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Dependency theories emerged in Latin America in the early 1960s as a challenge to traditional Marxist and structuralist thinking regarding whether capitalist development in the periphery was both still viable (given the transformations of the world economy after the Second World War), and still necessary (as an unavoidable transition step towards socialism).

There can be little doubt that the Cuban Revolution was a turning point in Marxist analysis of capitalist development in the periphery. The events in Cuba gave rise to a new approach, of which most of the ‘dependency analyses’ form part. This argued that capitalism had totally lost its historical ‘progressive’ role in the periphery (if it ever had one); that is, it was both no longer capable of developing the productive forces of backward societies, and (thus) no longer able to bring them closer towards socialism. Consequently, this approach also argued against the politics of the popular fronts in the periphery and in favour of an immediate transition towards socialism.

Following traditional Marxist analysis, the pre-dependency, pre-Cuban Revolution approach saw capitalism as still historically progressive in the periphery; however, it argued that its key historical task – the ‘bourgeois-democratic’ revolution – was being inhibited by a new alliance between imperialist forces and the traditional oligarchies. The bourgeois-democratic revolution was the revolt of the emerging capitalist forces of production against the old pre-capitalist order. This revolution would be based on an alliance between the rising bourgeoisie and other progressive forces of society; the principal battle line would be between the new capitalist elites and the traditional oligarchies – between industry and land, capitalism versus pre-capitalist forms of monopoly and privilege. Because it would be the result of the pressure of a rising class whose path was being blocked in political, economic and social terms, this revolution would bring to the periphery (as it had done in the centre) not only political emancipation but economic progress as well.

One of the main analytical challenges facing the pre-dependency Marxist analysis was to explain why the ‘bourgeois–democratic’ revolution in the periphery was not really happening as expected (a phenomenon that was seriously hindering the process of capitalist development there). Since Lenin, this analysis had identified imperialism as the unmistakable main obstacle facing this revolution. The traditional oligarchies could not be the reason for this as on their own, they were not expected to prove any match for the new emerging capitalist classes. Therefore, the principal target in this struggle was unmistakable: North American imperialism. The allied camp for this fight, by the same reasoning, was also clear: everyone, except those (pre-capitalist) internal groups allied with imperialism. Thus, the anti-imperialist struggle was at the same time a struggle for domestic capitalist development and industrialization. The state and the ‘national’ bourgeoisie appeared as the potential leading agents for the development of the new capitalist economy, which in turn was viewed as a necessary stage towards socialism.

The Cuban Revolution questioned the very essence of this approach, insisting that the domestic bourgeoisies in the periphery no longer existed as a progressive social force but had become ‘lumpen’, ‘rent seekers’, incapable of rational accumulation and rational political activity, dilapidated by their consumerism, and blind to their ‘real’ long-term interests. It is within this framework, and with the explicit motive of developing theoretically and documenting historically this new approach that dependency analysis appeared on the scene. At the same time, both inside and outside the Economic Commission for Latin America (ECLAC), two other major Dependency Schools began to develop (see structuralism).

The general focus of all ‘dependency’ analyses is the development of peripheral capitalism (or, rather, the lack of it). More specifically, these studies attempted to analyse the obstacles to capitalist development in the periphery from the point of view of the new interplay between ‘internal’ and ‘external’ structures that had emerged after the Second World War. However, this interplay was analysed in several different ways.

With the necessary degree of simplification that every classification of intellectual tendencies entails, I distinguish between three major approaches – not mutually exclusive from the point of view of intellectual history – in ‘dependency’ analysis. First is the approach begun by Paul Baran, Paul Sweezy and Andre Gunder Frank; its essential characteristic is that it attempted to construct a comprehensive theory of the practical impossibility of capitalist development in the periphery. In these theories the ‘dependent’ character of peripheral economies is the crux on which the whole analysis of underdevelopment turns; that is, dependency is seen as causally linked to permanent capitalist underdevelopment.

The second approach is associated with the ECLAC Structuralist School, especially Celso Furtado, Aníbal Pinto and Osvaldo Sunkel. These writers sought to reformulate the classical ECLAC analysis of Latin American development from the perspective of a critique of the obstacles to ‘national’ development. This attempt at reformulation was not just process of adding new elements (mainly political and social) that were lacking in the original Prebisch–ECLAC analysis (see Prebisch, Raúl), but a thoroughgoing attempt to proceed beyond that analysis, adopting an increasingly different perspective.

