UN IT 5 THE POLITICAL ECON OMY APPROACH

Structure
Objectives
Introduction: Evolution o f the Concept
Development as Modernisation
Development as Underdevelopment and Dependency
World System Analysis
Articulation o f Modes o f Production Approach
Class Analysis and Political Regimes
State Centred Approach
Globalisation and Neo-Liberal Approacli
Let U s Sum U p
Key Words
Some Useful Books
Answers to Check Your Progress Exercises

5.0 OBJECTIVES
Comparative politics seeks to study relationsliips among countries. I t seeks also to
find explanations for specific social and political phenomenon in these
relationships. The political economy approach to the study o f comparative politics
is one way o f looking at this relationship. I t proposes that there exists a
relationship between politics and economics and that this relationship works and
makes itself manifest in several ways. I t is tlie understanding o f this relationsliip .
and the manner i n whicli i t unfolds, which subscribes to this approach maintain,
provides the clue to the study o f relationships between and explanations o f social
and political phenomena. After reading tliis unit, you w i l l be able to:

understand various attributes o f political econorny as a concept;

learn how the concept lias become relevant for the study o f comparative
politics; and
know historically, putting into context the various ways in wllicll the political
economy approacll has fornled the basis o f studying relatio~lsllipsbetween
countries and social and political phenomena over tlie past years.

5.1 IN TRODUCTION : EVOLUTION OF THE

CON CEPT
Political economy refers to a specific way o f understallding social and political
phenomena whereby, econo~nicsand politics are not seen as separate domains. I t
.
is premised (a) on a relationsliip between the two and (b) the assumption that tliis
relationsliip unfolds in multifarious ways. These assu~nptionsconstitute important
explanatory and analytical frameworks witllin which social and political phenomena
can be studied. Having said this, it is important to point out that whereas the
concept o f political economy points at a relationsliip, there is no single meaning
which can be attributed-to tlie concept. Tlie specific meaning the concept
assumes depends on the theoreticallideological tradition. e.g., liberal or Marxist,
within wllicll it is placed, and depending on this positioning, the specific manner in
which economics and politics tllenlselves are understood.

I~iterestingly,the appearance o f econo~nicsand politics as separate domains is

itself a modern phenomenon. From the time o f Aristotle till the middle ages, the
concept o f economics as a self regulatinglseparate sphere was unknown. The

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 C o ~ a r a t i v eMethods and word 'econo~ny' dates back to Aristotle and signified in Greek 'the art of
Approaches
household management'. It is derived from the Greek oikos meaning a house, and
nomos ~neaninglaw. As the political evolution in Greece followed the sequence:
household- village- city state, the study of the management of the household came
under tlie study of 'politics', and Aristotle considered econo~nicquestions in the
very first book of Iiis Politics. Among the classical political economist, Adam
Smith considered political economy as 'a branch of the science of a statesman or
legislator'. As far as the Marxist position is concerned, Marx (1818-1883) himself,
generally spoke not of 'political economy' as such but of the 'critique of political
economy,' where the expression was used mainly with reference to the classical
writers. Marx never defined political economy, but Engels did. Political economy,
according to the latter, studies 'the laws governing the production and excliange
of the material means of subsistence' (Marx - Engels, Anti-Duhring). The Soviet
econoinic theorist and liistorian 1.I.Rubin suggested tlie followi~igdefinition of
political economy: 'Political ecolioniy deals with I~umanworking activity, not fro111
the standpoint of its technical methods and instruments of labour, but fro111the
standpoint of its social form. It deals with production relations wliicli are
established anlong people in the process of production'. (I.I.Rubin, Essuys on
Marx's Theory of Vtrlue, Black & Red, Detroit, 1928, 1972 reprint, P.X). In
terms of this definition, political economy is not the study of prices or of scarce
resources, it is rather, a stitdy of culture seeking answers to tlie questions, wliy
the productive forces of society develop within a particular social form, why tlie
~iiacliineprocess uiifolds within the context of business enterprise, and wliy
industrialisation takes the form of capitalist development. Political economy, in
short, asks how the working activity of people is regulated in a specific, historical
form of economy.

In the years after decolonisation set in, the understanding of relationships between
nations, and specific political and social phenomena, was infor~nedby varioi~s
approaches, viz., institution, political sociology and political econon~y.These
were geared primarily towards exa~niningthe manner in whicl~social values were
transmitted and also the structures through which resources were distributed. All
these would eventually form the bases or standards along which different ,
countries and cultures could be classified on a hierarchical scale of development,
and could actually be seen as moving along a trajectory of development and
change. Several theories were advanced as frameworks within which this change
could be understood. A~nongthese was the modernisation theory, which emerged
in the historical context of tlie end of Japanese and European ellipires and tlie
beginning of the cold war.

