------------------------------------------------------------------
NOTES ON ECLA's STRUCTURALISM AND DEPENDENCY THEORY.
by Róbinson Rojas Sandford (1992)
Historical background:
Up to 1929-33 Latin American economy had been characterized by free
trade...exporting raw materials and cash crops, that is.
The world trade crisis (1929-1930s) prompted Latin American governments
to radically rethink their approach to economic development, i.e. Latin
American exports declined from an average of about US$ 5,000 million in
1928-29 to US$ 1,500 million in 1933...There were serious problems with
current account in the balance of payments and foreign exchange
shortages...
Latin American societies found themselves able to finance decreasing
amounts of imported manufactured goods from the industrial countries;
...various measures were taken to conserve and ration decreased foreign
exchange resources:
1.- tariffs were raised,
2.- import quotas were enforced,
3.- restrictions on the use of foreign exchange.
Since the 1930s Latin America changed from a group of free-trading
economies to one of highly protected economies.
Latin American capitalists, making the most of the scarcity of goods
and the level of protection, began to produce or increase the domestic
production of goods previously imported (manufactured goods).
Their new political economy was based on the following:
A.- all major industrial countries (especially U.S.A and Japan) had
industrialized behind high protective tariffs;
B.- a country needed to develop a mature industrial structure before
it could become involved in the free trading of manufactured goods;
C.- protective policies should promote a wide rather than a specialized
range of industries;
D.- protective policies create more opportunities of employment at a
time of rapid growth in both national populations and labour
markets;
By the 1950s the above became formalized in the policy known as
IMPORT-SUBSTITUTION INDUSTRIALIZATION
as theorized by the influential "Comision Economica para America Latina
de las Naciones Unidas" (CEPAL) (United Nations Economic Comission for
Latin America, ECLA, today known as Economic Comission for Latin
America and the Caribbean, ECLAC).
The main theoretical tenet of ECLA's approach was that former colonies
and non-industrialized nations were "structurally" different from
industrialized countries, and, therefore, the former needed different
recipes for economic modernization than the latter.
ECLA argued that colonization transformed former colonies' economies
in "structures especialized in producing raw materials, cash crops and
foodstuff at low prices to meet the needs of the colonizer's economies".
That created economically "fractured" societies, in which a modern
sector was being constrained by international trade, and a traditional-
backward sector was blocking any process of economic modernization. These
structures were creating a dynamic that was impoverishing former
colonies instead of promoting capitalist industrialisation.
CENTER-PERIPHERY
ECLA argued that there was an international division of labour lead by
industrialized countries.
This division of labour separated the capitalist world economy in two
well defined sectors:
THE CENTER: United States and Western European
industrialized societies;
THE PERIPHERY: Latin American countries, India, newly
decolonized societies and the colonies
in Asia and Africa.
This center-periphery situation created an unbalanced process of
development characterized by the following features:
INTERNATIONAL TRADE: the prices of manufactured goods
bought by the periphery were raising
faster than the prices of raw materials,
cash crops and foodstuff sold by the
periphery to the center. (This was going
to be known as "the deterioration of the
terms of trade").
THE BARRIERS TO INDUSTRIALISATION: ECLA saw two barriers to development
in former colonies:
a) international trade forcing their
economies to concentrate in
producing more raw materials and
cash crops/foodstuff, which will
contribute to further
deterioration of terms of trade,
and,
b) the lack of a strong capitalist
class in Latin America and the
other former colonies calling for
a strong participation of the
state in the process of
industrialisation.
From the above, ECLA proposed two general approaches to promote
capitalist industrialisation in developing societies:
INTERNATIONAL APPROACH : organise developing nation-states in a united
front to negotiate with industrialized nations
better conditions of international trade,
creating international mechanisms for maintaining
fair prices for raw materials, cash crops and
foodstuff.
NATIONAL APPROACH: Promote national strategies of industrialization
based upon the main policy of producing
internally the majority of the manufactured
goods currently imported from industrialized
countries. This was going to be known as "the
import-substitution strategy".
