American Economic Association

Radical Analyses of Imperialism, the Third World, and the Transition to Socialism: A Survey
Article
Author(s): Keith Griffin and John Gurley
Source: Journal of Economic Literature, Vol. 23, No. 3 (Sep., 1985), pp. 1089-1143
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Journal of Economic Literature
Vol. XXIII (September 1985), pp. 1089-1143

Radical Analyses Imperialism,

of
The Third World, and the Transition
To Socialism: A Survey Article

By KEITH GRIFFIN
Magdalen College, Oxford University

and

JOHN GURLEY
Stanford University

We thank Duncan Foley, Arthur MacEwan, an anonymous referee,

and Moses Abramovitz for penetrating criticisms of earlier drafts.
In particular, we are grateful to Abramovitz for his persistent dis-
satisfaction with many portions of the manuscript and for his pro-
posed solutions to our difficulties.

THIS PAPER IS A SURVEY of Marxistand of the transitionprocess from precapitalist

other radical interpretations of inter-
actions among the three "worlds" of ad-
vanced capitalism, socialism, and the less
developed countries (LDCs). It includes,
first, analyses of the causes, aims, and
methods of capitalistimperialism.The sur-
vey next examines the impact of world
capitalism on LDCs, including theories of
dependency and unequal exchange and
the role of international agencies in the
development process of LDCs. The third
general topic is that of domestic policies
of the LDCs, such as policies of import
substitution and export promotion, as well
as other social programs aiming for devel-
opment. The survey, finally,extends to the
efforts of some less-advanced countries to
achieve socialistsocieties-that is, to issues
1089
or immature capitalist economies to so-
cialist ones. Wherever possible, we ap-
praise or raise questions about the radical
literature, for the purposes of guiding
readers who are unfamiliar with the ter-
rain and of stimulating radicalsto improve
their efforts in these areas.
By radical literature we mean that
which is highly critical of capitalism, fa-
vors socialism, and often employs Marxian
analysis.Marxiananalysiscontains an eco-
nomic interpretation of historicalchanges,
which employs the categories of the pro-
ductive forces, the relations of production,
and the superstructure; the view of the
primacy of the production process in es-
tablishing class structures, other social re-
lations, and noneconomic institutions and
1090 Journal of Economic Literature, Vol. XXIII (September 1985)
sets of values; the importance of class rela-
tions and methods by which one class ex-
ploits another; a dialectical method that
finds determinants of change within the
processes themselves that are being stud-
ied; a revolutionary outlook that involves
not only quantitative but also qualitative
transformationsor "leaps";and a disposi-
tion to treat problems wholly-that is, in
the context not only of economics but also
of politics, society, and culture. Contem-
porary Marxist analysis often, but not al-
ways, includes the labor theory of value.
At the turn of this century there was
only one world, a capitalist world of
wealthy and dominant countries, on the
one hand, and of poorer and subordinate
ones, on the other. The Bolshevik revolu-
tion of 1917 began the breakup of that
world and the formation of the second
world, that of Marxiansocialist countries,
which now number a couple of dozen,
some of which are economically advanced
but most of which are still poor. After
World War II, a third world was formed
of less-developed countries that gained-
or had previously secured-political inde-
pendence from their former colonial mas-
ters. This left the first world more nar-
rowly defined as the advanced capitalist
countries.
Radicals,however, are usually reluctant
to posit a third world, for they see most,
perhaps all, of these countries as underde-
veloped capitalist ones, tied in subordi-
nately to the first world. Thus, the main
radical view is that there are only two
worlds, one of capitalism and one of Marx-
ian socialism. However, in this paper we
shall use the more customary framework
of three worlds-the third, to repeat,
consisting of underdeveloped capitalist
countries. We place the Marxian-socialist
LDCs in the second world.
Speaking generally, third world coun-
tries have made some notable economic
advances since World War II. This is par-
ticularly true when these gains are com-
pared with those of present-day industrial-
ized countries before World War II. The
postwar economic progress of these
LDCs, however, has been grossly uneven:
the top third (ranked by income per cap-
ita) has grown substantiallyfaster than the
middle third which, in turn, has far out-
paced the bottom third. Moreover, coun-
tries of the first and second worlds are
pulling away from the bulk of third world
countries, certainly in absolute terms and
at times relatively. Thus, the entire array
of nations is moving like an expanding uni-
verse: those farthest advanced from their
starting points are travelling the fastest,
those at a short distance from their origins
are merely creeping along, and those in
the middle are moving at more average
speeds. Some of the strong exceptions to
this generalization are third world coun-
tries like South Korea, Taiwan, and Hong-
kong, the growth records of which have
been remarkably robust.
Despite the general progress of the
LDCs, there is continuing large-scale pov-
erty, stark inequalities of incomes and
wealth, and much unemployment among
their populations. Additionally, the popu-
lations themselves are burgeoning in
many of these countries, contributing to
urban blight, dwindling per-capita food
supplies, and other social maladies. Never-
theless, more than a few third world coun-
tries have avoided, or moved through and
beyond, many of these disorders and, if
they are not on "easy street," they are
advancing briskly on most of these fronts.
Heterogeneity is the name of the game
in the third world.
Broadly speaking, radicalsascribe many
ills of third world countries to the bygone
imperialist policies of the colonial powers
and to the postwar economic domination
of the LDCs by their former political rul-
ers. Radicals are concerned less with the
actual advance in third world countries
than with why their progress has not been
faster. In this connection, they are inter-
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1091
ested in questions of exploitation and op-
pression of working classes, which are un-
der the sway of their own ruling classes,
and in questions regarding the exploita-
tion of the LDCs themselves by interna-
tional capital. They see the problems of
lagging progress, poverty, inequality, and
unemployment as arising from unequal
power relations-past and present-
among countries and among classes within
countries. They believe that current trade
relations between advanced capitalist and
third world countries often benefit the for-
mer much more than the latter, and that
international financial agencies, with
which many LDCs have to deal, operate
primarily in the interests of the leading
capitalist nations. They also allege that
many domestic policies of third world
countries, which appear to be "mistakes"
to conventional economists, are in fact
purposeful and rational measures from the
standpoint of ruling classes.
Radicals do not believe that it is possible
to eliminate (or even substantially reduce)
the problems of the working classes in
third world countries within the frame-
work of capitalist class structures, institu-
tions, and values. In general, they see
working-class emancipation arising only
after capitalism has been overturned and
socialism established. Even then, some
radicals are far from sanguine about the
short-run impact of this transformation on
the welfare of the working classes, for af-
ter the successful revolutions many of the
most serious problems begin.
In addressing problems of third world
countries and their working classes, radi-
cals are concerned with the pernicious
legacies of the old colonialism, the con-
tinuing baleful influence of neocolonial-
ism, the exploitative policies of ruling
classes, the unequal economic and finan-
cial relations in international commerce,
the biased role of the state in serving prin-
cipally the interests of ruling classes, and
the ultimate salvation through socialism
of the oppressed and exploited-all of
these accents give radical work on eco-
nomic development a different cast from
that of standard economics.
I. Meanings and Sources of Imperialism
Radical economists have studied many
aspects of imperialism. We shall divide
their concerns into: 1) the definitions and
stages of imperialism, 2) the causes and
aims of imperialist activities, especially
the most recent wave, and the methods
employed by the capitalist powers to
achieve their ends, 3) the extent and na-
ture of the exploitation of the subordinate
countries and peoples by the imperialists,
and 4) the impact of capitalist imperialism
on the economies and societies of the de-
pendent areas. In this part, we shall dis-
cuss the first two topics; the last two will
be covered in Part II.
A. Definitions and Stages of Imperialism
The term imperialism was introduced
into Marxist theory during the first two
decades of this century, although it was
commonly used in England from the mid-
1870s, and it was also employed to refer
to the expansionist policies and personal
rule of Louis Napoleon Bonaparte (Napo-
leon III)during the 1850s and 1860s (Wolf-
gang Mommsen 1980). Friedrich Engels
used the term in this latter connection and
also to describe the actions of the Euro-
pean "civilization-mongers" in China
(Marxand Engels 1980, Vol. 15). Imperial-
ism was given international currency by
the Boer War.
Broadly speaking, imperialism now
means the domination by one country or
group of people over others, in ways that
benefit the former usually at the expense
of the latter. Capitalistimperialism,in par-
ticular, is the exercise of such domination
by leading capitalist nations and their
large private corporations,ordinarilyover
less-developed areas of the world. Most
 1092 Journal of Economic Literature, Vol. XXIII (September 1985)
Marxists and other radicals focus on the
economic motives that generate capitalist
imperialism, and most seem to mean by
"economic domination" that a country
can profit unduly in markets largely
shaped by its economic and political
power.
For V. I. Lenin (1939, originally pub-
lished: 1917)-as Giovanni Arrighi (1978),
Anthony Brewer (1980), Harry Magdoff
(1969, 1978), and others point out-the
new imperialism began around the turn
of this century; it was marked by war-like
tendencies among the major capitalist
countries, which had already divided most
of the world's territory among themselves.
Lenin did not use imperialism to mean
the scramble for territory, but he did note
that imperialism was a reality before the
international trusts had decided which
countries would "belong" to them. As Bob
Sutcliffe wrote, the rush for territory "was
a prelude to imperialism which really be-
gan partly as a result of the fact that the
division of the world was complete (Roger
Owen and Sutcliffe 1972, p. 314). Charles
W. Lindsey (1982) agrees: "Imperialism
might remain important in Lenin's theory
for the redivision of the world, but not
its division" (p. 7). Lenin stressed some
of the main characteristics of the new im-
perialism: the merger of industrial and
bank capital into finance capital, the
growth of capital exports, and a rise of
military production and militarism. Le-
nin's perspective was influenced by J. A.
Hobson's treatment of the subject (1965,
original publication: 1902) but he espe-
cially followed the analysis of Rudolf Hil-
ferding (1981, original publication: 1910),
which designated the new imperialism as
the era of finance capital and of a growing
struggle for supremacy among national
monopolies supported by their states. This
Hilferding-Lenin viewpoint, which was
also shared by Nikolai Bukharin (1973,
1979; original publications: 1917, 1919-
1920), is often referred to as the classical
Marxist definition of imperialism, to distin-
guish it from more contemporary usages.
Recently, Bill Warren (1980) has de-
fined imperialism as "the penetration and
spread of the capitalist system into non-
capitalist or primitive capitalist areas of
the world" (p. 3). This suggests not only
the element of domination but it also em-
phasizes the imposition of a new mode
of production on less-developed areas.
Victor G. Kiernan (1978) sees imperialism
as "coercion exerted abroad . . . to extort
profits above what simple commercial ex-
change can procure" (p. i). Magdoff (1969,
1978) has argued that the meaning of im-
perialism should be extended to include
the involvement of, say, U.S. capital in
Western Europe, because^ the "antago-
nism between unevenly developing in-
dustrial centers is the hub of the imperial-
ist wheel," and because U.S. capital "skims
off part of the cream" of Europe's past
and present "exploitation of colonial and
neo-colonial countries" (1969, p. 16).
The term imperialism has also been
modified as old or new and formal or infor-
mal. The first two modifiers generally
refer to capitalist imperialism before or
after 1870-1900, while the last two refer
to exploitative relations with or without
direct political control by the dominant
country over the subordinate one (Arrighi
1978). Informal imperialism is usually
identified either with the "imperialism of
free trade," as presumably practiced by
Britain during much of the nineteenth
century, or with neocolonialism, which
developed mainly after World War II,
following the breakup of the capitalist
empires. As radicals see the issue, neo-
colonialism focuses on the continuing
economic domination by the capitalist
powers over less-developed areas, despite
their loss of direct political control in these
areas. Neocolonialism has been called im-
perialism without colonies. Eric Hobs-
bawm (1969, p. 131) has further refined
these concepts.
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1093
The old imperialisms were associated
with commercial capitalism and the early
stages of industrial capitalism. Magdoff
(1978) divided these imperialisms into
three stages: from the late 1400s to the
middle 1600s, from about 1650 to 1770,
and from the 1770s to the 1870s. In his
treatment, the first stage featured Euro-
pean countries plundering the accumu-
lated surpluses of non-Europeans and pi-
rating from each other. During the second
stage, Britain and other colonial powers
attempted to refashion economies around
the world, using much slave labor, so as
to provide themselves with raw materials,
food and exclusive markets for their man-
ufactured goods. During the third stage,
Britain defeated France and launched a
campaign for new markets in Asia and Af-
rica; eventually forming a second empire
(after losing the American colonies). This
stage was shaped by the efforts of Britain
and others to break up and transform non-
capitalist areas into the conqueror's own
mode of production.
The new imperialism began towards the
end of the last century and grew out of
what is called monopoly or finance capital-
ism. The prelude to this stage was an
increasing number of capitalist powers
vying among themselves for territory in
Asia, Africa, and the Pacific Islands. A
struggle then began over the redivision
of the colonies, sparked by the challenges
of the emerging capitalist powers (Japan,
Germany, Italy) to those already estab-
lished (Britain and France). In these years
Britain lost her pre-eminent position as
the leading world power, and a new surge
of militarism accompanied rising competi-
tion among the imperialists.
Neocolonialism came to full flower after
World War II, but it can be traced back
to the early 1800s when Latin American
countries achieved political indepen-
dence from Spain and Portugal during and
after Napoleon's Spanish and Portuguese
invasions. The defeat of Napoleon re-em-
phasized Britain's role as the world power
and enabled her, for some time, to domi-
nate much of the world economically, in-
cluding South America. However, the ma-
jor waves of decolonization and political
independence of new nations occurred in
the past four decades.
After 1945, the United States became
the defender of the "free world" (defined
by radicals as the free-enterprise world,
with or without democratic institutions)
and greatly aided in the establishment of
a system of neocolonialism. Those years
also saw the rising importance of multina-
tional corporations, and the "integration
of military production with the dominant
industrial sectors" (Magdoff 1978, p. 110).
Many radical economists believe that neo-
colonialism is necessarily associated with
greater military output, partly because of
technical advances in weaponry, partly
because of the threat to capitalism from
the spread of Marxism around the world,
and partly because military power is nec-
essary to maintain the imperialist network
of trade and investment in the absence
of direct political control (e.g., Magdoff
1978, pp. 242-44; Kiernan 1978, Part Six).
Paul Sweezy (1942) has shown the connec-
tion between the new imperialism and
militarism (pp. 308-10).
Radicals, however, have made insuffi-
cient efforts to enrich their definitions by
analyzing why, at any moment of time,
some capitalist nations are imperialistic
while many are not, and why, over time,
these patterns have changed so dramati-
cally. Closely associated with these ques-
tions are those regarding patterns of mili-
tary production among capitalist nations
and arms sales by them to other countries
in the first, second, and third worlds. What
accounts for these patterns and why have
they changed over time? Moreover, radi-
cals have devoted little space to the exten-
sion of definitions of imperialism to the
aggressive behavior of some socialist
states-for example, the Soviet Union's in-
1094 Journal of Economic Literature, Vol. XXIII (September 1985)
vasion of Afghanistan, Vietnam's takeover
of Cambodia, China's forays against Viet-
nam, and so on. A thorough analysis of
this "social imperialism"-as the Chinese
termed Soviet aggression-would do
much to deepen the meaning of capitalist
imperialism, neocolonialism, and other
references to capitalist domination and
aggression.
B. The Causes,Aims, and Methods of
Imperialism
Theories about the determinants of im-
perialism fall into four main categories:
economic, political, social, and personal.
Although radical economists favor the
economic explanations, there has been
much disagreement among them regard-
ing the specific economic factors involved.
Analysts from other disciplines have
tended to stress either the other determi-
nants, usually the political ones, or a com-
plex mixture of several including the eco-
nomic explanations.
1. The Classical Marxist Explanations
and Others. Although Karl Marx and
Friedrich Engels did not analyze imperial-
ism as such, they did discuss capitalist ex-
pansion around the world. In their view
(1947, 1955; original publications: 1932,
1848), modern industry (the stage of capi-
talism after the "manufacture proper" pe-
riod) established the world market; it cre-
ated products in abundance that required
for their sale constantly expanding mar-
kets; it required raw materials drawn from
the farthest corners of the earth; and it
created new wants "requiring for their
satisfaction the products of distant lands
and climes." Marx and Engels saw the
bourgeoisie exporting not only their
cheap commodities but also their mode
of production: the bourgeoisie "creates a
world after its own image." These authors
considered capitalist expansion around
the globe to be brutal but progressive, in
the sense of advancing capitalism toward
its socialist future.
In his most mature work (1967b, origi-
nal publication: 1894), Marx wrote of the
"innate necessity" of capitalism to seek
an ever-expanding market for its money
and commodity capital, and of the impor-
tance of declining profit rates at home to
the expansion of trade and capital exports.
Marx argued that capital invested in for-
eign trade by an advanced country can
earn a higher rate of profit because its
commodities compete only with those
produced in other countries with inferior
production facilities. Therefore, the com-
modities of the less-advanced countries
can be undersold, even though prices of
the commodities from the advanced coun-
tries exceed their values. Moreover, an ad-
vanced country's capital invested in colo-
nies is likely to yield higher profit rates
owing to the more backward state of these
areas (i.e., to a higher ratio of variable to
constant capital) and to their more intense
exploitation of slave, coolie, and other
labor.' In other writings Marx ascribed
various motives to the British in their im-
perialist policies in India: "The aristocracy
wanted to conquer it, the moneyocracy
to plunder it, and the millocracy to under-
sell it" (Marx and Engels 1980, Vol. 12,
p. 218). Later, the millocracy desired to
profit by developing India. Marx also ar-
gued that the motives behind the plans
for English colonization in India were to
bring English civilization to the natives,
to "afford a barrier against Russian inva-
sion," and to promote trade with Central
1 For Marx, the value of a commodity is the socially-
necessary labor-time used to produce it, counting
both present labor-time and the labor-time embod-
ied in the depreciation of capital goods and the using
up of inventories (the latter two called constant capi-
tal, c). The variable capital (v) is the socially-neces-
sary labor-time required to maintain and reproduce
labor-power. This labor-power produces not only this
amount but more, the extra being surplus value (s),
which is captured by the capitalist owners. The sum
of c, v, and s is the value of a commodity. The ratio
of its price (price of production) to its value may
be greater than, less than, or equal to the average
of these ratios, depending on the relative amount
of constant to variable capital used in its production.
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1095
Asia. However, Marx considered colonial-
ism to be a dying system, associated with
early capitalism, and giving way to the
development of "the world market." De-
spite the multiplicity of surface motiva-
tions behind imperialism, Marx basically
saw such expansionism as grounded
within the capitalist mode of production
itself, as a necessary consequence of the
capital accumulation process, hence, ulti-
mately as a progressive force-that is, as
leading to socialism. As Shlomo Avineri
(1969) stated: "The need for expanding
into the non-European world is, thus, an
immanent feature of bourgeois society"
(p. 2).