Finally, the third approach, started by Fernando Henrique Cardoso and Enso Faletto, attempted to distance itself from the first by deliberately avoiding the formulation of a mechanico-formal theory of dependency and underdevelopment – specifically, by trying to avoid a mechanico-formal theory of the inevitability of underdevelopment in the capitalist periphery based on its dependent character. In turn, it concentrated on the study of what have been called ‘concrete situations of dependency’; that is to say, the precise forms in which the different economies and polities of the periphery have been articulated with those of the advanced nations at different times, and how their specific dynamics have thus been generated.

The First Approach: Dependency as a Formal Theory of the Inevitability of Capitalist Underdevelopment: On Cutting a Knot That Could Not Be Unravelled

There is no doubt that the ‘father’ of this approach was Baran. His principal contribution (1957) took up the approach of the Sixth Congress of the COMINTERN regarding the supposedly irresolvable nature of the contradictions between the economic and political needs of imperialism and those of the processes of political transformation, economic development and industrialization of the periphery.

To defend its interests, international monopoly capital would not only form alliances with pre-capitalist domestic oligarchies intended to block progressive capitalist transformations in the periphery, but its activities would also have the effect of distorting the process of capitalist development in these countries. As a result, international monopoly capital would have easy access to peripheral resources and finance, and the traditional élites in the periphery would be able to maintain their monopoly on power and their traditional (mostly predatory and rent-seeking) modes of surplus extraction. Within this context the possibilities for any form of dynamic economic growth in dependent countries were extremely limited or non-existent; the surplus they were able to generate (mainly from primary commodity export activities) was largely appropriated by foreign capital, or otherwise squandered by traditional elites. Therefore, long-term economic stagnation and underdevelopment was inevitable. The only way out was political. At a very premature stage, capitalism had become a fetter on the development of the productive forces in the periphery and, consequently, its historical role had already come to an early end.

Baran developed his ideas influenced both by the Frankfurt School’s general pessimism regarding the nature of capitalist development (see Jay 1996) and by Sweezy’s (1946) proposition that the rise of monopolies imparts to capitalism a tendency towards stagnation and decay (see monopoly capitalism). He also followed the main growth paradigm of his time, the Harrod–Domar model, which held that the size of the investable surplus was the crucial determinant of growth (together with the efficiency with which it was used: the incremental capital–output ratio).

Starting out with Baran’s analysis, Frank (1967) attempted to prove the thesis that the only political and economic solution to capitalist underdevelopment was a radical transformation of an immediately socialist character. For our purposes we may identify three levels of analysis in Frank’s model of the ‘development of underdevelopment’. In the first (arguing against ‘dualistic’ analyses), he attempted to demonstrate that the periphery had been incorporated and fully integrated into the world capitalist economy since the very early stages of colonial rule. In the second, he tried to show that such incorporation into the world capitalist economy had transformed the countries in question immediately into capitalist economies. Finally, in the third level, Frank attempted to prove that the integration of these supposedly capitalist economies into the world capitalist system was achieved through an interminable metropolis–satellite chain, through which the surplus generated at each stage was successfully siphoned off towards the centre. Therefore, for Frank the choice was clear: continue to endlessly underdevelop within capitalism, or socialist revolution.

In my opinion, the real value of Frank’s analysis is his critique of the supposedly dual structure of peripheral societies. Frank argues convincingly that the different sectors of the economies in question are and have been, since very early in their colonial history, well integrated to the world economy. Moreover, he has correctly emphasised that this integration has not automatically brought about capitalistic economic development, such as ‘optimistic’ models (derived from Adam Smith) would have predicted, in which increased international trade and the division of labour would inevitably bring about economic growth and prosperity. Nevertheless, Frank’s error lies in his attempt to explain this phenomenon by using the same economic deterministic framework of the model he purports to transcend. In fact, he merely turns it upside-down: integration into the world economy cannot possibly bring about capitalism development in the periphery because the development of the industrialised centre necessarily requires the underdevelopment of the periphery. Frank’s error is characteristic of the whole tradition of which he is part, including Baran (1957), Sweezy (1946), Amin (1970) and Wallerstein (1974, 1980) among the better known. In their analysis, there is always a priority of external over internal structures; in order to do this, they have to separate almost metaphysically the two sides of the opposition (the internal and the external), losing in the process the notion of movement through the dynamic of the contradictions between these two structures. The analysis which emerges is one typified by ‘antecedent causation and inert consequences’.