Check Your Progress 1

N ote: i) Use the space given below for your answers.
i
ii) Check your progress wit11 the model answer given at the end of the unit.
1) What do you understand by the political~economyapproach to the study of
comparative politics?

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 The Political Economy
5.2 MODERN ISATION THEORY: DEVELOPMEN T AS A,pproach

MODERN ISATION
The theory o f modernisation was an attempt by mainly First world scholars to
explain the social reality o f the 'new states' o f the third world. Modernisation
theory i s based upon separation or dualism between 'traditional' and 'modern'
societies. The distinction between 'traditional' and 'modern' societies was derived
from Max Weber via Talcott Parsons. A society in which most relationships
were 'particularistic' rather than 'universalistic' (e.g. based on ties to particular
people, such as kin, rather than on general criteria designating whole classes o f
persons) in which birth ('ascription') rather than 'achievement' was the general
ground for holding a job or an office; in which feelings rather than objectivity
governed relationships o f all sorts (the distinctions between 'affectivity' and
'neutrality'); and in which roles were not clearly separated - for instance, the
royal household was also the .state apparatus ('role diffuseness' vs. 'role
specificity'), was called 'traditional'. A 'modern' society, on the other hand, was
characterised by the opposite o f all these. Other features generally seen as
characteristic of traditional societies included things like a low level o f division o f
labour, dependence on agriculture, low rates o f growth of productior., largely local
I
networks o f exchange and restricted administrative competcncc. Again modern
I societies were seen as displaying the opposite features. Following from this
I
'opposition' o f the two categories, 'modernisation' referred to the process o f
transition from traditional to modern principles o f social organisation. This
process o f transition was not only seen as actually occurring in the newly
independent countries o f Asia, Africa and Latin A~nerica,the attainment of a
modern society as it existed in the West, was seen as their strategic goal. A
modern society was defined as a social system based on achievement,
universalism and individualism, as a world o f social mobility, equal opportunity, the
rule o f law and individual freedom. This was contrasted with traditional societies,
based on ascribed status, hierarchy and personalised social relations. The purpose
of modernisation theory was to explain, and pronzote, the transition from
traditional to modern society.

Modernisation theory argued that this transition should be regarded as a process

o f traditional societies 'catching up' with the modern world. 'The theory o f
modernisation was most clearly elaborated in the writings o f W.W.Rostow (The
Stages of Economic Growth: A Non-Communist Manifest4 Cambridge
University Press, Cambridge, 1960), who argued tliat there were five stages o f
development through which all societies passed. These were: (i)the traditional
stage; (ii)the preconditions for take off; (iii) take off; (iv) the drive toward
maturity and (v) high mass consumption. Third World societies were regarded as
traditional, and so needed to develop to the second stage, and thus establish the
preconditions for take-off. Rostow described these preconditions as the
development o f trade, the beginnings o f rational, scientific ideas, and the
emergence o f an elite that invests rather than squanders its wealth. The theory
argued that this process could be speeded up by the encouragement and diffusion
of Western investment and ideas. Scholars in this tradition also argued tliat
industrialisation would promote westkrn ideas o f individualism, equality o f
opportunity and shared values, which in turn would reduce social unrest and class
conflict.

As we have mentioned earlier modernisation theory developed in the context o f

cold war and at times it is unclear whether (a) modernisation theory was an
analytical or prescriptiv'e device, (b) whether modernisation was actually occurring
or whether it should occur and (c) whether the motives o f those promoting
I
modernisation was to relieve poverty or to provide a bulwark against communism?

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 The two factors are obviously connected, but the subtitle o f Rostow's book - 'a
non-coniniunist nianifesto' - suggests that the latter may have been considered
more important than the former.

To conclude, we can say that modernisation theory was based on an evolutionary

model of development, whereby all nation-states passed through broadly similar
stages of development. In the context of the post-war world, it was considered
imperative that the modern West should help to promote the transition to
modernity in the traditional Third World.

Check Your Progress 2

N ote: i) Use the space given below for your answers.

ii) Check your progress with the model answer given at the end of the
unit.
1) What kind of develop~nentpath did modernisation theory suggest for the 'new
states' of the third world?

5.3 DEVELOPMEN T AS UN DERDEVELOPMEN T AN D

DEPEN DEN CY
Dependency theory arose in the late fifties and the sixties as an extended critique
of the modernisation perspective. This school of thought is mainly associated with
the work of Andre Gunder Frank, but the influence of Paul Baran's (The
Political ECOIIQIII~of Growth, Monthly Review Press, 1957) work is also very
important. Baran argued that the economic relationships that existed between
western Europe (and later Japan and United States) and the rest of the world
were based on conflict and exploitation. 'The former took part in 'outright plunder
or in plunder thinly veiled as trade, seizing and removing tremendous .wealth from
the place of their penetration' (Baran 1957: Pp.141-2). The result was transfer of
wealth from the latter to the former.