The post-Marxianradicalliterature gen-
erally regards the expansion of the capital-
ist mode of production and of bourgeois
society as inherently harmful to the non-
European world, owing both to the vio-
lence accompanying the establishment
and maintenance of capitalism around the
globe and to the exploitative nature and
other inherent evils of this mode of pro-
duction once established. Marx himself
saw the global spread of capitalismas both
destructive and constructive-the former,
in that European capitalism was brutal in
dissolving small semibarbarian and semi-
civilized communities; the latter, in that
capitalism, with all its evils, was a higher
economic form and thus enabled mankind
"to fulfill its destiny." Marx then added:
"Then whatever bitterness the spectacle
of the crumbling of an ancient world may
have for our personal feelings, we have
the right, in point of history, to exclaim
with Goethe: 'Shouldthis torture then tor-
ment us/ Since it brings us greater plea-
sure?/ Were not through the rule of Ti-
mur/ Souls devoured without measure?'"
(Marx and Engels 1980, Vol. 12, p. 133).
During the early 1890s, after Marx's
death, Engels studied the imperialism of
his day and concluded that, while such
endeavors could temporarily relieve capi-
talist crises back home, they would only
make the final collapse of capitalism more
certain in the long run-for they acceler-
ated the processes of capitalist develop-
ment, including the concentration of capi-
tal.
AlthoughJ. A. Hobson was not a Marxist
he belongs in this narrative owing to his
influence on Lenin and other Marxists.In
Hobson's major work on imperialism
(1965, original publication: 1902), he con-
cluded that imperialism was based on
profit-seeking by commercial, industrial,
and financial classes, and was made more
intense by the maldistribution of wealth
and income, domestically, that produced
an excess of saving (i.e., a deficiency of
consumption demand); and, this imperial-
ism was fostered at home by "masked
words" (coverup slogans) and by "playing
upon the primitive instincts of the race."
Hobson believed that the "animal lust of
struggle, once a necessity, survives in the
blood -. . ." The cure for imperialism was
the transfer of unearned incomes of the
wealthy to the working classes or to the
national budget. In either case, consump-
tion demand would rise, obviating the
need of capital to seek higher profit rates
abroad. He thought that this could be
achieved if a genuine democracy were es-
tablished, a "popular government," in
place of the existing sham-democracy.
Hobson approved of imperialism under
certain conditions: a higher race, he said,
might forcibly interfere with a lower race
if this contributed to "the civilization of
the world." However, he could find no
such cases.
One of the most important contribu-
tions to classical Marxist thought was
made in 1910 by Rudolf Hilferding (1981),
who argued that imperialism was an inte-
gral part of the latest stage of capitalist
development, in which "finance capital"-
became the product of the fusion of indus-
trial and bank capital. Finance capital is
capital supplied to industrial monopolies
by financialintermediaries, with the latter
1096 Journal of Economic Literature, Vol. XXIII (September 1985)
in the dominant position; it is the age of
indirect finance through intermediaries,
to use a more modern way of saying it,
instead of direct finance through stock and
bond markets and brokers.
Hilferding argued that the develop-
ment of capitalism produced monopolies
and cartels which found it profitable at
home to support high tariffs,the tariffsin
turn also contributing to further industrial
and bank concentration. The resulting in-
crease in domestic prices (monopoly
prices), however, while boosting profits of
the monopolies, also stunted their output,
denying them the advantages of larger-
scale production and lower unit costs. To
capture these advantages, the monopolies
strove to increase their exports of goods
and services. At the same time, they ex-
ported capital to less-developed areas so
as to establish highly profitable operations
abroad, where cheap labor, lower rents,
and special privileges abounded. The ex-
port of capital ensured that the capital-
exporting country would be the supplier
of industrial goods. In short, imperialism
was the method by which monopoly capi-
tal, behind tariff walls, reduced its unit
costs and thus enhanced its profits.
Unlike trade in commodities, Hilferding
wrote, capital exports require strong State
support abroad, especially because "the
competition for investment produces fur-
ther clashes and conflicts among the ad-
vanced capitalist states themselves."
While there are some tendencies toward
cohesion among capitalist powers (e.g.,
each might have investments in one or
more of the others), Hilferding expected
rivalry and conflict to set the dominant
note. In particular, Germany was rapidly
increasing its industrial development but
it lacked colonial possessions. "This is a
situation which is bound to intensify
greatly the conflict between Germany and
England and their respective satellites,
and to lead towards a solution by force"
(1910, p. 331).
Hilferding believed that during this age
of finance capital (or imperialism)class an-
tagonisms would take a back seat to na-
tionalist fervor, racism would be intensi-
fied as a justification for the brutal
treatment of "natives"; and liberalism
would wither in the face of warring states.
A few radicals have criticized some as-
pects of Hilferding's analysis. For exam-
ple, Paul Sweezy (1942, p. 269; 1972) ar-
gued, and others agree, that the period
of finance capital proved to be a passing
phase, because it developed into one that
featured internal finance from the grow-
ing surpluses of ever-larger corporations.
More generally, it is claimed that the role
of the banker is less powerful today than
it was in Hilferding's time. (Michael Bar-
ratt-Brown 1970). Since Lenin relied
heavily on this aspect of Hilferding's anal-:
ysis, the criticismsare also directed to him.
Moreover, the heavy emphasis that Hil-
ferding placed on a rising spiral of tariffs
and protectionism in accounting for mo-
nopolies' high profitsand for the fragmen-
tation of the world market has not been
carried over with any zeal into more re-
cent radical analysis. Further, Hilferding
argued that the collapse of capitalism
would come through political and social,
not economic, factors, and it would come
gradually, not through violent revolu-
tion-these views, too, run against the
grain of mainstream Marxistanalysis.Nev-
ertheless, the principal thrust of Hilfer-
ding's account of monopolies, imperial-
ism, and the resulting conflicts among ma-
jor capitalist powers set the stage for
Lenin and others. Since Lenin's time,
however, radicals have not made notable
progress in advancing imperialist theory.
Rosa Luxemburg (1951, original publi-
cation: 1913) argued that imperialism is
caused by the inherent impossibility of
capitalismselling all of its production prof-
itably within the bounds of capitalist rela-
tions of production. If there is to be ade-
quate aggregate demand, capitalists must
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1097
sell part of their output (especially that
representing reinvestable surplus value)
to "outsiders"or precapitalistbuyers, who
may be within or outside of the nation
in question. Ultimately, Luxemburg
thought, sales will have to be made
abroad-to pre-capitalist areas, which are
largely self-sufficient and thus must be
forcefully brought into the commercial re-
lations demanded by capitalism.These ne-
cessities lead to imperialist activity. The
argument, in short, is that capitalism must
have a noncapitalist environment in
which to grow, whatever the stage of capi-
talist 'development. Luxemburg believed
that imperialism was the historical stage
that prolonged the life of capitalism. And
it is "the political expression of the accu-
mulation of capital in its competitive
struggle for what is still left of the non-
capitalist.regions of the world" (p. 446).
She also alleged that capitalism'sprofit re-
quirement led it abroad in search of new
sources of productive forces, particularly
labor power and raw materials. These
searches were accompanied by force,
fraud, and state power-by a growing mil-
itarism.
The flaws in Luxemburg'sanalysishave
been widely recognized in radical circles.
She assumed constant consumption de-
mand by workers and, based on this, the
folly within a closed capitalist system, of
continued capital accumulation by capi-
talists out of their profits (more properly,
surplus value). Hence, her conclusion: use
the profits to produce goods that are sold
outside of the system. But, if wages and
consumption grow in a developing sys-
tem, further capital accumulation could
grow, too, with purpose and profit. Nikolai
Bukharinpointed this out in 1924, Sweezy
in 1942, as did many others in between
and since.
Bukharin (1973, original publication:
1917) was one of the most interesting
thinkers on the topic of imperialism. Al-
though he borrowed much from Marxand
Hilferding, he consolidated their analyses
in instructive ways, extending them and
producing some insights into the nature
of the imperialist drive. He defined impe-
rialism as the policy of finance capital, the
policy being to expand the territory of the
state. Imperialismis a policy of conquest-
by finance capital, which is characteristic
of a definite stage of capitalist develop-
ment. The basic contradiction, within this
stage of capitalism, had become that be-
tween expanding productive forces inter-
nationally and continued national appro-
priation of surplus value.
Bukharin was concerned to show that,
while the world economy could become
better organized and less chaotic, as world
productive forces continued to grow, it
was not likely to become less conflictive-
in fact, it probably would be the reverse.
Thus, Karl Kautsky'svision of capital be-
ing transformed into a single world orga-
nization, a universal world trust, was possi-
ble theoretically, but not practically-for
such an organization to be stable all ele-
ments within it had to be and had to re-
main equal in all important respects. Be-
cause this was quite unlikely, a universal
world trust (Kautsky'sultra-imperialism)
could not be formed; or, if formed, would
quickly be undermined by the national
group that considered itself superior to
the others in productive forces, state
power, or in some other important re-
spect.
Lenin also took much from the work
of Hilferding, as well as from that of Hob-
son. Lenin (1939, original publication:
1917) defined imperialism as the monop-
oly stage of capitalism,which began in Eu-
rope during the early 1900s. He ascribed
growing capital exports, a principal mark
of the new imperialism, to "the fact that
in a few countries capitalism has become
'over-ripe' and (owing to the backward
stage of agriculture and the impoverished
state of the masses) capital cannot find a
field for 'profitable' investment" (p. 63).
1098 Journal of Economic Literature, Vol. XXIII (September 1985)
He also stated other reasons for capital
exports: "In these backward countries
profits are usually high, for capital is
scarce, the price of land is relatively low,
wages are low, raw materials are cheap"
(p. 63). He declared that the imperialists
desired to gain control of sources of raw
materials, or at least to prevent others
from gaining such control. Lenin believed
that the drive for colonies was abetted by
the politics and ideology associated with
monopoly capi-tal,as well as by the desire
of one imperialistnation to undermine the
hegemony of others.
He argued that imperialism speeded up
the growth of the backward countries,
spreading capitalism with alacrity, but
that it tended to retard development in
"the countries which are richest in capital
(England)"(p. 114). A tendency to decay
and stagnation, which is characteristic of
monopoly capital, is pronounced once
competition is eliminated and monopoly
comes onto center-stage.
A number of criticisms of Lenin's treat-
ment of imperialism have appeared.
James O'Connor (1971) discusses several
of them as does Lindsey (1982), who also
advances some critiques of his own. Radi-
cal and other critics have challenged Le-
nin's link between monopoly capitalism
and imperialism, his analysis regarding
the timing and importance of capital ex-
ports in the imperialist drives, his asser-
tion that there were important qualitative
differences between British expansionism
in the first and second parts of the 19th
century, his German bias (Peter KarlKresl
1973), and other aspects of this most fa-
mous of all theories of imperialism. It has,
however, stood up well despite these at-
tacks.
Although Joseph Schumpeter did not
know of Lenin's essay when he wrote his
own work on imperialism (1951, original
publication: 1919), it has become one of
the most potent challenges to Lenin and,
more generally, to all imperialism theories
that are based on economic determinants
arising out of capitalism, including those
of Hilferding and Otto Bauer against
whom Schumpeter'swork was written. Al-
though not a Marxisthimself, Schumpeter
drew on his deep knowledge of Marx to
present an alternative formulation of im-
perialism within a historical and analytical
framework that could not easily be dis-
missed by Marxists.
Schumpeter surveyed many of the im-
perialisms of past centuries, from the an-
cient Egyptians, to the Arabs, to Louis
XIV, to Catherine II of Russia. He found
that commercial and economic interests
were generally not the principal motiva-
tions for such aggressive behavior (with
a few notable exceptions); rather the im-
perialisms were rooted in the "dark pow-
ers of the subconscious," in "powerful
drives by virtue of long habit," and in "in-
stincts of war and power." Personal whims
and personal interests (e.g., Alexander the
Great, Catherine) also were important.
Coming to the modern era, Schumpeter
argued that capitalism was basically op-
posed to wars and conquests. This was true
of both the capitalists and the workers
("The type of industrial worker created
by capitalism is always vigorously anti-im-
perialistic"p. 94). Consequently, if capital-
ism developed imperialist tendencies it
was owing to alien elements within it that
were atavistic, rooted in the past auto-
cratic state. Although these precapitalist
elements continued to have great vitality
in capitalist societies, "in the end the cli-
mate of the modern world must destroy
them" (p. 129). Capitalism itself repre-
sented a new social order that exhibited
tendencies of peaceful compromise, cos-
mopolitanism, and non-hostile interna-
tional exchanges. Monopoly capitalism-
a departure from capitalism's true com-
petitive path, arising as it does from politi-
cal causes-could lead to imperialism,
Schumpeter thought, but the advance of
democracy and competition would under-
mine this aberration. And similarly for
protectionism: it is true that such policies
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1099
raise monopoly profits and invite noneco-
nomic, even military, responses. But pro-
tective tariffs do not automatically grow
from the competitive system, so that they,
too, are destined to disappear.
2. More Recent Economic Explana-
tions. In spite of Schumpeter, most radi-
cal economists today have continued to
find the determinants of imperialism in
the necessities of the capitalist mode of
production. These "necessities," it ap-
pears, are of three general types: those
associated with a host of factors causing
rates of profit at home to decline or to
appear comparatively low, those linked
with the advanced capitalist countries'
needs for relatively scarce raw materials
and natural resources, and those associ-
ated with advanced capitalism's urge to
fashion and control the economic develop-
ment of the less-developed countries.
If capitalists were swayed by the first
group of factors, they would presumably
seek new markets for their goods, addi-
tional investment opportunities, cheaper
sources of raw materials, and cheaper la-
bor power. These efforts would be stimu-
lated either by poor domestic per-
formance or by attractive foreign op-
portunities for profitmaking, or both. If
capitalists were influenced by the second
set of factors,they would attempt, through
their state, to gain control over foreign
sources of the vital goods, not only to raise
rates of profits, but also to enhance the
chances for the continuation of capitalism
itself. If they responded to the third set
of determinants, they would attempt to
draw less-developed countries into the
global capitalist system and to impose on
them a division of labor that would re-
dound to the benefit of the center coun-
tries. Of course, all three drives may be
operating simultaneously, and many of
the explanationsof capitalist expansion as-
sign varying positive weights to all of
them.
Taken as a whole, the neo-Marxistview
follows the Hilferding-Bukharin-Leninap-
proach but places less weight on the role
of surplus capital in the center countries
and on the role of finance capital, as a
stage in capitalism'sevolution, in modern-
day imperialism. At the same time, more
weight is given to the role of multinational
corporations in imperialist activities.
These multinationals, though, are some-
what different from the international car-
tels that played such an important role
in Lenin's analysis. The latter were na-
tional monopolies combined into interna-
tional super-monopolies; the former are
national corporationsoperating in a num-
ber of countries. Some analystsemphasize
the multinationals rather than the state:
"6.. .it is of secondary importance
whether the monopolies make use of state
power to assert their interest at the pe-
riphery, or whether they rely chiefly on
the informal but effective weapon of their
disproportionate economic superiority"
(Mommsen 1977, p. 125). Another neo-
Marxist argument is that decolonization
has meant a change only in the tactics of
capitalism and not in its strategy or princi-
pal aims.
Although Harry Magdoff (1969, 1978)
has offered a bewildering list of causes of
imperialism,he, like almost everyone else,
apparently views the most basic determi-
nants as coming from the imperatives of
monopoly capitalism-but, at times, as
coming from the imperatives of capitalism
in general, whatever its stage of develop-
ment. He wrote that there is an inner
drive within the capitalist system leading
to imperialism. "The entire mechanism of
a market economy-competition, fluctua-
tions in consumer demand, uneven devel-
opment of complementary industries,
technological changes, the accumulation
of profits-force a restless drive of capital
to expand" (1969, p. 24). At other times,
the inner drive is associated with the de-
velopment of monopoly enterprises, of
multinational corporations.
In discussing these directives, Magdoff
has emphasized particularly the growing
1100 Journal of Economic Literature, Vol. XXIII (September 1985)
need of capitalism to control scarce and
vital raw materials and natural resources.
Likewise, Norman Girvan (1976) has
looked at imperialism in terms of minerals
and raw materials needed by the center
capitalist countries. Paul Baran (1957)
noted "the drive of monopolistic and oli-
gopolistic firms (and the financial groups
related to them) to invest abroad. . ." (p.
112). His reference is to the drive for prof-
its, a demand that grows directly out of
the commands of the capitalist system.
About a decade later, Baran and Sweezy,
in a major work, argued that postwar U.S.
militarism is based on the aim of contain-
ing and eventually wiping socialismoff the
face of the earth (1966, pp. 187, 191). The
reason for this aim is that the spread of
socialism reduces the profits of corpora-
tions by preventing them "from doing
business with and in the newly socialized
area" (pp. 192-93). Their conclusion is
that an American empire adds to the prof-
its of corporations, that the empire is in
danger from the spread of socialism-
hence, profits are, also-and that the mili-
tarization of America is for the purpose
of containing and eventually eliminating
socialism in the world. Their analysis sug-
gests that, before the advent of socialism
and its global spread, imperialism was on
the offensive in its search for profitmaking
opportunities. Since then, it has been
much more defensive, attempting to con-
tain socialism. However, U.S. imperial-
ism's aim remains the same: to maintain
and, if possible, to extend the empire.
These authors add that ". . . policing the
empire and fighting socialism are rapidly
becoming, if they are not already, one and
the same" (p. 206). (For a summaryof radi-
cals' views regarding U.S. imperialism in
Vietnam see Gurley 1980.)
Kiernan (1978) has taken a long view
of American imperialism. He has traced
this imperialism from the conquest by the
United States of native Americans and
Mexicansto its military incursionsinto the
Caribbean, Hawaii, Guam, the Philip-
pines, and China;to its domination of Cen-
tral America;and to its multiple post-1945
military invasions in Central America, the
Near East, Africa, and Asia. Much of this
aggression, he concludes, imposed a net
cost on the United States but yielded net
benefits to particular classes.
Over forty years ago, Sweezy (1942), in
what is now at least a minor classic, wrote
that monopolies breed tariffs and protec-
tion from foreign competition, and they
also restrict the field for capital accumula-
tion and so heighten the interest of the
monopolies in overseas investment (the
Hilferding theses). "Consequently in the
matter of colonial and territorial policy
monopoly capital is expansionist and an-
nexationist" (p. 302). At the same time,
a strong ideology of nationalism is neces-
sary for the imperialist struggle. In gen-
eral, Sweezy argued that capitalism is in-
herently expansionist,for it is alwaysfaced
by the threat of declining profit rates and
underconsumption tendencies, which
"put evergrowing obstacles in the path of
accumulation" (p. 304). Imperialism is a
solution to these problems.
