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Latin American Theories of Development and Underdevelopment

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Abstract

Upon its publication in 1989, this was the first systematic and comprehensive analysis of the Latin American School of Development and an invaluable guide to the major Third World contribution to development theory. The four major strands in the work of Latin American Theorists are: structuralism, internal colonialism, marginality and dependency. Exploring all four in detail, and the interconnections between them, Cristobal Kay highlights the developed world's over-reliance on, and partial knowledge of, dependency theory in its approach to development issues, and analyses the first major challenges to neo-classical and modernisation theories from the Third World.
Reflections
on
the Latin American
Contribution
to
Development Theory
Crist6bal
Kay
ABSTRACT
During the last decade a series
of
essays by prominent development theorists
were published in which it was argued that development theory was in crisis.
In my view the First World bias
of
development theory has contributed
to
its
shortcomings. This bias is evidenced by the failure
of
development theory
seriously
to
examine and incorporate into its mainstream the theories emana-
ting from the Third World. In this paper
I
deal with the Latin American
contribution
to
development theory. While development theorists have given
some attention
to
dependency studies and structuralism, far
too
little
appreciation has been given
to
the writings
on
marginality and internal colo-
nialism. However, the significance
of
the structuralist school for development
thinking and practice has yet
to
be
fully
acknowledged. Furthermore, depen-
dency theory has been much distorted and key dependency writers have been
completely ignored, especially in the Anglo-Saxon world. The following
themes
of
the multi-stranded Latin American development school are
examined: the debate on reform
or
revolution, the structuralist or centre-
periphery paradigm, the analyses on internal colonialism and marginality,
and the dependency studies. Wherever relevant the key differing positions
within the Latin American school are presented.
I
then proceed to examine the
shortcomings
as
well as the contemporary relevance
of
these Latin American
theories
of
development and underdevelopment.
INTRODUCTION
Over
a
decade ago a series
of
articles
by prominent development
theorists started
to
appear in which the state
of
development theory
was being examined.' The general thrust of these articles was that
development theory was in crisis. The postwar optimism of the birth
of development studies was turning by the late
1970s
to a feeling
of
frustration as for many the discipline had not fulfilled its original
Developmen/
and
Chunge
(SAGE,
London, Newbury Park and New Delhi),
Vol.
22
(1991).
31-68.
32
C.
Kay
promise. One
of
the initiators of this introspective exercise, the late
Dudley Seers
(1979: 7 14),
thought that one source for the revitaliza-
tion
of
the discipline could be found in the theories emanating from
the Third World. Following from Seers,
it
is my view that the First
World bias
of
development theory contributed to its shortcomings.
This bias is evidenced by the failure of development theory seriously
to
examine and incorporate into its mainstream body the theories
from the Third World.* There is a growing realization that this
First World bias has to be rectified. In recent years a spate
of
books
have been published which examine in
a
comprehensive and
rigorous way some
of
the theories which have originated from the
Third World.’ However,
I
am not arguing that the theories from
the Third World offer the solution
to
the crisis in development
theory. Far from it as these theories have problems
of
their own. But
I
do believe that
a
proper appreciation
of
these theories and, above
all,
a
closer and more balanced interaction between development
specialists from the North and the South are necessary for the
further development of development studies.
In this article
I
only focus on the Latin American contribution to
development theory. The article
is
divided in three parts. In the first
part
I
highlight some salient features of the multistranded Latin
American development school.
1
then proceed
to
examine some
of
its shortcomings and in the last part
I
analyse its contemporary
relevance.
1.
KEY
CONTRIBUTIONS
Although a distinctive body of thought which could be labelled
‘Latin American school
of
development and underdevelopment’
only emerged in the postwar period, one of its origins can be found
in the debate between Victor Raul Haya de la Torre and
Jose
Carlos
Marifttegui during the late
1920s
and early
1930s.
This debate sets
the scene for the two major strands which can be found within
the Latin American school: the structuralist-reformist and the
Marxist-revolutionary. What unites these two strands is that they
both argue against neoclassical and modernization theory and that
they define underdevelopment as being the outcome of a process
of
world capitalist accumulation which continually reproduces both
poles of the world system (i.e. both the centre and the periphery).
They argue that underdeveloped countries have peculiarities
of
their
Refections
on
Latin American
Contribution
to Development
33
own and for this reason neoclassical and modernization theory have
little relevance for understanding this reality, and worse, the policies
that are derived from these theories do not address the fundamental
problem
of
underdevelopment and can even aggravate it. The major
difference between these two paradigms is that the structuralists
think that by reforming the international and national capitalist
systems it is possible to overcome underdevelopment, while for
the Marxist only world socialism can ultimately overcome under-
development and the inequalities
of
the contemporary world
capitalist system. This difference is at the heart of the Haya-
Mariategui controversy.
Reform
or
Revolution?
This is a key question underlying the discussions of the postwar
Latin American development school. The different answers
to
his
question, which were at the centre of the debate between Haya de
la Torre
(1972)
and Mariategui
(1971)
defined the two major strands
within the Latin American development school.
To start with: what are
the
common elements? Both Haya and
Maridtegui characterized the mode of production in the country-
side as feudal
or
semi-feudal, condemned the landlord class and
imperialism for Latin America’s underdevelopment, and advocated
industrialization. Finally, both agreed that the development process
in Latin America differed from the classical European model and
that the bourgeoisie in Latin America was unable to perform the
progressive role
it
did in Europe.
In
what do they differ?
In
Haya’s view the revolution had to be
anti-feudal and anti-imperialist.
It
could not be a socialist revolu-
tion as, in his view,
it
was not possible to skip the historical stages
of
development, and thus
it
was necessary first to develop capitalism
fully. This revolution was to be led by the middle class, the pro-
letariat being too small and the peasantry too backward. Haya
called for the establishment of an anti-imperialist state which,
owing to the weakness
of
the national bourgeoisie and the strength
of the feudal class and imperialism, had
to
be state-capitalist.
However, he recognized some progressive aspects of imperialism
(modern technology and industrial capital) and thus the struggle
was
only
against the negative aspects of imperialism (pillage and
domination). The objective
of
the revolution was
to
achieve Latin
34
C.
Kay
America’s economic independence and development within cap-
italism (Germana,
1977: 149).
Marihtegui can be considered as the first Latin American neo-
Marxist who anticipates many of the dependency arguments. He
attacked Haya’s dualist position by arguing that feudal and cap-
italist relations are part
of
one single economic system. Further-
more, imperialist capital is seen as linked to, and profiting from,
pre-capitalist relations. Contrary to Haya, Marihtegui saw no scope
for the development
of
an autochthonous
or
independent national
capitalism. In his view the development
of
capitalism would not
eliminate pre-capitalist relations and would only intensify the
domination
of
imperialist monopoly capital. Furthermore, for
Marihtegui the socialist revolution could not wait until capitalism
had fully developed as argued by Haya. Mariategui also criticized
Haya for undervaluing the revolutionary potential of the peasantry.