And, this import-substituting drive was going
to be led by the governments through economic
planning (allocating resources to private hands,
both national and international, and state development
agencies in accordance with a general plan). From this,
the notions of "development economics",
"development planning" and "development
administration" became the theoretical foundations
of the process of development of the non-industrialised
societies
FOUR STAGES
CEPAL envisaged four stages of industrial development:
First Stage:
concentrated on the production of basic non-durable
consumer goods such as textiles, foodstuffs and
pharmaceuticals;
Second Stage:
specialization on more complex products, known as
consumer durables, such as gas/electrical cookers,
radios and television sets, and motor vehicles
(both the technologies and parts of these products had to
be imported at the outset, until domestic generation of
both was created)
Third Stage:
promotion of intermediate industries: plants
manufacturing steel, petrochemicals, aluminium, etc.
promotion of production of a wide range of parts and
components plants, supplying the consumer goods industries
Fourth Stage:
development of domestic technology through a growing
capital goods industry (manufacturing machinery and
plants)
In all this process, there was a need of utilizing foreign capital,
private domestic capital, and state capital.
By and large, since the late 1940s the process of import-substitution
strategy in Latin America was engineered through a distinctive
institutional structure:
the "triple alliance", or an alliance between
state owned firms,
national private enterprises, and
transnational corporations;
the balance between these categories varied from country to country.
By and large, national private enterprises were seen to be losing ground
in the 1960s to both public enterprises and transnational corporations.
THE ROLE OF THE STATE ENTERPRISE:
to invest in those intermediate and capital goods sectors
that continued industrial expansion seemed to require,
specially because of inadequate domestic capital market...
to invest in the extractive industries and in the further
processing and refining of the minerals concerned.
THE ROLE OF THE NATIONAL PRIVATE ENTERPRISE:
great diversity in terms of size, technological level and
forms of organization, but promoting large conglomerates
with a wide variety of manufacturing interests, and often
important tertiary functions in banking, insurance, finance,
tourism, commerce, and the media.
At the other end of the size range, large number of small
enterprises, they were labour-intensive (methods) and low
capital (inputs).
Actually, a "fractured" system of production was reinforced
upon the system of production inherited from colonial times,
with MODERN, INTERMEDIATE AND PRIMITIVE sectors ( see
R. Rojas, "Latin America: Blockages to Development", 1984,
Table 1, page 195, or
R.Rojas, Latin America: a failed industrial revolution:
www.rrojasdatabank.info/foh6.htm, and
R.Rojas, Latin America: the making of a fractured society:
www.rrojasdatabank.info/foh7.htm )
THE ROLE OF TRANSNATIONAL CORPORATIONS:
to produce high technology, capital-intensive products for
the domestic market under the same array of protective
legislation utilised for national enterprises. Foreign
direct investment was more important at the beginning on
mining and agribusiness, and then, the flows deviated to
manufacturing.
By the 1960s a clear process of "dependent" industrialisation was in
place in Latin America, as an outcome of this triple alliance, and
intellectuals from Chile, Argentina, Brasil and Peru, based at the
Universidad de Chile in Santiago, Chile, were producing an array of
criticism and elaborating alternative strategies for development:
"A real process of dependent development does exist in some Latin
American countries. By development, in this context, we mean
"capitalist development". This form of development, in the periphery
as well as in the center, produces as it evolves, in a cyclical way,
wealth and poverty, accumulation and shortage of capital, employment
for some and unemployment for others. So, we do not mean by the notion
of "development" the achievement of a more egalitarian or more just
society. These are not consequences expected from capitalist
development, especially in peripheral economies..."
"...in the end, what has to be discussed as an alternative is not the
consolidation of the state and the fulfillment of "autonomous
capitalism", but how to superced them. The important question, then,
is how to construct paths toward socialism"...( F. H. Cardoso and E.
