DEPENDENCE AND DEVELOPING COUNTRIES DEVELOPMENT : A CRITICAL SURVEY

 

To analyses the economies of developing countries, we need to study economic development in historical perspective. The story of growth is important as it helps determine whether socie­ties can meet basic needs of food, clothing, housing, health and literacy, and widen human choice to enable people to control their environment, enjoy greater leisure, acquire learning and use more resources for aesthetics and humanistic endeavors.

Capitalism rose in the West from the 15th to 18th centuries with the decline of feudalism, the breakdown of church, authority, strong nation-states supporting free trade, a liberal ideol­ogy tailor-made for the bourgeois, a price (market) revolution that speeded capital accumula­tion, advances in science and technology, and a spirit of rationalism. In the last 150 years, sustained economic growth occurred primarily in the capitalist West and Japan. But the devel­opment of underdeveloped countries was held in check by colonisation.

It started as a form of economic exploitation and has distorted the economic structure of the Third World countries from the very beginning. The underdeveloped countries were forced to become suppliers of raw materials to industrial countries. This unhealthy development effectively blocked indus­trial development in the primary producing countries.

The foreign domination of these coun­tries has limited the growth of the domestic market and the establishment of basic national industries for widespread development throughout the whole economy.

Thus the gap between developed and developing countries of Asia and Africa and Latin America has increased greatly over the years. A study of economic history reveals the following basic differences in the historical processes of development between developed and developing countries.

INTRODUCTION :

In the light of Trade Liberaliszation and Privatization packages under the auspices of World Bank and International Monetary Fund (IMF) and of the previous experiences of developing countries as to undergo matured theories regarding development and under-development in developing economies, the relevant areas to be probed for a critical analysis is the theory of dependency and development of under-development. 

INCOMES CLASSIFICATION OF ECONOMIES AND EMERGENCE OF DEVELOPMENT THEORIES AND PARADIGMS :

On the average, China, India and the people of Africa have lower incomes than the people of Latin America, while the Latin Americans have incomes lower level than the people of East Europe relatively to Western Europe, New Zealand, Australia, North America and Japan. The ranges of individual country incomes overlap, average incomes of individual countries give a snapshot impression of the geographical distribution of incomes in the world. Within each country, family incomes differ greatly. The incomes of the lower incomes group in developing country are shared by the peasants cultivating by peasant farmers will be the largest sector. In a developed economy the income generating sector is large scale manufacturing (larger share in G.D.P) while services will be the largest employment generating sector.

How does the economy move from a primitive technology of agriculture to modern technology based agriculture and services for enormously increased incomes ? Is the basic problem of economic development of the developing world. Development theory has undergone a sea-change during last five decades. The change is by no means total, nor is there universal agreement on what it takes for a country to develop, but the early faith in the ability of the state to direct development seems to be given way to a greater reliance on markets. Inward oriented strategies are more and more replaced by outward oriented strategies. In the recent past, many developing economies implemented market oriented reforms. With these changes has come a growing recognition that development is amulti-dimentional process, within which, price reforms, investment and institutional building are complementary. It is also true with India too, welcoming foreign direct investment and opening economy via liberalization and privatization as part of globalizing the economy. The nature extent and efficacy of the state's role and involvement in planned economies failed and now they are (Erstwhile USSR and other East European economies are centrally planned economies) in transformation towards market economies. We also have another set of economies from third world i.e., economies from Africa, i.e, Zimbabwe and Kenya in 1980's adopted the pro-market policies devised by the World Bank and IMF. Especially in Zimbabwe these radical reforms could not sustain as well in Ethiopia the same experience took place.

 DEPENDENCY - A SCHOOL OF THOUGHT :

Dependency:

During the 1960s, a number of writers went beyond the formulation of disequalising forces as examined by Prebisch, Singer, Myrdal, to a more vigorous interpretation of external depend­ency. Most prominent were the dependencies in Latin America and the New World Group in the Caribbean. Not “development economies” but “dependency economies” became their con­cern. They argued that conditions of dependency in world markets of commodities, capital, and labour power are unequal and combine to transfer resources from dependent countries to domi­nant countries in the international system.

1. Marx and Baran Theses:

In an earlier period, Lenin, and Marx warned about the orthodox liberal ideology which contradicted Ricardo’s mutual gains from trade as a result of free trade. And, from a Marxsist perspective, Stanford Probessor Paul Baran had written: “what is decisive is that economic development in underdeveloped countries is profoundly inimical to the dominant interests in the advanced capitalist countries. The backward world has always represented the indispensable hinterland of the highly developed capitalist West”.

2. The New School of Dependency:

The new school of dependency differs from the disequalising forces approach and the Marxian view. Being heavily represented by sociologists and political factors neglected by economists, dependency theorists argued that the developing countries are nothing but the periphery after trade opens up.After industrialisation the develop­ing country remains a periphery. Because the rich nations have monopoly power in R and D and are the home of multinational corporations (mines). The quality of technology used in production differs in a developing country from a highly capitalist developed one.