It is not surprising that this type of analysis leads Frank to develop a circular concept of capitalism. Although it is evident that capitalism is a system where production for profits via exchange predominates, the opposite is not necessarily true: the existence of production for profits in the market is not necessarily an indication of capitalist relationship of production. For Frank, this is a sufficient condition for the existence of capitalist forms of surplus extraction (and for the periphery to have been ‘capitalist’ since the beginning of colonial rule).

Although Frank did not go very far in his analysis of the world capitalist system as a whole, of its origins and its development, Amin (1970) and Wallerstein (1974, 1980) tackled this tremendous challenge. The central concerns of Frank’s theory of the ‘development of underdevelopment’ are also addressed by dos Santos (1970), Marini, Caputo, Pizarro, Hinkelammert, and continued later on by many non-Latin American social scientists. The most thoroughgoing critiques of these theories of underdevelopment have come from Brenner (1977), Cardoso (1972), Kay (1989), Laclau (1971), Lall (1975), Palma (1978), and Warren (1980).

I would argue that the theories of dependency examined here are mistaken not only because they do not ‘fit the facts’, but also – and equally important – because their mechanico-formal nature renders them both static and ahistorical. Their analytical focus has not been directed to the understanding of how new forms of capitalist development in the periphery have been marked by a series of specific economic, political, and social contradictions, instead only to assert the claim that capitalism had lost, or never had, a historically progressive role in the periphery.

Now, if the argument is that the progressiveness of capitalism has manifested itself in the periphery differently from in advanced capitalist countries, or in diverse ways in the different branches of the peripheral economies, or that it has generated inequality at regional levels and in the distribution of income, and has been accompanied by such phenomena as unemployment, and has benefited the elite almost exclusively, or again that it has taken on a cyclical nature, then this argument does no more than affirm that the development of capitalism in the periphery has been characterized by its contradictory and exploitative nature. The specificity of capitalist development in the Third World stems precisely from the particular ways in which these contradictions have been manifested, the different ways in which many of these countries have faced and temporarily overcome them, the ways in which this process has created further contradictions, and so on. It is through this process that the specific dynamic of capitalist development in different peripheral countries has been generated.

Reading their political analysis, one is left with the impression that the whole question of what course the revolution should take in the periphery revolves solely around the problem of whether or not capitalist development is viable. In other words, their conclusion seems to be that, if one accepts that capitalist development is feasible on its own terms, one is automatically bound to adopt the political strategy of waiting for and/or facilitating such development until its full productive powers have been exhausted, and only then to seek to move towards socialism. As it is precisely this option that these writers wish to reject, they have been obliged to make in their work a forced march back towards a pure ideological position to deny any possibility of capitalist development in the periphery.

The Second Approach: Dependency as a Reformulation of the ECLAC Analysis of Latin American Development

Towards the end of the 1960s the analysis of ECLAC regarding Latin American development suffered a gradual decline due to several key factors (see Furtado, Celso). The apparently gloomy panorama of capitalist development in Latin America in the 1960s led to substantial ideological changes in many influential ECLAC thinkers, and it strengthened the convictions of the Marxist ‘dependency’ writers reviewed earlier. The former were faced with the problem of trying to explain the apparent failure of their structuralist policies, particularly concerning import-substituting industrialization (see structuralism). The latter felt vindicated in their view of the unfeasibility of any form of ‘dependent capitalist development’.

Finally, by making a basically ethical distinction between ‘economic growth’ and ‘economic development’, most of the research done within the perspective of this second approach followed two separate lines, one concerned with the obstacles to economic growth (and in particular to manufacturing), the other with the apparently perverse character taken by capitalist development. The fragility of this formulation lies in its inability to distinguish between a socialist critique of capitalism and the analysis of the actual obstacles to capitalist development in the periphery.

The Third Approach: Dependency as a Methodology for the Analysis of ‘Concrete Situations of Development’

In my critique of the dependency studies reviewed so far, I have described the fundamental elements of what I understand to be the third of the three approaches within the dependency school. This approach is primarily associated with the work of Cardoso and Faletto, dating from the completion of their 1967 book.

Briefly, this third approach to the analysis of dependency can be summarized as follows.

  1. 1.

