Neo-Marxist Dependency Theories

Dependency and underdevelopment in Third World countries

1. Introduction

Many reasons have been proposed for the current world situation where the vast
majority of countries are underdeveloped and a small portion, the Western
countries, are relatively rich. In this essay I discuss the contributions made to the
debate by the Neo-Marxist theorists on reasons why this division exist, more
specifically, on the dependency of Third World countries on Western nations. In
the second section I look at Cuba as an example of how a nation has been capable
of ending a situation of dependency, and why it may, or may not, give hope to
other underdeveloped nations. 

2. Neo-Marxist dependency theories

The end of the World War II introduced an era of economic expansion and
polarization in the world (emergence of the Cold War), and it was in that light that
American social scientists were encouraged to study the Third World nation-states
with the intention to promote economic development and political stability in the
Third World (So, 1990:17)1. However, scholars from countries targeted by this
Modernization School of development started to develop their own theories, partly
as a result of 'sub-optimal' results of policies based on the modernization theories,
as well as concluding that imperialism in general "has actively underdeveloped the
peripheral societies" (Martinussen, 1997:86) they are living in. Critique on the
Modernization School first arose in Latin America as a response to the bankruptcy
of the program of the United Nations Economic Commission for Latin America
(ECLA). In short, the ECLA promoted protectionist policies together with
industrialization through import subsidies, which, in practice, resulted in a brief
economic expansion in the 1950s followed by economic stagnation
(unemployment, inflation, declining terms of trade, etc.). (So, 1990:91). 

Overall, the failure of the ECLA and the resulting decline of the Modernization
School theories, together with the crisis of orthodox Marxism 2, gave rise to what is
now referred to as Neo-Marxist Dependency Theories. 

2.1 Classical Neo-Marxist dependency theories 

First, influential, attempts to redefine underdevelopment and dependency theory

from a Third World perspective were carried out by Paul Baran and Andre Gunder
Frank.
Baran argued that the 'backward' countries were characterized by dual economies:
a large agricultural sector and a small industrialized sector (Martinussen,
1997:86). Profit margins and the potential to generate economic surplus from
agricultural produce are still minimal, where as of today roughly 1.4 billion
peasants in the Third World amount to a less than 13% of the world trade (Keet,
2002). Baran emphasized class relations and their impact upon the utilization of
economic surplus3 and its distribution of power as primary barriers preventing
development, thus the crucial point being internal conditions of the Third World
country. He advocated as solution (escape from dependency) implementation of
extensive state intervention to promote nationally controlled industrialization as a
precondition for evolution of other industrial sectors (Martinussen, 1997:87). 
In contrast with Baran, Frank's main thesis in identifying the causes of
underdevelopment, or: the development of underdevelopment, is the notion of
metropoles and satellites, where metropoles are the target of merchant capital
and the satellites' existence purely for 'feeding' the requirements of the
metropoles. The crucial mechanism for the extraction of economic surplus was
trade and other kinds of exchange of goods and services, including both
international exchange and internally in the peripheral societies. Frank's proposed
solution to the problem of dependency was the requirement for the Third World
countries to effectively de-link from the world market, to allow a country to
develop. (Martinussen, 1997:88-89). Thereby directly blaming external factors
(like their history of colonialism), whereas the Modernization School had assumed
that causes were to be found inside the Third World countries, such as culture,
overpopulation, little investment or just a general lack of motivation of the people
to do anything 'really constructive' towards progress of the nation. Moreover,
Frank argues that the very same process of development in the Western
metropoles simultaneously perpetuates underdevelopment in Third World satellites
(So, 1990). This essential distinction between external motive forces as opposed
to internal ones is further elaborated on more philosophically by Cowen and
Shenton (1996:60-115).
Last, I would like to mention Samir Amin and Arghiri Emmanuel. Amin, because he
moved from the agriculture-industry or metropole-sattelite to the concept of
centre and periphery, where the centre has an autocentric reproduction structure,
which is generally self-reliant, and a peripheral economy, characterized by an
'overdeveloped' (read: exploited) export sector (Martinussen, 1990:90), producing
goods for luxury consumption generating surplus and foreign currency instead of
peasants producing for themselves and stimulating regional development. A
simple example is the neatly packed mange-tout in your supermarket, produced in
Mozambique or Kenya; whereas 'we' in Ireland don't really need these vegetables,
but they could have used their fertile soil to produce food for themselves instead.
In line with the overdeveloped export sector and the related dependent-ness of
the peripheral economies, is the problem of unequal exchange of goods between
the centre and peripheral countries, as theorized by Emmanuel (1972). Emmanuel
saw problems in that workers were (still are) paid differently depending on the
location they perform their activities (i.e. in the centre or periphery), and the
unequal exchange related to the amount of labour for agricultural produce
(export) and imported goods (technology, machines) into the peripheral
countries4. Senghaas (2001) attributes the idea of unequal exchange from
Emmanuel to Amin, who incorporated Emmanuel's ideas in his later works,
referring to it instead as the systematic 'disturbed' dynamics of accumulation
between centre and periphery, resulting in asymmetric interdependence that
would need to be resolved by active state intervention, via an associative-
dissociative mixed strategy5, to stimulate indigenous development independent of
the world system. 

