmcrn The Latin American Critique of the Modcrniz ation Pnradigm 45
I. Tille II. l lct tne. Bl"rn
'30.~J72·4 1IC5~.7

ISBN II·H62.12·DII·7 3. The La f in American Dependency School 5h

ISBN II.H6232·271" Phk 56
The Dependency Perspective Takes Shape
The Essence of the Dependency Perspective 69

4. Criticism and Disintegration 79

The Nco-classical Reaction 79
Development v. Underdevelopment: The Marxist Critique 81
At the Crossroads: The Debate among the Dcpendcn tistas 91

5. Dependency Theory in Action: Caribbean Approaches

to Underdevel opmeu t 98

\. The Idea of Dependency in a Caribbean Context
Industrialization by Invitation: \V./\. Lewis
The Ne\\ World Group
The Struggle for Self-reliance III
BlOUon.cA-t"UQ!lO The Independence of the Caribbean Debate 118
• == -'
2. Background to the
Dependency Approach
l1e •.
~Iy The dependency approach originated in the extensive Latin American debate
nd on the problems of underdevelopment. which was a most valuable contri-
ng bution to modern social science. Not only did it contain an effective criticism
of the modernization paradigm. it also provided an alternative perspective
of and still functions as a catalyst in the development theory which is taking
:r. shape at present.
to The dependency school emerged from the convergence of two intellectual
al trends: one often called 'ueo-Marxism', and the other rooted in the carlie:
).' Latin American discussion on development that ultimately formed the
if ECLA (the United Nations' Economic Commission for Latin America) t rad-
'! -. ition.
The concept of nee-Marxism reflects a certain dualism in Marxist thinking.
i.e. on the one hand the traditional approach. focusing on the concept of
development and taking a basically eurocentric view. and. on the other. a
more recent approach. focusing on the concept of underdevelopment and
expressing a Third World view. Of course. much controversy has arisen as to
the continuity or discontinuity of these two approaches. To the orthodox
Marxists, the main body of nee-Marxist thinking is more or less incompatible
with the classic Marxist framework. This complex issue will be dealt with in
the first part of this chapter.
A second important background to the dependency school was the more
indigenous Latin American discussion on underdevelopment. reflecting
specific economic and intellectual experiences in various Latin American
countries, particularly during the depression of the 1930s. This economic
crisis dramatized the dimensions of Latin American dependence It initiated
more systematic economic research, and it necessitated a policy of import
substitution, later systematized into a development strategy. If we add to
this the early works of the Argentinian economist Raul Prebisch we have
the background story of ECLA. a story that forms the second part of the
chapter. The third part deals with the Latin American critique of the modern-
ization paradigm. This critique is an integral part of those theoretical trends
that lead to the dependency approach.

Dcpcnd cn cv Theory ill Transition Background In thv Def!elldellc.1' A/lpr(J<Jch

Marxism versus Nco-Marxism What Marx wrotc about Asia (apart from the draft of a theory about the
Asian mode of production) was mostly pure journalism, influenced by the
Marx and the Third World news of the Jay; Marx himself considered it to be 'extra income' of littlc
It would bc absurd to apply Marx's description and conclusions about 19th value." His writings on Asia therefore offer little information to the reader
Century European capitalism to the so-called problems of the underdeveloped interested either in Asia or the history of Marxist thinking: however, the fact
countries uf to day. It would be equally absurd to blame Marx for the futility that there arc so few of them makes them difficult to ignore."
of such an undertaking. In this context we shall, however, treat Marxism One of the key concepts in this contcxt is 'the Asian mode ofp roduc tion'.
as a system of thought which has been mechanically applied to the pr oblcrns In Marx's extremely tentative formulation this concept is of little value as a
of underdevelopment. Our purpose is not to criticize Marx, but to point out description of India, or indeed of the rest of Asia. Nevertheless, it offers
that thc intcllectual development in the Third World has becn greatly in· an important insight into the nature of Marxism, since the later published
Ilucnccd by the fact that Marxism, as well as a number of other systems of work on pre-capitalist social formations (which included a discussion of the
thought. was introduced as an ideology rather than as a theory. Indian mode of production) clearly documents a 'mult ilincar' view of
Before the Russian Revolution, Marxism was mainly represented by a fcw, development." The most remarkable aspect of Marx's analysis of the Asian
o lt cu poorly translated, publications. The subsequent large-scale distr ibution mode of production. however. is the fact that hc considers it t o be devoid of
llf Marxist Iitcraturc was more a m at t er of political zealousness than a· dynamics, which therefore, in a way. legitimizes colonialism. Marx, as wcll as
response to intcllcc tual demands. This is not onc of the bright cst chapters most other contemporary European intellectuals, no doubt viewed this
1I1 the history of Marxism. but it is important to the development of the slumbering society somewhat disdainfully; in Ionuulat ing the concept lie
dependency school, particularly since the lattcr was a reaction against intended to add to Hegel's analysis of the superstructure (oriental despotism)
schematic Marxism and the analytical weakness and political inefficiency by providing his own analysis of the basc (the Asian mode of production).
of orthodox communism. Marx's writings about the Asian mode of production were thus based on
In one of their more pamphleteering moods, Marx and Engels stated that an old European tradition of thought around the subject of 'oriental des-
thc future of the backward country is reflected in that of the more developed potism'. At first it was feared and respected. but as the Turkish empire
country: through thc rapid imr rovcmcnt of thc instruments of production declined, these sentiments changed into disdain. Turkey was the first model,
.uid vastly improved communications the bourgeoisie forces all nations, but as knowledge about Asia grew, the concept moved eastward.
including the most barbarian ones, into civilization. The low prices of goods Marx's contemporaries knew quite a lot about India, a little about China.
is thc heavy artillery with which it shoots down all Chinese walls, arid the. and very littlc about Japan. When speaking of Asia. Marx mostly meant India
means by which it forces the capitulation of the barbarians' stubborn hatc of (Kiernan. 1974, p ! (':). The same basic attitude is found when he docs ex-
foreigners. All nations are forceu to auopt the bourgeois mouc of prouuction. plicitly mention China. The general decline which was the result of the
unlcss thcy want to bc ruineu; it forces upon itsclf the introuuction of opium tradc in China, for cxample, is ucalt with in thc following drastic
su·callcu civilization, i.e. becoming bourgeois. In othcr worus: thc bour' tenllS: 'It would sccm as though history had first to makc this wholc pcople
gCllisic crcatcs a world in its own image. drunk bcfore it coulu rousc thcm uut of thcir hcrcuitary stupiJity' (Marx
iv!arx's tl1llughts about 'the problcms of undcrucvclopmcnt' uiu not uiffer and Engcls, 1960, p ~O).
significantly frolll thc prcvailing 19th Ccntury cvolutionism.! Thc Third Marx anu Engcls rcfcr sparingly to Latin Amcrica in thcir cxtcnsivc
World rcstcu. pcaccfully anu unsuspcctingly Iikc a sleeping bcauty, waiting' production. Thc rcfcrcnces thcy do makc arc strongly curoccntric in nature
fur thc Wcstcrn worlu's Prince Charming to awakcn thc process of dcvclop' (Aguilar, 1968. p 3), and ucal exclusively with politics, such as, for cxample,
ment. If not by a kiss, thcn by thc sworu. In onc of thc IlloSt frcqucntly the Mcxican-Amcrican of 1847, which Engcls thought of as :.l fortunatc
quotcd passagcs on the non-[urupcan worlu, Marx forcsccs an industrial and historically progrcssivc incidcnt: 'for such a cuuntry to bc draggeu into
revulution in lnui:.l as thc incvitablc rcsult of the English-built railways. historical activity by forcc is indccu a stcp forwaru. It is in thc intercst of its
own ucyclopll1cnt that hcnccforth Mcxico shoulu bc placcd unuer thc tute-
You cannot maintain a net of railw:.lYs over an immense country without lage of thc Unitcu States.' Marx agreeu: 'All thc vices of thc Spaniarus
introducinl!. all those industrial processes nccessary to mcet the immed, boastfulncss, gralluiloquencc, and quixoticisIII - arc founu in the Mcxicans'
iate and current wants of railway locomotion, and out of which there (Aguilar, 1968, pp 66 -7).
must grow the application of machinery to those branchcs of industry
not immediately connected with railways. The railways system will Marxism in Latin America
thcrefore becomc, in India, truly the forerunner of modern industry. Apart froIII thc basic JI1cthou, Marx's own writings thus proviucd a poor basis
(Marx and Engels, 1960,pp 84-5) for a gcnuinely Marxist analysis of thc CC(lI1omic conuitinns and the class

.2~ ~9

Dependency Theory in Transit ion Background (0 the Dependency Approach

struggle in Latin America. European immigraut s had introduced socialist 'proletariat' was in fact the primitive, Indian population. The new Peru was
ideas during the latter part of the l Oth Century, but they bore the mark of to be built on the latter's collectivist traditions, His homespun, national-
anarchism rather than that of Marxism (Alba, 1968, p 37). In Latin America, istic Marxism (somewhat reminiscent of Mao Zedong) was consistent with the
as well as in 11I0St other parts of the Third World, Marxism was spread Comintern line up until the tightening of the reins in 1928; after that he
through the Communist International (the Conrintern)." turned into an eccentric in an increasingly streamlined communist movement.
The first Comintern congress which specifically dealt with Latin American Towards the end of his life Mar iategui became more and more isolated.
questions was the Sixth, held in 1928. The following passage is quoted from His revolutionary nationalism led him to support Haya de la Torre, the
the Cominte rn's declaration on Latin America, which also initiated the 'hard populist leader of the Alianza Popular Revolucionaria Americana (APRA).
line' . Later Mariategui became convinced that the APRA would follow the example
of Kuomintang in China - which was quite an astute prediction. Haya de
In Latin America the Communists must everywhere actively participate la Torre replied by accusing Mariaregui of taking orders from Moscow -
in the revolutionary mass movements directed against the landlord which was absurd. The Com intern agents had tried to persuade Mariategu i
regime and against imperialism, even where these movements are still to change his Peruvian Socialist Party (PSI') into a communist party in 1928,
under the leadership of the petty bourgeoisie. In so doing, however, the but to no avail. The Com intern did not, at that time, permit any independent
Communists may not under any c ircu mst ances politically subordinate interpretations of the Marxist-Leninist doctrine. In the spring of 1929 the
themselves to their temporary ally. Whilst struggling for the hegemony, first Latin American communist congress met in Buenos Aires to come to
during the revolutionary movements, the Communist Parties must grips with the 'Mariategui problem'. After a stormy discussion, the congress
strive in the first place for the political and organisational independence criticized Mariat egui for his 'Trotskyist' views. After his death, the PSI' was
of their Parties, securing its [sic) transformation into the leading party changed into an orthodox communist party and a tool of the Com intern.
of the proletariat. The revolutionary throughts of Mar iategui as well as their correct interpre-
(Clissold, 1970, p 78) tation are still discussed today (Choy et al., 1970; Paris et al., 1973).
The case of Cuba is also a good example of the contrast between the
During the period between 1928 and the 1935 People's Front policy the orthodox, communist party line and a more voluntaristic, revolutionary
Comint ern enforced its 'ultra-left' line. characterized by a revolutionary strategy. Urged by the Com intern and aided by the Mexican Communist
puritanism which refused to collaborate with any bourgeois elements. The Party, the Cuban Communist Party was founded in 1925. Cuba already had
Nicaraguan Sandinista guerrilla for instance, was severely criticized. This line a militant, non-Marxist, radical nationalism with Jose Mart i as its central
was totally unsuccessful, with the exception, of course. of deteriorating figure. Marti had led the insurrection against Spain in 1895 and fell in
relations between the Soviet Union and the Latin American governments. The' combat. Those who claim that Fidel Castro was influenced more by Jose
softer line, introduced after 1935, lasted until the dissolution of the Comin Marti than by Marx are probably right.
tern in 1943; as a result of it the communist parties in several countries The depression created great social problems in Cuba during the 1930s,
eventually turned into significant political forces. when the economy was strongly dependent on the United States. In 1933
Most often, however, they remained as minority groups of little or no Fulgencio Batista led an insurrection against the dictator Gerardo Machado.
political importance. They rarely produced thinkers of any significance" Batista enjoyed extensive popular support, although not by the Communist
although the Peruvian JLlSe Carlos Mar iatcgu i was an exception. His Siete Party, which was illegal until 1938. Leu by BIas Roca, the Communist Party
Ensavos de Interpretacion de la Rcalidad Peruana (Seven Essays on the' played an important role in the labour movement. After 1935, when the
Peru~ian Reality) written in 1927 remains, according to Aguilar, 'the single Comintern proposed a popular front policy, the party sought allies in other
most important attempt to understand a national, Latin American problem in groups of the left, and eventually ended up supporting Batista. In return, he
a Marxist perspective' (Aguilar, 1968, P 12). In order not to give the not only legalized the party, but promoted two leading communists to
impression that early Latin American communism was unjustly scanty, we ministerial posts. The party changed name in 1944 and became the Partido
shall discuss Ma ria tegu i in some detail. In Siete Ensayos he described the. Socialista Popular (the PSP). Between 1938 and 1944 the membership had
history of Peru in a dialectic perspective, from the primitive communism grown from 23,000 to 122,000. In 1952 Batista's dictatorship moved towards
of the Incas to the socialism of some future age (Baines, 1972, Chap. 7). the right and the Communist Party was again made illegal. In 1959, Castro
Mur iat egu i claimed that the Spanish conquest had meant a retardation (to began the revolt which was carried out entirely without the support of the
feudal institutions). and that the subsequent capitalism had been perverted, Communist Party. The course of events of the revolt is well known: in
partly by the foreign economic influence and partly by the domestic alliance December 1956, 8::'. revolutionaries landed in Cuba from the boat Granma ,
between the bourgeoisie and the aristocracy. According to Mar iat egu i, the. 19 of them reached the Sierra Maestra Mountains and began the guerrilla

