Louis Proyect: The Unrepentant Marxist

(Posted to the Introduction to Marxism mailing list)

Where Bill Warren came from (image courtesy of The Cedar Lounge Revolution)

As should be obvious by now, much of the material that I have been forwarding is connected to major debates within Marxism, such as underconsumption/overaccumulation, dependency theory/Brenner critique, etc. This was not my original intention, but I have become persuaded that this is a good way to approach the material. Keep in mind that much of Marx and Lenin’s writings specifically arose in the context of a debate. I would also say that much of my training in Marxism, except for the occasional classes organized by the theory-bereft SWP, took place through my exposure to debates in the party.

Although the late Bill Warren is a pretty obscure figure today, he generated a lot of attention in the early 1970s when he wrote a 66 page article in the September-October 1973 New Review titled “Imperialism and Capitalist Industrialization” that argued that imperialism was dying out in the 3^rd world under the impact of local industrial development. In other words, capitalism was basically playing a progressive role in places like Brazil, India, Nigeria, etc. The end result of this development would be something approximating Thomas Friedman’s “The World is Flat” thesis.

As counter-intuitive as all this seems, there have always been bits and pieces of the Marxist classics that people like Warren could have appealed to. For example, Karl Marx wrote “The country that is more developed industrially only shows, to the less developed, the image of its own future” in the preface to V. 1 of Capital (1867 German Edition). Nearly 50 years later Leon Trotsky would write in “Third International After Lenin”:

In contrast to the economic systems which preceded it, capitalism inherently and constantly aims at economic expansion, at the penetration of new territories, the surmounting of economic differences, the conversion of self-sufficient provincial and national economies into a system of financial interrelationships. Thereby it brings about their rapprochment and equalizes the economic and cultural levels of the most progressive and the most backward countries. Without this main process, it would be impossible to conceive of the levelling out, first, of Europe with Great Britain, and then, of America with Europe; the industrialization of the colonies, the diminishing gap between India and Great Britain.

Since Warren’s article is so long, it would not be useful for me to forward the entire item. However, I will include some key passages from it as well as some rejoinders that appeared in the New Left Review. For those of you who have a particular interest in the topic, contact me offlist and I will be happy to send you the entire article(s).

Before proceeding, I would like to sketch out the political and historical context in which Warren’s ideas were put forward. To start with, Warren was a member of British and Irish Communist Organization (B&ICO, often referred to simply as BICO), a split from the Irish Communist Group in 1965 that adhered to various aspects of Stalinist and Maoist orthodoxy with some rather odd innovations, the most controversial of which was opposition to the Northern Irish Catholic struggle. They argued from a workerist perspective that was reminiscent of the CPUSA’s hostility to Malcolm X in the early 1960s.

In my view, it is no accident that both Warren and Robert Brenner were hostile to dependency theory, the only thing separating them ideologically was Warren’s going whole hog in favor of capitalism. Both were convinced that capitalism would be diffused from the more advanced countries to the less advanced ones, a view that owes much to the Communist Party’s intellectual traditions. In Warren’s case, you are dealing with a rather unmediated acceptance of Stalin-era stagism. With Brenner, you are getting an analysis that is heavily in debt to the Communist Party Historians Group that included such highly respected figures as Maurice Dobb, Christopher Hill, Eric Hobsbawm and E. P. Thompson. No matter how brilliant their scholarship, all of them was wedded to the idea that history proceeds through stages. Since Dobb was a primary influence on Robert Brenner, it is easy to understand why he would have such a strong reaction against a figure like Andre Gunder Frank who was so deeply influenced by Fidel Castro’s crypto-Trotskyist call for socialist revolution throughout Latin America even though conditions might not have ripened (in other words, an industrial proletariat had not been formed yet.) I say this despite the fact that Brenner has professed sympathy for Trotsky’s ideas in his NLR article. Politics is complicated, after all.

80 percent of Bill Warren’s article consists of empirical data meant to prove that capitalist industrialization was proceeding apace in the underdeveloped countries, thus rendering obsolete A.G. Frank’s notion that capitalism produces the “development of underdevelopment”. Additionally, Warren argues that Lenin’s theories were becoming obsolete as the differences between India, for example, and Great Britain were diminishing.

Warren’s article begins:

Current Marxist views of the relationship of imperialism to the non-socialist underdeveloped countries are that the prospects of independent economic development or independent industrialization in such countries are nil or negligible (unless they take a socialist option); and that the characteristics of backwardness, underdevelopment and dependence [1] which prevent such development are the necessary results of imperialist domination. Despite the state of controversy in which the theory of imperialism currently finds itself, these conclusions were generally accepted by all participants in a recent symposium on imperialism. [2] It will, on the contrary, be the burden of this article that empirical observations suggest that the prospects for successful capitalist economic development (implying industrialization) of a significant number of major underdeveloped countries are quite good; that substantial progress in capitalist industrialization has already been achieved; that the period since the Second World War has been marked by a major upsurge in capitalist social relations and productive forces (especially industrialization) in the Third World; that in so far as there are obstacles to this development, they originate not in current imperialist-Third World relationships, but almost entirely from the internal contradictions of the Third World itself; that the imperialist countries’ policies and their overall impact on the Third World actually favour its industrialization; and that the ties of dependence binding the Third World to the imperialist countries have been, and are being, markedly loosened, with the consequence that the distribution of power within the capitalist world is becoming less uneven.

To support his argument that the 3^rd world is becoming industrialized, Warren supplies many statistical tables. The first one he deploys is perhaps the most useful in at least understanding why he came to the conclusion that things were “improving”:

I should mention that I heard exactly the same type of arguments back in 1973 but not from a Marxist. When I worked at the First National Bank of Boston, I had a very likable manager who had graduated from Harvard and embraced liberal orthodoxies. When I used to argue that capitalism was destroying the 3^rd world (this was when I was young and impetuous), he frequently held up Brazil as a success and an exception that disproved my Marxist dogma.

If you go back and look at newspaper reports of the time, there were plenty of articles that supported my boss and Bill Warren who refers to Brazil frequently in his article, stating in one footnote that “Brazil ranks seventh among capitalist countries in commercial vehicle production and has nearly double the output of Italy in this important capital goods sector.”

Indeed, one 1971 N.Y. Times article sounds like it could have been written a couple of years ago when Brazil, Russia, India, China and South Africa (BRICS) were being widely discussed as a new economic bloc that would rival the traditional imperialist powers–just substitute “Lula” for “military government” and “progressive” for “conservative”:

There are holes in Brazil’s current economic boom-vast, blank areas where millions of people live on the edge of subsistence-and the military government has undertaken to fill them in its own conservative way.

Two Government projects are designed to give more of Brazil’s current industrial prosperity to the working poor at the bottom of urban society and to transform the medieval structure of the Northeast, a semiarid area where about 15 million people live in deadly poverty.

Of course these hopes were dashed as soon as the next major world economic crisis ensued, just as surely as they are being dashed in the BRICS countries today. That, after all, is how capitalism works. It is a system of expansion and contraction. If it only expanded, then Karl Marx and V.I. Lenin probably would have found careers as philosophy professor and lawyer instead of revolutionists.

The text that accompanies the table seen above should suffice to define Bill Warren’s basic argument:

Despite statements and predictions to the contrary, the underdeveloped world, considered as a whole, has made considerable progress in industrialization in the post-war period. Already, by the 1950s, the Third World accounted for a higher proportion of the world’s manufacturing output than it did pre-war. Whereas in 1937 the developed capitalist countries accounted for about nine times the manufacturing output of Latin America, Africa and Asia, by 1959 the ratio had been reduced to seven to one. Moreover, this tendency for manufacturing output to grow faster in the underdeveloped world than in the developed capitalist world continued into the 1960s-with Third World manufacturing output growing at about 7 per cent per annum between 1960 and 1968 while that in the advanced capitalist world grew at about 6 per cent. This was despite the fact that during the 1960s industrial growth in the developed capitalist world has been exceptionally high by historical standards, overall GNP growth easily exceeding the famous OECD Growth Target for the 1960s of 50 per cent over the decade.