Although there are differences between the leading scholars in the classical
dependency theories, the most important to remember is that these theories
attempt to describe underdevelopment and dependency from a Third World point
of perspective, most of them tried to identify external factors to explain the
backward economies, think unequal exchange imposed from 'other' countries, and
their polar theoretical structure is core versus periphery. Proposed solutions
include a socialist revolution together with a partial or complete de-linking from
the international system. 

2.2 Broadening and deepening of the theories 

Based on the 'classical' dependency theories outlined in �2.1 above, more

empirical data was gathered from the periphery point of perspective, not only form
Latin America, but also to compare dependency theories with African and Asian
countries. It appeared that not all observations could be explained by existing
theory alone: the actual changes in the less developed countries implied greater
and greater differentiation between the underdeveloped countries (Martinussen,
1997:93). In other words, Third World nations could not be categorized as one
homogenous group and, at least, their individual (colonial) heritage and social
structure ought to be taken into account, therefore elaboration on and expansion
of the relatively closed concepts of the classical Neo-Marxists was required. The
most important contributors to the debate of the 'new dependency' studies are
F.H. Cardoso, and Immanuel Wallerstein during his early publications (though his
later works have been categorized as 'world-system school'6). Similarities and
differences between these new ideas and the 'classical' dependency school are
summarized in Table 1.

Table 1. Comparison of old and new versions of dependency theories.

Classical Dependency 'New' dependency
Similarities 
Focus of
research 
Third World development 
Level of
National level 
analysis 
Core-periphery, dependency 
Key concepts 
Dependency harmful to development
Policy
implications
Differences 
Methodology High-level abstraction, Historical-structural,
focus on general pattern focus on concrete
Key factors of dependency  situation of
Emphasis on external: dependency 
Nature of unequal exchange, Emphasis on
dependency  colonialism  internal: class
Dependency Mostly economic  conflict, state
and Mutually exclusive (leads
development only to Mostly socio-political 
underdevelopment) Can coexist
 (associated-
dependent
development)

Source: Table 7.1 p 138 in So (1990). 

Cardoso claimed that the external factors would have very different impacts,
depending on the dissimilar internal conditions (history, social structures etc.). In
contrast to Frank, he regarded the national bourgeoisies of the dependent
societies as potentially powerful and capable of shaping development, with a result
not Amin's autocentric reproduction but a development in dependency, also
referred to as dependent, associated development. (Martinussen, 1997:93-96). A
striking example of such dependent development is the establishment and
'permanent' character of the Lom� conventions7. 
Although Wallerstein's later work is categorized as World-System Perspective, his
ideas do include many concepts of the Dependency School, such as unequal
exchange and the core-periphery exploitation8 (So, 1990:171), but approaches
dependency and underdevelopment from a world-wide overview down to
individual states and their positions within the system (Martinussen, 1997:97), as
opposed to from national to international level as other dependency theorists tried
to explain the observed problems. 