3. Trank’s Thesis:

As a Marxist analyst of Latin American affairs, Andre Gunder Trank states: “It is capitalism, world and national, which produced under development in the past and still generates underdevelopment in the present.” Underdevelopment, according to Trank, is not simply non-development but a unique type of socioeconomic structure that results from the dependency of the underdevelopment country on advanced capitalist coun­tries. This results from foreign capital removing a surplus from the dependent economy to the advanced country by structuring the underdeveloped economy in an “external orientation.”

4. Unequal Exchange:

Centre-periphery trade is also characterised by “unequal exchange”. This refers to deterioration in the peripheral country’s terms of trade. It may also refer to un­equal bargaining power in investment, transfer of technology, taxation, and relations with mul­tinational corporations. Let us take into consideration the relationship between MNCs and the host country. MNCs siphon off surplus from this country, use inappropriate capital intensive technology, alter con­sumers’ tastes and preferences and even reduce the ability of the government to control the economy.

5. Samir Amin’s Thesis:

A more Marxist analysis of unequal exchange has been presented by Samir Amin, an Egyptian economist who has specialised on African economics. Amin also analyses world capitalism in terms of two categories – centre and periphery. The economy of the periphery is distorted by outward effects. Hence they are affected adversely by rich, capital­ist, developed countries.By “unequal exchange” Amin means “the exchange of products whose production in­volves wage differentials greater than those of productivity”. He assumes that the tech­niques of production used in those sectors of the periphery dominated by international capital are similar to those used at the centre.

But since wage rates are much lower in the periphery than at the centre, unequal exchange results. Thus, “unequal exchange means that the prob­lem of the class struggle must necessarily be considered on the world scale”.

The problem of development and conditions of development forever is a passionate subject for the development economists. At the first out set, the problem of development and under-development in Latin America, within the perspective of dependence on foreign sector/factors appeared very interestiangly in the first half of 1960s. The formal beginning of the dependency school (D'School) is usually traced to A.G. Frank's article of 1966 illustrating the essentials of the new approach. A few years later his book appeared under the title "Capitalism and under-development in Latin America." It was viewed initially as the finest and comprehensive exposition of the underemployment. On the other hand, Frank himself was considered as the originator of the D'School. One can classify the D'School into Frankian and Post-Frankian periods. In fact the initial stream of most radical dependency studies was mainly authored by Carribean and Latin American economists such as F.H.Cordoso, T.Dos Santos, A.Quijano, R.M.Marini, O.Sunkel, C.Thopmas, J.Nun, V.Bambirra and others. In the 1970s the research methods of the D'School were taken up by scholars from other continents and of other nationalities Africans: S.Amin, G.Amin, A.Emmanuel: Asians : Sen.R., S.B.De Silva, S.Lal as well as European the British and French in A.G.Frank, the Development of under development particular whose contribution to the development of the D'School centered around numerous critical articles. Tracing the dependent nature of development of Third World is difficult but one can locate the contributors. New works based on theoretical and methodological achievements of the D'School have been incorporated into many conceptions of development of the third world capitalist economy. They indeed inspired the new ways in the evolution of economic thought. They encouraged as well political action on the international level, forming the theoretical basis for the concept of the New Economic Order. Nevertheless, their work has contributed to our understanding of the third world dependence and development.  

THE VIEW  OF DEPENDENCY :

1. Peripheral Capitalism:

According to Celso Furtado, since the 18th century, global changes in demand resulted in a new international division of labour in which the peripheral countries of Asia, Africa and Latin America specialised in the production and export of primary products in an enclave controlled by foreigners while, at the same time, importing consumer goods that were the result of techno­logical progress in the central countries of the West.

The increased productivity and new con­sumption patterns in peripheral countries benefited a small ruling class and its allies, who cooperated with the developed countries to achieve modernisation (economic development among a modernising minority). The result is peripheral capitalism, capitalism unable to generate innovation and dependent for transformation upon decisions from the external world.

2. Adoption of Western Economic and Political Systems:

According to A.G. Frank, contemporary underdeveloped countries (UDCs) do not reassemble the earlier stages of now-developed countries. To him and many others modernisation in UDCs is simply the adoption of economic and political systems developed in Western Europe and North America.

3. The Creation of Underdevelopment:

For Frank, the presently developed countries were never underdeveloped, although they may have been underdeveloped. In his view, underdevelopment does not mean traditional that is non-modern economic, political and social institution but subjection of UDCs to colonial rule as also imperialism, i.e., imperial domination of foreign powers.

Frank sees underdevelopment as the effect of the penetration of modern capitalism into the archaic economic structures of the Third World countries. In his view the deindustrialization of India during the British period and the disruption of African societies by the slave trade and subsequent colonialism are examples of creation of underdevelopment.

4. Ancillary Development:

Simply put, the economic development of the rich countries lead to the underdevelopment of the poor. Development in an LDC is neither self-generating nor autonomous, but ancillary. The LDCs are economic satellites of the highly developed regions of North America and Western Europe in the international capitalist system.

Thus Afro-Asian and Latin American countries which were the least integrated into the system tend to be highly developed. For Frank, Japa­nese economic development after the 1860s is the classic case illustrating Frank’s theory. Ja­pan’s industrial growth remains unmatched. The reason is that, Japan, unlike most of the Asian countries, was never a capitalist satellite.