30 31
1)('1"'''''('1/('\' Theory ill Transition Ba ck groun.I to the DCliCIl"CnC.l' Approach

war which led to Ba t ist as fall a few years later. The New Left in Latin America
From a conventional communist view the Latin American society was During the 1960s Latin Am er ica n po lit ica I pr act ice developed into someth ing
still 'feudal' in nature, and a mobil izat ion of the proletariat would therefore entirely different from what the official communist analysis had predicted.
he premature before Latin America had experienced its own 'bourgeois' The peasants were more inclined to revolt than the workers. and the rural
rcvo lut io n. In other words, it was the historical task of the growing bour guerrilla appeared to be an ult ernativc to organizational work within the
g~uisie to smash tile 'fcudal-impcrialis: alliance' - a task in which the pro labour movement. The 'traditional' Marxist views were consequently
ic.uriat I\'~IS to part icip atc. Only then would a socialist revolution be possible subjected to severe criticism from 'the left'. Furthermore, there was now a
(the 'two-stage strategy'). The Cuban Revolution challenged this political Marxist-inspired debate that did not necessarily have any connections with
view. Aguilar sums up the pre-Cuban phase as follows: the Couunu nist Party." The underlying political reason for this may be
sought in the Cuban Revolution.
In dica t ivc of the sit ua t io n of the Communist parties in this period, This revolution should not have been possible, according to the conven-
and a key to t he in t er nal and external conflicts that were ove rwh el ming tional Marxist view, and at the beginning, the Cuban Communis! Party saw
t hc m was their scant participation in the most important events of the Fidel Castro as a bourgeois adventurer. Ilis success, as well as the break-
moment. Nut in Guatemala in 1944, in Bolivia in 1952, or in Cuba in through Dr Chc Guevara's revolutionary appeals in other parts of the Lat in
1959, nor in any of the other political convulsions in Venezuela, American continent, undermined the conununkt parties' positions and I'orccd
Argentina. Colombia or Peru did the Co nuuunists play an outstanding them into a more or less radical re-evaluation of their earlier policies. Aguilar
r ole. says.
(Aguilar, 1968, p 38)
The repercussions of these events naturally went beyond the Cuban
conclusion it might be said that the role of Marxism in Latin America
III sphere. It is evident that many of t hc argu mcn t s that were hurled
was marg inul u nt il I ()60 wit h the exception of certain political movements dir cctly and obli que ly at the old Cuban couununist cadres ~ 'the
(Chile) and certain individuals (\Iariategui). Around 1960 the movement bachelors of Marxism' as they were disrespectfully called by Che
suffered lrom yet anothcr schism as a result of the Sino-Soviet connie! Guevara ~ could very easily be applied to nearly all the Communists
(Ratliff. IlJ7b, P ::). In spite of the Chinese challenge, to which should be parties of the co ntinc nt.
added the criticism from various 'Trotskyists', 'Castro ists' and nationalist (Aguilar, 1968, p 45)
communist s. alld the Soviet invasion of Czechoslovakia in 1961-:, the Latin
American communist parties have remained amazingly faithful to the Soviet (he Gucv.nas ideas about the role of the peasants in the revolution
l'nion. In terms of development strategic thinking they have been very close and the ability of the human will to surmount objective limitations is reminis-
[0 the ECL\ analysis (see below), and when the [CLA strategy ran into cent of Mao Zedong. Latin American Marxist» became even more fragmellted
dillil'ulties during the Il)(,Os, they were also subjected to criticism from the after the Sino-Russian couflict and Maoist ideas were allowed to grow freely,
dependency school. One of the best-known dependency theorists, i\.G. Frank, as was a less party-bound Marxism. Particularly at the univcrsit ics Marxism
h~ld t his to say about the Latin American communist parties: now became a part of the intellectual climate rather than just a stilted languagc
at communist party convent ions. The 'new left' had been born.
the latin Arue rica n communist parties and their ideologues ... The new le it was impatient. It wanted revolution here and I/O\\'. The cul-
haw made no co nt ribut ion to Marxism or any other theory that any mination of this polit icnl line was the Latin American Solidarity Conference
o nc has been able to discover. Programmatically t he y ha ve hcen held in l lavana in August llJ()7. Its motto was: 'The duty or a revolut ionary is
scarcl'ly as advanced as the bourgeois dcvclopmcnt ists from whom they to make revolution.' The influential Venezuelan Coml1lunist Party obcjctc d
diffc red at most in their largely Soviet-inspired and propagandist violently to !he fact that !-'idel Castro had assurucd the t ask or deciding who
o pposi t i on to American imperialism; politically they have been little was and who was not a revo lut ionary in Latin Arucric«. Other communist
m orc t han a tail wagged by tile national bourgeois dog who used the parties were, howcve r, moderate in their views. The secretary general of the
Comm u nis t parties temporarily excepting In Guatemala, Vcne zueh Chilean Communist Party noted two tendencies in the revolutionary move-
ancl Colombia t o keep a leach 011 till' dependence theorists, the Corn- ment in Latin America: a pro let 'Irian one and a bourgeois-nut ionalist one.
mu nist pur t ics a t horne and abroad loyally joined the opposition. The latter underestimated the role played by the working class, and showed
t lrunk . I 1I77. P 356) a tendency towards a nt i-sociulism _. but was, ncvert hclcss, rcvolui illnary.
Only imperialism could profit from a polarization of these! wo teudcncics
(Ratliff. 1976. l' 80). Allende's Iruu: <>rganizatiun was made possible through

-' - CI..~,C:;O - ~)iiJiini.-!r:;' 33
Dcpen dc ncy Theory in Transition Background to the Dependency Approach

this more moderate attitude. utilized in different social systems, The surplus was simply defined as the
In October of the same year, Che was killed by the Bolivian army and a difference between production and consumption. Furthermore he distin-
month later the 'guerrilla theorist' Regis Debray was sentenced to thirty years guished between actual and potential surplus, the latter defined as the differ-
in prison. This was the beginning of the end of the 'voluntarist' revolutionary ence bet ween the production that would be possible in a given geographical
strategy. Castro's support to various guerrilla groups became more selective. and technological environment, and that which may be considered to be
After this it becomes necessary to make a dear distinction between Cuban 'necessary' consumption. Baran admitted that this concept was primitive,
political views, which gradually grew more consistent with Soviet foreign but it had the great advantage of being relevant: it provided insight into the
policy, and Guevar ism, which may be summarized as follows: irrational elements of an economic system and underlined the need for
an analysis of the obstacles to a mobilization of potential resources. Baran
I. The people's army (i.e. guerrilla army) is capable of winning a war against used the concept in his analysis both of developed and underdeveloped
a regular army. countries but we are more interested in his views on the latter.
2. It is not necessary to wait for the objective conditions for the revolution According to Baran, capitalism had sprung from feudalism, which in its
to develop: they can be created by the guerrilla army, which thus becomes final stage of dissolution was characterized by increasing agricultural pro-
an embryonic revolutionary centre UC)CO insurreccionaii. duction, by a more extensive division of labour and by capital accumulation.
3. The armed struggle in the underdeveloped countries should primarily take These processes were all prerequisite to capitalism. Western Europe had led
place in the rural areas. this development by its geographically advantageous position and by its
lack of natural resources, which stimulated trade, shipping and pillaging. For
All of these three points were contrary to the long-established communist various reasons this process was not developed in the Third World. Plunder-
line in Latin America. Although Che Guevara in his later speeches and ing the colonies may not have increased the European national income by
writings often emphasized the importance of a Marxist-Leninist avant-garde much, but it did constitute a significant contribution to its economic surplus,
party, particularly for the socialist construction work, there was a lingering hence also to investment and economic growth. The colonies' economic
ambivalence when it carne to formulating thc theoretically correct relation surplus consequently diminished, their capital accumulation came to a halt,
between the rural guerrilla organization and the urban party organization. and their budding industries were killed by competition. In other words.
This ambivalence has, of course, been the source of a number of disagree- development in the colonies was forced off its natural course, and was now
ments, purges and schisms in -the Latin American communist parties: the completely dominated by imperialistic interests. The countries of the Third
disagreement about loco and party, about the continental extent of the World (Japan being a spectacular exception) stagnated somewhere between
revolutionary struggle, the relative importance of the rural and the urban feudalism and capitalism, and were the victims of the worst of both systems.
guerrilla, and the question of support to popular front governments - to This 'Marxist' view of the spread of capitalism differed radically from Marx's
mention a few, However, there is no reason for elaborating on the further own views. Baran abandoned the view of capitalism being spread from the
development of Cuevarism in Latin America: its more important aspects 'centre' to the 'periphery'; instead, he introduced the idea that 'underdevelop-
should now be obvious. During the late 1960s the somewhat fossilized corn ment' was an active process following the development in the centre,
rnunist movement in Latin America saw Guevarism as a great theoretical and This view, which constituted a clear break with classical Marxism, was
ideological challenge. Many dogmas were rejected, new questions were asked, more or less hinted at, or implicit in, Baran's analysis. It was, as we shall sec,
and the conditions for a more 'Latin American' Marxism were created. brought to its logical conclusion in the works of Andre Gunder Frank, ill
which the idea of 'the development of underdevelopment' was brought
Paul Baran and the Rise of Neo-Marxism forward. The Third World seemed to be doomed to perpetual underdevelop-
This ideological development coincided with the development of ment. No capitalist development tendencies seemed to undermine the feudal
nco-Marxism at the more academic level. It is no easy task to analyse the social structure, In fact Latin America, along with the rest of the Third
relationship between these two tendencies, However, it is obvious that they World, were de facto capitalist from the very moment they were incorporated
supported each other. Let us therefore leave the brutal political reality and in the capitalist world economy. The Latin American bourgeoisie was
take a look at the intellectual preparations made in the usually more relaxed parasitic and would never fulfil its historical mission of freeing the produc-
atmosphere of the university. Here Paul Baran's The Political Economy of" tive forces. The nee-Marxist view prescribed immediate revolutionary activity,
Growth U957) must be given credit for contributing significantly to the based on guerrilla tactics, instead of the communist 'two-stage strategy'.
upsurge of the 'new left' and 'neo-Marxism'. This is where the Guevarist influence comes in. Thus. the neo-Marxists. both
In his analysis of the political economy of development, Baran used the theoretically and practically, favoured a new line which at that t irue seemed
concept of economic surplus and examined how it had been created and to be in better agreement with the political realities than the orthodox

34 35
1J<'I)l'l/dl'l/tT Th corv ill Transition Ba ckgroun.t t o t h c DCflClldt'l/cy .:j pproact:

1\larxist one. Nco-Marxism was thus the academic expression of that for of cnpitalism (monopoly capitalism ): nco-Marxism, on the other hand, sees
which the guerrilla struggle stood at the practical-political level - a point imperialism from the periphery's. or the vict ims. point of view, which in
which was uften emphasized. Here are some quotes from an article which is turn implies that the interest has shifted Ir om development to underdevelop-
typical of the time: it was written in 1963 by the editors of the Monthly ment. This break with what is, for the classical .vlarxism, such a typical
Review. Paul Swcczv and Leo Huberman, after a journey through Latin evolutionary perspective is quite important to the distinction between
America." Marxism and nco-Marxism. Marxist-inspired leaders of the Third World, such as
Mao Zcdo ng or Amilcur Cabral have often h.i.! a nationalistic appearance
The only possible revolution in Latin America today is a socialist which has always been more acceptable to nco-Marxists than orthodox
revolu tion. Marxists.
The notion that there is a powerful national bourgeoisie in these
countries anxious to break away fro III US domination ... is unf'or- (2) Classes: Ilere we find several important differences. The Marxist analysis
t unutcly a myth. of classes is based on specifically European experiences, while that of the
There can be no doubt that Latin America needs and is ripe for neo-Marxists is based on the revolutionary struggle in the Third World with
socialist revolution, nut at Some distant date in the future but right a much more generous view of different groups' revolutionary potential.
n lJ II". Whereas Marxists have difflcult ics seeing anyone but the industrial proletariat
We' did not meet a single serious leftist in Latin America who is not as the revolutionary class par preference. the nco-Marxists will tend to let the
an ardent supporter of the Cuban Revolution ... There is just one peasants play this role - claiming that the industrial workers of the Third
thing that worries them, the extent to which Cuba in resisting the US, Worlu in reality form a 'labour aristocracy', Marxists believe in the existence.
may have fallen under the domination of the Soviet Union. or eventual emergence, of a national bourgeoisie in the Third World: nco.
Marxists, on the other hand, see the bourgeoisie as the creation and tool of
The above expresses an interpretation which was so different from the imperialism, and as such incapable of fulfilling its role as the liberator of the
prevailing Latin American Marxism that it is not without justification to forces of production.
speak of a change of paradigm vis-a-vis Marxism and, above all, in relation to
established theories of development." The former is. of course, the more (3) Revolution and Ethics: The nco-Marxists view the possibilities of start ing
prublematic of the two. A paradigmatic cleavage between two schools is a revolution with greater optimism. even if the conditions may be uufavour-
primarily characterized by a lack of communication; this criterion is relatively able, and in this context emphasize the importance of guerrilla warfare.
we}l met in the case of the modernization perspective versus the under- Marxism. on the uther hand. emphasizes organization and patient party work,
development perspective. The line between Marxism and nco-Marxism is panicularly amongst the workers. In other words, the nco-Marxists emphasize
much less clear and the distinction per se has also been subjected to some the role of the subjective factors, moral stimuli, the 'new' man, etc. Marxists
criticism (sec e.g. Taylor, 1974). An authoritative view claims that Marxism retain materialism and the emphasis on 'objective conditions' that gave Marx
is whole and indivisible, and that the neo- Marxists have either misunderstood his distinctive mark as a social scientist.
sonic basic Marxist theses (i.e. they arc 'poor' Marxists), or that they should
nul be thought or as Marxists at all. 9 The concept of 'nco-Marxism' will (4) Ecology: Marxism still shows traces of the 19th Century development
probably not survive for long and we merely use it as an heuristic concept to optimism, and many Marxists consider the concept of scarcity to be a bour-
indicate a specific stage in the history of Marxism, during which there were geois invention for the purpose of legitimizing economic inequality. Sonic
great gaps in the Marxist analysis of the problems of 'underdevelopment'. neo-Marxi sts now integrate the growing ecological consciousness and the
demands of environmental movements with their theory of development:
The Differences between Marxism and Nco-Marxism the blind faith in industrialism as the liberator of humanity has at the same
At this point it might be interesting to take a closer look at an at t cmpt to time undergone sonic major revisions. Similarly, there is now a tendency to
identify the phcnomcnun of nco-Marxism and the differences between neo- think of the cities as being parasitic, and to idealize the countryside - con-
Marxism and Marxism. Aidan Foster-Carter has brought forward a number of trasting sharply with Marx's own comments on 'the idiocy of rural lire'.
points which. in his opinion, contrast the two truditions.l'' Somewhat The nco-Marxist concept has caused considerable irritation among Marxists,
modified. they arc as follows: particularly as they have been accused of being 'Palaeo-Marxists'. We shall
return to this subject in connection with the Marxist criticism of the
( I) Imperialism and Nationalism: Marxism (as interpreted by Lenin) sees dependency school.
imperialism in a 'centre' perspective, that is, as a stage in the development Obviously, the differences which we have pointed out above are merely

