ECONOMIC

DEVELOPMENT
THE HISTORY OF AN IDEA

H.WArndt

The University of Chicago Press

Chicago and London
 H. .
W..ARNDT Hi is professo r emeritus of eco nomics at ThQA
e Ausstr ua n N.
rra ,,- na I
rvanc
Uruversuy. s boo k ~ Ri~ and Fall ofEconomic Growth: A Study in
Cont~mpo'llry Thought, IS also published by the University of Chicago Pres s. Contents

Th e Universi ty of Chicago Press, Chicago 60637

The University of Chicago Pres s, Ltd., London Preface vii
ell 19B7 by The University of Chicago
AUrights rese rved . Published 1987 Introdu ctory 1
Prin ted in the United States of America

96 95 94 93 92 91 90 S9 88 87 54321 2. Th e Prehistory (to 1945) 9

Libn.ry of Congress Ca taloging .in-Pu blic ation DaLl Western Origins-Reactive Nationalism-
Arndt , H . W. (Heinz Wolfgang), 1915_ Colonial The ory and Practice- Mainstream
Economic development. Economics- Marx and Marxism-War Aims and
Includes index. Postwar Plans
1. ,Econo mic deve lopmen t. 2. Develop ing
cocntnes-c-Economlc pol icy. I. Title.
HD82.A66 1987 338.9 86--25108 3 Development as Growth h945-1.965) 49
ISBN 0-226-{)2720-1
Capital Forma tion- Human Capital-Trade as
the Engine of Growth
Ii "-i I,
1-1 11 r-, 4 Social Objectives (1.965-1975) 89
0- ~
<,
Social Development-Employm ent-Inequali ty
, A Io~ " <,
and/or Pover ty- Basic Needs - Welfare or
Moderni sation
I q~ 7 ')1
Radical Counterpo int: The Left 115
" 5
c, From Marxism to Nee-Marxism: Paul Baran -
'l. Nee-Marxism : Latin American Anteceden ts-
Nco-Marxism: A. G. Frank-Neo-Marxism on
~ "Development" - Mao and Maoism- A New
-:t: International Economic Order-c-Neo-Marxist
r-; Revision ism

'"
I
0... v

r-,
 4
Social Objectives
(1965- 1975)

Towa rd s the end of the l'}60S, there wa s a more far-reaching

change in the climate of opinio n, and this time more clearly
abo ut the objecti ves of development, about end s rather than
means.
There had been straws in the wind . In 1')65. H. W. Singer
published an article with the th en surp rising title "Social De-
velopment : Key Growth Secto r." In it he pleaded for more
att ention to the social aspects of development-health, educa-
tion. nutrition. ' The problem o f the underdeveloped cou n-
tries is not just gr owth, but development. Development is
growth plus cha nge ; cha nge , in tu m , is social and cultural as
well as economic, and qualitative as well as qu antitative....
The key concep t must be the improved quality of people's
life."! The same theme, ind eed. some of the sam e formula-
tion s, had appeared a few years earlier in a United Nati on s
document (in the drafting of which Singer, then still senior
economist in the UN Secretariat in Ne w York , almost certainly
had a major part ). The UN Development Decade: Proposals for
Action.2