Frank examined Third World countries at close hand, and criticised the dualist
thesis (see in the above section), whicK isolated 'modern' and 'traditional' states,
and argued that the two were closely linked (Capitalism a n d Underdevelopment
in Latin America, Monthly Review Press, 1969; Latin America:
Underdevelopment o r Revolution?, Monthly Review Press, New York, 1969).
He applied his critique to both modernisation theory and orthodox Marxism,
replacing their dualism by a theory that argued that the world has been capitalist
since the sixteenth century, with all sectors drawn into the world system based on
production for market. The ties of dominance and dependence, Frank argues, run
in a chain-like fashion throughout the global capitalist system, with rnetropoles
appropriating surplus from satellites, their towns removing surplus from the
hinterland and likewise.

Frank's central argument is that creation of 'First' world (advanced capitalist

societies) and the 'Third' world (satellites) is a result of the same process
(worldwide capitalist expansion). According to the dependency perspective the
contemporary developed capitalist'countries (metropoles) were never
underdeveloped as the Third world (satellites), but were rather undeveloped.
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 i

Underdevelopment, instead o f being caused by the peculiar socio-economic T h e Puliticnl Econoniy

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structures o f the Third World countries, is tlie historical product o f the relations
(relations o f imperialism and colo~iialism)wliicli liave obtained between
underdeveloped satellites and developed metropoles. In short, develop~nentand
underdevelopment are two sides o f the same coin, two poles o f the same process
- ~netropolita~i capitalist development on a world scale creates the 'development o f
underdevelopment' in the Tliird world. According to Frank, Latin America's most
backward areas (e.g., Nortlieaster~iBrazil) were precisely those areas which had
once been most strongly linked to the metropole. Institutions such as plantatio~is
and haciendas, regardless o f tlieir internal appearance, liave since tlie conquest
been capitalist forms o f production linked to tlie metropolitan market. Economic
development, according to Frank, was experienced in Latin America only in those
times when the nietropolita~ilinkages were weakened - tlie Napoleonic Wars, the
depression o f the 1930s and tlie two World Wars o f the twentieth century - and it
canie to an end precisely as the rnetropoles recovered fro111 these disruptions and
recovered tlieir links to tlie Tliird world.

Dependency theory was indeed a powerful advance over modernisation tlieory,

but it suffered from peculiar weaknesses o f i t s own. First o f all, it suffered fro111
a certain liistorical character, viewing change within tlie Tliird world countries as
an outco~neo f its u~idifferentiateddependent status. As Colin Leys put it,
dependency tlieory "...co~icentrates on what happens to tlie underdeveloped
countries at tlie hand o f iniperialisni and colonialism, rather than on the total
liistorical process involved, including tlie various for~iiso f struggle against
imperialism and colonialism wliicli grow out o f the conditions o f
underdevelopment." (Colin Leys, Underdevelopmei~tin Ke~iya,Berkeley,
University o f California Press, 1975, p.20). Secondly, dependency tlieory tends to
be economistic. Social classes, states and politics appear as derivatives o f
economic forces and meclianisms and often receive very little attention. Classes,
class projects and class struggles appear neither as tlie prime movers o f liistorical
change nor tlie prime foci o f analytic attention. Thirdly, critics liave alleged tliat
the concept o f development i s obscure in dependency tlieory. Given tliat it i s
frequently argued that 'development' occurs in the Tliird world when tlie
~netropolitanlsatellitelinkages are weakened, does 'development' imply autarchy?
Since 'development' i s an attribute o f capitalist development in the metropoles, i s
the debate in tlie ultiniate analysis again about the Tliird world's ability to
replicate this path? Finally, tlie assumptions o f tlie dependency tlieory, fail to
provide explanations for tlie various so-called 'economic miracles' o f the Third
world? Thus, while marking an advance beyond tlie myths c f modernisation,
dependency tlieory did not fully escape its imprint. While modernisation tlieory
argued that 'diffusion' brought growth, dependency tlieory would seem to argue in
a similar vein that dependence brouglit stagnation.