The new wave of imperialism during
the final quarter of the 19th century,
Sweezy wrote, was due to the heightened
national rivalry,the emergence of monop-
oly capital, and the maturation of contra-
dictions within the accumulation process,
such as the tendencies for rates of profit
to fall and underconsumption to slow the
forward momentum (p. 299). As we previ-
ously noted, Sweezy disputed Hilferding's
emphasis on finance capital, alleging that
he "mistakes a transitional phase of capi-
talist development for a lasting trend" (p.
267). The dominance of bank capital,
Sweezy stated, comes during the transi-
tion between competitive and monopoly
capital, but it is a passing phase (p. 268).
Samir Amin (1976, 1977), one of the
more innovative but obscure writers in
the fields of imperialism and dependency
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1101
(the analysis of the impact of imperialism
on the LDCs as seen by the LDCs), has
argued that, during the era of competitive
capitalism, up to the 1880s, capitalism's
inherent tendency toward declining rates
of profit was generally overcome by a rise
in the rate of exploitation. However, this
led to production outrunning consump-
tion and hence to crises. These in turn
were partially overcome by capitalist ex-
pansion into the peripheral areas of the
world. From the 1880s to World War II,
monopoly capital became capable of ex-
porting capital, with the aid of the state,
and furthermore was induced to do so by
rising real wages and a consequent fall in
the rate of exploitation. During the "post-
imperialism" phase, after 1945, state mo-
nopoly capitalism organized the absorp-
tion of surplus capital, which was done
partially through militarism and waste
and partially through capital exports
(which, however, elicited offsetting in-
flows of capital)and the unequal exchange
existing between center and peripheral
countries (below: pp. 1113ff).
Amin has also pointed to class struggles
as the basic cause of declining profit rates.
Consequently, the roots of imperialism
can be traced to the struggle of classes,
including the working class, opposed first
to commercial and later to industrial capi-
talists, for these struggles have served to
reduce capitalists' profits, compelling
them to search for higher returns else-
where. These searches have led to impe-
rialistic behavior, which Amin defines as
the perpetuation and expansion of capital-
ist relations abroad by force or without
the willing consent of the affected people.
Thus, according to Amin, capitalism re-
quires imperialism to overcome the ad-
verse effects on profitmakingthat the foes
of capitalism have imposed on it. The
advanced capitalist countries, however,
engage voluntarily in the accumulation
process, but they impose "extraverted
accumulation"on countries in the periph-
ery. The latter countries, accordingly, not
having the development process in their
own hands, find their economies becom-
ing distorted ("disarticulated") and re-
shaped for the benefit of the center coun-
tries instead of their own working classes.
What is found in these economies is a
blockage of capitalism and the enervating
co-existence of several modes of produc-
tion.
One of the most unconstrained critiques
of Amin comes from Charles Barone
(1982). He reproves Amin for his excessive
eclecticism-throwing in every explana-
tion of imperialism, over the various
stages of capitalist development, almost
indiscriminately and certainly inconsis-
tently. Amin's treatment, Barone con-
tends, is based on the thesis that capital-
ism, over time, has undergone a series of
profound transformations,each of which
altered its essential nature. This view-
point, according to Barone, is probably
false but undoubtedly accounts for the
many different theories of imperialism
that Amin has strung together. Moreover,
Barone believes that Amin's dependency
analysisof the LDCs moves mostly on the
surface, that he fails to penetrate the
mode of production in the peripheral
countries, and so fails to integrate his anal-
ysis with the transformationof class struc-
tures and the changing nature of the capi-
tal accumulation process. For Barone,
Amin is, in short, an inconsistent Marxist.
Richard Wolff (1970) attributed the im-
perialism of modern capitalism to the
need of capitalist enterprises or their gov-
ernments for access to essential imports,
markets for their manufactured goods,
and spheres for capital investment. Wolff
alleged that these demands create anxi-
eties associated with possible changes in
market variables. The anxieties can be re-
duced if corporationsor governments gain
control over supplies, and imperialism is
one way to do this. Elsewhere, Wolff
(1974) has discussed the basic aims of Brit-
1102 Journal of Economic Literature, Vol. XXIII (September 1985)
ain in Kenya, from 1870 to 1930, which
were to protect "the existing international
economic relations, mainly those with In-
dia," and to reduce Britain's dependence
on markets, sources of food and raw mate-
rials from outside the empire (p. 146). The
first factor suggests that 6ne imperialist
action can lead to another, if the first has
to be protected. That is, the Suez canal
was needed to secure safe lines of commu-
nications and trade with India. Egypt was
required to protect the canal. The Anglo-
Egyptian Sudan, British Somaliland, and
British East Africa (Kenya) could then be
justified as necessary to protect the Red
Sea and Indian Ocean approaches to
Suez-sort of a rising domino effect.
In this same vein, Hamza Alavi (1964)
found that the driving force of modern-
day imperialism was not capital exports
to exploit cheap labor abroad but rather
the capitalists' need to dominate all mar-
ket outlets and sources of supply of raw
materials.
Several scholars, such as James O'Con-
nor (1971) and Tom Kemp (1972), place
heavy weight on the role of multinational
corporations in the imperialist endeavor.
O'Connor's thesis is that the continued
concentration and centralization of capi-
tal have produced giant U.S.-based multi-
national corporations, capable of seeking
control of assets abroad and profiting from
them, with the active participation of state
capital in international investment. All of
this is backed by a global foreign policy
in the interest of the multinationals.
3. Noneconomic Explanations. Capi-
talist imperialism has been explained by
a variety of noneconomic factors, all of
them more or less opposed to the neo-
Marxist economic approaches, and most
of them offered by nonradicals. These al-
ternative theories are principally political,
social, or personal; however, they often
comprise a mixture of explanations, even
reserving a few minor roles for the eco-
nomic factors.
Political explanations interpret the
functions of imperialism in terms of na-
tional or empire security, national pres-
tige, national rivalries, or the desire to
spread democracy and human rights (Ben-
jamin Cohen 1973; E. Badian 1968; Win-
fried Baumgart 1982; David K. Fieldhouse
1967 and 1982; John Gallagher and Ron-
ald Robinson 1965; and Gallagher, in
Roger Owen and Sutcliffe 1972). The so-
cial explanations base imperialism on so-
cial problems at home that can be over-
come by overseas expansionism. The most
notable explanation along these lines is
that of Hans-Ulrich Wehler (in Owen and
Sutcliffe 1972). The personal theories as-
sign imperialism to the failings in our-
selves, to the whims of one or two national
leaders, or to the aggressive drives that
arise from the innate characteristics of hu-
man beings (Cohen 1973; Lloyd Reynolds
1981; E. Stengers, in Owen and Sutcliffe
1972; and Badian 1968).
C. The Role of Economic Factors in
Imperialism
Radicals argue that economic factors
either loom large in the foreground or are
grey eminences in the background of al-
most all useful theories of imperialism.
The neo-Marxist and other radical ap-
proaches clearly place economic factors
at center-stage. Even the so-called social
theories of Wehler and others believe that
economic as well as social and political dif-
ficulties at home are responsible for impe-
rialist actions. Moreover, Wehler's analysis
begins with the irregularity of economic
development in the industrial countries
as the basic source of imperialism. Irregu-
larities are moderated by the economic
gains of overseas activities. Further, even
King Leopold, whom Stengers claimed
was solely responsible for Belgian imperi-
alism in the late 1800s, had profits from
colonialism constantly in mind. It would
seem that only if imperialism is explained
by our own individual aggressiveness, or
by the aggressiveness of certain leaders
or atavistic classes-and by that factor
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1103
alone-do the economic variables recede.
The political explanations of imperial-
ism would appear to be more troublesome
for neo-Marxistinterpreters. But even in
some of these theories economic factors
are heavily represented. In the account
of Gallagher and Robinson (1965), for in-
stance, Britain'sincursions in much of Af-
rica were for the purpose of protecting
India-presumably a security-politicalfac-
tor. But Britain's possession of India itself
involved prospective economic gains in a
substantial way, as several radicals have
pointed out. Again, in Fieldhouse's analy-
sis (1967, 1982), while problems arising
from peripheral insecurity and instability
contributed to further imperialist actions,
the original acquisitions of colonies may
have been encouraged by economic con-
siderations, and subsequent difficulties,
as Fieldhouse acknowledged, may have
grown out of the economic problems cre-
ated by the imperialists. With regard to
nationalism, Sweezy (1942) has noted that
a nationalist ideology is necessary for the
imperialist struggle and that imperialism
fosters nationalism. Thus, as Sweezy and
others see it, this political factor must ac-
company the economic determinants of
imperialism.
Imperialismis sometimes seen as a reac-
tion to the spread of communism (i.e.,
Marxism)in the world, hence as politically
rather than economically determined. But
radicalshave noted that the new imperial-
ism far predated the advent of communist
nations; the pattern of this imperialism
was established in the late nineteenth cen-
tury and it continued in much the same
way after the October 1917 revolution in
Russia.In this view, therefore, the spread
of communism can be considered, not as
the root cause of capitalist aggression in
the world, but simply as another-a most
important-force threatening the capital-
ists' economic gains from their global op-
erations. Moreover, as Magdoffand others
have noted, the economic forces that lie
at the heart of imperialism are underlined
by capitalism'sacceptance of military dic-
tatorships and other anti-democratic re-
gimes as members of the "free world,"
provided these nations are open to foreign
investment and other capitalist incursions
into their economies. As far as radicalsare
concerned, that observation caps the ar-
gument.
However satisfied radicals might be
with the present state of their theories of
imperialism, there are a number of ques-
tions that have not received persuasive
answers from them. Is it not true, as
Schumpeter alleged, that very often capi-
talists can gain more by peaceful trade
than by war, conquest, and expansion?
Why are not all capitalist countries impe-
rialistic?Why are some socialist countries
expansionist?Is this not a form of imperial-
ism? Why have many large countries been
imperialistic down through the ages,
whatever their mode of production? Ap-
parently some aggressive nations and
even their ruling classes have not gained,
on balance, by colonialism and imperial-
ism. Why, then, do they persist? What
room should there be in imperialism theo-
ries for ineptitude, errors, blunders,
chance, personal idiosyncracies? Inas-
much as religious fervor, nationalism, and
the desire for democratic rights have
probably become increasingly stronger
than class loyalties during this century (if
not before), why do radicals continue to
use class analysisso exclusively as the cen-
terpiece in their theories? Radicals have
addressed these questions, it is true, but
we do not believe that the issues have
been widely-enough recognized, much
less satisfactorilyresolved.
II. World Capitalism and Third World
Countries
Marx and Engels (in Avineri 1969),
paved the way for radical analyses-now
called dependency theory-regarding the
impact of world capitalism on less devel-
oped countries, though most contempo-
1104 Journal of Economic Literature, Vol. XXIII (September 1985)
rary Marxists depart dramatically from
their mentors' views. Marxand Engels saw
European colonial expansion, which, they
argued, was an inevitable outgrowth of
the development of capitalism,as brutaliz-
ing and plundering the peoples of the
colonized areas and disrupting or destroy-
ing their livelihoods. Despite all of this,
they believed that colonial expansion was
necessary to push many of the backward
countries off dead-center so as to implant
in them the seeds of capitalist develop-
ment. That development would bring
progress to these lands, but at the same
time it would drag masses of people
"through blood and dirt, through misery
and degradation." Capitalism, like all so-
cial processes, developed dialectically.
A century later, Paul Baran (1957) ar-
gued that the British, while enriching
themselves, "systematically destroyed all
the fibres and foundations of Indian soci-
ety" (p. 149). SupportingNehru's assertion
that the British were responsible for the
later "tragicpoverty of the people," Baran
proposed to demonstrate that these ex-
ploitative relationships and their conse-
quence of persistent impoverishment
epitomized the entire peripheral struc-
ture of world capitalism. This challenged
the ideas of Marx and Engels. Along the
same lines, Paul Sweezy (1968) claimed
that "capitalist development inevitably
produces development at one pole and
underdevelopment at the other";a propo-
sition, he emphasized, that applies not
only to relations between the advanced
capitalist countries and the colonial and
semicolonial countries, but also within
both these parts.
This thesis, first propounded by Otto
Kuusinen (1928, pp. 102-03), was general-
ized by Andre Gunder Frank (1966, 1967,
1972), who alleged that capitalism had
long ago entered every nook and cranny
of the satellite world in such a way as to
make global capitalism an integrated
structure of metropoles and satellites that
bound nations, regions, and urban-rural
areas into dominant-dependent relation-
ships. The millions of peasants and work-
ers at the base of this capitalist structure
continually produced economic surpluses
that were captured by the exploiters
above them, but these exploiters, in turn,
were exploited by those still higher in the
structure, and so on. The result was devel-
opment around the top and underdevel-
opment at the bottom. During wars and
depressions, when the higher metropoles
were fully engaged, the exploitative ties
were temporarily loosened, allowing a
type of development to take place in the
satellites,. When the ties were later
strengthened, underdevelopment was
again resumed. Frank (1972) also asserted
that "the greater the wealth [that was]
available for exploitation [in the past], the
poorer and more underdeveloped the re-
gion today; and the poorer the region was
as a colony, the richer and more devel-
oped it is today" (p. 19). His definition of
capitalism as production for profits in the
market has come under severe attack for
being too inclusive and non-Marxian. (See,
e.g., Ernesto Laclau 1971.)
Samir Amin (1976) has also endorsed the
polarization thesis. Amin believes that all
peripheral or satellite countries have four
main characteristics: the predominance of
agrarian capitalism; a local, mainly mer-
chant, bourgeoisie that is dominated by
foreign capital; the growth of a large bu-
reaucracy, which substitutes for the lead-
ership of an urban bourgeoisie; and masses
of poor peasants, urban unemployed, and
marginal workers who have not devel-
oped completely into a proletarian class.
As a result, the peripheral countries can-
not achieve development out of their own
momentum but are, instead, reduced to
"an incomplete and extraverted develop-
ment of local capitalism." The center
countries, moreover, impose an "unequal
exchange" between themselves and the
periphery, in which "exploitation through
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1105
trade" occurs (Arghiri Emmanuel 1972).
Amin claims that the dominance of for-
eign capital in the peripheral areas means
distorted development toward export ac-
tivities and excessive development of the
tertiary sector and light industry. It also
means that the satellite economy develops
unevenly, that it is incohesive, that it is
unable to develop cumulatively, and that
it tends to incur excessive debt to the cen-
ter countries. (These summaries are based
on Gurley, 1979.)
We shall now consider most of these
propositions in more depth.
A. Underdevelopment in a Historical
Context
Baran, Frank, and others argue that
underdevelopment arose from the way
the third world was incorporated into an
international economic and political sys-
tem, dominated initially by Europe and
later by the United States. This Western
hegemony, however, encountered contin-
uous resistance, and after decades and
even centuries of struggle by local peas-
ants, workers, and other nationalists the
old colonial and imperial regimes virtually
disappeared. In their place a system of na-
tion states has emerged. The scores of
countries which comprise these new na-
tions enjoy at least nominal independence
and often a considerable measure of sover-
eignty over their internal affairs.Notwith-
standing this, it is claimed, relations of de-
pendency and unequal exchange and the
network of international institutions es-
tablished after World War II seriously re-
strict the room for maneuver of the new
states.
It has long been contended by national-
ists in the third world and by radical econ-
omists and other social scientists in the
West that underdevelopment is not an
original state of nature but a product of
historicalforces. Thus, for radicals,Europe
did not "discover" the underdeveloped
countries; on the contrary she created
them (Griffin1969; R. C. Dutt 1963; J. S.
Furnivall 1967; Malcolm Caldwell 1968;
A. Moorehead 1966; Carl Ortwin Sauer
1966; Frank 1966, 1967, 1972). Radical
economists almost always mean this in its
strongest version: Europe turned some
countries that were "developed" for their
time into underdeveloped ones. In a
weaker version, subscribed to by only a
few, it means that Europe, finding under-
developed countries, created conditions
that prevented their later development.
The impact of imperialism took various
forms, differing from one place and one
time to another, and it is an unfinished
task of modern scholarship to write the
history of the colonized people, as op-
posed to the history of the colonizing pow-
ers. Britain in India and Africa, France
in Indochina and Africa, Holland in In-
donesia, Belgium in the Congo, Spain in
Latin America, Portugalin Africaand Bra-
zil, Japan in Korea, the United States in
the Philippines pursued different policies,
which had different consequences, and,
moreover, these policies and conse-
quences changed over time. But it is part
of the radicals'conventional wisdom that,
in most parts of the world, ordinary peo-
ple-farmers and fishermen, artisans and
small traders-either gained little or lost
much from being conquered. The civiliz-
ing missions of Europeans and others, rad-
icals aver, were a myth invented to soothe
the consciences of the conquerors,not the
wounds of the conquered.
In many regions of the world the expan-
sion of Europe resulted in a sharp decline
in population, partly as a result of the im-
portation of alien diseases, partly as a re-
sult of war, and partly as a consequence
of the destruction of the pre-existing social
structure (Colin Clark 1967). Notable ex-
amples where this occurred are the An-
dean region of South America, Mexico and
Central America, Australiaand the South
Pacific (Sauer 1966; Moorehead 1966;
Stanley Stein and BarbaraStein 1970; also,
1106 Journal of Economic Literature, Vol. XXIII (September 1985)
see Kiernan, 1978 for the impact of Amer-
ican imperialism on native peoples). In Af-
rica, from Guinea to Angola, the capture
and trade in slaves did much to depopu-
late large regions (AnthonyHopkins 1973;
C. R. Boxer 1973; Walter Rodney 1981;
Ruth First 1963) and to transform the
economy from one based on settled agri-
culture back to long-fallow agriculture
and nomadism. During the colonial pe-
riod, forced labor was used in many areas,
notably in the Belgian, Portuguese, and
French colonies, while elsewhere the
combination of head taxes and the alien-
ation of African lands resulted in the cre-
ation of a large, impoverished labor force
that had no alternative but to work on
European-owned plantations, farms and
mines (Charles Van Onselen 1977; Colin
Bundy 1979; Stanley Trapido 1978; Colin
Leys 1975; Arrighi 1970; Francis Wilson
1972; J. B. Knight and G. Lenta 1980).
Africa is widely regarded in the West as
the most "traditional"of underdeveloped
regions, yet there is nothing that is truly
traditional about rural Africa, if by that
term one means pre-imperial and pre-co-
lonial. Land use and land tenure systems,
population densities, the organization of
labor and the patterns of migration, even
many of the crops that are grown-all
these things were shown by radical schol-
ars to have been profoundly affected by
European penetration into the continent.