What about the current status of dependency theories? Much has changed since
the 1960s, especially the globalisation of political structures, the increased
presence and power of transnational corporations and neo-liberalism as an, if not
the most, important factor shaping these times. Recent works by Amin (2001;
Farag, 2002) and Surin (1998) indicate a mixture of Dependency School theory as
well as acknowledging the importance of the world-system, most notably the
unsustainable, destructive forces of financial markets on Third World countries
(i.e. about the generation of 'surplus' money not via labour and capital, but from
money; and its volatility). However, the theoretical structure is still bimodal (core-
periphery) and deterministic development (see Appendix A), though Amin has
introduced the definition of a 'Fourth World' of countries on the African continent
lagging even further behind, i.e. relatively more deprived, than 20 or 30 years ago
(Farag, 2002; Surin, 1998), which can be interpreted as the Third World being the
'semiperiphery' and the Fourth World as periphery, although Amin does not
mention this classification. On the other hand, Wallerstein fully follows the World-
System theories, but in a recent publication (2002) he also did address class
structures and societies on national level. 

3. Case study: Cuba

The reason why I decided to use Cuba as a case study in relation to

aforementioned dependency theories is that Cuba managed to defy most, of not
all, conventional ideas around development and dependency during the last 10
years. First, I will discuss the situation leading up to the end of the Cold War, then
changes in the agricultural sector and Cuban society in general, and will finish with
a brief analysis on the example Cuba may be for other nations still caught in the
dependency trap. 

3.1 The Alternative Model 

Despite the fact that Cuba had its socialist revolution, which was set as a
prerequisite by the classical dependency school as a means to be able to end the
dependency, the international relations did not change in the way
envisaged. Partly because of the, now 40-year long, U.S. embargo9 imposed on
Cuba, it moved more strongly towards the Soviet Bloc to become a player in the
COMECON: the consequence was continued export of sugar cane and increased
import of industrial equipment, petroleum, agrochemicals and staple food (Rosset
and Benjamin, 1994, Enr�quez, 2000), thereby carrying on the Classical Model of
agriculture (Wallerstein, 2002; Enr�quez, 2000) as advocated by the
Modernization School. Moreover, the Soviets paid 5.4 times more for Cuban sugar
cane than the world market price (Rosset, 2002), providing slightly more that
80% of Cuba's foreign exchange (Enr�quez, 2000), thereby fostering dependent
development of Cuban society. Its advantages were internal investment in the
establishment of an excellent education system and a relatively good health care
system, suggesting a classification of 'semiperiphery', but the end of the Cold War
resulted in an abrupt end of Cuba's dependent links with the Soviet Bloc:
"Suddenly $8 billion a year disappeared from Cuban trade, imports were reduced by
75 percent, including most foodstuffs, spare parts, agrochemicals, and industrial
equipment," (Dr. Funes quoted in Parker, 2002)
Other sources claim it to have been cuts of 82% (Rosset, 2002) of its pesticides or
over 90% of Cuba's fertilizer and pesticide use (Rosset and Benjamin, 1994:3).
Even more seriously,
"Estimates of the weight of the population's caloric intake that was derived from
imported goods ranged from 44 to 57 percent." (Enr�quez, 2000)
indicating a potential disaster in food shortages for the population. Thus Cuba, still
under U.S. embargo and virtually overnight left with no trading partner, was faced
with the challenge to find alternatives to the highly mechanized and industrialized,
mostly state-owned, large farms and to become self-reliant in its food production
to prevent widespread famine of its citizens.
Here Cuba's unique social structure has proven to be of great advantage: the
highly educated population together with state regulation and planning resulted in
an amazing 'greening of the socialist revolution', what has become to be known as
The Alternative Model. The major overhaul of the agricultural sector included the
following:
 Development of organic agriculture, including applying researched methods
of bio-fertilizers and bio-pesticides (based on micro organisms) and crop
rotation.10
 Change from large state-owned farms to smaller work-units and a scaling
down of management, yet maintaining country-wide coordinated state
planning, including introduction of new regulations for people to be paid in
ratio for their production and Cubans were actually allowed to own their
land (Enr�quez, 2000; Rosset, 2000; Rosset and Benjamin, 1994).
 Introduction of urban agriculture, called agroponicos or organoponicos,
employing 117,000 people who are providing about half the vegetables
grown in Cuba at a lower rate than the rural produced crops (Kovaleski,
1999).
Although Cuban citizens are still on food ransoms, and food availability had
dropped at least to only 60% (Kovaleski, 1999) during the 1991-1995 period,
Cuban agriculture has recovered in most areas to the levels of the 1980s (Parker,
2002) and is now world leader when it comes to knowledge of organic agriculture
(Rosset, 2002). 