5.4 WORLD SYSTEM AN ALYSIS

Immanuel Wallerstein further developed tlie idea o f world capitalist economy in
his 'world system analysis' (Immanuel Wallerstein, The Modern World System,
2 Vols. Academic Press, New York, 1974, 1980, covers up to 1750). Wallerstei~i
argued tliat the expansio~io f Europe stariing in the sixteenth century signalled the
end o f pre-capitalist modes o f PI-oduction in those areas o f tlie Third World
incorporated witliin tlie world capitalist market. According to this tlieory, dualism
or feudalism does not exist in tlie Third World. The moder~iworld system i s
i~nitaryin that it i s synonymous with tlie capitalist mode o f production, yet
disparate in that it is divided into tiers - core, serni-periphery, and periphery -
wliicli play functionally specific roles within the system as a wliole. World system
tlieory places a new emphasis on the niultilateral relations o f the system as a
wliole (core-core and periphery-periphery re latio~isbecome important to tlie
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 Comparative Methods and analysis as do core-periphery ones), rather than on the unilateral relations o f the
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system o f metropole and satellite characteristic o f dependency theory.

Wallerstein's basic argument was that the creation o f the world capitalist
economy in tlie sixteenth century led to a new period o f history, based on
expanded accuniulation rather than stagnant consumption. This was attributable to
tlie emergence o f three key factors: (i)an expansion o f the geographical size o f
the world in question (through incorporation), (ii)the development o f variegated
methods o f labour cotltrol for different products and different zones o f the world
economy (specialisation) and (iii)the creation o f relatively strong state machineries
in what would be tlie core states o f this capitalist world econonly (to assure the
transfer o f surplus to the core).

I n tlle formatio~io f the world economy, core areas emerge as countries where
tlie bourgeoisie got stronger and landlords weaker. The important relationship that
determines whether a country is to be a core or part o f peripliery is dependent
on tlle strength o f its state. According to Wallerstein those countries that could
achieve the process o f 'statism', i.e., the co~lcentrationo f power in tlie central
authority, became the core countries o f the world economy. On the other hand,
tlie strength o f the state machineries is explained 'in terms o f tlle structural role a
country plays in the world economy at that moment o f time'. A strong state
enables the country as an entity to get a disproportio~lateshare o f tlie surplus o f
the entire world economy. The stability o f the world capitalist system is
maintained due to three factors: (i)the concentration o f military strengtll in the
liands o f the dominant forces, (ii) pervasiveness o f an ideological commitme~itto
tlle systeln as a wllole and (iii)tlie division o f tlle majority into a large lower
stratum and a smaller middle stratum. 'l'he existence o f tlle semi-periphery means
tliat the upper strata (core) is not faced with the unified oppositio~lo f all others
1\
because the middle stratLltii (semi-peripllery) is both tlie exploited and the
exploiter. Tlle semi-periphery, however, also constitutes a site for change. New
core states can emerge from tlle semi-periphery, and it is a destination for tlle
declining ones.

The world system theory has been widely criticised for its primary focus on the
'system imperative'. Thus in this theory, all events, processes, group-identities,
class and state projects are explained by reference to tlle system as a whole.
The implication o f such a reference point is that all tlie abave nierltioned actors
are seen as embedded within the system so much so tliat they do not act in their
immediate concrete interests but always in accordance with the prescripti&is or
dictates of the system. Critics have also pointed out that the theory explains the
contemporary capitalist world inadequately, since it focusses attention on the
market, failing to take into account tlle processes o f productioo.

Check Your Progress 3

N ote: i) Use tlle space given below for your answzrs.

ii) Check your progress with tlle model answer given at the end o f tlle
unit.

1) What is meant by underdevelopment? What kind o f relationship exists

between First world and tlie Third world cou~itriesaccording to dependency
theory?

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 T h e Political Economy
I 2)- What do you understand by the concept of world systehn? How are different Approacli
parts of world interconnected according to tlie world system perspective?

j
5.5 ARTICULATION OF MODES OF' PRODUCTION
APPROACH

From the late 1960s an attempt was made to resurrect a certain variant of
Marxian approach to the transition process in the Tliird world in which mode of
production was tlie determining concept. Theorists belonging to this scliool of
development argued tliat Tliird world social formations encompass several modes
of productio~iand capitalism both dominates and articulates with pre-capitalist
modes of production. These theorists made a distinction between social
formation and mode ofproduction. Social formation refers to a combination of
economic, political and ideological practices or 'levels'. Mode of productio~irefers
to tlie economic level that determines whicli of the different levels is dominant in
tlie 'structured totality' that constitutes the social formation. The economic level
sets lirnjt on the other levels, that carry out functions wliich necessarily reproduce
the (economic) mode of production. These non-economic levels therefore enjoy
only a relative autonomy from tlie mode of production. The mode of production or
'economic' level is in turn, defined by its 'relations of production', i.e., tlie direct
relation between the immediate producer of the surplus and its immediate
appropriator. Each couplet, slave-master, serf-lord, free labourer-capitalist define a
separate mode.