5. Satellite Relationship and Underdevelopment:

Brazil perhaps best illustrates the connection between the satellite relationship and underdevel­opment. Since the 19th century, the growth of its major cities has been satellite development — largely dependent on outside capitalist powers, specially Britain and the USA. Consequently some regions in interior Brazil have become satellites of these two countries and, through them, of the Western capitalist countries.

Frank suggests that satellite countries experience their greatest economic development when they are least dependent on the world capitalist system. Thus, Argentina, Brazil, Mexico and Chile grew most rapidly during World War I (1914 -18), the Great Depression (1929-33) and World War II (1939-45), when their trade and financial relations with the major capitalist countries were the weakest. Interestingly enough and significantly, too, the most underde­veloped regions today are those that have had the closest ties to Western capitalism in the past.

They were the greatest exporters of primary products, and the biggest sources of capital for developed countries and were abandoned by them when—for one reason or another — business fell off. Frank gives examples of undivided Bengal, the one-time sugar-exporting West Indies, and Northeastern Brazil, the defunct mining areas of Brazil, highland Peru and Bolivia; and the former silver regions of Mexico in this context.

He contends that even the large plantations that had contributed much to underdevelopment in Latin America, origi­nated as a commercial, capitalist enterprise, not a feudal institution. This very fact contra­dicts the generally held thesis that a region is underdeveloped because it is isolated and pre capitalist.

6. Unequal Exchange:

Dependency based on the international division of labour led to unequal exchange relation between the rich and the poor. The terms of trade of LDCs deteriorated because LDCs had to pay high prices for developmental imports and received less prices for their exports. So their balance of trade position deteriorated.

According to Frank, a Third-World economy can developed only by withdrawing from the world capitalist system. However, this implies a large reduction in trade, aid, investment and technology from the developed capitalist countries.

In the post Second World War (1939 – 45) period, developing countries grew much faster than they did earlier. Yet, the post War growth of such countries has not been no faster than that of developed countries. Whether this means convergence or divergence depends on time, scope and definitions.

Although conditions in the poor countries are for different from those in the advanced capi­talist nations, the mainstream of development thought has still been rooted in traditional neo­classical economies. Despite the earlier anticipation of some development economists, however, an entirely new sub-discipline of development economies has not arisen. On the contrary, devel­opment economists have come to rely more and more on conventional principles of price analysis and the market mechanism.

Even the revision of development strategies during 1970s has been dominated by interna­tional trade liberalisation. It is believed that there are mutual gains from trade to be realised by both rich and poor countries alike if they liberalise their foreign trade regimes. Foreign invest­ment from rich country to a poor country yields some gains both to lender and borrower. The promotion of a liberal international economic order should yield a positive sum game – not a North-South confrontation.

Any attempt to put into precise words regarding D'School meets with difficulties. There are several reasons for such a state of affairs. First, the sheer volume of output of D'School is a barrier of considerable magnitude for historians and critics of economic, social and political thought. Reading the works of individual even the most well known authors is, unfortunately, no substitute for more through acquiantance and can not ensure a correct appraisal of the whole body of work. The contributions of  The approach of Soviet and Polish economists to the problem of dependence and its implications is more throughly treated by A.W. Kubiak in "Studies on the Development theory", Research Institute for the Developing Economies, Warsaw School of Economics, 1986, Warsaw, Poland various dependence writers diverge widely in respect of their subject matter, point of view and conclusions. The views of individual authors evolve, under the impact of discussions, their research objective.

The D'School is a user of more or less diverging views but unanimous, however, as far as the subject matter is concerned Dependence and development or under development of the third world) as well as methods of analysis (historical, inter-disciplinary, dialectical, globally oriented approach). The long term perspective adopted by the dependency writers in their investigations allows to identify changes in economic and social structures. Analyses are carriedout on the basis of historical information encompassing the period of expanding mercantilism which spread overseas (chiefly to Latin America) the formation of the export oriented colonial economy (1600 - 1850) that underwent some modifications retain, however its export orientation (1850 - 1930) the period of development characterized by import substituting industrialization as well as the present time marked by the expansion of transnational corporations in to the backward areas.

Investigations of economic phenomena are usually set against the complex background of social and political matters seen in the This is particularly true of A.G.Frank. He rejected in late seventies the theses he had propounded in the 1960s. A.G.Frank, Dependent Accumulation and underdevelopment, The Macmillan Press, London, 1978, perspective of class relations and in an institutional environment. The extent to which the socio-political phenomena are actually incorporated into the analyses can vary, however, from fairly small in the works of Frank to avery large in Cordoso's. The dependency writers are primarily interested in the participation of various classes in the generation of income in relation to production or social costs of production, and above all in the distribution of income or benefits that various classes derive from particular models of production and distribution.' The D'School writers accept gladly some form of dialectics, look at various phenomena in their movement and mutual interaction. They encompass to a greater extent global phenomena. It should be stressed that the periphery is analysed either as constantly interaction with the centre or as an element of the world economy. Surprisingly, the D'School yields many categories which diverge widely from their standard economic interpretations. The traditional economic structure is changed, with the production relations. Karl Marx, Engels, Lenin focussed their interest on the relations of production in different social formations and on different levels of advancement within one formation. The focus on the relations of distribution was taken from Rosa Luxumberg. The spotlight on the distribution is precisely what differentiaties the dependency writers from contemporary marxists who carry on only the approach of Marx.