3.2 A survival kit for eliminating dependency?

"We are told that small countries cannot feed themselves, that they need imports to
cover the deficiency of their local agriculture. We hear that a country can't feed its
people without synthetic farm chemicals, yet Cuba is virtually doing so. We are told
that we need the efficiency of large-scale corporate or state farms in order to produce
enough food, yet we find small farmers and gardeners in the vanguard of Cuba's
recovery from a food crisis. We hear time and again that international food aid is the
answer to food shortages-yet Cuba has found an alternative in local
production." (Rosset, 2000)
Acknowledged, Cuba has faced real hardship in the 1990s, but it is also an
example that the so-called 'de-linking' as outlined by the Dependency School is
possible. Proof of the viability of organic agriculture is the other great windfall
(Parker, 2002). The next thought is: can this Alternative Model be a blueprint for
other dependent countries? World System dependency theorists might claim Cuba
was already in the semiperiphery, especially because they have a highly educated
population who were vital in its policies for survival. But Neo-Marxists can
highlight the advantages of the present socialist structure that was already in
place. Enr�quez (2000) points out the analogous, albeit slower, process that is
happening in China and Vietnam, and adds that former Soviet Bloc countries do
not experience a similar change because they do not have the socialist planning
structure in place anymore. She even goes a step further, claiming that the U.S.
embargo might have contributed positively to the change, because it did not allow
industrial and capital investments in Cuba, thus preventing swapping one form of
dependency into another (neo-liberal) one and thus ending the unequal
exchange. 

Whereas other Latin American nations have lost more liberties of their authority to
manage their own economy (Anon 2, 2002), Cuba has proved it is possible for a
so-called (semi)peripheral country to stand on its own feet. However, the majority
of dependent, Third World, nations do not have a socialist structure with highly
educated people in place at the time of writing, nor a U.S. embargo imposed on
them to prevent neo-liberal influences, therefore it may not be the blueprint for
change towards independent development, but it certainly does give hope that by
employing original, inventive measures there might be a way out of the
dependency trap. 

4. Conclusions

As a result of the dissatisfaction of the development policies advocated by the

Modernization School, new theories emerged based on the point of view of the
developing countries. These Dependency Studies focused on the division of the
world into core and periphery, where the level of analysis was the Third World
nations involved. Early dependency theorists focused on the general pattern of
dependency as an economical phenomenon due to colonization and unequal
exchange, whereas later scholars of the Dependency School investigated the
historical-structural nature of dependency of peripheral countries, emphasizing the
state and class conflicts (hence a socio-political phenomenon) and asserting that
dependency and development can co-exist by so-called 'associated-dependent
development'. 

During the Cold War, Cuba was following the dependent development path in a
socialist setting, the agricultural sector following the Classical Method, however
investing the generated surplus in its people and maintaining socialist planning
policies, which were most likely the main contributing factors in the successful de-
linking form its dependency on the Soviet Bloc after the end of the Cold War.