It may be argued that this apparent success is attributable to the high statistical growth rates associated with very small industrial bases and is therefore delusive, or, alternatively, that in terms of output per head the record of the underdeveloped countries compared with the developed capitalist countries is rather poor. However, inspection of the figures for individual countries over a longish period shows the ability of many underdeveloped countries to maintain faster rates of growth of manufacturing output than the already industrialized economies (table iii). Moreover, the really unique feature of the post-war industrialization advance in the Third World taken as a whole, is its sustained momentum over a period longer than any previously recorded. Thirdly, this industrialization has been (and is) taking place in a period when neither war nor world depression have acted to ‘cut off’ the ThirdWorld from the advanced capitalist countries-and yet it is this cutting-off that Gunder Frank considers crucial in explaining such industrial progress as has been made (in partial exception to his ‘developing underdevelopment’ and ‘increasing polarization’ theses.)

Certainly, the growth of manufacturing output per head in the underdeveloped countries does lag behind that of the imperialist world, in part because of the unprecedented post-war rates of population growth in the former. But to take the growth of manufacturing output per head as a basis of comparison is to apply an extremely demanding criterion of performance. Similarly, the same point applies to the growth of total output per head. Clearly, from the point of view of living standards, per capita growth rates are the most relevant criterion. However, from the perspectives of the distribution of world industrial power and the growth of the market (which are more relevant to the problem at hand) total, rather than per capita, growth rates are the central issue.

One of the first responses to Warren’s article came from Philip McMichael, James Petras and Robert Rhodes in the May/June 1974 issue of NLR. (It should be mentioned that Petras had weighed in against Andre Gunder Frank beforehand, thus proving that you can’t automatically amalgamate Warren and the Brenner critique just on the basis that they both are opposed to dependency theory.)

Their article titled “Imperialism and the Contradictions of Development” zeroes in on Warren’s fixation on growth for growth’s sake:

Warren argues from his Table III (Annual Average Rates of Growth of Manufacturing for Selected Countries) that the ‘unique feature of the post-war industrialization advance in the Third World taken as a whole, is its sustained momentum over a period longer than any previously recorded’. But time series data reveal a cyclical pattern of industrial expansion interrupted by crises. For example, growth conditions in Brazil alternated between a boom in the 1950s, stagnation in the early and mid-1960s, and boom again in the late 1960s. To average out growth conditions is to conceal the specific problems of industrial expansion in the Third World. Warren also ignores the phenomenon of ‘internal colonialism’-by citing industrial growth apart from overall growth, he fails to establish the size of the sector affected and its relationship to and impact upon the Third World economy. In Latin America for instance, the overall growth rate between the mid-1950s and mid-1960s was low, yet industry expanded. To exclude these various conditions of industrial expansion allows Warren to project quite unqualified and optimistic assertions, devoid of any direct recognition of the contradictions accompanying this phenomenon.

Warren claims from his observations of absolute growth rates that there has been a significant ‘redistribution of world industrial power’. To measure distribution of world industrial power by ‘growth rates’ of industry, which include economies starting from the barest minimum of industrial production and cover a generation, is delightful simplicity. The volume of production, the level of technology, the research capabilities, the allocation of resources, the development of education and the use of manpower, are equally or more relevant to measuring the historic capacity of a country to become a significant industrial power. Warren wishes to prove a ‘redistribution’ of industrial power, but can only scrape up a one per cent difference in the industrial growth rate between the imperial centres and the Third World: a very slender reed upon which to hang such a weighty claim!

Specifically, the growth of the proportion of industry to GDP is in part accounted for by the low-productive nature of non-manufacturing sectors in the Third World; and in the imperialist countries the expansion of highly mechanized agricultural production and skilled services account for a greater proportion of GDP. Very different conclusions would have been suggested if Warren had acknowledged these critical realities of contemporary capitalism.

In the same issue of NLR, there was also a rebuttal by Arghiri Emmanuel titled “Myths of Development versus Myths of Underdevelopment”. Emmanuel was a dependency theorist committed to the theory of “unequal exchange” shared by Samir Amin.

Emmanuel accused Warren of cherry-picking his data, especially through its failure to address the largely agrarian composition of 3^rd world countries that indicated their failure to evolve toward 1^st world conditions, where farm labor and the peasantry are insignificant. One particular table spoke volumes:

Also of particular interest is how Emmanuel challenge’s Bill Warren’s rosy-hued view of the role of oil in the 3^rd world. Keep in mind that the early 70s were marked by a petroleum boom quite similar to that of recent years and led to illusions at the time that Saudi Arabia would rival the U.S., just as there have been illusions until recently that Russia would become a major world power as well.

It may well be that the recent oil upheaval will help to demystify these matters. We can now see that the increase in the price of oil, and the fantastic profits made from it, will be largely illusory-manifested in mere alterations in book-entries in banks in Zürich, London and New York-for lack of adequate structures for the absorption, and so for the consumption, of commodities and services that could be imported by the oil-producing countries. These ‘structures of reception’ are, quite simply, domestic incomes, and in particular adequate wage-levels, since, even if it is a question of importing capital-goods, the latter will eventually lead to an increase in the production of consumer-goods, and under the free-enterprise system no entrepreneur is going to invest ‘upstream’ of a branch when he has not already available, ‘downstream’, an outlet for the corresponding final product.

Thus, the rise in the price of oil will very probably remain formal, costing nothing to the consumer countries as a whole, and bringing no profit to the producing countries. The latter will continue to receive, in real values, only the cost of production, some 10 or 20 cents per barrel, plus a very small additional part of the price, realized in the form of armaments, or of a few tankers and perhaps also some refineries installed here and there. The rest of the price they will never receive, for lack of capacity to consume it. In other words, these countries, after having been for a long time too poor to be able to sell their oil at a normal price, when at last they have the opportunity to unite and, nominally, dictate this price, turn out to be too poor to be able to ensure that they are paid it in real terms.

Furthermore, the fact that the cost of production of oil in the Middle East continues to be between 10 and 20 cents a barrel today renders present prices very vulnerable. The least weakening of the Arab ‘united front’ will lead to their rapid collapse. The only force that could consolidate these prices durably would be an increase in the actual cost of extraction. Let us imagine that the recent price-increases had been preceded by a wave of strikes in the Middle East which had resulted in a very substantial increase in wages. Let us further imagine that, as a consequence, there had followed a rapid economic development of these countries, and intense urbanizations so that the price of a square metre of land in Saudi Arabia or Iraq had risen to the level of California or Texas; and that, as a result of all this, the real cost of extraction had risen from 10 cents to 10 dollars a barrel. It is clear that nobody, in those circumstances, would have vociferated about ‘blackmail’.

For this is the logic of capitalism: you can easily make the rest of the world pay for your wages and your consumption as previously established, that is, the prices of your factors of production, whatever these may be. You cannot, without problems and conflicts, make the rest of the world pay a price based on an exchange of equal quantities of such factors.

[This was originally posted to the Introduction to Marxism mailing list.]

Ten years after Monthly Review published André Gunder Frank’s “Capitalism and Underdevelopment in Latin America”, Robert Brenner wrote an article in the July-August 1977 New Left Review that took aim at the “dependency school” associated with Paul Sweezy, Paul Baran, Samir Amin and André Gunder Frank. All of these authors were readily identifiable with Monthly Review, but Brenner attacked Immanuel Wallerstein as well, who was seen much more as a “world systems” theorist than a dependency theorist. Whatever differences existed between the dependency and world systems theories, they were united in their belief that capitalism was responsible for the development of underdevelopment in the 3^rd world.