Social Development
The conce pt of " social d evelopmen t" was even the n not new .
Ind eed. it we nt back to the earlie st days of the United Na-
tion s.> The two supreme organs of the United Nat ions were
from the beginning the Security Cou ncil and the Econ omic and
Social Council (ECOSOC). In 1949, the General Assembly in-
vited ECOSOC to initiate a survey of the " world social and
cult ural situa tion," in tended as a coun terpart to the regu lar
survey of the wo rld economic sit uat ion (late r the annual World
Economic Survry). A small team in the Secretariat, the embryo
O IA PTER F O UR
of the later Social Division of the Depa rtment of Economicand
Social Affairs, produced. a Preliminary Rrporl on the World $ociQI
Situation in 19;2 and in 1955 the IntlTniltiotlat Survty of Pro-
grammes of Social Daxiopment. The second RrJ'IOrt on the World
SocMI Situation, wh ich appeared in 1957, was said to demon -
strate " the need for a mu ch closer integration of economic and
social objectives tha n has yet been achieved in most s0-
oeties.?" It also referred to work that had begun in the Social
Division on indicators of social development, with the object
of replacing the inadequate measure of per capita income by
"analysis of variou s 'components' representing interna-
tionally accepted values (hea lth, nutrition, education , h~u s
ing, employme nt, personal income) and by the use of vario us
statistical indi cators for these components .r"
To strengt hen this work, Tlnbergen persu aded the Dutch
govern ment to finance a separate instituti on. The United Na-
tions Research Institu te for Social Developmen t (UNRISD)
was established in Geneva in 1963, with H. W. Singer and I. F.
de long as initial co-directors. " to conduct research into prob-
lems and policies of social develop men t and relation sh ips
among various types of social development during different
phases of economic growth.?" In the 19705 UNRISD came to
be associated with quite radical approaches to development.
But in its ea rly years, it was tru e of UNRISD, as of most others
until the late 1C)60s, that "issues of social development were
generally considered secondary to th ose of economic
growth,"? The emphasis was at most on "bala nced. economic
and social development ."? The UN reports on the " world so-
cial situation" maintained a tone of qualified optimism; the
statistics suggested that the social situation was continually
"Improving.t't Singer himself, in an article writte n in 11}68, his
last year with the United Nations, deprecated " the current
fashion of talkin g about a 'decade of frustration' [as] ...
somewhat exagge rated ." If anything, he seemed to suggest,
statistics of GOP grow th understated the improvements that
had occu rred . " When we substitute other more indi rect indi-
cators, such as imp rove ment in th e literacy rate, increases in
the stock of education al capital within the po pulation , or
health indicators such as the incidence of certain dise ases , the
Social Objrctives (l965-J 975)
picture of the 1l}6os is by no means of slower progress than in
the 19505; rather the contrary.vw In any case, he and others
interested in social development in that period did not see a
conflict or trade-off between economic and social objectives .
As Singer put it in his 196; article, "improvements in peopl e's
level of life can be achieved both directl y (rsodal develop-
ment') and indirectly via income and economic resources
Feconomic devetopmenrj.vu " Better health , better educa -
tion , better nutrition " are themselves " the keys to growth ."12
This earnest and sober concern wi th social development
quite suddenly gave way in 1969 to vigorous denundation of
the grow th-oriented development econo mics of the prev ious
twenty-five years. The first dramatic statement of this new
view was by Dud ley Seers, of the Institute of Developmen t
Studies at Sussex Universi ty, in his pre sidential add ress to the
Eleventh World Congress of the Society for International De-
velopment (SID) in New Delhi in November 1')6<), which was
published under the title "The Meanin g of Development."
" We have misconceived the natu re of the main challenge of
the second half of the twenti eth century" by making a 5 per-
cent gro wth rate of GNP the target for the First Development
Decade . It was "very slipshod of us to confuse development
with economic development and economic de velopment with
econom ic growth ." It was naive to assume that " increase s in
national income, if they are faster tha n population growth,
sooner or later lead to the solution of social and political prob-
lems ." " It looks as if economic gro wth may not mere ly fail to
solve social and political difficulties; certain types of gro wth
can actually cause the m." 'The questions to be asked about a
country' s development are therefore: What has been happen-
ing to poverty ? What has been happening to un employment?
What has been happening to inequality? If one or two of the se
central problems has been growing worse, especially if all
three have , it would be strange to call the resu lt 'development'
even if per cap ita income has do ubled .v' ?
Two years later, the Pakistani economis t Mahbub ul Hag,
then with the World Bank, gave the same ideas an even sharp-
er formulation in his address to the Twelfth SID Congress at
Ottawa. " A high growth rate has been, and is, no guarantee
9'
C HAPTER F O UR
against worsening poverty and political explosions . Where did
the development process go astray? We conceived our task not
as the eradication of poverty but as the pu rsuit of certain levels
of average income . . .. The basic problem of development
should be redefined as a selective attack on the worst forms of
pover ty. . .. Development goals must be defined in terms of
reduction and eventual elimination of malnutrition, disease,
illiteracy, squalor, unemployment and inequalities. . .. We
were taught to take care of ou r GNP as this will take c~re ?f
poverty. Let us reverse this and take care of poverty as this will
take care of GNP. In other word s, let us worry about the content
of GNP even more than its rate of increase." 14
For some years during th e earlY.1970S, this became.the dom-
inant them e in th e development literat ure, to the POint where
some of the protagonists felt able to speak of the "cu rr~n t
consen sus.v' " In qu ick succession, employment, equality,
poverty eradication , and basic ne~ds ,~lfilment bec~me the
goals of new "development strategies. The res t of this chap-
ter is devoted to an account of this phase in development
thinking .
Employment
In September 1970, David Morse, long-~e director-ge~eral of
the International Labour Office (lLO), 10 a speech which be-
came famou s because it gave th e world-or at least the profes-
sion- the slogan "de thronement of GNP," told a Cambridge
conference " to make employme nt a ma jor goal and criterion of
developmen t."!" " Unaccept ably high rates of unemp loy~en t
and underem ployment," he argued, " have not only pre vailed
over the past decade but have in fact often increased, even in
developing countries which have claimed reasona ble rates of
economic growth .t"? . " unemployment," in this context, was given a very wide
The ILO, the oldest of the spec ialised agencies of the United
Nations, had always regarde d problems of unemployment
and employment as one of its major responsibiliti~s. In t~e
interwar years, unem ployment in th e advanced ind ustrial
count ries had been the dominant concern . In the pos twa r
years, with the developed countries enjoying full em-
9'
ployment, attention shifted to problems of unemployment
and underemployment in the Third World. As early as H)61 ,
almost ten years before the Ca mbridge conference , the ILO
pu blished the report Employment Objectives in Economic Develop-
ment, in which an exper t gro up, while emphasising that the
emp loyment problems of developing countries could not be
solved without rapid economic growth, also argued tha t even
rapid gro wth might not provid e enoug h jobs and suggested
tha t "employment objectives should be given weight in the
choice of alternative patterns of econo mic development.v' "
Toward the end of the decade, this idea of an "em-
ploymen t-oriented approach to de velopment" inspired some-
thing of a crusa de. In 1969 the ILO, in close asso ciation with
the Sussex Institute, of which Dudley Seers was director and
which ha d meanwhile been join ed by Singe r as well as Richard
Jolly, launched a " World Emp loyment Programm e."! " The
ILO and the DECO undertook studies of the available statis-
tical evidence on unemployment in developin g countriesw
and the ILO organised a series of employment missions to
selected countries to assist their govern ments in drawing up
comprehe nsive employment policies. The first two of these
missions, to Colombia and Sri Lanka, were led by Dud ley
Seers, the third, to Kenya, join tly by Singe r and Jolly.
The cen tral theme of the Colombia report, published in 1970
under the title Towards Full Employment, was "the limited sig-
nificance of economic grow th. "21 In Colombia, " the poorest
sections of th e po pulation ha ve gained little, if anyt hing, from
the grow th of some 5 per cent per year (in real terms) of th e
econo my since the mid-1950S," and growing une mployment
is at the heart of this problem.s> The mission therefore made it
its task to produce "a development strategy in which red uc-
tion of unemp loyme nt is given the high est prtonty."> But
meaning, to cover no t only those without work but also those
for whom employment provid ed by the economy is inade-
quate in the sense that "they have jobs but want to work
longer hou rs or more intensively" or that they " lack a sou rce of
income both reliable a nd ad equ are.">
Both the Colombia and the Sri Lanka missions confirmed
93
C HA PTER F O UR
.
wh at othe r stu dies had alread y brought to light, and wha t
should ha ve bee n obvious, that in developin g count ries,
wh ere the state does not pr ovide income support for the un-
employe d, open unem ploymen t is very largely confined to
young , urban , relatively ed ucated , middle-class. peopl~ who
can afford to wai t for better jobs than are readily available.
Nor, it appeared, could the problem be ad eq uately described
in terms of " underemployment," although there were .no
dou bt large num be rs es pecially in rural areas of developing
countries who fou nd work o nly intermittently or who we re
" technically at work but virtu ally idle."25 In fact, it bec~me
increa singly evident that, as the rapporteur of the Cambndge
conference put it, " it was impossible to ma ke progress so long
as unemployment was taken as the starti ng point. ... The
problem had been misstated , and it was not really an em-
ployment problem at all. " 20 . ble to achieve a high leve l of employment in Colombia without
'The findings of the three employment missions (as distinct
from their original terms of reference) ... -" Singe r later con-
ceded, " pretty qu ickly made it clear tha t th~ unt'11lploy~~~
concept .. . was qu ite unsuited to the developing cou ntnes .
" Disgu ised unemployment" or " underemploym ent" were
equall y inappropriate terms . 'These people often work ed ex-
trem ely hard and extremely long hours and it seemed absu~d
to describe the m as underempl oyed .t' Vft was the Kenya mis-
sion, led by Singe r and Jolly, which d rew the logical conclu-
sion .28 lt put the emphasis overwhelmingly on " the wo rkin g
poor (who) work long hou rs for low inco mes" ; f? r this , as th.e
report noted at the outset, " is the most pe rvading and basic
issue ." 29
If the problem was the low pr oductivity of the working
poor, rather than unemploymen t o~ unde remployme nt, the
argu ment see med to ha ve come full CIrcle. The ta.s k o~ de velop-
ment policy was, it see med, not so. mu ch to flI~d Jobs as to
increase the productivity of people 10 ~ork or, 10 the ~ords
used in the Ken ya rep ort and frequently 10 subsequent d.l~CU ~:
sion, to create " more productive employment oppo~tumbe s .
As an early commentator on the Kenya report pointed ou t.
"o ne would have expect ed th e mission to acknow ledge that
poverty is the ubiquitous condition which is altered by
94
growth. "30 All three missions, in fact, despite their " em-
ployment orientatio n," included ambitious economic growth
target s in their policy recomme nda tions. The Colombia report,
for all its " dethro nement of GNP," demand ed an average
growth rate of 8 pe rcent for the 197os, significantly high er than
the 55 percent rate the co untry had achieved in the 196oS,31
and the Kenya report stresse d " our emphasis o n continued
growth and expanded production in every sector."32 But
growth of total or pe r capita income was now only part of
the answer and apparently not by any means the most im -
portant part . The focus shifted to its compos ition an d dis-
tributi on.
The shi~ began with the Colombia report . For altho ugh its
authors still saw the problem primarily in term s of unemploy-
ment, th~y " cam.e to the conclusion tha t it would be impossi-
changing the distribution of income ."33 The reasons they gave
w~re, ~st, ~ha t th e rich tend to spe nd their inco me on goods
With a high import content and, seco nd, tha t prod uction of the
goods pu rchased by the poor tends to be more labour intensive
than production of those demanded by the rich. 34 Thus one
part of an employme nt -oriented de velopmen t strategy must
be a change in th e pattern of demand throu gh a red istribution
of income from rich to poor. " Income dis tribution lies at the
heart of the employme nt problem."35
A year later, in the Kenya report, significantly entitled Em-
ployment, Incomesand EqU4li ty, the central problem was seen as
inequality itself, " imbalance of oppo rtu nities ." " If the pr ob-
lem is primarily lack of jobs, the solution must be the pro vision
of more jobs. But if the problem is pri marily an imbalance of
opportu nities, the solution must be to pu t right the im-
balances. .. . Hen ce our emphasis on putting right the im-
balances, on equity in place of gross ineq uality, in earn ings ,
edu cation , and land holdings, am on g regions, districts and
ind ividuals, and in other resp ects ."36
Another novel, and for some time influ ential, theme of the
report was its condemnation of the usual practice of LOC go v-
ernments of favouring the modem over the traditional or, as it
preferred to state it, the " informal" sector of craftsmen, pet ty
95
C HAI"TER F OUR
trad ers , an d purveyo rs of other services, an d of ham pe ring
this sector by harassment and restrictions . The report stressed
that, although the informal secto r " is often regarded as unpro-
ductive and stagna nt, we see it as providin g a wide ran ge of
low-cost , labou r-inten sive, compe titive goods and services."37
Thus, from about 1972, employment gave way to equ ity as
the favoured orientation of development strategy. Before we
turn to look at this more closely, one implication of em-
ployment orientation dese rves brief discussion . Thi s was the
belief tha t the employ ment problem in developin g countries
demanded the use of labour-inten sive technologies in indus-
try and agricultu re. In the wo rd s of the Colombia report , " lev-
els of employment can be raised not only by improv ing the
pattern of demand but also by producing th ings in more la-
bou r-intensive ways." )8 The view came to be wid ely sup-
ported that the employment probl ems of the Third World were
aggravated.by importation and encouragement of inappropri-
ate technology, as well as by the " demonstration effect" of
Western consumerism. "Since most new techniques are in-
vented in the developed countries where unskilled labour is
relatively expe nsive . . . they tend not to be well suited for
developing count ries where labour is cheap ."39 Moreover, " in
general there have bee n both delibera te attempts to foster a
capital inte nsive heavy industry base and the use of a range of
policy instru men ts which tended to favou r, not necessarily by
des ign, capital inten sive production ." 40
One possible inference from e mployme nt orientation was,
therefore, that developing countries wo uld do well to follow
an outwa rd rath er than an inward looking ind ustrialisation
strategy, since " the main reason for development having pro-
ceeded along capital-intens ive lines (appeared to lie ) in the
import-substitution policies ad opted .v- ! while countries such
as Hong Kong and Taiwan , wh ich had followed an outwa rd-
looking policy had secured " a product mix and prod uction
techniques approp riate to actual factor proporno ns.v-! The
aut hor of a survey of " new thinking" abou t develop ment pu b-
lished in 1972, therefore, linked the new concern about unem-
ployme nt with the Little-Scitovsky-Scott ad vocacy of outward-
loo king industrialisation and inferred the des irability of LtXs
Social ObjfCtirxs(1965 - 1975)
maki~g " use of market forces instead of tilting ineffectively
and disastrou sly agains t them".oquite unlike most of the ILO-
Sussex group who tended to agree with Mah bub ul Haq in his
scepticism abo ut " this faith in price ad justm en ts ." ,u
A second policy implication could be a less welcoming at -
~tude ~y developing countries towards multinational corpo ra-
tion s, since " the encouragement of foreign investment, under
these conditions, has tende d to lead to capi tal inten sivene ss in
~n acute fo~m . "4s A third implica tion d rawn by some was that
It was desirable to develop " intermediate technology: ' be-
twee n the capital-intens ive technology of the West and the
traditiona l handicraft techn ology of less developed countries.
The best known proponent of this latter approach was E. F.
Schumacher, who founded the Londo n-based Intermediate
Technology Development Group and, in his widely acclaimed
book SmallIs Beilutiful, made intermediate techn ology part of a
broad ons laugh t on Western ind ustrial society .w
In these various ways, the pr oponents of an employment-
oriented development stra tegy found comm on ground, on th e
one hand, with liberal advoca tes of outward-looking policies
and, on the other, with radical critics of Western capitalism
and eve n of Weste rn style modernisation in any form .
Inequality andior Poverty
The Kenya report was hardly published when the Il .O 'Sussex
~liance received powerful support from what a few years ear-
her wo uld have been considered an unl ikely quarter- the
World Bank . Robert S. McNamara , president of the bank since
11}68, devoted most of his Septembe r 1972 annual address to
the board of govern ors to the theme "Social Equity and Eco-
nomic Growth ." ln words recalling Dud ley Seer's 1969 presi-
den tial address, he questioned whether achievem ent of the 6
percent growth target recently adopted by the United Nations
for its Second Developme nt Decade would gua rantee a signifi-
cant adva nce in the quality of life for the majority of the two
billion peo ple of the less developed count ries. Increases in
national income would not benefit the poor if they did not
reach the poo r. 'They have not reached the poor to an y sigrufi-
 .
C HAP'nR F o ull
cant degree in most d eveloping co u ntries in th e past. .. . The
problems of poverty are deeply rooted in the ins titutional
frame wo rk. particu larly in the d is tribution of economic and
politi cal power within th e sys tem."47 A year later. in Nairobi,
he returned. to the same theme. " Growth is not equitably
reachin g the poor. ... Rapid growth has been accompanied
by greater mald istribution of income in many developing
countries." Absolute equality is chime rical, but "absolute
human degradation when it reaches the proportions of 30 to 40
per cent of an entire citizenry- cannot be ignored, ca nnot be
suppressed, and cannot be tolerated for too long a time by an y
government hoping to preserve civil order."48
McNa ma ra, former president of the Ford Motor Company
and then U.S. secre tary of defen se thr ough most of the Viet-
nam War years, had from the beginning of his term as presi-
dent of the bank, and even before.e" bee n outspoken on the
problems of the Third World. bu t initially his conce rn, as that
of most others in the 1'}60s, had bee n mainly with the gap
between the rich and poo r nations. One of his first acts as
president of the World Bank had been to carry out a proposal
by his predece ssor for the appointment of a high-level com-
mission to report on this pr oblem and on what the rich coun-
tries could do to alleviate it. Wh en the Pearson Com mission's
report was discussed at a special international conference at
Columbia University in Febru a ry 1970. 50 McNamara's address
still concentrated on the problem of aid, though signifi-
cantly- as domestic sod al probl ems were increa singly com-
peting for attention and reso urces- he spoke of the United
States " twin respo nsibilities .. . to assis t in alleviating under-
development at home and abroad .t''" But from 1971 o nwards,
in a successio n of pu blic statements and in the operational
programs of the bank, he insist ently called attention to the gap
betwee n rich and poo r with in developing countries. S2
At first the stress was on ineq uality. In his 1971 speech to
the board of gove rno rs he declar ed that, thoug h growth in the
Third World had reached 5 percent in the 1960s, "the distribu-
tion of this GN P increase has been so unequal -as between
countr ies, regions and socio-eco nomic groups-c-that it has fi-
nally created a reaction aga inst growth as the primary develop-
Strill Objtctirxs (J 965- J 975'
ment objective. an d ~ de mand for greater attention to
em ployment an d income distri butio n.vw Add ressing
UNCTAD III in Santiago a few months later. he quoted esti-
mates f~r Brazil, Mexico, and India as " not untypical" exam.
pies to Illus trate " the seve re maldistribution of income and
wealth wh!ch exists within the developing countries" an d
urged actio n " to red uce the cru shing disparities of
opportunity. "54
. In th,e next two years, the emphasis shifted further, from
Ineq uality to poverty. In September 1972, McNamara sug-
g~st~d " the first step sho uld be to establish specific targets,
within the development plan s of individual count ries, for in-
~m~,~rowth among. the ~r~st 40 per cent of the popula-
tion. A year late r, 10 Nairobi, he urged that a major pa rt of
th~ develop.ment effo~ be directed at the bottom 40 pe rcent.
Wl,th the object of era dica ting absol ute poverty by the end of
this century.se A year later again, in Sep tember 1974, he an.
nounced t~at ~n~ programs " will put prim a ry emph asis not
on th e red ls.tribution of income and wealth-as jus tified as
that may be In many of our member countries-Lbur rather o n
increasin~ the prod~ctivity of th e poor, thereby providing for a
more equi table shan ng of the benefits of growth .vw
The shift of emphasis from inequality to poverty in
~~ama~a's thin king paralleled , and prob ably encouraged, a
similar shift in the gene ral development deb ate. The early de-
mands for the " de thr onemen t of GNP" had quite rad ical ove r.
~?nes. Dud~ey Seers ~ his 196<) add ress , after stating flatly tha t
the .need. IS no t. as IS gene rally imagined , to accelerate ear
norruc growth-which coul d eve n be dangerous-but to
cha.nge the na ture of the development process," canva ssed
various approaches- " China and Cuba are trying" -and
warn ed of the political difficu lties of any d rastic measure s for
th.e ~edi~tribution of wealth . 'Those with high incomes . ..
~ mevltably.t~ to ~nd ways of maintaining privilege, resort-
mg .. . to rolthcal Violence rather than give it up."S8 Clearly,
preoccu patton with " Who ge ts the be nefits?" 5':l has radical
implica tions to which only a minority among the Western de-
vel?pm ent profe ssion were ready to subscribe. It was also
easier to agree on red uction ofa bsolut e tha n of relative poverty
99
C HAPTER F O UR
as a policy objective. For a situation where all sections benefit
from growth, even though the rich benefit more than the poor,
is not so obviously undesirable. Hence, after initially " pro-
claiming the necessity to sacrifice growth in order to achieve
better distribution," the Su ssex-ll.OcBank school and its sym-
pathisers, on the principle that " it is only through an increase
in GNP that there will be anything significant to distribute," 60
began to ad vocate " red istribution with (or from ) growth .:'
All agreed that " distribution cannot be left as a fortuit ou s
by-product of growth but mu st be made a conscious and ex-
plidt element of policy."? ' The majority, howev er, cam e to
favour what Singer in his later account called " incremental
redistribution" becau se it implied " red ucing povert y largely
through creati on of productive employment opportu nities out
of incremental income."62 Rather than aim at redistribution of
the existing stock of wealth-though land reform would still
be needed in man y developing countries- policy should see k
to en sure that most of the g rowth in GNP would accrue to the
bottom 40 percent. Such a policy would avoid the " inherent
tendency [of emphasis o n GNP growth .. _ to solidify a nd
accentuate existing inequalities," yet " encounter much less
political resistance" than outright r~istribution . 63 ,:",i.s ~.
came the rationale of the "poverty-oriented strategy, With Its
aim of a guaranteed " minimum income" at or above some
established " poverty line," Mwh ich for some years dominated
thinking in the McNamara-led World Bank . It was given an
even more specific formulation when the IlO in 1975 launched
its "basic need s" approach.
Basic Need s
The idea of a development program specifically directed at
prov iding a minimum income for the poor had been in the air
for some time . One of the first concrete proposals on these
lines was published in 1962 by the Indian Planning Commis-
sian under the title " Pers pective of Development, 1961- ;'6. " 05
It embodied ideas which its join t secreta ry, Pitambar Pant, had
bee n devel oping in the precedin g years. "The central concern
of our planning has to be the removal of poverty as earl y as
possible.... The minimum which can be gua ranteed is lim-
ited by the size of the total product and the extent of red istribu-
tio~ which is feasible ."66 Arguing that, 'in a country as poor as
India, poverty cannot be eliminated by redistribution, if only
because " some degree of inequality of incomes ... is an es-
sential part of the structure of incentives in any growing econ -
a my," and that poverty reduction continues to depend on the
most rapid possible growth of GNP, he suggested that it
should be possible to plan for a guaranteed minimum income
of Rp. 2 0 per month by 1975. This, he ca lculated, could be
achieved by a 7 percent annual rate of growth of GNP and
~me redistri~ution: planning sh ould aim at doubling per cap-
Ita consumption of the bottom 2 0 percent , while that of the top
20 percent would increase by only ) 0 percent over the
period.e"
The Ken ya report ten years later put forward a similar pro-
gram. If half the pro jected 7 percent growth of GN P could be
channelled to the bottom decile in the income distribution,
while the income of those in the top decile was kept constant,
then, allowing for population growth, the income of the
poores t group cou ld be doubled by 1985.6H McNamara, simi-
larly, demanded development plans aimed at income gro wth
for the poorest 40 percent, such that their income wou ld rise at
least as fast as the national average in the next five years a nd
significantly faster in the longer run.~
The idea of giving this minimum income approach the more
pointed form of a " basic needs" strategy was the brainchild of
louis Emerij and others at the ILO, who in 1975 conve ned a
World Employment Conference. " Basic needs" beca me the
central theme of the conference document, publish ed in 1976
under the title Employment, Growth and Basic Needs, and in just
t,"'o or three years th is theme was the subj ect of a very large
literature."? Both Dudley Seers in 1'}69 and Mahbub ul Heq in
~97 1 had used th e phrase " basic needs," though only in pass-
109, wh en referri ng to the minimum bundle of goods and
services that a min imum income mu st cover."! The phrase
now became a slogan an d a program.
The programmatic introd uction to the conference docu -
ment spelled ou t the concept. Starting out from the prem ise
io r
CIIAPTER FO UR
that "contrary to earlier expectati ons, the experience of the
past two decade s has shown that rapid grow.th of a~r~gate
output does not by itself reduce poverty and Inequality' ~nd
tha t " it is no longer acceptable in human term s or responsible
in political term s to wait several generations for the benefits of
development to trickle down until the y finally reach the
poorest groups," the document asked the confe~enCE' to rec-
ommend " the ad option by each country of a bas ic-needs a p-
proach, aiming at the achievement of a certai n ,~imu ,:,
standard of living before the end of the century. For this
purpose, "ba sic needs are defined as the minim um standa: d
of living wh ich a society sh ould set for the poo.re.st grou ps o~ Its
people." The standard should cover " the rrurumum requ ire-
ments of a family for personal cons umption : food, shelte r,
clothing, " but also " access to essential services, such as .sa f~
drinking water, sanitation, transport, health and ed~c~hon
and an " adequately remunerated job for everyone willing to
work ." Finally, there should be " a healthy, hu.mane and .satis-
fying environment, and popular participation 10 the making of
decision s that affect the lives and livelihood of the people and
individual freed oms." To achieve these objectives, "some re-
direction or redistribution of investment over time , and a re-
distribution of the ownership or the utilisation of land " were
essential. A pre requi site for ove rcoming political obsta cles ~o
such mea sures may be " the organi sation of rura l workers 10
trade un ion s and similar organisations. " There was no reason
to fear a necessary conflict between a basic-needs strategy and
economic growth. "Such measures need no t impl y a slower
growth of output . They place a greaterempha ~is on pattern~ of
growth leading to a mo re equi table distribution of the gams
from growth, and they may well lead to increasing growth
rates as well." 72
Little of substance wa s added to this in subsequent expo si-
tions . Some attempted to distinguish a basic-needs ap proach
from the McNama ra an tipoverty a pproach on the grou nd that
its target was the satisfaction of basic needs for the whole
population, not me rely the bottom 20 or 40 percent .P N(.)t
everyone agreed tha t the re was no trade-off between baSIC
need s and growth . A basic-need s ap proach , some though t,
implied that " growth of ou tput is pursued only to the extent
tha t it is complementary to the red uction of economic and
social inequalities.v/s A good deal was made of the notion that
the first generation of the post-1945 development economists
had expounded a theory of " trickle down" on which the basic
need s approach was said to represent an intellectual advance.
Since poverty in most devel oping countries was primaril y a
rura l phenomenon, the basic-needs approach went hand in
hand with emphasis on rural development.P and therefore
also with decentralised administration and "comm unity de-
velopment rath er than central planning."76
There was much discussion of the conceptual difficulties of
defining basic needs, with a tendency to see k a way ou t by
concentrating on " a core of basic needs. "'77 But the temptation
was great to ..widen the concept, both ove r time- "defining a
standard of basic needs in abso lute terms for a particular peri -
od of time but allowing for its subsequent revision upwards as
national resources pennit" 78- and in scope. There we re ech-
oes of most of the issues debated in the domestic context in
Western countries in the preceding years , the environment
and nonrenewable resources .w participation, and discrimina-
tion . Singer thought it dearly right to emphasise " the social
character of basic needs standards" but added a cautionary
note. 'There must be some question as to the extent to which it
is useful to dilute this concept furt her by including parti cipa-
tion, bas ic human rights, etc."so
There was also discussion of the implications of the basic-
needs approach for aid, with su ggestion s that " a donor com-
mitted to the support of a poverty-oriented strategy of rural
dev elopment " has a right to ins ist o n appropriate performance
criteria, on the one hand, and that " a basic needs approach has
a promi sing potentia l for reanimating public support for devel-
opment aid ," SI on the other.
By the mid-l 97oS, whe n the basic-needs approach was con-
ceived and popularised , the world scene had changed greatly
from the days in the late 1960s, when social objectives first
oversha dowed economic gro wth in thinking about develop-
ment. In the OECD countries, growth had slowed down , and
stagflation, agg rava ted by th e first oil shock, had disp laced the
'OJ
C HA PTE R F O UR
Vietnam War and the associate d sociopolitical travails in pub-
lic concern . The international economic repe rcussions which
severely affected ma ny developing countries had, in tum,
made a New Int ern ational Economic O rde r the priority issue
in the minds of most Third World spokesmen. Significantly,
by 197'6, McNamara, while still referring to his many state-
ments about the prob lem of absolute poverty during the pre-
ceding years, pointed out that international economic
developments now gave priority to " the problems of the
poorest countries" an d th e need to " recapture the momentum
of economic growth ."82 A yea r later, his annual ad dress
focused on the North-Sou th problem an d on his derision to
invite Willy Brandt to head a commission on that subject.w
The basic-needs approach fell victim to these new preoc-
cupation s. By the end of the decad e, it came to be seen as a
passing phase in thinki ng about development, a phase which
had left an important mark on almost everyone concern ed but
had certa inly not achieved anything like a conse ns us , The
same fate befell another formulation of social objectives which
deserves a brief account before we look back on the social-
objectives cha pte r as a wh ole. This was the so-called " unified
approach" to development.
The same discontent s which led Dudley Seers in 1969to ask
ques tions about the meaning of development encouraged new
initiatives by D. V. McGranahan and o thers, who had, for
many years, first in the UN Social Affairs Department in Ne w
York and then at UNRISD in Geneva, advocated social ap-
proaches to development and the design of de velopment indi-
cators bette r able than GNP pe r head to capture dev elopment
" as multi-dimensional. involving change in structure and ca-
padty, as well as outpU t." SoI One of these initiati ves was a
meeting of experts on social policy an d planning held in Stock-
holm in September 1969, with Gu nnar Myrd al as chairman,
Benjamin Higgin s as vice-chairman, and H. W. Singe r as rap-
poneur.w The purpo se of the meeting was " to clarify further
the role of social factors in developmen t" and its chief resu lt a
rep ort which propounded the notion of a " more un ified treat -
ment" of "the develop ment process as a com plex whole,"86
As Higgins exp lained in a later retros pective account, the
,,'.
SocialObjectives(1965- 1975'
starting poin t of the unified approach was "a rejection of
growth of na tion al income as the sole objective of develop-
",lent planning. . . . It stressed the need to plan directly and
simultaneo usly for all objectives of develop ment with fuJI cog-
niza nce of interactions and feedba cks amo ng them."87 " When
'development' comes to mean aU elements of hu man life that
contribute to hum an welfare, inclu ding nutri tion, health, shel-
ter, employment, the physical environment, the socio-cultural
~nvi~nment ~~ q uality ~f life, and such matters as partidpa-
non In th~ decision-making process, a sense of human dignity,
of belo~gtng, etc., sta nda rd neoclassical an d nco-Keynesian
econofiU':S has only a limited con tributio n to make to develop-
men~ polier a,nd planning." /:l8 The 1969 report was hardly less
ambitious m Its recommendation . "Th e dominance of econo-
mists among the social scientists and the earlier dev elopmen t
and easier quantification of their concepts, has meant tha t
~e rt~ i ~ nonmarket aspects- those unap propriately labelled
social - have been neglected in approache s to develop-
menl. " w,l " To ach ieve effective development planning, all
planners should thin k in term s of all goals. "90
ECOSO~ and the Gene ral Asse mbly approved the expe rts'
report and Instructed the Secretariat to undertake fur ther work
on the unified approach . A research team at UNRlSD, led by
~~ranahan, was entrusted with the task. It produced a pre-
Itmmary repor t, a number of country studies, and yet an other
expe rt group which met , again in Stockholm, in Novembe r
1972 , again including Myrdal and seve ral other well-known
names (Gamani Corea, Egbert de Vries, Ali Mazrui, Josef Pa-
jestka, bu t not this time Singer) and with Higgins as rep por -
teur."! The repo rt was not an unqualified su ccess. As one who
had been closely associated with the whole enterprise com-
mented later, " each member of the team ende d with his own
'unified approach .' " 92 As usually happe ns in such cases,
" UN' continued for a while under its own momentum. ES-
CAP prod uced a Marxist version .v> UNRlSD, hampered by a
shortage of funds, struggled to produce a final rep ort in 197.5 .
Meanwhile, " the 1970S sa w, instead of pro gress toward con-
sens us on a unified approach, a continual dive rsification of
interpretations of developmen t.vv- The unified ap proach, a
>0'
CHAPTER FOUR
complex notion, was soon superseded by the basic-needs ap -
proach, a simpler o ne. Basic needs, as a later director of UN-
RISD noted -not. one sus pects, without a trace of
Sclladenfreudt- " rapid ly achieved much wider acceptance in
international circles, but its fall from favour after rejection by
Third World govern ments has been equall y rap id." 95
Welfare or Modernisation
How does one account for the chapter in thinking about devel-
opment which has been surveyed in the preceding pages, for
what one is almost tempted to call the rise and fall of social
objectives as the dominant theme in the development debate?
The quick succession of form ulations, from "social develop-
men t" to "employment orientation," " equity," " poverty
eradication," and finally "basic needs, " invites Dore's sar -
donic reference to " the accelerating rate of slogan obso les-
cence .vw No doubt, the " intern al dynamics of the
International Development Conference Community"?" had
something to do with it. But there can be no questioning the
sincerity, indeed passionate conviction, with which Dudley
Seers, Singer, McNamara, Mahbub u1 Haq , and many others
sought to arouse consciences about the terrible conditions in
which hundreds of millions of human beings in the Third
World were living and dying.
The explanation put forward by the dethroners of GNP
themselves was quite straightforward. It wa s a case of learning
from expe rience. The experience of the 1960s had demon-
strated tha t even rapid economic growth does not necessarily
alleviate unemployment, ineq uality, and poverty , and may
eve n make them wor se. " Unemployment rates and in-
equality," claimed Seers, had risen " by large steps" in the
1960s.'Jtl According to Morse, un em ployment had increa sed
" even in those developing countries which have achieved rea-
sonable rates of economic growth"; grow th has, " if an ything,
only increased the ineq ualities be tween the privileged few and
the unde rpriv ileged masses. "IN Increases in na tional income,
even at quite high rates, accord ing to McNamara, " have not
reached the poo r to any significant exte nt in most developing
",6
Social Objectives (1965- 1975)
countries";IOO Indeed, " rapid growth has been accompanied
by greater maldistribution of income in ma ny dev elop ing
countries." lOI The authors of an influen tial sta tistical study of
income distribut ion in developing countries, published. in
1973, claimed that it carried. " the frightening implica tion ...
that hundreds of millions of desperately poor people through-
out the world have been hurt rather than helped by economic
development. " l02
The trouble with this explanation was that the evide nce on
which it relied was q uickly shown to be shaky or at best in-
conclusive. Case studies presented at the very 1970Cambridge
conference at which Morse proclaimed. the det hronement of
GNP had " one strikin g feature in common . They all see med to
show that unemployment, expressed. as a pe rcenta ge of the
total labour force, might actuall y be declinin g. " 103 In an y case,
as we have seen, the advocate of the employment-oriented.
approach qu ickly conceded that unemployment or even un-
deremployment was not really the main probl em; it was the
poverty of the working poor. As regards trends in inequality
and poverty, the data for the most part were, in the view of
critics, inadequate to support firm or swee ping conclusions.
Bu! such evidence for pessimistic conclusions as was present-
ed m ~he two most widely cited studies, those by Adelman and
Moms and by Chenery et al. , was soon subjected to de vastat-
ing criticism . One reviewer concluded that the data showed
neither any "significant decline in the absolute level of in-
come, with rising per capita income, for the poorer income
groups" nor any " marked relationship between income
growth and changes in income shares ." 104 Another conclude d
that " there is no evidence of large masses of people (like the
lowe st 60 per cent or 40 per cent or even 10 per cent) sufferin.,g
from growth in an y country. Even East Pakistan did better
~ hen undivided Pakistan was growing fast. Increased misery
m Banglade sh has come from stagnation or decline, not
g.rowth." IOS Chenery himself concede d tha t " on th e empirical
Side, the new conve ntio nal wisd om seems to be almost as
misleading as the old . While in some growing econo mies the
poor receive little o r no be nefit, in others the op posite is true:
even the relative sha re of the poverty grou ps has increased in
"'7
CHAPTEIt Fault
several notable cases. "I06 At the end of the decade, a co nsid-
ered jud gm ent on the still " scanty evide nce" was that " where
growth was very sl.ow, in part s of Sout h Asia a nd Africa, there
may have been some worsening of the position of the poo rest
20 to 4 0 pe r cen t of the popu lation , bu t this is far from proven .
Where growth was rapid, all large section s of the po pu lation
benefited, tho ug h some mor e than olhe rs." I07
It is difficu lt to resist the co nclusion that the deth ronem ent
of GNP among Western develop ment economists ar ound 1970
was less an ineluctable inference drawn from statistical evi-
dence for the developing co untries than a reflection of social
crisis-alienation and rebelliousness am ong the young ,
do ubt s and tribulation s amo ng their elde rs-in the developed
countries the mse lves. The " growing questioning of Western
consumer-urban-in dustrial models" to w hich Jolly attributed
the change in views about development's" wa s far more ob-
vious in the West ern countries themselves than in the Third
World, where it was confined in the main to Maoist or Islamic
fundamentalist s. As an astute Indian observer pointed out ,
the resurgence of interest in distributional problems am ong
Western development economists had less to d o with " devel-
opment disasters" in Nigeria or Pakistan (for both of whi ch
nationalism provided as plausible an explanation as griev-
ances about social injustice) tha n with the crisis of American
politics and society of the mid -rceos-c-failu re to solve tradi-
tiona l problem s of pov erty a nd race, q ues tion ing of the Ameri-
can d ream that equality of o pportunity through ed ucation
could reduce inequalities of inco me and wealt h, sharpening of
domestic conflict over Vietnam-and the spread of this mal-
aise from the United States to othe r Western countnes.t'" It
was no accident that in the firs t speec h in w hich McNam ara
d rew attention to pove rty in the Third World he introduced
the subject by referring to the poor in the United States and
depl oring the fact that, though sta tistically speaking their con-
d ition was improving, they were actually " growing poo rer
relative to the rich ,"IHl ln a n intelle ctual climate in whi ch eco-
nomic growt h stood at an increasing d iscount in the West,
assaulted by social critics, nee-Marxist rad icals, environmen-
talists and Club-of-Rome prophets of d oom, II I it wa s an ea sy
",8
5ocUJ1ObjfCtivN (1965- 1975'
an d natural step to "dethrone ment of GNP" also for the Third
World.
Not un~aturalJy, there wa s a good deal of overlap in the
Western Itterature on development between liberal (in the
Ameri can sense) criticism of " neoclassical" growth-oriented
development econom ics and the neo-Marxist and o ther radical
criticism of im perialism, neocolonialism , an d " depe ndency"
which will be con sidered in the next chapter , Whe n Seers
spo ke of " in tern al contrad ictions in the development process
far more severe than those to which Marx drew a tten tion"112
and when Griffin decla red , with reference 10 the gree n revofu-
~ion tha~ " tech n.ical change in agriculture is resulting in greater
m~ome inequality an d a polarisation of social classesvu a they
might h~ve been taken to belo ng to either camp.
The VI~W that t~e shift towards social objectives of de velop-
ment derived mainl y from Western anxieties is lent indirect
surport by the gen erally cool reception the shift had in the
Third "Y0rld itself . Obviously, the re was concern among Third
World in tellectuals and politician s about their countries' vast
prob,lems of poverty:-some of the earliest thorough sta tistical
studies were by Indians about poverty in Ind ia.1I4 So, as we
~v~ seen~ was one of the first proposals for a guaranteed
nu~unum I~come . ~u t there was relatively little support either
for Ideological envtron mentalism_Pitamba r Pan t, in his pa-
per for a pre paratory me et ing for the 1972 Stockhol m con-
ference said bluntly that in his country " the worst pollution is
po verty" 1I5_ or for the successive new social " approaches"
t? development-employment-orientation, poverty-eradica-
bon , or basic needs.
Ind ian, Indonesian, Mexican , an d Nigeria n leaders were
well a war~ ,of the need to create more productive employment;
opportunities, but they sho wed little enthusiasm for the la-
bour-intensiv~ industrialisation stra tegies recommended by
Western advisers. The q uip that " the clothing, footwear,
canned mushroom or artificial wig pattern of the typical export
success story is not every cou ntry's idea of a foundation for a
mod.ern ind ustri al structure" l lb may have been a caricature,
but It conta ined an impo rta nt element of lDC thinking. As
Jolly reported in his account of the 19]6 Wo rld Employm ent
"'9
C HArTER FOtJR
Conference, some LDC delegates made no secret of fear ~hat
"an unqualified emphasis on a ppropriate technology might
forever relegate the Thud . World to In enor pr od u ~ t s ta t us:" 117
. fen
For similar reasons, LOe plan ners embraced with consider-
able reluctance the notion put forw ard an d po pularised by the
ILO Kenya report that , both for equity and effid~ncy reasons,
the informa l or traditi onal sector of LDC economies should be
strengthened rather than pushed as ide. . .
Western advocacy of equity, pove rty e radication. an~ baS.IC-
need s objectives fared little better. There was somet~~ng m-
hercntly paradoxical in the Sussex-ll.O'Bank a~mom~on.s to
LOe govern men ts and elites to pursue growth with redlstr.lbu-
tion . LDC administrators who attended the 1970 Cambndge
conference, we are told , "d id not see an appeal for a funda-
mental redistribution of resources as a sensible message to
take back to their political master s."! " As the Indian econo-
mist Srinivasan pointed out, major redistribut ions of wealt h
have in the past resu lted only from war or f~reign occup~tion
or violent revolution . "These event s are unlikely to be deliber-
ately promoted by governments in power." 119 The lndon es i~n
scholar Soedjatmoko, seeing " more and mor~ donor c~u~tnes
jumping on the Basic Needs bandwagon,' asked similarly
pointed ques tions: "Are th e donor nations pre pared to acce~t
the political conseque nces of such a deep intrusion on then
part in the life of anoth er peopl e? History shows tha t only
through foreign occupation after military defeat, or through
the colonial relationship, could a foreign bureaucracy hope
effectively to bring about, in such a short time, social changes
which suit their own perceptions and values." 120 Performance
criteria aimed at efficiency and growth had been resen ted ;
would performance criteria aimed at equity through.ru ral de-
velopment be more acceptable? "~0~1~ ~ny dev~lopm~ cou~
try be prepared to accept foreign aid If It IS combined With this
kind of foreign presen ce In. therr
' rura I areas."' 121
,,,
When Soedjatmoko referred to the donors own percep-
tions and values" he tou ched on the most fundamental que.s -
tion . As a Western commentator put it, " there remain
differences in values, in what different people may want for
their country' s futu re. Some may want faster progress towa rds
no
modernity as they interpret it, which may include military and
political power; others may lay stress on meetin g basic
needs.. .. Econ omists cannot tell people wh at they should
want."I 22 And if this assumed too readily tha t ru lers and
ruled , rich and poor, share common perception s of " their
country's futu re," Ronald Dore made much th e same point
when he asked " how far governments are receptive to
. egalitarian prea ching anyway. What the Third World rulers
actually do set as the ir objectives is a research topic too much
neglected . I sus pect that a major mo tive, over and above sur-
vival, is to increa se nati onal 'strength' and prestige, to raise
the nat ion's position in the internationa l pecking orde r and
thereby their OW " position in the ranks of the world's
ruler s." I23
Fundamentally, the reason why the basic-needs strategy
was rejected by Third World spokesmen was that they consid-
ered it unlikely to promote, and possibly to imped e, what to
most of them were more impo rtant aspira tions-mode rnisa-
tion at home and a New International Economic Ord er abroad.
They tended to see " basic needs fulfillmen t as being at the
expense of growth, at the expense, therefore, of the assertion
of national strength they seek-a denial, in other words, of
the ir quest for equa lity in the comity of nations" 12" and they
were suspicious of Weste rn motives in urging the strategy
upon them . " Unfortunately, basic huma n need s as a strategy
can appear as hypocrisy and bring ran cor to relations betw een
the Third World and the Western industrial powers . .. if it is
taken as a substitute for the broad processes of modernisation
which have brou ght wealth an d power to the West." 125
The quest for a New International Econom ic Order belon~s
to the next cha pte r. But the reference to modernisation makes
this an appropriate place for comment on a contribution to the
development debate which might have been expected to fig-
ure prominently in this chap ter bu t has not yet been men-
tioned at all-Gunna r Myrdal's A sia" Druma. l 26
A sian Drama was begu n in Delhi in 1957 wh en Alva Myrdal
had been a ppo int ed Swed ish ambas sado r to India. It was pub-
lished in three volumes eleven yea rs later, in 18. It was an
encyclopedic work wh ich, from an India n vantage po int , cov-
C HAM"ER FOUR
SociJ11Obj til'f"S (1965- J975)