    In common with the two other approaches to ‘dependency’ discussed already, this third approach sees the Latin American economies as an integral part of the world capitalist system, in the context of increasing internationalization of the system as a whole. It also argues that the central dynamic of that system lies outside the peripheral economies and that, therefore, the options which are open to them are limited (but not determined) by the development of the system at the centre. In this way the ‘particular’ is in some way conditioned by the ‘general’. Therefore, a basic element for the analysis of these societies is given by the understanding of the general determinants of the world capitalist system, which is itself rapidly changing. However, the theory of imperialism, which was originally developed to provide an understanding of the dynamics of that system, has had enormous difficulty in keeping up with the significant and decisive changes in the capitalist system since the death of Lenin. During this period, capitalism underwent substantial changes, and the theory failed to keep up with them properly.

    One widely recognized characteristic of the third approach to dependency has been its effort to incorporate these transformations. For example, this approach was quick to grasp that the rise of the multinational corporations after the Second World War progressively transformed centre–periphery relationships, as well as relationships between the countries of the centre. As foreign capital became increasingly directed towards manufacturing industry in the periphery, the struggle for industrialization, which was previously seen as an anti-imperialist struggle, in some cases increasingly become the goal of foreign capital itself. Thus dependency and industrialization ceased to be necessarily contradictory processes, and a path of ‘dependent development’ for important parts of the periphery became possible.

  2. 2.

    The third approach has not only accepted but has also tried to enrich the analysis of how developing societies are structured through unequal and antagonistic patterns of social organization, showing the social asymmetries, the exploitative character of social organization and its relationship with the socio-economic base. This approach has also given considerable importance to the particular aspects of each economy like the effect of the diversity of natural resources, geographic location and so on, thus also extending the analysis of the ‘internal determinants’ of the development of peripheral economies.

  3. 3.

    However, while these improvements are important, the most significant feature of this approach is that it attempts to go beyond the analysis these internal and external elements, and insists that from the premises so far outlined one arrives at only a partial, abstract and indeterminate characterization of the historical process in the periphery, which can only be overcome by understanding how the ‘general’ and the ‘specific’ determinants interact in particular and concrete situations. It is only by understanding the specificity of ‘movement’ in the peripheral societies as a dialectical unity of both these internal and external factors that one can explain the particularity of social, political and economic processes in these societies.

Only in this way can one explain how, for example, the same process of mercantile expansion could simultaneously produce systems of slave labour, systems based on other forms of exploitation of indigenous populations, and incipient forms of wage labour. What is important is not simply to show that mercantile expansion was the basis of the transformation of most of the periphery, and even less to deduce mechanically that that process made these countries immediately capitalist. Rather, this approach emphasizes the specificity of history and seeks to avoid vague, abstract concepts by demonstrating how, throughout the history of backward nations, different sectors of local classes allied or clashed with foreign interests, organized different forms of the state, sustained distinct ideologies or tried to implement various policies or defined alternative strategies to cope with a constantly changing imperialist challenge.

The study of the dynamic of dependent societies as a dialectical unity of internal and external factors implies that the conditioning effect of each on the development of these societies can be separated only by undertaking a static (and metaphysical) analysis. Equally, if the internal dynamic of the dependent society is a particular aspect of the general dynamic of the capitalist system, it does not imply that the latter produces concrete effects in the former, but only that it finds concrete expression in that internal dynamic.

The system of ‘external domination’ reappears as an internal phenomenon through the social practices of local groups and classes, who share the interests and values of external forces. Other internal groups and forces oppose this domination, and in the concrete development of these contradictions the specific dynamic of the society is generated. It is not a case of seeing one part of the world capitalist system as ‘developing’ and another as ‘underdeveloping’, or of seeing imperialism and dependency as two sides of the same coin, with the underdeveloped or dependent world reduced to a passive role determined by the other.

There are, of course, elements within the capitalist system that affect all developing economies, but it is precisely the diversity within this unity that characterizes historical processes. Thus the analytical focus should be oriented towards the elaboration of concepts capable of explaining how the general trends in capitalist expansion are transformed into specific relationships between individuals, classes and states, how these specific relations in turn react upon the general trends of the capitalist system, how internal and external processes of political domination reflect one another, both in their compatibilities and their contradictions, how the economies and polities of peripheral countries are articulated with those of the centre, and how their specific dynamics are thus generated.

However, as is obvious, this third approach to the analysis of peripheral capitalism is not unique to ‘dependency’ studies and as such, in time, has superseded them.

See Also