The proximate cause of Brenner’s article was to refute Paul Sweezy’s analysis of the origins of capitalism. In the 1950s, Sweezy debated Maurice Dobb in the pages of Science and Society over the “transition to capitalism question”. In “Studies in the Development of Capitalism” Dobb put forward the argument that capitalism developed through a combination of changes in the British countryside (enclosure acts, etc.) and colonialism in the New World. Strongly influenced by the historian Henri Pirenne, Sweezy took the position that a revival of trade with Asia was primarily responsible. Sweezy’s analysis influenced A.G. Frank as will be evident in Brenner’s polemics below.

Brenner adopted Dobb’s basic thesis but dropped the part about colonialism. Indeed, he was so emphatic about capitalism originating in the British countryside that he was positively hostile to any analysis that looked to “primitive accumulation” in the New World. In other words, he found the analysis of Baran and Frank that I have posted here over the past month or so to be outside of Marxism insofar as they supposedly put the struggle between nations over that of the class struggle. Basically, Brenner was arguing from the standpoint of classical Marxism against “Third Worldist” deviations-at least that is the way he saw it.

Brenner’s article is very long (70 pages) so I will only forward and comment on the sections that are relevant to the debate over dependency theory. (Unfortunately the article is only accessible to NLR subscribers so I really can’t supply a direct link.) My comments will appear in italics and will be enclosed by brackets. The “transition question” is of course very crucial to Marxist theory but will probably return to it later on after we have worked through the debates in Marxism over imperialism.

* * * *

New Left Review I/104, July-August 1977
Robert Brenner
The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism

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[André Gunder] Frank and Capitalist Development

It has thus been maintained that the very same mechanisms which set off underdevelopment in the ‘periphery’ are prerequisite to capital accumulation in the ‘core’. Capitalist development cannot take place in the core unless underdevelopment is developed in the periphery, because the very mechanisms which determine underdevelopment are required for capitalist accumulation. In the words of André Gunder Frank, ‘economic development and underdevelopment are the opposite faces of the same coin’. As Frank goes on to explain: ‘Both [development and underdevelopment] are the necessary result and contemporary manifestation of internal contradictions in the world capitalist system . . . economic development and underdevelopment are relational and qualitative, in that each is actually different from, yet caused by its relations with, the other. Yet development and underdevelopment are the same in that they are the product of a single, but dialectically contradictory, economic structure and process of capitalism. Thus they cannot be viewed as the product of supposedly different economic structures or systems . . . One and the same historical process of the expansion and development of capitalism throughout the world has simultaneously generated-and continues to generate-both economic development and structural underdevelopment.’ [3] Specifically: ‘The metropolis expropriates economic surplus from its satellites and appropriates it for its own economic development. The satellites remain underdeveloped for lack of access to their own surplus and as a consequence of the same polarization and exploitative contradictions which the metropolis introduces and maintains in the satellite’s domestic structure.’ [4]

Obviously such a view of underdevelopment carries with it a view of development, the unitary process which ostensibly brought about both. Frank’s primary focus has in fact been on the roots of underdevelopment, so it has not been essential for him to go into great detail concerning the origins and structure of capitalist development itself. Yet, to clarify his approach, it was necessary to lay out the mainsprings of capitalist development, as well as underdevelopment; accordingly, Frank did not neglect to do this, at least in broad outline. The roots of capitalist evolution, he said, were to be found in the rise of a world ‘commercial network’, developing into a ‘mercantile capitalist system’. Thus ‘a commercial network spread out from Italian cities such as Venice and later Iberian and Northwestern European towns to incorporate the Mediterranean world and sub-Saharan Africa and the adjacent Atlantic Islands in the fifteenth century . . . until the entire face of the globe had been incorporated into a single organic mercantilist or mercantile capitalist, and later also industrial and financial, system, whose metropolitan centre developed in Western Europe and then in North America and whose peripheral satellites underdeveloped on all the remaining continents.’ [5] With the rise of this system, there was ‘created a whole series of metropolis-satellite relationships, interlinked as in the surplus appropriation chain noted above’. As the ‘core’ end of the chain developed, the ‘peripheral’ end simultaneously underdeveloped.

Frank did not go much further than this in filling out his view of capitalism as a whole, its origins and development. But he was unambiguous in locating the dynamic of capitalist expansion in the rise of a world commercial network, while specifying the roots of both growth and backwardness in the ‘surplus appropriation chain’ which emerged in the expansionary process: [6] surplus appropriation by the core from the periphery, and the organization of the satellite’s internal mode of production to serve the needs of the metropolis. In this way, Frank set the stage for ceasing to locate the dynamic of capitalist development in a self-expanding process of capital accumulation by way of innovation in the core itself. Thus, for Frank, the accumulation of capital in the core depends, on the one hand, upon a process of original surplus creation in the periphery and surplus transfer to the core and, on the other hand, upon the imposition of a raw-material-producing, export-dependent economy upon the periphery to fit the productive and consumptive requirements of the core.

It has been left for Immanuel Wallerstein to carry to its logical conclusion the system outlined by Frank. Just as Frank and others have sought to find the sources of underdevelopment in the periphery in its relationship with the core, Wallerstein has sought to discover the roots of development in the core in its relationship with the periphery. Indeed, in his magisterial work, The Origins of the Modern World System, [7] Wallerstein attempts nothing less than to establish the origins of capitalist development and underdevelopment and to locate the mainsprings of their subsequent evolutions.

Wallerstein’s System

Wallerstein aims to systematize the elements of the preliminary sketch put forward in Frank’s work. His focus is on what he terms the ‘world economy’, defined negatively by contrast with the preceding universal ‘world empires’. So the world empires, which ended up by dominating all economies prior to the modern one, prevented economic development through the effects of their overarching bureaucracies, which absorbed masses of economic surplus and prevented its accumulation in the form of productive investments. In this context, Wallerstein declares that the essential condition for modern economic development was the collapse of world empire, and the prevention of the emergence of any new one from the sixteenth century until the present. Wallerstein can argue in this way because of what he sees to be the immanent developmental dynamic of unfettered world trade. Left to develop on its own, that is without the suffocating impact of the world empires, developing commerce will bring with it an ever more efficient organization of production through ever increasing regional specialization-in particular, through allowing for a more effective distribution by region of what Wallerstein terms systems of ‘labour control’ in relation to the world’s regional distribution of natural resources and population. The trade-induced world division of labour will, in turn, give rise to an international structure of unequally powerful nation states: a structure which, through maintaining and consolidating the world division of labour, determines an accelerated process of accumulation in certain regions (the core), while enforcing a cycle of backwardness in others (the periphery). [8]

Without, for the moment, further attempting to clarify Wallerstein’s argument, it can be clearly seen that his master conceptions of world economy and world empire were developed to distinguish the modern economy, which can and does experience systematic economic development, from the pre-capitalist economies (called world empires), which were capable only of redistributing a relatively inflexible product, because they could expand production only within definite limits. Such a distinction is both correct and necessary. For capitalism differs from all pre-capitalist modes of production in its systematic tendency to unprecedented, though neither continuous nor unlimited, economic development-in particular through the expansion of what might be called (after Marx’s terminology) relative as opposed to absolute surplus labour. That is, under capitalism, surplus is systematically achieved for the first time through increases of labour productivity, leading to the cheapening of goods and a greater total output from a given labour force (with a given working day, intensity of labour and real wage). This makes it possible for the capitalist class to increase its surplus, without necessarily having to resort to methods of increasing absolute surplus labour which dominated pre-capitalist modes-i.e. the extension of the working day, the intensification of work, and the decrease in the standard of living of the labour force. [9]

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Wallerstein does not, in the last analysis, take into account the development of the forces of production through a process of accumulation by means of innovation (‘accumulation of capital on an extended scale’), in part because to do so would undermine his notion of the essential role of the underdevelopment of the periphery in contributing to the development of the core, through surplus transfer to underwrite accumulation there. More directly, Wallerstein cannot-and in fact does not-account for the systematic production of relative surplus product, because he mislocates the mechanism behind accumulation via innovation in ‘production for profit on the market’: ‘The essential feature of a capitalist world economy . . . is production for sale in a market in which the object is to realise the maximum profit. In such a system, production is constantly expanded as long as further production is profitable, and men constantly innovate new ways of producing things that expand their profit margin.’ (rfd, p. 398.)