]lJ 37
De pe nden cv Theory ill Transition Background to the Dependencv Approach

rough indications of general tendencies. On this basis it might be difficult and that of the Chile University in 1935. Led by President Aguirre Cerda,
clearly to define two theoretical camps with contrasting but internally the Popular Front government founded the Corporacion de Foniento de
identical views. It might be said that neo-Marxism has accepted the changes' Producion (CORFO) in 1939. This agency constituted the link. between
through which Marxism has passed after its transplantation from European academic research and practical social planning. CORFO initiated a number
to non-European soil, while the Marxists have been anxious to safeguardt of empirical studies which later formed the basis for a macroeconomic
the purity of Marxism. Contrary to Foster-Cart er, we believe, as suggested' analysis, which broke a number of economic taboos because of its orientation
above, that it is inadequate to speak of two distinct 'schools'; instead, we are towards domestic, economic problems. Chile developed inter alia a positive
witnessing a dialectic, intellectual process in which Marx is the thesis and"' attitude towards central economic planning; this view was further expanded
nco-Marxism the antithesis, i.e. a phase in the universalization of the Marxist •. when the United Nations located the Economic Commission for Latin
tradition. This is the way in which we shall use the concept.'! The theoretical America (ECLA) in Santiago.
deficiencies in orthodox Marxism with regard to its analysis of the social It is interesting to not" that the debate on economic research resulted in
conditions in the Third World are now being mended and its gaps filled, as a certain polarization between the economists of the ECLA and the national
will be discussed later on. university on the one hand and those from the Catholic University on the
other. The latter had been influenced by the Chicago School, and were
known as 'Los Chicago Boys'. On a more theoretical level this conflict man-
ECLA Development Thinking ifested itself in the famous debate between 'structuralists' and 'monetarists'
to which we shall return below.
During the inter-war period a growing number of ideas and analyses basedli
on concrete, Latin American conditions, as well as on more systematic social Raul Prebisch and ECLA
science research began to appear. Until then 'social science' had mainly The Great Depression in the 1930s was a great divide in economic theory in
consisted of speculations in social philosophy, strongly influenced by Euro-[' the industrialized world and it is also in these experiences that we find t he
penn culture and social debates. The Latin American authors were isolated[' roots of a specifically 'peripheral' theory of economic development. The key
pensadores ('thinkers' or amateur philosophers) who mechanically grafted figure here is undoubtedly Raul Prebisch who from 1935 to 1943 was
European, 18th-Century evolutionism, Auguste Comte's positivism and social" Director-General of Banco Central in Argentina. a country that was most
Darwinism on to Latin American conditions.P severely hit by the depression. The idea of a centre-periphery structure in the
The indigenous analyses of Latin America which appeared at the end of world economy was implicit in Prebisch's early economic policy writings
the l Oth Century were orgies in self-criticism and catalogues of Latin concerning Argentina, in which inward-directed development and industrial-
American weaknesses (Hirschman, 1971 l. as, for example, Bunge's Nuestn ization were seen as the remedy (Love, 1980, P 54). It should, however. be
America (1903) and the Chilean Francisco Encina's Nuestra il/ferioridad noted that this industrialization drive is a recurrent phenomenon. which can
econoniica: sus causas, Sl/S consecueucias (Our Economic Inferiority: Its be structurally explained as the ideology of latecomers in development.
Causes and Consequences) (1912). The obvious conclusion from this type of This ideology goes back to Friedrich List and the German reaction to Britain
analysis was the idea of economic development through imitation. In 1895, as the workshop of the world, subsequently emerging in other industrializing
the Argentinian B. Albcrdi said: 'North America is South America's great, countries; the United States in the mid 19th Century, Russia in the late 19th
economic example' (Hirschman, op. cit., p 275). Century, Eastern and South Eastern Europe in the inter-war period, and
As a result of the First World War, the Mexican and the Russian Revo- Brazil, Chile, Argentina and Mexico in the 1930s and 1940s. It was the ex-
lutions and repeated interventions by the US in the Latin American states'] periences of these countries which provided the rationale for the import

ing world, rather than in Latin America. At the same time, the social analysis
internal affairs, there was a change towards finding the faults in the surround ~ substitution strategy recommended by ECLA in the 1950s.
The formulation of a distinctly Latin American view of underdevelopment
began to be based on more systematically conducted research, rather than on and of development is intimately related to [CLA, founded in 1948 in
the pensadores and their more or less subjective ideas influenced by European" Santiago, Chile. In addition to twenty-one Latin American countries, Great
social research and debates. Britain, France and the Netherlands also became members.
As far as the social sciences were concerned, Chile appeared to be the As opposed to m ost of the other regional UN agencies (the economic
country providing the most favourable conditions for research. particularly commissions for Asia and Africa), the ECLA soon developed its own views
in the area of economics. Systematic instruction in that subject was given as on the problems of underdevelopment and development. The one who really
early as I R13, the economic journal Revista Economica was founded in 1886,· should be credited with this achievement is Raul Prebisch, who became head
The department of economics at the Catholic University was formed in 1922 of the EC LA in 1950. A few years before, Prebisch had written a document.

38 39
!JerCl/dCIlCT Th co rv 111 Transition Backgroun J to t h c Dependcllcy A p pro ach

eventually to become the' ECLA Manifest": The Economic Development of structures. Technical progress may favour the producer by reducing costs
Latin America and its Principal Problems (Prebisch, 1950). This document (which in turn may increase profits and/or wages). Prebisch claimed that
begins as follows: development in the centre rarely led to price reductions, mainly because of
the high degree of monopolization of the factor and goods market there. The
In Latin America, reality is undermining the out-dated schema of the fact that imperfect competition was dominating meant that price falls could
international division of labour, which achieved great importance in the be avoided, and also that the labour unions, because of their strength, could
nineteenth century and, as a theoretical concept, continued to exert claim a share in the technical progress in the form of increased wages.
considerable influence until very recently. Under that schema, the In the periphery, the opposite was supposed to be the case. Here, the
specific task th a t fell to Latin America, as part of the periphery of the consumer received the fruits of technological change via reduced prices,
world economic system, was that of producing food and raw materials mainly because primary producers operate under competitive conditions.
for the great industrial centres. There was no place within it for the However, in reality it was the consumer in the centre who was favoured,
industriuliza tion of the new countries. It is nevertheless being forced since technical progress in the periphery primarily occurred in the export
upon them h y events. Two world wars in a single generation and a great industry. Thus, the cent re would benefit both fi o m the periphery's technical
economic crisis between them have shown the Latin-American progress as well as from its own.
countries their opport unit ies, clearly pointing the way to industrial On the demand side it was noted that the goods produced for export in
activity. the centre and in the periphery had different income elasticities. The income
elasticity of imported primary products in the centre was considerably lower
From this passacc it is obvious that Prcbisch sought the causes for Latin than the income elasticity of imported industrial goods in the periphery.
American undcr dcv ciopment outside the continent, and he found them in the This was a result, ill fer alia. of Engels's Law, which states that the percentage
system of international free trade. Consequently, his first attack was 011 the share spent on food is a diminishing function of income. An increase in
nco-classical theory of trade. According to Prcbisch. this theory supported income in the centre would therefore lead to a lower percentage change in
the existing international division of labour. in which the periphery had the demand for impoi ted primary products than a similar increase in income
specialized in the production of primary products an.l the centre in the pro- in the periphery would change the demand for imported industrial goods.
duction of industrial goods, as well as the idea that this division of labour Thus, even the demand side held clements that would lead to a deterioration
would result in the greatest possible advantage to all the parties involved. of the primary producing countries' t erru s of trade.
As an example he showed what. according to the theory. would happen if Through this analysis I'rebisch came to the conclusion that the under-
technical progress was more rapid in the centre's production of industrial development of Latin America was due to Its reliance on exports of pruu.iry
goods than in the periphery's production of primary products. Assuming that products (also called the Prcbisch-Singer thesis. since Hans Singer published
the fall in prices would be inversely proportional to the growth of produc- similar ideas at the time (Singer. IlJ50). Prebisch also claimed that a con-
tivity, the prices of industrial goods would fall more rapidly than those of raw tinued emphasis on the export of primary products would inevitably lead to
materials. The periphery would then be able to purchase more industrial a further deterioration or the periphery's terms or trade. In turn. this would
~oods for the same amount of primary products, and thus progress would affect the durucst ir uccumularion of capital, However. the international
accrue to all countries of the world even without an industrialization of the mechanisms of equalization would function as predicted hy the nco-classical
periphery. theory or trade if the periphery were to export industrial goods instead. Thus,
Prcbischs own empirical studies. however, showed that this prediction Latin America would he able to keep the fruits of its Ullin technical progress.
was not generally valid. He had found that Great Britain's terms of trade had The natural solution to the problem was therefore industrialization.
gradually improved since I SSG, and since Great Britain was predominantly As we shall sec later. \V.A. lewis came to similar conclusions through his
.m importer of primary products he concluded that during this long period analyses of the Caribbean. l lo wevcr, his development strategy Was rather the
the terms of trade of the primary producing countries (i.c. the periphery) opposite to that which emerged in latin America. lewis proposed an export-
had SCI iously deteriorated in relation to Great Britain (i.e, the centre). oriented indust rializut ion, whereas Prcbisch's and the LelA strategy,
l'rcbischs explanation of the deterioration of the periphery's terms of roughly, may be summarizcd as follows:
trade was that most of the profits from the various increases in productivity
had bcucfit cd only the industrialized countries. Ill' also tried to show that - The process of industrializatiun W~IS to be speeded up by the substitutiun
this had not been a unique phenomenon, hut a sign of underlying structural of a large part of current imports hy doincstic pro dur tiou. Initially, dorucst ic
relations which the nco-classical theory of trade had not taken int o account. industries were 10 be protected from fureign competition hy tariffs and other
On tile production side the theory had primarily neglected the true market support measures, hut once their competitive ability had improved, the firms

4U 41
Dcpcnde n cv Theon' ill Transition Background to the Depe nden cv Approach

should be able to manage on their own. sidered to be typical of a modern society; the various characteristics of an
.- The production of raw materials would continue to play an important role underdeveloped society would automatically disappear in the process of
in the Latin American economics. The income earned from exporting raw industrialization. The traditional oligarchy, for example, would play a
materials should be used to 'pay for imported capital goods, and thus help diminishing role, which would lead eventually to both economic and political
increase the rate of economic growth. democracy; this, in turn, was thought to be necessary for the development of
- Initially, foreign businesses were to help speed up the process of capital a modern mass consumption society with a high level of technology, culture
accumulat ion. However. there was a certain feeling of reservation towards and scientific activity.
greater dependency on foreign subsidiaries (Cardoso, 1977, p 29). Because of their belief in progress these Latin American scholars were
.- Governments should actively participate as co-ordinators of the industrial- given the nickname desarrollistas or developmentista: the Brazilian Celso
ization programme. Increased government involvement was necessary to Furtado was one of them. Having experienced the rapid expansion in Brazil
break the chains of underdevelopment. during the 1950s, he wrote:
- Later (towards the end of the 1950s), the ECLA became the driving force
behind the efforts at creating a Latin American common market in order to By now the Brazilian economy could count on its own dynamic element:
facilitate further industrialization. industrial investments supported by the internal market. Growth
quickly became two-dimensional. Each new impulse forward would
Programmed Industrialization mean an increasing diversification, a larger mass of resources for invest-
If the FCLA's theoretical explanation of underdevelopment and its sketches ment, a quicker expansion of the internal market and the possibility
of alternative development strategies are called the first phase, the second of such impulses being permanently surpassed.
phase may be said to have begun when the Commission tried to translate the (quoted from Hirschman, 1968, p 2)
st raicgy into practicul policies. The initial guidelines for this work were drawn
up at a conference in Rio de Janeiro in 1953. A well-prepared policy of The ECLA Theory of Development
industrialization was said to be required if the process of underdevelopment We shall now return to ECLA's theoretical work. Prebisch's analysis of terms,
was to be reversed. and the [CLA therefore tried to convince the Latin a, of-trade is usually the only one referred to in this context, but it is important
American governments of the necessity of this, offering to assist in the pre- to realize that ECLA and Prebisch had more to say, 13 in spite of the fact .that
paration of detailed development programmes for each cOLIn try. The phrase most of the interest was focused on an analysis of the external sector. 14
programmed industrialization became popular. They actually tried to present a complete theory of development which
Initially, [CLA strategy was rather coldly received by the Latin American particularly emphasized the st ructu ral im balances between centre and
governments, which is also why most of the Commission's development pro- periphery. Their approach not only dealt with questions related to the theory
grammes remained paper exercises. This resistance to its ideas explains why of trade and the strategy of industrialization, but also encompassed the entire
the ECLA could not, and should not, propose measures that were too radical, complex of development. ECLA attempted to show that underdevelopment
of affected internal problems. LInd reforms and other basic, structural is not the same as undevelopment , i.e. lack of development. Underdevelop-
changes never received a high priority on the list of necessary changes. ment was instead to be thought of as the result of a specific process that led
A couple of years later several Latin American governments did, in fact, to underdevelopment in one part of the world and development in another.
begin to collaborate more closely with the [CLA: Argentina, Brazil, ECLA, however, never did manage to formulate a 'general theory of under-
Colombia and Peru were among the first countries to follow [CLA strategy. development'. Instead, a new method of analysing the complex of under-
The Commission could now directly influence the development strategies by development was introduced, the structuralist method, but in spite of that,
offering technical assistance in their planning and application, but, what was the paradigm of modernization was never really abandoned. Apart from its
even more important, it could influence the development process indirectly rather unconventional treatment of international relations, the Commission
by training local planners in the ECLA way of thinking. The Commission's was quite traditional. We have previously discussed the great optimism of
doctrines were therefore quickly spread across the continent. ECLA economists about the ability of industrialization to put an end to
The belief that industrialization was the remedy to underdevelopment underdevelopment. Like many other economists at the time, the ECLA
spread not only to the Latin American countries during the 19505, but to theorists overemphasized the role of capital in the development process.
most of the countries in the Third World. It was generally assumed that the After all, the main point was that the periphery's deteriorating terms of trade
process through which the industrialized countries had gone was essentially affected the accumulation of capital and consequently also the rate of
repeatable, and that the current conditions in these countries were the economic growth.
ultimate goal of development. A well-developed industrial sector was con- Thus the paradigm of modernization was still pretty alive, but ECLA and

42 43
O"I)('II<1CII<'.I' Theon' III Transition Background to the Dc pc nd cncy Approa ch