Additionally, Marihtegui held that the indigenous peasant com-
munities (the
ayllu)
could constitute the germ of the socialist trans-
formation in the Peruvian countryside. Thus, Mariategui advocated
a socialist revolution which would be brought about by a political
alliance between workers, peasants and ‘the conscious elements
of
the middle class’ under the leadership of the proletarian party
(Baines,
1972: 150).
While Haya considered that
the
national bourgeoisie was
oppressed externally by imperialism and internally by feudalism and
that the struggle for national liberation should therefore take pre-
cedence over the class struggle, Mariategui held the opposite view.
Marihtegui argued that the local bourgeoisie was organically linked
to imperialism and feudalism and that they jointly oppressed and
exploited the urban and rural workers. Thus, the
fight
for national
liberation did not neutralize the class struggle and, on the contrary,
was subordinated to
it.
Furthermore, the local bourgeoisie was
unable
to
fulfil this task and only the working class could accom-
plish
it
(Germana,
1977: 165-6).
Marihtegui’s pioneering analysis
of
the issue
of
indigenous
peoples had a major influence on the theory
of
internal colonialism
(of
which more later). He challenged the prevailing view that the
‘indigenous question’ was a racial and cultural issue, instead of
viewing
it
as rooted
in
the land problem. Furthermore, finding a
solution to the issue was also necessary for solving the national
question (Angotti,
1986:
39,
45).
In short, Haya de la Torre and
Reflections on Latin American Contribution
to
Development
35
Mariitegui foreshadow some of the central issues of, and debates
within, the Latin American development school.
Structuralism: The Centre-Periphery Paradigm
While various writers developed the structuralist paradigm, Raul
Prebisch’s original ideas were pivotal in launching this perspective,
whose influence has extended beyond Latin Ameri~a.~ The struc-
turalists’ perspective is both holistic and historical
-
for a good
example, see Sunkel and Paz
(1970).
But the originality
of
the
structuralist paradigm lies in the proposition that the process
of
development and underdevelopment is a single process, and that
the disparities between the centre and periphery are reproduced
through international trade (Rodriguez,
1980).
Thus, the peri-
phery’s development problems are located within the context of the
world economy, revealing the holistic nature
of
structuralism.
It
is
also an historical perspective as structuralists probe into the origins
of
the intergration
of
Latin American economies into the dominant
capitalist system as producers of primary products. CEPAL’
termed this pattern
of
development in the periphery the ‘primary-
export model’
or
‘outward-oriented development model’. The
cepalista
school strongly advocated an import-substituting-
industrialization policy (of which more further on) which would
help peripheral countries to switch to what they termed an ‘inward-
directed’ development process and allow them to overcome some
of
the key structural obstacles to development (Sunkel,
1966).
The cornerstone of structuralism is the centre-periphery paradigm
(Rodriguez,
1977).
This paradigm attempts
to
explain the unequal
nature
of
the world economic system.
It
also suggests a series of
policies to narrow the gap between countries of the centre and those
of
the periphery. According to this paradigm the duality in the world
economy originated
with
the industrial revolution in the centre when
the possibilities for increasing the productivity
of
the factors
of
production rose dramatically. The diffusion
of
this technical
progress was, however, very uneven throughout the world. The
centre countries internalized the new technology by developing an
industrial capital-goods sector and by spreading the improved
technology
to
all
economic sectors. This resulted
in
the development
of
an homogeneous and integrated economy.
In
the periphery,
36
C.
Kay
by contrast, new technologies were largely imported and mainly
confined
to
the
primary-commodity-producing
export sector. As a
consequence, the peripheral economy became both disarticulated
and dualist: disarticulated because
it
had to import the advanced
technology from the centre; and dualist because
a
large gulf
in
pro-
ductivity developed between the export and subsistence sectors. A
sizeable low-productivity pre-capitalist sector survives
in
the peri-
phery, producing a continuous surplus of labour. This large surplus
of labour keeps wages low and prevents the periphery from retaining
the fruits of its own technological progress as productivity increases
in the export sector are largely transferred to the centre owing to
the deterioration
of
the terms
of
trade (ECLA,
1951).
Thus, in
CEPAL’s view international trade not only perpetuates the asymme-
try
between centre and periphery but also deepens
it.
The structuralist school also played a prominent part
in
the
ideological current, known as
desarrollisrno
or
developmentalism,
which swept through most of Latin America from the end of the
Second World War until the early
1970s.
Desarrollisrno
regarded
the state as the crucial agent for economic, social and political
change. When linked to populism,
desarrollismo
became a power-
ful, though elusive, political force. Its ideology was anti-feudal,
anti-oligarchical, reformist and technocratic (Cardoso,
1980).
In
today’s parlance
it
proposed a ‘redistribution
with
growth’ strategy.
The heyday
of
desarroNismo
was in the
1960s
when several reformist
governments came
to
power in Latin America and the
US
launched
its New Deal with Latin America, known as the Alliance for
Progress (Levinson and de Onis,
1970).
Its downfall came
with
the
establishment of military-authoritarian regimes in the Sout hern
Cone in the
1970s
and their pursuit of the radical monetarist policies
of the ‘new right’
or
‘neo-conservatives’.
In the remainder of this section
I
briefly review three specific
development issues discussed by the structuralist school: the deterio-
ration of the terms of trade, the process
of
import-substituting-
industrialization, and the
structuralist-monetarist
controversy on
inflation.
The Deterioration
of
the Terms
of
Trade
CEPAL’s thesis on the deterioration of the periphery’s terms of
trade sought to challenge conventional economic theories of
international trade (such as Samuelson’s factor price equalization
theory) and to question the existing international division of labour
Reflections on Latin American Contribution to Development
37
(CEPAL,
1952).
Prebisch’s analysis
of
the deterioration
of
the
terms of trade deals both
with
demand and supply conditions of
commodity markets
(1949, 1959, 1964).
I
refer only to his supply
arguments
as
these are more typically structuralist. Prebisch is
above all concerned
with
the international redistribution of the
‘fruits of technical progress’. Theoretically
an
increase
in
pro-
ductivity can result in either a fall in the price
of
a commodity where
this technical progress has occurred, thereby benefiting the con-
sumers;
or
in a rise in the payment
to
factors
of
production (i.e.
wages and profits), thereby benefiting the producers;
or
in
a
combination of both (Singer,
1950).
According to Prebisch
(1950)
the existence
of
trade union power and oligopolies in the centre
means that prices have not fallen, or have fallen to a lesser extent
than the increase
in
productivity. Thus, workers and capitalists in
the centre are able to gain the fruits
of
their technical progress
via
rises in wages and profits. Meanwhile the opposite has happened
in the periphery as a result of the weakness
or
non-existence of
trade unions and the greater competition facing export-producers.