Faletto, in working paper discussed in the late 1960s in CESO -Centro
de Estudios Economico Sociales-, Universidad de Chile, and later
included in the introduction to "Dependency and Development in Latin
America", University of California Press, 1979, a translation of
"Dependencia y desarrollo en America Latina", Siglo XXI, Mexico, 1969)
DEPENDENCY THEORY
In Santiago de Chile, Universidad de Chile, in the Center for Social
Studies, CESO, a group of Latin American intellectuals (especially
economists and sociologists), in the early 1960s, began an overall
criticism of modernization theory and structuralist theory as seen by
ECLA's scholars, and started a set of theoretical approaches that was
going to be known generically as Dependency Theory. Names like
O. Sunkel, E. Faletto, T. Dos Santos, A. Quijano, F. H. Cardoso,
A. G. Frank, J. Ramos, R. Rojas, among many others, are associated with
different shades of dependency theory. Names like A. Pinto and R. Prebisch, are
associated with centre-periphery-structuralist theory. All these names
are associated with the economic-political-antimperialist debate and
theory creation process taking place in the 1960s and early 1970s in
Santiago, Chile, and irradiating to the rest of the American continent.
Dependency basic point of view was as follows:
-ECLA's structuralist reading of Latin American (and probably the rest
of former colonies) societies as economically "fractured" was correct.
-ECLA's assumption that international trade could take a "fairer"
shape within conditions of capitalist monopolic capital was incorrect.
-ECLA economic theories and critiques were not based on:
----- an analysis of social process
----- an analysis of imperialist relationships among countries
----- an analysis of the asymmetric relations between classes
-Import-substitution strategies, carried out in conditions of capitalist
relations of production dominated by the economic empires led by United
States was a recipe for further "colonization", "domination",
"dependency".
-Old fashioned export-led strategies will have the same results, though
faster.
-There is no possibility of becoming independent, free nation-states
in a world dominated by the capitalist economic-political empires.
Therefore, the only possibility of becoming independent is creating
an alternative system of production, a non-capitalist system of
production. Here, the majority of dependentist intellectuals were
proposing "socialism" as alternative, socialism as was being developed
in Soviet Union (Dos Santos, et al). There was a minority that saw
the Soviet system as yet another social stratified social formation,
as bureaucratic socialism, and originating a new type of imperialism,
addressed as "social imperialism". This minority was proposing the
study of alternative socialism, roughly along the lines of what was
the political manifesto of the cultural revolution in People's China.
(Among them, R. Rojas)
To advance in the creation of dependency theory, a methodology was
adopted, which can be summarized as follows:
Subject matter for the theory:
societies whose structures are based
neither on egalitarian relationships
nor on collaborative patterns of social
organization.
Analytical approach:
the understanding of the strong inequalities characterizing
these social structures will require:
1.- an explanation of the exploitative process through which
these structures are maintained;
2.- the analysis of the system of production;
3.- the analysis of the institutions of appropriation.
The above amounts to the socio-economic fabric of a society, and
then its explanation to the political economy of inequality.
Therefore, central to dependency approach is assigning priority
to the analysis of the following:
a) mechanisms and processes of domination through which
existing structures are maintained (both national and
international structures);
b) forms of dependency creating mechanism of self-perpetuation
and the possibilities of change;
c) antagonistic and non-antagonistic relations between social class
and groups.
From the above, the most important model in dependency theory:
---the relationship between external and internal forces
as forming a complex whole whose structural links are
not based on mere external forms of exploitation and
coercion, but are rooted in coincidences of interests
between local dominant classes and international ones,
and, on the other side, are challenged by local dominated
groups and classes---
the above model allows to understand alliances and struggles between
classes and sector of classes.
Thus,
internal forces: domestic mechanisms of exploitation
external forces: international mechanisms of exploitation
(international financial institutions,
transnational corporations,
international financial system,
international production system; and
foreign states, foreign armies,
foreign embassies protecting the
international mechanisms of exploitation)
the complex articulation of the above reappears as an "internal"
set of forces through the social practices of local groups and
classes which try to enforce foreign interests, because they
coincide with their own interests.
