Development Sociology - World System and Dependency Theory

World-Systems Theory

One of the primary historical-sociological perspectives is that of the worldsystems
analysis, a neo-Marxian approach built around analyses of modes of
production. This approach developed from an analysis of the economic and
material world, specifically capitalism as it emerged and developed in Europe
beginning in the 1500s. The world-systems analysis generally argues that this
new economic and social system broke the power of earlier political and
economic empires and systems, and developed towards a dominant world
system. While originating in Europe, the world system that has emerged over
the last five hundred years is without limits and extends for its reach throughout
the globe. In contrast to some Marxian approaches, this world system is not
always progressive in its effects, it encompasses a variety of modes of
production, and could ultimately be replaced by a socialist world system.


The world-systems analysis was developed by Immanuel Wallerstein (1930-)
who has been a professor at Columbia University, McGill University, and currently
the State University of New York at Binghamton. Wallerstein is best known for
his The Modern World-System, published in 1974. In this work he analyses the
origins of the modern system, beginning around 1500, where there began a
shift from political and military forms of dominance to economic influences
and power. In later volumes, Wallerstein traces the development of this new
system, showing how it is creating core, periphery, and semi-periphery regions
of the world. While political structures are connected to economic ones,
Wallerstein argues that a variety of political structures are compatible with the
capitalist world system.


The world-systems theory abandons national economies and the nation state
as the unit of analysis. Marxian theory generally works within the framework
of national social structures, with a capitalist and a working class being rooted
in the organisation of production and distribution on a national scale. The
world-systems theory considers the division of labour, exploitation, and
inequality on a world rather than a national level. That is, capitalism is not just
organised on a national level, it develops and uses resources, labour, production,
and markets on a world scale.


The development of Canada could easily be interpreted within a world-systems
approach. European expansion led to the development of Atlantic fisheries to
supply food for Europe. Later the development of the fur trade made Canada
supply furs for European consumption. These were connected to the
development of industry and consumer markets in Europe – with an emerging
bourgeoisie and working class. The development of trade and European
expansion across North America destroyed many of the aboriginal economies
that existed earlier. Agricultural and industrial changes in Europe led to export
of dispossessed and poor Europeans to settle in North America. Forest, mining,
and agricultural products were exported to Europe, thereby assisting in the
growth of European and North American capitalism. While some areas benefited,
others became disadvantaged as a result of these developments. Social and
class structures have a connection to this international division of labour and
the forms of development of production and markets on a world scale.
In world-systems analysis there are three types of regions. The core areas of
the world system are the wealthy countries of Europe and North America that
dominate and exploit much of the rest of the world. These countries tend to
have relatively free labour markets with relatively well paid skilled workers. In
contrast, the periphery is poor and exploited, exporting raw materials to the
core economies. Conditions for workers in the periphery tend to be very poor,
and workers in these countries are often coerced through slavery or threat of
starvation. The core countries benefit by maintaining the peripheral countries
in a backward state.


Semi-peripheral countries combine aspects of the core and periphery, being
exploited and exploiting. Examples might include some of the poorer parts of
Europe (Portugal or Greece) or some of the better off South American countries
such as Argentina. The key to the division, however, is not so much the
countries but the position any area occupies within the international division
of labour. For example, there may be peripheral areas of core countries (some
parts of northern Saskatchewan or the Maritimes) and core areas in primarily
peripheral countries.






Implications of World-System Analysis


In terms of sociological analysis, there appear to be at least three implications
of the world-systems analysis.


a) Expansion: Unlike earlier empires, which had limits to expansion prescribed References
by the ability to politically govern a wide area, there appears to be little
limit to the capitalist world system, especially today. It has expanded over
the last five hundred years and shows no signs of ending the domination
of the world economy. Wallerstein argues that this is one difference of the
current world system from earlier ones – there was a decisive break around
the period 1500, whereby capitalism, technology, and science combined to
create an expansive and global system.


b) International scope: Social structure has an international basis. Any analysis
of the social structure must consider the international aspect of this. That
is, the particular place any group occupies in an international division of
labour may be more important than the seeming place within the national
economy and society.