Tlie mode of production perspective, takes as its point of departure tlie production
of tlie surplus product and is able, therefore to move to an explanation of tlie
division of the world between core arid periphery based 011 the modes of
production rather than trade relations. Tlie core therefore coincides with tlie
capitalist regions of the world, which are largely based on free wage labour. The
periphery on the other hand, was incorporated into the world economy on tlie
basis of rofree relatiolis of production (tliat is, non-capitalist modes of productjon),
which prevented an unprecedented accumulation of capital. Unequal trade
relations were therefore a reflection of unequal relations of production. It is for
these reasons that the 'advanced' capitalist countries were able to dominate other
areas of the world where non-capitalist modes of production existed.

On tlie face of it, mode of production perspective appears to constitute at least a

partial return to the sectoral (modern and traditional) analysis of modernisation
theory. The crucial difference, however, is that unlike dualist interpretations, tlie
I e~iiphasishere is on the interrelatedness of modes of production. It is argued that
the capitalist expansion of the West in the sixteenth century, encountered pre-
capitalist modes of production in the Third World wliich it did not or could not
totally transforni or obliterate, but rather which it si~iiultaneouslycoilserved or
destroyed. Tlie relationship between capitalist mode of production and the pre
capitalist modes of production, however, has not remained static and capitalist
relations of production have emerged in tlie periphery. Capitalism in tlie periphery
is of a-specific kind, one that is qualitatively different from its for111 in core
countries. The marked feature of capitalism in the periphery is its combination
with non-capitalist modes of production - in other words, capitalism coexists, or
'articulates', with non-capitalist modes. Non-capitalist production may be
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 Colnparative Methods and restructured by imperialist (that is, 'core-capitalist') penetration but it is also
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subordinated by its very 'conservation'.

The modes of production theory is, however, weakened by a functionalist

methodological approach. This is because the theory explains social change as a
product of the necessary logic of capitalism. This results in circular reasoning. If
pre-capitalist modes of production survives then that is evidence of its functionality
for capitalism and if pre-capitalist modes broke down then, that too is evidence of
capitalism's functional requirement.

This approacli has also been criticised on the grounds that it subordinates human
agency to structure, and assumes that social phenomena are explained by their
functionality for capitalism, rather than by actions and struggles of human beings
themselves.

5.6 CLASS AN ALYSaS AN D POLITICAL REGIMES

In tlie early 1970s yet another approach to explain tlie socio-political changes
taking place in the Third world countries emerged from Marxist scholars.
Prominent contributions came from Colin Leys (Underdevelopment in Kenya,
University of California Press, Berkeley, 1975) and James Petras (Critical
Perspectives on I~~perirrlisr~~ urtd Social Classes in the Third World, Mo~ithly
Review Press, New York, 1978) who explained tlie transition process in the
developi~igworld not in t e r m of world imperatives or articulation of modes of
production, but in terlns of classes as tlie prime movers of history. The focus
here is not on development, i.e., growth, versus stagnation. Tlie key question
which surfaces in ~ e t r a sand Leys work is: development for whom?

Petras differs from the 'external' relations of world system analysis and the
'internal' relations of modes of production analysis. Tlie salient feature of Third
World societies, according to him, is precisely the manner in which external and
internal class structure cross one another and the various conibinations of class
symbiosis, and interlock. Capitalist expansion on the world scale has engendered
tlie existence of collaborative strata in Third World which not only orient
production outwardly but also exploit internally. Decolo~iisationgave these strata
access to the instrumentality of the indigenous state and tlie choice of several
developmental strategies based on different internal and external class alliances. In
order to explain different patterns of development strategies, Petras examines (a)
tlie condifions under which accu~~tuluiion lakes place, which includes: (i) the
nature of state (and state policy), (ii) class relatiolis (process of surplus extraction,
intensity of exploitation, level of class struggle, concentration of work force), and
(b) the inlpacf of capiial accunzulation on class structure, which includes
u~iderstanding:(i) class formation/conversion (small proprietors to proletarians or
kulaks, landlords to merchants, merchant to industrialist etc., (ii) income distribution
(concentration, redistribution, reconcentration of income), and (iii) social relations:
labour market relations ('free' wage, trade union bargaining), semi-coercive
(market and political/social controls), coercive (slave, debt peonage).

Broadly speaking Petras suggests that post independence national regimes in the
developing world can choose among three strategies or types of class alliances
for capital accumulation. First, there is the neocolonirrl strategy wherein the
national reglime participates wit11 tlie core bourgeoisie in exploiting tlie indigenous
labour force. Wealtli and power under the neo-colonial regime is concentrated in
tlie hands of foreign capital. Secondly, the national regime may undertake a
nufional de~elopmenfulstrategy based on exploitatio~iof tlie indigenous labour
force and the limitation or elimination of the share going to iniperial firms. I n
terlns of tlie pattern of income distribution the major sliare goes to the
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 intermediate strata (in the form of the governing elite of the periphery). Thirdly, The Political E c o ~ ~ o n i y
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the regime may ally with the indigenous labour force, nationalise foreign or even
indigenous enterprise, redistribute income, and generally undertake a national
1 populist strategy as against core capital. Income distribution is more diversified,
spreading downward. Although we cannot go into the details over here, Petras
has mucll to say about the interrelations among these strategies and tlle role of
the imperial state in slloring up neo-colonial regimes and undermining the others.

