Marxist and Neo-Marxist Theories of Development
Posted April 18, 2011on:
Classical Marxism: Marx, Engels, Luxemburg and Lenin
- Underdevelopment: Baran (1950) and Frank (1969)
- Dependency Theory: Cardoso (1972), Evans, Chase-Dunn (1975) and Janvry & Garramon (1977)
- World System: Wallerstein (1979)
Response to Neo-Marxism = Orthodox Marxism: Laclau, Brenner (1977), Phillips, Warren, and Sender & Smith
Classical Marxism was, naturally, created by Marx (1818 – 1883). Marx said that when the more advanced country sells its goods above their value even though it is cheaper than the competing countries. He calls this capitalist imperialism. Marx’s view of capitalist imperialism, then, was that it would generate ‘a proliferation of autonomous capitalism, such as he expected in India and did witness in North Africa.’ Marx saw outlying areas of the world as undeveloped until they were developed by capitalism, and this is a point on which Marx would agree with neo-evolutionary and modernisation theorists. Marx and Engels didn’t write much about development but more about capitalism and lots about dominant and subordinate classes. Marx’s interest was about how capitalism developed in the first world, and other countries were only used in comparative studies, although the roots of Marxist development theories lie in classical Marxism. Marx favored evolutionary thought because he saw stages of growth towards inevitable capitalism.
Rosa Luxemburg was the first Marxist to emphasize the third world in The Accumulation of Capital (1913). Luxemburg discussed the West’s productive capacity outstripping the consumer’s ability to buy, so the pre-capitalist, developing countries provided raw materials and new markets for capital. Luxemburg predicted a world capitalist system using the third world. She also anticipated neo-Marxist theory by seeing capitalist imperialism and its associated militarism in the third world as linked to the survival of Western capitalism, although imperialism was not centrally important to her.
Lenin elaborated on imperialism, informed by Luxemburg, Bukharin and Hilferding. Lenin defined imperialism as the “monopoly stage of capitalism”, and he this as a recent phenomenon, emerging in the 1860s and being established in the early years of the 20th century. The key idea of Lenin’s conceptualization was ‘finance capital’ – ‘capital controlled by banks and employed by industrialists’, therefore the centralization of local, national and world economics.
The neo-Marxists came after classical Marxists. The difference between classical Marxism and neo-Marxism is that neo-Marxists see imperialism as responsible for underdevelopment. All underdevelopment draws on Lenin. There are three branches of neo-Marxism: underdevelopment, dependency, and world-system.
Baran (1950s) who was a neo-Marxist underdevelopment theorist developed Lenin’s ideas of imperialism by saying it was in the interests of capitalism to keep the third world as an ‘indispensable hinterland’ because it provided the West with raw materials. The ‘indispensable hinterland’ also gave a chance to extract an economic surplus. Baran (1950s) also suggested de-linking from the world economy and the introduction of socialist economic planning. Therefore, his thinking was a direct challenge to economic development theory at Baran’s time.
Frank (1969) developed Baran’s neo-Marxist underdevelopment by saying there were metropolitan vs. satellite areas. Frank (1969) drew inspiration from Paul Baran of the 1950s, and was able to conceptualize Baran’s notions in terms of a capitalist world system of metropolitan and satellite areas. Frank’s dominant world metropolitan areas subordinate the satellite regions. The dominant world metropolitan areas subordinate the satellite regions through military, political and trade agreements, and extract an economic surplus. Within countries, the capital city underdevelops outlying satellite regions and the capital city is in turn underdeveloped by the world metropolitan center. Statistics indicate industrial underdevelopment by industrial powers – in WW II, Latin America had ‘marked industrialisation and growth’ (Parsons of evolutionary universals talks of a four class system: elite urban, lower class urban, elite rural, and lower class rural. Wallerstein talks of a semi-periphery. The core of the satellite exploits its own hinterlands (i.e. Brazil converted its regions into internal colonial satellites) an deepens development. The big thing, Frank says, is that to Change their reality, satellites must Understand it. [This is getting into Oscar Lewis’ culture of poverty in modernisation.]