However, the main argument put forward by Prebisch
to
explain the
inability of workers to capture a significant part of the increase in
productivity is the existence of a large surplus labour force.
An additional factor is the
low
productivity of the pre and semi-
capitalist sectors with their
low
subsistence incomes and wages
which act as
a
restraint on wage increases in the export sector where
most of the productivity increases in the periphery occur (ECLA,
1951).
Prebisch
(1959)
proposed a variety
of
policies to counteract the
negative tendency of the periphery’s terms of trade. He suggested a
tax on primary exports and a set of duties on manufacturing imports
to help switch resources within the periphery from primary export
to industrial activities
(1959:
263). He also proposed to allow union
activity in the primary export sector to push up wages, to defend
primary commodity prices through concerted international action,
and to press for the reduction
or
elimination of protection
for
primary commodities in the centre. Thus, Prebisch was
not
against
expanding the periphery’s exports
so
long as these helped to reduce
its labour surplus and thereby drive up wages and export prices
(1959:
263). However, the main thrust
of
his argument was aimed
at
changing the periphery’s structure of production and developing
an
industrial sector through a series
of
measures which would
encourage the allocation of additional productive resources to the
38
C.
Kay
industrial sector. This would help the periphery to retain its pro-
ductivity increases.
Import-substituting Zndustrialization
Prebisch
(1968, 1969)
favoured the periphery’s industrialization
because he believed that this would reduce its vulnerability to
international economic crises, lead to greater increases in produc-
tivity and incomes, and reduce unemployment, thereby removing
one
of
the causes
of
low wages in the periphery, and avoid further
deterioration in its commodity terms of trade. Structuralists viewed
industrialization in dynamic terms, unlike mainstream economists
who viewed
it
in static comparative advantage terms. Thus neo-
classical economists tended
to
argue against the periphery’s indus-
trialization. For Prebisch
(1959: 257)
the relevant comparison
is
not
between domestic production costs and the world market price
of
industrial commodities but between the increase in incomes
obtained by employing the periphery’s factors
of
production in
industry and their alternative employment in the primary-export
sector. As long as the income gains are favourable
to
industry then
an appropriate protectionist policy has
to
be established. Pro-
tectionism is required
so
long
as the productivity of the periphery’s
industry falls below that
of
the centre countries and
so
long as this
productivity differential
is
not compensated for by wage dif-
ferentials. Prebisch
(1959: 252)
did not favour low wages as an
alternative
to
protectionism as this would reproduce the unequal
international terms
of
trade. But he was also against excessive pro-
tectionism as this would discourage agricultural production and
encourage industrial inefficiency.
Cepalistas
were initially optimistic about the benefits industrial-
ization would bring to the periphery.
It
was regarded as the panacea
which would not only overcome the limitations
of
the outward-
directed development process but would also provide social and
political benefits such as enhancing the middle and working classes
and democracy. Notwithstanding, one
of
the first criticisms to
emerge
of
import-substituting-industrialization policy came Erom
within the CEPAL fold itself. Prebisch
(1949)
had already voiced
misgivings about Latin American industrialization in the late
1940s,
and during the
1960s
CEPAL was publishing
a
series of critiques of
the import-substituting industrialization process (Prebisch,
1961,
1963;
Tavares,
1964;
Furtado,
1965;
ECLA,
1966, 1970).6
Structuralists criticized the ‘actually existing’ import-substitution
40
C. Kay
economic development and in overcoming the deficiencies
of
the
market. For the structuralists the removal of the main obstacles to
development requires structural reforms of a social and political as
well as an economic kind. While structuralists favour an inward-
oriented and, to some extent, a self-reliant development strategy,
monetarists advocate an outward-oriented development strategy
driven by a closer reliance on the international market. Important
political differences also exist: Structuralists are considered to be
broadly on the left while monetarists are seen to be on the right.
Structuralists are largely reformist although
a
few may also favour
revolutionary change.
Furthermore, structuralists situate the problem
of
inflation
within the context of the problem
of
development of the Third
World while monetarists are less prone to do
so.
Thus, structuralists
would forgo price stability for development while the monetarists’
attitude is the opposite. This difference arises because for the struc-
turalists, inflation in Latin America arises from the socio-political
tensions, sectoral imbalances and expectations generated by the
process of development itself. Meanwhile, for the monetarists
it
is
the inflationary process which is the major obstacle to growth.
Internal Colonialism: Ethnic and Class Relations
Although the term internal colonialism was sporadically employed
by earlier authors, its modern conceptualization was developed
during the mid-
1960s,
principally by Pablo Gonzalez Casanova,
Rodolfo Stavenhagen and Julio Cotler
(1967).
Running through
the analysis are the distinctive and multiple relations
of
exploitation
and domination which characterize situations
of
internal
colo-
nialism in the Third World. Thus internal colonialism is defined by
Stavenhagen
(1973: 280-1)
as
the subordination
of
modes of production and forms
of
precapitalist accu-
mulation
to
the dominant mode
of
production, which leads
to
the subordination
and exploitation of certain economic and social sectors,
of
certain segments
of
the population from certain geographical regions, by others. Internal colonialism
is
a
structural relation characteristic
of
the juxtaposition
of
modes of production
corresponding
to
different historical periods within the global framework
of
dependent capitalism and the situation of underdevelopment.
National liberation struggles and the postwar decolonization
process influenced the formulation
of
the concept of internal
Reflections on Latin American Contribution
to
Development
4
I
colonialism as well as theories of imperialism and colonialism.
A
more direct source of influence were the writings of the
indigenistas
(indigenists) who were pro-Indian and anti-hispanic, and often
middle-class urban
mestizos.
Maridtegui
(1955:
28),
who also
influenced the internal colonial analysts, was critical of the
indigenistas
with the exception
of
Valcdrcel because he linked
indigenismo
with socialism. In Maridtegui’s view the problem of
indigenous peoples could not be solved through humanitarian and
philanthropic actions
as
it
was not a moral
or
cultural question
but was rooted in the socio-economic system. Furthermore, well
intentioned outsiders could not resolve the question of indigenous
peoples, as this was a social question whose resolution had to be
undertaken by the indigenous peoples themselves. Despite his
criticisms Maridtegui was influenced by the
indigenistas,
as through
his arguments against them he was able to define his own position
on the Indian question (Castro,
1976).
In turn the internal colo-
nialism analysts criticized the
indigenistas
for failing to pose the
Indian problem in terms of the struggle against colonialism,
imperialism and capitalism (Gonzalez Casanova,
1979: 53).
In his analysis of internal colonialism Gonzdlez Casanova
(1
965)
lists a series of characteristics attributable to colonialism and
finds that many of the factors that defined a situation of colo-
nialism
between
countries in the past also exist
within
some pre-
sent day independent Third World countries.
It
is this similarity
betweem the past colonial relations of domination and exploitation
between countries with those that exist today within some countries
which prompts him to use the term internal colonialism when
referring to the latter. The theory of internal colonialism is one
of
the first challenges to modernization theory, particularly of the
dualist thesis (Johnson,
1972).