ered almost every conceivable aspect of devel opment. It thus ofSouth Asia as "soft states" and his belief that " the Success of
had a good deal to say abo ut le vels of living and inequality in ~Ianning for development requires a readi ness to place obIiga-
un derd eveloped countries . It acknowledged as "a major goal ~ons on peo ple in all social stra ta to a mu ch greater extent than
of planning for de velopment in the region to raise the IS n~~ don.e in any of the South Asian countries. It req uires, in
abysmally low levels of living for the mass of the peoplevw addl~on, ngorous enforcemen t of obligations, in which com.
and that " in all the plans that spell out goals for dev elopment, pulsion plays a strategic role. " 132 It is arguable that Myrdal's
the egalitarian ideology is prom inen t.v ' P But the focus of the ou~look was closer to that of a rticula te pu blic opinion in many
wh ole work was neither poverty nor inequality but what Myr- ASian and othe r developing countries than was that of the
dal called the " modernisa tion ideals" of India and other un- Sussex-IL()'Bank pr?ponents of social objectives. Certainly.
derdeveloped countries. As the "explicit value premises of the development for social welfare was liable to be very different
study ," he explained , "among all the he terogeneous and con- from deve lopment for mod erni sation.
flicting valuations that exist in the countries of the region , we
have deliberately selected th e new ones directed toward
'modernisation.' " 129
What Myrdal meant by " modern isation ideals" is perhap s
best expressed in one of his foo tnotes, where he quotes from a
speech by Nehru: " But we have to deal with age-old practices.
ways of thought, ways of action. We have got to get out of
many of these traditional ways of production, traditional ways
of distributi on and traditional ways of consumption . We have
got to get out of all tha t int o what might be called more modem
ways of doing so. Wha t is society in the so-called advanced
countries like today ? It is a scientific and technological society .
It employs new techniques, w hether it is in the farm or in the
factory or in transport. The tes t of a country's advance is how
far it is utilizing modem techniques. Modem technique is not a
matter of just getting a tool and using it. Modem technique
follows modern thinking . You can't get hold of a mod ern tool
and have an ancient mind . It won't work." 130 Myrdal himself
summed up what he conceived to be the main modernisation
ideals as " national independence, national consolidation , rise
of prod uctivity, rise and red irection of consum ption" and,
per haps, political democracy, though he stressed that " this
ideal is not essential to a system comprising all the other mod-
ernization ideals." 13l Risingconsumption and greater equality
are there, but only as components of a mu ch wid er set of goals .
If there was one them e of A sian Drama, besides the empha -
sis on modernisation, wh ich influenced thinking abou t devel -
opme nt during the 1lJ7OS it wa s Myrda l's view of the countries

