Notes on 'Development Theory in Transition - The Dependency Debate & Beyond: Third World Responses' by Magnus Blomstrom and Bjorn Hettne
1984: Zed Books, London

introduction

"traditional and still far from abandoned thinking on development is based on experiences specific to the Western world and [their] claim to universal validity must therefore be repudiated" (p.1) - the core of the book is the Latin American debate

the debates began in the 1940s, and were later criticised, from the left as well as right

"it is an established fact that dependence is a historical situation in most nations in the Third world" eval: would some contest this?

p.3  uses Kuhn's concept of paradigm shift to explain discrepancy between modernization and dependency - ideas become implemented for more reasons than just their own merit

Hettne and Blomstrom argue that several things are common to most dependency school theorists:
"- Underdeveloment is intimately connected with the expansion of industrialised captialist countries
  - Development and underdevelopment are different aspects of the same universal process
  - Dependency is, however, not only an external phenomenon, but is also manifested in different ways in the internal (social, ideological and politcal) structure" (p.6)

analyses 3 main view points

1. World System Approach

2. 'new' Marxism, not ethnocentric, challenge to dependency

3. older Marxism, but freed of ethnocentricity and false optimism

1. The emergence of Modern Development Theory

- development and economic growth initially considered to be synonmous

there are three distinct phases of economic though relevant here:
Classical (Smith, Ricardo, Malthus)
Smith wrote about increasing production, division of labour, bigger markets etc, Mathus about population growth and Ricardo about distribution of production among classes
as well as neo-classical and Keynesian

-
"MARX is often considered to belong to the classical school" (p.8) but in fact his analysis forms a seperate tradition

Marx holds a "materialist interpretation of history"; Maxist development theory based on the process of production, which breaks down in the FORCES OF PRODUCTION (humans, tools, raw materials, etc)
RELATIONS OF PRODUCTION (human relations in production, exchange and distribution of the material utilities in a society)
- the forces & relations of production are interrelated, they affect each other

all historical changes relate to the conflict between forces and the relations of production, when relations don't match forces, they are replaced with new and more advanced ones 
"in a class society there will always be those who benefit from the old (obsolete) production relations" - so there may be a delay before the social revolution

Marx doesn't just analyse history in economic terms - ideology, religion, law etc ('the social superstructure') are important as they can "precipitate the development of the [economic] base, and periodically slow it down, or stop it completely" (p.9)

but, the social superstructure is not free-standing - it is ultimately "determinded by the requirements of the economic base" (p.10)

colonialism as a necessary lift "In order to reach a state of socialism, all societies, including the less developed ones, are required to pass through the various stages of capitalist development. However, Marx doubted tht the less developed countries were capable of accomplishing this on their own"
-

Lenin
- capitalist development is less developed regions is more complex than suggested by Marx's analysis" (p.10)
Lenin wrote polemically; arguing against the idea that capitalist development was impossible in Russia (even though it was a long way behind other nations) - he thought captialism was not necessary to reach socialism. Although he was writing about Russia, this view has relevance to the third world.
He thought that capitalism was "both politically necessary and economically possible" (p.11) - "certain traditional (pre-capitalist) structures remained an obstacle to further development", therefore, less developed countries are involved in a process whereby "pre-capitalist structures were destroyed and replaced by something new, but also a more complex process in which external and internal structures interact"
Marx disregards "the importance of politcal independence...he had not realized the way in which colonial ties affected industrial development in the less developed countries"

Lenin wrote "The progressive effects of capitalism, on the contrary, are not to be seen there (in the colonies), despite the infiltration of foreign captial. When the dominant imperialist power needs social support in the colonies, it joins forces, first and foremost, with the ruling classes of the old pre-capitalist system - the feudal-type landlords, the commercial and money-lending bourgeoisie - againist the masses" (cf p.11)
colonial ties act as an obstacle to capitalist development, therefore political independence important
-
Neo-classical
classical economics lacks a long-term perspective, concerned with resource distribution in society, a static model.
John Maynard Keynes - analysed macro-economic problems, argued that studying aggregated supply/expenditure is useful in solving/explaining economic problems - however these problems were short-term ones of stabilization (depression/unemployment in industrialized countries). Keynes intentionally disregarded long-term problems of underdevelopment and as such "did not directly contribute to the theory of development" (p.12)

Harrod-Domar model - "intimate relationship between an economy's rate of growth...and its level of saving/development" - investment the key to development, therefore the dominant view in the 1950s was the development problem was one of capital shortage

Rostow
identifies 5 stages of economic growth: (p.13
1. Traditional society
2. The pre-take off stage
3. Take-off
4. The road to maturity
5. The society of mass consumption
the final stage is one where the "citizen is able to satisfy more than their basic needs" (p.13)
according to Rostow "international relations did...speed up the process of development"
he saw his theory as an "alternative to Marxist theory, but the key element in his thinking was, nevertheless, the process of of capitalist formation"

Balanced v. Unbalanced Growth

arguements based "on the logic of the vicious circle:since standard of living, saving, investments and purchasing power kept each other locked at a low level" a limited (industrial) development

'complementarity' the key concept; different aspects of industry, agriculture and infrastructure work together - the extent of the collaboration determined by a societies ambition.

criticised by Albert HIRSCHMAN - says that decision-making/entreprenuerial skills assumed to be available were not always available in sufficient numbers for all areas of the economy - better to concerntrate on one area; bottlenecks will create the pressure needed - thus UNBALANCED growth favoured

Trade and Development

early development economists argue that international trade was good; unrelated to underdevelopment

"neo-classicists considered foreign trade to be an effective 'engine of growth' and were therefore in favour of free trade... international division of labour in which all nations specialize and export onl those commodities which they can produce cheaply"

Ricardo inspired ideas developed by Hecksher and Ohlin (pre-WWII) explained why certain countries have compartive cost advantages

free-trade would ultimately reduce wage differences which would "in turn, lead to a more equal, international distribution of income"

other indirect advantages:
1 - materials (raw, machinary) would become available
2 - trade might transfer technical/administrative know-how
3 - increased competition (16)

foreign trade re-examined in modern times Western economists, Hans Singer, Gunnar Myrdal and Dudley Seers & from the 3d World - Raul Prebisch

Singer - peripheral states dependence on exporting raw material hampers their development - worsening trade terms mean the periphery is ill-served by specialization; industrialization should instead be their goal

Myrdal - 'backwash' effects lead to underdevelopment - free trade agravates difference, not equalising them. Countries that have already developed will benefit most from the expansion of the market

Early Structuralism 

1963 - Dudley Seers rejected current economic theory's claim of universality - specific to 'modern industrial captialism' - although he did not use Kuhnian terms at the time, "it is striking to see how Seer's reasoning implies some kind of paradigm crisis and anticipates a new paradigm"

according the structuralist view, underdevelopment, is "a problem of relations rather than a problem of scarcity" (p.17-8)

dualism - when two states (rich/poor, agriculture/industry) exist together within a system (sector, state, internationally)

Myrdal wrote about a cumulative causal process - the stagnant region in a dual society loses political power, as institutions are concerntrated in the richer areas - loses its autonomy "can be see as [a] predecessor to the dependency approach" (p.19)

The Modernization Paradigm

early, simple development theories saw development as "purely economic and based upon simple methods of growth, in which capital formation was the key factor" - but this was eurocentric, and when underdeveloped countries came to be studied, a big gap between theory and reality clearly existed - other disciplines introduced: