ECOP2616

Take Home Exam A

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Bethaney Debenham
230430556

The preeminence of globalisation in today’s world has meant that questions of distribution have
increasingly fallen along international lines. Critically evaluated here today are modernisation and
dependency theory which each speculate about contemporary distributions of resources, skills and
profit. It will be seen that while both theories present convincing accounts of some countries
development experience, they similarly both suffer from a tendency to universalise their claims and
oversimplify the multitude of factors which constitute the development process.

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Modernisation theory, which has been championed the Washington Consensus, presupposes that
development is the key to distributing higher standards of living - politically, economically and
socially - and that development in turn occurs in tandem with ‘stages’ of economic growth (Rostow:
1959). The main vehicle of such growth is international trade as heightened rates of interaction
precipitated by direct investment into a country result in “spillovers” in areas of capital, managerial
techniques, markets and especially technology. (Soysa & ONeal 1999: 767).. It is assumed that
injection of these factors boost what Rostow calls the ‘preconditions of take-off’ essentially
facilitating a society-wide shift towards modernisation. (Rostow 1959: 4-7)

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By contrast dependency theory contends that it is a structural imperative of the capitalist system that
some nations be steeped in underdevelopment as a means of exploitation, both productive and in
terms of resources. Frank, describes international capitalism through a model of ‘core’ and
‘satellites.’ (Frank 1969) Expanding Wallerstein’s world systems theory (1976) he extrapolates such
relations to describe domestic circumstances too, particularly the existence of ‘dual track societies’
between underdeveloped countries metropolises and urban sites. (Frank 1976: 18) In this
framework, institutions perpetuate exploitation, at the significant cost of the development of satellite

Conceivably this may be attributed to the sheer size of available data as well as problems defining exactly what is meant by equality. efficiency seeking. ! Both theories trend towards assumptions and simplifications (Narula & Driffield 2012: 3). Narrula and Driffield propose that simplifications may have (disturbingly) evolved for the sake of “mathematical elegance”. These are problematic in that. Many critiques have been made of modernisation theory and its practical application in the Washington Consensus’ ‘one size fits all policy’ which at it’s core. different motivations for investment (market seeking. for example makes reference to the multiple frames of analysis available to proponents of core-satellite relations. or to align more deftly with economic schools of thought. without unanimous agreement as to what constitutes inequality in the first place. Ghose. ! Dependency theory is similarly plagued by such tendencies for universalism particularly between types of trade. claims of such will be forever built on shaky foundations. or as an export platform) (Balwin 2013: 13). There is a tendency within both theories to universalise their claims. presumes away historical experiences of colonialism. resource extraction. conflicts and exploitation unique to many nations. . tariff jumping. The claim of ‘capped’ development throws into doubt the presumed linear nature of the relationship between increasing international trade and higher rates of living in non-developed and transition economies. each embedded with differing notions of inequality (2004: 231). because such externalised domestic development is not selfperpetuating. Accepting Ricardo’s theory of comparative advantage (Wu & Hsu 2012: 2124) it could stand to reason that targeted investment may in fact play to a country’s strength and thus bolster its domestic conditions and overall position internationally. There is a lack of differentiation between greenfield and brownfield investment. and a failure to account for the consequential differences of investment in different sectors constitutes a significant gap in the literature.states themselves beyond a certain cap.

New York.1-16 Soysa. 766-782 . G (1967). I. (1959). A. Capitalism and Underdevelopment in Latin America. R. Driffield. (2012) ‘Does FDI Cause Development? The Ambiguity of Evidence and Why it Matters’. Cambridge Journal of Economics. Ghose. Oneal J. while modernisation and dependency theory’s present compelling commentaries of the development process for some countries. K. 28. Imperialism and Underdevelopment. both have been liable to universalise their claims and oversimplify the complexities of the development process.’ American Sociological Review. R. (2004). R. 'The Stages if Economic Growth. ! Question 2 References Balwin. Switzerland. pp. 1970. I. pp.. 12:1. (2013) ‘The New Relevance of FDI: The GVC Perspective’ from Foreign Direct Investment as a Key Driver For Trade. N. G. pp.. (1999). Frank A. Global Agenda Council on Global Trade and FDI. 13. ‘Global Inequality and International Trade’. volume 24. European Journal of Development.' The Economic History Review. (1979). World Economic Forum. The Case for a Multilateral Agreement on Investment. ed. 64:5. pp 1-7. R. Geneva. ‘Boon or Bane? Reassessing the Productivity of Foreign Direct Investment. Rostow. R. pp. Frank A. ‘The Development of Underdevelopment’ from Rhodes.! ! In conclusion. Monthly Review Press. 229-252 Narula. Growth and Prosperity. New York and London.

Y. 2183-2189 ! ! ! ! ! . pp. J. 27:3. C. I.Wallerstein.(2012). Hsu. pp. ‘Foreign Direct Investment and Income Inequality: Does the relationship vary with absorptive capacity’. Economic Modelling. The British Journal of Sociology. Wu. 343-352. 29. (1976) ‘A World System Perspective on the Social Sciences’.