" 3
 5
Radical Counterpoint
The Left

The preceding chapters have treated what might be caned the

CJlnto fermo of thought-chiefly Western thought-about de-
velopment as a policy objective for the Third World. What aU
these stra nds of thought have had in common is that their
exponents broadly favoured "development," although the
pre cise mea ning give n to thi s notion changed over time . Mate-
rial progress in Adam Smith's sense form ed an impo rtan t com-
ponent, but differentauthors and schools of thought attached
different weight to it relative to other ends-justice, equality,
freed om , national power. The ide as su rveyed in the preceding
chapters also had in common that, for the most part, they
were, or became for a wh ile, th e con ven tion al wisdo m, at least
among those who wrote about such matters.
In this chapter and the next we turn to the radical counter-
point on develo pmen t, th e views of those who were, one way
or the other, at odds with the conventional wisdom. The se
radi cals were not all ne cessarily agai nst an y kind of material
progress . But they we re either so preoccupied with the need to
overth row the existing inequitable social order, with revolu -
tion and red istribution , that they had little to say abou t the
kind of development that would or should follow thereafter,
or they were in varying d egree sceptical about or opposed to
Western-typ e modernisat ion for the less de veloped cou ntries.
The forme r version of radi calism migh t, for want of a more
sensible termin ology, be labelled Left, the latter Right. Among
the former, various strands of nee-Marxism are obvious ly
prominent. Among the latter, there is a spect rum from West -
ern sce ptics, such as Boeke an d Fran kel, to oppone nts of mod -
erni sation o n religiou s grou nds , such as Gand hi and the
Ayatollah Khom eini . We begin with the Left.

