1. Development Theory I: Modernisation and Dependency

2. Structure of the Lecture
Section One: Brief Historical Introduction
Section Two: Modernisation Theory
Section Three: Dependency Theory
Section Four: Capitalist Structuralism

3. Historical Introduction
For ideas of development economics or development theory to make sense it necessary to recognise difference between developing and developed societies
In many respects both Marxists and liberals did not recognize differences in C19th and early C20th

4. For Marx Imperialism was about the export of capital
The expansion of capitalism led to uniformity
Not that different from liberal political economy
Even critics of Imperialism (Hobson) saw it as ‘developmental’

5. Modern Development Economics was born in Latin America in the 1930s in response to world depression
The main early contributions of Development economics come under heading of the ‘structuralist’ school

6. The work of these early scholars was quickly dwarfed by contributions of US based liberal scholars in the early post-war period who sought to frame a comprehensive theory of development (Modernisation theory)
Explicit ant-communist political agenda

7. 1960s (in wake of the Cuban revolution) formation of a radical explanation of underdevelopment

8. Modernisation Theory Has cultural, political and economic component
Different authors stress different aspects of the argument

9. Evolutionary Theory of Human History: Third World Societies are less ‘evolved’ than first world societies
Policy framework to fight communism
Parsons overtly uses biological metaphor

10. A number of levels of the analyse
First and third world ‘man’ are seen as different physiologically (Oscar Lewis and David McClelland ).
First world ‘man’ is individualist, rational and goal orientated.
Third world ‘man’ is collective, irrational and fatalist

11. Second, first and third world social systems are fundamentally different in terms of levels of evolution:
Parsons Ideas of evolutionary ‘universals that all societies need to evolve beyond a particular level’.

12. Basic: Social stratification, Cultural Legitimating
Advanced: Bureaucratic Organisation, Money and the Market Complex, Generalised Universalistic Norms, and finally Democracy

13. Politically modernisation theorists did not simply promote liberal democracy
Concerned with problems of transition (the confluence of the modern and the underdeveloped)
Need mechanism of integration, depersonalisation, mediation and moderation to make democracy work

14. Order (anti-communism) most important
Army appeared as a rational modern institution. A medium term political solution
Pye, "Armies in the Process of Political Modernization”
Democracy ideal in long-term

15. Economic Theory of Modernisation
Rostow and Stages (Traditional Society, Preconditions for take-off, Take off, Drive to Maturity, Mass Consumption)
Values and ideas of traditional society are a problem
After this rates of investment. . Invest per cent of national income.

16. Lewis. Dual Economy and Expanding Capitalist nucleus
Two economies in underdeveloped state (capitalist and traditional)
The key to achieving growth is expand capitalist sector

17. It is necessary to channel additional resources to the sector.
Squeeze the peasantry
Importantly there is no serious consideration of external constraints

18. Criticisms of Modernisation:
Tradition simply becomes a residual characteristic (not seriously analysed)
Theory of evolution is crude
You cannot simply ignore the structures of the global economy

19. You cannot simply ignore the structures of the global economy
The economic solutions it proposes will exasperate poverty in the medium term
Political solutions questionable?
Does not properly delineate between different societies
All cultural explanations of growth pose problem of hitting the target (Catholicism, Confucianism etc )

20. Dependency Theory Marx turned on his head
Focus on exchange than production
Underdevelopment and development two sides of the same coin
The idea of a traditional sector is nonsense
The problem is how third world is integrated into the global economy

21. Frank
Unequal Exchange: All trade is monopolist an controlled by the centre for its over benefit (source of control changes). Same systems work internally (Major cities exploit the countryside)
Lumpenbourgoise:
All development is simply the development of underdevelopment

22. The entire economy is thoroughly penetrated by global capital
Although capital may lose interest in regions and periods of passive and active involution (Sub Saharan Africa example of passive involution)
For Frank active involution has limits

23. The Amin variation
Different explanation of Unequal Exchange: Wages and Dynamic Advantage
Excepts that there is pre-capitalist elements in the third world

24. However, these elements are penetrated by and their development is shaped by capitalism
Some development is possible but only extraverted development auto centric development is impossible
Thus for Amin (1973: 292) there no direct correlation between underdevelopment and GDP.

25. Criticisms of Dependency:
Hopelessly ridged (particularly Frank)
Insensitive to variations within the Third World (corrected by Cardoso)
Degrees of dependency. It is not Black and White
Belittles the real achievements of the third world (development of underdevelopment or extraverted development)
What is equal exchange?

26. Economic Theory of Modernisation
Lewis. Dual Economy and Expanding Capitalist nucleus
Two economies in underdeveloped state (capitalist and traditional)
The key to achieving growth is expand capitalist sector

27. It is necessary to channel additional resources to the sector.
Squeeze the peasantry
Importantly there is no serious consideration of external constraints

28. Capitalist Structuralism
We deal with this last because it represents a ‘middle ground’ understanding of third world states interactions with the world economy (Furtado).
It primarily theory devised by economists and is not necessarily a comprehensive theory of development

29. Some parallels with Lewis but differences
More sensitivity to external (fact you are developing in relation to the developed)
Terms of Trade
Emphasis on the domestic market and third world common markets
Primary focus on balance of payments rather than savings constraint

30. Policy Instruments:
Capitalist planning
Trade barriers
Moderate Wage Increases (expand markets and drive productivity)
Tax the Rich not the peasants (the rich have a bad pattern of consumption)

31. Conclusion Questions for You: What do these two approaches agree upon?
What can be salvaged?

32. Class Exercise: Election Fever
There is a election in a middle income state (say Brazil).
Divided into 3 groups (one representing modernisation, one dependency, one capitalist structuralism). Put forward a manifesto with main policies (and rational for these policies). Nominate a candidate who gave a brief election address.