It
also entails a critique
of
orthodox
Marxist theory for its exclusive focus on class relations to the
neglect of the ethnic dimension.
A
major contribution of the theory
of internal colonialism is to explore the links between class and
ethnicity.
Gonzalez Casanova
(1965)
explicitly distinguishes relations of
internal colonialism from urban-rural and class relationships. Rela-
tions of internal colonialism differ from urban-rural relations in
that they have a different historical origin and are based on dis-
crimination. They also differ from class relations as they cut across
class lines. Rural-urban and class relations cannot be
fully
under-
stood without reference to internal colonialism, particularly in those
42
C. Kay
Third World countries with significant indigenous populations.
Undoubtedly the analysis of internal colonialism allows
for
the
enrichment
of
the class analysis. Stavenhagen
(1965)
argues that
during Mexico’s colonial period and the first decade after political
independence, colonial and class relations appear intermixed, with
the former being dominant. Thus, the class relations between
Spaniards (including
mestizos)
and the indigenous people largely
took the form
of
colonial relations. Nevertheless’within
a
wider per-
spective, colonial relations have to be considered
as
one aspect
of
class relations which were being forged by the mercantilist interests
on
a
world scale. With the subsequent development
of
capitalism on
a world scale and its penetration into the remoter regions
of
Mexico
from the second half
of
the nineteenth century, class relations
increasingly entered into conflict with colonial relations as the latter
primarily responded
to
mercantilist interests while the former met
capitalist needs. Internal colonialism, by maintaining ethnic divi-
sions, impedes the development
of
class relations as ethnic con-
sciousness may override class consciousness.
The concept
of
internal colonialism gave impetus
to
the critiques
of
dualist theories because it argues (a) that the capitalist develop-
ment of the dominant countries is responsible for the formation and
reproduction
of
internal-colonial relations within the subordinate
countries and (b) that the relations of domination and exploitation
which define internal colonialism were not typical of the capitalist
development in today’s capitalist countries.
Marginality: Social Relations and Capital
Accumulation
Two major strands
of
the Latin American marginality school can
be distinguished: dualist
or
integrationist, and single system
or
class. The former strand
is
located within the modernization
paradigm while the latter encompasses the structuralist and Marxist
paradigms.
In the early
1960s
the concept
of
marginality was taken up by
Latin American social scientists working within
a
modernization
paradigm to refer
to
certain social consequences arising from the
rapid and massive postwar urbanization process in Latin America
(Mattelart and Garreton,
1965;
DESAL,
1969).
Rapid urbanization
arose from a ‘population explosion’ and an unprecedented high rate
Reflections
on
Latin American Contribution to Development
43
of rural-urban migration resulting in sprawling shanty towns,
slums and squatter settlements (Mangin, 1967; Germani, 1973;
Castells, 1974). Structuralist and neo-Marxist writers used the
term marginalization with reference to the import-substituting
industrialization’s inability to absorb the growing contingent of
the labour force and to its tendency to expel labour. This capital-
intensive industrialization process led to further income concen-
tration and marginalization
of
sectors
of
the population from the
fruits of technological progress (Lessa, 1973). As industrialization
came to be dominated by foreign transnational corporations, this
approach to marginality was linked to dependency theory (Sunkel,
1972a).
Those working within a modernization paradigm viewed mar-
ginality as lack
of
integration of certain social groups in society;
those working within a Marxist paradigm viewed marginality as
arising from the nature of the country’s integration into the world
capitalist system. The policy recommendations differed: while the
former group argued for measures aimed at integrating the marginal
groups into
a
reformed capitalist system, the latter argued that
marginality was a structural feature of capitalist society that only
a
socialist development option could solve.
Gino Germani is probably the most outstanding proponent
of
modernization theory in Latin America. Considering marginality to
be a multidimensional phenomenon, he starts his analysis by
defining marginality as ‘the lack of participation
of
individuals and
groups in those spheres in which, according
to
determined criteria,
they might be expected
to
participate’ (Cermani, 1980: 49). Accord-
ing
to
Germani (1972, 1980), marginality usually arises during the
process of transition to modernity (which he defines as an industrial
society) which can be asynchronous
or
uneven as traditional and
modern attitudes, values, beliefs, behaviours, institutions, social
categories, regions, and
so
on, coexist. This asynchrony means that
some individuals, groups and regions are left behind and neither
participate in, nor benefit from, the modernization process. They
thus become marginal.
By the late 1960s the modernization view on marginality was
being challenged from various quarters (Stavenhagen,
197
I
;
Perlman, 1976). The theoretical weakness
of
the modernization
position
of
marginality was seen as stemming from its failure
to emphasize the class character
of
society and from its adher-
ence to a dualist position which precludes an exploration
of
the
44
C.
Kay
interconnections between the ‘marginal’ and ‘integrated’ sectors as
well as between the developed and underdeveloped countries within
the world capitalist system.
The Marxist view
on
marginality partly originated in response
to
the modernization view and partly in response to
a
debate within
Marxist theory. According
to
Quijano
(1966)
marginality reflected
a
particular manner
of
social integration and participation rather
than non-integration
or
non-participation
as
the modernization
theorists claimed. Given his view
of
marginality as the expression
and consequence
of
a
certain social system, reformist measures as
the modernization theorists advocated, were seen to be inadequate.
Nun
(1969)
created a new category
-
‘marginal mass’
-
which
he differentiates from the Marxist concepts
of
‘relative surplus
population’ and ‘industrial reserve army’. Likewise, Quijano
(1974)
proposed the concepts
of
‘marginal labour, and ‘marginal pole
of
the economy’and wrestled with their relationship to existing Marxist
categories.
Quijano’s and Nun’s preoccupation with marginality arises out
of
the disillusionment and critique
of
the post-Second World War
industrialization process in Latin America which failed
to
absorb
the rapid increase in the labour force. They pinpoint the problem
of
marginalization as originating from the increasing control
of
foreign capital over the industrialization process resulting in its
monopolization. Thus, marginality is largely
a
recent phenomenon.
Nun
(1969:
201)
argues that the penetration
of
transnational
corporations into Latin America has created such
a
large relative
surplus population that part
of
it is not only afunctional but even
dysfunctional for capitalism. This part
of
the relative surplus
population does not perform the function
of
an industrial reserve
army
of
labour, as
it
will never be absorbed into this hegemonic cap-
italist sector, even during the expansionary phase
of
the cycle, and
therefore
it
has
no
influence whatsoever on the level
of
wages
of
the
labour force employed by the hegemonic sector. Thus, in Nun’s view
a
new phenomenon, not foreseen by Marx, has emerged in the
dependent countries, for which Nun has coined the new concept
of
‘marginal mass’.
Quijano
(1977)
identifies various sources
of
urban and rural
marginality: first, the development
of
a monopoly sector which
generates unemployment by bankrupting some industries
of
the
competitive sector; second, both hegemonic and competitive capital
destroy part
of
the handicraft, workshop, small commerce and
Reflections on Latin American Contribution to Development
45
small-service sectors, making that labour redundant; and third, cap-
italism penetrates agriculture, expelling labour. The question then
arises as to how this marginal labour makes a living. Quijano argues
that an increasing proportion of Latin America’s population seeks
refuge in what he calls the ‘marginal pole’ of the economy. He dis-
tinguishes between two types
of
marginal population: the ‘marginal
petty bourgeoisie’ and the ‘marginal proletariat’. The former is less
numerous and less marginal, being self-employed. Their productive
activities and services are largely geared towards the marginal
population but they may find a market
in
the urban proletariat
and the non-marginal petty bourgeoisie. Meanwhile, the marginal
proletariat find only occasional temporary employment in the
labour-intensive and non-technified activities such as construc-
tion, and non-productive and manual services. They are unlikely to
be employed by the marginal petty bourgeoisie as the latter lack the
resources. These types
of
marginals heighten social differentiation
by constituting a sub-class within the petty bourgeoisie and pro-
letariat respectively.
Quijano’s and Nun’s theory of marginality has generated a lively
debate largely from a Marxist perspective. A group of radical
social scientists, working in the Brazilian Centre for Analysis and
Planning (CEBRAP) in
Sgo
Paulo, have made the most significant
contribution
to
this debate. Among this group are Cardoso (1971,
1972a), Kowarick (1974, 1975, 1979), P. Singer (1973) and
F.
de
Oliveira (1985). The discussion has centred on three major issues: (a)
the extent
to
which the marginality concepts differ from Marx’s
industrial reserve army
of
labour; (b) the contribution of mar-
ginals to the process of capital accumulation and their articulation
to the dominant mode of production; and (c) the relationship
between marginality and dependency. With regards to the first,
the CEBRAP critics query the need for new concepts and hold
that existing Marxist categories are adequate. With regards
to
the second, they argue that the marginals’ contribution to capital
accumulation is far greater than suggested by the
marginalisfas.
They also put greater emphasis on analysing the social relations of
production of the marginal sector which they characterize as being
largely non-capitalist but functional for capitalist accumulation.
Finally, with regards to dependency, they stress that marginality
relies as much on internal as external factors. This reflects the
CEBRAP perspective
in
which greater emphasis is given to the
internal dynamism
of
dependent countries.
46
C.
Kay
Following the CEBRAP critics, the main weakness
of
marginality
analysis is its tendency to underestimate the significance
of
the
‘marginals’
for
the reproduction of the capitalist system. Many
critics have pointed out how this ‘underclass’, ‘sub-proletariat’,
‘immiserated fraction
of
the working class’or ‘informal labour’ is far
from being at the margin of the national and international system
of capital accumulation (Perlman, 1976; de Janvry and Garramon,
1977; Portes and Walton,
1981;
Cockcroft, 1983). However, there
is still
a
need to develop
a
conceptual framework and terminology
to refer to such an important reality. This the more recent discussion
on the formal and informal sectors has attempted to do (Lomnitz,
1978; Tokman, 1978; Portes, 1983). Despite the theoretical and
empirical shortcomings of the Latin American marginality school,
its merit has been to draw attention to the plight of a vast and
heterogeneous mass
of
impoverished Third World labour and to
stimulate detailed research on how the poor make a living and cope
with their poverty. It has also pointed to a gap in social theory which
had
so
far failed dismally
to
analyse and theorize on a major
problem of underdevelopment and development.
Dependency Analysis: Structuralism and Marxism
The dependency literature has stimulated many debates and pro-
voked
a
bewildering array of critiques. While some critics of depen-
dency theory have made a positive contribution many other critics
have revealed an ignorance of key dependency writings, spreading
many distortions and creating much confusion. In particular, there
exists an imbalance (especially common in the English-speaking
world) regarding the diffusion of dependency theory: the excessive
focus on the writings
of
Andre Gunder Frank
to
the neglect of other
authors.
Although some propositions are shared, many important differ-
ences remain between dependency writers. Two key positions can be
differentiated: reformist and Marxist.’ Some
of
the main reformist
dependency writers are Fernando Henrique Cardoso, Osvaldo
Sunkel, Celso Furtado, Helio Jaguaribe, Aldo Ferrer and Anibal
Pinto. Their ideas are best seen as a further development of the
structuralist school as they attempt to reformulate CEPAL’s
developmentalist position in
the
light of the crisis of import-substi-
Refections on Latin American Contribution to Development
47
tuting industrialization. Within the Marxist dependency camp are
the writings of Ruy Mauro Marini, Theotonio
Dos
Santos, Andre
Gunder Frank, Oscar Braun, Vania Bambirra, Anibal Quijano,
Edelberto Torres-Rivas, Tomas Amadeo Vasconi, Alonso Aguilar,
and Antonio Garcia, among others. However, they are best con-
sidered as neo-Marxists as they query the progressive role of
capitalism in dependent countries.
The Reformist Approach to Dependency
Within the reformist
dependentista
group variations also arise as
they highlight different aspects
of
dependency. While for Sunkel the
keyword is ‘national disintegration’, for Furtado it is ‘dependent
patterns of consumption’ and for Cardoso
it
is ‘associated-
dependent development’.
Sunkel’s (1969, 1972a) analysis focuses on the
way
in which trans-
national capitalism creates a new international division of labour
leading to national disintegration in Latin America. As trans-
national conglomerates began to take over the commanding heights
of the ecomony, particularly in the industrial sector, Sunkel (1972b)
saw them as driving a wedge into national society. While a minority
of
the country’s population is integrated into the transnational
system and receives some of the spoils, this is
at
the cost of national
disintegration. Each social group is fragmented, with
a
larger
proportion
of
capitalists as compared with the middle class, and in
turn
a
larger proportion of the latter as compared with the working
class, being incorporated
into
this system. Sunkel (1973), however,
believes that development without dependence and without rnargi-
nalization can be achieved by reforming the asymmetrical nature of
the international capitalist system through hard bargaining and
pragmatic negotiations. Thus, his position is reformist although his
optimism is guarded.
For Furtado (1972, 1973) the control of technical progress and
imposition
of
consumption patterns
from
the centre countries are
the key factors which explain the perpetuation of underdevelopment
and dependence in the periphery. The increasingly diversified
consumption pattern geared towards the high-income groups in the
peripheral countries structures an equally diversified industrial
consumer-goods production pattern. The technology for produc-
ing these products comes from the centre countries and largely
from multinationals. This capital-intensive technology perpetuates
further the concentration
of
income and the surplus of labour,
48
C.
Kay
thereby reproducing the vicious circle
of
underdevelopment and
dependence.
