The rise of dependency theories

Dan Flavin (1933–1996), The Diagonal of May 25, 1963, 243.8 × 9.2 cm, 1963.
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By CLAUDIO KATZ*

Dependency theorists argued with liberal interpretations and sought convergence with radical tendencies of nationalism.

Dependency theories developed in the 1960s and 70s around three strands. Ruy Mauro Marini, Theotonio Dos Santos and Vania Bambirra postulated a Marxist conception, which was complemented by the satellite metropolis vision of André Gunder Frank. Both perspectives were confronted with the thesis of associated dependent development proposed by Fernando Henrique Cardoso. What were your disagreements?

socialism and liberalism

The Marxist dependency theory was a direct product of the Cuban Revolution. Until 1960, no one imagined the beginning of an anti-capitalist process 90 miles from Miami. It was assumed that these transformations would be a consequence of previous changes in the centers of world power. Cuba's success disturbed this scenario and opened up great expectations of coming socialist horizons for Latin America.

Marini, Dos Santos and Bambirra postulated concepts in line with this hope. They participated in organizations that fought against military dictatorships and encouraged leftist projects in the turbulent period between the rise of the Chilean Popular Unity (1970) and the fall of Sandinismo (1990).

The three authors confronted US imperialism and conceived proposals for Latin American integration and international association with the so-called socialist bloc. They provided a drastic break with the political strategy of the communist parties, which proposed to forge alliances with the bourgeoisie in order to generate models of national capitalism.

Brazilian thinkers sought convergence with the radical trends of nationalism and distanced themselves from the conservative strands of this current. His conceptualizations of underdevelopment developed in close connection with all the debates of the left at that time (attitude towards the USSR, position towards reformist governments, opportunity for armed struggle) (Bambirra, 1986: 113-115, 78-82).

Dependency theorists clashed with liberal interpretations, which attributed regional backwardness to the insufficient absorption of Western civilization or to indigenous, mestizo and Hispano-Portuguese cultural heritage.

Marini demonstrated the inconsistency of this conception, recalling the colonial exaction suffered by Latin America and the subsequent dominance of wasteful oligarchies (Marini, 2007: 235-247).

Dos Santos also questioned the liberal proposal to repeat the US model, through the adoption of modernizing behaviors. He pointed out that the region's international insertion as an exporter of agromining products obstructed its development and refuted the fallacy of a gradual convergence with the advanced economies (Dos Santos, 2003). He also demonstrated the inconsistency of all the indicators used by neoclassical economists to assess the transition from a traditional to an industrial society (Sotelo, 2005).

Dos Santos rejected the dualist liberal interpretation of underdevelopment as a conflict between modern and laggard sectors of the economy. He highlighted the artificial character of this antinomy and portrayed the close integration between both segments (Dos Santos, 1978: 283-198).

Frank also participated in this criticism, highlighting that the backward sector was not an obstacle to the prevailing model, but its main recreator. He stressed that Latin American underdevelopment did not correspond to the absence of capitalism, but to the gravitation of a modality dependent on that system.

This approach by Frank not only challenged the liberal mythology that pitted regional backwardness against Western modernization. By defining underdevelopment as an intrinsic feature of dependent capitalism, he replaced the focus on ideal typologies with historical characterizations of social regimes (Laclau, 1973; Wolf, 1993: 38).

Developmentalism and Marxism

Marxist dependency theorists were influenced by ECLAC's conceptions, which attributed the backwardness of the periphery to the deterioration of terms of trade and the structural heterogeneity of economies with high unemployment, elite consumerism and agricultural stagnation.

Developmentalists promoted industrialization through import substitution and greater public sector investment. They questioned their attachment to the agro-export model and defended economic policies favorable to the national bourgeoisie.

Marini agreed with several of Prebisch's diagnoses on the origin of underdevelopment and with some of Furtado's theses on the adverse impact of labor supply on wages. But he never shared the hope of resolving these imbalances with bourgeois modernization policies. He pondered ECLAC's theoretical findings, questioning its expectations for autonomous capitalist development in Latin America (Marini, 1991: 18-19).

In addition, he criticized his lack of knowledge of the role played by the region in the accumulation of central economies. Marini explained the center-periphery gap through the dynamics of capitalism and stressed the inexistence of another variant of this system for the Third World. He stressed that underdevelopment could not be eradicated with simple corrective policies or with higher doses of investment (Marini, 1993).

Dos Santos formulated a similar critique. He recalled that Latin America's backwardness was not the result of the lack of capital, but of the place occupied by the region in the international division of labor (Dos Santos, 1978: 26-27).

Dependency theorists were also opposed to presenting the state as an artifice of growth, oblivious to the limitations of the dominant classes. Therefore, they did not believe in the margin suggested by ECLAC to complete Latin American industrialization.

In this approach, they demonstrated an affinity with Marxist economists from other regions who renewed the characterization of post-war capitalism, avoiding presenting this stage as a simple continuation of the previous Leninist scenario (Katz, 2016).

Dos Santos highlighted the new gravitation of multinational companies and the growing global integration of capital. He joined Amin's diagnoses of the law of value operating on a global scale and agreed with Sweezy's assessment of US protagonism. Bambirra also highlighted the North American predominance in the new circuit of global accumulation.

These visions connected the mutations of capitalism to the study of the crisis of that system. Marini evaluated the dynamics of the decreasing trend in the rate of profit in the periphery, remembering that the percentage decline in profitability comes from the reduction of new living work incorporated in goods, in relation to the dead work already objectified in raw materials and machinery. He emphasized that this modification reduces the rate of profit in proportion to the total invested capital.