A key part of underdevelopment neo-Marxist theory is dependency theory; this arose in Latin America in the 1960s with the failure of economic development plans favored by Western institutions such as the World Bank, IMF and the TNCs. ‘Dependentistas’ called for more national control of the development process and foreign capital investment. Dependentistas argued that the way out of dependency was through gov’t reforms, and possibly revolution, because ‘development’ in most third world countries is only in the interests of foreign capitalism and not in the interests of the mass of the population. This led to the concept dependent development to describe the type of development which occurs in NICs in Latin America and East Asia. We’ll talk of four dependentistas: Cardoso (1972), Evans, Chase-Dunn (1975), and Janvry & Garramon (1977).
Cardoso (1960s/70s, 1972) was an underdevelopment dependentista neo-Marxist. Cardoso paid attention to how elites in poorer nations have allied, historically, with foreign interests to the detriment of the poorer masses. Cardoso thinks Frank (underdevelopment) is wrong in that some elite aspects CAN develop in the third world. Therefore, there are islands of development in the third world, which make an anti-nation in the nation. To permit the state and bourgeoisie groups to command the banner of nationalism would be a mistake with grave consequences, because they are out to rip off the population. Somehow one has to clue the masses into what is going on and break them out of Oscar Lewis’ culture of poverty.
Evans’ data suggested that in the mid-1970s Brazil and Mexico received 50% of US direct investment in third world manufacturing. Therefore, their industrialisation was highly dependent upon international financing.
Chase-Dunn (1975) has PROVEN dependency theory MUST be taken seriously as an explanation for uneven development in the world economy. The finding of a negative effect of investment dependence on economic development means that foreign capital MUST be seen as a form of control as well as a flow of resources. Chase-Dunn points to Beckford (1971) as the most plausible explanation – he says Nations which are subjected to external controls can’t appropriate their own surplus capital for investment in balanced development. Chase-Dunn says TNCs operate to further their own growth, but not the development of the countries in which they are located. Chase-Dunn also says political and economic forces which attempt to mobilize balanced national development are suppressed, and that foreign investment combines positive direct effects on the enterprise in which it is invested with negative effects on the rest of the national economy, resulting in overall negative effects.
Janvry & Garramon (1977) are dependentista neo-marxists. They say that “Through dualism, surplus value is increased not only by the orthodox means of central economies – principally increasing the productivity of work to reduce necessary labor embodied in wage goods – but in addition and dramatically more effectively by collapsing the price of agricultural labor by an amount equal to the production of use-values by the worker’s family in the subsistence plot. In this way, subsistence agriculture supplies cheap labor to commercial agriculture which in turn supplies cheap food to the urban sector where it sustains low wages – latifundias. Janvry & Garramon say social articulation is when the wage level is related to productivity. If social articulation is broken, it means that productivity can rise but wage level doesn’t – i.e. if you have a fully proletarianised labor force, then the level of wages must be sufficient to cover the subsistence needs of the worker and his family. That is articulation. “Only when the supply of slaves is highly elastic and at a low price is over-exploitation possible, with resulting early exhaustion through death or incapacitation.” In the West Indies, the owners just killed slaves with hard work. In Latin America, there were no slaves, just “free labor” under this system. Fierce competition among these mini-fundistas, the guys who get land on the labor market, leads to a wage below subsistence that merely compliments the gap between subsistence needs of the worker and his family, and the use values produced in his plot. Janvry says a child does three things for the parent: consumption, production and protection. Consumption is for the core. [Mamdani (1972) notes, “People are not poor because they have large families, Quite the contrary, they have large families because they are poor.”
World system underdevelopment neo-Marxism is represented by Immanuel Wallerstein. Wallerstein further advanced the concepts of underdevelopment theory in The Modern World System, by reconceptualising Frank’s model and adding another category. Wallerstein’s theory is based on a capitalist world-system: periphery (Latin America, Africa and Third World Asia), semi-periphery (NICs), and the core. Each level underdevelops the lower one. NICs got their own category in the neo-Marxist theory of development. Wallerstein says that the nation-state’s development status is shaped by its placement in the overall world-system. Wallerstein gives a new definition of capitalism: maximisation of profit rather than mode of production and private property. Wallerstein’s capitalist world-system neo-Marxist theory synthesized various theoretical and empirical strands within neo-Marxist theory.