Cardoso is one
of
the key contributors
to
the dependency
approach.’ In their pioneering and
by
now classical book, Cardoso
and Faletto (1979) analyse the changing relationship between
internal and external factors which have determined the develop-
ment process in Latin America from the early ‘outward expansion’
of
newly independent nations to the present period
of
inter-
nationalization
of
the market and the ‘new dependence’. By grafting
CEPAL’s historical periodization of ‘outward and inner-directed
economic development’
to
different types
of
dependency situations,
Cardoso and Faletto marry CEPAL’s economic structuralism with
dependency analysis. Their economic analysis remains very much
within the
cepalista
mould but they add a social and political
analysis largely absent from CEPAL’s writings. Their originality lies
in the way in which they analyse the changing relationships between
economic, social and political forces at key junctures in post-
colonial Latin America, and the manner in which they relate the
changing internal relationships
to
external forces, i.e. their attempt
to throw 1igt.t on the question
of
how internal developments link to
external changes and how the world system impinges differently
upon the various Latin American countries.
This interaction between internal and external elements forms
the core
of
Cardoso and Faletto’s characterization
of
dependence.
They seek to explore diversity within unity
of
the various historical
processes, contrary
to
Frank’s search
for
unity within diversity.
Dependence is not regarded simply as an external variable as they
do not derive the internal national socio-political situation mechan-
ically from external domination. Although the limits for manoeuvre
are largely set by the world system, the particular internal configura-
tion of a country determines the specific response
to
the same
external events. Thus, they do not see dependency and imperialism
as external and internal surfaces
of
a single vessel, with the internal
reduced
to
a shadow
of
the external. They conceive the relationship
between internal and external forces as forming a complex whole
and are exploring the interconnections between these
two
levels and
the ways in which they are interwoven.
In contrast
to
some other dependency writers, Cardoso (1973b)
does not regard dependency as being contradictory
to
development
and
to
indicate this he coins the term ‘associated-dependent develop-
ment’. He rejects Frank’s idea that when the links
of
dependence are
50
C.
Kay
and monopoly capitalism, and that the so-called national bour-
geoisies of the underdeveloped countries are unable to uproot
underdevelopment also influenced
dependentistas.
Among the Marxist dependency writers Marini
(1973)
has made
the most systematic theoretical effort
to
determine the specific laws
which govern dependent economies. Although Marini is, in my
view, the most outstanding Marxist
dependentista,
his work is
almost completely unknown in the English-speaking world. Marini’s
central thesis is that dependence involves the over-exploitation or
super-exploitation of labour in the subordinate nations. This
over-exploitation
of
labour in the periphery arises from the need of
capitalists to partly compensate for the fall in profit rates result-
ing from unequal exchange. Unequal exchange means that the
periphery’s profit rate falls and the centre’s rises as value is trans-
ferred from the former
to
the latter. Thus, over-exploitation helps
to compensate
for
unequal exchange. In turn this over-exploitation
of labour hinders
the
transition from absolute to relative surplus
value as the dominant form
in
capital-labour relations and the
accumulation process
in
the periphery, thereby reinforcing their
dependence.
lo
According to Marini the circuit
of
capital in dependent countries
differs from that in centre countries. In dependent countries the two
key elements
of
the capital cycle
-
the production and the circula-
tion
of
commodities
-
are separated as
a
result of the periphery
being linked
to
the centre through the over-exploitation of labour.
Production in Third World countries does not rely on internal
capacity for consumption but depends on exports to the developed
countries. Wages are kept low in the dependent countries because
the workers’ comsumption is not required for the realization of com-
modities. Thus, the conditions are set for the over-exploitation
of
labour
so
long as a sufficiently large surplus population exists. In the
dominant countries, meanwhile, the two phases of the circulation
of capital are completed internally. Once industrial capital has
established itself in the advanced countries, capital accumulation
depends fundamentally on increases
in
labour’s relative surplus
value through technical progress. The resulting increase in labour
productivity allows capitalists to afford wage increases without a
fall in their profit rate. This rise
in
the workers’ income fuels the
demand for industrial goods and
so
the cycle continues.
Turning now to the most famous writer on dependency, Frank’s
main contribution to dependency analysis occurs before he actually
Reflections on Latin American Contribution
to
Development
5
1
uses the term dependence, but is found in his central and well-known
idea
of
‘the development of underdevelopment’
(1966).
Although
the concept
of
dependence
is
best-known to an English-speaking
audience through the work
of
Frank, he is
a
reluctant and temporary
dependentistu.
As he himself acknowledges: ‘In using the word
“dependence”
I
only just attach myself
-
1
hope temporarily
-
to
the new fashion, already
so
widespread that it has become equally
acceptable to the reformist bourgeoisies and to revolutionary
marxists’ (Frank,
1970: 19-20).
Indeed, by
1972
he already pro-
nounced dependence as dead, ‘at least in the Latin America that gave
it
birth’ (Frank,
1977: 357).
In retrospect Frank’s writings can best be considered as belonging
to
the
world-system perspective to which he, together with Samir
Amin and Immanuel Wallerstein, has made such
a
vital contribu-
tion.
Of
course, Frank’s work has been extremely influential
all
over
the world but
it
would be a mistake to consider him
as
the depen-
dency writer
par excellence.
His prolific and polemical writings
helped to popularize the dependency vision, but at the same time the
identification outside Latin America
of
dependency theory with the
work
of
Frank has led to
a
one-dimensional view
of
it. Readers in
the English-speaking world thereby failed to perceive the variety and
richness
of
the Latin American dependency school.
11.
CRITICAL
WEAKNESSES
A renewal
of
structuralist and dependency analysis is called for
if
they are
to
continue to challenge and present an alternative
to
the
neoclassical and modernization paradigms.
I
have identified seven
major issues which need to be reconsidered.
First, the structuralists’ and
dependentistus’
central emphasis on
the deterioration of the terms of trade and unequal exchange respec-
tively needs to be recast.
It
detracts from the fundamental issue
of
class struggle within each society, and
it
fails
to
draw some key
lessons from the historical experience
of
those countries that
managed
to
grow successfully over long periods of time. Unequal
exchange, by transferring part of the economic surplus generated in
the periphery to the centre, undoubtedly diminishes the periphery’s
capacity for capital accumulation and growth. However, a country’s
development has as much
to
do with its ability
to
generate, as to
retain, its surplus, and this
is
largely determined by
its
internal mode
52
C.
Kay
of
production. A country’s socio-economic formation is, in turn,
the outcome
of
a complex interaction between economic, social and
political factors within which the class struggle assumes major signi-
ficance. By locating exploitation solely at the level between nations
these analyses obscure the fact that exploitation is
a
class pheno-
menon. This primacy of relations between nations goes some way
towards explaining why class is a category which is practically
absent in structuralist thought and
is
not given
a
crucial place within
dependency studies.