Marini also indicated that the influx of capital to the periphery mitigated this decline in the central economies, by increasing the exploitation of workers from the periphery and making the supply of food and inputs for metropolitan industry cheaper. But he pointed out that this compensation accentuated the asphyxiation of consumption capacity in countries with lower wages (Marini, 2005).

Dos Santos shared this combined reasoning of the crisis as a result of valuation imbalances (decreasing tendency of the rate of profit) and tensions in the realization of value (insufficient purchasing power) (Dos Santos, 1978: 154-155). Both authors adopted a multicausal view – similar to Mandel's approach – which clarified several characteristics of the crisis in the periphery (Katz, 2009:117-119).

Dependency theorists also converged with Mandel and Amin in registering the new bifurcations present in underdeveloped countries. For this reason, Marini examined the manufacturing imbalances of intermediate economies affected by higher costs, technological disadvantages and chronic deficits in the trade balance. His diagnosis of Brazil (or Argentina and Mexico) coincided with what was exposed by industry scholars from equivalent countries in Asia and Africa.

Marini analyzed the average economies of Latin America to overcome presentations of the periphery as an indistinct universe. He corrected old traditions of Marxism that likened Latin America to regions of Asia or Africa.

The same purpose led Dos Santos to investigate the specificity of Latin American industries, subject to external increases in imports and internal suffocation due to the narrowness of the labor market.

Bambirra conceptualized the same problem by introducing distinctions between Latin American economies. She contrasted early industrialization countries (Argentina, Mexico, Brazil), later industrialization (Peru, Venezuela) and agro-export structures without industry (Paraguay, Haiti) (Bambirra 1986: 57-69). This attention to the uneven underdevelopment of the region was an analytical pillar of dependency theorists.

The new categories

Marini interpreted the deterioration of the terms of trade as an expression of unequal exchange. He claimed that transfers of value to the center did not derive from the inferiority of primary production, but from the objective dynamics of accumulation on a world scale (Marini, 1973). He thus highlighted the generic gravitation of the law of value in this process.

But the Brazilian thinker did not deepen this analysis and avoided the differentiated study of these phenomena inside and outside the industry, which was initiated by the theorists of unequal exchange (Emmanuel, Amin, Bettelheim). Nor did he explore the dynamics of oil rents recycled into financial circuits, as Mandel did. Dos Santos adopted the same perspective. He only placed unequal exchange in the context of international trade disputes, which usually affect the periphery (Dos Santos, 1978: 322-323, 367).

Latin American authors focused their attention on the imbalances of dependent reproduction. Dos Santos studied how trade imbalances combine with debt and inflation imbalances in the industrialized countries of the periphery.

Marini conceptualized the financing, production and commercialization cycle of these economies, in contrast to the core countries. He noted that private investment is lower than in the metropolises and that foreign capital drains funds through royalties, revenues or purchases of machinery. He described how companies make extraordinary profits by taking advantage of cheap wages and illustrated how low purchasing power hampers the domestic market (Marini, 2012).

Thus, he theorized ECLAC's structural heterogeneity in Marxist terms, as a dependent cycle. He took over from Prebisch the diagnosis of strong limits to accumulation as a result of sectoral disproportions and restrictions on consumption and considered that this capitalist adversity prevented development.

But he saw these imbalances as specific contradictions of dependent capitalism and investigated their dynamics using a model drawn from Book II d' The capital. In this reasoning, he avoided abstract equilibrium assumptions and detected the same tensions in industrial accumulation that Amin and Mandel observed.

Marini highlighted the narrowness of purchasing power, returning to the hypotheses of underconsumption in Luxembourg. But he located the problem in the peripheral scenarios. Instead of analyzing how the obstruction of domestic demand pushes metropolitan capital abroad, he studied the imbalances that this process generates in underdeveloped economies.

The Brazilian thinker already knew the dynamics of mass consumption in central countries and, therefore, presented a theory of obstructed Fordism in the average economies of the periphery. He highlighted the existence of a great stratification of consumption between the low and medium-high segments and underlined the absence of a mass of middle-income consumers, comparable to developed countries.

But Marini located the main peculiarity of industrialized peripheral economies in the super-exploitation of work. He used this term to describe the condition of workers subjected to payment of wages below the value of their labor power. He indicated that this anomaly was the background of the dependent situation and the conduct of the dominant classes, which profited from rates of surplus value higher than those of the center.

Marini considered that the bourgeoisie of the periphery compensated in this way for the losses derived from its subordinate place in the world market. He pointed out that Latin American capitalists used the workers' consumption fund as a source of capital accumulation.

The dependency theorist made it clear that overexploitation was only viable in regions with large labor surpluses, resulting from indigenous overpopulation (Mexico), rural exodus (Brazil) or migratory flows.

He identified the main peculiarity of medium-sized Latin American economies in the way of generating surplus value. Like Amin, he highlighted the existence of higher levels of exploitation. But instead of explaining this datum through differences in wages greater than differences in productivity, he attributed the phenomenon to a qualitatively lower remuneration of the workforce. This assessment was formulated in view of the industrialization process of a country with huge income inequalities (Brazil).

*Claudio Katz is professor of economics at Universidad Buenos Aires. Author, among other books, of Neoliberalism, neodevelopmentalism, socialism (Popular Expression).

Translation: Fernando Lima das Neves.

Originally published in the magazine Jacobin Latin America.

 

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