__________________________________
forms of dependency:
-capital goods production sectors are not strong enough to
ensure continuous advance of the system;
-financial sector depends upon external support;
-technological sector depend upon external supply;
-organizational patterns of the domestic system of
production depend upon the international market;
from the above "patterns of industrialization" emerge:
industrialization in dependent economies enhances
income concentration, as it increases sharp differences
in productivity without generalizing a given level
of productivity to the whole economy...
industrialization in the periphery increases disparity
of income among wage earners accentuating what has
been called in Latin America the "structural heterogeneity"...
industrialization in the periphery can be characterised as
"dependent capitalist development" which generates regimes
of production subordinated to the capitalist imperial core...
(see ECLA, "Social Change in Latin America in the Early 1970s",
United Nations, 1973, and the notion of "structural fracture"
in R. Rojas, "Latin America: blockages to development",
doctoral dissertation, 1984, both text available at
RRojas Databank: http://www.rrojasdatabank.info)
Memorandum: dependency theory rejects any form of "capitalist
development" for the periphery, and proposes the
creation of alternative systems of production, mainly
socialists -here the concept is not equivalent to
"soviet socialism", which dependency theorists were
criticising already in the early 1960s. For an attempt
to create alternative systems of production see
S.Allende: Speech to the UN General Assembly, 4th Dec. 1972:
www.rrojasdatabank.info/foh12.htm
Chile: The Popular Unity's Programme 1969 (Alternative Development):
www.rrojasdatabank.info/programm.htm
U.S. Senate: Covert Action in Chile 1963-1973:
www.rrojasdatabank.info/covert.htm.
_____________________________________________________________________
Additional reading:
R.Rojas: The Chilean way to socialism. Popular Unity:
www.rrojasdatabank.info/chile1.htm
F.H.Cardoso: Dependency and Development in Latin America:
www.rrojasdatabank.info/cardoso1.htm
E. Galeano:Latin America and the Theory of Imperialism:
www.rrojasdatabank.info/galeano1.htm
R.Rojas: El desarrollo del dominio imperialista en Chile:
www.rrojasdatabank.info/imp0.htm
A.Okolo: Dependency in Africa: stages of African political economy:
www.rrojasdatabank.info/africa2.htm#BOX1
O. Sunkel: The transnational corporate system. 1985:
www.rrojasdatabank.info/sunkeldp.htm
T. Dos Santos: The structure of dependence:
www.rrojasdatabank.info/santos1.htm
see also BOX 2
_____________________________________________________________________
______________________________________________________________________
BOX1__________________________________________________________________
LATIN AMERICA.- GDP PER CAPITA AS % OF U.S. GDP PER CAPITA
(percentage)
1952 1992
Argentina 33.9 26.0
Bolivia 6.0 2.9
Brazil 13.7 11.9
Chile 17.1 11.8
Colombia 15.1 5.7
Costa Rica 9.1 8.4
Cuba 19.1 7.1
Dominican Republic 10.5 4.5
Ecuador 5.5 4.6
El Salvador 11.3 5.0
Guatemala 10.4 4.2
Haiti 4.1 1.7
Honduras 8.0 2.5
Mexico 12.5 14.9
Nicaragua 8.8 1.5
Panama 18.6 10.4
Paraguay 4.6 5.9
Peru 6.3 4.1
Uruguay 19.1 14.4
Venezuela 26.7 12.5
------------------------------------------------------------------------
The United States Department of Commerce, and World Development Report
1993
________________________________________________________________________
________________________________________________________________________
TABLE 1 AVERAGE RATE OF GROWTH (% PER YEAR)
GROSS DOMESTIC PRODUCT
LATIN AMERICA
1965-1973 1973-1980 1980-1991
Argentina 4.4 2.1 -0.3
Barbados 6.7 3.5 2.2
Belize 5.8 5.4 5.3
Bolivia 4.2 3.8 0.3
Brazil 9.8 6.4 2.4
Chile 3.5 3.7 3.6