Second, and following from the above, the thesis that the
development
of
the centre countries is a consequence of the exploita-
tion
of
the peripheral countries and that the underdevelopment
of
the peripheral countries is a consequence
of
the development
of
the
centre countries, has
to
be revised. Recent historical research has
shown that the development
of
the centre countries was above all
a
result
of
the internal creation, appropriation and use
of
surplus and
had less
to
do with the pillage
or
exploitation
of
peripheral coun-
tries. The reasons for the successful development
of
the now
advanced countries have
to
be sought principally in the particular
economic, social, and political institutional framework which they
created and which was amenable
to
capital accumulation and
innovation. What is being argued is that development and under-
development are primarily rooted in social relations
of
production
and not in relations
of
exchange. Analyses which focus on exchange
relations between nations tend
to
underemphasize internal obstacles
to
development and overemphasize external obstacles. Further-
more, participation in the international division
of
labour can lead
to development, while an autarchic development strategy does not
ensure development.
Third, the role
of
the state in development needs
to
be redefined.
Structuralists and
dependentistus
have
to
arrive at
a
more realistic
appreciation
of
what the state can and cannot
(or
should not) do.
The early writings
of
CEPAL, in particular, reveal an idealized
picture
of
the developmentalist state as a liberating, equalizing, and
modernizing force in society, the implication being that
if
only the
oligarchical state were in the hands
of
the industrial bourgeoisie
and staffed by technocrats and professionals,
all
would be fine as
the state would then become the main force for progress. This
enlightened state would implement development programmes
whose fruits would be distributed widely through a newly created
welfare system. In turn,
dependentistas
had an idealist vision
of
Reflections
on
Lati:i American Contribution to Development
53
the socialist state. Not only would the proletarian state abolish
exploitation and poverty but, through a comprehensive programme
of
nationalization and planning, also achieve a self-reliant and
self-sustaining development process, finally overcoming under-
development and foreign exploitation. Thus, structuralist and
dependentistas need
to
give far greater recognition to the limitations
of the state
in
overcoming underdevelopment and dependence and
to
the pervasiveness of both situations. Also more attention needs
to be paid to the manifold relationships between state interventions
and market mechanisms, as
in
today’s more complex world the
state-market dichotomy is an increasingly simplistic vision.
Fourth, structuralist and dependency analysis needs to give a
more explicit commitment
to
civil society, especially
in
view of the
recent traumas experienced
in
the wake of the authoritarian state
in
Latin America.
It
is necessary
for
civil society to strengthen the
ability of exploited groups to organize and express their needs
so
as
to influence and shape development processes as well as
to
resist
further repression and exploitation. New social movements, such
as anti-authoritarian, religious, ethnic, feminist, regional, anti-
institutional and ecological movements, are emerging
in
Latin
America. These differ from the old class-based movements, and
politicians and social scientists ignore them at their peril. Futher-
more, the spread of non-governmental organizations is a testimony
to the crisis of the state as well as an expression of civil society’s need
of, and desire for, alternative forms
of
institutional representation.
In
both structuralism and dependencia there is a need
to
rediscover
civil society, to present proposals for strengthening the social
participation and the social organizations of the weak, the voiceless,
the oppressed, and the poor.
It
is also imperative
to
give greater
recognition
to
the importance of cultural and ideological elements
in
the mobilization of society for development, the institution-
alization of change, and the achievement of social cohesion and
integration.
Fifth, more research needs to be undertaken into the varied
processes of class formation and exploitation which are sensitive to
ethnicity, gender, and culture, and into the local forms of domina-
tion and political control, such as patron-client relationships.
In
recent years ethnic and gender divisions have surfaced
with
renewed
force, and the development literature is bereft of ideas regarding
how best
to
deal
with
these issues and propose policies for over-
coming the exploitation of ethnic groups, women, and what are
54
C. Kay
often called ‘minorities’. The ecological theme also has
to
be further
explored and given greater importance in view of the increasing
ecological crisis.
Sixth, structuralist and dependency analysts have
to
undertake
more studies of the smaller or micro units of
a
country. These micro
studies must, of course, be linked
to
the global or macro national
and international theories. Dependency studies have a tendency to
distort historical processes or to neglect the particular in their
attempts
to
generalize. The specificities
of
certain experiences are
simply abstracted away
so
as to conform
to
the general model and
many small, but by no means insignificant, occurrences are simply
not analysed.
It
is often the distinct and unassuming small events
which give diversity and richness to a theory, making
it
less prone
to
dogmatic and unidimensional tendencies.
Last but not least, structuralist and dependency writers have to
consider the possibility and feasibility of
a
variety of styles and
paths of development. Dichotomies such as capitalism
or
socialism,
outward or inward-directed development, and import-substitution
or export-promotion-industrialization are increasingly simplistic
visions in today’s highly interlinked and complex world.
111.
CONTEMPORARY RELEVANCE
Despite these criticisms and reservations, Latin American theories
of underdevelopment and development provide a fertile starting
point for understanding and overcoming the Third World’s,
and particularly Lartin America’s, present predicament. This is
especially the case
if
structuralism and dependency thinking are
understood as methods of analysis, as frameworks, and as series of
propositions rather than as fully fledged theories. In what follows
I
give a few illustrations regarding the contemporary relevance of
the Latin American school.
The Curse
of
External Vulnerability
Already
in
the late
1940s
the structuralists argued that the key
obstacle to Latin America’s economic development was the foreign
exchange constraint, and in the late
1960s
the
dependentistas
expressed this central problem in terms
of
external dependence.
Today Latin America’s external vulnerability is even greater than
before. This is largely a consequence of the neo-monetarists’
Reflections
on
Latin American Contribution
to
Development
55
outward-directed development strategy, and more specifically of the
debt crisis (Thorp and Whitehead,
1987).
In addition, the struc-
turalists’ and the
dependentistas’
analysis
of
the terms
of
trade and
unequal exchange retains some validity (Spraos,
1983;
Evans,
1987),
but new factors, such as the debt, contribute
to
the region’s external
vulnerability. In recent years the studies on the terms
of
trade
between North and South have multiplied, most notably because
of
their drastic deterioration and negative consequences, particularly
for some African countries (Thirlwall and Bergevin,
1985;
Sarkar,
1986;
Maizels,
1987).
Finan cia1 and Techno logical Dependence
The debt crisis has added a new dimension
to
the region’s con-
siderably aggravated financial dependence.
It
also
reveals the
limited options open
to
the debtor countries as
a
consequence
of
their technological dependence. In this way some aspects
of
depen-
dency analysis are vindicated. The problem
today
is not just one
of
insufficient growth
of
foreign-exchange earnings and capital
accumulation:
it
has been made considerably worse as
a
result
of
the
crippling foreign debt (Griffith-Jones and Sunkel,
1986).
In order
to
service this debt Latin America has been a net exporter
of
capital
since
1982
(Roddick et al.,
1988).
This has meant that the rate
of
capital formation has fallen with the consequent stagnation
or
negative growth of the economy (PREALC,
1987).