Now, there is no doubt that capitalism is a system in which production for a profit via exchange predominates. But does the opposite hold true? Does the appearance of widespread production ‘for profit in the market’ signal the existence of capitalism, and more particularly a system in which, as a characteristic feature, ‘production is constantly expanded and men constantly innovate new ways of producing’. Certainly not, because production for exchange is perfectly compatible with a system in which it is either unnecessary or impossible, or both, to reinvest in expanded, improved production in order to ‘profit’. Indeed, we shall argue that this is the norm in pre-capitalist societies. For in such societies the social relations of production in large part confine the realization of surplus labour to the methods of extending absolute labour. The increase of relative surplus labour cannot become a systematic feature of such modes of production.

[The above paragraph is crucial to understanding the difference between Frank and Wallerstein on one side and Brenner on the other. For Brenner, the production of relative surplus value over and against absolute surplus value is a sine qua non for capitalism. The earliest stage of capitalism is marked by the production of absolute surplus value through 11 hour work days using very simple machinery. But with increased competition, capitalism is forced to rationalize production and improve labor productivity through technological innovation. In other words, the industrial revolution. Implicit in this analysis is the failure of the plantation and mining systems in the colonial world to live up to Brenner’s litmus test. To illustrate, Belgium was deeply involved in the production of relative surplus value when its working class produced automobile tires in the 1920s but in the Congo, when workers were dragooned into tapping rubber using the simplest of tools, there was only the production of absolute surplus value. In my view, this distinction between absolute and relative surplus value is not very useful in understanding colonial capitalism.]

[Brenner now turns to a lengthy discussion of his differences with Sweezy and Wallerstein over the transition from feudalism to capitalism that I am skipping over. Suffice it to say that his critique revolves around the idea that the transfer of wealth-including gold, silver, fur, etc.-from the New World to Europe could not account for the rise of capitalism. He makes this even more explicit when he turns once again to André Gunder Frank.]

Frank and his Critics

From this perspective, it is impossible to accept Frank’s view, adopted by Wallerstein, that the capitalist ‘development of underdevelopment’ in the regions colonized by Europeans from the sixteenth century-especially the Caribbean, South America and Africa, as well as the southern part of North America-is comprehensible as a direct result of the incorporation of these regions within the world market, their ‘subordination’ to the system of capital accumulation on a world scale. Frank originally explained this rise of underdevelopment largely in terms of the transfer of surplus from periphery to core, and the export-dependent role assigned to the periphery in the world division of labour. [83] These mechanisms clearly capture important aspects of the functioning reality of underdevelopment. But they explain little, for, as the more searching critics of Frank’s earlier formulations pointed out, they themselves need to be explained. In particular, it was stated, they needed to be rooted in the class and productive structures of the periphery. [84]

However, in more recent work, Frank has attempted to respond to his critics specifically by integrating an analysis of internal class structure into his theory of underdevelopment. He argues that ‘underdevelopment is the result of exploitation of the colonial and class structure based on ultraexploitation; development was achieved where this structure of underdevelopment was not established because it was impossible to establish. All other factors are secondary or derive from the basic question of the type of exploitation.’ [85] By this reasoning, it was the relations of exploitation which came to dominate Latin American and Caribbean production for export, especially slavery and other sorts of enforced-labour systems, which determined underdevelopment. Thus, ‘The colonial and class structure is the product of the introduction into Latin America of an ultraexploitative export economy, dependent on the metropolis, which restricted the internal market and created the economic interests of the lumpen bourgeoisie (producers and exporters of raw materials). These interests in turn generated a policy of under- or lumpen development for the economy as a whole.’ [86] Perhaps we could paraphrase Frank’s argument in the following terms: on the one hand, growing production for the market stimulated by world demand determined increasing pressure to extract greater surplus; on the other hand, the establishment of class systems of production based on the direct use of force determined that this increasing output would be achieved through the extension of absolute, rather than relative, surplus labour-with familiar results.

[The final paragraphs of Brenner’s article get to the political differences between “dependency theory” and what he offers up as a return to a class-based Marxism.]

Conclusions

Frank’s original formulations aimed to destroy the suffocating orthodoxies of Marxist evolutionary stage theory upon which the Communist Parties’ political strategies of ‘popular front’ and ‘bourgeois democratic revolution’ had been predicated. [107] Frank rightly stressed that the expansion of capitalism through trade and investment did not automatically bring with it the capitalist economic development that the Marx of the Manifesto had predicted. In the course of the growth of the world market, Chinese Walls to the advance of the productive forces might be erected as well as battered down. When such ‘development of underdevelopment’ occurred, Frank pointed out, the ‘national bourgeoisie’ acquired an interest not in revolution for development, but in supporting precisely the class system of production and surplus extraction which fettered economic advance. In particular, the merchants of the periphery backed the established order, for they depended for their profits on the mining and plantation enterprises controlled by the ‘reactionaries’, as well as the industrial production of the imperialists in the metropolis. But even the industrial capitalists of the periphery offered no challenge to the established structure-partly as a consequence of their involvement in luxury production serving the upper classes-while they merged with the ‘neo-feudalists’ through family connections and state office. As Frank asserted, to expect under these circumstances that capitalist penetration would develop the country was, by and large, wishful thinking. To count on the bourgeoisie for a significant role in an anti-feudal, anti-imperialist revolution was to encourage a dangerous utopia.

Yet, the failure of Frank and the whole tradition of which he is a part-including Sweezy and Wallerstein among others-to transcend the economic determinist framework of their adversaries, rather than merely turn it upside down, opens the way in turn for the adoption of similarly ill-founded political perspectives. Where the old orthodoxy claimed that the bourgeoisie must oppose the neo-feudalists, Frank said the neo-feudalists were capitalists. Where the old orthodoxy saw development as depending on bourgeois penetration, Frank argued that capitalist development in the core depended upon the development of underdevelopment in the periphery. At every point, therefore, Frank-and his co-thinkers such as Wallerstein-followed their adversaries in locating the sources of both development and underdevelopment in an abstract process of capitalist expansion; and like them, failed to specify the particular, historically developed class structures through which these processes actually worked themselves out and through which their fundamental character was actually determined. As a result, they failed to focus centrally on the productivity of labour as the essence and key to economic development. They did not state the degree to which the latter was, in turn, centrally bound up with historically specific class structures of production and surplus extraction, themselves the product of determinations beyond the market. Hence, they did not see the degree to which patterns of development or underdevelopment for an entire epoch might hinge upon the outcome of specific processes of class formation, of class struggle. The consequence is that Frank’s analysis can be used to support political conclusions he would certainly himself oppose.

Thus so long as incorporation into the world market/world division of labour is seen automatically to breed underdevelopment, the logical antidote to capitalist underdevelopment is not socialism, but autarky. So long as capitalism develops merely through squeezing dry the ‘third world’, the primary opponents must be core versus periphery, the cities versus the countryside-not the international proletariat, in alliance with the oppressed people of all countries, versus the bourgeoisie. In fact, the danger here is double-edged: on the one hand, a new opening to the ‘national bourgeoisie’; on the other hand, a false strategy for anti-capitalist revolution.

[The above paragraph is really the coup de grace that Brenner intended to deliver to Monthly Review Marxism. Although he does not spell it out exactly, the words “cities versus the countryside” are a veiled reference to Maoism. It is true that Monthly Review identified itself as Maoist to some degree and could have been challenged on that basis, but it is puzzling that Brenner did not make that line of attack clearer. Furthermore, the idea of adapting to the ‘national bourgeoisie’ is hardly supported by André Gunder Frank’s career. While his Marxism, and particularly his evolution into a “long wave” theorist, often left something to be desired, he was never one to stump for a progressive 3^rd world bourgeoisie.]