Colombia 6.3 5.0 3.7
Costa Rica 7.1 5.3 3.1
Dominican Republic 9.7 4.8 1.7
Ecuador 7.6 6.6 2.0
El Salvador 4.4 3.2 1.1
Guatemala 6.0 5.5 1.1
Guyana 3.1 1.0 -2.8
Haiti 1.7 4.3 -0.7
Honduras 4.6 6.6 2.5
Jamaica 5.3 -2.9 1.8
Mexico 6.8 6.2 1.2
Nicaragua 3.5 -1.9 -2.3
Panama 7.4 4.6 0.2
Paraguay 5.1 9.6 2.7
Peru 3.9 2.8 -0.4
Trinidad and Tobago 3.2 7.0 -4.6
Uruguay 1.2 4.3 0.5
Venezuela 3.7 3.3 1.4
------------------------------------------------------------------------
AGGREGATE RATE OF GROWTH FOR NINE LATIN AMERICAN COUNTRIES:*
1965-1973 6.6
1973-1980 4.8
1980-1991 1.5
________________________________________________________________________
*Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, Mexico, Peru
and Venezuela
________________________________________________________________________
source: Trends in Development Economies 1992, The World Bank, 1992
________________________________________________________________________
TABLE 2 NINE LATIN AMERICAN COUNTRIES*
AGGREGATE ANNUAL RATE OF GROWTH -GDP
1900-1913 2.1
1913-1929 2.8
1929-1954 3.5
1950-1960 5.4
1960-1970 5.5
------------------------------------------------------------------------
ANNUAL RATE OF GROWTH OF MANUFACTURING INDUSTRY
Industrial countries Developing countries*
1938-1950 4.5 3.8
1950-1960 5.0 6.9
1960-1970 5.6 6.3
ANNUAL RATE OF GROWTH OF MANUFACTURING INDUSTRY
(per capita)
Industrial countries Developing countries*
1938-1950 3.8 2.1
1950-1960 3.8 4.5
1960-1970 4.4 3.6
INDEX OF OUPUT IN MANUFACTURING INDUSTRY
Developing countries*
Light industry Heavy industry
1938 100 100
1953 162 217
1958 222 372
1963 270 556
1970 389 994
------------------------------------------------------------------------
INDEX OF OUTPUT IN MANUFACTURING INDUSTRY
Industrial countries Developing countries*
1938 100 100
1953 196 191
1958 251 267
1963 325 366
1970 468 563
1980 661 1,108
1991 914 1,454
-----------------------------------------------------------------------
ANNUAL GROWTH OF OUTPUT IN MANUFACTURING INDUSTRY
Industrial countries Developing countries
1938-1953 4.6 4.4
1953-1958 5.1 6.9
1958-1963 5.3 6.5
1963-1970 5.6 6.3
1970-1980 3.5 7.0
1980-1991 3.0 2.5
________________________________________________________________________
* Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, Mexico,
Peru and Venezuela.
________________________________________________________________________
source: Statistical Yearbook 1970 and Statistical Yearbook 1971,
United Nations, 1971
Trends in Developing Economies 1992, The World Bank, 1992
________________________________________________________________________
Table 3.- EXPANSION AND CONTRACTION OF LATIN AMERICA'S FOREIGN TRADE
(US$ millions)
Year Imports Exports Total
1910 1,098.1 1,308.6 2.406.7
1920 2,884.6 3,490.7 6,375.3
1922 1,616.4 2,108.1 3,724.5
1928 2,393.6 3,029.7 5,423.3
1932 610.4 1,030.4 1,640.8
1939 1,346.5 1,858.5 3,205.0
1946 3,532.1 5,993.9 9,526.0
1951 7,287.4 7,311.3 14,598.7
________________________________________________________________________
source: compiled from the Pan American Union's FOREIGN TRADE SERIES and
from FOREIGN COMMERCE YEARBOOK, published by the U.S.
Department of Commerce, and from G. Wythe, "An Outline of Latin
American Economic Development", New York, 1949
________________________________________________________________________
END OF BOX 1____________________________________________________________
________________________________________________________________________
BOX2 ___________________________________________________________________
From Cardoso and Faleto, "Dependencia y Desarrollo en America
Latina", Siglo XXI, Buenos Aires, 1969
----------------------------------------------------------
We seek a global and dynamic understanding of social structures
instead of looking only at specific dimensions of the social
process.