'"
CHAI"TER FIVE
From Marxism to Nee-Marxism: Paul Baran
Until World War II, Marxism had little to say about economic
development in what we now call the Third World . To Marx
and Lenin, as we-saw in chapter 1, events in Asia and other
"ba ckward" parts of the world were of interest almost ex-
clusively for their possible bearing on the prospects for revolu-
tion in Europe. When Marx th ought about the future of these
countries, he took it for granted that they would follow in the
footsteps of the West , passing through capitalism to socialism.
For Lenin, imperialism was important as the highe st stage of
Western capitalism-presaging its early end . For the few in-
digenous Marxists in the colonies, the objectives of ridding
their people of capitalist exploitation and throwing off colon ial
oppression were still one and the same.
With the eme rgence of economic development as a major
issue in world affairs in the postwar years, with the atta inment
of national independence by most of the former colonies, and
with the victory of communism in China, the intellectual cap-
ital of classical Eu ropean Marxism was obviou sly inadeq uate
to the need s of a new ge neration of revolutionaries. The first to
adapt Marxism to the new situation by presenting a Marxist
view of the problems of the Third World was Paul Baran.
Baran was a Russian who had received his Marxist school-
ing in the Germany of the Weimar Rep ublic. Ambivalent to-
ward s Soviet communism to the end of his life- he never
wave red in his conviction that the Russian Revolution was the
greatest victory for the side he was on, but confessed on re-
turning from his last visit to Moscow in 1955 that "after a trip to
the socialist countries only resu ming life under capitalism
could restore one's faith in socialism" - he foun d a niche and
made his name as an American acad emic. I His first major
contribution was an article, written in 1949 or 1950 but not
published until 1952 in The Manchester School, with the telltale
title "On the Political Economy of Backwardness."?
For the most part , Baran 's analysis of the problems of the
underdeveloped countries did not differ from that of the first
generation of ma instream develop ment econom ists, such as
Rosenstein-Roden. Nurkse and Singer. Like them , he deplored
n6
Rmiial1 Cou ntapoint: Thr lLft
the fact that the " momentous expa nsion of productivity and
welfare" yielded by nineteenth-centu ry capi talism had been
confined to Western Europe and a few countries of Western
settlement and had left vast expanses and peoples of Eastern
Europe, Latin America, Asia, and Africa "in the deep shado w
ofba.ckwardn~s. "3like them , he saw the answer to the prob-
lem ~ econonuc grow th . "The only way to provide for eco-
norru c growt h and to prev ent a contin uous deterioration in
living standa rds is. to assure a steady increase of total output
(a~~ad. of population growth)," and this requ ired increased
~tilisation of underutilised resources, especially transfer of ag-
ncul~ral surp lus labou r to ind ustrial pursuits, and econom ic
planning to overcome the obstacles to private investmen t pre -
sented by lack of externa l economles.s Where he differed from
t~e mainstream economists was in Introd ucing into this anal y-
StS Marxist political economy.
'The crucial fact rendering the realizati on of a development
progra mme illusory is the political and social Structure of the
govern ments in power ."s The int ru sion of capitalism into
backw~,rd feudal societies did not produ ce capitalist develop-
ment : .What resulted was an economic and political amalgam
combining the worst features of both worlds-feudalism and
capit.alism-and blocked effectively all possibilities of eco-
nonuc growth."6 The es tablishment of capitalist instituti ons
was bey?~d . the reach of the tiny middle class. The fledgling
bourgeoisie 10 th~ underdeveloped countries sou gh t nothing
b~t accommodation with the existing order, through deals
~th feudal landlords or powerful foreign investors. In the se
circumstances. none of the policies proposed by main stream
~evelopment. eco.nomists could achieve anything. The injec-
ho~ of. planmng into a society living in the twiligh t bet'ween
c.a plt:bsm ~nd f~udalism could but result in additio na l corrup-
tion. Foreign aid was liable to do more harm than good .e
What was needed-the McCarthyist atmosphere of the time
mad~,it i~ad visabl~ t~ad~~ate a socialist revolution openly-
was SOCIal collectJV1sm. 'The tran sition may be abru pt a nd
painful."<oJ
A yea r after the publica tion of the article, Baran gave a series
of lectures a t Oxford , which, in revised form, became The Polit-
"7
C HAPTER F IVE
icnl EcotlOmy of Growth, first published by the Monthly Rroiew,
the Marxist journal established in 1949and edited by Baran 's
friend Paul Sweezy. 10 The first book by a Marxist author to
focus largely on the problems of underdev elopment, II it be-
ca me enormously influential. Baran was happy to see
"PEOGraphy" adopted as a distinct branch of Marxist
theory . 12 .
In the main, the book. like the earlier article, was a combine-
tion of current development economics with current commu-
nist doctrine. Baran had no doubts about the "absolute
desirability of econo mic development," defined, syn-
onymousl y with econo mic growth, as "an inc-rease over time
in per capita output of material goods.t' P Like Marx, he looked
forward to "ever-increasing rational domination by man of th e
inexhaustible forces of nature, " 14 but he insisted on " the in-
compatibility of sustained economic growth with the ca pitalist
system. . . . Socialist economic planning represents the only
rational solution of the problem't ' f He still argued for indus-
trialisation along Rosenstein-Redan's lines, but now with
much more emphasis on the Soviet model. 'The military per-
formance of the Soviet Union during th e war and the rapid
recovery of the war -ravaged economy provided the final proof
of the strength and vitality of a socialist society." Guided by
the same Soviet model, he saw no future in peasant agri-
culture; " mechanisation is the answer . . . modern machine-
ry ... under conditions of large-scale farming ." !"
There are , however, even in the first edition of the book,
traces of a theme whic h was to become mu ch more prominent
in the radical left literature of th e 1960s, traces which provide
some justification for the view th at Baran "can truly be .called
the foundi ng father of nso-Marxism." !" Like Marx, he still saw
the problem of underdevelopment as a problem of back-
ward ness . But unlike Marx, he no longer saw ca pitalism as a
stage in the process of development. On the contrary , " the
capitalist system, once a migh ty engine of economic deve lop-
ment has turned into a no less formidable hurdle to human
advancement ."! " The reaso n is that "economic development
of underdeveloped countries is profoundly inimical to the
dominant interests in the advanced capitalis t coun tries."! "
u8
Radical Coutlterpoillt: The Left
Drawing on Lenin's theory of imperialism, bu t with the spot-
light now on the victims rathe r than the beneficiaries, he ar-
gued that " the backward world has always represented the
ind ispensable hinterland of the high ly devel oped capitalist
West," as the source of raw material s, vast profits, and Invest-
ment outlets .20 Natu rally, these dominant interests are bitterly
opposed to the industrialisation of their "source countries." 21
Development aid by the West is a ruse, "expected to lessen
popular pres sure for industrialisation , to weaken the move-
ment for economic and social progress.vw Even the notion of
neoco.l o~lism (thou gh not the word ) made what may have
been ~ ts first appearance : after attainment of independence,
American imperialism imposes its control through "economic
infiltration ."23 Japan achieved economic develop ment be-
cause, lacking raw materials or a market for foreign manufac-
tures, it " had no attracti ons to imperialism." 24 Something
dose to the essential thesis of nee-Marxism appeared in the
s t~ te m~nt that " the role of monopoly capitalism and impe ri-
ahsm m the ad vanced countries and economic and social
backwardness in the underdeveloped countries are inti-
mately related, represent merely different aspects of what is
in reality a global problem." 25
But Baran only hinted at the idea . Even the lon g foreword
he wrote to a second edition of the book in 1962, under the
impact of a decade of Maoism in China, of Khrushchev's con-
demnation of Stalinism, and of Cas tro's revolution in Cuba,
did not develop this theme further . Neo-Marxism in this
sense, though perhaps conceived at Stanford and subse-
quently nurtured at other American campuses, was of Latin
American desce nt .
Neo-Mardsm: Latin American An tecedents
In most of Asia and Africa, hope for a better future reste d in
the early postwar years on decclon lsation, the attai nment of
national inde pen de nce. In Latin America, any notion that it
merely needed liberation from colonial domination for back-
wardness to give way to economic development was refuted
by historical experience. Most of the countries of Latin Ame r-
" 9
C HAPTEIl F IVE
ica had been independent for at least a century. yet the great
majority of their peo ple remained in poverty. Indeed . by .at.
most any yardstick. economic devel opment in Latin Ameri ca
seemed in the last few decades to have fallen further behind
Europe, North America, and Oceania. To radical intellectuals
concerned with Latin America, neither Marx's concepti on of
capita lism as a necessa ry first stage of develop ment from
feudalism nor eve n Baran 's view of capitalism as an obstacle to
emergence of these countries from underdevelop men t sound-
ed convincing. Nee-Marxism was a reformulation of Marxism
to fit the Latin American case, an d it d rew o n idea s developed
in Latin America, chiefly by a group of economists around
Prebisch at ECLA. the United Nations Econ omic Commission
for Latin America, at San tiago in the 1950s . The two chief
ingredien ts were what came to be known as the theo ries of
deprndency and structuralism.
Ikp<ndmcy
I noted in an earlier cha pter Prebisch's " centre-pe riphe ry"
interpreta tio n of the wo rld eco nomy.26 Few mainstream de-
velopment economists would han' disag ree~ , except pe r!~aps
in emphasis, with his statement that growth 10 the West had
left un touched the vast peripheral area" or with his complaint
that the benefits of capitalist economic growth had been very
un evenl y sha red be tween the developed " centre" and the un-
derdeveloped " pe riphery," thou gh most of them were scep-
tical about his theory of a secular decline in the term s of trade
for primary products as a major cause. The first to tran slate this
interpretation into a theory of " de pendency" ~p~a rs .to h~ve
been the Brazilian econ omis t Celso Furtado, m his historical
study of The Economic Growth of Brazil (1957}27 Here, and in
subseq uent elabo ratio n, he defined the relation sh ip be twee n
the centre an d the periphery as one not merel y of unequal
sha ring of the benefits of development but of dependen ce
involving do mination an d economic explo itation . He saw as
the chief mechan ism of depend en ce wha t Nu rkse and others
had called the " demonstratio n" effect whereby the way of life
of a small min ority in the peripheral count ries is mod ern ised
''0
RiuficafCount"P",int: T~ 14t
th~ugh trans~lantation of ~estem consum ption patterns,
while transnational corporations control access to modem
technology . The result is " pe ripheral capitali sm , a capitalism
unable to gen erate innovations and dependent for transforma-
tion upon decisions from the o utside . I call external depen-
den.ce . the structu ral situa tion in which such peripheral
capitalism prevails in certa in co untries. " 28
The best known, and sharpes t, formulation of the ECLA
depend en cy theory was presen ted some years later by the
Chilea n economist Osvaldo Sunkel. Sunkel was not a conve n-
tional Marxist. In his earl iest sta tement of the doctri ne he
rejected both depe nd ency an d " the false o ption of socialist
rev? lution" in fav ou r of " authen tica lly national develop ment"
which wo~ld " concentrate on basic prod uctive sectors (steel,
pe trochemicals, etc.) .. . under mu ltinational Latin American
control. " 29 But his disagreem ent was with " the classical Marx-
~ t appr~ch," which had " restricted itself mainly to the role of
rnternattonal monopoly ca pitalism," neglecting its effects on
the peripheral countries.w a nd his own view came close to this
later nee- Marxist position .
The historical evoluti on of international cap italism, he ar-
g~ ed , ~ nd " basic structural elements" of the system, have
given rise to underdevelop rns m .a! " It is postu lated that un-
derdevelopment is part an d parcel of this historical process of
global dev elopment of the international system, and the re-
fore, that underd evelopment an d development are simply the
two faces of o ne single universal process.. . . The evolution of
this global system of unde rde velopme nt-development has,
o~er a period of time, given rise to two great pola rizations:
First, a polarization of the world between countries, ... the
devel oped, ind ustrialized, advanced 'central northern'
~nes ... and the undevel oped. poo r, depe ndent, and 'pe-
npheral southern' ones . .. . Second, a polarization within
cou ntri~, .between ad vanced and mod em groups, reg ions
and acnvin es, and backward, primitive. marginal and de pen-
dent groups, regions an d activities ."32
Depe ndency as the key problem of underde velopm ent, al
least in Latin America, was taken up an d ad umb rated by ma ny
others who were not Marxists o r advoca tes of revolution . It
C HA PTER F IVE
served well to express both th e frus tration felt by Latin Arnett-
can in tellectuals about th e failure of capitalism in Latin Amer-
ica to match its achieve ments in Europe and North America
and the resent ment of the overw helming power and presence
of the United States. While Prebisch had focused chiefly on
dependence through trade . especially the vul nerability of
countries exporting primary produ cts, the depend ency theo-
rists from Furtad o and Sunkel on, after a decade of efforts to
promote developmen t by industrialisation based on import
substitutio n, focused on th e role of multinationals in produc-
tion for the domestic market in the mos t advanced coun tries of
Latin America-Brazil, Chile. Argenti na, and Mexico.
Structuralism
In an economic sense structuralism has been described as a
view of the world as inflexible. "In economic terms, the supply
of most thi ngs is inelastic."D
In the nineteenth century and well into the twentieth , so-
cialists and other critics of capitalism had condemned it chiefly
on two grounds. First , tha t it was unjust and exploitativ e.
Second . that it was unstable, prone to crises, and doomed to
collapse. Rarely, if ever, had capitalism been criticised on the
ground that it was inefficient , that its quin tesse ntial rnecha-
nism, of market forces operating th rough the price system,
failed to work. This third line of criticism, wh ich may be called
the doctrine of market failure. was developed, chiefly in Brit-
ain, in the 1930Sand 19405.34
The classical and neoclassical thesis according to which
market forces operating throu gh the price mechanism can be
expected to assure an optimum allocation of resources, ~tat
ically and dynamically, was open to att ack at thre e point s.
First, prices may give th e wrong signals because they are dis-
torted by monopoly or externa lities. Second, labour and other
factors may resp ond to price signals inadequately or e~e n per
versely. Third, although ready to resp ond appropnately to
correct price signals, factors of production may be immobile,
un able to move quickly if at all. It was this third leg of the
RRdicol Counterpoint: Tht Left
" market failure" tripod that came to be called structuralism .
Criticism of the working of the price system was initially
directed at the first, the signalling, component. Major contri-
but ions were Pigou's sys tematic examination in The Economics
of Welfare (1920) of extern al economies and diseconomies
which give rise to divergences betw een private and social mar-
gin~. net product; criticism of the ass umption of perfect com-
petition by Sreffa, Chamberlin, Joan Robinson, and others,
whi~ demonstr~ted tha t price signals are in practice likely to
be d,stort~ by un~rfections, monopolistic or oligopolisrc;
and, most influential of all, Keynes's General Theory, which
was also an attack on the Signalling component since it rested
fun~~~en.taUy on a critique of the classical postulate of price
fleXIbility. 10 the capital and labour markets .w In the 19405.
~osen~tem-Rodan combined the Pigovian and Keynesian cri-
tique tnto an argument that economic development of less
developed countries could not be left to market forces but had
to be planned .
Sriticism of the second aspect of the price system . the re-
sponse compo nen t, remained subdued in relation to devel-
oped coun tries, although attacks on the model of economic
/ man.are as old as the mod el itself. 36 Such criticism played a key
role 10 Western thought about economic development , in the-
ories of econo mic dualism from Boeke onwards. the view th at
peop le in traditional societies do not respond to economic in-
centives, or respond perversely (backward-sloping supply
curvesj .w But this line of criticism, of its natu re, appealed to
conservative sceptics about development rather than to so-
cialist and oth er radical critics of capitalism.
Criticism of the th ird aspect, the mobility component,
emerged in the 1930Sand early 1940S as part of a more general
and direct questioning of the efficacy of the price syste m. A
series of stu dies by Oxford econ omists, la ter collected in a
volume of Oxford Studies in the Price Mechan ism, th rew doubt on
the Interest-elasticity of investment, the efficacy of the ex-
change rate as an instru ment of balance of payments adjust-
ment, an d on the mobility of labou r.>" An economic history of
the interwar period, written un der the influence of Rosen -
"3
CHAPTER Prv s
stetn -Rodan, contains what may have been the first fullexposi-
tion of what later came to be called structuralist doctrine.
"G iven the large maladjustments in the balan ces of payments
and economic structure of different countries which the (first
world) war had left behind . . . their correction by means of
adju stments in price/income levels had become impracticable
or intolerable as a result of greatly increased rigidity in the cost
and price structure of the advanced capitalist economies; . . .
ultimately owing to the immobility of resou rces, market forces
could not or-for good reasons- were not allowed to effect
the necessary adju stments."39
A similar outlook inspired the work. during and after the
war, of a group at the Oxford Institute of Statistics arou nd the
Polish economist Michal Kalecki, who from a Marxist starting
point had in importa nt respects anti cipated Keynes's General
Theory. At various times, the group included T. Balogh , E. F.
Schumacher, and Dud ley Seers and was in close conta ct with
Rosenstein-Roden, H, D. Henderson , and Kaldor (who after
the war for a time joined Myrdal in Ge neva, as director of th e
Research Division of the UN Economic Commission for Eu-
rope). All of these were prom inent in th e debate on planning
and direct controls which took place as Britain emerged from
the controlled war econ omy..w
They were also among the pioneers of devel opm ent eco-
nomics. Most. though not aU,1 of the first generation of devel-
opment economists shared a broadly structuralist outlook, in
the sense of scepticism about the efficacy of the price mecha-
nism and a conviction that government planning and controls
must make up for " market failure ." Some. such as Rosen stein-
Rodan and Sc itovsky, emphasised the inadequacy of prices as
a gu ide to investment decision s. Others, such as Myrdal a nd
Singer. stressed what th ey believed to be the unacc~pta~le
social costs of the free play of market forces, especially Its
effects in aggrava ting ineq uality, nationally and interna-
tionally. All agreed that for various reasons all three compo-
nent s of the price mechanism work even Iess well in
un derdeveloped tha n in developed countriesa nd that neo-
classical economic theor y was therefor/largely inap plicable to
"'4
Radiall Counterpoint: Tht l..41
LDCs. Myrdal, in Economic Throry and Underdeoeloped Regiotls.
put this view in his usual pour (pater irs bourgeois manner : "In
the less well integrated countries ... where the state allows
freer play to 'natural' forces and has, in fact, because of the
general povert y so mu ch less scope for policy interferen ce-
even short-term changes are continuously liable to start a de-
velopment towards some sort of public disaster. "42
In the late 19505, structuralism in this broad sense gave rise
to a specific structuralist theory of inflation in Latin America.
The essence of this "structuralist," as again st " monetarist,"
view of inflation was th at "inflation is a natural accompanl-
ment of growth; inflation cannot be curbed through monetary
and fiscal means without provoking un emp loyment or stagna-
tion of grow th because of supply rigidities; the instability of
export proceeds, generating a capacity-to-import bottleneck ,
as well as supply inelasticities inh eren t in the growth process ,
rend ers it imposs ible to curb inflation in the short run." 43
The stru cturalist theo ry of inflation , like the dependency
theory, was homemade in Latin America, chiefly by the ECLA
group of economists assembled by Prebisch at San tiago. But,
unlike the dependency theory, it owed a good. deal to the
structuralist economists in Britain, both through their influ-
ence on the general climate of opinion and through direct
contact.
Chief credit for fonnulating th e Latin American structuralist
theory of inflation belongs to a Mexican economist and a
Chilean one. Juan Noyola in 1956 published an article in wh ich
he argued that inflation is not a monetary phenomenon but the
result of interaction betw een the two factors, "basic inflation -
ary pressures" du e to structural rigidities and the "propagat-
ing mechanism" of competing income dalms.w In 1958 the
Chilean economist Osvaldo Sunkel developed the idea . He
stated the central proposition concisely: "Basic Inflationary
Pressu res. These are fundamenta lly govern ed by the struc-
turallimitations, rigidity or inflexibility of the economic sys-
tern. In fact, th e inelasticity of some productive sectors to
adjust to changes in deman d-or, in short, the lack of mobility
of productive resources and the defective functioning of the
'"
CIIAPTER F IVE
price system-are chie fly responsible for structural inflation -
ary disequilibrium." '-5
Both Noyola and Sunkel cited as their autho rity for th e
structuralist explanation an article by Kalecki published in
Mexico in 1955 on th e basis of lectures he had given there two
years earlier. Sunkel developed his ideas while Ka.l~or and
Chenery were visiting ECLA. The forme r wa s working o n a
paper on Chile's economic probl em s in whi ch he furthe r e labo-
rated Kalecki's argument that ine lastic supply of food had
been a major factor causing inflation . Ch enery expo unde d a
gene ral stru cturalist view in his advocacy of the use of input-
output ana lysis and linea r programming for investment plan -
ning in developing countries : " A central problem in develop-
ment policy is the adequacy of free market forces in allocating
investme nt resour ces.. . . Three kinds of defect in the free
price mechanism . . . combine to produce a rigid market st ruc-
tur e. ... Serious structu ral disequilibrium in the use of la-
bour, natural resources and foreign exchange" represents one
of the situa tions requiring state interventi on in investment
decision s..u.In the followi ng years EeLA structuralist thinking
received furt her rein forcement through visits to Santiago by
Balogh and Seers .V
ECLA thinking about dependency and structuralism ,
though dearly antimarket and near-socialist in its implica-
tions, was still a long wa y from revolutionary Marxism and
soon came under attack from more rad ical contemporaries.
" In spi te of their critical nature, ECLA economic theo ries and
critiques we re not based on analysis of social process, d id ~ot
call attention to the imperialist relation ship am on g countnes,
and did not take into account the asymmetric relation s be-
tween classes .'?" Or, as another nea-Marxist put it more
bluntly somewhat later, " the ECLA bureaucrats, how ever rad-
ical in the UN context, were divorced from the mas s of the
Latin America n poor. Not surp risingly, ECLA managed to
avoid the realities of th e class struggle in Latin Ame rica and the
role of the USA in tha t struggle.v-" The write r who did most to
build a nee -Marxist edifice on ECLA founda tion s, through
a "synthesi s of ECLA struc turalism an d Marxism ," so was
A. G. Frank .
".
Radical Counterpoint: Thel..rft
Nee-Marxism : A. G. Frank
Andre Gunde r Frank, like Paul Baran, came to the United
States from Euro pe, but as a boy. He studied at the University
of Chicago and like many others was caught up in the campus
revolt of the rrud-rceos, stirred by the events in Vietnam . After
Khrushchev's denunciation of Stalin , and after Hungary and
Czech oslovakia, the Soviet model had lost much of its appea l
to young rad icals. They were attracted by the image of Ho Chi
Minh , by Mao's Great Cultural Revolution an d, especiall y in
the United States, by the nea rby Cuban Revolution and the
rhetoric of Fidel Castro. " Witho ut Fidel Castro, Frank would
have been impossible.v''!
In the very first sentence of the preface to his first majo r
work, historical studies of developm ent in Chile and Brazil,
which were published in 196] unde r the title Capitalism and
Underdevelopment in Latin America, he sta ted his main thesis: " It
is capitalism, wo rld and nat ional, w hich produced under-
developmen t in the past and w hich still gene rates under-
development in the present .vee Although he claimed to hold
this view " with Paul Baran," 53 it was really quite new. Baran
had merel y suggested an intimate relation between imperi-
alism and underdevelopment. Frank, in strikin g contrast to
Marx's view that capitalism was a necessary stage in lifting the
underdeveloped world out of its backwa rdness an d even to
Baran 's main view that capitalism constituted an obstacle to
this process, maintained that underd evelopment was cau~d by
capitalism .
In part, Frank's thesis rested on Lenin's theory of impe ri-
alism , with its implication that economic development in the
metr opolitan ca pitalist countries took place at the expense of
the underd eveloped colonies, through expropriation of the
latter' s surplus . "The metropolis exp ropriates economic sur-
plus from its sa tellites an d ap propriates it for its own economic
development. The satellites rem ain und erd eveloped for lack
of access to their own surplus an d as a cons eque nce of the
same pola riza tion a nd exploita tive co ntradictions which the
metropolis introd uces and mainta ins in the satellite's domestic
economic structure. The combination of these contradictions,
"7
C HAPTER F IVE
once firmly implanted, rein forces the process of dev elopment
in the increasingly dominant metropolis and underdevelop-
ment in the eve r more dependent satellites until the y are re-