Its new approach formed the basis for its evcntual abolition, Their structural ap- The Latin American Critique of the Modernization Paradigm
proach. which in Chapter I we called 'early structuralism' was extremely impor-
tanto not only in the theoretical debate on development, but also in a number The economic growth of the more industrialized countries of Latin America
of other theoretical contexts such as the' Latin American inf1ation controversy', implementing ECLA policies came to a halt during thc llJ60s_ Instead of
Thc cause of inf1ation had been keenly discussed in Latin America since 'taking off into self-sustained growth' there was general economic stagnation,
thc early 1950s. This debate is not as well known outside Latin America as and, as a result of that, both social and political problems came to the fore.
that about the development of the terms of trade. The [CLA rarely par· The shortcomings of the policy of import substitution were becoming obvious.
t icipat cd officially. but some of the economists working at the Commission The purchasing power was limit cd to certain social strata. and the domestic
did. At an early point they attempted to formulate a theory of inf1ation market showed no tendency to expand after its needs had been fulfilled. The
which was to be an alter native to the prevailing nco-classical one, and import dependency had simply shifted from consumption goods to capital
particularly to thc theory [or nrulat cd by the monct arists. of whom the goods. The conventional export goods had been neglected in thc general
most extreme claimed that inf1ation was not a result of a given economic frenzy of indust rializa tion: the result was acute balance-of-payment problems
system. but rather a problem of 'the printing press'. Inflation was prim- in one country after another. The optimism of growth changed into deep
arily due to t he 'irresponsibility' of individual finance ministers. who depression.
print cd too much money to cover the government's budget deficit. The Raul I'rcbisch and Cclso Furtado. two veterans of Latin American develop-
solution to the problem was therefore simply 'to stop the printing mcnt economics, now both realized that although industrialization had been
presses'. which essentially is the same thing as reducing govcrIllllcnt ex- initiated, it did not automatically continue by itself. I Icre is a comment from
pcndit ur cs. 1966 by Fur tado: 'In Latin America there is a general consciousness of
The structuralists. on the other hand, claimed that the Latin American living through a period of decline The phase of 'easy' development,
countries faced several 'structural' problems which automatically created through increasing exports of primary products or through import substitu-
inflat ionary pressures. Basically they were attributable to supply inelasticities: tion has everywhere been exhausted (quoted from Hirschman, 196R).
In cco nouuc s with such problems. limitations of thc quantity of money The growing consciousness of the fact that economic growth -- I'm as long
would not stop inflations (except in tire very long run at the cost of, for as it lasted -- did not necessarily have any social or political counterparts
example. a rise 111 unemployment to unacceptable levels). The monctarists' also contr ibu tcd to the widespread pessimism. During the 1960s the ECLA
solution to the problem. which was simply a 'proper' monetary policy, was published a report on the social situation in Latin America, together with the
iucrcforc rejected. With reference to the FC LA analysis of t he general process annual economic review. Together, these publications offered a peculiar
of ~rowth in Latin America. which primarily saw development as a result picture of the development: on the one hand industrialization and growth,
of the supply of capital, the st ruct ralists criticized the organizations that and on thc othcr unemployment and mar ginaliz ation. Many students of
I'olloweu the monetarists' recommendations (e.g. the IMf) for having far too development saw this as confirmation of the fact that established develop'
rcst rict ivc criteria for lending moncy." ment thinking was going through a crisis, 17
The political rccommcndations made by [CLA had a common dcnorn-
inat or the demand for increased govcmmcnt involvement. It was the task Stavenhagen
of the gl)\<,rnmcnt to correct all structural clements standing in the way We have already dealt with the [CLA critique of simplified growth theories
,ll development However, EeLA always pointed out vcr y carefully that it and the vir'l\ of foreign trade as the prime mover behind development. In
did not propose a planned economy. Thc 'Russian' model was as vigorously this cont cxt we shall deal with a much broader discussion which questioned
rejected as the laisscz-fairc model. The market economy was to remain, but the entire, established paradigm of modernization. In an influential essay
under the 'surveillance' of thc government. This 'Keynesian' view played an from 1966 the Mcxican sociologist Ro dolfo Stavcnhagen cIiticizcd what he
IllIportant rolc in Latin Amcrica. but it was also acceptcd in almost all of the called 'Thc Scvcn Erroneous Thcses on Latin AnlCrica' (Stavenhagcn, 19(6).
Third World. Sincc the 19505, governmcnts havc playcd a much more active
rolc in thesc cconomics than in any 111hcr part of thc capitalist worlo. (l) 7711' Latin American cOlin tries arc dual societies: This proposition states
An cxtcnsivc dcbatc followcd in thc wakc of thc LCLA. Attacks wcre that two diffcrcnt and, to a certain cxtcnt, indepcndent societics exist within
launchcd from both libcral and radical corners. The debatc bctwccn the thc Latin Amcrican countries: one traditional agrarian society and one
liberal cconomists and thc ECLA is of little intercst tn thc grl)wth of the modcrn, urbanized socicty. Thc former is often associatcd with feudalisnl and
dcpcndcncy schooL and is thercforc not includcd hcrc. Of morc relcvance, the lattcr with capitalism, which also implies that 'feudalism' is an obstacle
howcvcr. is the criticisnl of thc modcrnization paradigm coming from Latin to devclopmcnt that must bc rcplaced by progrcssivc c<ipitalism. Both
Amcrican social scientists. socicties are, howcver, in reality tlIe result of the same process.

44 45
Dependency Theory ill Transition Background to the Dcpe ndcncv Ap{)/'()(/ch

(2) Progress in Latin America will come about by the spread of industrial of these two classes. This thesis has primarily been examined by the orthodox
products into the backward, archaic and traditional areas: This thesis assumes left, but the workers' and peasants' interests were, in reality, not identical. In
that the modern expansive sector automatically starts a process of develop- Latin America it is a fact that the stronger the internal colonialism, i.e. the
ment in the traditional sector, that the transition from traditional to modern greater the differences between the metropolis and its domestic colonies. the
society is a process which inevitably includes all the traditional societies in less opportunities there are for a true political alliance between workers and
the world today, and that the centres of modernity are nothing but the result peasants.
of the propagat ion of elements originating in already developed countries.
Stavenhagen objected to this by claiming inter alia that the spreading out of Cardoso
modern consumption goods did not imply an increase in welfare per se, and Stavenhagen was here thinking of the experiences in Mexico which. in fact.
that it instead managed to drive out local industries and trades, and even- were common to a number of Latin American countries. Brazil was, perhaps.
tually led to classes of middlemen and usurers. As far as capital is concerned, the country in which the development optimism of the 1950s had found its
the spreading seemed to go in the opposite direction ~ from the backward most uninhibited expression. Everyone. right across the political spectrum,
areas to the developed areas. The progress of the 'modern' area was, in reality, thought that Brazil was in the 'take-off stage', and that those most respon-
achieved at the 'traditional' area's expense. sible for this condition were the growing number of 'entrepreneurs'. During
this time sociologists in Sao Paolo established the Centre for Industrial
(3) The existence of backward, traditional and archaic rural areas is an Sociology where the various industries in the Sao Paolo area were studied ill a
obstacle to the formation of an internal market and to the development ofa Schumpeterian perspective. The results were not always as expected: the
progressive and national capitalism: In St avenhageri's opinion this was false Brazilian businessmen did not turn out to be the backbone of the growing
because in Latin America there was no progressive, national capitalism, nor Latin American bourgeoisie: they were found to be totally devoid of initiative
were the conditions such tha t one might develop. and energy, totally dependent on the government and foreign capital
(Cardoso, 1967, pp 94-1 14). Doubt therefore arose about the Latin American
(4) The national bourgeoisie has an interest in breaking the power and the bourgeoisie. The thought that it was incapable of fulfilling its historical
dominion of the landed oligarchy: The landowners', financiers' and industrial- mission - to release the productive powers and create a transition from
ists' interests were, in reality, joined in the same economic groups, the same feudalism to capitalism - turned out to be a most important aspect of the
companies, and occasionally even in the same families. There is no reason dependency theory.
why the national bourgeoisies and the land oligarchy shouldn't get along. Fernando Hen rique Cardoso was among the sociologists who earned
out the sociological studies of the 'entrepreneurs' in Sao Paolo, and later
(5) Latin American development is the work and creation of a nationalist, wrote a general critique of the current social sciences, particularly the 'theory
progressive, enterprising and dynamic middle class, and the social and economic of modernization' within the discipline of sociology (Cardoso and Faletro.
policy objectives of the Latin American governments should be to stimulate 1969, pp 8-10). Cardoso and Faletto pointed out that the pattern 'from
'social mobility' and the development of that class: Those classes called the traditional to modern' was a reincarnation of the German sociologist 'I onnics's
middle classes are very closely connected with the existing economic and old dichotomy of Gemeinschaft and Gesellschaft .
political structure and lacked the dynamic that might make them catalysts in They raised two objections to this: firstly, neither concept is broad enough
a process of independent economic development. to cover all existing social situations, nor is it specific enough to distinguish
the structures that determine the life-styles of various societies. Secondly,
(6) National integration in Latin America is the product of miscegenation: these concepts do not show how various stages of economic development arc
This thesis suggests that the development was moving towards some kind of linked to the various types of social structure characterized as either 'trad-
universal society in which the differences between the dominant white itional' or 'modern'.
minority and the mass of natives in the rural areas would disappear. This
thesis was wrong because a biological and cultural mixing does not imply a With this kind of characterization it continues to be impossible to
change in the existing structure per se. In the internal Latin American explain the transition from one type of society to another. In fact,
colonies the mestizos represent the local and regional ruling classes, and do in change in social structures, far from being only a cumulative process of
fact suppress the natives. incorporating new 'variables', involves a series of relations among social
groups, forces, and classes, through which some of them try to impose
(7) Progress in Latin America will only take place by means of an alliance their domination over society. (Ibid. p 10)
between the workers and the peasants, as a result of the identity of interests

46 47
Dep endcn C.l' Theory in Transition Background to the Dependency App roach

What they call the historical-structural method is the alternative to the - In formulating these laws, development theory must take into account
prevailing. schematic and mechanical analysis: the international contradictions of the process, abandoning any formalist ic
attempt to reduce it to a un ilineal transition from one type of society to
For us it is necessary to recognise from the beginning that social struc- another. Rather the theory would have to show how through these very
tures are the product of man's collective behaviour. Therefore, although contradictions society as a whole can reach higher forms of organization.
enduring, social structures can be, and in fact are, continuously trans- These forces, and the social forms they imply, are better described as social
formed by social movements. Consequently, our approach is both trends than as models of a future situation to which we should aspire.
structural and historical: it emphasizes not just the structural con-
ditioning of social life, but also the historical transformation of Moving now (rom Bruztl to Chile (and keeping in mind that both Cardoso
structures by conflict, social movements, ancl class struggles. Thus our and Dos Santos went to Chile after the Brazilian military coup in 196";)
methodology is his t orical-st ruct ural. (Ibid., p.x). we find the same phenomenon: great dissutisfucuon at the way in which the
established social sciences explain the Latin American reality, and at their
This criticism of the prevailing development theory and the search for inability to provide guidelines for an adequate policv of development.
alternative approaches was obviously an expression of a more widespread
intellectual climate in Latin America in the miu-I960s. Sunkel
We have chosen the Chilean economist Osvuldo Sunk el (Formerly with the
Dos Santos EeLA) as an example of this dissatisfaction (sec Sunkel, 1lJ69 and 1lJ7!,
Thcoronio Dos Santos. also a Brazilian, sums up the tradit ional ideas on as well as Sunkel and Paz, I (nO). Sunkcl claimed that the problem with the
development as follows (Dos Santos, 1968b [1973 J): prevailing analysis of the development question was that it was based on
conventional theories of growth and mudcrnizat ion. As claimed by other
Development means advancement towards certain well-defined general Latin Americans, t o whom we have referred earlier. this theory saw the
objectives which co rrcspond to the specific condition of man arid society to mature capitalist economy as the goal 01" all development efforts: the under-
be found in the most advanced societies of the modern world. The model is developed nations were analysed in terms of a previous ami imperfect stage
variously known as modern society. industrial society, mass society anu so on. 011 the way to this goal. Sunkcl believed that this idealized and mechanical
vision ought to be replaced by a more historical method, the result of which
L'ndcrdcvc loped coun tries will progress towards this modcl as soon as they
would be a better understanding of the real nature of the underdeveloped
have eliminated certain social. political. cultural and institutional obstacles.
nation's structure and its changes. The approach suggested by Sunkcl simply
These obstacles arc rcpresem ed by 't radit ional societies', 'feudal' systems,
meant that the characteristics of underdevelopment should be viewed as
or 'feudal residues'. depending on the particular school of thought.
normal results of the functioning of a specific system. In the case of the
Cert am economic. polit ical and psychological processes can be singled out underdeveloped nations these results arc wei] known: low income. a slow rate
as allowing the must rational mobilization of national resources and these of growth. regional im balance, inequality, unemployment. dependency.
can be categorized (or the usc of economic planners. monoculturc and cultural. economic. social and political marginaliz ation.
To all this is added the need to co-ordinate certain social and political etc. The conventional theory considered these symptoms to be deviations
forces in support of a development policy and to devise an ideological basis (rom the ideal pattern which. like children's diseases, would disappear with
which urgani/es thc will ofvarious nations in the 'tasks' of development. growth and modernization. It did not rc.ilizc that behind this lay ~l system,
the formal functioning of which produced these results, and that this would
Once the conventional development theories have been proven to be continue fur as long as development policies at tacked the symptoms of under-
indefensible. Dos Santos goes on to provide the basic prerequisites for a more development rather than the basic structural clements that had created
solid theory of development: undcrdcveIo pm ent.
According to Sunk cl, once Latin America is seen in this perspective it
The theory of development must analyse the process of development in becomes obvious that considcrublc influence W~lS exercised by external tics;
its various historical and concrete manifestations. however, their importance should not cover up the existence of internal,
structural problems. A realistic analysis of l.atin American development
It must extract. through such an historical analysis, the general laws of should therefore be based on the assumpt ion that the socioeconomic system
development of the societies it chooses to investigate. has been shaped by two types of structural clements: external and internal.
The former have been more important factors as far as Latin American

4:--\ .f l)

Depe nd en cv Theory ill Transit ion Backgrou nd to the Dependencv Approach

developrncn t is concerned. justified to quote Frank's arguments about these three points. However. we
An adequate analytical scheme for the study of underdevelopment. and shall limit ourselves to an account of one of the variants of the paradigm of
for the formulation of development strategies, must be based upon know. modernization, namely the one he calls 'the ideal-typical index method'. The
ledge of the process. the structure and the system. Underdevelopment cannot idea of this method is to compare an underdeveloped country with a
be seen as a stage in the development of an economically, politically and developed one by means of various indicators: the differences thus revealed
culturally autonomous society. Underdevelopment should rather be thought are then established as the substance of development. This approach is
of as part of the global historical process of development. Underdevelopment manifested in two ways: by pattern variables and by stages of growth, As
and development are two sides of the same universal process, i.e, they inter. shown in Chapter I the tradition of pattern variables goes back as far as
act and are mutually conditional. Their geographic expression is manifested classical sociology, and was applied to the problems of underdevelopment
in two polarizations: first, the polarization of the world between the rich by Bert Hoselitz. In that chapter we also dealt with the foremost represen-
industrialized and developed nations on the one hand and the underdeveloped tative of the school of 'stages', Walt Rostow.
backward, POOf. peripheral and dependent nations on the other; secondly, Frank argues that many developed nations show strong particularistic
the internal polarization between advanced, modern industries and the so. tendencies, that ascribed status is widespread and that the structure of roles
called 'traditional sector'. is not as functionally specific as our official ideology might have it. Similarly,
The concepts of development and underdevelopment must therefore be traits of 'universalism', 'achievement' and 'specificity' might be found in the
seen as partial yet mutually dependent structures forming one single system, underdeveloped nations. After having destroyed the empirical basis of the
One important characteristic which separates the two structures is that the pattern variable analysis on the problems of underdevelopment Frank goes on
developed system, mainly because of its ability to grow, to a great extent to question the theoretical bases for analysis:
dominates while the underdeveloped system is dependent. partly because
of the nature of its own dynamics, All of this can, of course, be used both Hoseli tz leaves far from clear just which is the social whole whose role
between nations, as well as between regions within a country. This school of patterns he would change from one set of variables to another in order
thought focused on two types of polarizing processes: one at the level of to effect develo pmen t. Here the theoretical inadequacy is even more
international relations. the other at the nationalleve!' So much for Sunkel. glaring, for it contravenes the generally accepted rule of social and all
scientific theory to look for and refer to the systemic whole in terms
of which the reality (in this case underdevelopment) can be explained
As far as the group of scholars who were soon to be known as the depen- and changed, The social system which is today the determinant of
dentistas and their critique of the prevailing theory of development is con- underdevelopment certainly is not the family, tribe, community, a
cerned, it is difficult to ignore Andre Gunder Frank's influential paper 'The part of a dual society, or even, as I shall argue below, any underdeve-
Sociology of Development and Underdevelopment of Sociology' from 1969. loped country or countries taken by themselves.
In it Frank criticized the Research Centre on Economic Development and
Cultural Change and its periodical Economic Development and Cultural As an example of the limitations of pattern variable analysis, Frank in
Change (the EDCC) to which Frank himself had been a contributor. Frank's terms of development policy mentions the fact that the growth of the middle-
Latin American experiences have obviously led him to question the 'paradigm' class groups in Latin America has not led to a higher level of development
of which this periodical is the foremost representative. It should be noted - quite the contrary.
that in it Frank acknowledges his debt to Rodolfo Staverihagen, amongst Growth stages are a further development of the pattern variable analysis
others - and there are certain similarities between Frank's and St avenhagen's in the sense that the two idealized poles are united through a series of stages.
critique; Frank's critique is, however, more theoretical while Stavcnhagen's As the reader might recall, Rostow mentions five such stages: (I) the trad-
discussion, more concretely, is tied to Latin American, particularly Mexican, itional stage; (2) the pre-take-off stage; (3) the take-off; (4) the road to
empirical studies. Frank's critique was also more directly aimed at specific maturity; and (5) the mass consumption society. It is difficult to find these
scholars, particularly the group around the EDCe, e.g. Manning Nash, Bert stages in reality.
F. Hoselitz, Marion Levy, Everett Hagen and David McClelland. Through his
critique Frank wanted to show that the modernization perspective, as Rostow's stages and thesis are incorrect primarily because they do not
developed by the above-mentioned scholars was (I) empirically untenable, correspond at all to the past or present reality of the underdeveloped
(2) theoretically insufficient and (3) practically incapable of stimulating a countries whose development they are supposed to guide. It is explicit
process of development in the Third World. in Rostow, as it is implicit in Hoselitz, that underdevelopment is the
In view of the importance of his critique during the late 1960s it might be original stage of what are supposedly traditional societies - that there