c) Difference and Inequality: In contrast to theories of modernisation or
globalisation that argue that there may be a single, more uniform world in
the future, the thrust of world-systems analysis is that continued
inequalities and backwardness are furthered at the same time that wealth
and progress occur in the core. This world system does not require similar
culture, politics, or even modes of production in different regions. Rather,
the capitalist world system can accommodate many different political forms
(democracy, totalitarianism, monarchies, military rule) and different forms
of production (slavery, semi-feudal forms of large estates and impoverished
peasants, market-oriented agriculture). While the economic power of
capitalism makes its effects felt on a world wide scale, this system creates
wealth in some places and takes wealth away from others. As a result,
poverty and inequality are essential aspects of such a system. This creates
strains and can lead to redistribution of power and wealth on a world wide
scale.


d) Study of Change: The world-systems analysis provides a useful way of
examining changes that have occurred and continue to occur across the
globe. For example, the migration of large numbers of people from poor to
richer countries is a result of the developments on the world system —
destroying traditional ways of life and livelihood in the sending countries
and filling labour supply needs in receiving countries. At the same time,
this approach may be overly economistic in much the same manner as
much Marxian analysis. That is, the world-systems analysis does not pay
much attention to culture and does not appear to consider it as an
independent aspect. Further, the assumption of dominance of European
and North American capitalist forces may be somewhat ethnocentric.

Dependency Theory of Underdevelopment

Dependency can be defined as an explanation of the economic development of a state in terms of the external influences—political, economic, and cultural— on national development policies (Sunkel 1969: 23). Theotonio Dos Santos emphasises the historical dimension of the dependency relationships in his definition:

[Dependency is]...a historical condition which shapes a certain structure of the world economy such that it favors some countries to the detriment of others and limits the development possibilities of the subordinate economics...a situation in which the economy of a certain group of countries is conditioned by the development and expansion of another economy, to which their own is subjected (Dos Santos 1971: 226).

There are three common features to these definitions which most dependency theorists share:

First, dependency characterizes the international system as comprised of two sets of states, variously described as dominant/dependent, center/periphery or metropolitan/satellite. The dominant states are the advanced industrial References nations in the Organisation of Economic Co-operation and Development (OECD). The dependent states are those states of Latin America, Asia, and Africa which have low per capita GNPs and which rely heavily on the export of a single commodity, or a few commodities, for foreign exchange earnings.

Second, both definitions have in common the assumption that external forces are of singular importance to the economic activities within the dependent states. These external forces include multinational corporations, international commodity markets, foreign assistance, communications, and any other means by which the advanced industrialised countries can represent their economic interests abroad.

Third, all the definitions of dependency indicate that the relations between dominant and dependent states are dynamic because the interactions between the two sets of states tend to not only reinforce but also intensify the unequal patterns. Moreover, dependency is a very deep-seated historical process, rooted in the internationalisation of capitalism.

The Central Propositions of Dependency Theory

There are a number of propositions, all of contestable, which form the core of the dependency theory. These propositions include:

1) “Underdevelopment” is a condition fundamentally different from “undevelopment”. The latter term simply refers to a condition in which resources are not being used. For example, the European colonists viewed the North American continent as an undeveloped area: the land was not actively cultivated on a scale consistent with its potential. Underdevelopment refers to a situation in which resources are being actively used, but used in a way which benefits dominant states and not the poorer states in which the resources are found.

2) The distinction between underdevelopment and undevelopment places the poorer countries of the world in a profoundly different historical context. These countries are not “behind” or “catching up” with the richer countries of the world. They are not poor because they lagged behind the scientific transformations or the Enlightenment values of the European states. They are poor because they were coercively integrated into the European economic system only as producers of raw materials or to serve as repositories of cheap labor, and were denied the opportunity to market their resources in any way that competed with dominant states.

3) Dependency theory suggests that alternative uses of resources are preferable to the resource usage patterns imposed by dominant states. There is no clear definition of what these preferred patterns might be, but some criteria are invoked. For example, one of the dominant state practices most often criticised by dependency theorists is export agriculture. The criticism is that many poor economies experience rather high rates of malnutrition even though they produce great amounts of food for export. Many dependency theorists would argue that those agricultural lands should be used for domestic food production in order to reduce the rates of malnutrition.