Orthodox Marxists critiqued neo-Marxism, suggesting that neo-Marxist theories of development misunderstood Marx’s basic categories of analysis. For example, Wallerstein and other world system theorists argued that peripheral areas of the world began to be incorporated into the world system starting in the 15th and 16th centuries, but this implies that the capitalist world system existed before the industrial revolution, which is when Marx said capitalism developed. Orthodox Marxists returning to Marx’s original writings argued for a shift away from the whole world as an object of analysis, and back to the region and nation state. Orthodox Marxists tend to base their analysis on what is actually occurring in the third world, and see neo-Marxist analyses to be overly vague, even wrong. For Orthodox Marxists, development is always uneven, therefore that the third world is underdeveloped by the first is not a new problem. However, they see it as a problem to treat the world as a whole. They prefer a state-centered, class struggle – after all, the third world has many countries at different stages of development. Orthodox Marxists also argue that neo-Marxists focus on external exploitation which deflects from internal dynamics. Therefore, neo-Marxists give elites the opportunity to use ‘underdevelopment’ and ‘dependency’ to their own advantage to serve the masses… so they say, but actually they serve their own interests. Orthodox Marxists featured here are Laclau, Brenner (1977), Warren (1973, 1991), and Sender & Smith.
Laclau was a Latin American thinker who touted mode of production in his orthodox Marxist theories. Laclau spearheaded the critique against Frank & Wallerstein, saying that their definition of capitalism as profit-motivated production for the market is not enough because the neo-Marxists ignore the Marxist concept of the relations of production between capitalists and workers. Laclau also says Frank mixes up the mode of production with the coming of the Spanish to Latin America, because theoretically the Latin Americans would have had mode of production even in their own civilization. According to Laclau, neo-Marxists confuse capitalism with an exploitative economic system. For Laclau, as for Marx, capitalism should be seen as a particular mode of production based on the sale of labor, as well as separation from the means of production. Laclau doesn’t think it’s enough to think only of profit. Also, Laclau criticizes Wallerstein’s periphery and semi-periphery split, because Wallerstein saw the core as being based on a free skilled labor force, and periphery on coerced, less skilled labor force – but this coerced labor force is not in line with original Marxism. Laclau says he doesn’t know what “free labor” is, because labor that is hired, by definition, isn’t free, and therefore Wallerstein doesn’t understand Marxism!
Brenner (1977) critiqued neo-Marxism by saying that one needs to stay state-centered and focus on the inner dynamics of the countries, and not the world system. Class struggle generally is neglected by neo-Marxists, who see the third World classes as merely comprador, or the local agents of the core countries. To ORTHODOX Marxists, class struggle is a central concept.
Phillips, and orthodox Marxist critic of neo-Marxism, suggested that neo-Marxists should stop analyzing the pros and cons of development, and concentrate on the nature of class conflict in developing countries instead.
Warren (1973, 1991) was one of the liveliest orthodox Marxist writers to pursue the mode of production analysis. Warren insisted that development WAS occurring in the third world. Warren said, ‘What the third world needed was more, not less, capitalism, because the more people in the capitalist mode of production worldwide, the more likely there will be a global proletarian revolution, leading to socialism and communism. Warren says world-system dependentistas and/or underdevelopment theorists are wrong because the third world is richer and more independent. However, neo-Marxists didn’t buy Warren’s new take because of his statistics, among other reasons (World Bank, GNP). Warren’s statistics didn’t show the distribution, but just the average. Therefore, his non-Marxist sources didn’t convince the neo-Marxists. Warren’s theory is as such:
- Growth rates were high in the 3rd World since WW II, and there was little evidence to show a gap between the rich and the poor.
- In the 3rd World, innovation, the accumulation of capital, and manufacturing occurs, so they weren’t compradors.
- Warren sees urbanisation positively, because of a rise in GNP and improvements in living conditions.
- Living conditions like education, nutrition, health and housing in the 3rd World improved.
- Capitalist agriculture spread to outlying areas in the 3rd World, replacing pre-capitalist modes, links to higher wages, and agricultural output.
- Manufacturing became a larger percentage of GDP of many developing countries.
Therefore, Warren was optimistic about development in the 3rd World although he admits that the poorest parts are still ‘problematic’. Warren says this is because they have been starved by capital.
Sender and Smith are also orthodox Marxists. Sender and Smith applied Warren’s analysis to Africa, where the conclusion was that capitalism in Africa was the central dynamic of a wide range of African societies. For Sender and Smith, the failure of African development was due to neglect of the export sector because of ISI (Import Substitution Industrialisation) based on neo-Marxist de-linking and not enough exporting (EOI, export oriented industrialism).