DC!JCI/(ICIICl' Theory ill Tra nsit io n Backgroun d t o th c Dcpcndcncv A/Il)/'()acli

were 110 stages prior to the present stage of underdevelopment. It is 2. See his ie t t cr to Engels (17/12, 1858) in Torr (1951) I' 66.
further explicit in Rosto w that the now developed socie ties were once 3. On China, sec references in note 2. Marx's comments on India arc mainly
underdeveloped. But all this is quite contrary to fact. found in Mar x-En gcls ( 1960).
4. See Hobsba wm's introduction to Marx (1964).
According to Frank, underdevelopment was not an original stage, but 5, This dues not imply that the Latin American Marxism did not exist in
rather a created condition: to exemplify. he points to the British dcindus- its 'pre-So\iet' form, The Argentinian socialist Juan B. Justo t ranslat cd
t rializ at ion of India, the destructive effects of the slave trade on African Marx's writings into Spanish, but rejected Marxism-Leninism (Aguilar,
1968, p 8).
societies and the obliteration of the Indian civilizations in Central and South
Anie ricu. The greatest problem in Rostow's analysis was, however. the fact 6. The t rad itional alternative to the communist parties san ctiou ed by
the Comintcrn was various Trotskyist groups, but they were not exactly
ih.u not all of the countries which according to him were ready for t akc-off,
in the centre of political activity either. It is not always easy to deter-
l'l1ulJ manage the final jump.
mine who reasonably might have been Trotskyists, since Trotskyism was
The thcorctic al shortcoming of Rost ows analysis is primarily the fact that the standard accusation following all those who were excluded from the
It IS based on 'comparative statics' rathcr than being dynamic, and that the Communist Party. The Trotskyist criticism of the La tin American com-
overall perspective is lost. In terms of development policy the approach is munist parties was, however, fierce from time to time (Alexander, 1973).
~ravely compromised because of Rosrow's political affiliation: 7. 'Notes on Latin America', MOlllhh Review (February 1963).
8. Aidan Foster-Carter has dealt with the first relation in 'Ncoma rxist
As to the efficacy ot the policy recommended by Rost ow, it speaks for Approaches to Dcve lop mcnt and Underdevelopment' (Foster-Carter,
itself: no country. once un dcr dcvc lo pc d. ever managed to develop by 1973), an d with the second one in 'From Rost ow to Gun dcr hank:
Rost o w's stages. Is that \\'hy Rostow is now trying to help the people Confliit ing Paradigms in the Analysis of Un dcr dc vcl oprm-nt ' (roster-
Carter, 1'176).
of Vietnam, the Congo, the Dominican Republic, and other under-
9. A.G. Frank defends himself by saying that he never claimed to be a
d cvc lo pcd c oun t rics to overcome the empirical, theoretical, a n d policy
Marxist (conversation in Gothenburg, Spring 1(78).
shortcomings of his manifestly non-communist intellectual aid to 10. It might be in t erest i ng to note that Fost er-Cart c r was working as a socio-
economic development and cultural change by bombs, napalm, logist in Dar-es-Salaam when he wrote this. As poin t ed out in Chapter 7,
chemical and biological weapons, a nd military occupation? Dar-es-Salaam was one of the 'secondary centres' of the dependency
The tone of Frank's article is strongly polemic, which is illustrated by the 11. We thus view ne o-Ma rxis m as a phasc r at he r than as a school, In what
above quot a t ion ; it is also typical of the intellectual climate at the universities might be called 'Marxism in a theoretical context' there will always be
of the mctropo lcs during thc late I 960s. During the so-called students' one mainstream defending the integrity of Marxism. This mainstream
rcvolut ion of 196R Frank was one of the main suppliers of arguments with has, during certain periods. had difficulties explaining reality by means
which the students criticized their teachers for having used bourgeois pro- of established theories. It might then he a quest ion of analysing new
problem areas (t hc pr o l-le ms of underdevelopment) by means of a
p:rganda in their t cuch ing. In other words Frank l'hyed the role or 'popular-
theory which really was developed for use in a different social context,
i/cr and intermediary in the critical. Latin American debate OIl the social or accepting that reality has changed in a way that requires the intro-
sell'nces in tile mid-1960s. As we shall show later, he played a similar role in duction of new rlc m cn ts in the theory. We find an example of the latter
.lisscminat ing thc ideas of the dependency school. Juring the early 20th Century when capitalism, in many ways, had
become different from what Marx lia d analysed. The so-called 'second
generation' of Marxists m ade numerous errors in their search for ex-
planations of this. New hypotheses were put forward which were not
Notes always consistent with the views and methods of the mainstream. Even-
tually, the Marxist method (i.e. hist oriral ma te rialism) was refined to
1. ,\5 far as Marx's and Engels's evolu .ionist view of capitalist development the point where it was capable of explaining the latest aspects of the
is concerned, we ought to rioint out that their extensive w ritings, in fact, development of world capitalism. The result was the theory of imperial-
do contain attempts to analyse the problem in a more diversified manner. ism.
In their opinion l rcla n.l was thrown back several centuries by the British During the period when the theory of imperialism was developed we
invasion. instead "f being set free by the more developed country's magic might even speak of 'nco-Marxism' (Swcc zy, 1972, pp 37 1'0. When
wand (which is wh at they thought would happen in India). We might 'Marxist' theory was later adjusted to incorporate tile new nco-Marxist
also mention Lenin's growing insight into the complex and contradic- traits with unchanged theoretical integrity, it ret urncd to the main-
tory nature of the capitalist process of development. stream.

~=: 53

Dependency Theory in Transition Background to tli« De p enden cv Appmacil

We have chosen to call the mainstream 'Marxism', since the word order. Corn tc's view of society was definitely deterministic, but political
'orthodox' might contain a value judgement. Lukacs provides an early rulers could nevertheless facilitate the birth of the modern order by
example of attempts to define 'orthodox Marxism': according to Lubes, sociology. His political ideal was the administrating meritocracy.
'orthodox Marxism does not imply an uncritical acceptance of the results His theories never gained any importance in Europe (except in French
of Marx's research, In the Marxist context orthodoxy is purely a refer- sociology, where certain elements remained). It is therefore paradoxical
ence to method, It is the conviction that the true method of research is that the doctrine of positivism dominated Latin American philosophy.
found in dialectic materialism, and that this method can be further H.E. Davies says: 'In fact, in no other part of the modern world did
developed, deepened and completed only in the spirit of its originator; positivism as a general pattern of thought achieve a stronger hold on the
all attempts to surpass or improve it have merely led to, and must lead to minds of a dominant elite than it seems to have achieved in Latin
banality and eclecticism' (Lukacs, 1923), America' (Davies, 1972, p 99).
Our idea of 'Marxism' is obviously close to Lukacs's 'orthodox Marx' 13. Pre bischs breadth and activity in other areas is seen by Di Marco's bib-
ism', However, one might question the true meaning of working in liography of his work (1972).
Marx's spirit: the dependency school has truly worked in that spirit 14, The interested reader will find an extensive analysis of the ideas of the
without being Marxist for that reason (see e.g. Wallerstein's defence in ECLA in Rodriguez 1980. See also Hirschman (1961) and Cardoso
Chapter 8). Secondly, it is often necessary to express some vague 'pre- (1977).
understanding' in order to tackle a newly arisen problem. This book 15. A survey of the Latin American debate on intlation between the m oric ra-
claims that the dependency school's attempts, even if they were not rists and the structuralists may be found in Baer (1967) or Rodriguez
Marxist, eventually resulted in a vitalized, Marxist view of 'underdevelop- (1980) Chap. 6.
ment', 16. The references in note 8 also contain a survey of the debate between
There will always be dissenting voices in the development process of the neo-classical economists and the ECLA school.
a theory. In the context of the new Marxist theory of development Bill 17. Sunkel applied these autobiographical notes during the SAREC Work-
Warren's voice has been heard the most (see Chapter 4), If we view shop on Development Theory (Vast erhaninge, August 1977). See also
Marxist theory before the dependency school as the thesis, the de pen- Het t ne and Walle nst een (1978).
dency school as the antithesis, and the current mainstream as the syn-
thesis, we are forced to interpret Warren's contributions to the debate as
a return to the thesis, The kind of Marxism Warren represents has strik-
ingly been called 'neo-classicul Marxism' by Dudley Seers (Seers, 1978),
Although Warren explicitly starts from a Marxist position he nevertheless
comes to much the same conclusion as do the neo-classical economists,
This, according to Seers, is because both schools have their roots in the
classics - Smith and Ricardo - and because both of them were developed
in Europe during the 19th Century, thus having numerous common
elements, 'Both doctrines assume competitive markets and the over-
riding importance of material incentives. They are both basically inter-
nationalist and also optimistic, technocratic and economistic. In par-
ticular, they both treat economic growth as 'development' and as due
primarily to capital accu mula tiou' (ibid.}.
12. The positivist ideas date back to the sociological science of Auguste
Comte (1798-1857), References to Comte are rare nowadays, and the
connotation of positivism has changed and become more general; it
might therefore be in order to explain Cornte's positivism. His sociology
centres around the tensions between that which is 'traditional' and that
which is 'modern'. To Co m te the former was theological and military,
and the latter scientific and industrial. The process of modernization,
which was inevitable and basically the same in all societies, also affected
(and perhaps above all) human thinking, which developed from fetishism
to 'positivism'. Positive thinking, marked by observation and accuracy,
was developed by the natural sciences and later by the social sciences,
whose origin was sociology. The purpose of sociology was to determine
the stage reached by society, thus facilitating the creation of the modern

54 55
Latin American Dependency School

3. The Latin American which these changes take place depends, to a large extent, on the degree
of flexibility of the institutional framework within which the economy
Dependency School (Furtado, 1965, p47)

Now, Furtado was also referring to differences between capitalist develop-

ment in the centre and in the periphery in a way that was to become typical
for the dependency school. The developed countries were characterized by
the fact that there was an interdependent relationship between purchasing
power and investment which, eventually, led to a general increase in the
standard of living.! thus creating a basis for an industrial democracy in which
various political forces could limit the power of the capital owners.
The Dependency Perspective Takes Shape Furtado earlier assumed that the periphery would also develop along
these lines, provided capitalist development could be starred by means of
The economic stagnation in Latin America together with the lack of con- import substitution. Now he claimed that the internal structure which colon-
fidence in the prevailing development theories created a sense of great ialism had created in these countries was extremely rigid. The Great Depression,
confusion. The intellectuals were groping for alternative explanatory models. for example, had created an opportunity for Brazil to get rid of this structure,
There were certain limitations to the extent to which ECLA could provide since the government, inadvertently, had followed a strict. Keynesian
assistance in this area: first, since ECLA focused its attention on purely economic policy; it bought large quantities of coffee which were later des-
economic problems. social and political problems were excluded from the troyed. By 'using coffee as fuel for the locomotives' domestic employment
analysis. Secondly, ECLA's dependence on conservative Latin American was kept up, while the import possibilities were reduced. This was also
governments precluded the use of analyses and remedies that appeared too an incentive for import substitution. However, the internal structure was not
radical. such as land reforms. A group of economists who had earlier been changed and the traditional sectors were not abolished, resulting in continued
associa ted with ECLA, as well as the younger generation 0 f economists work- economic inefficiency and stagnation.
ing for ECLA, together constituted one of the new currents. We begin this Furtado's earlier optimism had thus soon changed into pessimism. The
chapter by describing the radicalization of ECLA's approach, this is followed ECLA strategy of industrialization had increased foreign dependence rather
by a discussion of theorists who were influenced by Marxism or nco-Marxism. than reduced it. Imported consumption goods had merely been replaced by
imported capital goods and intermediate products necessary to the industrial
The E(LA Analysis Radicalized: Furtado and Sunkel structure that had been created in Brazil. The dependence upon the export
One of the most influential of the more radical ECLA theorists was the of primary products had also increased, since it alone was to pay for the
Brazilian Celso Furtado.' He was originally a traditional economist in the imports.
sense that he strongly emphasized lack of capital in the underdeveloped From this growing interest in the internal social structure, Furtado came
countries. Like the others associated with ECLA he attributed this lack of to the conclusion that it was obviously of great interest both to the foreign
capital mainly to external factors (i.e. the periphery exported raw materials industries and to the domestic oligarchy to keep large groups of the popu-
and imported industrial goods), and also found the solution to the problem lation marginalized. In this way salaries could be kept down and profits up.
to he import substitution. After the rapid industrial growth in Brazil during Furtado described the social structure standing ill the way of development
the 1950s. he was optimistic about the future. in Brazil as follows:
However. his views soon changed. As director of planning of the poorest
regions of Braz.i] he experienced the developments leading up to the military In short, the social structure ... can be outlined as follows: at the top
take-over in I CJ6C+. In Furtado's analysis of this period we find a definition of is a ruling class composed of various groups of interests, in many res-
development which indicates that he had abandoned the earlier emphasis pects antagonistic to each other, therefore unable to form a plan for
on the growth of productivity. national developments, and holding the monopoly of power unchall-
enged; lower down we have a great mass of salaried urban workers
Economic development, being fundamentally a process of incorporating employed in services, which forms a social strata [sic] rather than a
and diffusing new techniques, implies changes of a structural nature in proper class; beneath this is a class of industrial workers, which hardly
both the systems of production and distribution of income. The way in represents one tenth of the active population of the country but