True, bourgeois revolutions are not on the agenda. International capitalists, local capitalists and neo-feudalists alike have remained, by and large, interested in and supportive of the class structures of underdevelopment. Nevertheless, these structures have kept significant masses of use value in the form of labour power and natural resources from the field of capital accumulation. Until recently, of course, the class interests behind ‘industrialization via import substitution’ have not, as a rule, been strong enough to force the class structural shifts that would open the way to profitable investment in development. However, with contracting profit opportunities in the advanced industrial countries and the consequent drive for new markets and cheap labour power, potentially available in the underdeveloped world, such interests may now receive significant strength from unexpected quarters. Should a dynamic of ‘development’ be set in motion as a consequence-and that is far from certain-it could hardly be expected to bring much improvement to the working population of the underdeveloped areas, for its very raison d’être would be low wages and a politically repressed labour force. But this would in no way rule out its being accomplished under a banner of anti-dependency, national development and anti-imperialism.

[What would be Brenner be alluding to above? He is warning against an “anti-dependency” government that represses its own working class using “anti-imperialist” rhetoric. Possibly the most striking example of this tendency in the past 30 years has been the Islamic Republic of Iran. Once again, it must be underlined that Monthly Review has never adapted to the Islamic Republic notwithstanding the occasional strange posting on MRZine that Monthly Review editors have tolerated for reasons not worth going into here.]

Most directly, of course, the notion of the ‘development of underdevelopment’ opens the way to third-worldist ideology. From the conclusion that development occurred only in the absence of links with accumulating capitalism in the metropolis, it can be only a short step to the strategy of semi-autarkic socialist development. Then the utopia of socialism in one country replaces that of the bourgeois revolution-one moreover, which is buttressed by the assertion that the revolution against capitalism can come only from the periphery, since the proletariat of the core has been largely bought off as a consequence of the transfer of surplus from the periphery to the core. Such a perspective must tend to minimize the degree to which any significant national development of the productive forces depends today upon a close connection with the international division of labour (although such economic advance is not, of course, determined by such a connection). It must, consequently, tend to overlook the pressures to external political compromise and internal political degeneration bound up with that involvement in-and dependence upon-the capitalist world market which is necessary for development. Such pressures are indeed present from the start, due to the requirement to extract surpluses for development, in the absence of advanced means of production, through the methods of increasing absolute surplus labour.

[The warnings about ‘third-worldist’ ideology have to be understood in the context of the reaction against the excesses of the 1960s. Many socialists woke up with a hangover when they discovered that chants of “Ho, Ho Ho Chi Minh” had fallen on deaf ears in the U.S. and other industrialized countries. Basically, Brenner wanted to reorient the movement back to the metropolitan centers where the working class was powerful enough and advanced enough to “overlook the pressures to external political compromise and internal political degeneration”, but unfortunately not at all interested in socialist revolution. Not much has changed since Brenner wrote this article. The 3^rd world continues to supply the shock troops against imperialism and the revolutionary process in Venezuela, Bolivia, Ecuador, and Peru would seem to have a lot more in common with André Gunder Frank’s analysis than Robert Brenner’s, particularly when you keep in mind that Frank was calling attention back in 1967 to Mariategui, a relatively obscure figure in Marxism at that time but one destined to influence the Latin American revolution of the 21^st century.]

On the other hand, this perspective must also minimize the extent to which capitalism’s post-war success in developing the productive forces specific to the metropolis provided the material basis for (though it did not determine) the decline of radical working-class movements and consciousness in the post-war period. It must consequently minimize the potentialities opened up by the current economic impasse of capitalism for working-class political action in the advanced industrial countries. Most crucially, perhaps, this perspective must tend to play down the degree to which the concrete inter-relationships, however tenuous and partial, recently forged by the rising revolutionary movements of the working class and oppressed peoples in Portugal and Southern Africa may be taken to mark a break-to foreshadow the rebirth of international solidarity. The necessary interdependence between the revolutionary movements at the ‘weakest link’ and in the metropolitan heartlands of capitalism was a central postulate in the strategic thinking of Lenin, Trotsky and the other leading revolutionaries in the last great period of international socialist revolution. With regard to this basic proposition, nothing has changed to this day.

[The reference to Portugal and Southern Africa clearly was intended to bolster the idea that the classical model of working class revolution was returning once again. However, at the very time that Brenner was writing these words, the Sandinista revolution was rapidly gathering strength and moving toward final victory. The class forces of that revolution involved small ranchers and the informal economy, hardly the traditional bastions of proletarian revolution. Perhaps today’s financial crisis will spur the world working class into action once again but it would be a mistake to dismiss social forces that have not been vetted by classical Marxism. History does move in wayward directions after all.]

For those whose interest was piqued by my introduction to Andre Gunder Frank, I have now posted 3 lengthy excerpts from his “Capitalism and Underdevelopment in Latin America” on the Yahoo Introduction to Marxism class:

1. On Chile

2. On the “Indian Problem”

3. On “feudalism” in Brazil

Eventually I will be posting commentary on the readings here as well.

(This was originally posted to the Introduction to Marxism mailing list on Yahoo.)

In a little while I will be posting the preface to Andre Gunder Frank’s 1967 “Capitalism and Underdevelopment in Latin America: Historical Studies of Chile and Brazil,” a book that is clearly indebted to Paul Baran’s “Political Economy of Growth,” a key chapter of which was posted here the other day. [This is now available at: http://groups.yahoo.com/group/marxism_class/message/265.] As is the case with Baran, there simply is noting available on the Internet that captures their contributions to “dependency theory” so once again I am resorting to my trusty Epson scanner.

Once you have had a chance to digest this introduction and Frank’s preface, I will post 3 excerpts from “Capitalism and Underdevelopment in Latin America”, either this evening or tomorrow:

1. The opening pages of Section One, “Capitalist Development of Underdevelopment in Chile”.

2. Section two, “On the ‘Indian Problem’ in Latin America”

3. The opening pages of Section Four, “Capitalist and the Myth of Feudalism in Brazil”

Frank’s preface begins with this acknowledgement of Baran: “I believe, with Paul Baran, that it is capitalism, both world and national, which produced underdevelopment in the past and which still generates underdevelopment in the present.” Furthermore, the book introduces the formulation that virtually defined dependency theory: the development of underdevelopment.

Although I am by no means an expert on Andre G. Frank’s evolution as a political thinker, it is safe to say that the concerns that were present in his work from the 1960s to the 1980s soon gave way to a new approach, namely “World Systems”, an academic cross-discipline associated with Immanuel Wallerstein. No longer would Frank focus on class relationships in semi-colonial societies in Latin America. He became preoccupied with “long waves” in history of the sort that made Anglo-American imperialism hegemonic at one time and that would now put Asia in the driver’s seat once again. His last book “Re-Orient” displayed not the slightest interest in socialism, but only the deep social and economic forces that would make China a hegemonic world power once again.

Many of Frank’s articles can be read at an archive maintained by Róbinson Rojas, but virtually nothing from the 1960s and 70s when he was writing book after book detailing the impact of imperialism in Latin America. You will find much more in this vein: The Five Thousand Year World System in Theory and Praxis.  When one adopts time frames of 5,000 years, it is difficult to reconcile that with the urgent task of socialist revolution. This is not to say, however, that A.G. Frank was reconciled to the status quo. Until his death of cancer 3 years ago at the age of 76, Frank remained committed to opposing American imperialism even if he seemed to have lost sight of the agency that might have had the power to stop it dead in its tracks, namely the working-class.