For this reason, the D'School is some times called the "Neo-marxist" paradigm. Among the numerous descriptions and classifications of the current, the analysis of G.Palma stands out as a particularly interesting and precise:

1. The works of G.Frank, Dos Santos, Marini and Pizzario as well as F.Hinkelmert constitute an attempt to construct a theory of under-development of the Latin America.

2. The approach of Sunkel and Furtado is an effort to reformulate Economic Commission for Latin America (ECLA)'s analyses of dependent development.

3. The remaining contributions started by Cardoso and Paleto give analyses of concrete form in which dependence appears and develops. The typology referred to above does not consider numerous researchers 'applying methodology of dependence such as, S.Amin, Emmanuel, Wallerstein. The Carribean dependency authors (Thomas, Levitt) or Indian Economists (S.Lal, R.Sen and S.B., De Silva). Neither does Palma examine the evolution of the dependency school as a whole nor the modifications in view of particular authors belonging to S.G.Palma. Dependency a formal theory of under-development or a methodology for the analysis of 5 concrete situations of under-development ?

4 A.Foster & Carter from Rostow to G. Frank-conflicting paradigms in the analysis of underdevelopment, in "World Development" Vol.4, 1976. 5 World Development, Vol6, 1978. It would be a mistake to think the systematization of the multifaceted dependency thinking as an easy task. The characteristic features of this body of knowledge (and at the same time its weak points) are precisely the multiple formulation of fundamental problems and the multidirectional evolution of views held by its proponents. As much as we agree H.Bermestein that it is possible to discern certain common features as well as difference in the views of the dependency economists.

Generally the subject matter of the dependency theory is constituted by the state and dynamics of the economy in the developing countries (of the periphery) beginning with the medieval period to right now. All the D'School writers negate western linear evolutionism with assumptions of permanently traditional and backward character of peripheral economies vis-a-vis the developed countries (Centre) and thus invalidate the principle of development imitating the path of the rich countries.

According to them the periphery was not always poor, there was a time when its level of development was equal or even surpassed the achievements of the western countries. It is stressed that exploitation of other parts of the H.Bernstein, "Sociology of underdevelopment Vs. Sociology of Development" in D.Lehmann (ed) Development Theory. Four Critical Studies, London, 1979. This assumption is typical of Western Economic theories of under development, e.g. of Leibenstein, Nurkse, Rostow, Lerner etc. 

World was one of the important factors in the success of the early coiners in capitalists development. In other words, the drain of surplus from the periphery was and still is the most important source of the primitive accumulation of capital. The dependency authors have come to the conclusion that historical development of capitalism on the world scale leads to the emergence of different forms of inequality (in terms of class and space) which underlines the complementarity of the two parts of the world. The countries which were drawn later into the world capitalist economy. The development of the centre and of the periphery -this interdependence was from the beginning qualitatively different - it was just dependence. Initially they assumed that dependence based on inequality between the centre and the periphery was the fundamental characteristics of functioning and development under capitalism on the world scale and hence stress was laid upon specific features and mechanism of peripheral development.

D'School writers claimed that development of the periphery is dependent and dependence. Dependence and Dependence theory, itself is the reason for differentiation of development prospects in the centre vis-a-vis periphery. It is because dependence reflects the differentiating and asymmetrical process of capitalist production and reproduction on the world scale; its analysis is a key to the explanation of under-development and advancement of the periphery. 

WHAT IS DEPENDENCY ? WHAT ARE THE MECHANISMS OF ITS EMERGENCE AND REPRODUCTION ? WHAT FORMS IT DOES ASSUME ?

Apart from the category of dependence and its impact upon the development of the periphery, the dependence economists devoted attention to the manifestations and consequences of dependent development as well as to explain the various forms of dependence. Dependencies emphasized the lack of autonomy in the development of the periphery (S.Amin), its totally external conditioning development of under-development and exploitation of the periphery by the centre, (Frank, Dos Santos, Hinkel, Marini, Caputo, Pizzaro, Emmanuel), inability of the state to effectively steer the capitalist development and its subordination to the world system (Frank, Cardoso), lack of interdependence between the development of key dunamic sectors in the economy, gaps in the process of capital reproduction (Cardoso),social marginalisation of the exploited classes etc. A number of publications concerning various aspects and manifestations of dependence had to face the challenge of processes that have proved to be a severe test for a variety of propositions advanced by the dependence writers.

Numerous controversies were stirred by such descriptions of dependency. Since the D'School writers failed to provide a full and generally accepted definition of dependence in relation to the developing countries and analysis of a developmental effort not actually defined. Historical studies as well as real economic processes occured in the 1970's demonstrated that the periphery is not only a heterogeneous part of the world, but it is also rapidly changing. Some countries of the periphery, developing in the conditions of dependence, made considerable head away on the path of development. For instance Australia and United States of America were indeed a dependent part of the capitalist economy, but managed to transform themselves into the countries of the Centre.