5.7 STATE CEN TRED APPROACH

In the field of comparative political econonly a backlasll took place against
d e ~ e l o ~ ~ ~ ~ e in
~ ~tlle
t a late
l i s ~1960s
n and tlle early 1970s wlle~lconcept of state
and power were revived. 'The contributio~lsto tlle theory of state canle pri~narily
fro111 Marxist scl~olarsl~ip. I n Marx, Engels and Lenin tlle concept of state is
premised on its relationsllip with tlle existing class divisions in society. It is tlle
nature of this relationship, however, which llas remained a matter of debate
among Marxists. One tradition, prevalent in tlle United States of America (USA),
emanated from comlnunity studies that identified power along the lines of position
and reputation, is associated with works of G.W.Domhoff (Who Rules Anierica?,
Prentice Hal I, New Jersey, 1967; The Higher Circles, Rand0111House, New
York, 1970; Who Really Rules?, Goodyear Publishing, Santa Monica, California,
1978; The Powers That Be, Random House, New York, 1979). Domlloff s maill
thesis is that there not only exists an upper class (corporate bourgeoisie) in USA,
but also that this class, is a governing class. Donllloff s contributio~lshave been
seen as a part of i~lstru~nentalist tradition within Marxism in wllicll state is seen
as an instrument of the ruling or do~ninantclass. This perspective is guided from
Marx and Engels's concern expressed in The Corrir~iur~is~ Manifeslo that tlie
executive of the state "is but a committee for managing the common affairs of
the wllole bourgeoisie". A careful reading of Domhoff s works, however, suggests
that he does not subscribe to tlle i~lstru~llentalist viewpoint and the state in USA
is seen as representing tlie interests of the corporate class while at the same time
opposing the interests of individual capitals or fractions of tlle business elite.

A second tradition revolved around what llas been described as tlle structuralist '
view of the state and is found in the writings of French Marxists, notably Nicos
Poulantzas. Poulantzas in llis early work (Political Power a11d Social Classes,
New Left Books, London) argued that functions of the state in capitalisnt are
broadly determined by the structures of the society rather than by the people
who occupy positions of tlle state. The state operates in a 'relatively autonomous'
manner to counteract tlle combined threats of working class unity and capitalist
disunity in order to reproduce capitalist structure. Poulantzas in his later work
(State, Power and Socialism, New Left Books, Verso edition, London, 1980)
argues that the capitalikr slate irself is an arena of class conflict, and that
whereas tlle state is shaped by social-class relations, it is also contested and is
therefore the product of class struggle within state. Politics is not simply the
orga~lisatio~lof class power tllrougll tlle state by dominant capitalist class, and tlie
use of that power to manipulate and repress s~~bordinate groups, it is also tlle site ,

of organ ised conflict by mass social nlove~nentsto influence state policies, and
gain control of state apparatuses.

An interesting debate on the state theory in the West figured in tlle pages of New
Left Review in 1969-70, in the form of an exclla~lgebetween Ralpll Miliba~lda:ld
Poulantzas. As Poulantza's view has already been discussed above, we sllall
briefly exmine now the contribution of Ralpll Miliband. Tlle debate in New Left
Review centered around Miliband's book The State in Capitalist Sociey: An
Analysis of the Western Systern of Power (Basic Books, New York, 1969) in
, which he argued that while the state may act in Marxist terms, on behalf of the

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 Culnpwrrtivc klcthods and ruling class, it does not act at its behest. The state is a class state, but it rnust
..\pprorchcs
have a high degree o f uutortoi~yand independence if it is to act as a class
state. 'The key argilrnent in Miliband's work is that state may act in the interests
o f capitalist, but not always at their command.