56 57
Dependency Theory in Transition Latin American Dependency School

constitutes its most homogenous sector; and finally the peasant masses. early 1960s. He left this institution for a professor's chair at the University
(Quoted in Brookfield, 1975, p 148) of Chile, where in 1966 he gave a lecture in which he dealt with the problem
. of dependency, noting how it had been neglected in Latin American social
From this point on, Furtado left his previously rather economistic analysis science." He referred to the question of dependency 'as an area which until
in favour of a broader approach in which the social structure played an now has been taboo as far as serious analyses are concerned'. Sunkel pointed
important role. He now tried to combine certain parts of Marxism with out that 'dependence' nevertheless had become a popular topic outside the
Keynesian theory. According to Furtado, both had advantages and disad lecture halls; he obviously intended to make this complex of problems aca-
vantages. For Marxism it was a matter of isolating the structural insight from demically respectable. He rejected the 'revolutionary' solution (which was
its unacceptable teleology; Keynes, on the other hand, had never put much diligently debated in radical circles): '... a radical, socialist revolution is,
emphasis on structural changes. His con tribution consisted of a new and •• in my opinion, a highly improbable historical event in the immediate future
useful view of the government and its role in the economy. of Latin America' (Sunkel, 1969, p 32).
It is interesting to see that Furtado had already touched on the problem His views on the Latin American bourgeoisie contain an entirely different
of rigid social structures. As we shall later see, contemporary Marxists often air of optimism to those of the radicals, with whom we shall deal later.
dwell on this. Although Furtado never attempted to carry out an 'analysis Sunkel than believed in the possibility of political alliances between certain
of the modes of production', his approach nevertheless shows that there were middle-class groups and the poorer urban and rural strata:
dependency theorists who did not consider development in the periphery
only as a reflection of what was going on in the centre - which is what the These new alliances (which ought not to be confused with the ones that
dependency school is usually accused of doing. Instead, he believed in some have occurred in the past in Latin America) represent national collective
sort of interaction between external and internal factors, with the emphasis interests and objectives in a better and different way from that which
on the lat ter. was the case in traditional dual societies. Nationalism, development,
Furtado left Brazil after the 1964 coup, and moved to Paris, where he and organized mass participation are the ideological pillars of such
expanded his analysis to cover all of Latin America. His pessimistic 'aura' alliances.
became more pronounced: the continent's only salvation, as he saw it, lay (Ibid., p 27)
in increased self-reliance - which was brought out quite clearly in his book
Economic Development of Latin America (Furtado, 1969). Here he says: Certain Latin American countries (we assume that Sunkel primarily
'A move towards the solution of these and other problems related to external thought of Chile) should, on the basis of these alliances, be capable of carry-
relations would be inconceivable without a parallel effort to bring about ingout a 'national policy of development', which Sunkel defined as follows:
structural reforms and create new forms of co-operation in the region' (p 302).
He particularly emphasized an increased public commitment. The govern- The nationalism of development is a force of national affirmation,
ment should strive to restructure the entire economy, so that modern tech- an aspiration to self-determination and .sovereignt y, a desire to par-
nology could be disseminated to all sectors of production, thus also guaran- ticipate in the benefits and creation of modern and universal culture
teeing a more equitable distribution of income which, in turn, would put an and science, the desire to attain liberty, democracy, equality of oppor-
end to social marginalization. It was also important that the Latin American tunities and well-being, which the more industrialized countries enjoy
countries gained a certain technological independence, and that the intra- to a greater or lesser extent.
regional trade expanded. . (Ibid., p 32)
Furtado played an important role, not only in the Latin American debate, 1',
but, together with Andre Gunder Frank, as the most important proponent Unlike Raul Prebisch, Sunkel emphasizes the internal factors: 'The possi-
of the dependency perspective outside of Latin America. Most of his works bilities of carrying out a national development policy basically depend on the
have been translated into English, French and Spanish, and are thus read all domestic situation' (ibid., p 46). This is really the gist of the radicalization
over the world. of the ECLA analysis. The ECLA had, as might be remembered, diplomatic
The Chilean Osvaldo Sunkel is also important in the context of the radical- reasons for not wanting to touch on the sensitive subjects of the Latin
ization of the ECLA perspective. He started his professional career as an . American countries' domestic affairs.
economist during the early 1950s and has thus, together with Furtado, Compared to the dependency theorists who had been influenced by
worked within the framework of the established paradigm and contributed Marxism, Sunkel appears to be relatively moderate. He differs from them by
to its downfall during the 1960s. being more eclectic. He does not reject Marxist theory, but works within a
As we have previously mentioned, Sunkel worked with ECLA during the structuralist tradition developed by ECLA economists, to whose left wing

58 59
De pendencv Theory in Transit ion Latin A mcrican Dependency School

Sunkcl and Pedro Paz, his collaborator in a classic development theoretical, Obviously, the countries themselves are not the main components of this
work, belonged (Sunkel and Paz, 1970). global system. According to Sunkel, the conventional theory of international
Unlike the ECLA theorists, Sunkel and Paz chose a broader, interdis- trade makes a fundamental mistake by considering countries to be distinct
ciplinary approach, while at the same time they spoke more openly about units of an economic system, in which transactions between these units take
internal Latin American conditions, class contradictions, etc. Thus, Sunkel place. The global system is, instead, characterized by two distinct but inter-
found the Marxist analysis of the historical development of imperialism to be acting structures: transnational capitalism represented by the economies of
acceptable, but argued that it had neglected to deal with that which happens most of the industrialized countries (the centre) as well as the 'modern'
within the countries subjected to imperialism. On this point he found the sectors of the underdeveloped coun tries, and the regions that are peripheral
theory of the so-called 'backwash' effects of international trade (developed to the centre as well as the much larger part of the underdeveloped countries
by Gunnar Myrdal and other structuralist oriented economists) to be at least which have been excluded from 'development' and remain in a state of stag-
a promising start. This theory was, however, incomplete in that it mainly nation and marginalization (the periphery). The relations between these two
dealt with the effects of trading in raw materials. Sunkel found a new form . structures are, in tu rn, characterized by polarization, both at the in ternational
of the transnational corporations. He described the general tendency of the and the national level. Sunkel's global model is characterized by the fact that
global system, in which both developed and underdeveloped countries formed the substructures cut straight through the national boundaries. There exists
integral parts in terms of transnational integration and national disintegration a dynamic that determines the function of the whole system and the purpose
(see Figure 3.1). of the analysis is to understand this process. The key institution in this
analysis is the transnational corporation,
Figure 3. I Sunkel's view about the long-term process of development was pessimistic:
Sunkel's Model of Global Dualism '... this transnational process of integration tends to intensify the process
ofcultural, political, social and economic underdevelopment in the peripheral
nations, where it, at the same time, increases dependence and precipitates
domestic disint egra ti on'.
After the military coup in Chile, Sunkel continued his work on 'trans-
national capitalism and national disintegration' at the University of Sussex
J The Capitalist System in England. Sunkel's later thoughts on development and dependence may be
found among his various writings in connection with this project. Since they,
within the framework of the structuralist school, may be said to form part
• '\ Developed Country ofthe current development debate, we shall return to them in Chapter 8.

Marxist Influences: Cardoso and Faletto

Some of the views did not emanate directly from the ECLA, but should
The Periphery of
'~I I The Transnational instead be seen in the light of the Latin American Marxist tradition. Let us
, Core
Capitalism first examine the more traditional Marxist influences. They originated in a
'sociological annex' to the ECLA, i.e, the Latin American Institute [or Social
and Economic Planning (ILPES). After the military coup in Brazil ill 1964,
\. ' Underdeveloped Fernando Henrique Cardoso moved to Chile and joined the I LPES.4 Here
r Country
Cardoso and the Chilean historian Enzo Falctto conducted sociological and
historical studies of various cases of dependencia, a concept which quickly
gained support among the social scientists at the EeLA and at the univer-
sities in Santiago.
The fact that social scientists from various parts of Latin America could
discuss and compare experiences from different countries was, no doubt,
important to the further development of the dependency perspective. Thus it
is hardly correct to tie the new ideas to one or two names alone." However,
a mimeographed manuscript entitled Dependcncia y Desarrollo en America
Latina (Dependency and Development in Latin America) by Cardoso and

60 61
Dependency Theory in Transition Latin American Dependency School

Faletto did circulate during 1967. This work (published as a book in 1969) industrialization after the Second World War. As mentioned earlier, the ECLA
is now considered to be one of the classics of the dependency theory provided the necessary arguments, but in international banking circles the
(Cardoso and Faletto, 1969). policy of import substitution was considered to be inappropriate. However,
In contrast to the ECLA analyses, Cardoso and Faletto focused on the the rationale for carrying out this policy was, according to Cardoso, totally
sociopolitical aspects of dependency. 'Only a study of the conditions of the irrelevant since It was determined primarily by the nature of the class
decision making will enable us to explain why a change of economic con- alliances in the Latin American countries. When, for reasons mentioned above,
ditions will benefit some countries but not others.' In other words, they saw this policy had had its day and economic stagnation ensued, these alliances
economic development as an expression of various combinations of class .collapsed. as did the typical 'populist alliance' between the bourgeoisie and
interest that vary from one historical situation to another. The way in which -: organized labour - a fragile arrangement that served as the basis of Latin
a dependent economy was linked to the world market was crucial; the linkage American democracy. When that could no longer be maintained, military
as well as the local response might vary. Thus, the dependency situation dictatorships followed one after the other. Typical of them all was the fall
constituted an historically changing pattern, the complexity of which pre- of the Goulart regime in Brazil in 1964. Concomitant with a new political
cluded all general laws of development - particularly those claiming that situation were, of course, new economic strategies and development trends.
all countries go through certain predetermined stages of development. From this account it is quite obvious that Cardoso and Faletto represented
However, it is possible roughly to identify certain stages of development an approach which was mainly characterized by its orientation towards con-
in countries placed in similar historical circumstances, e.g. the Latin crete studies of dependency. Cardoso explicitly refrained from the formulation
American countries. After they gained independence (from Spain or Portugal), of a new theory, and rejected, on several occasions, after the dependency
political power was based on an alliance between the modern, commercial perspective's definite breakthrough, the idea that the dependency theory
agrarian sector and the old hacienda economy. The new commercial elite should be thought of as a theory independent of the Marxist theory of im-
dominated this alliance and the economic-political result was what in Latin perialism. Instead, Cardoso maintained that: 'The theory of imperialist
America is called desarrollo hacia afuera, an export-oriented development, capitalism, as is well known, has so far attained its most significant treat-
based on the production of raw materials. This phase principally lasted until ment in Lenin's works' (Cardoso, 1972, p 83).
the Great Depression in the 1930s, which, conventionally, is considered to However, if it was not for a relatively revisionistic attitude to basic tenets
be the starting point of a more differentiated and introverted type of econ- of Leninism, Cardoso would not have been considered a true dependency
omic development in Latin America, or desarrollo hacia adell/roo theorist:
From their sociopolitical perspective, Cardoso and Faletto claimed that
this type of development actually started much earlier (the time varied from In spite of the accuracy of Lenin's insights as measured against historical
country to country) because of the rise of a new middle class which was events during the first half of the century in many parts of the world,
gradually absorbed by the various national power structures; thus, the some important recent changes have deeply affected the pattern of
emphasis was on the power political base rather than on the external impetus, relationship between imperialist and dependent nations. These changes
which was the same for most of the Latin American countries. However, the demand a reappraisal of emergent structures and their main tendencies.
response changed from country to country, depending on the way in which Even if these modifications are not so deep as the shift that enabled
the class alliances were made up. Lenin to characterize a new stage of capitalism during the period of
The regime of Getulio Vargas in Brazil (1930) was, for instance, based on I; imperialist expansion, they are marked enough to warrant a major
a compromise between the oligarchy made up of sugar and coffee producers modification of the established analyses of capitalism and imperial-
and the new urban bourgeoisie. Vargas's policies provided an incentive, while ism. Nevertheless, contemporary in ternational capitalist expansion
the coffee economy at the same time was kept alive by heavy subsidies," and control of dependent economies undoubtedly prove that this new
Colombia presented a contrasting situation. The urban interests did not pattern of economic relationships among nations remains imperialist.
succeed in acquiring any power from the traditional oligarchy, so the positive However, the main points of Lenin's characterization of imperialism
response to the new economic opportunities consequently failed to appear. and capitalism are no longer fully adequate to describe and explain the
The so-called banana republics (the Central American mini-states) on the present forms of capital accumulation and external expansion.
other hand lacked the prerequisites for a more independent economic policy;
the effects of the Great Depression were therefore purely negative. The It is interesting to note that Cardoso considers Baran's and Sweezy's
peasants revolted in reaction to their deteriorating situation, and were put analyses of monopoly capitalism as a further refinement of the Marxist
down by military force. theory. In his opinion a similar refinement is required to tackle the con-
Some of the larger Latin American countries continued their line of "sequences of monopoly capitalism in the dependent economies. Here Baran

62 63
Dependency Theory in Transition Latin A m erican Dependency School

again provides important ideas (in his Political Economy of Growth), to This definition is also found in an article published in the American
which Cardoso, nevertheless. has some objections (Cardoso, 1977, p 23). Economic Review in 1970: 'The Structure of Dependence', which principally
The importan t thing, as far as Cardoso is concerned, is that he never sees sums up Dos Santos's views vis-a-vis the widening debate during the 1970s.
development and dependence as completely incompatible. We shall return to this subject in a later chapter.
'Development of underdevelopment' (in A.G. Frank) sums up another The Latin American societies could, in Dos Santos's opinion. only be
misconception. The fact is that the assumption of a structural 'lack of studied if allowances were made for the fact that they were an integral part
dynamics' in the dependent economies (caused by imperialism) is a mis of the world capitalist system. To analyse the problem of development from
representation of the true nature of the economic view of the situation. an historical point of view, he identified three' different fonns of dependence:
(I) colonial dependence; (2) financial-industrial dependence; and (3) tech-
'It is necessary to understand that in specific situations it is possible to expect
development and dependency' (Cardoso, 1972, p 94). We shall show later nological-industrial dependence. The first one was characterized by trade
that an 'extreme' dependency position considers development and under monopolies complemented by colonial monopolies of land. mines and labour
development to be two sides of the same coin, and sees dependence as the in the colonized countries. The second form of dependence occurred during
ultimate cause of underdevelopment. the latter part of the 19th Century. and was characterized by large conccn-
trations of capital in the centres, and by investments in the production of raw
Nee-Marxist Influences: Dos Santos and Marini materials and agricultural products in the periphery. The countries belonging
Another Brazilian. Theotonio Dos Santos. had also moved to Santiago de to the latter developed into export economies, the structure of which was
Chile after the military coup in Brazil. In 1966 he published the first results marked by their position of dependence. The third form of dependence came
of his research in Chile: Crisis Economica y Crisis Politica,' In El Nuevo into existence after the Second World War and was characterized by multi-
Caracter de la Dependencia, which was published the following year, Dos national corporations establishing industries that were linked to the
Santos introduced the term 'the New Dependence' in an attempt to explain dependent countries' domes: ic markets. Dos Santos's writings are primarily
the failure of the policy of import substitution." 'The New Dependence' was related to this third form which constitutes 'the New Dependence'.
characterized by the fact that North American investment in Latin America 'The New Dependence' was essentially an answer to the [CLA policy of
had increased as well as changed orientation. The emphasis was shifted away import substitution as well as an attempt to show the limitations of this
from raw materials to industry, from which the most advanced and dynamic kind of policy. The industrialization resulting from the policy of import
sectors. such as electronics, were selected (Dos Santos, 1978). substitution was doomed to stagnation after a short while because of the
According to Dos Santos, this seemed to indicate that a new international f restrictions placed on the expansion of the domestic market by dependence.
division of labour was about to be established, in which the periphery was' These restrictions were: the working class was heavily exploited, which
no longer made up of raw material exporting enclave economies. The modern limited its purchasing power. Secondly. the technology was capital intensive,
sector of the entire periphery was now incorporated in the imperialist system; which created relatively few jobs. Thirdly, the repatriation of profits led to
but the development remained partial and with no dynamics of its own an extremely limited domestic surplus. Dos San los came to the conclusion
because of the dependency relations. that the alleged backwardness of these economies was not caused by a lack
In an article from 196R (Dos Santos, 1968b [1973] ) Dos Santos not only of integration with capitalism, but rather that the most serious obstacles to
criticized the established development theories, but also offered the de- their overall development were due to the international system and its laws
pendency approach as an alternative. This article also contained the following, of development (Dos Santos, 1968b [1973]). The solutions proposed by
frequently-quoted definition of the concept of dependency: organiza tions such as the ECLA and UNCTAD were therefore insufficicn t.
The only alternatives were, according to Dos Santos. military regimes which
lly dependence we mean a situation in which the economy of certain opened the door to fascism (Braz il), or revolutionary regimes which laid the
countries is conditioned by the development and expansion of another foundation of socialism (Chile). This tendency towards a polarized view -
economy to which the former is subjected. The relation of interde- fascism or socialism - which was in no way peculiar to Des Santos. was
pendence between two or more economies, and between these and presumably a result of the fact that most of the dependency theorists came
world trade, assumes the form of dependence when some countries from either Brazil or Chile.
(the dominant ones) can expand and can he self-sustaining, while other According to Dos Santos, the concept of 'dependence' could not be
countries (the dependent ones) can do this only as a reflection of that formulated outside the boundaries of the theory of imperialism, but should
expansion, which can have either a positive or a negative effect on be seen as a complement to the term imperialism. since 'dependency is the
their immediate development. internal face of imperialism in our Latin American countries' (Dos Santos,
1977a). A dependency theory was therefore needed as a complement to the

b4 65
Dependency Theory in Transition Latin A III erican Dependency Schoo!