As a subscriber to the A-List, the mailing list launched by my friend and comrade, the late Mark Jones, Frank was full of piss and vinegar to the very end as this excerpt from a message he posted 3 months before his death would indicate:

In addition, Uncle Sam also obliges the states in the Third World to act as collection agencies or even as Repo Goons, where goons are the ones sent out to repo-ssess the Godfather’s property by any means. Only in this case, it is not even that; for he is just taking new possession, since the original debt has long since been paid off. The states raise taxes and fees from the population but lower social spending on education and health to at home to divert funds to pay the debt abroad. They also borrow in turn from private capital at home at high interest rates that the state pays to the rich lenders, but out of taxes collected from the poor. That way, income is ”recycled” from poor to rich at home as well as from these poor via the foreign debt to the even richer abroad. These literally forced savings of the poor are then sent to Uncle Sam in the form of ”service” on the $ debt that is “owed” to him.

In my view, A.G. Frank’s “dependency theory” was influenced just as much by the victory of the Cuban revolution as it was by Paul Baran’s “Political Economy of Growth”, written a half-decade before the guerrillas entered Havana victoriously. In making the case that capitalism was responsible for the “development of underdevelopment”, Frank was simply expressing the same ideas found in Fidel Castro’s 1962 Second Declaration of Havana:

What “Alliance for Progress” can serve as encouragement to those 107 million men and women of our America, the backbone of labor in the cities and fields, whose dark skin-black, mestizo, mulatto, Indian-inspires scorn in the new colonialists? How are they-who with bitter impotence have seen how in Panama there is one wage scale for Yankees and another for Pan­amanians, who are regarded as an inferior race-going to put any trust in the supposed Alliance?

What can the workers hope for, with their starvation wages, the hardest jobs, the most miserable conditions, lack of nutrition, illness, and all the evils which foster misery?

What words can be said, what benefits can the imperialists offer to the copper, tin, iron, coal miners who cough up their lungs for the profits of merciless foreign masters, and to the fathers and sons of the lumberjacks and rubber-plantation workers, to the harvesters of the fruit plantations, to the workers in the coffee and sugar mills, to the peons on the pampas and plains who forfeit their health and lives to amass the fortunes of the exploiters?

What can those vast masses-who produce the wealth, who create the values, who aid in bringing forth a new world in all places-expect? What can they expect from imperialism, that greedy mouth, that greedy hand, with no other face than misery, but the most absolute destitution and death, cold and unrecorded in the end?

Like just about everybody who decided to become a revolutionary in capitalist society, starting with Marx and Engels themselves, Andre Gunder Frank started out as a conventional thinker as he explains in the preface:

The analysis and conclusions of these studies also carry implications, again to use Paul Baran’s words, for the responsibility of the intellectual; and these may be clarified in the form of a personal note. My own social and intellectual background is that of middle-class North America, and my professional formation that of the most reactionary wing of the American bourgeoisie. (My principal professor and teacher of economic theory [Milton Friedman] became the chief economic adviser to Barry Goldwater in his 1964 presidential campaign.) When I came to Latin America some three years ago, I thought of the problems of development here in terms of largely domestic problems, of capital scarcity, feudal and traditional institutions which impede saving and investment, concentration of political power in the hands of rural oligarchies, and many of the other universally known supposed obstacles to the economic development of supposedly traditionally underdeveloped societies. I had read Paul Baran, but I did not really understand him or any part of the world. The development policies, such as investment in human capital and discontinuous strategies of economic development, which my academic research had led me to publish in professional journals, were more or less of a piece with those of my colleagues, even if I did not go to extremes of classical monetary policy and pseudo-Weberian and neo-Freudian attitudinal and motivational analyses and policy.

In the earliest stages of his academic career, Frank had to contend with Walter Rostow’s “modernization” thesis that served as the primary ideology for liberal imperialism in the mid-1950s, against which Paul Baran’s “Political Economy of Growth” was directed. In an intellectual memoir titled ironically “The Underdevelopment of Development“, Frank recounts:

In 1958 I spent three months as visiting researcher at MIT’s Center for International Studies (CENIS) and met Ben Higgins, W.W. Rostow and the others. Rostow wrote his Process of Development (1952) and Stages of Growth: A Non-Communist Manifesto (1962). Although Rostow and company dealt with Keynesian type macro economic and even social problems, they did so to pursue explicitly the neo-classical counter revolutionary, and even counter reformist, cold war ends. The quintessential modernization book, David Lerner’s (1958) Passing of Traditional Society, appeared while I was there. At the same time, Everett Hagen wrote his On the Theory of Social Change (1962), David McClelland his Achieving Society (1961), and Ithiel de Sola Pool his right libertarian/authoritarian political works.

But it was engagement with the problems of ordinary people in Latin America that fully converted Frank into a revolutionary, as his memoir continues:

To find out more about that [social change], I went to Cuba in 1960, looked at political change in Kwame Nkrumah’s Ghana (where I was disappointed to find little) and in Seku Toure’s Guinea (where I mistakenly thought that I had found more). Then, I decided to be consequential: I quit my assistant professorship at Michigan State University and went to find (out for) myself from the ‘inside’ in the ‘underdeveloped’ ‘Third’ World. Since I decided I could never become an African, I went to Latin America, where acculturation seemed less daunting.

In 1962, in Mexico, I wrote about the ‘Janus faces’ of Mexican inequality (reprinted 1969). I saw internal colonialism there instead of separate sectors in a ‘dual’ economy or society. In Peru, Anibal Quijano arranged for me to meet Marta Fuentes in Chile. We shared our concern for social justice, which would guide our concern for development with equity before efficiency. We married and had two children with whom, as with each other, we spoke Spanish. Together, but without consulting our children and at their cost, we embarked on the long journey ‘to change the world.’

To begin with, I wrote a critique of an article on land reform by Jacques Chonchol (reprinted 1969). He counseled, and later practiced, slow land reform. I argued for the necessity of fast agrarian and other revolution, to forestall counter-reform. This was probably my first explicit critique of reformism from a more radical perspective. I also foretold that any economic integration of Latin America would help foreign investors more than local ones. I increasingly saw the reformist house as no more than a remodeled capitalist one. I thought it was necessary to replace this one by a socialist house instead. Just how much tearing down and rebuilding this change might involve was less than clear.

I still welcomed any proposed reforms, but considered them insufficient if not altogether unworkable, and put my confidence instead in the Cuban way. Of course, Cuba was developing socially and visibly improving education, health, reducing race and gender discrimination, etc. It was not yet clear that this was the main forte of the Cuban way. No one yet knew that this social development was not being matched by or grounded on a concomitant development of its economic base. The inadequate or incorrect Cuban development of this economic base would ultimately make the continued social development dependent on the aid of massive foreign subsidy. This Cuban experience seems to disconfirm the Schultzian thesis (and then also mine) about the necessity and sufficiency of investment in ‘Human Capital and Economic Growth’ (1960).

Finally, I would recommend a look at Andre Gunder Frank’s personal autobiography, which is an excellent complement to “The Underdevelopment of Development”. While it would be difficult to deduce that his early years might have led ineluctably to a revolutionary path, they suggest that the revolutionary economist had as much of a bohemian streak as the motorcycle driving Che Guevara:

During summer vacations in college and for many years after that, I held down all sorts of jobs until I was fired from most of them – always for the same reason: insubordination. These jobs included building pre-fab houses in the Washington DC suburbs, digging ditches and laying the concrete sidewalk from the north-west corner of the campus of the University of Michigan campus to its library, and therefore many years later I could tell my son that I had once made a ‘concrete’ contribution to his welfare there as a graduate student. In Washington state, I worked in a saw mill and then as a logger, as well as again digging ditches and ‘gandy-dancing’, that is laying railroad track. In Michigan, I built automobiles at Willow Run [which had been built during World War II to manufacture B 17bombers], and in New Orleans I tended 32 spools in a row of twine to spin them for the International Harvester Corporation. There, I also worked as a private eye, as well as of course in the French Quarter tourist industry as a waiter on Bourbon Street, a picture painter in Jackson Square, and in the Mardi Gras parade walking around dressed as a huge paper-mache Old Gran Dad whisky bottle, on which people knocked asking for samples that I was unable to supply. Alas, I had no ”aptitude” for any of these: I had taken an employment aptitude test at the Louisiana State Employment Commission, which showed that , as they duly informed me, I had aptitude for NOthing, and especially NO INTELLECTUIAL aptitude. Therefore, they said, I should try my hand at automobile mechanic, as which they however could find no job for me. In San Francisco, I carted refrigerators and similar household equipment up three flights of stairs for a moving company, and for free concert attendance I ushered people up and down the aisles of the San Francisco Opera House. At Union Square, I wrapped Christmas presents in the basement of the fancy I. Magnin department store until I was fired for refusing to warp something too ugly for words and in my opinion for wrapping. In Chicago, I loaded freight cars at night, and in the daytime I was supposed to placate the irate customers of a furniture store whose sales personnel made their sales by promising delivery dates that were impossible to meet. Since I sided more with their innocent customer victims, the sales people had me fired.