Thus, the central thesis about the decisive or determining influence of dependence upon the development of the periphery was threatened. It was also claimed that, now a days interdependence replaced the relation of dependence. As a result, new conceptions of interdependence have been advanced as a substitute for the theory of dependence. Criticism in relation to the D'School implies greater need for more precise definitions as well as more thorough research into the relationships between dependence and (under) development. The D'School itself concentrated its efforts on analysis of processes taking place within the periphery and did not explain unequal development of its various parts, nor the reasons for rapid growth and structural change in the group of the dozen or so countries of the third would and their external expansion. Therefore a number of researchers turned to the analysis of the world system, seeking there more convincing solution to the persistent and growing doubts. These new endeavours have partially abandoned the initial subject matter of the dependents i.e. , the relationship between dependence was included into the analysis of the mechanism of the world capitalist economy. A.G.Frank in his reassessment of the dependency thinking, its genesis and achievements brought into relief entitled "Dependence is Dead. Long live / Dependence and the Class Struggle'.

THE CONCEPT OF DEPENDENCY :

One can discern two types of approach in descriptions and attempts at a definition of dependence.

The first one creates dependence as economic and social category and seeks its roots in the relations between the classes of the Centre and of the periphery. Such relations determine the mechanisms of functioning of the peripheral economies. The second approach develops certain propositions of the early structuralists. The essence of dependence is sought among the economic factors (productive forces) which exert impact upon the social aspects of development. A.G.Frank, Dependence is dead, Long live dependence and the class struggle. The notion of dependence itself gradually widened and acquired greater depth. A.G.Frank who is reputed to have founded the whole approach, did not infact, explain the nature of dependence. He did not show its sources and premises and merely drew attention to its manifestations (the surplus drain, creation of the capitalist structure), the greatest merit in the study and identification of economic dependence of the peripheral counbtries upon the centre should go to the Latin American Economists in particular Dos Santos, Cardoso, Faletto as well as to the Canadian economist C.Leys. According to Dos Santos, dependence is a situation of conditioning in which the economies of one group of countries are conditioned by the development and expansion of others.

If one is to comprehend the nature of dependence one has to say that Dos Santos investigated the economic relations generated within the periphery as well as inter relationships between different international and national elements which create the dependence situation. In this and other works, Ds Santos emphasis that the interlinked elements he refers to are to be found not only among the forces of production, but above all, in social groups and class forces. Thus the conception of dependence can not be understood without turning towards analyses of the inter-relationships between dominant interests in the hegemonic centres and the T.DosSantos, the crisis of Development theory and the problems of Dependence. All this suggests that, if the actions of dominant forces in the centre did not find the basis and support in the actions of the dominant classes of the periphery, it would have to be dependent. Thus,, dependence has social nature. Hence, through class alliances, dependence is a set of relationships in which the external factors are reflected at numerous levels of internal changes, which in themselves, can reinforce the model of external relationships. Economic alliances explain why the world capitalist system is reflected in the development of the periphery. Dependence is no longer an external matter. "The national situation says Dos Santas, is determined by its own specific movement.

The international situation within which this movement is accomplished constitutes a general condition and not the cause of national processes, since this situation is an element constituent of the inside of nation that determines the impact of  the international situation upon the national reality. The crisis of development theory, and the most significant contribution to the understanding of the class nature of dependence is authored by Cordoso. According to him, the economic process is as social process whereby different social groups and classes attempt at the creation of an economic system which allows for the attainment of their goals and interests. . As a result, analyses is focussed on characterizing a common and conflicting interests of various classes, inside the periphery and in the world scale. Cordoso and Faletti conclude that common interests i.e., the economic prerequisites, between the various classes of the centre and of the periphery and the relevant states lead to class and state alliance. In a manner the economic processes occuring in the periphery are seen as originally linked to social and political processes. They require to the investigated jointly and not merely analyses side by side and then put together. Cordoso and Faletto understand dependence as a part of social relations between various classes as well as between those classes and state. Thus Cardoso finds contradictions inherent in the state which created the nation without itself being sovereign, are at the heart of all dependency issues.

The relations between the dominant classes of the periphery and of the centre are not only based on and limited to external forms of exploitation and coersion. Such ties are deeply rooted in the conformity of interests between these classes, Economic alliances of classes of the Centre and the particular class in the periphery which realized the central bourgeoisie interests and reflects the organization of international capitalism constitute the origin of the classes formation processes in the periphery. Collaborating with the central bourgeoisie in the process of exploitation of the toiling masses of the periphery, certain peripheral classes not only foster the objectives and interests of the bourgeoisie in the centre, but also reinforce their own position in the social hierarchy becoming thus the ruling classes. The remaining classes and social groups and this yields the specificity of development in different countries of the periphery. According to Cordoso, these economic alliances are not lasting . The choice of the collaborating class in the periphery is determined by current and long term interests of the bourgeoisie of the centre. At the same time, as the dependent Cardoso.

Associated Dependent development, theoretical and practical implications in Stephen (ed) Authoritarian Brazil-origins, Politics and Future" New Heaven Press, London, 1977. 18 Cardoso, Associated Development, op.cit. capitalist advances, the spectrum of social forces allied to the collaborating class widens. In this manner the incorporation of the periphery into the world capitalist economy leads to the emergence of a peculiar social system in which profits are distributed among the small section of the local economic interest groups and international bourgeoisie.