theory of imperialism. The latter should analyse the factors behind the . for his critique of the established development theory, which we have
internationalization of capitalism, while the former should show the effects discussed in the previous chapter; at the same time he served as a link
of this process in the relevant countries. between the Latin American debate and the English-speaking academic world
Dos Santos later abandoned the above-mentioned definition of dependence by publishing most of his works in English. At this point it should be men-
and attached greater importance to the internal structures. He ernphasized ]" tioned that outside Latin America the dependency school has been more or
the fact that the internal factors, determined (determina) social changes. less identified with Frank.
However, dependence created the prerequisites for the development of in· Frank was one of the first in Latin America to work with an alternative
ternal structures, and the relation between the external and the internal theory of the Latin American economic development. The earliest results
factors was considered as dialectic (Dos Santos, 1977a, 1977b and 1978). from this attempt were presented in a book entitled Capitalism and Under-
Another well-known dependency theorist, Ruy Mauro Marini, was also development in Latin America, pu blished in 1967. In this book, which was
a member of the group of Brazilians working in Chile. He was primarily an analysis of the economic history of Brazil and Chile, he came to the con-
engaged in the formulation of a model that could explain how capitalism, at clusion that 'development and underdevelopment are two sides of the same
a global level, could simultaneously generate development in one part of the coin'. Thus, according to Frank, it was the incorporation into the world
world and underdevelopment in another. Marini made a strong distinction capitalist system that led to development in some areas and underdevelop-
between 'dependent' or 'peripheral capitalism' and the form of capitalism ment in others.
found in the centres. The development of the former was conditioned by that Following Baran, Frank stressed that it was the utilization of the economic
of the latter. This form of dependence led to a transfer of surplus from the surplus that had caused development and underdevelopment. Frank's analysis
peripheral countries to the centre. (See Marini 1969a and b; 1972a and b.l accentuated the monopolistic structure of capitalism and its effects on the
The peripheral economies were according to Marini dominated by foreign real and the potential surplus. The world capitalist system was characterized
capital, the production of which was primarily intended for export. This by a metropolis-satellite structure, where the metropolis exploited the
implied that, in these countries, the firms' realization of profits was basically satellite. While this had facilitated the expropriation of large portions of the
. independent of the domestic demand (primarily determined by the workers' underdeveloped countries' actual surplus, it had also prevented these
wages). Thus, the workers' role was limited to that of producing as cheaply countries from realizing their potential surplus. The monopoly structure was
as possible, which, in turn, meant that their wages could be pressed down. found at all levels, i.e. the international, the national and the local level, and
However, the firms must be able to realize their profits somewhere - and created a situation of exploitation which, in turn, caused the 'chain-like'
this was done in the centre, where wages had been able to rise more than they flow of the surplus from the remotest Latin American village to Wall Street
would have done without the relations with the periphery. According to in New York.
Marini, both workers and capital owners in the centre had a common interest
in maintaining their contacts with the periphery in a way that enabled them The monopoly capitalist structure and the surplus expropriation/
to continue 'exploiting' the economic surplus. 9 appropriation contradiction run through the entire Chilean economy,
Marini introduced the concept of superexploitation in order to explain past and present. Indeed, it is this exploita tive relation which in chain-
the process of exploitation in the periphery which was made possible by the like fashion extends the capitalist link between the capitalist world and
fact that domestic demand was of little importance to the firms' realization national metropolises to the regional centers (part of whose surplus
of their profits. The low wages led to the eventual stagnation of the small they appropriate), and from these to local centers, and so on to large
domestic market, with an economic crisis as the inevitable result. landowners or merchants who expropriate surplus from small peasants
When Marini analysed the development in Brazil by means of this model or tenants, and sometimes even from these latter to landless laborers
(see e.g. Marini, I 972a), he developed another concept which became central exploited by them in turn. At each step along the way, the relatively
to the dependency school - namely that of subimperialism. Marini used this few capitalists above exercise monopoly power over the many below,
term in an attempt to translate Lenin's definition of imperialism to a 'depen expropriating some or all of their economic surplus and, to the extent
dent capitalism'. Thus, subimperialism was supposed to be 'the highest stage that they are not expropriated in turn by the still fewer above them,
of dependent capitalism'i '" appropriating it for their own use. Thus at each point, the international,
national and local capitalist system generates economic development
The Crystallized Theory of Dependence: Frank for the few and underdevelopment for the many.
Andre Gunder Frank joined the circle of Latin American dependentistas during (Ibid., pp 7-8)
the mid·1960s, and he soon became one of the driving forces behind the early
development of the dependency school. He became internationally known The satellite tended to be increasingly dominated by the metropolis as

66 67
Dependcncv Theory ill Transition
Latin A m erican De pc ndcncy School

well as increasingly dependent upon it. The strength of this dependency Figure 3.2
relation might, however, vary from time to time. A weakening might occur Frank's Metropolis-Satellitc Model
when the metropolis experiences crises, such as depressions or wars. Some
development had also begun in the satellites during such periods, which was
why Frank asserted that the weaker of the metropolis-satellite relations, the
better the development prospects of the satellites. M = The world metropolis
There was another important contradiction of capitalism, according to m = metropolis
Frank - the contradiction of continuity in change. Here he argued that the 5 = satellite
basic structure of capitalism had remained unchanged since the 16th Century,
despite all changes. The 'development of underdevelopment' that had taken
place in the periphery had continuously accentuated the fundamental contra-
diction. This was why development strategies such as those formulated by
the ECLA were totally meaningless.
Frank's theory may be summarized as in Figure 3.2. The metropolis-
satellite relations, which arc found at alllcvcls of world capitalism, are shown
by the lines drawn between the circles. A split circle shows that an agent may
act as both a metropolis and a satellite. depending on thc perspective from
which you look at the circle. The process of exploitation starts at the bottom
of thc figure. where thc landless labourers (satellites) are exploited by the
small landowners. In this relation the small landowners act as 'agents' of the
metropolis, and can thus appropriate part of the surplus. However, they
cannot keep all of it. Some of it 'flows' up through the system, since the
small landowners are exploited by the large landowners and traders, and
in this relation assume the role of satellites. New metropoles are found at
higher levels in the hierarchy: they, in turn, exploit the large landowners and
the traders. who now become satellites. Thus the economic surplus flows
upward in thc system in a chain-like fashion until it eventually reaches the
world metropolis (M).
In other words. a comprehensive view of world capitalism and the fact
that the world capitalist system embraces the entire economy of each 5 5 5 5 5 5
member country were, according to Frank, important prerequisites. He paradigmatic form, if by the latter we mean that the theory could now be
thereby also rejected the notion of 'dualism', an economy consisting of two expressed in a small number of theses that were contrary to established ideas
separate. unconnected sectors - one modern and one traditional. He even while at the same time they seemed to be in better agreement with the reality
went so far as to deny that feudal production relations have ever prevailed of the Third World than was the prevailing orthodoxy in development theory.
in Latin America during its colonial history. Instead, 'rc assumed that an
all-embracing. integrated world capitalist system existed even during the
mercantilist phase of capitalism. This was explained by the fact that the The Essence of the Dependency Perspective
primary purpose of the economy founded in Latin America by the newly-
arrived Spaniards and Portuguese was to produce goods for export - which, There is a great deal of confusion about what the dependency school!'
in Frank's opinion, did not constitute a feudal economy. actually represented and about what it really said about 'the concrete effects
The implications of this view are important for the political strategy. of dependence, the relative importance of external and internal factors, etc.
Since there were no feudal, semi-feudal, or other pre-capitalist modes of Consequently, the critique of the dependency school, to which we shall
production present in Latin America, there was no reason for organizations return in the next chapter, has often been sweeping and unfair. It is quite
of the left to support a 'bourgeois democratic revolution'. All efforts should natural for the object of the critique to react by not recognizing himself and
instead be directed towards a 'socialist revolution', by considering it to be a caricature, The following, discontented observation
It may be argued that Frank's writings gave 'the dependency theory' a by Cardoso is one example of this kind of reaction:

Dependency Theory ill Transition Latin A m erican Dependency School

The most general and formal of Gunder Frank's works are received as theoretical ambitions of their own, but who often consider their work to be
though they were his best, the formal definition of dependency a complement to the Marxist theory of imperialism.!" It is obvious that the
furnished by Theotonio dos Santos is appended, the problematic of classification has a polemic purpose, i.e. to reject the dependency school as
subimperialism, and marginality is sometimes inserted, one or another an independent theoretical tradition, and to facilitate the fusion of certain
of my works or of Sunkel is footnoted, and the result is a theory of branches of the school and Marxism.
dependency - a strawrnan easy to destroy. Although all these approaches are relevant in their own ways, a compar-
(Cardoso, 1976, p 13) ison between them shows that different criteria of classification may lead
to quite different conclusions about the role of dependency theory. It is
Cardoso's reaction is understandable. The theoretical positions taken up therefore necessary to construct a multidimensional scheme in which the
by the representatives of the dependency school are far from being as homo- various criteria are made explicit. We shall use six dimensions which enable
geneous and unequivocal as the critique might lead one to believe.P However, us to sum up the various views of dependency theorists in a more nuanced
after a relatively thorough examination of the majority of the school's way.
theoretical contributions, it is not difficult to understand the critics either.
Since the various advocates of the school group themselves differently, Holism v. Particularism
depending on the issue, it is almost impossible to provide a systematic Along this dimension we locate authors who produce global models, the
account of its theoretical positions. dynamics of which are determined by the system in its entirety, rather than
Most of the suggested classifications have one common flaw: one-dimen- by processes in the various parts of the system; others const rue an overall
sionality. let us use Richard Bath's and Dilmus James's ambitious and perspective from the constituent parts.
generally sympathetic survey as an example: their classification of dependen- In his critique of the modernization perspective (see Chapter 2) A.G.
tistas is primarily based on the importance placed on external and internal Frank used the concept of holism as a scientific criterion by means of which
factors. They distinguish between the following three groups: the 'conser- he rejected the 'bourgeois' theory of development. Frank stressed that under-
vatives' (inner reform is meaningful); the 'moderates' (external dependence development in a particular country can only be understood when it is seen
limits the efficacy of economic-political measures); and the 'radicals' as an effect of that country's position and function in the larger system (of
(external dependence must be broken) (Bath and James, 1976). It is true that which it is an integral part). This holistic ambition eventually leads to an
the authors use other criteria in their discussion, but they are not used as a analysis of the global accumulation of capital of the type carried out by
basis for the classifica tion, and appear in a more ad hoc fashion. Frank and Sam ir Am in (see Chapter 7). Sunkel's model of transnational
Other classification attempts are similarly one-dimensional. Sanjaya Lall capitalism is characterized by a similar holistic ambition. Here we also find a
has, for instance, written an important critique of the dependency school dynamic which determines the way in which the whole system works. We
(see Chapter 4): he uses the various assessments of the possibility of capitalist might call it structural dualism at the global level.
development as a criterion, and distinguishes between the following: (1) those Other dependency theorists have narrowed down their analysis to the
who believe that dependence always leads to poverty; (2) those who believe dependent societies, and refrained from global approaches. We are referring
that growth is limited by market restrictions, and that it therefore, sooner to Dos Santos and Marini, who both tried to develop a special theory about
or later, turns into stagnation; and finally (3) those who believe that growth . peripheral capitalism, and to Cardoso and Faletto, who saw the dependency
is possible, but always subordinate to that of the centre (Lall, 1975). approach as a method of a concrete analysis of the periphery. We shall later
A third attempt at classification, that of Gabriel Palma, distinguishes argue in favour of regarding the 'world system theorists' as a breakaway
between (I) dependence as a theory of Latin American underdevelopment, group of the dependency school and the establishment of a distinct theoretical
(2) dependence as an elaboration and a reformulation of the ECLA analyses tradition. In summary, we might therefore say that an attraction towards
of Latin American development problems, and (3) dependence as a method holism, i.e. an accen tuation of the whole, was characteristic of the dependency
of analysing concrete cases of underdevelopment in the Third World (Pahna,' school even though its analysis primarily concerned the periphery,
1978). Palma makes the interesting observation that the view of the first
category is similar to that of the so-called Narodniks during the latter part External v. Internal
of the 19th Century, i.e. that capitalist development in Russia was impossible Here it is a question of what really governs development in a peripheral
because of various structural constraints (see Chapter 1).13 He then com- economy; external or internal factors. External factors lie outside the domain
pares Lenin's critique of the Narodniks' view with the Marxist critique of the of the national economy; internal ones refer to domestic causal relations.
dependency school (with which he sympathizes). Palma is therefore more It is a popular misconception that the dependency school explained under-
positively inclined towards the scholars in the third category, who have no development by the external factor only, i.e. the imperialist-capitalist