solved through the aba ndo nment of capitalism by one or both
interdependent parts . " 5-1
But when Frank added that "economic de velopment a nd
underdevelopment are the opposite faces of the same coin"ss
he we nt much further than Lenin . It was, he claimed, o nly
because of the intru sion of capitalism that the countries of
Sout h America expe rienced underdevelopment. " Because of
capitalism , Chile's economy was already underdeveloping
throughout the three centuries before independen ce.v'v
Frank gave " underdevelo pment" a transitive mean ing: " I un-
derdevelop yoU." 57 As anothe r historian of Latin America
with a similar ou tlook, Keith Griffin, explained: "Rostow's
theory (of stages of economic growth, like Marx's] attributes a
history to the de veloped countries but denies all history to
the underdeveloped ones.... To class ify these countries as
'traditional societies' begs the issue.... The history of the
underde velop ed cou ntri es in the last five centuries is, in large
part, the history of the consequence s of European expansi on .
... The auto ma tic functio ning of the international econ omy
which Europe do minated first created underdevelopment
and then hindered efforts to escape from it." 58
Griffin tried.to generalise the idea to other parts of the Third
World, citing a historian of Indonesia who claimed. that the
more observant of the Du tch merchants who ca me to the East
Indies in the sixteenth century " had recognized. that southe rn
and eastern Asia were far ahead of western Europe in riches as
well as in commercial ability" and were inferi or only in military
and navigational technology.5'j But the thesi s that under-
developmen t was caused by capitalism derived what plau -
sibility it had from Latin Ameri can history and politics.
If the re was some thing naively romantic about the notion
that Aztec Mexico and Inca Peru before the arriv al of the Span-
iard were more " develo ped" than their twentieth-cent ury suc-
cess or societies, it was certa inly true tha t, in the wake of the
European expansion, " the ind igenous societies were de -
stroyed ," frequ en tly resulting in " a decline in the welfare of
Radicat Coumerpoint: Thtl.Lft
the subjuga ted people. " w It was also true that, in contras t to
most of Asia and Africa, where capitalist development re-
mained pe ripheral to still pred omi na ntly precapitalist social
and econo mic systems an d where a t least unti l World War II
national independence movements united the politically artie-
ulate from all strata, " most of Latin America had been thor-
oughly incorporated into wor ld ca pitalism. Hence it made no
sense to spea k of feudal. 'semi-feudal' or 'archaic' eleme nts in
Latin American society- elements which would give meaning
to the idea of a 'bourgeois-democratic' revolution.vst In Latin
America the attainment of na tional independence had con-
sp icuously failed to usher in a classless society or, with a few
exceptions, a democratic polity . The local middle class had
been inclined to take French culture rather than British or
American business en terprise as its model. The national bour-
geoisie which in Asia had been championed by Lenin as a
potential ally ag ains t imperialism was dism issed by Fran k, in
the Latin American context, as a Lumpen.bourgeoisie,62 " incapa-
ble of carryi ng out the progressive role of the European bour -
geoisie," 63 subservient comprador members of an international
coalition of owning classes .
The integratio n of Latin Ame rica into the international mar -
ket economy had tended to exace rba te do mestic inequalities
and to strengthen trade and investment links which could
easily be seen as involving depe ndence on the American c0-
lossus an d its tra ns national corporations. In these conditions,
the nee-Marxist interpretation fell on fertile ground-not least
because " for half a century Latin American universities had
been mass-producing an intellectual pro letariat, larger tha n
the oppo rtunities for their employment in the law. journalism,
literature, o r other conge nial professions .vs-
In the decade following the campus revolt, Frank 's neo-
Marxist doc trine came to dominate the rad ical literature in
Western countries, widely tau ght a nd studied at Western uni-
versities a nd ad umbrated in books, journals, magazines, a nd
confere nce proceed ings . It continued to be popular amo ng
Latin America n intellectuals without giving rise to any major
new ideas, but hardly evoked an echo in the rest of the Third
World, in Africa, the Midd le East, or south an d east Asia.o 5
 CHAPTER F IVE
One of the few exceptions was the Senegalese. Samir Arrun,
who . in two books initially published in French in the early
19]'OS, applied the Latin American conce pts of peripheral cap-
italism and dependence to West Africa and extend ed Pre-
bisch 's " terms o f trade" thesis by drawing on the ideas of the
sociologist Emmanuel (Greek but also franco pho ne) on " u n-
equal exchange.vs"
Whereas Preb isch had merely a rgued that th e develop ing
count ries are adversely affected by a secular downward trend
- in the commod ity terms of trade for primary prod ucts, Em-
manuel put forward the proposition that all in ternational trad e
between d eveloped and develop ing countries constitutes " u n-
equa l exchan ge" (and is ther efore p res umably unjust) because
it involves exchange at equal mark et values of goods embody-
ing unequal am ou nts of current labour. As Amin recognised,
" this inequality reflects the inequality in p roductivity.vs" But
he failed to add the corollary that, given this inequality of
labour p rod uctivity. the less developed cou n tries can trade at
all only because their wage levels tend to be p roportionately
lower .w Like most neo-Marxists, he saw the remedy not so
much in d evelopment . which would gradually raise level s of
labour prod uctivity and real wages in the developing cou n-
tries. but in " liberation of the peri phe ry" through socia list
revolution, for " com plete socialism will nece ssarily be based
on a modem econo my wi th high productivity . "69
An incidental bu t not unimpo rtan t by-p roduct of the neo-
Marxist definition of und erd evelopmen t wa s that it provided
mu ch better in tellectual su p po rt than the d ass ical Marxist con-
cept of backwardness for the cons isten t refu sal of the Soviet
Unio n to acknowledge an y responsibility. whether through
aid or trade. towards the count ries of the Third World, on the
ground that their eco nomic problems were the conseque nce of
Western colonialism (in which Russia of course had no pa rt).
Neo-Marxism on " Develop ment"
Compa red to their strong and orig inal view s about under-
development , the nco-Marxists of the 1960s and 19705 had
' )0
Rizdial1 Cour uerpoeu: The lLft
relatively little to say about development. There were at least
tw o obviou s rea sons for this. both rooted in class ical Marxism.
One was the preoccupation with distributive sha res. im -
plicit in the conce p t of eco no mic su rplus . In Marx 's magnifi-
cent d ynamics. eco nomic surplus had played a key role as part
of the mechanism of historical change, both as the substance of
the class struggle and as the so urce of capital accum ulation,
an d neo-Marxist s conti nued to argue in the abstract that "con-
trol of this economic su rpl us d et ermines the nat ure of the
development process .'?" But in pra ctice their ove rriding con-
cern With wha t they sa w as the exploitative, zero-su m-game
character of capitalism, internationally and nationally, diver-
ted the ir atten tion from analysis of economic development and
from policies that might help promote it.
A second, related reason was that their prime objective was
the rev olut ionary overthrow of the existing social ord er. When
Baran put forward the seemingly paradoxical view that " de-
velopment {is] inevitably a rev oluti onary and not an evolu tion-
ary process.?"! he was echoing Marx's dialectical materialism .
But the practical implication appeared to be that no develop-
me nt was possible until capita list institutions were swept
away an d the expropriators exp rop riated ; and if this was so,
there was little point in worrying very m uch about the preci se
forms that postrevolu tion ar y d evelopment migh t or should
take.
For revolutionary activists, as for Lenin a generation earlier,
the first task was to gain power. The question " What is to be
done after the revolution?"n had to wait. The nearest Baran
came to addressing the ques tion in The Poliiical Economy of
Growth was in the final peroration in which he predicted a
gloriou s futu re for the underd eveloped coun tries under so-
cialism: " Drawin g its energies from the immeasurab le sou rces
of free people, it will not only irrevocably conque r hunger.
disea se and obscu ran tism. but in the very p rocess of its vic-
torious ad va nce will rad ically recreate man's intellectual and
psychic structure . "73
Of cou rse, few of those w ho con tribu ted to nee -Marxist
thought were the mse lves revo lutionary activists . The great
".
C HA PTER F IVE
majority were intellectual s, mostly academics and students. at
American and other universities. During th e 1970s, some of
them borrowed suitable idea s from the main stream debate on
economic developme nt wh ich was discussed in the last chap-
ter . "Small is bea utifu l" mad e little appeal, even as the Soviet
model began to lose its glamour, and " intermed iate tech-
nology" owed too much to neoclassi cal trade theory to be
attractive. Most nee-Marxists also contin ued to follow the offi-
cial Soviet line in deriding mainstream de velopment econo-
mists' concern with population co ntrol- "screaming the
horr ors of overpo pulation.v' " But the Club of Rome message
could be ada pted- " impe rialism uses up resources so tha t by
the en d of the century irreplaceable fossil fuels and other min-
erai resources will largely be extinct"75-and some went so far
as to demand deind ustrialisation of the West: " Marxism is
being asked in the twentieth century to preside over the d ei~
dustrialisat ion of part of th e globe and the ru ral-based ecologi-
cally evolut ionary developmen t of the rest. Those who insist
that such a process has noth ing to do with Marxism merely
ensure that wha t they choose to call Marxism " ill ha ve noth-
ing to do with what hap pens in the world ." 76 But such ideas
did not survive long among nee-Marxists any more than the y
did on all but the fringe of mainstream thinking about
development.
Ther e were also echoe s of the distinction between
" growth" and " development." But the strongest nee-Marxist
statement on this issue, by Samir Arnin, was mainly concerned
to ad vocate a transition from " growth stimulated from abroad
to intern ally generated and self-financing growth."?" In the
West African co ntext, he thought. neocolonialism was con-
tinuing " the distortion toward exp ort activities (extraversion)
which . . . doe s not result from 'inadequacy of the home-
market' but from the superior productivity of the cent er in all
fields which compels the periphery to confine itself to the role
of compleme ntary su pplier of prod ucts for the production of
which it possesses a na tura l adva ntage : exotic agricultural pr o-
duce and mine rals ." ?" The re was alread y implicit in this a
notion , which had a brief vogue a few years later, the notion
'J'
RiuliCJJl Counterpoint: Thr Uft
that development req uires the "breaking of links with the
world economy .vw
. On~e again, it was Dud ley Seers, who, in a n article pub--
lished In 1977, so ught to define " the new meaning of develop-
men t."80 In an analysis which owe d a good deal to Latin-
American nco-Marxist thinking, he cited rad ical critics who
reject " redistribution with growth" as politically impractical:
" Why should those with economic and political po wer give it
away, as these policies requi re? .. . Social pro gress will be
!ndefinitely preven ted by a homogeneous ru ling class until it is
in d ue course overt hrown in a revolution.ve! Instead of ad-
vocating revolution, Seers advoca ted breaking the "external
links" to which he attri buted many of the difficulties of domes-
tic red istribution. Time was ripe, he declared, for another crit-
ical look at th e meaning of de velop me nt. "The eleme nt to
add . .. is self-reliance.vw O n the econ omic side, this meant
"re~ udng dependence on imported necessities, especially
baSIC foods, pe troleum and its products, capital equipment
and expertise." Policies would be need ed to cha nge life-styles
" using taxes, price policies, advertising and perhap s ration-
ing." There was also a need to reduce "cultural dependencies
on one or more of the great powers," e.g., by raising the
proporti on of higher degree s ob tained at horne .w The objec-
tive is not necessarily autarky . How far to go depen ds on each
coun try's circumstances. The key to the new development
strategy was " not to break all links. which would almost any-
where be socially damaging and politically unworkable, but to
adopt a seiectioe approach to externa l influe nces of all types. " 84
Most surp rising at first sight, for someone so close to neo-
Marxism, was Seers's " explicit endo rsement of nationaHsm -
which ceases to be an 'obstacle' to development and becomes
instead part of the very esse nce of it."85 But this , too, reflects
Latin American ideo logy. Seers, in fact, at this stage of his
thinking, stood somewhere between what have been called
the two Latin American currents in the "altern ative" ap -
proach- alterna tive that is. to the neoclassical approach of
liberal mainstream development economics. One of these was
repre sented by nee-Marxists. the othe r by the ECLA nee-cor-
' JJ
C HA rTER F IVE
poratists- " nee" becau se, despite affinities, the latin Ameri-
can variant d iffered from the European corporatism of the
19305, wh ich evolved into Iascism.s" "Corporatists 'deny the
inevitability of class strugg le.' It is not the capitalist class or the
capitalist system that lies at the heart of underdevelopment in
the periphery , bu t the way the international structure of that
system has affected nati onal development. '?" Clearly, there
was in Latin America a spectru m from Peronist-type po pu -
lism, which had much resemblance to the fascism of Mussolini
or Franco, via ECLA "corporatism" to various strands of neo-
Ma rxism, all united in their rejection of liberalism and neo-
classical economics and in their conviction that the existing
international order was to blame for th e problems of
und erdevelopment.
Somewhere near the nee-Marxist end of this spectrum was
anothe r, also predominantly Latin American, strand of
thought about development, often referred to as "liberation
theo logy," mainly because, as its best-kn own exponent, Denis
Goulet, explained, its ideas " made their greatest inroad s in
religious writings on development : papal encyclicals, docu-
ments issued by the World Council of Churches and the Pon-
tifical Commission on Justice and Peace." BS Priests, working
among the poor in Catholic countries in Latin America or in the
Philippines, often found themselves thinking on much the
same lines as Marxist guerillas, and nee-Marxist ideas pro-
foundly influenced official church pronoun cemen ts on
development .
Goulet followed a Peruvian theo logian , Gutierre z, in reject-
ing the term "de velopment" in favour of "liberation." "<De-
velopment,' although frequ ently used to describe various
change processes, stresses the benefits said to result from
these: material prosperity, highe r prod uction and expanded
consum ption, bette r housing and medical services, wider edu-
cational opportunities and em ployment mobility and so on."
But " 'development' does not evoke asy mme trical power rela-
tions operative in the world or th e inability of evolutionar y
change models to lead, in man y countries, to the desired objec-
tives." By contrast, "<liberation' implies the supp ressio n of
elitism by a populace which assumes control over its own
' }4
Rildial ! Colm Urpoint : Tht lLft
change processes: ' Liberationists stress ethical values. " Al-
though all men must surely have enough goods in order to be
more hum an, they say, development is simply a mea ns to the
human escent .vw
Another member of the same school, a forme r parish priest
in Puerto Rico, Ivan lllich, went even further, denouncing the
fraud perpetrate d by UNESCO and othe rs in arousing false
expectations among th e Latin American poo r through the
spread of prim ary ed ucation . "Underdevelopment as a state of
mind occurs when mass needs are converted to the demand
for new brands of packaged solutions wh ich are forever be-
yond the reach of the majority . . . . The fraud perp etrated by
the salesmen of schools is less obvious but mu ch more funda-
men tal than the self-satisfied salesmanship of the Coca-Cola or
Ford rep resentative, because th e schoolman hooks his peo ple
on a much more demand ing dru g." 90
Such extreme views probably comman ded few followers .
But the liberationists shared with more conventional neo-
Marxists, and inde ed with radical left writers on development
who in the late 1960s and 1970S filled thousands of pages of
books and booklets, the belief th at th ere was, somewhere, a
better path to development than that advocated by main-
stream development economists, promoted by international
agencies, or followed by most lDC governments. Goulet ex-
pressed this consensus whe n he said that " revolutionary Latin
Americans resist this kind of development. They look instead
to China, Cuba and Tanzania as examples of success.v'"
Sometimes Vietnam was add ed to this list. But it was "China's
path of deve lopment" that evoked most interest and
enthusiasm.
Mao and Maoism
When Mao Tse-tu ng led communism to victory in China in
1949, his objectives were not, initially, very differen t from
those of Lenin and Stalin in Russia. China, it is true, con-
formed even less than Russia to Marx's conception of a society
attaining socialism after passing th rough a stage of ind ust rial
capitalism. Even more than Lenin's, Mao's was a "Comrnu-
' J5
C HAPTE R F IV E
rust-led revolution based o n nationalism and ag ra rian discon-
tent." 92 For some yea rs before 1949, Mao, cautioned by
lenin's experience, had planned " to lead China in the direc-
tion of socialism, though capitalism will still be ena bled to
grow to an appropriate extent for a fairly long peri od .,>qJ ~fter
the seizure of power in 1949, landowners were expropriated
and urban private enterprise was gradually nationalised , bu t,
as the Ame rican rad ical economist J. G. Gurley has pointed
ou t, Mao did not wait for the socialist revolution to be com-
pleted before " embarking o n an enormous industrialisation
effort.. . . Aside from its importa nt military implicatio ns ,
heavy industry would be required if agriculture . . . was 10 be
transformed into a modem sector, . . . with the infusio n of
modem inputs, such as electric power, machinery and trac-
tors,' '94 and supported by massive Soviet assistance in the
form of experts and capital equipment. Throughout the 19505 ,
there was little in Mao's thinking to differentiate it from
orthodox Marxist -Leninism . As late as 1958, he would say,
wholly in the spirit of Ma rx, that " the more (men ) increase
their power in the combat with nature, the more they freel y
co mmand as by magic the latent productive forces, making
them appear eve ryw he re and develop rapidly" ;95and his su d-
den deci sion in tha t yea r to emba rk on the Great Leap Forward
appears to have been motivated by the belief tha t " China
would pe rhaps not need so much time as hitherto to catch up
with the most adva nced industria l cou ntries ."?"
All this, however, is not what the world has come to associ-
ate with Maoism. Mao's " passionate desire to tran sform man ,
with its curio us mixture of humanitarian an d tota litarian
motives,"?" came to the fore in the ea rly 1960s, wh en , after the
disaste r of the Grea t leap Forward, agg ravated by natural
calamities an d the withdrawal of So v-ie t aid, the leadership
un der Liu Shao-c hi set China on a course which Mao feared
would restore traditional bureau crat ic and man agerial class
relattonships-c-vtaking the capitalist road ." In unl eashing the
Crea t Proletarian Cult ura l Revolution upon China , Mao's pri-
mary objective undoubtedly was to complete the revolution as
he conceived it. After the political and economi c stages had
been carried o ut, there remained , in C. P. Fitzgerald's para-
,,6
RAJiall Colmlnpoi'd : ~ lLft
ph rase, "a furt he r stage; the govern me nt had been chan ged
and the economy tran sformed, but the Chinese themselves,
their thoughts, their tast es, their outlook o n life and their per-
sonal hopes and ambitions, remained largely unaltered.. The
last step was to be a cultural revolution , wherebv these cha rac-
teristies were to be remodelled, culminating tn ge nuine so-
cialists to wh om the way of life and thought of his ancestors
would be as alien as those, for example, of the pagan world to
the Christian era which followed it." 98
In the following years, Mao's resolve " to carry the revolu-
tion into the supe rstructure v'" developed into a gigan tic social
expe riment in " mobilising collective ene rgies.v' w Incessan t
exhortation gave Mao's instructions, in the words of two West
em sympa thisers, " a hypnotic, even magical, characte r.v wt In
an effort to replace material by moral incenti ves, financial re-
wards, such as bonuses and piecework, were abolished .
Egalitarian zeal fou nd expression in the abolition of ranks and
insignia in the armed forces . Millions of young Red Guards ,
carrying the little red books of Mao's thoughts, rampaged
through the cou ntry. A large proportion of the country's intel -
ligentsia-party cad res , officials, and academics-were re-
moved from their posts, often publicly h umiliated a nd
rusticated . Confucian books were burned , librarie s ransacke d.
works of art of ea rlier centuries destroyed . Somewhere be-
tween eight and fifteen million young peo ple were sent from
the cities to work as agricultural labourers in com mu nes, in
what has been called " the largest forced transfer of popula -
tion an y govern ment has tried since Stalin's mass depor-
tations . rca
As Mao's health ga ve way a nd power slipped from his
hands, first the army and later a more pra gmatic leadership
under Teng Hsiao-p 'Ing took contro l. overcame the le ft-wing
"Gang of Four ," and gradually restored orde r. Deno uncing
the Great Leap Forward and th e Great Cultu ral Revolution as
enormo us mistakes, the new lead ers during the 1 9705 and
early 1980s reversed course, restoring economic incentives in
agricultu re and industry and embarking on a more market-
and expo rt-oriented development strategy .
AU through the I '}60S and for some years into the 1970S,
" 7
C HA m R FI VE
"Maoism" exerte d a powerful appeal among Western left-
wing intellectuals, young and old . In the immediate aftermath
of the Great Cultural Revolution, an Oxford historian had no
hesitation in calling Mao " by far the greatest man in the world
today- probably the greatest of this century," lm while a
Cambridge economist , speaking of the less developed coun-
tries, thought that China was " one (perhaps the only one)
where developmen t is really going on. " 104
The appeal of " Maoism" was manifold . " Fo r the young it's
idea lism; for the mid dle-aged nostalgia; for the worried an
alterna tive lifestyle." l05 To young radicals in the West , the
Cu ltural Revolution appealed as "an outbreak of revolution-
ary romanticism." l06 Many were repelled by the Soviet Unio n,
where, it seemed , "a privileged group now hold s power and
seeks to perpetuate it by destroying revolutionary spirit and
developing another self-Interes t and the consumer sod-
ety."I07 The notion of a peasant revolution evo ked echoes of
Rousseau and Thoreau . " In peasa nt societies, revolution , fc l-
lowed by the cons truction of socialist values , is a t least possible
(even if Marx doubted it). This vision is Mao's contribution,
and it helps to explain why leadership of the world socialist
movem en t is passing in part from the Sovie t Union to Ch ina
and othe r peasan t societies .v'P" Middle-class pu ritan s at od ds
with Western consumerism and materialism were attr acted by
" the moral elem ent in Ch inese socialisrn.vt ?" " Maoists deem-
phasize material incentives, for they are the very manifesta-
tion of a selfish, bourg eois society... . Maoists believe that
each pe rson should be devoted to ' the masses,' . . . shou ld
serve the world proleta riat. ... A selfish person is not an
admirable person."1 10 Maoism mea nt doing away with all the
distasteful fea ture s of contemporary approaches to develop-
ment in the Third World . " Maoists believe that economic de-
velop me nt can best be promoted by breakin g down
specialization, by disman tling bureaucracies, and the under-
mining of centralising and divisive tendencies that give rise to
expe rts, techn ician s, a uthorities and bu reaucrats rem ote from
or manip ulating 'the masses.' . .. Maoist s seem perfectly will-
ing to pursue the goa l of transforming man even thoug h it is
tem pora rily at the expense of some economic growth . ':11 1
",
Rsdiad CoUlIlnpoill t: ~ lLft
Maoism was a phase in Western rad icalism. The Great Cui.
tural Revolution coincide d with the Vietnam War an d the stu.
dent revolt o n Western campuses. As D. S. Zagoria pointed
out in his judiciou s summing up of Mao's achieve ments and
failures in China, " many people who are alienated from con.
temporary society pro ject their dis satisfaction on to China .
They see in China virtues that America once had but lost, such
virtu es as self-discipline and self-sacrifice .vtw An Australian
journalist, viewing the ph en omenon of Western Maoism after
a long spell as correspondent in Peking, commented sar-
donically: " I often used to wonder what th e Chin ese masses
would thin k of the slave ring ad ulation which vestemers have
applied indiscrimina tely to their sys tem. How they must have
felt to see comfortable foreigne rs accep ting the notion that
the re were no human problems in packing high school grad u-
ates off to the countryside or separating hu sbands and
wives." I13
For all its vogue in the West, Maoism mad e little impact in
Third World coun tries. Thr oughout the 1960s and 1970s the
Soviet Union and China bid for Third World support. "The
barrage of revolutio nary rh etoric was, of course, intended bv
each side to win ove r all revolutionary communists stru ggling
for powe r."1l4 But to revolutionaries in Latin America, Africa,
an d Asia, the Soviet Union and Ch ina were great powers,
more important as su ppliers of political and military support
than as models of development, an d here the Soviet Union
had a decisive edge because it " was better able to su pply mon -
ey, arms and training facilities than the Chines e." llS "The
Maoist splinter parti es that appea red in some Latin Ame rican
countries an d the guerilla movements that claimed Chinese
ins piration, proved ineffective.vue The circumstances which
made it possible for Mao Tse-tung to impose on China, in a
spirit of roma ntic puritanism, " a revo lution takin g place under
an alrea dy esta blished dictat orship of the proletariat.vt t"
were not remotel y replicated in a ny other country. In Cuba,
Angola, and Vietnam , " the gue rilla leaders, once in pow er,
would prefer Soviet big battalions to Chinese doctrinal at-
tractions. " 118
There was anothe r way in wh ich radical, if not necessarily
" 9