In Cordoso view the system is not static, it reacts to the changes securing in the centre. In relation to the problem of measurement of dependence, Cordoso stresses that such a measurement of dependence or independence of Sovereign states and its scope does not explain key problems:

a) the dependence of which socio-economic classes or groups has diminished ?

b) which classes have become more independent ?

c) what alliances and interests within each individual country and at the international level provide the direction to the historical process of development. The problem of economic alliance as the fundamental cause of dependence and under-development of the peripheral countries belongs to the most widely discussed issue with-in the dependency thought.

Cordoso's views were upheld by G.Frank who thereby revised substantially his earlier propositions. In his book "Lumpen Bourgeoisie, Lumpen development, Dependence, Class and Politics in Latin America", Frank stresses that the most important thing is to understand under development in terms of social / economic classes. According to him, bourgeoisie generates the policy of under development in the economic, social and political life of Latin American nations through the use of Government as well as other state instruments. Later C.Leys in his study of Kenyan society and economy arrives at the conclusions similar to Cordoso's that peripheral bourgeoisie collaborated with the bourgeoisie of the centre, and it is its natural ally in the exploitation of the peripheral. The outflow of surplus is in view of Leys secondary importancein so far as it is a natural phenomenon in the capitalist development of the periphery. He also says 'under development of the periphery is not caused by the transfer of surplus which is appropriated by the metropolis capital, and this is irrespective of its dimensions. Such transfer should be considered as an effect of peripheral structure which discourage production investment that would rely in the surplus generated in A.G.Frank, Lumpenbourgeiosie, Lumpen development Dependence, class and Politics in Latin America.

The second thesis was not confirmed by the Canadian economist Ms.Nicola Swainson, in her detailed study of capital structure in local and expatriate corporations in Kenyan industries, she maintains that local capital extended its pattern of accumulation into manufacturing industries. This has led to cooperation as well as competition with foreign capital. This is a compromise between the two extreme formulations of Leys. It is possible to affirm, therefore, that at early stages of development the peripheral economy is dependent upon the internal social structures while at some later stages it is dependent upon the internal and external structures. Economic and class alliances are clearly relevant to the problem of the state activity to its role in the transmission of dependence as well as to the nature of peripheral development. The state policy as resultant from the class struggles and the fundamental relations of dependence in the periphery is, according to the D'School subordinated to the mechanism of operation of the world capitalist economy. The state under peripheral capitalism developed and strengthens as a resultant policies pursue by the dominant classes which are favourable to C.Leys, Capital Accumulation, class formation, Dependence. The development of the corporate system as well as due to links between entrepreneurs are conducive to the emergence of a specific market, for the peripheral capitalism. In its operation it relied on income concentration and marginalisation of the society. In consequence the state is being separated from the nation and state policy does not serve the national interests.

As the D'School development and its influence various studies appeared which were focussed on specific types of symptoms of dependence (in trade, finance and technology). The scope of these studies was usually restricted to the indication of various forms and manifestations of dependence and of its impact upon selected sectors of the peripheral economy. Such studies were aptly described by T.Billick as "Dependence worries" and were treated as a separate strand. Killick as well as Caporaso, Zare and Gobalet (all African Economists) introduced the distinction between dependence and dependency. The former is assumed to be result of trade capital or technological ties with other countries. It does not lead to lasting negative economic effects and economy, in question, is able to operate without such ties. But dependency on the other hand springs from the integration of T.Santos .The periphery into the world economy and as such generates durable transformations in economic and social structures of the peripheral countries. Therefore dependency can justifiably be seen as a wider concept than dependence.

 DEPENDENCY AND UNDER DEVELOPMENT :

The relationships between dependency and under-development constitute the central problem as well as the main point of contention of the D'School. However, this is not to say that the dependence writers devoted most of their effort to its study. The reverse is true, most of their attention was directed to the problems of functioning of the peripheral economy. In the multifaceted opinions of the dependence writers one can discern three approaches to the problem of dependence and under development of the periphery.

1. Dependency generates growing under-development of the peripheral countries in relation to the countries of the centre.

2. Dependency leads to a specific, distorted pattern of development ie. , to the so-called peripheral or dependent capitalism.

3. Dependency leads to a specific, distorted pattern of development, in other words, dependence promotes growth and development in some peripheral countries, while gives rise to under-development in some other areas. 

 DEVELOPMENT OF UNDER DEVELOPMENT :

For a long time the D'School was being identified with the under development and as such attracted the attention of both marxist and development economists. The diagnosis of under development which was contrary to the western theory of the identification of causes of under development in the external factors ie. , the links with the capitalist countries and not in natural and economic conditions prevailing in the backward areas as well as the promotion of the idea of disassociation from the world capitalism as a necessary path of development in the periphery have made the D'School world renown. The works of dependence writers of 1960s were fairly uniform in their conviction that capitalist development in the periphery was impossible both in case when it is imported from outside or generated in an autonomous fashion. It is quite surprising to note that in spite of the initial relative unanimity as regards the consequences of dependence there have always been quite diverging news among dependence writers as to what the dependency itself was. The difference were also particularly notable in respect of manner and mechanisms through which dependency influenced the under development in the periphery. A.G.Frank indicates the existence of internal and external monopolies in the economies of the peripheral countries. These monopolies saturate the satellite economy with capitalist structures and generate the phenomenon of exploitation of satellites by metropolis. Its most visible manifestation is the appropriation and transfer of economic surplus. A.G.Frank defined capitalism and feudalism are not modes of production but as a socio-economic system characterised by specific types of exchange relationship. He thus neglected their connections with class structures and relations of production and built what is rightly emphasized by e.Laclau static and mechanistic model of under-development incapable of fully explaining the social transformation brought about by capitalism in the peripheral 29 countries. Similar drawbacks are shared by mechanisms of social and economic under development sketched in the works of Dos Santos and S.Amin. Dos Santos view is that capitalism was transferred from the centre to the periphery along with the mercantilist expansion of Western Europe into the vast areas of Latin America.