70 71
Dependency Theory ill Transition Latin A mcrican Dependency School

penetration. Theoretically figuring out how external and internal conditions the dependency school. It was thus characteristic of the latter to place a
interact has, in fact. been one of the school's main problems, to which a greater or lesser amount of importance on the external factors,
number of more or less elegant solutions have been found. The notion of
external conditions mechanically determining internal ones is tied to Frank's Economic v. Sociopolitical Analysis
earlier writings. above all to the controversial metropolis-satellite model in Certain authors of the dependency school work exclusively with economic
which dependency traces a path from Wall Street to the remotest Indian analysis, whereas others emphasize social and political conditions. Normally,
villages. The concept of 'satellite' suggests a total lack of own dynamics. It this difference can be explained by the author's disciplinary origin. The
is significant that the use of this concept has been limited, and that the more difference is nevertheless important to the result of the analysis,
neutral conceptual pair centre-periphery has been used instead. IS The early dependency analyses were mostly carried out by economists,
Although Frank occasionally warned against a mechanical-cxternalisuc while the contributions from other branches of the, social sciences were
interpretation of the model, that trap is difficult to avoid because of the relatively few. This explains the strong economic orientation which was
structure of the model. However, it should be remembered that during the particularly pronounced in the earlier ECLA studies. Prebisch , for example,
mid·I960s the dependency approach had a sharp polemic sting directed at never really abandoned the purely economic analysis, Sunkel wanted to,
the then prevailing evolutionist theory of development which disregarded but never managed it. In this context, Furtado is interesting, From having
international relations and claimed that the development of the national been a 'conventional' ECLA economist, he gradually began to emphasize
economy was basically internally determined. The polemic exaggerations sociopolitical aspects,
were soon abandoned: in Dos Santos's writings we find a tendency towards Frank's and Dos Santos's formulations of the problems of dependence
seeing the interaction between external and internal factors, although the are based on the interaction between different economies; they dutifully
former arc dominant. In a controversy with Frank, Dos Santos says about include some references to class structure and political conditions, In true
underdevelopment that it 'rather than being one of satellization is a case of nee-Marxist spirit they analyse development and underdevelopment as a
the formation of a certain type of internal structure conditioned by inter- consequence of the flow of the economic surplus in the metropolis-satellite
national relations of dependence' (Dos Santos, 1968b [1973], P 76), In a model. Their view of political alternatives is rather simplified: socialism or
later article (Dos Santos, I 977b), he goes one step further, and provides a fascism. This is partly, in turn, due to the fact that the dependency theorists
distinction between 'conditioning' (external factors) and 'determining' (in- are mostly Brazilians or Chileans, and partly because Brazil and Chile syrn-
ternal factors). This distinction may not be particularly informative, but it bolized the alternatives of socialism and fascism during a strategic period in
does suggest that the emphasis has been shifted from the external to the the history of the dependency school.
in ternal factors. The dependentistas are often accused of neglecting class analysis, which
Sunkcl also tries to steer clear of Scylla and Charybdis, and sees a dia- might not only be due to their thinking in terms of models, but also to a
lectic relation between the external and the internal. However, as in the case certain bias towards economics. The use of concepts such as 'class', 'class
of Dos Santos's distinction, it is doubtful whether the concept of 'dialectics' consciousness' and 'class struggle' (which is quite common) does not con-
leads us one step closer to a distinct idea of the relationship between the stitute an analysis of the political dynamics of a dependent structure.
external and the internal. Although Cardoso and Falcito do emphasize both social structure and
Cardoso is obviously more inclined to emphasize internal factors, In his political conditions, their approach is limited by the fact that their interest
and Falctt os analysis the response to the external impulse varied because the is mainly in the government and the political process of decision-making,
class alliances varied from country to country, Furtado's point of view is and not so much in the great mass of Latin Americans who are the real
quite similar. He accentuates the rigid colonial structures in his explanation victims of underdevelopment. Cardoso later acknowledged this flaw:
of Brazil's failure to achieve a self-generating growth.
August in Cueva offers the most 'intcr nalistic' view: To me wha t is importan t is to try to understand and encourage social
forces to counterbalance the power of private enterprise and the
dependency theory holds that the nature of our social formations is polit ical presence of the armies in cou ntries where the armies are
dependent on how they arc integrated with the world capitalist system. politically important. I am thinking of popular movements and grass-
But is it not more correct to state the inverse? Is it not the nature of roots kinds of reaction. What kind of party or movement can mobilize
our societies that determines its links with the capitalist world? people in this kind of society? The problem of development in our
(Cueva, 1974 [1976]) Jays cannot remain restricted to a discussion about import substi-
tution, not even to a debate on different strategies for growth. in terms
This statement places Cueva firmly in the Marxist camp rather than in of export or non-export policies, internal or external markets, orien-

Dependency Theory in Transition Latin A merican Dependency School

tation of the economy, etc. The main issue is people's movements and development'), while the opposite view is held by those who are close to
consciousness of their own interests. classical Marxism.
(Hettne and Wallensteen, 1978, p 32) It should be pointed out that by development in this context we mean
capitalist development. The question then is: is capitalism possible in the
In other words, Cardoso uses a broad, interdisciplinary approach, an periphery? To Marx and Engels this was a matter of course - almost
historical-structural analysis (as he calls it) which considers both structural equivalent to a natural law - a position from which a Marxist can only stray
determination and historical change. Even if underdevelopment is determined with some difficulty: Cardoso claims that capitalist development in the
by a given structure, the process is, in his opinion, not mechanical but periphery is possible, but limited to what he calls 'dependent capitalist
dialectic, containing dynamics, changes and alternatives. development' or 'associated dependent development'. We have already
mentioned that Cardoso's 'historical structuralism' implied a dialectic view of
Sectoral/Regional Contradictions v. Class Contradictions development as a process containing changes and alternatives.
While some authors accentuate the fact that a regional or sectoral polarization Somewhere in the middle of this spectrum we find authors like Sunkel
occurs in the total system, both at the international and at the national level, and Dos Santos. The latter rejects Frank's theory of 'development of under-
others base their analysis on the fact that the fundamental conflict is found development' and claims that it is necessary to realize that development and
in class contradictions. In other words, these authors seek the dynamics in dependence might, in certain situations, be expected, We might call Sunkel's
the class struggle. approach 'pessimistic' in the sense that he sees underdevelopment as a long,
Marxists often criticize the dependency school for its lack of class analysis. inevitable process that threatens large parts of the periphery with margin-
The contradictions in Frank's metropole-satellite model were primarily alization and stagnation. However, it should be pointed out that it is certain
regional. Despite several attempts at modification (e.g. Frank, 1972), the structural segments of the countries of the periphery that are being under-
impression of regions opposing each other in some kind of exploitative developed, not the countries per se. As opposed to the centre, these peri-
relationship remains. In Frank's opinion, the Latin American bourgeoisie pheral segments are of such a magnitude that they affect the entire 'national
is incapable of starting a process of accumulation and unconscious of its economies'.
own needs and interests. This 'class analysis' is, furthermore, restricted to the
bourgeoisie (the lumpenbourgeoisie ) which, from a Marxist point of view Voluntarism v. Determinism
disqualifies it, since 'class' must be thought of as a concept that implies The various representatives of the dependency school have all taken great
relations. We shall deal with the Marxist critique in greater detail later. care to keep their analyses politically relevant, and the majority of them are
Marini's analysis also rests on regional contradictions. He claims that all advocates of a rather loosely defined socialist revolution. The popularity
capitalists and workers jointly exploit the periphery. Looking at Sunkel's of the dependency school can partly be explained by the growing impatience
approach, we find that he emphasizes the sectoral contradictions between with the defeatism of the Latin American communist parties. As already
the transnational sector and the underdeveloped economy. This contra- mentioned, the official Marxist analysis stated that the Latin American
diction is dominant, with an inhibitive effect on class consciousness and countries must develop from feudalism to capitalism. Consequently the
class struggle. communist parties' strategy consisted in supporting progressive bourgeois
Cardoso does try to carry out a class analysis, but in a rather complicated parties striving for a national, industrial-capitalist development and in fight-
and diffuse fashion, which seems to annoy those who are used to the primary ing the alliances between feudal and imperialist forces.
contradiction between labour and capital. Cardoso claims that the class The nee-Marxist views which claimed that Latin America was already
structure which developed in Western Europe is basically different from that capitalist, but doomed to underdevelopment, provided an entirely different
which developed in Brazil, and that a priori it is impossible to say which basis for a political strategy. 'Revolution Now!' was the typical attitude, and
is 'progressive' and which is 'reactionary'. The components of his analysis the Cuban Revolution had led the way. The early dependency school,
are not the 'classes', but the structural relationships between various social primarily Frank, is thus associated with a 'voluntarist' line which was sharply
groups. contrasted with the communist parties' determinism. Other dep enden tistas,
like Cardoso, are found somewhere between the extremes. Cardoso accuses
Underdevelopment v. Development the Latin American Marxists of 'determinism', and Debray and Guevara of
'Dependency theory' is often used synonymously with 'theory of under- voluntarism. However, this differentiated view elicits a political ambiguity
development', and to certain representatives of the dependency school, which is annoying to some (Myer, 1975). Further down the deterministic
development is totally incompatible with any kind of dependence. Here again line we find Sunkel, whose markedly structuralist approach rarely reaches the
we find Frank representing the most extreme view ('development of under- actual social groups and their political situation. Politically, he has advocated

74 75
Dependency Theory in Transition Latin A m erican Dependency School

a reformism which is close to social democracy. modern world are located in different countries. With time the discussion
From this discussion it should be possible to construct an ideal-typical becomes more complex, it is enriched and provokes internal contro-
dependency position which, whatever relevance it might have in reality, does versies' (Cardoso, 1976). The concept of d epe ndencia, in the sense which
express a certain internal consistency. For example a typical dependency it later had among dependency theorists, was introduced in a paper
published by Cardoso in 1965: EI Proceso de Desarollo en America
position in terms of methodology would stress holism, external factors,
Latina: Hipo te sis para una Interpretacion So ciologica (Cardoso, 1965).
sociopolitical analysis, regional contradictions, polarization between develop- 6. This was a case of 'inadvertent Keynesianism', as we have pointed out
ment and underdevelopment and the role of subjective factors in history. earlier. The purchasing power was kept up by 'running the locomotives
Generally, we might say that those who are consistently identified with the on coffee' during the Great Depression, leaving Brazil relatively streng-
left antipole of the scheme assume a typical dependency position. Such a thened.
position can be summarized in the following: 7. This was later published as: So cialism o 0 Fascism o: Dilema de America
Latina (PLA, Santiago, 1968).
- The most important obstacles to development were not lack of capital 8. Both of these books were later issued in one volume, entitled So cialismo
or entrepreneurial skills, but were to be found in the international division o Fascismo: El Nuevo Caracter de fa Dcpendencia y 1'1 Dilcma Latin-
of labour. In short, they were external to the underdeveloped economy - americana (Chile, 1971). Revised edition, Consejo Editorial, Mexico,
not internal.
9. The model of 'peripheral capitalism' with which Marini was working is
-- The international division of labour was analysed in terms of relations largely based on Rosa Luxemburg's book The Accumulation of Capital
between regions of which two kinds - centre and periphery - assumed par- (Luxemburg, 1913). Since the model has been further developed and
ticular importance. since a transfer of surplus took place from the latter to made more sophisticated by Sarnir Am in, we have chosen to provide a
the former regions. more detailed examina tion of this type of dependency theoretical work
- Due to the fact that the periphery was deprived of its surplus, which the in connection with our discussion of him in Chapter 7. This is why we
centre could utilize instead for development purposes, development in the have dealt so perfunctorily with Marini at this point.
centre somehow implied underdevelopment in the periphery. Thus develop- 10. This is how we interpret Marini when he says: 'Subimperialism - the
ment and underdevelopment could be described as two aspects of a single form which dependent capitalism assumes upon reaching the stage of
monopolies and finance capital' (Marini, 1972a, pi 5).
global process. All regions participating in this process were consequently
II. In other words, the object of our analysis is the dependency school,
considered as capitalist, although a distinction was made between central
a conoept that appears together with the dependency theory and the
and peripheral capitalism. dependency paradigm. We shall use 'dependency school' because it
- Since the periphery was doomed to underdevelopment because of its appears to be the most neutral term. The concept of 'theory' is unsuit-
linkage to the centre, it was considered necessary for a country to disassociate able, since a number of different dependency theorists have received
itself from the world market and strive for self-reliance. To make this possible their theoretical impulses from different sources. When the dependency
a more or less revolutionary political transformation was necessary. As soon school was at its peak during the late 1960s and the early 1970s a
as the external obstacles had been removed, development as a more or less number of authors wanted to develop a distinct theory, but this idea
automatic and inherent process was taken for granted. has now been ahandoned. As far as the paradigm concept is concerned,
we might say that the dependency perspective was born during a para-
digm crisis - the dependency school's first task was to tear up the
prevailing ideas about development and underdevelopment - but there
are different opinions about the dependency school having replaced the
Notes old paradigm with a new. An analysis of the dependency school's para-
digmatic breakthrough may be found in Foster-Carter (1976) and Rox-
1. The discussion of Furtado is partly based on Brookfield (1975) Chap. 5. borough (1976). To avoid a controversy about the terminology, we shall
2. A more extensive explanation of this reasoning is found in our discussion use 'school' by which we mean a group of authors who are united by a
of Sa mir Arnin's model of global accumulation of capital. Amiri's analysis common perspective, but who may not necessarily agree on all details.
of 'pure' capitalism is reminiscent of that of Furtado. See also Ruy 12. Leys (1977) is an example of a highly generalized, and therefore often
Mauro Marini. below. unfair, critique.
3. This lecture was later published as National Deve lo p ment Policy and 13. A detailed analysis may be found in Walicki (1969).
Ex t ernal Dcpe ndence in Latin America (Sunkel, 1969). 14. When he wrote this article, Palma was directly influenced by Cardoso
4. The best introduction to the writings of Cardoso is found in Kahl (1976). who was in England at that time (interview with Palma in London,
5. Apropos this, Cardoso says: 'Every new paradigm precedes from a com- May 1980).
plex discussion among persons, institutions and groups, which in the

Dependency Theory in Transition

15. Wallerstein, who most consistently has continued along Frank's line of
thought, uses the concepts of "core'<'periphery', and the term 'external
arena' to describe the areas which have not as yet been incorporated
4. Criticism and
into the global capitalist system (see Chapter 8).

The enthusiasm about the new ideas of the 1960s subsided gradually during
the early 1970s. The dependency school was now criticized by those who had
previously supported it. At the beginning, the critique was directed at isolated
errors and misunderstandings in the dependency analysis. As a general
approach, dependency had been accepted, and was left alone - for the time
The ensuing debate was a more or less internal dispute between various
Marxists. This controversy turned out to be of great importance to the future
of the dependency school. It might, however, be interesting to see how neo-
classical economists viewed the dependency school before we examine the
Marxist critique. We conclude this chapter with a summary of the Latin
American contributions to this debate.

The Neo-elassical Reaction

It would be misleading to speak of a real debate between conventional econ-

omists and the dependency school. It was more of a long poignant pause.
Foster-Carter has provided a striking description of this by referring to the
way in which Andre Gunder Frank's writings were received by the advocates
of the modernization paradigm l Foster-Carter, 1976). Frank's works were
reviewed in only a few of the well-known journals, and all of them took a
more or less unappreciative attitude. Alec Nove, for example, intimated that
he would hardly have passed a student who had produced a paper similar in
quality to that of Frank (Nove, 1974).
This lack of communication and sympathy can only be explained by the
fact that, as already mentioned, it was a matter of two completely different
paradigms. The neo-classical economists did not consider the dependency
school's analyses to be 'scientific'. They claimed - often correctly - that the
dependency theorists had little knowledge of neo-classical economic theory.
It can of course hardly be denied that their knowledge in this particular area
was often far from perfect. Some of the major dependency works opened
with a critical summary of neo-classical theory to which no self-respecting
neo-classical economist would put his name (see, e.g. Amin, 1970).

78 79