(This post originally appeared on the Introduction to Marxism mailing list at Yahoo.)

Paul A. Baran

Paul Baran had exactly the kind of credentials shared by fellow MR editors Paul Sweezy and Harry Magdoff. Like Sweezy, who once taught at Harvard, Baran was an established academic who managed to hold on to a teaching job at Stanford until his death by heart attack in 1964 at the age of 54. He was established enough to have even co-authored an article on the consequences of the Allied air assault on Germany with J. K. Galbraith in 1947. Of course, some of their detractors might tend to write off Sweezy and Baran as post-Keynesians to begin with.

And all three had jobs in Roosevelt’s administration. Baran was with the OSS (the forerunner of the CIA!) for two and a half years and then moved on to the U.S. Strategic Bombing Survey (hence the article alluded to above.)

Paul A. Baran was a Russian Jew whose father, a physician and Menshevik supporter, moved the family to Germany in 1920. Paul did his undergraduate work in Germany, but earned his Economics PhD in Moscow in 1928 before moving back to Germany. After Hitler’s rise to power, he found his way to the U.S. and taught at the New School before taking military-strategic jobs in the Roosevelt administration. In 1949 he became a professor at Stanford where he remained until his death.

In 1961, Baran wrote an article for Monthly Review on “The Commitment of the Intellectual” that should serve as an inspiration for everyone:

The desire to tell the truth is therefore only one condition for being an intellectual. The other is courage, readiness to carry on rational inquiry to wherever it may lead, to undertake “ruthless criticism of everything that exists, ruthless in the sense that the criticism will not shrink either from its own conclusions or from conflict with the powers that be.” (Marx) An intellectual is thus in essence a social critic, a person whose concern is to identify, to analyze, and in this way to help overcome the obstacles barring the way to the attainment of a better, more humane, and more rational social order. As such he becomes the conscience of society and the spokesman of such progressive forces as it contains in any given period of history. And as such he is inevitably considered a “troublemaker” and a “nuisance” by the ruling class seeking to preserve the status quo, as well as by the intellect workers in its service who accuse the intellectual of being utopian or metaphysical at best, subversive or seditious at worst.

When Baran wrote “The Political Economy of Growth” in 1955, it was clearly in the spirit of a “readiness to carry on a rational inquiry to wherever it may lead.” This was a year in which the American Colossus straddled the globe even more than it does today. Unlike today, however, the promise of capitalist modernization was far more seductive. With the 10 year expansion following WWII, why would any developing country refuse to follow the development path urged by the U.S.?

In John Bellamy Foster’s excellent review of this book, you can find the historical context for Baran’s challenge to mainstream economics:

The best known mainstream work on development to be published in the early post-Second World War period was W. W. Rostow’s Stages of Economic Growth, significantly subtitled A Non-Communist Manifesto. Rostow described five stages that all countries had to pass through: (1) traditional society, (2) the preconditions for take-off, (3) the take-off, (4) the drive to maturity, and (5) the age of high mass consumption. The key stages in this process were of course the preconditions for take-off, during which the cultural and technological foundations for an industrial revolution were laid, and the take-off itself, which in Rostow’s theory could be explained primarily by the sudden increase in savings from 5 percent to 10 percent. The final result was not in question; the only real issue was when countries would pass through these various stages. The conditions allowing for a take-off could be speeded up, Rostow argued, through the diffusion of Western culture, know-how, and capital, overcoming legacies of economic and cultural stagnation.

If some benighted 3^rd world country like Vietnam decided not to follow Walt Rostow’s advice, then there was no other recourse than to force them at gunpoint to do so. As Henry Kissinger once said of Salvador Allende’s Chile, “I don’t see why we need to stand by and watch a country go communist because of the irresponsibility of its own people.”

The importance of Walt Rostow in the mid 1950s cannot be minimized. In the latest issue of the Nation Magazine, there’s a review of several books under the title “Mandarins, Guns and Money,” including David Milne’s “America’s Rasputin: Walt Rostow and the Vietnam War.” Reviewer Mark Mazower writes:

Theory alone guaranteed nothing, unless politicians and their staffers listened. Rostow’s connections boosted his advancement. From his Yale undergraduate days he knew Richard Bissell (the Bay of Pigs and other CIA achievements still before him) as well as the man who brought him to MIT, his old friend Max Millikan. Like Rostow, Millikan had been involved as an economist in the European reconstruction effort of the late 1940s–in his case as assistant to the Marshall Plan administrator Paul Hoffman. Between joining MIT and setting up the Center for International Studies, Millikan also served briefly as assistant director of the CIA under Walter Bedell Smith. All these connections proved vital. The center grew out of Project Troy, an early State Department commission to research radio jamming and psychological warfare against the Soviet Union. When State’s money dried up, Millikan turned to his old employers, the CIA, and to the Ford Foundation (by now run by his former boss Hoffman). Harvard stood aloof; led by sociologist Talcott Parsons, its social scientists were engrossed in the loftier goal of creating an entirely new theory that would unite all the social sciences. MIT was happy to do the nitty-gritty problem-solving for the government, and it got the loot. In 1953 Ford assured the center’s future with an enormous $1.8 million grant. For MIT it was a bargain: it put in almost no money and got terrific input into the shaping of foreign policy.

Millikan had wanted Rostow at the center because they basically agreed on what America needed. In the early 1950s the cold war suddenly became a global competition for influence in the decolonizing world, and many felt that Washington needed to compete much more aggressively. In 1954, a week after the battle of Dien Bien Phu, Rostow and Millikan took part in a conference to generate a “world economic plan” that would ensure the triumph of freedom. The two men wrote the resulting report, forwarded to Eisenhower, emphasizing development aid as the key to securing American foreign policy goals: it had worked in Europe, and now America needed to spend in the Third World. This got nowhere with Ike: he was too much of a fiscal conservative, and his inner circle disliked Rostow’s boosterish tone. But others were listening, especially a young senator from Massachusetts. Rostow wrote some speeches for Kennedy, then joined his Administration, whose Alliance for Progress, the centerpiece of what Kennedy proudly proclaimed to be the Decade of Development, marked the modernizers’ moment. In Washington, as assistant to McGeorge Bundy–Kennedy’s national security adviser–Rostow was given special responsibility for Southeast Asia. Vietnam was his bailiwick, a chance to show what modernization theory could do to win the cold war. After Kennedy’s death, Rostow replaced Bundy as Johnson’s national security adviser–“my goddamn intellectual,” the Texan growled. Rostow’s hour had come. No wonder Professor Pool was gung-ho.