Analysts believe that China represents
a rather different case because the coun-
try was never wholly colonized. Instead,
China was incorporated into a nefarious
trading arrangement against her will and
forced to import opium in exchange for
useful products. Indeed, the country was
defeated in three successive Opium Wars
within the span of twenty years, namely:
1839-1842, 1856, and 1858-1860. The
consequence of these disasters, according
to Victor Lippit (1980) and many others,
was widespread drug addiction, the par-
tial transfer abroad of her economic sur-
plus which could have been used for capi-
tal accumulation and growth, partial co-
lonization and conquest, the payment of
indemnities and the granting of special
privileges to foreigners, the weakening of
her indigenous social structure, and, in the
three decades before the revolution of
1949, a sharp decline in the standard of
living for the masses, including, of course,
most of the rural population. Underdevel-
opment in China cannot be attributed
solely to imperialism;it is more likely that
internal and external forces interacted in
a process of mutual causation. In the view
of radical scholars, however, it would be
implausible to claim that the impact of
the West (and later Japan) on China was
wholly or even on balance beneficial.
Defenders of European, American, and
Japanese imperialism point to three
sources of economic benefit to third world
countries. First, it is argued that colonial-
ism destroyed feudal or precapitalist eco-
nomic systems and encouraged the
creation of a capitalist labor market.
Presumably this is thought to have been
of benefit to the ruralpopulation since the
majority of the labor force lived in rural
areas. Second, the imposition of free trade
in commodities, even if on a restricted ba-
sis, permitted the principle of compara-
tive advantage to operate. Since the advo-
cates assumed that the third world had
a comparative advantage in agricultural
and mineral products, this too should have
increased the well-being of the rural pop-
ulation. Third, uninhibited international
capital flows, largely in the form of direct
investment in plantations, mines, and
public utilities, allowed investment and
growth to occur in capital-scarceunderde-
veloped countries which otherwise would
have remained stagnant. Thus, as radicals
interpret the advocates' case, on balance,
imperialism was good for the conquered
peoples: it led to a higher level of output
because of improved allocative efficiency
and to a higher rate of output growth be-
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1107
cause of a faster rate of capital accumula-
tion.
The historicalrecord, at least on the sur-
face, provides little support to those who
defend the colonial regimes; furthermore,
radical economists and historians take is-
sue with each of the three points on which
that defense is based. Some radicalsargue,
first,that labor markets in the third world,
during the colonial period, were charac-
terized by coercion, monopsony, and vari-
ous systems of labor control that were
designed to reduce the level of re-
muneration of local people, ensure an
adequate supply of labor to expatriate-
controlled enterprises, and prevent both
occupational and unregulated geographi-
cal mobility. Formal slavery was the ex-
ception rather than the rule, but the sys-
tems of labor control that were devised
were also harsh and far removed from the
free labor markets of laissez-faireeconom-
ics. In Kenya, Southern Rhodesia, North-
ern Rhodesia, and Tanganyika, for exam-
ple, a cheap, regular African labor supply
was obtained by sharply reducing the
amount of land available to Africans,
thereby creating overcrowded reserves;
by imposing hut, poll, and other taxes; by
threatening to conscript Africans into the
army if they were not working for wages;
by using tribal headmen to recruit labor;
by introducing an all-inclusive internal
pass system in combination with policies
to encourage immigration from neighbor-
ing territories; and by using forced labor
where all else failed (Wolff 1974). Many
features of these colonial labor markets
persist today and constitute one aspect of
the neocolonialism or internal colonialism
that afflicts so much of the third world
(Van Onselen 1976; Bundy 1979; Trapido
1978; Leys 1975; Arrighi 1970; Wilson
1972; Knight and Lenta 1980; Griffin
1981; E. E. Rich and C. H. Wilson 1967).
Second, leaving aside "free trade" in
slaves, addictive drugs, and guns, radicals
claim it is far from clear that the forcible
insertion of the third world into a trading
system dominated by advanced capitalist
nations operated to the advantage of third
world countries or, more to the point, to
the advantage of a majority of the popula-
tion in third world countries.
The precise effects on the third world
of the spread of an integrated interna-
tional market are the subject of much de-
bate, but one interesting hypothesis is that
the imposition of "free trade" and the re-
sulting growth of primary product exports
from the underdeveloped countries oc-
curred "at the expense of industrialization
of these countries and also at the expense
of other crops or products primarily
meant for domestic consumption"(Bagchi
1982, p. 119). The case of de-industrializa-
tion in India and Bangladesh is quite well
established (Bagchi 1976, 1982). The de-
industrialization of India, for example,
started in the 1800s, under freer trade,
when its cotton manufacturerswere elimi-
nated. "Other rural or urban manufac-
tures were ruined partly by the rise of
alternative sources of supply and by gov-
ernment restrictions." India was opened
up to a flood of manufactured imports; in
return India supplied agricultural prod-
ucts; and it became dominated by "colo-
nialism, landlordism and usurious money-
lending interests" (Bagchi 1982, pp. 82-
88). It is possible that something similar
but perhaps of lesser magnitude occurred
in China and other parts of the third
world. Clearly more research needs to be
done on this topic, but enough is known
to cast doubt on the proposition that freer
trade brought immediate and substantial
gains to all parties in every instance. In-
deed, a contrary proposition has been ad-
vanced: namely, in at least part of the
third world the results of trade-induced
changes in the commodity composition of
output were unemployment, a decline in
the supply of some foodgrains, and only
marginal gains for most of the population.
This entire process of industrial contrac-
1108 Journal of Economic Literature, Vol. XXIII (September 1985)
tion and unemployment, a shift from food
to cash crops, and a decline in living stan-
dards of the urban and rural poor is
summed up by Bagchi in the phrase "ex-
port-led exploitation," as contrasted with
export-led growth (Bagchi 1982, p. 119;
George Beckford 1972).
Export-led exploitation is the view of
imperialism as seen from the periphery.
Seen from the center, the purpose of mod-
ern imperialism, in the eyes of many radi-
cals-as we stated in the previous sec-
tion-reflects the desire of large capitalist
enterprises and their governments to se-
cure essential imports on favorable terms
(e.g., oil); to obtain protected markets for
exports (including exports of arms); and
to obtain unchecked access to third world
countries for investment. (Wolff 1970;
O'Connor 1971; Anthony Clayton and
Donald Savage 1974; Van Onselen 1973;
R. M. A. Van Zwanenberg 1975; M. Mason
1978; R. G. Thomas 1973.) This quest for
economic security and advantage, radicals
allege, leads inevitably to attempted con-
trol of foreign economies through direct
intervention (including covert and overt
military intervention) or, indirectly, by
obtaining control over local political au-
thority. Economic power and political
power usually go hand in hand.
Third, a number of writers, radicals
among them, have begun to argue that,
far from gaining from international capital
flows, the growth of third world countries
was severely damaged because a large
part of their economic surplus was trans-
ferred abroad, where it was used to in-
crease the consumption of the richer
classes and raise the general level of in-
vestment abroad. This does not deny the
obvious fact that some investment flowed
to the third world and thereby, in the first
place, helped to increase its economic sur-
plus. But the net flow of resources, it is
claimed, was from the underdeveloped
countries to the developed, not the other
way round. Orthodox economists may ac-
cept that there were instances of plunder,
pillage, unfair bargaining, unequal trea-
ties, and the like, but these are regarded
as special cases (Reynolds 1983, p. 956)
and perverse ones, whereas the radical
view is that perverse flows of resources
were and are the norm.
Convincing evidence on this matter,
however, still remains to be assembled.
Nevertheless, modern research has un-
earthed some examples in which capital
appears to have flowed from the periph-
ery to the center, assuming that a surplus
on merchandise account is indicative of
a resource transfer abroad. Thus, Spain's
exploitation of Latin America's mineral
wealth was reflected in an export surplus
in Spanish America and higher consump-
tion on the Iberian peninsula-though this
was imperialism by merchant capitalists.
Britain's possession of most of the West
Indies resulted in a capital transfer to the
mother country which is equivalent to
eight to ten percent of Britain's entire in-
come in the closing years of the 18th cen-
tury, "and probably a larger percentage
in the period preceding the American
War of Independence" (Richard Sheridan
1965). The Indonesian export surplus in
1876-1880 was more than six percent of
Indonesia's income, and the presumed fi-
nancial counterpart was profits trans-
ferred back to Holland by the Dutch East
Indies Company which helped consider-
ably to raise living standards in the mother
country. The exploitation of Bengal by the
British East India Company is, of course,
notorious. Famine reduced the population
by over a third during 1769-1771: yet,
from the mid-18th until well into the 19th
century five to six percent of Bengal's in-
come was siphoned off as unrequited ex-
ports and locally financed expenditure on
wars of conquest incurred by the East In-
dia Company (Bagchi 1982; Baran 1957;
Sumit 1980; and Damodar Kosambi 1956).
These figures acquire added signifi-
cance when set beside Arthur Lewis'
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1109
much quoted statement that "the central
problem in the theory of economic devel-
opment is to understand the process by
which a community which was previously
saving and investing four or five percent
of its national income or less, converts it-
self into an economy where voluntary sav-
ing is running at about twelve to fifteen
percent" (Lewis 1954). Radicals contend
that, in retrospect, it now appears that
many third world countries had no diffi-
culty reaching and exceeding a savings
rate of fifteen percent once they became
independent and acquired greater control
over their economies. However, such sav-
ings rates occurred only in recent decades,
and there is no evidence in radical litera-
ture that, if these countries had become
independent in the mid-1800s or in the
mid-1700s, they could have achieved any-
thing close to those rates. After all, few
of today's industrial countries had such
high savings rates a century ago; none had
them two centuries ago; and, the Latin
American countries which did achieve
political independence in the 19th cen-
tury were generally unable even to ap-
proximate such heights.
Nevertheless, the central problem of
underdevelopment, as radicals formulate
it, was that during the era of imperialism
a high proportion of the economic surplus
potentially available for domestic invest-
ment was transferred abroad in the form
of uncompensated exports or was used lo-
cally to pay for the cost of colonial admin-
istration, the maintenance of large stand-
ing armies and police forces, and the high
standard of luxury consumption of the ex-
patriate ruling class. Some of these waste-
ful expenditures continued in the post-in-
dependence, neocolonial regimes. Even
so, savings rates at that time did generally
rise substantially.
Unrestrained capital flows, as a number
of radical economists have pointed out,
did little or nothing, on balance, to raise
investment and growth in the pre-inde-
pendence period in those countries which
account for most of the people in the third
world-that is: undivided India, Burma,
China, Indonesia, Indochina, Nigeria, and
Zaire. On the contrary, the net movement
of financial flows was from the third world
to the advanced capitalist countries, and
thus resource transfers constituted one of
the mechanisms of underdevelopment.
Even today, some analysts argue, contrary
to both neoclassical and orthodox Marxist
views, the natural tendency within the
world economic system is for savings to
flow from capital-scarce poor countries to
capital-abundant rich countries, because
the real rate of interest and the return
on investment (especially in industries
based on new technology) are higher in
rich countries than in poor ones (Griffin
1978; Amin 1974).
1. Theories of Dependency. As we
noted previously, theories of dependency
are concerned with the impact of imperi-
alism and neocolonialism on the econo-
mies and societies of third world coun-
tries, as seen by those countries
themselves. Radicals require that such
theories should be able to describe the
global operation of the capitalist system
during the neocolonial era while account-
ing for the persistence of some colonial
features in third world economies and the
dependence of these economies for their
development on economic impulses origi-
nating outside their borders. One analyst
stated that dependency arises because
"some countries can expand through self-
impulsion while others, being in a depen-
dent position, can only expand as a reflec-
tion of the dominant countries, which may
have positive or negative effects on their
immediate development" (Theotonio Dos
Santos 1970, pp. 289-90). Dependency
theorists inquire into the reasons for such
economic dependency when these coun-
tries have political independence.
Just as international relations are ana-
lyzed by radicals in terms of a hierarchy
1110 Journal of Economic Literature, Vol. XXIII (September 1985)
of states (center and periphery, first for-
mulated carefully by Ratul Prebisch in
1950), between which there is relatively
little mobility but much inequality and
conflict, so too society, for most depen-
dency theorists, is analyzed in terms of
social stratification, class conflict, and ex-
ploitative relations. On a national plane,
these relations typically give rise to vio-
lence and repressive governments. Histor-
ically, radicals claim, Central and South
America and, more recently, Africa, illus-
trate the political consequences of depen-
dency. According to radical thought, these
consequences often include a military
takeover because the combination of neo-
colonialism-dependency has retarded and
distorted the development of a strong in-
digenous ruling class, leaving an uneasy
and unstable balance of social forces
within these societies. One solution to this
problem has been military rule.
An early theory which, however, does
not meet all the requirements of a depen-
dency theory (nor do its authors meet all
the requirements of radicals) was that of
structuralism. This school of thought
emerged largely and appropriately in
Latin America where political indepen-
dence was achieved early. It was con-
cerned with an explanation for the un-
steady, incomplete, and inflation-ridden
development in peripheral countries, es-
pecially in South America. It found a good
part of the explanation in demand and
supply rigidities and in certain inappropri-
ate institutional arrangements. Economic
growth in the periphery was often accom-
panied by the growth of imports that ex-
ceeded the growth of exports; the latter,
consisting mainly of primary products,
were income inelastic and at the same
time subject to a secular deterioration in
terms of trade with industrial imports. To
continue growth, therefore, many periph-
eral countries were compelled to practice
import substitution, which raised domes-
tic prices and often sparked a general in-
flation. The inflation pain could be eased
only by slowing the growth rate of output.
But slower growth itself heightened social
tensions, threatening class warfare. More-
over, structuralists postulated, exports
lagged and domestic supplies suffered be-
cause of the inelasticity of agricultural pro-
duction, which responded sluggishly to
price and other stimuli owing in part to
defective patterns of land tenure. These
patterns were survivors of precapitalist re-
lations of production, in which bonded la-
bor, absentee management, autocratic
labor relations, and monopoly power
aborted sensitive responses to market
forces and favored instead the mainte-
nance of the economic and social status
quo. Economic growth, therefore, was
likely to be accompanied by increases in
food prices, which would touch off wage
increases and force the monetary authori-
ties, if they wished to avoid social up-
heaval, to increase the growth rate of the
money supply. The result would be infla-
tion. The structuralists contended that
monetary policies could not correct these
structural weaknesses; hence, they could
not be employed successfully in periph-
eral countries (Prebisch 1959, 1962; Hans
Singer 1950; Gunnar Myrdal 1957; Dud-
ley Seers 1963; Hollis Chenery 1975; Celso
Furtado 1979; Joseph Grunwald 1961; Da-
vid Felix 1961). Structuralism has been
criticized on the grounds that much em-
pirical data are inconsistent with the pos-
tulates of this theory; some of the rigidities
are owing to nothing more than govern-
ment and other interferences with mar-
ket processes; land tenure systems have
been misinterpreted; excessive monetary
growth, not structural factors, cause infla-
tion; and that, at best, the model applies
only to Chile (Roberto de Oliveira Campos
1984; Alain de Janvry 1981).
The more genuine theories of depen-
dency were developed by Baran (1957),
Frank (1966, 1967, 1972), Furtado (1964,
1966, 1970), Fernando Cardoso (1972) and
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1111
others (Dos Santos 1973; Stein and Stein
1970; Osvaldo Sunkel 1973; P. O'Brien
1975). The thrust of their argument,
which turned Marx on his head, was that
capitalism is a powerful engine of growth
in the center, but in the peripheral coun-
tries it tends inevitably to produce under-
development and poverty.
This is partly because of the "uneven
development" of capitalism, in three
senses. First, capitalist development has
occurred, historically, in cycles or long
waves. In the downward phase of the cy-
cle the countries on the periphery have
been disproportionately affected: their
terms of trade deteriorate; the volume of
exports falls; their capacity to import capi-
tal goods and, hence, their overall rate of
investment declines; consequently na-
tional product falls, often sharply. This
clearly happened in the depression of the
1930s and to a lesser but still significant
extent in the recent downturn of 1979-
1982. Poor, developing countries that are
tied to major boom-and-bust economies
are necessarily pulled increasingly into de-
pendent relations.
Second, while initial stimulants to
growth sweep through an integrated
economy in ever-widening ripples and so
benefit capitalist countries in the center,
initial stimulants often peter out or are
even turned into "backwash effects" (also
called backsetting effects) in the periph-
eral countries. As Gunnar Myrdal (1984)
put it:
If left to take its own course, economic develop-
ment is a process of circular and cumulative
causation which tends to award its favours to
those who are already well endowed and even
to thwart the efforts of those who happen to
live in regions that are lagging behind. The
backsetting effects of economic expansion in
other regions dominate the more powerfully,
the poorer a country is [p. 499].
The backsetting effects, which tend to halt
growth or even reverse it, emanate from
the low levels of social mobility, communi-
cations, and education; the small degree
to which values are shared throughout the
society; sectors and industries especially
vulnerable to general growth in the econ-
omy; rigidities in demands, supplies, and
markets; population surges that wipe out
the per capita benefits of growth; and so
on. Harvey Leibenstein (1957), a nonradi-
cal writer, also made an early analysis of
what he called the income-depressing
forces that might offset the income-raising
ones in developing economies. Included
in his list of depressants were demon-
stration effects, during an initial surge of
growth, that boosted consumption and
luxury imports. Leibenstein postulated
that, in many cases, the depressants would
overwhelm the stimulants if the stimu-
lants were employed gradually and mod-
erately. The depressants could be over-
come only with some "critical minimum
effort"-or a big push, as P. N. Rosenstein-
Rodan (1963) called it. The presence of
indivisibilities and complementarities was
a key argument supporting the necessity
of a major, integrated effort to overcome
backwardness. Amin (1976, 1977), Fur-
tado (1979), and others have also analyzed
the difficulties of growth in the periphery,
in the face of the types of characteristics
of these societies as outlined by Amin
(above, pp. 11OOff).
Third, dependency writers contend
that the third world is impoverished be-
cause of the appropriation by the center
of part of the economic surplus generated
in the periphery. This last feature, which
we have already discussed, also figures
prominently in the analysis of the effects
of colonialism; in fact this is one of the
points at which the literature on depen-
dency and imperialism merge.