While the above mentioned debates focussed primarily on the nature o f state in
Western capitalist societies, a lively contribution to the debate on the nature o f
state in the developing world followed. Hamza Alavi ('The State in Post-Colonial
Societies: Pakistan and Bangladesh', New Lefr Review, No.72, 1972) characterises
the post-colonial state in Pakistan and Bangladesh as 'overdeveloped' (as it was
creation a f metropolitan powers lacking indigenous support) which remained
relatively autonomous from the dominant classes. The state co~~trolled by
'bureaucratic military oligarchy' mediates between the competi~lginterests o f three
propertied classes, na~nelythe lnetropolitan bourgeoisie, the indigenous bourgeoisie
and the landed classes, while at the same time acting on behalf o f them all to
preserve the social order in which their interests are embedded, namely the
irlstitutio~lo f private property and the capitalist node as the d o ~ n i ~ l mode
a ~ ~ to f
production. This theme o f relative autonomy was later taken by PI-anab Bardhan
(The Political E C O I ~ Oof I I Developn~e~tt,
!~ Basil Blackwel I, Oxford 1986) in his
analysis o f the Indian state, where state is relatively autonomous o f the d o ~ n i ~ ~ a n t
coalition co~lstitutedby capitalist, landlords and professionals. State, however, in
Bardhan's forlnulatior~re~nainsa prominent actor which exercises 'choice in goal
formulation, agenda setting and policy execution'. The idea o f overdeveloped post-
colonial stgte and the concept o f relative autonomy in the context o f relatio~lsllip
between state and class in the context o f African societies was carried in the
work o f John Saul ('The State in Post-Colonial Societies: Tanzania', The Socialist
Register, London, 1974). Another perspective came in the work o f Issa G.Shivji
(Class Struggle in Tanzania, New York, 1976), who argued that the person~lel
o f the state apparatus tllemselves emerge as the domi~lantclass as they develop
a specific class interest o f their own and transfornl themselves into 'bureaucratic
bourgeoisie'.

The debate on the nature and role o f the state have continued in journals like
.Review of Africun Polificul ECOIZONI~, .Jotmral of Co11fe11lpomry Asiu, Latilt
A~nericanPerspective and the annual volunles o f Socidist Register in light o f
changes taking place in the forms o f economy, social classes and political forces.
I

Check Ybur Progress 4

N ote: i) Use the space given below for your answers.
ii) Check your progress with the model answer given at the end o f the
unit.
1) What is meant by mode o f production? What is the nature o f socio-economic ,
reality in the Third world according to the articulation o f mode o f production
theory?

.......................................................................................................................
2) The state centred approach revived the concept o f state and power in the
study o f comparative politics. Discuss.

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 T h e Political Economy
5.8 GLOBALISATION AN D N EO-LIBERAL Approach

APPROACH
I n the context o f globalisation, the 'neoliberal' nod ern is at ion approach has
emerged as a dominant paradigm giving explanations for and prescribing remedies
for underdevelopment in peripheral states. Tlie neoliberal paradigm proposes that
the underdevelopment o f peripheral states o f the 'Third World is primarily because
o f the failure o f state-led development strategies particularly import-substitution
industrialisation. I t believes that these countries can, however, develop and obtain
competitive advantage in an open world econolny by rolling back state-control. A t
the heart o f the neoliberal perspective lies thus the notion o f 'separation' or
dichotomy between tlie state and the market. The paradigm limits the role o f the
state to providing 'enabling' conditions o f 'good governance' in which market
forces can flourish unhindered. This enabling role involves the preservation o f law
and order, the guarantee o f private property and contract, and the provision o f
'public goods'. Criticising this assumption o f a natural dichotomy between the
state and market, Ray Kiely (Sociology and Developntent: The lmpasse and
Beyond, UCL Press, London, 1995, p. 128) points out that tlie separation between
the two cannot be taken as natural but historically and socially constituted. The
appearance o f separate political and economic spaces, he pcil::s out, is unique to
the capitalist social relations which emerged in England and cannot therefore be
generalised to the rest o f 'advanced' capitalist world nor to the developing world.

international institutions like the World Bank a ~ i dI M F have, however, proceeded

to implement this ahistorical neoliberal model onto tlie developing world, with its
accompanying prescriptio~isregarding structural adjustment and 'good governance'.
The World Bank, for example, asserts that the economic problems o f tlie
developing word can be attributed to 'too much government' and a subsequent
failure o f market forces to operate freely. The proposed remedy is therefore, the
encouragement o f the private sector and tlie liberalisation o f 'national economies'.
I n order to achieve these objectives, three key policy proposals are recommended:
(i)currency devaluation, (ii) limited government and incentives to tlie private
sector and, (iii) the liberalisation o f international trade. These structural adjustment
programmes, however, overlook the socio-economic realities o f specific countries
and the role played by the state in providing social justice. The withdrawal o f the
state from this role, so as to unfetter market forces, means that the state is no
longer expected to play a role in balancing unequal resources. This then leads to
an increase in the vul~ierabilityo f the weaker sections, particularly women andlof
the working class, deepening already existing hierarchies within countries.