(The review can be read in its entirety at: http://archives.econ.utah.edu/archives/marxism/2008w37/msg00278.htm)

So, as you can see, Paul Baran had his work cut out for him when he challenged the idea that every country could become prosperous simply by following sound free-market principles. The core of his idea around this question can be found in Chapter 5 of “Political Economy of Growth”. It is titled “On the Roots of Backwardness” and can be read on the Introduction to Marxism mailing list at Yahoo. It is one of those seminal texts that can only be read by getting one’s hands on the book either from MR Press (that I strongly recommend) or from your better local library. Chapter five introduces the remainder of the book, which is basically an examination of the failure of Rostow’s and other such capitalist economics formulas in the real world.

It was the first significant challenge to bourgeois “development” economics and as such had an enormous influence on United Nations economists such as Raul Prebisch and Andre Gunder Frank. It would eventually serve as the core of what became known as “dependency theory”, a debate over which began to rage in the 1970s and persists until today. Like John Bellamy Foster, I agree with this theory despite seeming evidence to the contrary such as Brazil in the 1960s and China today.

Baran poses this question this way:

The question that immediately arises is, why is it that in the backward capitalist countries there has been no advance along the lines of capitalist development that are familiar from the history of other capitalist countries, and why is it that forward movement there has been either slow or altogether absent? A correct answer to this question is of foremost importance. It is indeed indispensable if one is to grasp what at the present time stands in the way of economic and social progress in underdeveloped countries, and if one is to understand the direction and the form which their future development is likely to assume.

He begins by referring obviously to the Sweezy-Dobb debate over the origins of capitalism, but without referring to either principal by name. It should not come as any great surprise that Baran lines up with his long-time collaborator Paul Sweezy who saw the “European miracle” as very much a function of global trade and/or plunder:

In Western Europe, mercantile accumulations were particularly large, and, what is of considerable significance, highly concentrated. This was partly due to the geographical location of the Western European countries which gave them the possibility for an early development of navigation, and with it of a rapid expansion of maritime and riparian commerce. It was caused secondly–paradoxically enough–by Western Europe’s being in terms of natural resources poorer and in terms of its economic development at the relevant time in many respects more backward rather than more advanced than the parts of the world which were the objects of its commercial penetration. Hence the drive to procure tropical produce of all kinds (spices, tea, ivory, indigo, etc.) that could not be obtained nearby, hence also the effort to import valuable products of Oriental skills (high quality cloth, ornaments, pottery, and the like), and hence finally the wild scramble to bring back precious metals and stones that were in short supply at home. The resulting far-flung trade, combined with piracy, outright plunder, slave traffic, and discovery of gold, led to a rapid formation of vast fortunes in the hands of Western European merchants.

Despite the tendency of many who took Dobb’s side in this ongoing debate (Brenner and Wood come to mind first and foremost) to represent Sweezy as outside of Marxism at least on this point, Baran’s analysis is pretty close to Marx’s himself as expressed in chapter 31 of V. 1 of Capital:

The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England’s Anti-Jacobin War, and is still going on in the opium wars against China, &c.

Baran claims that left to their own devices, India, China and other countries where what Jim Blaut referred to as “proto-capitalist” institutions existed (particularly in large trading entrepôts such as Calcutta), capitalist development would have taken place through the impact of “the rising bourgeoisie everywhere [that] shook the foundations of the pre-capitalist order.” In other words, there was no particular European “genius” or “exceptionalism” at work.

Unfortunately for countries on the cusp of capitalist transformation, the penetration by European colonialism interfered with the natural economic development taking place and introduced distorted class relations inimical to capital accumulation. The classic example of this was British textile exports into India, which destroyed the local handicraft industry that could have served as a “take-off” point for manufacturing just as it did in Great Britain in the 1700s. Instead you ended up with Great Britain prospering at India’s expense. Baran notes: “The volume of wealth that Britain derived from India and that was added to Britain’s capital accumulations has to my knowledge never been fully assessed. Digby notes that estimates had been made according to which between Plassey and Waterloo–a period of crucial importance for the development of British capitalism–between 500,000,000 and 1,000,000,000 pounds worth of treasure was taken by Britain from India.”

So countries like India ended up neither with feudalism or capitalism but a wretched mixture of the two social systems as Baran put it:

Thus the peoples who came into the orbit of Western capitalist expansion found themselves in the twilight of feudalism and capitalism enduring the worst features of both worlds, and the entire impact of imperialist subjugation to boot. To oppression by their feudal lords, ruthless but tempered by tradition, was added domination by foreign and domestic capitalists, callous and limited only by what the traffic would bear. The obscurantism and arbitrary violence inherited from their feudal past was combined with the rationality and sharply calculating rapacity of their capitalist present. Their exploitation was multiplied, yet its fruits were not to increase their productive wealth; these went abroad or served to support a parasitic bourgeoisie at home. They lived in abysmal misery, yet they had no prospect of a better tomorrow. They existed under capitalism, yet there was no accumulation of capital. They lost their time-honored means of livelihood, their arts and crafts, yet there was no modern industry to provide new ones in their place. They were thrust into extensive contact with the advanced science of the West, yet remained in a state of the darkest backwardness.

Baran concludes his chapter with an interesting discussion of Meiji Japan, a kind of bourgeois revolution “from above”. Baran explained why it succeeded:

The answer to this question is extraordinarily complex and at the same time extraordinarily simple. It is simple because, reduced to its core, it comes down to the fact that Japan is the only country in Asia (and in Africa and in Latin America) that escaped being turned into a colony or dependency of Western European or American capitalism, that had a chance of independent national development. It is complex because it was only a felicitous confluence of a large number of more or less independent factors that gave Japan its lucky break.

Basic among them–reminiscent of the paradox presented by Western Europe and in particular by Great Britain–was the backwardness and poverty of the Japanese people and the paucity of their country’s natural resources. “Japan had very little to offer either as a market for foreign manufactures or as a granary of raw materials for Western industry.” Consequently the lure of Japan to Western European capitalists and governments came nowhere near the irresistible attraction exercised by the gold of Latin America, the flora, fauna, and minerals of Africa, the fabulous riches of the Indies, or the supposedly bottomless markets of China.

No less important was the fact that in the middle of the nineteenth, century, when Western penetration of Asia reached the highest degree of intensity, the resources of the leading Western European countries were already severely taxed by other undertakings. Especially Great Britain, the world’s leading colonial power, had enough on its hands in Europe, the Near East, India, and China without becoming involved in a militarily most uninviting campaign for the conquest of Japan. This strain on Britain’s expansionist capabilities accelerated the far-reaching change in the nature and orientation of its colonial policy that was afoot from the middle of the nineteenth century. Although veiled by a political debate that appeared to be mere shadow boxing–with the Tories fully accepting the essence of Palmerston’s foreign policies–it actually implied the transition from old-fashioned piracy characteristic of the mercantile phase of capitalism and of primary accumulation of capital to the more subtle and complex strategy of modern imperialism.

But what decisively affected the position of Japan was another characteristic of modern imperialism: the growing rivalry among the established imperialist whales, and the arrival on the world stage of a new imperialist power, the United States. It was that rivalry, with the resulting checks and balances in international power politics, that had much to do with preventing Britain from meting out to China all of the punishment that was suffered by India; and it was this very same international jealousy that rendered it impossible for any one imperialist power to attempt the conquest of Japan. Although in the case of Japan it was the United States that carried out the initial opening-up and that imposed upon it its first unequal treaty, neither the stage reached in the development of American capitalism nor its international status allowed the United States as yet to try to establish exclusive control over Japan. “The proximity to China gave Japan extraordinary strategic importance. The powers that forced upon Japan the unequal treaties watched jealously lest any one of them gain predominant influence in Japan, let alone be able to convert it into its colony and thus into a staging area for further advance into China.”

For further reading on the evolution of capitalist Japan, I can strongly recommend Jon Halliday’s “A Political History of Japanese Capitalism”, a 1975 MR book. As many of you know, Halliday has become a rabid anti-Communist, his most virulent work being “Mao: the Unknown Story” co-written with his wife Jung Chang. Despite this evolution, Halliday was a very sharp thinker 33 years ago and his work from that period stands the test of time.