How can we explain this paradox? ! ! Contemporary society is unique in that while equality is accepted with unprecedented levels of legitimacy as an ideal to strive for. Thus unequal distribution of wealth is justified on the basis of meritocracy . Central to neoliberalism is the belief that anyone can rise to the top. and the delegitimisation of any alternatives. Modern societies are characterised by the unprecedented legitimacy of equality as an ideal and political norm. wherein it is assumed that liberty and equality are incompatible and one has to be chosen over the other (Goodheart 2014: 324). This is achieved by contending that the apportionment of talents and opportunities is an impartial (Hayak 1976: 64). neoliberalism has prescribed an extraordinarily narrow meaning to equality as it is discussed in political and economic circles. Indeed what has been constructed here is a zero sum game of morality. narrowly constructed meanings of ‘inequality’. social and economic inequality is increasingly perpetuated both internationally and domestically. ! First. essentially disregarding institutional privilege and disadvantage that are the manifest consequences of a variety of preferences and how these overlap (Crenshaw 1991). “Equality” in these circumstances has come to mean only equality of opportunity. meritocratic discourse has become a mechanism for those already possessing power to perpetuate it (Littler 2013: 53). the rise of the myth of free markets. what De Botton has labelled “a practical belief in the innate equality of all humans and in the unlimited power of anyone to achieve anything” (de Botton 2004: 47).that anyone who possess wealth has earned it by virtue of their abilities. as Littler points out. yet they generate vast social and economic inequalities. effort and persistence (Callinicos 2000: 39).3. In the US for . This paradox is a historical phenomenon linked inextricably with the rise of neoliberalism and concurrently. However. Žižek points out that this trade has even become a central point of identification.

but as results of interferences with those markets. In fact. when the question is posed. and fosters stereotypes which places the populations well being entirely on themselves as individuals. inequality has been framed as belonging to an . and popular culture (Centeno & Cohen 2012: 328). Markets have become normalised as “natural laws” which to fight against is fundamentally futile. crises of capital. ! ! Further neoliberalism has perpetuated a “myth” of free markets which has been accepted and enacted in policy. such as seen in the Washington Consensus. (thus implying winner and losers) but promising “everyone will win” (Dean 2013: 54) Internationally this promise is made through liberal trade theory arguing for trickle down benefits.” in that it excursuses hegemony within the academy. simultaneously holding competition at the core of its functioning. political circles. shocks. “What am I to the Other?” The answer will be “free” (1997: 8). many traditionally state administered social functions have now become functions of the economy. Globally it has become so dominant that alternatives are viewed almost completely as impossibilities (Pollin 2005: 173). continued inequalities are explained away not as flaws of free markets. ________ states that neoliberalism “must be viewed as the triumph of an ideology. Neoliberalism’s free market is presented as the most efficient vehicle for ensuring human well being. As such. interference by the state can only have negative effects. Neoliberal market theory is inherently contradictory. poverty. ! Finally. because completely free markets have never wholly existed. perpetuating and increasing inequality in a context which values equality as a political and social norm is explained by the delegitimisation of any alternatives to neoliberalism.example. Wood points out that this results in a lack of democratic accountability (2004: 12). Domestically. As such. but empirically marred by a history of capital flight and fostered dependence (Ghose 2004).

! Centeno. ‘Global Inequality and International Trade’. 43:6. Polity. A. (2008) ‘Enjoying Neoliberalism’. Crenshaw. New Left Review. ultimately unaccountable to any political/social institutions. N. ! Thus it is clear that the paradox at the centre of contemporary society in accepting equality as a norm while not contesting increasing rates of inequality both internationally and domestically. ! Callinicos. pp. Cultural Politics. (2004). A. Stanford Law Review. I/212. Chapter 3: ‘Equality. J. 1241-1299 Dean. pp. 38:3. A. 229-252 . K. Cambridge Journal of Economics. M. Ghose. narrowly constructed meanings of ‘inequality’. ! Question 3 References ! de Botton. (1991) ‘Mapping the Margins: Intersectionality. 47-72 Fraser. again. (1995) ‘From Redistribution to Recognition? Dilemmas of Justice in a ‘Post-Socialist’ Age’. pp. July-August. and the delegitimisation of any alternatives. pp. Annual Review of Sociology. J. pp 45-63. Identity Politics. Expectation and Envy’. N. (2000) Equality. the rise of the myth of free markets. pp. (2004) Status Anxiety. K.36-64.68-93. (2012) ‘The Arc of Neoliberalism’. pp. 4:1. is explained by the historical rise of neoliberalism and with it.“unconscious yet omniscient” market (Centeno & Cohen 2012: 329). 28. 17-14. Penguin. A & Cohen. and Violence against Women of Color’.

324-327 Hayek. E. E. 51:4. Society. ! Littler. Chapter 1 ‘The detachment of economic power’. (1997) The Plague of Fantasies. (1976) Law. pp 9-25.2. 53-70 Pollin.Goodheart. Wood. Vol. ! Žižek. University of Chicago Press. pp. (2013) ‘Meritocracy as Plutocracy: The Marketising of Equality Under Neoliberalism’. pp. L. Verso. 2005. London: Verso. pp. Legislation and Liberty. S. F. The Mirage of Social Justice. A. (2003) Empire of Capital. New formations: a journal of culture/theory/politics. 80-81. ! ! . (2014) ‘Between Liberty and Equality’. London: Verso. R. Contours of Descent. J.62-85.