S.Amin in turn claims that dependent capitalism (which subordinated pre capitalist modes of production existing in Latin America) originated as a result of the domination of unequal . All the dependence writers subscribing to the development of under development thesis do not mention the loss of the economic surplus. A..G.Frank devoted to this pehnomenon in his analysis of the exploitation of Chile, but hardly mentions it in the case of Brazil. Moreover, the proofs of large scale transfers of surplus which are supplied by dependentists suffer from significant methodological drawbacks. Dos Santos in his calculation leftout indirect contribution of foreign capital to the growth of production exports and imports which has led to the exaggeration of losses. Besides, he did not consider the time lag between the moment of investment outlays and the moment of repatriation of profits generated by it so that the calculations were very in-accurate. In Emmanuel's theory of unequal exchange , we can also find shortcomings those can partly be summed up as the limitation of his argument to the supply side only, the neglect of demand in the price mechanism for both means of production and exchange of commodities.

Profits that the developing countries obtain from the production and sale of numerous goods are determined not only by this mechanism described by Emmanuel, but also by some other factors, such as monopolistic regulation qualifications and labour intensity in both groups of countries. The structure of resource allocation, state interventionist, which S.Amin are all left out of consideration. In consequence, Emmanuel's theory is neither a sufficient proof for the existence of the inequality of exchange nor does it yield sufficient evidence to lack the thesis that dependence is at the root of progressive under-development of the peripheral countries. A.G.Frank says "even a nationalit Govt. can't successfully promote capitalist development because of the constraints imposed by the international environment". In his opinion the state remains an entirely sub- ordinated element of global system irrespective of its political sovereignty. None of the dependence writers presented a full and convincing picture of all the mechanisms that could lead to the reproduction of under development in the countries of the periphery. Their explanation raise numerous doubts and leave many questions unanswered. It was fairly difficult to provide practical verification of Frank's contention about the development of under-development. In spite of the fact that Frank was fully conscious of the economic situation in Latin America which has resulted from the colonial and imperialist expansion, his definition of under-development is not quantitative and measurable but qualitative and non-measurable. Frank concludes that "Underemployment is not simply lack of development or non-development, but it constitutes a unique social economic structure generated by the integration of a given economy into the realm of developed capitalist countries. 

The interests of foreign and local business class are clearly manifested in the creation of export oriented enclaves in agriculture and mining. The indigenous business class fostered establishment of industries production of luxury consumer goods. In this manner, the pattern of growth of demand, which, by the way, does not reflect the needs of the people. The emergence of dependent and distorted structure favoured the transplantation of new order. Monopolistic sectors which were not integrated into the domestic economic structure, such as altered organizational structure has effectively shifted the growth of demand for labour and excluded large portions of labour force from the market. Additionally, this was the fundamental method where dependent capitalism disseminated against masses. Thus, the dependency writers analyzed the structure of the periphery from the point of view of economic mechanism that created it. The criteria followed by the dependence writer to the evaluation of under development are very general, quite imprecise. They do not provide the basis for easy comparisons between individual peripheral economies. The dependency theory is capable of giving a clear and precise typology of peripheral countries as regards the level and character of underdevelopment, except different studies specified the individual regions (Latin America, The Caribbean , Africa and Asia). A number of D'School writers assume that poor classes are indeed exploited and oppressed but did not explain how this takes place. Hence, lack of conceptual clarity affects to an equal degree the categories of under-development and exploitation. The radical writers in D'School have given scope to numerous criticisms. The subsequent evolution of the D'School was greatly influenced by E.Laclaw whose critique had given rise to new way looking at dependence problems, and as well as the arguments of Warren and Weisskopf. The arguments of Warren and Weisskopf based on the comparison of growth rates in the countries of the periphery and those of the centre in 1970's. By taking the four South East Asian countries as examples, Warren has demonstrated that peripheral economies are capable of sustained growth through the development of the industrial manufacturing sector. While Weisskoof showed that a number of peripheral economies increased their national income at a faster rate than the centre.

Causes of Underdevelopment:

According to Frank the following economic activities have contributed to underdevelopment, not development:

1. Replacing indigenous enterprises with technologically more advanced, global, subsidi­ary companies.

2. Forming an unskilled labour force to work in factories and mines and on plantations.

3. Workers migrating from villages to foreign-dominated urban complexes.

4. Opening the economy to trade with, and investment from, developed countries.

According to dependency theorists, the causes of underdevelopment are not to be found in national systems alone but must be sought in the pattern of economic relations between hegemonic, or dominant, powers and their client states.