With the rise in
debt service, Latin American countries have had
to
drastically
reduce their imports (Marcel and Palma,
1990).
The brunt
of
the
cuts in imports was borne by capital goods, further aggravating the
crisis. Thus, the
dependentistas’
focus on the negative consequence
of
technological dependence continues
to
be relevant, but has
to
be
adjusted to the new circumstances.
The Continuing Structuralist-monetarist Controversy
The debt crisis, together with the resurgence
of
inflation, has also
led
to
a renewed interest in the old structuralist-monetarist debate
on the IMF’s adjustment and stabilization programmes (Baer and
Welch,
1987;
Ffrench-Davis,
1988).
Many Third World govern-
ments resent IMF interference in the formulation
of
their internal
economic policies (Petras and Brill,
1986).
Seers
(1981)
attacked the
short-sightedness
of
IMF policies and, while castigating some
developing countries that followed structuralist-type policies for
financial irresponsibility, argued that economists in the developed
56
C.
Kay
countries could learn useful lessons from the structuralist-mon-
etarist debate. He criticized those economists for not taking the
structuralists’ contribution on inflation into account and condemns
their ignorance
of
it. In turn, structuralists need to consider short-
term monetary and fiscal measures and to link these more closely to
the debt problem when designing an anti-inflationary programme.
This the recent neo-structuralist ‘heterodox shock’ stabilization
policies have started to do in some Latin American countries but
with little success
so
far (Manzetti and dell’Aquila,
1988;
Baer and
Beckerman,
1989).
Structural Heterogeneity, Marginality and the
In
formal
Sector
The analysis
of
structural heterogeneity retains significance,
especially as differences in productivity between and within sectors
have become even more acute in the last decade. Such disparities in
productivity lead to increased intra and inter-sectoral imbalances,
widen income differentials, limit the spread
of
technological pro-
gress, and reflect the continuing,
if
not growing, marginalization
(Wells,
1987).
Most new investments and modern technologies
go
to
the most productive enterprises within each sector and many,
if
not
most,
of
these new investment resources
go
to the industrial sector.
Thus marginality is still a problem as labour continues
to
be mar-
ginalized both from and by
a
modern technology which is largely
imported from the advanced countries (Sheahan,
1987).
Con-
sumption patterns in underdeveloped countries are increasingly
being ‘denationalized’ or internationalized as growing sectors
of
the
population imitate those
of
the developed countries. The creation
of
such dependent consumption habits extends as far as agro-industrial
food products (Lajo,
1983).
Also the neo-conservatives, stabiliza-
tion programmes have increased the mass
of
the structurally
unemployed (PREALC,
1985).
These unemployed have
to
fall
back
on their ingenuity
to
devise survival strategies varying from petty
trading activities to casual and low-paid labour in the informal
sector.
Ethnicity, Regionalism and the National Question
The resurgence
of
ethnic and regional-autonomist movements in
many parts
of
the world reveals the persistence
of
these problems
(see, for example, the special issue
of
Third World Quarterly,
1
1
(4),
1989
on ‘Ethnicity and World Politics’). The studies on internal
Reflections on Latin American Contribution to Development
57
colonialism do provide an entry into the analysis of some
of
these
issues.
New Industrialization Strategies
In the late
1940s
and early
1950s
when the structuralists first
advocated import-substituting industrialization, they had to battle
against orthodox economists who argued that less-developed coun-
tries should continue
to
specialize
in
primary-commodity produc-
tion on the grounds
of
international comparative advantage. At that
time the dispute was over whether Third World countries should
industrialize
or
not; today
it
is about whether they should follow
an import-substituting or an export-oriented industrialization
strategy. Neoclassical economists who advocate an export-oriented-
industrialization strategy conveniently forget
that
a couple of
decades earlier they were opposed to any kind
of
industrialization
strategy for the Third World
-
except for one spontaneously and
gradually induced by free markets. Their position has changed
(though often not publicly admitted) in view of the successful indus-
trialization of the newly industrializing countries in East Asia. The
spectacular breakthrough into manufacturing exports of these
countries in the last couple of decades is hailed as
a
success
of
free-
market policies and is used as a stick with which to beat the early
supporters of import substitution and
all
those who favour state
interventionism in the economy (Balassa,
1981;
Lal,
1983;
Ranis
and Orrock,
1984).
However, on closer examination a more com-
plex picture emerges from the industrialization experience of the
newly industrializing countries (Schmitz,
1984;
Harris,
1987).
While
some oriented their industrialization to the external market, many
entered the export market after having first gone through an
import-substitution process. The key difference between the old
import-substituting countries and the East Asian newly industrializ-
ing countries is that government intervention in the latter was much
more selective, responsive to new events, and less enduring, and
their ultimate purpose was increasingly to expose the industrial
sector to international competition (Colman and Nixson,
1986:
267-325).
It
might therefore be judicious for some underdeveloped
countries to combine varying degrees and types
of
protectionism,
export-promotion and state intervention according to changing
circumstances in a manner which was already being suggested by
structuralists.
58
C.
Kay
CONCLUSIONS
While in the early
1960s
Seers held out the hope that the new
discipline
of
development economics might overcome the crisis
in economics, by the late
1970s
he argued that development eco-
nomics itself was in crisis. On the one hand, he perceived that
developed countries were beginning
to
experience structural
problems in the postindustrial era and, on the other hand, that
the rapid industrialization
of
some developing countries, together
with the growing interdependence of the world economy, revealed
a new situation (Seers,
1979).
He then concluded that the way
forward was
for
economics and development economics
to
be
replaced by development studies because it offered the best hope
for the interdisciplinary and world-system approach which was
required for understanding and tackling the development problems
in
both the North and the South.” In this context he mentioned
that the Latin American school
of
development provided some
useful pointers (Seers,
1979: 714).
Streeten echoes similar senti-
ments by arguing that today
it
is necessary
to
stress the ‘unity in
diversity’ and concludes, following Hirschman, that ‘the explana-
tion
of
Southern societies, with different tools
of
analysis, has often
led
to
new illuminations and discoveries in our own Northern
societies, thereby re-establishing the unity
of
analysis’ (Streeten,
1983: 876).
In
outlining the contribution, shortcomings and contemporary
relevance
of
the Latin American school
I
have endeavoured to show
that closer attention
to
the writings emanating from the Third
World can provide one
of
the sources for the renewal
of
develop-
ment theory. There is certainly
an
urgent need today
to
develop and
assert alternatives
to
neo-conservative theories and policies in both
the South and the North.
I
have argued that the Latin American
theories
of
development and underdevelopment provide a useful
platform from which
to
develop an alternative to the neo-conserva-
tive and modernization paradigms.
For
this
to
happen, the Latin
American theories would need
to
address a number
of
shortcomings
and become part
of
a
more general theory
of
development in which
the contributions to development theory from the North and other
regions
of
the South are duly taken into account.
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