Paul Baran's (1957) central point is that
the principal obstacle to rapid economic
growth in countries of the third world is
the way in which their potential economic
surplus is utilized, not so much the size
of it. This economic surplus is the differ-
1112 Journal of Economic Literature, Vol. XXIII (September 1985)
ence between potential output and essen-
tial consumption. He argues, first, that
much of the potential economic surplus
is not realized; second, much of the real-
ized economic surplus is misused by those
who appropriate it. A large part of it is
dissipated in the form of unemployed la-
bor and excess industrial capacity; in
workers employed unproductively; in
wasteful expenditure, including consump-
tion of tobacco, alcohol, and other drugs
stimulated by consumption patterns, im-
ported from the West, often through the
activities of transnational corporations;
and through luxury expenditures by the
landlord and capitalist classes. These in-
clude landowners, moneylenders, and
merchants-that is, the classes formed
during the imperial era which inherited
the state at the time of political indepen-
dence. It also includes the state itself and,
among other things, its heavy expendi-
tures on police and military forces-ex-
penditures which, it is argued, are neces-
sary to preserve internal security and
maintain control over the mass of the pop-
ulation. In addition, much of the realized
surplus is transferred abroad in the form
of profit repatriation by foreign capitalists
or service payments on the foreign debt,
or as capital flight by the local elite, who
hold deposits overseas "as hedges against
the depreciation of the domestic currency
or as nest eggs assuring their owners of
suitable retreats in the case of social and
political upheavals at home" (Baran 1957,
p. 177). Finally, if against all the odds, a
third world country tries to overcome its
underdevelopment, it is likely to find its
efforts are frustrated by the "animosity [of
imperialism] towards all genuine initiative
at economic development on the part of
the underdeveloped countries" (Baran
1957, p. vii). The center tries to keep the
periphery firmly in its grip.
Baran's insights have had an enormous
influence on radical economists. The focus
on the potentially large economic surplus
has encouraged writers to explore the pos-
sibility of self-reliant development, to cast
doubt on the importance of foreign aid
and foreign borrowing, to measure the
sizes of the surpluses (Lippit 1974), to in-
vestigate ways in which the surplus is si-
phoned off to the rich countries, and to
examine links among the domestic class
structure, international dependency, and
capital accumulation (Frank 1972; Amin
1976).
The dependency theorists have been
criticized, within radical circles, for: defin-
ing capitalism in terms of the "circulation
sphere" (instead of the more fundamental
production sphere) and, hence, in seeing
capitalism everywhere, even during its
early stages; overemphasizing the role of
surplus extraction by the center from the
periphery in the underdevelopment of
the periphery; posing the conflict be-
tween the periphery and the center more
in geographic terms than in terms of social
classes; and supposing, one-sidedly, that
capitalism is incapable of initiating devel-
opment in the periphery. On this last
point, dependency theories, by and large,
and Baran's in particular, lead to the con-
clusion that peripheral countries are
doomed to stagnation, so long as they are
integrated into world capitalism; and that
the center, based on its appropriation of
the periphery's surpluses, can generate a
growth that stands in dramatic contrast
to that of exploited regions. Yet, radical
critics have pointed out that, during the
1970s, the evidence seemed to throw
doubt on both observations: many of the
third world countries were growing rap-
idly, even within the context of capitalism,
while most of the center countries were
encountering difficulties with increasing
unemployment, declining growth, and ris-
ing rates of inflation (de Janvry 1981, pp.
18-22; Robert Brenner 1977; Geoffrey
Kay 1975; Charles Bettelheim, in Emman-
uel 1972; Ernest Mandel 1975; Warren
1973; Sanjaya Lall 1975; Gabriel Palma
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1113
1978; Patrick McGowan 1976; O'Brien
1975). These criticisms, however, do not
apply across the board to each and every
dependency theorist, but they are fairly
directed to the school as a whole.
Even if it is assumed that world capital-
ism generates wealth and growth in the
center and poverty and stagnation in the
periphery, the dependency theories can
be faulted for not having presented con-
vincing explanations of the market forces
(the "plain forces" are clear enough!) that
achieve this biformity. More generally,
they have failed to specify thoroughly how
wealth and poverty are both generated
by the same capitalist processes, whether
within a given country or between coun-
tries. A persuasive explanation of the po-
larization process should begin with the
fundamental mechanism of exploitation of
labor by capital. According to Gurley:
the explanationwould then include the process
that makes the reserve army of labor a neces-
sary element of the capitalist mode of produc-
tion and an analysis of how the expansion of
this mode dispossessesand impoverishesprevi-
ously self-sufficientproducers.The explanation
would also include an analysisof how the capi-
talist mode necessarily builds on efficiency,
which is often antithetical to equity; of how
it builds on specialization,which increases the
vulnerability of people and areas to adverse
developments; and of how it transfers wealth
from poor areas to wealthy ones, via the price
mechanism. It would then go on to discuss the
values and behavior patterns, engendered and
supported by the capitalist mode, which com-
pel individuals to seek success even at the ex-
pense of others' welfare and which encourage
and reward cheating and extortion of the poor
by the rich. Finally, the explanation would
show how poverty, once established, feeds on
itself-the poor lack capital, information,edu-
cation, and so on-and how wealth, once estab-
lished, also feeds on itself [1979, p. 206-07].
This remains to be accomplished, al-
though, as we shall now see, some progress
has been made.
2. Theories of Unequal Exchange.
Many radical economists have argued that
third world countries, particularly the
smaller and poorer ones, have become in-
corporated into an international economic
system in which they specialize in the pro-
duction and trade of primary products for
which the income elasticity of demand is
low. In consequence it is maintained that
there is a long-run tendency for the net
barter terms of trade to decline and this,
in fact, is one of the ways by which the
economic surplus is transferred to the ad-
vanced capitalist countries.
Neoclassical economists, applying stan-
dard trade theory, contend that, if the rel-
ative price of primary commodities should
fall, countries can be expected to alter the
composition of output by shifting re-
sources from primary commodities to
other activities enjoying more favorable
relative prices. That is, the change in
prices would signal a change in compara-
tive advantage and this would lead to a
change in the pattern of production, con-
sumption, and trade. Radicals reply that,
in small countries with specific natural re-
source endowments, factors of production
may be highly immobile, hence the com-
position of output cannot adjust quickly
and without heavy cost to a country's
terms of trade. Moreover, once a particu-
lar structure of production has been estab-
lished, for whatever reason, labor and cap-
ital tend to become relatively immobile
because they become incorporated into
the productive process in the form of du-
rable and specific skills and equipment.
Adjustment to changes in the terms of
trade occurs not by shifting given re-
sources from one sector to another but
by investing in those sectors where profit
prospects have improved. Thus, it is the
rate of capital accumulation and the gen-
eral pace of development that is crucial
in determining the ability of a country to
respond to a change in prices. In small,
slowly-growing underdeveloped countries
a decline in the terms of trade is a serious
matter.
The thesis of the declining terms of
1114 Journal of Economic Literature, Vol. XXIII (September 1985)
trade was first put forward by Raul Pre-
bisch (1962) and Hans Singer (1950). The
long debate that ensued concentrated on
statistical issues: the limitations of the orig-
inal data, use of the inverse of terms of
trade of the United Kingdom as a proxy
for terms of trade of primary products,
the role of falling transport costs in the
c.i.f. value of imports, improvements in
the quality of manufactured goods, and
the introduction of new manufactured
products. These doubts led most econo-
mists to believe that the Singer-Prebisch
thesis was false or at best not proven. Re-
cent work, however, has shown that, over
the seventy years down to World War II,
there was a deteriorating trend in the rela-
tive price of primary commodities but
that there was no such trend over the pe-
riod from 1945 to 1975 (John Spraos 1980).
Since 1975, there has been a sharp fall
in the terms of trade of most third world
countries, apart from oil exporters, as a
result of the world depression and other
factors.
Meanwhile, the debate's focus shifted
to a concern with the distribution of the
gains from trade. The relevant concept
of the terms of trade in this case is not
the net barter terms of trade but the dou-
ble factoral terms of trade. It has been
maintained on theoretical grounds that
the double factoral terms of trade of third
world countries would tend gradually to
decline over time and hence that the dis-
tribution of the gains from trade would
favor the rich countries. If true, this would
tend to increase inequality in the distribu-
tion of the world's income between the
poorest primary-producing countries and
the advanced industrial or recently indus-
trializing countries (Albert Berry, Fran-
gois Bourguignon, and Christian Morris-
son 1983). The reason the double factoral
terms of trade tend to decline is that tech-
nical advances are concentrated in the
center, in the rich industrialized coun-
tries, and consequently labor productivity
rises more rapidly there than elsewhere.
The argument turns, then, not just on
the natural resource specificity of many
third world countries nor even on the low
rate of investment in many of the poorest
countries, but on the low level of expendi-
ture on research and development in the
third world. Radicals assert that, because
their expenditure on research is small,
third world countries are responsible for
very few product and process innovations
and, consequently, have few opportunities
to reap the quasi-rents which accrue to
those on the frontiers of technology.
The concentration of technical change in a few
countries, industries and firms constantly re-
creates a monopolistic organization of industry
and enables innovating enterprises to price
their products in such a way as to include a
substantial element of rent. The rent element
in prices, in turn, ensures that value exchanged
through trade will favour the rich countries
(where innovation occurs) and prejudice the
development of poor countries (whose exports
frequently, but not always, are sold on competi-
tive markets) [Griffin 1978, p. 26 and ch. 5].
Empirical evidence to test this proposi-
tion has been scarce, but John Spraos
(1983) has recently shown that the data
available do indeed lend support to the
view that the double factoral terms of
trade probably have contributed to grow-
ing inequality. A very different analysis
of unequal exchange based on differences
in wage rates is put forward by Arghiri
Emmanuel (1972).
Emmanuel's thesis is that "unequal ex-
change" mainly accounts for the growing
inequality among nations-that poor na-
tions trade products containing more for
less labor-hours with rich nations. To ar-
rive at this conclusion Emmanuel makes
two assumptions: first, capital is mobile in-
ternationally whereas labor is not; second,
the ratio of the wage rate to the marginal
product of labor is lower in poor countries
than in rich. His first assumption ensures
that profit rates (allowing for risk differen-
tials) are equalized throughout the world;
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1115
his second assumption ensures that wage
rates in the third world, even in sectors
which use the most advanced technology,
will be lower than in rich countries. As
a result, poor countries will receive lower
prices for their exports relative to the
prices they must pay for imports from rich
countries. In Marxist terminology, there
is a transfer of surplus value from the poor
to the rich nations.
Bettelheim, in an appendix to Emmanu-
el's book (1972), criticizes Emmanuel's
analysis as largely confined to the sphere
of circulation or exchange, which thus ne-
glects the more fundamental sphere of
production. Bettelheim claims that Em-
manuel's error comes from ignoring the
fact that wage differentials are grounded
in the production sphere-in the uneven
development of productive forces across
nations-and should not be "given" as an
independent variable. That is, differences
in wage rates among countries are due
to differences in labor productivity and
these differences in turn reflect differ-
ences in the extent of mechanization and
in the skill and training of the labor force
throughout the economy. Inequality be-
tween two countries arises primarily from
the degree to which the forces of produc-
tion have been developed and it is mis-
leading to characterize trade between
those two countries as "unequal" or ex-
ploitative.
Exploitation arises not so much between
one country and another as between
classes. According to Bettelheim, Emman-
uel's analysis of poor nations versus rich
nations ignores the primary contradiction
in the third world by covering up the class
struggles within each underdeveloped
country. It is only through such struggles
that radical changes in the relations of pro-
duction can occur, i.e., in property rights,
in ownership of the means of production,
and in the organization of work. Yet
changes in production relations are neces-
sary to remove the inhibitions preventing
full development of the forces of produc-
tion. In the nonsocialist countries it is the
world domination of capitalism, through
colonialism, imperialism and its after-
math, which is responsible for the re-
tarded development of the poor countries,
hence, for their low wages and living stan-
dards. That is, retardation is one conse-
quence of a particular system for orga-
nizing production; it is not a consequence
of exchange within that system.
Thus, unequal exchange cannot be ex-
plained by differential wage rates, Bettel-
heim maintains, for these have a more
fundamental, objective basis. The domi-
nant countries benefit from the interna-
tional capitalist system, but that very sys-
tem helps to retard the development of
poor countries. Retardation, of course, is
only relative. The great majority of third
world countries have experienced an in-
crease in average living standards in the
last 35 years and many, particularly the
better-off third world countries, have en-
joyed growth rates of income per head,
at least comparable to those achieved in
the advanced capitalist countries. The
poorest countries, however, which ac-
count for about two-thirds of the popula-
tion of the third world, have lagged far
behind the rest and show no signs of re-
ducing the vast gulf which exists between
them and the rich nations of Western Eu-
rope and North America. The issues, then,
are not whether dependency or unequal
exchange prevents growth (clearly they
do not) but whether they accentuate in-
ternational income inequality and, if so,
whether for most impoverished third
world countries the socialist option would
be preferable. Radicals such as Bettelheim
argue that most third world countries can-
not escape from their subordinate status
as long as they remain within the capitalist
system. The dominant countries under-
stand this perfectly well, he says, and go
to great lengths to entice or compel the
third world to stay within the fold.
1116 Journal of Economic Literature, Vol. XXIII (September 1985)
Emmanuel has been criticized by many
radicals, including Krishna Bharadwaj
(1984), who claims that he has placed the
entire burden of his analysis on exchange
relations (surface phenomena), has re-
duced all differences among countries to
the relatively trivial one of rich (high
wages) and poor (low wages), and has
largely confined himself to a static analysis
with too many important variables taken
as given. Others have charged that Em-
manuel's assumption of unrestricted capi-
tal movements leading to equal rates of
profit would imply faster rates of growth
in the periphery and the elimination of
the wage gap between center and periph-
ery. Still other criticisms have been re-
corded: de Janvry 1981; de Janvry and
Frank Kramer 1979; Mandel 1975. (For
a defense of Emmanuel, see Bill Gibson,
1980.)
B. Foreign Aid and International
Financial Agencies
Most liberals support foreign aid and
the international agencies that purvey it
on the grounds that it accelerates develop-
ment and reduces world poverty. Radicals
contest this. They argue, first, that most
foreign aid is not used ultimately to in-
crease the rate of capital accumulation
and growth; it is used to increase private
consumption or recurrent public expendi-
ture, including military expenditure (Mo-
hammad Rahman 1967; Rahman 1968;
Thomas Weisskopf 1972; Griffin 1978,
1984). Second, much of the additional in-
vestment that does occur has a low eco-
nomic rate of return; its purpose is not
so much to increase output as to be a mon-
ument to the generosity of the donors
(Griffin 1978). Third, as a result of these
two effects, the net impact of foreign aid
on a country's long-term rate of growth
often is negligible and may even be nega-
tive (Griffin 1984).
Even if growth does not accelerate,
however, poverty may nevertheless de-
cline because of the effects of aid on the
distribution of income. However, within
some third world countries, inequality ap-
pears to be increasing rather than dimin-
ishing and radicals argue, fourth, that for-
eign aid and the policies that accompany
it reinforce this tendency. Finally, looking
at the third world as a whole, it is clear
that aid is distributed highly unequally;
in fact, in the majority of bilateral and
multilateral aid programs a country's per
capita income and the amount of aid re-
ceived per capita are positively associated
(Douglas Dacy 1975; Griffin and Frances
Stewart 1973). Thus, as many radicals see
it, foreign aid accentuates inequalities in
the distribution of per capita income
among third world countries-unless, as
we must add, the net impact of foreign
aid on a country's long-term growth rate
is negative.
Aid is given to governments. It does not
follow from this that the country con-
cerned benefits from aid, much less that
the poorest people in the country benefit.
On the contrary, radicals maintain, much
foreign aid is used to prop up military re-
gimes and other authoritarian govern-
ments which repress the poor (Seers
1983); aid programs in such countries are
more likely to harm those at the bottom
of the economic ladder than to help them
(Michael Scott 1979; Frances Moore
Lappe and Joseph Collins 1978; Lappe,
Collins, and David Kinley 1980). It is
hardly surprising that radicals believe aid
is of little benefit to the poor because most
bilateral foreign aid programs are in-
tended to promote the political, commer-
cial, and industrial interests of the aid-giv-
ing countries; they are generally not
designed to eradicate poverty in the pe-
riphery. Thus, at best, economic develop-
ment in the third world could only be a
by-product of bilateral aid programs.
Turning to the multilateral agencies,
radicals consider the IMF, World Bank
and their sister institutions to be, essen-
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1117
tially, agents of international capital. The
ultimate purposes of their policies are to
preserve and extend the system of capital-
ism, to establish a favorable environment
for the penetration of internationalinvest-
ment and profitmaking by transnational
corporations,and to integrate third world
countries as closely as possible into the
network of world capitalism. This integra-
tion, according to radical interpretations,
subordinatesthe less developed countries
to the dominant industrial powers within
the hierarchical structure of international
capitalismand leaves them open to exploi-
tation.
Teresa Hayter (1971) sees foreign aid
as a weapon of foreign policy in the hands
of the donor countries. Aid is also "a con-
cession by the imperialist powers to ena-
ble them to continue their exploitation of
the semi-colonial countries" (p. 9). It is in-
tended to preserve the capitalist system
in third world countries. Further, she says
that foreign aid is a subsidy for transna-
tional corporationspaid for out of general
taxes-because it raises the demand for
their products, finances overhead capital
facilities in the third world, and finances
the repatriation of profits and interest
from these countries. Aid is used to avert
potentially disruptive crises. In fact, Hay-
ter claims, stability has often been sought
by aid agencies at the expense of develop-
ment (see also Rosemary Thorp and Law-
rence Whitehead 1979). Finally, and most
important, aid is employed to exert "le-
verage" for the purpose of changing or
influencing the policies of third world
countries in specific ways. She notes that
this is a strategy not only of the U.S.
Agency for International Development
but also of the World Bank and the IMF.
Cheryl Payer (1974) considers the IMF
as an agent of transnational corporations
and international capital which, them-
selves, are enemies of the independence
of third world countries. She makes this
charge on the basis that an aim of the IMF
is to integrate third world countries into
the world capitalist system and such inte-
gration makes the poorer countries de-
pendent on the more advanced ones. The
specific policies of the IMF are directed
toward achieving free markets and equi-
librium prices, including exchange rates;
control of the money supply and budget
deficits; denationalization of industries;
control of wage rates; and so ample invest-
ment openings, stable economic and fi-
nancial environments, and profitablepros-
pects for foreign private investment and
the later repatriation of profits. The IMF
policies favor stability over growth, and
by so doing lead to rising unemployment,
lower living standards for large numbers
of people, and ever-rising foreign indebt-
edness. These results, in turn, generate
unrest among workers, discontent among
the middle class, and the imposition or
strengthening of authoritarian regimes
(see also Felix 1983). With regard to inter-
national debt, Payer argues that the IMF
package includes loans from the Fund to
the third world countries and, later, loans
from others-for the purpose of allowing
LDCs to pay interest and principal on past
debts and to finance the growth of imports
coming from import liberalization poli-
cies: ". . . the Fund does not advise na-
tions on how to reduce their imports and
stand on their own feet economically, but
coaches them on how to qualify for in-
creased quantities of new credit" (p. 46).