Marxist, ideology, with its egalitarian emphasis on redistribu-
tion and its hostility to capita lism and imperialism, during the
1970S came to influence Third World thinking mu ch more
powerfully than it did in its Maoist manifestation . This was the
formulation by Third.World spokesmen of demands for a New
International Economic Order. Although not, in itself, a strat-
egy of developm ent, it formed so importan t an ingredient in
Third World thinki ng about development that it demands
some attention; and although not necessarily radical in its im-
plication s for the domestic structure of society in developing
countries, it had so man y surface affinities with left-wing rad i-
cal thought about develop men t that it is best dealt with here.
A New International Economic Order
When Western econom ists, such as Singer and Myrdal, in the
1950Sdem anded action by the West, th rough aid and technical
assistance, to help th e less-deve loped countries to develop
and th us narrow the gap between rich and poor nati ons, the y
were in effect advocating internationalisation of the welfare
state. When Prebisch in the I g60S argued that the old order of
free trad e between the "centre" and the " periphery" did not
meet the trade needs of the deve loping countries, he was in
effect advocating intemationalisation of protecti on . When in
the 19]05 spokesmen of the Third World demanded a new
international economic order , they-or at least some of
them- introduced into the debate an element best de scribed
as internationalisation of class conflict.
The concerns of the Nonaligned Movem en t, formed in the
19505 by Nkrumah, Nasser, Nehru, Sukamo, and other lead-
ers of the newly independen t countries of Africa and Asia, had
been political rath er tha n economic- decolonisation of the re-
maining dependent territories and an international role and
voice for the Third. World independent of th e First and Second
Worlds and their Cold War. As decolon isation was substan-
tially accomplished, incidentally giving Third World count ries
majority control of th e UN General Assembly, and as detente
between the two superpowers lessened the force of " non-
alignment" as a unifying slogan.U? the emphasis shifted to
RJuliall Counterpomt: TM1Lft
econo mic issues. In the preparations for UNCfAD 1, the
"Group of 77" Third World member countries of the United
Nations formed themselves into an effective bargaining unit
which succeeded in turning the new organisation into a trade
union of LDCs, with a program of demands on the deve loped
countries ready-made by Raul Prebisch . But throughout the
I')60S it remained a program of demand s for concessions to be
negotiated in international discussion.
The atm osphere changed quite su ddenly in 1973 with the
oil price increase of tha t year. The Club of Rome had prepared
the ground with its dire pred iction s of early exhau stion of oil
and other nonrenewable resources. The Octobe r 1973 war be-
tween Egypt and Israel. which galvanised the Arab members
of the Organisation of Petroleum Exporting Countries (OPEq
into concerted action to raise the price of oil and to threaten to
cut offoil supplies to countries branded as supporters of Israel,
provided an object lesson . "The boycott and price rise clearly
showed what power the oil states possessed when they could
act in uniso n against the .. . industrialised countries.v'w The
success emboldened the nonaligned coun tries at their Algiers
meeting of that year to proclaim the principle of "uncondi-
tional right" to comman d natu ral resources. The host at that
meeting, President Boumedienne, at the sixth Special session
of the UN General Assembly; whi ch was called at his request,
was even more explici t: "Nationalisation is a stage of develop-
ment."121 The successful OPEC cartel action suggested that
the Third World was in a position not merely to request bu t to
"force the industrialised countries to make conces sions .v'P
It was here that nco-Marxist idea s about development pro-
vided valuable intellectual underpinning. Early in 1974, Denis
Goulet, in the article "Development and the International Eco-
nomic Order: ' gave three reasons for the view tha t " the work-
ings of the internationa l economic order are crucial to the
domestic effort of poo rer countries to achieve developm ent. "
One is that the present international economic order blocks
social justice no t only by freezing the unjust d ivision of the
world's wealth but also by favouring privileged classes in the
underdeveloped countries at the expense of the popular
masses. A second reason , echoing Frank , is that it embod ies
'4'
C HAPTER F IVE
"dependency and domination- and hen ce und erdevelop-
ment. " The third is that " without reciprocity no internationa l
orde r can foster authenti c develop ment. " " An international
economic ord er controlled by a few rich countries ... can not
be a jus t development order. All nations mu st have effect.ive
access to resou rces and a share in effective decisions govermng
their use."123
The " Declaration on the Establishment of a New Interna-
tional Economic Order" adop ted by the sixth special sessi on in
Apri11974 contained a list of twenty broa dly formulated de-
mands, largely taken from earlier UNCfAD program s, in-
spired by principles of "equity, sovereign equality,
inte rdependence, common interest and cooperation amon g all
States ."124 Amon g the m were sus tained improvemen t in the
terms of trade for primary products; favourable conditions for
tran sfer of financial resou rces to de veloping countries; reform
of th e international monetary system; pr omotion of transfer of
technology to developin g countries; improvemen t in th e com-
petiti veness of natural raw materials with synt hetics; preferen-
tial and nonreciprocal trea tmen t for de veloping countries,
wherever feasible, in all fields of internatio nal economic coop-
eration; full permanent sove reignty of every state over its nat-
ural resources, including the right of nationalisation; and
regulation and supervision of the activities of transn ational
corp orations. The accompanying Program of Action spelled
these out in more detail but did not add anything of subs tance.
The ideological high-water mark of the New Intern ational
Economic Orde r (NlEO) as a radical movemen t was reached at
the Nonaligned Conference held at Dakar in Febru ary 1975
The nee-Marxist ideas of the Latin Ame rican depend ency
th eorists and of Samir Amin (here on his home grou nd) re-
sounded in the docum ent adopted at the conference. " In brief,
the nonaligned countries argued that th e dev elopmen t of th e
rich capitalist countries is intimately related to the colonial and
neo-colonial exploitation of the periphery. . . . The Third
World functions as a reservoir of raw materials and cheap
labour power, contri buting to the develop ment of th e center
while ind igenous social systems are disrupted and Third
World societies are less able to satisfy their ow n basic needs
'4'
lV2dical Counterpoint: The Left
than they were before the colonial period . Any 'development'
that occurs is distor ted and un even, invo lving only a small part
of the population and confining itself to sectoral and regional
enclaves." 125
In the following years, the NIEO campaign scored some
successes, most cons picuo usly in the acceptance in principle
by the developed countries of th e chief plan k of the NIEO
commodities pr ogram, the creation of a UN Common Fund .
But in most of the (nearly forty) issue areas grad ually identified
by its prop on ents. w Nort h-South negotiations bogged down,
and as a political force the campaign lost most of its mo-
mentum in the later 1970s . Among the reasons were politi-
cal developme nts- stronger resistance in the North and
weakening dri ve in the Sou th . In the de veloped countries,
increasingly beset with domestic economi c and social prob-
lems as growth slowed down, arguments such as th ose of th e
Pearson Commission and the Brandt Report came up against
more inward-looking policies and "aid weariness." In the de-
veloping countries, disillusion set in with the gradual realisa-
tion that the monopoly power whi ch had been so effectively
used by OPEC in the case of oil did not extend to any other
significant commodities and was in danger of backfiring even
in the case of oil. More important , th e Third World lost its
political cohesion, as the economic experience and in terests of
its members increasingly diverged . The rich Arab OPEC coun-
tries, the newly indus trialising countries (NICs) of north and
south east Asia, and for a time also some of the most adva nced
Latin American countries, such as Mexico and Brazil, found
they had less an d less in common with the least-developed
count ries of Africa or eve n with the low-income countries of
Sout h Asia. With more and more midd le-income cou ntries
emerging in the Third World, th e bipolar concep tion of a world
divided into haves and have-nota which was fundamental to
the class-war ideology declined in plausibility. much as its
equivalent in capitalist societies, the worker-cap italist dichoto-
my, had done in the preceding deca de s. As a delegate of Sin-
gapore, a country which was doing very well und er the
existing interna tional order, is said to have remarked, ap ropos
of a Cuba n draft at the Nairobi UNO AD: " Who am I un iting
' 43
CHAM'Ek FIVE
with and for what objectives and purposes and against
whom? "121
The notion that underdevelopment was due to the existing
international economic order was bound to seem increas ingly
du bious du ring a decade which saw ave rage per capita income
in the developing countries o f the Third World rise at an un-
precedented rate and faster than in th e devel oped cou ~tries ,
so that the "gap," which had been the focus of so much dISCUS-
sion in the preceding years for the first time narro wed . True,
progress in the Third World was very uneven . But this very
fact cast further doub t on the nee-Marxist interpretation since
it posed the obvious qu estion why, un der the exi s tin ~ interna-
tion al order which presumably affected all developing cou n-
tries in much the same way, some were doing so much bet-
ter than others. The inference seemed inescapable that the
problems of countries which were doing bad ly had much more
to do with their domestic situa tion than with any external
factors .
The basic dilemma from which no amo un t of rhe toric could
extricate the NIEO campaign was that it demanded a bette r
deal for poor countries, not poo r people. " Equality of states,
not people, is wha t th e New International Economic Order is
abou t." I28 The very first of the principles proclaimed in the
1974 declaration by the UN General Assembl y was the prin ci-
ple of " sovereign equality of states ." Thus, when in the follow-
ing year the ILO adv ocated a basic needs strategy, the
developing countries were at best lukewarm.P" seeing it "as
an attempt on the part of the rich countries to meddl e in their
internal affairs." 130 If the objective of development was, as the
neo-Marxists insisted, to free the mas ses from poverty and
exploitation, it was not obviou s that massive transfers or ~t ~er
concessions to autocratic govern ments of wh atever political
complexion would promote development. The gibe that aid
too often represented a tran sfer " from the poor in rich coun-
tries to the rich in poor countries" was not entirely without
justification. In many of its manifes tations, the NIEO cam-
paign invited the sus picion th at it was concerned, as has been
said of the Brandt Report, "with something that appeals less to
Radical Counterpoint: The Ltift
the bellies of th e poor than to the hearts of the rulers of poor
countries; namely, an increase in their pcwer.r">'
But this appeal itself guarantees for the NIEO, or at least for
demands for economic concessions by the developed coun-
tries to developing ones a con tinuing role in the United. Na-
tions and other international forums. For government s
struggling with unmanageable domestic problems and en-
meshed in domestic power struggles, the temptation to blame
their troubles on forces beyond their control, whether the in-
ternational economic order or the machinations of imperia lists
an~ n ~olonialis ts, is hard to resist. And the left-wing ideo-
logical tinge of the NIEO campaign, born of past resentment of
colonialism and sustained by the hold of socialist and other
radical ideas on articulate publi c opinio n and governments in
much of the Third World, has exemp ted the Comecon coun-
tries from its strictures and ensu red the sympathy and often
active political support of th e Soviet bloc for most of its de-
mands in the continuing internat ional debate.
Neo-Marxist Revisionism
As early as 11)62, Paul Baran had pointed to " political troubles
within the socialist camp" - Khrushchev's denunciation of
Stalinism, the Sino-Soviet split , the setback suffe red by China
in the wake of the Great leap Forward- and to the risk that
people would lose faith in revolution . 132 By the late 1970S, the
disintegration of the monolith wa s even more apparent. What
had happened to Christianity after 1,500 years seemed to be
happening to communism within a century. In China, Maoism
had been swe pt away by a ne w leadership which, in th e eyes
of Western Maoists, appeared to put a "one-sided emphasis
on production .v' <' Countries professing Marxism were at log-
gerheads all over the world - Vietnam with China and Cam-
bodia, Ethiopia with Somalia, Yugoslavia and Albania with all
the others. It was eviden t that "the socialist camp . . . is far
from un ited ." I34
Moreover, the re was "much disagreement over what Marx-
ian socialist development is supposed to be."I35 What Teng
CHA PT ER F IVE & diall Counterpoint: TM l4t