Similarly, the notion o f 'good governance' within tlie neoliberal agenda o f

international aid giving institutions, as providing tlie enabling conditio~iswithin
which market forces can flourish, has been viewed within scepticism. Kiley, for
example, points out that the World Bank's explanations o f the failure o f structural
adjustment programmes in Sub Saharan Africa, as lack o f good governance, fails
to specify how 'public accountability', 'pluralism' and the 'rule o f law', all o f
which are cited by the World Bank (Governance and Development, World
Development, Washington, DC, 1992) as important constituents o f good
governance, can be achieved without the participation o f the lower classes o f
society. The concept o f good governance within the neoliberal agenda, envisages
a condition where democracy and freedom are seen as antagonistic. Freedom
involves preservation o f private property, free market, and provision o f negative
freedoms like the right to speech, associate and move freely, conditions, in other
words, which preserve market economy. Democracy, on the other hand, is seen
with suspi~ion,as belonging to the political realm where demands for participation
and distribution o f resources are made. Tlie latter, it is feared niay endanger,tlie

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 C o n l ~ a r a t i v ehiethuds and freedoms essential for the strength o f the eco~lomicrealm. l'lle prioritisation o f
.4pproacLes
freedom over democracy, as prescribed by the neoliberal paradigm, fails thus to
meet the developmental needs o f the people.

Check Your Progress 5

I
Note:i) Use the space given below for your answers.

ii) Check your answer with the model answers given at the end o f the unit.
I
1
i
1) What are the key elements o f the neo-liberal approach?
I

5.9 LET US SUM UP

I
The political economy approacll emerged in the wake o f decolonisatioll to
understand and explain the relationship among nations and socio-political
phenomena. At the basis o f this approach was the assumption o f a relationship
between the domains o f politics and economics. The moder~lisation,
underdeve!n;;nent and dependency, world systems, articulation o f the modes o f
production, class analysis, state-centred analysis and the neoliberal analysis are
domina~ltamong the various explanatory frameworks which have emerged in the
last few decades. While, the a~lalyticaltools o f all these frameworks have varied,
almost all have 'development' as their key problem. 111 the process o f exploring
this problem witllin a comparative perspective, they have, inevitably seen the
world in terms o f a llierarcl~isedwhole. They do, however, provide important
insights into the intricacies o f eco~lo~llic
forces and the lllanner in a sy~nbiosiso f
econolny and polity works witllin and in connection with extenla1 forces.

5.10 KEY WORDS

Globalisation: A process o f bringing world together in terms o f economic and
social interactions o f countries and people. I n other words the world is supposed
to be a global society with global issues and problems which are to be tackled
with global efforts and cooperation.

Class State: A state that works to protect the interests o f a particular class. I n
Marxian terminology it is used to describe the present liberal states as protecting
the interests o f capitalist class.

Structural Adjustments: Reforms in Economics like currency devaluation,

incentives to private sector, liberalisation o f international trade etc.

T h i r d World: States wllicll emerged independent after Second World as a

process o f decolo~lisatio~land economically and industrially non-developed.

5.11 SOME USEFUL BOOKS

Chattopadhyay, Paresh, 'Political Economy: What's in a Name?', Monthly
Review, April, 1974.
Chilcote, Ronald H., Theories of Conparafive Politics, Westview Press, Boulder,
72 1994.
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 Cliilcote, Ronald H., 'Alternative Approaclies to Comparative Politics' in Howard T h c Political Economy
Approach
J.Wiarda (ed.), New Directiorls in Cor~iparativePolifics, Westview Press,
Boulder and London, 1989.
Kiely, Ray, Sociology and Developtrierif, UCL Press, London, 1995.
Limqueco, Peter and Bruce McFarlane, Neo-Marxisf Theories of Developtrient,
Croom Helm and St.Martin Press, London, 1983.

5.12 AN SWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress 1
1) Political Ecoliomy Approach is promised on tlie assumption tliat politics and
1 economy are interrelated. To uliderstatid political processes it is liecessary to
, look that in eco~ioniicco~itextslike means of production and pmduction
,
relations.
Check Your Progress 2

1) Purpose of moder~iisatioliis process of traditional societies catcliirig u p witli

tlie ~iioder~i
world. The steps suggested for tliat are : i). Traditional stage
ii) the precoliditions for take off; iii)take off; iv) tlie drive towards maturity
and v) high mass consumption. For elaboration see section 5.2.

Check Your Progress 3

1) See Section 5.3

2) See Section 5.4

Check Your Progress 4

1) Mode of Production means how in a society goods are produced and
distributed. It also refers to the economic level which determines which of
tlie different levels is do~ninantin tlie structured totality that colistitutes the
social formation. In tlie third world countries gelierally pre-capitalist mode
coexists witli the capitalist niode of production.
2) See Section 5.7

Check Your Progress 5

1) Neo-liberal approach is based on the study and evaluation of concepts like

good governance, structural adjustments, withdrawl of the State, globalisation
etc.

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