Thus, third world countries are led into
a "debt trap" in which they must borrow
still more in order to meet payments on
their previous borrowings. This process,
Payer claims, is especially vicious when
borrowing coincides with a world capital-
ist depression (which comes periodically
but inevitably) and there is a consequent
decline in the export earnings of third
world countries that are needed to service
the debt. Countries that become en-
meshed in this trap are easily manipulated
by capitalist powers and their agencies.
1118 Journal of Economic Literature, Vol. XXIII (September 1985)
Her conclusion is that, if third world coun-
tries wish to develop rapidly, they must
"withdraw from an exploitative system
and suffer the dislocations of readjust-
ment," which is nonetheless superior to
petitioning "the exploiters for a degree
of relief" (p. 214).
In a later study of the World Bank,
Payer (1982) charges that it "deliberately
and consciously used its financial power
to promote the interests of private, inter-
national capital in its expansion to every
corner of the 'underdeveloped' world" (p.
19). The Bank seeks this aim through a
panoply of policies, all leading, however,
to the promotion of multinationalcorpora-
tions (especially, for a time, the interna-
tional oil companies) and to the preven-
tion of nationalists and socialists gaining
state power. The Bank, she alleges, gener-
ally will not loan to revolutionary, anti-
capitalist governments-unless as others
have added, the loans serve to weaken,
even more, the cohesion of world social-
ism. A theme of Payer's study is that Bank
policies result in higher profits and lower
wages in the LDCs, hence, in perpetuat-
ing poverty. But the real purpose of the
Bank is not to eradicate poverty; rather,
it is to serve the markets of advanced capi-
talist countries. "The Bank has been obe-
dient to the wishes of the U.S. executive
branch ever since it was founded" (p. 42).
And, of course, she adds, every president
of the Bank has been an American.
Even assuming that an aim of the Bank
is to help the poor, its policies and recom-
mendations have been criticized as inef-
fective. A. J. M. van der Laar (1976, 1979)
charges that they are highly unrealisticbe-
cause they are based on an assumption
that technological solutionswill sufficeand
social relations can be ignored. Instead of
viewing the poor in terms of "structurally-
determined dependent relationship vis-a-
vis the rich," the Bank has chosen to re-
gard the poor as "isolated groups of the
population which the development pro-
cess has simply passed by" (1976, p. 15).
As a result of this approach even those
Bank projects ostensibly directed toward
the poor have been largely unsuccessful
in alleviating poverty.
Studies, by radicals,of the World Bank's
operations in specific countries are in-
tended to lend support to the general
analyses above. For example, Payer in-
cludes in her work case studies of several
countries and a large number of Bank
projects. Hayter also looks at Bank, Fund,
and AID projects and policies in four
South American countries. Likewise, a
study of the World Bank's objectives in
the Philippines (Walden Bello et al. 1982)
concludes that a paramount (but unstated)
goal was political:namely, to defuse urban
and rural unrest, even though Bank poli-
cies were advertised as economic pro-
grams. Another unstated objective was to
"thoroughly integrate the Philippine
economy into the international capitalist
order dominated by the United States"
(Bello et al. 1982, p. 15). The latter objec-
tive was sought by opening the economy
to foreign capital and "liberalizing" the
foreign trade sector by engineering a shift
from import-substitutingindustrialization
to the promotion of primary commodity
and manufactured exports. The Bank it-
self publicly set out to overcome economic
stagnation by fostering growth-inducing
measures. There were some initial suc-
cesses, "followed by a protracted stale-
mate, then spectacular collapse" (p. 41).
According to the authors, the basic failure
of the Bank's explicit policies arose not
from trying to impose a particularcompo-
sition of output upon the country but from
its assumption that the productive forces
of the economy could be increased with-
out changes in the social relations of pro-
duction. For most radicals this really
means the mistake was in thinking that
growth could occur under capitalism,
when in fact it was possible only under
socialism.
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1119
The authors ask, "how could an agency
supposedly devoted to development con-
tribute instead to underdevelopment, to
the creation of an economic disaster?"(p.
200). The answer they give has three
parts. First, the Bank's principal goal is
to serve international capital, while the
goal to achieve economic development in
the third world is only of secondary impor-
tance. It would be pure coincidence if the
best policies for attaining the principal
goal were also the best development poli-
cies. Second, they believe that decision-
makers in the Bank do not have a realistic
view of the world. They avert their gaze
from problems of class conflict and exploi-
tation; instead, they see a series of techni-
cal problems-inefficiencies and scarci-
ties-to be overcome. Finally, officials of
the Bank are technocrats who work within
an elitist institution. Apparently they be-
lieve that the economies of the third world
can be managed and directed from above,
in the same way that the Bank itself is
managed. This is possible, however, only
as long as "politics"do not interfere. Thus,
the Bank has an interest in keeping poli-
tics at bay and this can be transformed
easily into a tolerance for repressive re-
gimes and a general advocacy of "firm
government."
A fundamental assumption of radicals
in these studies of international finance
is that the integration of LDCs into the
world capitalistsystem would reduce, per-
haps even eliminate, their development
possibilities. Another fundamental as-
sumption is that LDCs could achieve de-
velopment only within a socialist mode
of production-and, as many radicals see
it, only within a self-sufficient socialism.
There are, however, several well-known,
striking counter-examples to each of these
propositionsand, generally speaking, radi-
cals have not faced up to them. Although
the Filipino economy is not one of these
counter-examples, it is nevertheless true
that more progress has been made there
in the past two decades or so than the
book title by Bello and his associates (De-
velopment Debacle) would indicate, or
than the many "failures," "crises," and
"spectacular collapses" discussed in the
text would suggest. After all, from 1960
to 1982 the Philippines' GNP per capita
grew at the annual rate of 2.8 percent;
life expectancy at birth, in 1982, rose to
64 years; the crude death rate per 1000
fell from fifteen in 1960 to seven in 1982;
and education at all levels became more
available to the population (World Devel-
opment Report 1984, pp. 218, 256, 266).
This is not to deny the many economic
and social failures of the Marcos regime;
rather, it is to assert that radicals, like ev-
eryone else, can be misled by the initial
propositions that they take for granted.
We will note in Part III, from the stand-
point of the economy as a whole, that
some radicals have argued that policy
"mistakes"are in fact purposeful and ra-
tional when seen from the perspective of
ruling-classinterests. It is possible, there-
fore, that when the IMF advises the elimi-
nation of such policies, usually involving
interference with free markets and prices,
it is working either in the interest of the
economy or in the interest of international
capital and against that of a ruling class.
Also, it is possible that some LDCs have,
in fact, carried out errant policies from
almost anyone's point of view in the econ-
omy, the correction of which by the IMF
or the World Bank would be a service to
the population at large. Lastly it is quite
possible that as long as an LDC operates
within the capitalist mode of production
its economy would "work better" if its
leading class were invigorated with prom-
ises of higher payoffsfor capital formation,
risktaking, and the like. Once again, this
does not deny that radicals have a strong
case against many IMF and World Bank
measures (as viewed by the LDCs' work-
ing classes); rather, it pleads for a more
balanced presentation, the depiction of a
1120 Journal of Economic Literature, Vol. XXIII (September 1985)
more complex multi-toned canvas which
is truer to reality than black and white
would be.
III. Domestic Class Structuresand the
State
Most peasants are scarcely conscious of
internationalforces that impinge upon the
third world. They probably know little
about how their own society is organized
and are unaware of the connections
among social organization, political struc-
ture, and government policy. On the
other hand, the peasantry understands
very well the organization and mode of
operation of the economy and society
where they live and work.
Radicalsbelieve that neoclassicalecono-
mists mostly ignore the complexities of
class societies, and that they simplify their
analysis to the point of caricature by con-
centrating so single-mindedly on the be-
havior of individuals in a classless uni-
verse. On the contrary, economists of a
more radical persuasionoften assume that
society is divided into identifiable groups
or classes which have different and fre-
quently competing interests. This clash of
interests occurs not only in the market-
place, as when rural trade unions and
plantation managers confront one an-
other, but above all in the political arena,
where the outcome of the struggle to con-
trol state and government policies deter-
mines the distribution of income, level of
accumulation, rate of production growth,
and much else.
A. Class Analysis
Those writing in the Marxisttradition
usually identify classes by their relation-
ship to the means of production. In capi-
talism, for instance, a capitalist class owns
the capital goods, controls the production
process, acquires the commodities pro-
duced by workers and, in the end, appro-
priates part of the value created by labor.
This part is distributed as industrialprofits,
interest, and rent-to industrial,financial,
and landed capitalists, respectively. The
working class owns its own labor power,
and little else, which it sells on labor mar-
kets as a commodity, receiving wages in
return. Other classes are similarly identi-
fied by their roles in this particular mode
of production, for example peasants, who
may be small rural capitalists, tenants,
share-croppers, or landless agricultural
workers (Marx and Engels 1947, 1955;
Mao Tse-tung 1965).
Class analysis has proved to be a pow-
erful tool to understanding problems
ranging from political macro-dynamicsto
economic micro-issues. Radicals do not
find it surprising that they can illuminate
areas in which conventional economists
founder, inasmuch as the latter are alone
in trying to understand human phenom-
ena exclusively in terms of the behavior
of isolated individuals.No historian,sociol-
ogist, political scientist, or anthropologist
would systematically ignore all social for-
mations larger than the nuclear house-
hold.
The richness of class analysis can be il-
lustrated by citing a few studies in which
it has been used to enlighten a wide range
of issues. Barrington Moore in his 1966
classic has used it to study the origins of
the modern political system in England,
China, Japan, India, and elsewhere. For
example, Moore analyzed the origins of
communism in China in terms of peasant-
incohesiveness, the weak links between
it and the upper classes, and the "margin-
alization" of many peasants-a land-short
peasantry. The social origins of fascism in
Japan and Germany had strong similari-
ties:
In both countries, regimes emerged whose
main policies were repression at home and ex-
pansion abroad. In both cases, the main social
basis for this program was a coalition between
the commercial-industrial elites (who started
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1121
from a weak position) and the traditional ruling
classes in the countryside, directed against the
peasants and the industrial workers. Finally,
in both cases, a form of rightist radicalism
emerged out of the plight of the petty bour-
geoisie and peasants under advancing capital-
ism [p. 305].
Some economists working in Latin
America have sought to explain sustained
rapid inflation in terms of a struggle
among groups to increase their shares of
the national income, or at least to prevent
their shares from declining as a result of
strongly pressed demands by others (Ma-
rio Simonsen 1964; Tom Davis 1963). In
India, Ashok Mitra (1977) has employed
class analysis to examine the terms of
trade between agriculture and industry.
Manyradicalshave invoked classes to clar-
ify particular instances of imperialism
when it was otherwise inexplicable in
terms of the nation as a whole.
In a remarkable study, Alain de Janvry
(1981) has invoked classes to explain the
genesis of complicated sets of economic
policies in Latin America. He explains that
in most Latin American countries today
the industrial bourgeoisie has formed an
alliance with the "junkerlanded elites"-
semifeudal elites who own capitalist agri-
cultural enterprises that hire wage labor-
ers. The junkers provide agricultural
exports and industrial raw materials
necessary to sustain import-substituting
industrialization.The urban capitalists, in
turn, protect the junkers' profits by re-
stricting imports of competing products,
imposing low taxes, and investing heavily
in technical agriculturalchange while en-
suring that surplus rural labor helps to
keep wages low. The rural labor force,
whether employed on junker estates or
as peasants in the traditional sector, is
more proletarian than agrarian; conse-
quently, for the majorityof the ruralwork-
ing population the availability of employ-
ment and the wage rate are more
important in determining economic wel-
fare than output per hectare on their small
plots.
Much debate now centers on the phe-
nomenon of "interlinked factor markets"
and the related fact of "market isola-
tion"-which refer to classes and power
relations instead of to individual behavior
in efficient markets. The former term sig-
nifies a situation in which a single transac-
tion specifies the prices and quantities of
several factors of production. This can oc-
cur, for instance, when a landowner simul-
taneously rents land to his tenant, pro-
vides him with credit, and hires the tenant
or members of his family part time for
wages. In such a situation, factor prices
are not necessarily market-clearingprices,
nor do they reflect the balance of supply
and demand in the normal sense. The
price paid for a factor of production varies
widely even within a restricted geographi-
cal area. This is what is meant by market
isolation.
Neoclassical economists have set out to
explain interlinked factor markets and
market isolation as responses to market
imperfections, a desire to spread risk or
reduce uncertainty, and the imperfect
availability of information. That is, these
phenomena are seen as having arisen in
order to make markets function more effi-
ciently than would otherwise have been
possible (KaushikBasu 1983). Radical ap-
proaches to these phenomena, however,
place them firmly within a class context
and regard changes in contractual ar-
rangements as responses to changes in
economic, legal, technological, and politi-
cal circumstances which affect the bar-
gaining power of contracting parties. A
typical case would be a conflict of interest
between a landlord and his sharecropping
tenant, but the method of analysisis quite
general and can be used, for instance, to
explain the response of landowners to
usury" laws or to legislation prohibiting
share tenancy, the introduction of new
technology and the need to have guaran-
1122 Journal of Economic Literature, Vol. XXIII (September 1985)
teed supplies of labor at particular times
of year (Amit Bhaduri 1973; Ajit Ghose
and Ashwani Saith 1976; P. K. Bardhan
and A. Rudra 1978; P. K. Bardhan 1980;
Kalpana Bardhan 1983). The emphasis,
then, is not on efficiency of the market
in allocating resources but on the ability
of those who control resources other than
labor and own most of the productive as-
sets to take full advantage of their eco-
nomic power.
Even for those who are reluctant to em-
ploy a conflict model of society in analyz-
ing the major issues of development, class
analysishas helped to call attention to the
fact that the poor are not a single class
but a heterogeneous collection of people,
one group differing from another in terms
of its geographical location, demographic
characteristics,occupation, and so on. The
interests of these various poor groups do
not necessarily coincide and in many cases
policy measures which help some of the
poor actually harm others (Griffin and
James 1981). The rich, of course, also are
heterogeneous and divided. They may be
split by language or religion, or among
competing regional blocs; they may have
differing economic interests based on agri-
culture, manufacturing,or trade and com-
merce; they may be divided along clan,
tribal, or family lines. Despite this frag-
mentation into squabbling factions, radi-
cals insist that, in most countries for most
of the time, the commonality of interests
among the rich as against the poor is suffi-
ciently well perceived to keep them from
undermining their control of the state by
internecine struggle.
The state, in radical literature, is an in-
strument in the hands of the governing
class. Radicalsclaim that it is usually used
to further the interests and protect the
advantages of the ruling class. It may also
be used by the governing class as an in-
strument for all-rounddevelopment, or to
satisfy some demands of an increasingly
strong subordinateclass that can no longer
be ignored. Often the state has been em-
ployed to favor: particular ethnic groups
(as with the Sinhalese in Sri Lanka or the
Malaysin Malaysia),the urban population
at the expense of the rural (Ghana),a caste
of militaryofficers(Pakistan),an authoritar-
ian monarchy (Morocco), the dominant
position of a group of large landowners
(Nepal and Guatemala), or the interests
of large industrialists(Brazil).The pursuit
of class interests may lead to economic
growth but in many third world countries,
radicals believe, it has also led to growing
inequality and sometimes to further im-
poverishment of significant sections of the
population. Radicals point out that this,
in turn, is associated with the intense and
perhaps rising social and political unrest
throughout much of the third world, in
Kenya, Chad, Chile, El Salvador,Peru, the
Philippines, Bangladesh, and elsewhere.
The problems of poverty, especially ru-
ral poverty, and of social unrest underline
the necessity for purposeful government
intervention. But given the class basis of
the state, a question arises about the possi-
bility of effective action. It is this question
that we consider next.
B. The State and Domestic Policy
Economists seem to agree that domes-
tic policies are one of the basic causes of
poverty in the third world, in both urban
and rural areas. Orthodox economists,
however, assume that the state is essen-
tially an even-handed institution which at-
tempts to maximize a "socailwelfare func-
tion." If welfare is not in fact maximized,
this must be because policy mistakes have
been committed, and it is the job of the
economist to point out these mistakes to
government so that they may be cor-
rected. The most commonly used tool in
this type of policy analysis is applied wel-
fare economics.
Radical economists, on the other hand,
as we have just indicated, have quite a
different point of departure, that of class
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1123
analysis. (See Bob Jessop 1977; David
Gold, D. Lo and Eric Wright 1975 for sur-
veys of theories.) In some third world
countries (forexample, Latin America)the
groups who control the state are well en-
trenched, the class structure is well de-
fined, and the political system (but not
necessarily an individual government) is
relatively stable, until it is overthrown by
a revolution, as in Cuba and Nicaragua.
In other countries, the class hierarchy is
in flux, as various groups struggle against
one another to fill the power vacuum cre-
ated by departing colonialists. In some
cases, notably in Africa, a military and bu-
reaucratic elite has taken power, whereas
in other cases, including parts of Asia, po-
litical power has accrued to those who
dominate the productive sectors of the
economy, namely: large landowners and
industrialists.
What the orthodox economist regards
as a mistake, therefore, the radical econo-
mist is likely to regard as a deliberate at-
tempt to improve the position of particu-
lar interests. Using class analysis, the
radical economist is less inclined to pre-
scribe policies to governments than to try
to explain why the policies in question
were first introduced and to discover who
has benefited from them. (The role of the
state, in a variety of situations, is demon-
strated in: Baran 1957; Eugene Genovese
1965; Eric Williams 1966; Nicos Poulant-
zas 1973, 1979; Ralph Miliband 1969,
1977; Suzanne de Brunhoff 1978; Frank
1972; Andreas Papandreou 1972; Kiernan
1978; and G. Kitching 1980.)
The difference in approach is well illus-
trated by disequilibrium prices. Conven-
tional economists, surveying the "dis-
torted" prices prevalent in the third
world, advocate the use of "shadow"
prices in selecting investment projects;
the shadow prices are determined by esti-
mating social costs and benefits, or else
they advocate actually changing the er-
rant prices into true market prices. Radi-
cals respond that governments may wish
neither to alter actual prices nor to intro-
duce an effective system of shadow prices
because they know that if they were to
do so the class distribution of benefits and
burdens would be altered in a way that
is unfavorable to the classes in power
(Stewart 1975).
