Dependency Theory - Other Dependency Theorists

Other Dependency Theorists

Two other early writers relevant to dependency theory were François Perroux and Kurt Rothschild. Other leading dependency theorists include Herb Addo, Walden Bello, Fernando Henrique Cardoso, Enzo Faletto, Armando Cordova, Ernest Feder, Andre Gunder Frank, Walter Rodney, Pablo González Casanova, Keith Griffin, Kunibert Raffer, Paul Israel Singer, and Osvaldo Sunkel. Many of these authors focused their attention on Latin America; the leading dependency theorist in the Islamic world is the Egyptian economist Samir Amin (Tausch 2003).

Later, world systems theory expanded on dependency arguments. It postulates a third category of countries, the semi-periphery, intermediate between the core and periphery. The semi-periphery is industrialised, but with less sophistication of technology than in the core; and it does not control finances. Capitalism in the periphery, like in the center, is characterized by strong cyclical fluctuations.

The rise of one group of semi-peripheries tends to be at the cost of another group, but the unequal structure of the world economy based on unequal exchange tends to remain stable (Tausch 2003).

Tausch (2003) traces the beginnings of World systems theory to the writings of the Austro-Hungarian socialist Karl Polanyi after the First World War. In its present form it is usually associated with the work of Immanuel Wallerstein.

Ever since the capitalist world system evolved, there is a stark distinction between the nations of the center and the nations of the periphery.

Former Brazilian President Fernando Henrique Cardoso, when he was still a social scientist, summarized his version of dependency theory as follows:

• there is a financial and technological penetration by the developed capitalist centers of the countries of the periphery and semi-periphery;
• this produces an unbalanced economic structure both within the peripheral societies and between them and the centers;
• this leads to limitations on self-sustained growth in the periphery;
• this favors the appearance of specific patterns of class relations;
• these require modifications in the role of the state to guarantee both the functioning of the economy and the political articulation of a society, which contains, within itself, foci of inarticulateness and structural imbalance.

Tausch (2003), based on works of Amin from 1973 to 1997, lists the following main characteristics of periphery capitalism:

1. Regression in both agriculture and small scale industry characterizes the period after the onslaught of foreign domination and colonialism
2. Unequal international specialization of the periphery leads to the concentration of activities in export oriented agriculture and or mining. Some industrialization of the periphery is possible under the condition of low wages, which, together with rising productivity, determine that unequal exchange sets in (double factorial terms of trade < 1.0; see Raffer, 1987)
3. These structures determine in the long run a rapidly growing tertiary sector with hidden unemployment and the rising importance of rent in the overall social and economic system
4. Chronic current account balance deficits, re-exported profits of foreign investments, and deficient business cycles at the periphery that provide important markets for the centers during world economic upswings
5. Structural imbalances in the political and social relationships, inter alia a strong 'compradore' element and the rising importance of state capitalism and an indebted state class (Tausch 2003)

The analysis of development patterns in the 1990s and beyond is complicated by the fact that capitalism develops not smoothly, but with very strong and self-repeating ups and downs, called cycles. Relevant results are given in studies by Joshua Goldstein, Volker Bornschier, and Luigi Scandella (Tausch 2003).

Dependency theorists hold that short-term spurts of growth notwithstanding, long-term growth in the periphery will be imbalanced and unequal, and will tend towards high negative current account balances (Tausch 2003). Cyclical fluctuations also have a profound effect on cross-national comparisons of economic growth and societal development in the medium and long run. What seemed like spectacular long-run growth, may in the end turn out to be just a short run cyclical spurt after a long recession. Cycle time plays an important role. Giovanni Arrighi believed that the logic of accumulation on a world scale shifts over time, and that we again witness during the 1980s and beyond a deregulated phase of world capitalism with a logic, characterized - in contrast to earlier regulatory cycles - by the dominance of financial capital (Tausch 2003).

At this stage, the role of unequal exchange in the entire relationship of dependency cannot be underestimated. Unequal exchange is given, if double factorial terms of trade of the respective country are < 1.0 (Raffer, 1987, Amin, 1975). Labor in the export sectors of the periphery is being exploited, while monopolistic structures of international trade let the centers profit from the high prices of their exports to the world markets in comparison to their labor productivity.