We stress the socio-political nature of the economic relations
of production.
We assume that the hierarchy that exists in society is the
result of established ways of organizing the production of
material and spiritual life.
This hierarchy also serves to assure the unequal appropriation
of nature and of the results of human work by social classes and
groups.
So we attempt to analyze domination in its connection with
economic expansion.
-----------------------------------------------------------
We recognize that:
---- social structures are the product of man's collective
behaviour. Therefore, although enduring, social structures can
be, and in fact are, continuously transformed by social
movements.
---- our approach is both structural and historical: it
emphasizes not just the structural conditioning of social life,
but also the historical transformation of structures by
conflict, social movements, and class struggles.
---- this mode of analysis is useful for those structures based
on social asymmetries and on explotative types of social
organization.
---- this mode of analysis require the study of the system of
production and the institutions of appropriation, that is, the
socio-economic base of society.
---- a central role is assigned to the analysis of the mechanisms
and processes of domination through which existing structures are
maintained.
-------------------------------------------------------------
Our approach should bring to the forefront both aspects of
social structures:
the mechanisms of self-perpetuation and the possibilities for
change.
briefly, in spite of structural 'determination', there is room
for alternatives in history.
---------------------------------------------------------------
the basic characteristic of dependency studies: the emphasis on
global analysis.
significant data are those that illuminate trends of change and
emerging processes in history in unanticipated ways.
---- we conceive the relationship between external and internal
forces as forming a complex whole whose structural links are not
based on mere external forms of exploitation and coercion, but
are rooted in coincidences of interests between local dominant
classes and international ones, and, on the other side, are
challenged by local dominated groups and classes.
---- imperialist penetration is the result of external social
forces ( multinational enterprises, foreign technology,
international financial system, embassies, foreign states and
armies, etc)...but, then, the system of domination reappears as
an "internal" force, through the social practices of local groups
and classes which try to enforce foreign interests, not precisely
because they are foreign, but because they may coincide with
values and interests that these groups pretend are their own.
---- capital concentration by multinational companies and the
monopoly of technological progress in the international market
located in the center of the international system are obligatory
points of reference for the analysis.
---- so the analysis of structural dependency aims to explain
the interrelationships of classes and nation-states at the level
of the international scene as well as at the level internal to
each country.
----------------------------------------------------------------
BASIC SITUATIONS OF DEPENDENCY
we describe two dependency situations that prevailed prior to the
present system of international capitalism based on the dynamism
of multinational corporations: dependency where the productive
system was nationally controlled and dependency in enclave
situations.
----- in enclave economies, foreign invested capital originates
in the exterior, is incorporated into local productive processes,
and transforms parts of itself into wages and taxes... the goods
are realized in the external market
----- in economies controlled by the local bourgeoisie, the
circuit of capital is formally just the opposite...the starting
point for capital accumulation is thus internal...the
international market is required to realize the final steps of
the capital circuit.
----- the case of contemporary dependent industrializing
economies controlled by multinational corporations gives the
impression of a return to the enclave type of economy. However,
although initial accumulation often results from external
investment (though not nevessarily, because multinational
corporations do often use local funds to invest), there is an
important difference vis-a-vis enclave economies: a substantial
part of industrial production is sold in the internal market.
----- so, the forms adopted by dependency may vary considerably.
This variation in formis expressed in the socio-political context
through the size and type of the working class as well as of the
bourgeoisie, the size and type of'middle class,' the weight of
bureaucracies, the role of the armies, forms of state, the
ideologies underlying social movements, and so forth.
---------------------------------------------------------------
From the economic point of view a system is dependent when the
accumulation and expansion of capital cannot find its essential
dynamic component inside the system. In capitalistic economies
the crucial component for the drive to expand is the capacity to
enlarge the scale of capital. This cannot be done without the
creation of new technologies and continuous expansion of the
production of 'capital goods', that is, machinery and equipment,
to permit the continuing growth of enterprise expansion and
capital accumulation.
[end from Cardoso/Faleto...]
________________________________________________________________________
END OF BOX 2____________________________________________________________
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