Secondly, both within and among states, the unfettered forces of the market-place tend to exacerbate rather than to mitigate existing inequalities. The dominant foreign power benefits at the expense of its client states and the clientele class benefits at the expense of other classes.

For these two reasons development does not take place through the trickle-down of wealth or through the gradual diffusion of modern attitudes and modern technology and thus the up­ward mobility of individuals expressed by their gradual absorption into the modern sector is no solution to the problem of the impoverishment of the masses.

To dependency theorists, foreign investment and aid did not promote development in the Third World, but were used as a means of exploitation, that is, of extracting capital from client states. Even where such transfers from the developed states generated economic growth de­pendency, theorists would expect it to be a distorted pattern of growth that exacerbated in­equalities among classes as well as among regions within client states.

Conflict of Interests:

But the orthodox liberal ideology is not true in the real sense. The rich, capitalist developed nations gain from trade liberalisation at the expense of poor countries. In an earlier period, Lenin’s warnings of imperialism contradicted Ricardo’s mutual gains from trade as a result of free trade. In recent decades, parallel to the rise of the new development economies and the revision of development strategies, there have been a number of dissenters who propound a radical critique of mainstream development thinking.

There are many proponents of “Conflict of Interests”. They are Rail Prebisch, former head of Argentine central bank and first Executive Director for the U.N. Economic Commis­sion for Latin America (ECLA); Gunnar Myrdal, Secretary of the European Economic Com­mission and author of the American Dilemma; and Hans Singer, an economist who had studied the “depressed areas” of Britain and joined the United Nations as early as 1946. Unlike Marx­ists who concentrate on the unfavourable effects of imperialism or colonialism, these crities did not base their critique on any notion of “deliberate exploitation” by the advanced capital­ist nations.

A. Myrdal’s View:

As he argued that “Market forces will tend cumulatively to accentu­ate international inequalities, [and] a quite normal result of unhampered trade between two countries, of which one is industrial and the other underdeveloped, is the initiation of a cumulative process toward the impoverishment and stagnation of the latter.”

Myrdal based his argument on the possibility that the factors that made for increasing dis­parity between rich and poor countries – what he called “backwash effects” – could out weight the factors that made for the spread of prosperity from rich to poor countries – what he called the “spread effects”.

By backwash effects Myrdal refers the destruction of local handicrafts and small scale industry by cheap imports from the industrialised countries, the drain of spilled labour force from the less developed countries, and the biasing of the economy toward en­claves that produce primary product exports.

Believing that trade in primary products will only produce a polarisation effect that is stronger than the spread effect, Myrdal argues that “economic development has to be brought about by policy interferences” instead of through a dependence on international markets that “strengthen the forces maintaining stagnation or regression.”

B. Prebisch-Singer Thesis:

Raul Prebisch and Hans Singer are the main critics of this ideology. The found that after opening up trade the terms of trade of the developing nations have fallen. This occurs because the technological innovations take place in the highly industr­ialised developed nations. They export manufactured goods and increase their relative terms of trade.

Prebisch-Singer have found out that if the income of a particular individual increases, then he prefers manufactured goods than primary products. As the income levels of developed na­tions are very high compared to the developing ones, the normal residents of those countries prefer manufactured goods.

They also support Myrdal’s view of deindustrialisation and economic drain. They also sup­ported Myrdal’s view that cheap foreign goods destroy the domestic industries of underdevel­oped nations. This is nothing but “backwash effects”.

Industrialisation based on import substitution is, therefore, advocated to protect the one-sided gains from trade. Tariff protection and quotas on industrial imports are believed capable of forestalling a further deteriorations in the terms of trade, avoiding BOP fluctuates which check growth when export prices fall and promoting the absorption of the labour surplus in industry.

In their advocacy of industrialisation protection, and planning, Myrdal, Prebisch, Singer influenced the early tenets of the new development economies. Their argument had consider­able appeal to the newly emerging countries, especially when they were combined with Rostow’s “stages” and Rosenstein-Rodan’s “big push”.

By the 1960s, however, the new development economies were subject to criticism from two divergent streams of thought – neoclassical eco­nomics, which underlay the revision of development strategies and the dependency school.

CONCLUSION

So the growing development of under-development thesis was no longer relevant for atleast three groups of countries. It looks Palms is right in stressing that D'School writers are all too eager to jump from the analysis of specific economic, political and social contradictions generated by dependent capitalism to the conclusion that, in the situation of dependence, capitalism has lost its progressive character. 

If we study the history of centre and periphery argument then we see that the developing na­tions are affected from time to time. If industrialisation in the developing nation takes place; then the quality of the product produced in those countries are backdated than those produced in developed nations.

So the price of the commodities produced from developing countries not only deteriorates terms of trade but also the quality of the product. This is Sarkar-Singer’s “Double Jeopardy Theory” (1991).

If protection takes place then the respective infant industry in present becomes more infant in the future and requires more protection. If export promotion takes place then the respective country may prosper in the future.

But for the case of large internal economies like India and China (which have large internal markets), import substitution is more preferable than export promotion. Economists are yet to reach a consensus about which policy is more attractive. So we are not able to reach a clear conclusion about the policy choice of the developing countries in the long run.