4) The preceding proposition can be amplified as follows: dependency theorists rely upon a belief that there exists a clear “national” economic interest which can and should be articulated for each country. What distinguishes the dependency perspective is that its proponents believe that this national interest can only be satisfied by addressing the needs of the poor within a society, rather than the satisfaction of corporate or governmental needs. Trying to determine what is the “best” for the poor is a difficult analytical problem. Dependency theorists have not yet articulated an operational definition of the national economic interest.


5) The diversion of resources over time (and one must remember that dependent relationships have persisted since the European expansion beginning in the fifteenth century) is maintained not only by the power of dominant States, but also through the power of elites in the dependent States. Dependency theorists argue that these elites maintain a dependent relationship because their own private interests coincide with the interests of the dominant States. These elites are typically trained in the dominant States and share similar values and culture with the elites in dominant States. Thus, in a very real sense, a dependency relationship is a “voluntary” relationship. One need not argue that the elites in a dependent State are consciously betraying the interests of their poor; the elites sincerely believe that the key to economic development lies in following the prescriptions of liberal economic doctrine.


The Policy Implications of Dependency Analysis




If one accepts the analysis of dependency theory, then the question of how poor economies’ development becomes quite different from the traditional questions concerning comparative advantage, capital accumulation, and import/ export strategies. Some of the most important new issues include:


1) The success of the advanced industrial economies does not serve as a model for the currently developing economies. When economic development became a focused area of study, the analytical strategy (and ideological preference) was quite clear: all nations need to emulate the patterns used by the rich countries (see Unit 10 for more details on growth theories and its critics).


2) Indeed, in the 1950s and 1960s there was a paradigmatic consensus that growth strategies were universally applicable, a consensus best articulated by Walt Rostow in his book, The Stages of Economic Growth. Dependency theory suggests that the success of the richer countries was a highly contingent and specific episode in global economic history, one dominated by the highly exploitative colonial relationships of the European powers. A repeat of those relationships is not now highly likely for the poor countries of the world.


3) Dependency theory repudiates the central distributive mechanism of the neoclassical model, what is usually called “trickle-down” economics. The neoclassical model of economic growth pays relatively little attention to the question of distribution of wealth. Its primary concern is on efficient production, and assumes that the market will allocate the rewards of efficient production in a rational and unbiased manner. This assumption may be valid for a well-integrated, economically fluid economy where people can quickly adjust to economic changes and where consumption patterns are not distorted by non-economic forces such as racial, ethnic, or gender bias. These conditions are not pervasive in the developing economies, and dependency theorists argue that economic activity is not easily disseminated in poor economies. For these structural reasons, dependency theorists argue that the market alone is not a sufficient distributive mechanism.

4) Since the market only rewards productivity, dependency theorists discount 

aggregate measures of economic growth such as the GDP or trade indices. Dependency theorists do not deny that economic activity occurs withina dependent state. They do make a very important distinction, however,between economic growth and economic development. For example,there is a greater concern within the dependency framework for whether the economic activity is actually benefiting the nation as a whole.

Therefore, far greater attention is paid to indices such as life expectancy,literacy, infant mortality, education, and the like. Dependency theorists clearly emphasize social indicators far more than economic indicators.

5) Dependent states, therefore, should attempt to pursue policies of self-reliance. Contrary to the neo-classical models endorsed by the International Monetary Fund and the World Bank, greater integration into the global economy is not necessarily a good choice for poor countries. Often this policy perspective is viewed as an endorsement of a policy of autarky, and there have been some experiments with such a policy such as China’s Great Leap Forward or Tanzania’s policy of Ujamaa. The failures of these policies are clear, and the failures suggest that autarky is not a good choice. Rather a policy of self-reliance should be interpreted as endorsing a policy of controlled interactions with the world economy: poor countries should only endorse interactions on terms that promise to improve the social and economic welfare of the larger citizenry.