For example, in many countries ex-
change rates are overvalued; the conse-
quent excess demand for foreign ex-
change, to purchase imports, typically has
been contained by introducing import
permits and other trade controls. The
combination of an overvalued exchange
rate and import controls then enables the
government to bestow favors upon its sup-
porters in the form of import licenses, fa-
vors which result in large income gains
in the form of scarcity rents. Similarly,the
price of finance capital often is less than
its opportunity cost, and real interest rates
sometimes are negative. Therefore, credit
must be rationed and anyone who suc-
ceeds in obtaining the rationed credit is
assured large profits. It is well known that
when credit is allocated by administrative
devices those who succeed in obtaining
it tend to be the large and well-established
enterprises, not small and new borrowers.
That is, the system is biased in favor of
those who control the majormeans of pro-
duction (the "rich") and discriminates
against those who do not (the "poor").If
the poor get any credit at all, they must
rely on moneylenders and the informal
or parallel credit markets. Again, policies
may, in any of several ways, deny available
land to the peasants, resulting in much
unemployment. These measures may ap-
pear wrong-headed to the uninitiated, but
be perfectly sensible from the standpoint
of a rural or urban bourgeoisie that profits
from the immediate availability and
cheapness of labor, especially during sea-
sonal peaks (Edward Boorstein 1968,
ch. 1).
It is for these reasons, radicals charge,
1124 Journal of Economic Literature, Vol. XXIII (September 1985)
that the orthodox prescription of social
cost-benefit analysisis fundamentally mis-
conceived: it is unwanted by the rich and
powerful classes who do well out of a "dis-
torted" system, and it is unhelpful to the
poor and powerless classes who are the
victims of that system.
Similar problems arise in the realm of
social expenditure. Health expenditure in
the third world has been concentrated in
the major cities, in large capital-intensive
hospitals, and on curative medicine. Yet
the majority of the population lives in the
countryside, needs simple clinics and a
network of paramedical personnel, and,
above all, would benefit enormously if em-
phasis were placed on preventive rather
than individual curative medicine, includ-
ing the provision of clean water supplies
and adequate sewage disposal, the eradi-
cation of malnutrition, and the control of
epidemic diseases. Indeed, it is becoming
recognized that even in the advanced in-
dustrialized countries the major improve-
ments in health were due not to conven-
tional medical interventions but to
improvements in the environment and in
living conditions (Thomas McKeown
1979; Alastair Gray, Oct. 1983). The po-
tential benefits of such policies in the third
world are widely acknowledged and, in
fact, the WHO and UNICEF have man-
aged to secure agreements from govern-
ments to promote (PHC) "primaryhealth
care" (WHO/UNICEF 1978, WHO 1979).
Why, then, are medical resources allo-
cated in the way they are? Either govern-
ments are inept, which is the implicit an-
swer of the orthodox economist, or else
they are not maximizing social welfare in
any meaningful sense but, instead, are
maximizing the benefits of the urban rul-
ing class, including the urban-basedmedi-
cal profession. As Malcolm Segall makes
quite explicit (October 1983):
The reshaping of the health sector in the direc-
tion of PHC inevitably encounters opposition
from the main beneficiaries of the existing situ-
ation. On the consumer side these comprise
. . . the urban rich . . . On the producer side
are the health care professionals,especially the
doctors, and private capital in the form of the
pharmaceuticaland medical equipment indus-
tries, and those private hospitalsand health in-
surance companies that are profit-making.This
is a formidable enough alliance [p. 32].
The same sort of problem occurs in edu-
cation. In most third world countries a dis-
proportionate amount of the resources
available is allocated to university (more
generally, tertiary) education at the ex-
pense of primary and secondary educa-
tion. Moreover, the net private benefits
of tertiary education often exceed the net
"social" benefits by a wide margin. The
reason for this is that the private benefits
reflect large government subsidies per
student in tertiary education and great ed-
ucation-related wage differentials, often
inherited from the social values of the co-
lonial regime, which persist in the face
of market pressures. To the orthodox
economist, it would seem sensible to re-
duce the wage differentials, reduce the
subsidy to tertiary education, and increase
public-sector support for primary and sec-
ondary education. The problem is that
none of these things is likely to happen
because the present "misallocation"of re-
sources strengthens the elites who domi-
nate most third world countries. That is,
from the point of view of those who con-
trol the government, there is no misalloca-
tion of resources.
Radicalsclaim that the logic of their ap-
proach can be applied to questions of ma-
cro-economic development strategy. Ap-
plied welfare economics declares that
third world countries ought to follow a
policy of modified iree trade (Ian Little,
Tibor Scitovsky, and Maurice Scott 1970).
Class analysis suggests that countries fol-
low the policies they do, not because they
misunderstand the logic of the principle
of comparative advantage but because of
the interests of those who control the
state. The pro-industry, anti-agriculture,
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1125
and anti-free trade policies followed by
Pakistan and Bangladesh, for example,
highlight the fact that in both countries
the ruling class consists of a coalition of
industrialists,urban bureaucrats, and the
military. In Argentina, the twists and turns
of policy are the outcome of a struggle
between a rising industrial class and an
older, large landowning class that exports
primary products and is now in relative
decline. If the strategy of import-substitut-
ing industrializationwere to disappear, it
is improbable that it would be replaced
by free trade and laissez faire. More likely
there would be even greater efforts to
form an alliance of third world nationalist
and populist forces and greater pressure
to institute a (NIEO) New International
Economic Order. (The quest for a NIEO
was initiated by third world countries in
1974 in an attempt to alter the distribu-
tion of wealth and power between the
North and the South. A radical assessment
of the NIEO is given by Frank 1980; Fur-
tado 1979; and an overall analysisby Cline
1979.) Conventional economic analysis
usually misses this political dimension of
economic policy. Some liberal economists
even claim that the enthusiasm of the
third world "for some of the New Interna-
tional Economic Order items seems
scarcely explicable, except in terms of bad
advice" (Little 1982, p. 373).
The crucial division between conven-
tional and radical economists would seem
to center on distributive issues, but the
actual situation is rather complex and
even paradoxical. Many radicals do want
more equal distributions of income and
wealth for their own sake. At the same
time, they seemingly agree with Marx
that, once the issue of who owns and con-
trols the means of production is settled,
income and wealth distributions will fall
into place; questions of distribution, for
Marx,were secondary. Moreover, radicals
frequently affirm that there is no neces-
sary conflict between faster growth and
a more equal distribution of wealth and
income. And this seems to be buttressed
with evidence from some countries. But
many of this persuasion also recognize
that, if the capitalist mode of production
remains intact, a redistribution of income
away from the capitalist class might well
slow down the accumulation and growth
process. Furthermore, it seems to be
widely agreed among radicals that, given
capitalist relations of production and the
nature of the capitalist state, any signifi-
cant redistribution of wealth and income
toward the dispossessed is out of the ques-
tion. Consequently, radicals have a long
way to go before their position on this is-
sue is sharpened and freed of contradic-
tions.
Radicals believe that orthodox econo-
mists usually give priority to increasing
production first while putting equity on
a back burner; orthodoxy postulates a
trade-off between growth and equity.
While there is much truth in this observa-
tion, many orthodox analysts have more
sophisticated views on this issue, noting
that some third world countries, such as
Taiwan and the Republic of Korea, have
achieved simultaneously both growth and
greater equity. Moreover, as Simon Kuz-
nets (1968) has shown, growth may be ac-
companied in its early stages by rising in-
equalities but, in its later stages, by the
opposite. However, these conclusions
have been disputed by Charles Wright
(1978).
Nevertheless, in recent years, a consid-
erable body of evidence from a number
of countries indicates that the domestic
economic and social policies that were fol-
lowed have resulted in greater inequality;
indeed, in some instances, they accentu-
ated poverty. Rene Dumont (1966)
pointed to former-French West Africa
where there are rapidly growing dispari-
ties between impoverished peasants and
high-living urban elites. He blamed most
of these on the colonial legacy without,
1126 Journal of Economic Literature, Vol. XXIII (September 1985)
however, excusing the African leaders
who slavishly followed European values
and policies. In some cases (Chad, Zaire,
Uganda, Somalia, Madagascar,Niger, Su-
dan, Ghana, and Senegal) the incidence
of poverty has increased primarily be-
cause national income per capita has
fallen (World Bank 1984, which covers
1960-1982). In other countries, however,
the incidence of poverty failed to decline,
and quite possibly rose, despite growth in
aggregate output per head. This view was
first put forcefully by the ILO in a study
which covered ruralpoverty in the Philip-
pines, Indonesia, Malaysia,Sri Lanka,Ban-
gladesh, Pakistan, and the Indian states
of Tamil Nadu, Bihar, Uttar Pradesh, and
the Punjab (ILO 1977; Griffinand Azizur
Rahman Khan, March 1978). A later study
suggests that in Nepal, too, the rural-
poor's standardof living has declined (Riz-
wanul Islam, Khan and Eddy Lee 1981).
A similar phenomenon seems to have oc-
curred in several African countries, not-
withstanding the growth they have expe-
rienced, namely: Tanzania, Sierra Leone,
Zambia, Malawi,and most likely the Ivory
Coast (Dharem Ghai and Lawrence
Smith, August 1983).
These findings have been disputed by
a number of orthodox economists. Some
assert it is not true that poverty has in-
creased or merely: "in a sense, there are
no facts" (Little 1982, p. 210). Others be-
lieve that the case is not proven, the data
being unreliable or not comparable over
time (Sudhir Anand 1983). Still others,
that the phenomenon affects only a few
countries or has occurred only over lim-
ited periods. Or, alternatively, that the
problem is not serious and can be cor-
rected by larger doses of present policies
leading to faster growth (Montek Ahluwa-
lia 1976, 1978); modified trickle-down ap-
proaches are also advocated.
The present evidence is not extensive
or solid enough to resolve the issue, to
everyone's satisfaction,of whether growth
of income per capita in some third world
countries has been accompanied by the
further impoverishment of some groups.
It is perfectly clear, though, that economic
growth in much of the third world has
not done a great deal, if anything, to allevi-
ate large areas of poverty. Radicals chalk
up these dreary results to capitalism.They
point out that China, Cuba, and other so-
cialist countries have mopped up the
worst forms of destitution, so progress
along both the growth and equity fronts
is possible. They have been reluctant,
however, to face up to the fact that some
third world countries, capitalist to the
core, have done much the same thing.
How can this diversity of results across a
number of countries with widely different
class structures and social relations be ex-
plained? This is another item for the fu-
ture agenda of radicals.
IV. The Transition to Socialism
In this final part we shall discuss some
of the controversy among radical econo-
mists regarding problems of countries in
transition from pre-capitalist or capitalist
to socialist economies. This survey in-
cludes issues associated with the question
of alternative paths to a socialist society.
It also covers some of the literature con-
cerned with whether the Soviet Union,
China, and a few other socialist countries
are in fact socialist.
A. Background
If the main prediction of Marxand En-
gels had come true, socialism would have
been built on the high and sturdy founda-
tions of advanced capitalist societies.
These foundations would have included
a generous supply of productive forces,
a large and knowledgeable urban indus-
trial working class, a capitalist class that
was mostly without function, and a highly
concentrated industrial structure of huge
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1127
enterprises and financial firms. Proleta-
rian revolutions would have occurred in
these societies because of the increasing
failure of capitalism to utilize properly its
productive forces, including, especially, its
army of labor power and because of the
continuing exploitation of workers by an
increasingly parasitical capitalist class.
The victorious working class would have
constructed a socialist society by radically
transforming capitalist relations of pro-
duction to socialist forms, establishing a
dictatorshipof the proletariatover the for-
mer ruling classes, and releasing the
underutilized and misallocated, but am-
ple, productive forces to meet the rising
needs of the people (Marx1978; Marxand
Engels 1947, 1955).
As it turned out, however, socialism
arose in the less-developed areas of the
world where capitalism was still imma-
ture, urban industrial workers were a
small proportion of the labor force, stan-
dards of living were often abysmally low,
and where only an undeveloped (or un-
derdeveloped) structure of economic in-
stitutions and practices existed. Socialism
had to be constructed on the foundations
of poverty. Most radical economists ex-
plain this turn of events along Leninist
lines: after Marx' day, capitalism became
a world system consisting of a global hier-
archy of exploiting and exploited nations,
with each nation exploiting those below
it and being exploited by those above it.
Those countries at the bottom, which
were most exploited and most oppressed,
became the weakest links in the global
system, and these links were broken by
nationalistand socialistrevolutions against
the capitalist imperialist nations at the top
of the pyramidal edifice (L. S. Stavrianos
1981).
B. Paths to Socialism
This chain of events has raised many
problems about the feasible paths to so-
cialism from a precapitalist or immature
capitalistbase. An instructive exchange on
some of these problems took place fifteen
years ago between Sweezy and Charles
Bettelheim (1971), which involved the
meaning of socialism,the theory and prac-
tice of the transitionprocess, and an analy-
sis of backslidingby some erstwhile social-
ist countries to some form of state
capitalism. Much of this discussion was in-
fluenced by previous work of Marxist
economists on the transition from feudal-
ism to capitalism (Maurice Dobb 1963;
Sweezy and Dobb 1967).
Both Sweezy and Bettelheim (1971)
came to the more recent debate having
been favorably moved by China's experi-
ences under Mao Tse-tung (Mao Zedong)
especially by the Cultural Revolution and
unfavorably influenced by Soviet experi-
ence. Despite this common ground, seri-
ous differences developed between the
two analysts.The most basic was whether
central planning could be identified with
socialism and the reliance on markets
identified with capitalism. Sweezy at first
wrote as though this were so (a position
also taken by Nicolaus, 1975), but Bettel-
heim denied these associations, claiming
that "plan" and "market" were simply
surface forms behind which lay the real
social relations, the class structure of soci-
ety. Bettelheim proposed that socialism
should be defined as a society in which
the immediate producers (i.e., the work-
ers) dominate the conditions and results
of their productive activity. The crucial
question, therefore, in judging whether a
society is on the road to socialism is politi-
cal: namely, does the working class hold
power? It is true, Bettelheim acknowl-
edged, that central planning is conducive
to the retention of such working-class
power, while the reliance on markets
(commodity relations) would tend to un-
dermine it. However, since both the bour-
geoisie and the proletariat can engage in
planning, and since both will use market
processes to some different degree, the
1128 Journal of Economic Literature, Vol. XXIII (September 1985)
important question is not plan versus mar-
ket but proletarian power versus bour-
geois power.
Sweezy and Bettelheim (1971) raised
the question of what constitutes the prole-
tariat "in the kind of underdeveloped
countries in which most of the anti-capi-
talist revolutions of the twentieth century
have taken place" (p. 49). Sweezy's own
reply to this was that the proletariat was,
in effect, a "substitute proletariat,"which
had arisen "through prolonged revolu-
tionary warfare involving masses of peo-
ple" (p. 52). This substitute proletariat
consisted of people "with essentially
proletarian attitudes and values even
though [they] may not [have been] the
product of a specifically proletarian expe-
rience" (p. 52). But their revolutionary ex-
perience molded them into a revolution-
ary force for the overthrow of the old
system and the building of the new one.
Bettelheim answered Sweezy's ques-
tion by proclaiming that:
The proletarian character of a revolution, in
fact, depends more on the dominant role of
the proletarianideology and of the party which
embodies this ideology, than on the 'numerical'
strength of the proletariat.The dominant role
of the proletariat in the revolution, therefore,
is primarily ideological and political [1971, p.
69].
Thus, according to Bettelheim, anyone
can take either the capitalist or the social-
ist road because class positions are not
"rooted in a class situation circumscribed
by the process of production"(p. 71)-that
is, because "proletariat"and "bourgeois"
are not fully formed at the time of the
revolution-so, anyone can be trans-
formed by the ideological class struggle.
But there must be, in all of this, leadership
by a Marxist-Leninistparty that incorpo-
rates the "theoretical and practical lessons
drawn from the struggles of the world pro-
letariat" (p. 72). Such a party must remain
the servant of the masses; it must be a
power instrument of the workers.
Hence, Sweezy and Bettelheim con-
cluded, a poor country is on the road to
socialism if its working class has political
power, which is exercised by a Marxist-
Leninist party that is an instrument of the
workers and which enables them to domi-
nate the conditions and results of their
productive activity. This underlying
power will be reflected on the surface by
the increasing domination of planning
over markets. The roles of revolutionary
movements and proletarian ideology are
crucial in poor countries that largely lack
an authentic proletarian class, for a substi-
tute proletariat must be fashioned from
such experiences.
With regard to the role of ideology in
the transition to socialism, radical econo-
mists have been much influenced by the
writings of Antonio Gramsci (1957, 1971).
He stressed how important it was for the
proletariat in a capitalist society to de-
velop its own culture and ideology prior
to its assumption of power so as to over-
come, after the revolution, bourgeois
ideology that was bound to remain strong
for some time. Gramsci believed that the
proletariat had to become "philosophers,"
with a critically coherent conception of
the world. It should not mouth and act
out the philosophy of the dominant class.
He reminded the proletariat that correct
ideas could have the power of material
forces. But these proletarian elements of
the superstructure have to be consciously
and purposely developed, for they do not
appear from "a haphazard and sporadic
germination" (1957, p. 187). In this con-
nection, the Communist Party has an im-
portant role in the elaboration and propa-
gation of proletarian ideology, for most
working people do not have "a clear theo-
retical consciousness of their actions"
(1957, p. 66).
Although, in a poor country, after a suc-
cessful revolution, the working classes
may have political power, control over the
conditions of their work, and the makings
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1129
of a proletarian ideology and culture, im-
portant economic problems remain. One
is whether the new government should
attempt to attain socialismby first empha-
sizing gains in production (productive
forces), changes in relations of production
(institutionsand practices most closely as-
sociated with work, including class struc-
tures), or both. This problem presents it-
self in an exigent form because of the
material poverty from which the country
starts. How should it proceed?
These issues have been raised by a num-
ber of radicals, including Gurley (1978,
1983, 1984). There are certain advantages
to changing the relations of production
immediately after the revolution, such as
carrying out land reforms, nationalizing
some key industries, and beginning a cen-
tral planning agency. These and other
measures would qualify in satisfying the
revolutionists' immediate demands for
progress toward socialism and in meeting
minimum equity standards and the most
urgent social needs. (But Bukharin, 1979,
insisted that production was bound to
fall during the immediate transition pe-
riod.)