Hsiao-p' ing was saying about Mao's rule did not sit well with poor suffered. Cos ta Rica grew a nd Cuba failed to grow while
the enthusiasms of Western Maoists, nor could the perfor- their poo r prospered. Both China and Taiwan are cited as
mance of Pol Pot please enthusiasts for the Khmer Rouge peas- ' mod els' of development. Both Tanzania and Peru are floun -
ant revolution .136 Some of the more open-minded among neo- dering. Capi talism has not brought freedom to Chile or South
Marxists began to concede that, pace Baran and Frank, cap- Korea and socialism has no t brought liberation to Cambodia or
italist development in the Third World wa s possible . Writers North Korea."lo
such as Bill Warren, " although spe aking from a Marxist per- Some neo-Marxists. whil e conceding that rapid econ omi c
spective, " pointed out that " the re have been tremendous In- development of some sort was going on in much of the Third
creases in the forces of production in the postwar period, that World, objected that it fell far short of the socialist ideal. " What
development is indeed occurring in exactly the way Marx is important is an understanding of the essence of contradic-
wou ld ha ve predicted ." 137 Countries such as Brazil, Mexico, tion ... between technocratic elitis m and a vision (of] . . . a
and Nigeria wer e going through a capi talist revolution . Curley state capable of seeking socialist forms for the social organiza-
concluded from " sib-comparisons" of the relative perfor- tion of the fu tu re ."l Others int erpreted the widely diverge nt
man ce of pair s of socialist and capitalist de velopi ng cou ntries experi en ce in different part s o f the Third World as evide nce
that they " challenge the fund am ental notion of socialist su pe - tha t " the development process is a di alectic one ." 14S Others
riority." I38 He sugges ted that " Marxists ou gh t to look care- again, initially sympathe tic to th e nee-Marxist position, were
fully at what conven tio nal econom ists call success sto ries . . . . led to a co mpletely agnostic condusion . "There are no general
Circu ms tances have permitted many Third World countries to patterns of development ju st as the re is no general d efinition
stand on their own feet and to p ursue, in the nam e of na- of development. Each people m ust w rite its own history ." l46
tion alism , a more self-directed course toward industrializati on
and highe r living sta nda rds." l39 No ne of this shook Gu rley's
belief in the " world tran sformation to socialism . . . . Socialism
is bound to replace capitalism almost everywhere. " 140 But at
any rate, it wa s a Marxian, ra ther than a nee-Marxist, vision-
development through a capitalist stage .
Latin American neo-Marxists tended to react to su ch evi-
dence by amending Frank's formulation. " To the exten t that
today monopoly capital does promote a form of industrial
growth, it makes more sense to speak of 'd epe nd en t d evelop-
ment,' rather than of 'd evelopme nt of underdevelop-
ment.' " 141 (Frank responded to this by designating oil-boo m
coun tries , such as Venezuela, as " ultra-u nderdeveloped" be-
cause they suffer " ultra-incorporation of their satellite into the
metropo litan sphere" ;142 but this ter minology d id not com-
mend itself eve n in nee-Marxist circles .)
O the rs reacted by ad opting what migh t be called a neu-
tralist position : " A look at the postwar record indicates that
cou ntries p rospered and stagnated rega rdless of social sys te m
or develop men t strategy . Brazil and Mexico grew while their

'4. '47