Beyond those early actions, there are
several strategies that combine, in varying
degrees, the development of a country's
productive forces, on the one hand, and
the transformationof its relations of pro-
duction, on the other. A strategy that gives
priority for some time to the former, while
the latter is changed less quickly, is based
on the belief that "socialistinstitutions and
practices are unsustainableif they are not
supported by higher levels of production"
(Gurley 1983). The opposing view is that
such a strategy runs the risk of sooner or
later undermining whatever gains have
been made toward a socialist society. This
is because, in a transitionsociety, capitalist
incentives, values, and institutions would
be relied on heavily to achieve the pro-
duction gains. A second strategy gives
immediate priority to the radical trans-
formation of the society's relations of
production, while productive forces move
ahead more slowly. This strategy is
founded on the belief that "the immediate
establishment of socialist institutions and
practices is necessary to eliminate the pre-
socialist forms that supported the privi-
leged positions of the old ruling classes-
thereby getting rid of the old ruling classes
themselves-and to release the oppression
exerted on the working classes by these
feudal and capitalist forms" (Gurley 1983,
p. 111). This is the strategy generally fa-
vored by Mao Tse-tung, who believed that
it would, at the same time, greatly pro-
mote production gains, as peasants and
others were released from their chains.
The opposing view, as previously indi-
cated, is that socialist institutions cannot
be sustained in the absence of a highly
productive economy-a view that as-
sumes, contrary to Mao's belief, that the
two tasks are trade-offs,not complements;
that the active pursuit of one goal tends
to endanger the attainment of the other.
Radicals seem sharply divided on this
issue, or at least much puzzled by it. Most
would probably agree with Sweezy and
Bettelheim (1971) that the paramount
consideration during the transition to so-
cialism is to insure that workers possess
political power. But whether that power
can be retained by pursuing, for some
time, primarilyproduction gains (as China
is presently doing) is a question unre-
solved, indeed hardly discussed, in radical
literature. Similarly, there has been little
discussion of the other strategy that may
employ "leaps" (rapid and coordinated
changes in relations of production), the
counterpart to the "big pushes" on the
production side. Some of these issues have
been addressed recently by Victor Lippit
in a thoughtful analysis of the dynamics
of the transition process (Selden and Lip-
pit 1982), and Bettelheim, in all of the
works cited, has treated these issues his-
torically and analytically.
1130 Journal of Economic Literature, Vol. XXIII (September 1985)
C. Backsliding
There has been much discussion and
a great deal of disagreement among radi-
cals regarding whether the Soviet Union,
the countries of Eastern Europe, and
China are socialist societies in the Marxian
sense. The debate has necessarily involved
the meaning of Marxiansocialism, as well
as analyses of those societies' conformity,
or lack of it, to the Marxian principles.
As would be expected, the Soviet Union,
Eastern Europe, and China have their de-
fenders, but also their detractors, among
the radicals.
An early indictment of the Soviet Union
was that of Leon Trotsky (1972, originally
published: 1937) who, in the mid-1930s,
claimed that the Soviet Union was a "tran-
sitional society," not yet a socialist one.
Trotsky alleged that socialism requires
a substantial buildup of the productive
forces and, in an underdeveloped country,
international proletarian help, neither of
which occurred during the 1920s in the
Soviet Union. He believed that Stalin's
radical policies at the end of the 1920s
and the beginning of the 1930s were intro-
duced too suddenly and without adequate
political preparation.Since then, he noted
in 1937, the country had made impressive
economic gains but at tremendous costs-
lagging labor productivity, gross imbal-
ances, poor quality of goods, terrible man-
agement, growing inequalities and privi-
leges, and a huge bureaucracy. The last,
according to Trotsky, resulted from the
isolation and backwardness of the Soviet
Union; the bureaucracyarose from the de-
feats of the European working classes in
the 1920s and the decimation of Soviet
workers in the civil war of 1918-1920.
Trotskypointed out that socialismis not
automatically attained by public owner-
ship of the means of production, for such
juridical forms have different social con-
tent at different levels of the productive
forces. A "true socialism," he said, re-
quires the spread of democracy, freedom,
greater equality, central planning, and
revolutionary internationalism in foreign
policy. Socialism cannot be slowly built in
one country, from a level of impoverish-
ment and surrounded by enemies. Any
such socialismwill be deformed, distorted,
and truncated-a caricature of the society
that Marx visualized.
Sweezy analyzed the state of Soviet soci-
ety forty years later. He believes that the
Soviet Union does not come near to living
up to the principles of a Marxian-socialist
society, but that it is not a capitalist soci-
ety, either (Nov. 1967, Nov. 1974, Jan.
1975, Mar. 1976, and May 1977a). On the
first point, Sweezy writes that the USSR
has a ruling stratum composed of political
bureaucrats and economic managers,
which is steadily hardening into a new rul-
ing class. Consequently, workers are di-
vorced from the power centers and, in
fact, according to Sweezy, the entire soci-
ety is depoliticized and nonrevolutionary.
This has turned individuals' concerns in-
ward toward themselves and their families
and away from social problems generally,
and it has required increasing use of pri-
vate-material work incentives rather than
collective-moral incentives. Sweezy views
Soviet society as containing large dispari-
ties in incomes and privileges and as vio-
lating socialist principles of equality in its
distributionof consumer goods. He specu-
lates that the Soviets could have made dif-
ferent decisions during the 1920s, thereby
taking a different path to a socialist soci-
ety, but, once the wrong path was chosen,
the future was mostly determined by the
past (Oct. 1977). The mistakes were Sta-
lin's in subordinating almost everything
to rapid economic growth, in fostering
inequalities in income and status, in en-
couraging the erection of a huge bureau-
cracy and the creation of a labor aristoc-
racy and a managerial elite, and in failing
to rely on the masses in building a socialist
society. Sweezy thinks that, without the
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1131
continuing participation of the workers in
building socialism, the planning system
necessarily became inefficient and un-
wieldly and work incentives had to take
increasingly bourgeois forms.
In Bettelheim's (1976b, 1978) two vol-
umes on the USSR,which cover the period
1917-1930, he contends that the Bolshe-
vik Party very early succumbed to "eco-
nomism"-an interpretation of Marxism
that subordinatesthe transformationof so-
cial relations to the development of pro-
ductive forces. Economism shuns class
struggles in the belief that the bourgeoisie
can be overcome without them. The re-
sult, according to Bettelheim, was that so-
cial relations of production and distribu-
tion were largely unchanged. The reasons
for this were that the Bolsheviks had a
very narrow-and narrowing-revolu-
tionary base, with hardly any influence in
the countryside, they lacked an under-
standing and the experience to overcome
the complex problems facing them (war
and civil war, foreign interventions, eco-
nomic disasters, isolation in the world),
and they did not have the resources to
replace the bourgeois bureaucracy and
the bourgeois industrial managers. Bettel-
heim emphasizes that proletarianpolitical
power, nationalization, and other new ju-
ridical relations do not automatically pro-
duce socialism. That requires protracted
class struggles, which the Bolsheviks did
not carry out. As a consequence, a new
ruling class emerged, a state bour-
geoisie.
Bettelheim also shows that Stalin's and
other Soviet leaders' decisions to replace
Lenin's New Economic Policy, begun in
1921, with all-out collectivization of the
countryside was based on erroneous rea-
soning: that the kulaks were mainly re-
sponsible for the slowing of agricultural
progress, and that the potentialities of ag-
riculture under existing arrangements
were exhausted. Thus, the Soviet leaders
failed to carry through the NEP, incor-
rectly blamed elements of the NEP for
problems arising in the late 1920s, and
mistakenly struck out on a radically differ-
ent path. The leaders did not adhere to
NEP because they did not understand the
potential of the peasants and they wanted,
through industrialization,to expand an ur-
ban proletariat.
Rudolf Bahro (1981) has written a pow-
erful analysisof Eastern Europe, including
the Soviet Union, but his policy recom-
mendations appear either irrelevant to
the analysis or border on utopianism.
Bahro contends that this geographical
area is following, not a Marxist path to
socialism, but a "non-capitalist road" to
industrialization. He characterizes the
Eastern European societies in still other
ways: an "actually-existing socialism,"
"protosocialism,"and "socialismin an em-
bryonic stage." It is clear that he does not
consider these societies to be genuinely
socialist. Because they started out on the
noncapitalist road to industrialization
from a position of underdevelopment, ac-
cording to Bahro, a strong bureaucratic
state assumed the tasks of development,
because no social class was mature enough
to lead this march. On top of powerful
state bureaucracies, party bureaucracies
were erected, the entire structure becom-
ing quasi-theocraticand deadening. More-
over, in these societies, workplaces were
organized hierarchically, those giving or-
ders separated from those obeying them.
Consequently, at the workplaces and in
government and in the party, the working
class did not play, and was incapable of
playing, the leading role in these societies.
Bahro claims that bureaucratic rivalry
is the only driving force in noncapitalist
societies, a counterpart to the profit mo-
tive under capitalism. However, while
capitalist competition eliminates the
"dead wood," bureaucratic rivalries do
not. "The laws of bureaucratic behaviour
time and again take precedence over eco-
nomic rationality" (1981, p. 222). At al-
1132 Journal of Economic Literature, Vol. XXIII (September 1985)
most every level in these societies, it is
the people against functionaries.
Bahro examines the policy implications
of his analysis by first specifying what he
calls the two most crucial problems of the
age: alienation (i.e., powerlessness, impo-
tence) and the dangers of environmental
destruction. He calls for a cultural revolu-
tion to alter radically the awareness of
people about these problems, and he
warns that ever-rising material needs
must be stopped. If they continue to grow,
he states, society will always be too poor
for communism-because there then can
be no "leap into freedom," as Marxprom-
ised, beyond the realm of work. Socialism
is not needed for higher living standards,
he concludes, but for the reconciliation
of humans to nature and for the full devel-
opment of human beings. These are the
directions in which capitalism is incapable
of moving, but the bourgeois societies will
not be vanquished, as Marx prophesied,
through the continued development of
productive forces;instead, they will be ov-
ercome through a change in the con-
sciousness of the masses.
While Sweezy and Bettelheim believe
that the Soviets departed from the path
to genuine socialism as far back as the
1920s, other leftist critics of the Soviet Un-
ion claim that the turn onto the wrong
path occurred with Khrushchev's rise to
power in 1956. This position was taken
by the Chinese Communist Party under
Mao Tse-tung's leadership, and it was the
view adopted by many Marxists around
the world who subscribed to the Chinese
analysis of the USSR.
The Maoist position was that the Soviet
Union's mode of production is state mo-
nopoly capitalism, which is led by the bu-
reaucrat-monopolybourgeoisie and is run
as a brutal fascist dictatorship. The econ-
omy of the USSR, according to the Chi-
nese, is on a war footing, and that aggres-
sive country desires to take world
hegemony away from the United States.
The Soviet Union, in short, has moved
from capitalist restoration to social-impe-
rialist policies-that is, imperialist in
deeds but socialist in words.
Maoists admitted that the Bolsheviks
had a terribly rough time in their early
post-revolutionary years, which com-
pelled them to compromise with capital-
ism. These compromises, however,
became so deeply embedded in the
economy that, in attempts to eliminate
them, the Bolsheviks adopted such harsh
measures as to damage severely social-
ism's concern for the people's welfare. In
addition, the Maoistsalleged, later on Sta-
lin made many errors, especially in over-
stressing the role of the productive forces
and ignoring class relations. This led him
to promote bourgeois incentives, to toler-
ate growing inequalities, and to create se-
rious imbalances in the economy. He ig-
nored the masses and concentrated power
at the top.
Nevertheless, the Maoists claimed, Sta-
lin did not restore capitalism. This was ac-
complished when the Khrushchev-Brezh-
nev group captured party and state
power, changed the nature of the owner-
ship of social wealth, and so began to ap-
propriate much of the surplus value cre-
ated by the working people of the country
(Social Imperialism, reprints from the Pe-
king Review, 1977, and Mao Tse-tung
1977).
These themes have been taken up by
the radical groups identified with the te-
nets of Maoism.The Revolutionary Union
(1974), for example, has stated how capi-
talism was restored by Khrushchev in the
Soviet Union and then extended by
Brezhnev and Kosygin. The RU's analysis
points to an extension of private markets,
the undermining of rural collectives, the
rising importance of the profit motive in
resource allocation and the retention of
more profitsby the individual enterprises,
the introduction of sharper wage hierar-
chies, the acceptance of growing inequali-
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1133
ties and bourgeois culture, and the pursuit
of imperialist goals. The Soviet economy
is a "planned state capitalist" economy,
according to the RU and other radicals.
"With the rise to power of Khrushchev,
the bourgeoisie managed to seize control
of the Communist Party . . . and from this
position turn the state into an instrument
of bourgeois dictatorship and begin the
restoration of capitalism" (1974, p. 53). A
new state-financed bourgeoisie, compris-
ing high party and state officials, became
the ruling class. The Soviet Union has be-
come, as this analysis would have it, an
imperialist power, an arms merchant, and
counter-revolutionary. These and similar
views are also expounded by the editors
of The Communist (1983).
Other radicals aligned with Soviet
views, such as Jonathan Aurthur (1977),
argue that the Soviet Union is still follow-
ing the socialist path because its industries
are state-owned, its farms are collectives,
its central planning system is intact, and
the workers have political power through
their vanguard Party. Others add that the
Soviet economy does not generate busi-
ness cycles, it has no reserve army of labor,
it creates no excess surplus value pressing
for imperialist activation-in short, it does
not act like a capitalist society, as Marx
analyzed such a society (Capital, vol. 1,
1867).
David Laibman (1983) states that the
Soviet Union is a socialist society, that it
has not become either a "state capitalist"
or "a bureaucratic mode of production."
State capitalism, in itself, does not de-
scribe a social formation because the state
"derives its social function and power
from those of the dominant class." State
capitalism makes sense only where there
is "an entrenched capitalist social struc-
ture complete with all necessary institu-
tional proximate forms and capable of its
own reproduction, which then transmits
to the state sector the social relations that
are part of its own functioning" (p. 15).
Similarly,"bureaucratic-exploitation"is il-
lusory, inasmuch as the power of bureau-
crats is derivative, depending on the na-
ture of the dominant class. And Laibman
claims that a capitalist social structure
does not exist in the Soviet Union. He cites
as evidence the various sources of work-
ers' power; the absence of a market in
labor-power, the lack of unemployment,
and an expanding social security system.
He also notes the trend toward greater
economic and social equality and the lack
of evidence that there is a reproducible
ruling class or that business cycles have
been generated. "The overwhelming
weight of the evidence establishes the ab-
sence of all the necessary conditions for
the existence of a ruling upper class" (p.
29).
Albert Szymanski (1983) has criticized
the Maoist view that the Soviet Union is
no longer socialist. This view, in his opin-
ion, confuses socialism with communism,
and anarchism and syndicalism with so-
cialism. Socialism means workers' power
over the economy and state, with income
distributionaccording to work, writes Szy-
manski, and these criteria are compatible
with material incentives, decentralization
of decisionmaking, some economic and so-
cial inequalities, and much else usually as-
sociated with capitalism. The evidence
shows that there is no state bourgeoisie
exploiting the working class. Moreover,
workers do have ultimate economic and
political power, even though they may not
exercise it on a day-to-day basis. Labor
power is not a commodity, for there is
no reserve army of labor and wages are
not set on markets. The economic position
of the working class has improved mark-
edly, with higher incomes, greater equal-
ity, and more social consumption. Also the
Soviet Union, according to Szymanski,
does not act as an imperialist power-that
is, there is no pressure to export capital
or to invest overseas for profit. In fact,
Soviet overseas investments are not only
1134 Journal of Economic Literature, Vol. XXIII (September 1985)
miniscule but serve largely to facilitate So-
viet exports. The Soviets do not benefit
disproportionatelyfrom trade with or eco-
nomic assistance to other countries.
Ernest Mandel (1979, 1981, 1982) rep-
resents a position between that of the
Maoistsand that of the radicals taking the
Soviets' views. Mandel argues that all "so-
cialist" countries are in fact societies in
transition between capitalism and social-
ism-that is, in the phase of the dictator-
ship of the proletariat. Beyond socialism,
the second phase, lies communism. The
transitional society has relations of pro-
duction specific to it, not to capitalism or
socialism. Planning and markets collide in
the transitionalsociety. The Soviet Union,
Mandel claims, is "a bureaucratically de-
generated workers' state," the bureau-
cracy being "neither a legitimate repre-
sentative of the proletariat . . . nor a new
class" (p. 38). Nevertheless, the Soviet Un-
ion, too, is in the transition or first phase,
but its progress is blocked. This bureau-
cratic barrier can be overcome only by
a new political revolution. Mandel's ap-
proach to this issue was challenged by
Geoffrey Silver and Gregory Tarpinian
(1981, 1982) who countered that socialism
itself is a transitionphase between capital-
ism and communism (hence the "socialist"
countries may, indeed, be socialist), that
Mandel's first phase is devoid of class con-
tent, and that his notion of socialism is
ahistorical and utopian.
The case of the People's Republic of
China has also been scrutinized by radi-
cals, especially since 1976 when Mao died
and the so-called Gang of Four, his closest
associates, were deposed and arrested by
less radicalgroups.The main questions are
whether China was on a true socialistpath
during Mao'sreign and whether, since his
death, the country has set forth on a capi-
talist road. The position of the Revolution-
ary Union and other like-minded radicals
is that Mao's China, in stark contrast to
the Soviet Union, was following a Marxian
path to socialism and communism, and
that the defeat of the Gang of Four sig-
naled the triumph of revisionism and an
abrupt turn down the capitalist road. This
about-face happened, it is said, because
it was difficult for the Maoists to rid the
economy of commodity relations left over
from the previous society, to weaken the
spiritual fetters of Confucianism, and to
shake off the legacy of a colonial mentality
and a strong nationalist bent. The main
evidence for the about-face, according to
this view, is the heavy new emphasis on
production to the neglect of social trans-
formation and class struggles, and the
many bourgeois institutions (e.g., markets
and private occupations) and practices
(e.g., monetary incentives and profit crite-
ria) that have been extended throughout
the system. Central planning and collec-
tive activities are giving way to their bour-
geois counterparts.
Bettelheim (1978) has written the most
powerful indictment of the policies of the
post-Mao regime. He claims that, since
Mao's death, China has taken a great leap
backwardfrom socialism. He supports this
conclusion with the observations that pro-
duction and profitsnow hold sway, domes-
tic and international markets are increas-
ingly guiding resource allocation, class
struggles have been demoted, the masses
and the workers in particular no longer
have the initiative as everything is de-
cided from above, revolutionary con-
sciousness and the social welfare have
been pushed to the background by indi-
vidual interests, socialist institutions are
being dismantled, and educational, social,
and economic inequalities have become
more pronounced. Although Bettelheim
recognizes errors made, both in theory
and practice, during the Mao era, he be-
lieves that Maoist China was clearly on
the right path and that the "new leader-
ship . . . can only suffer defeats, as the
entire history of revisionism shows" (p.
115).
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1135
Other radicals demur. Joan Robinson
(1979a), for example, has questioned most
of Bettelheim's interpretations of the new
policies, alleging either that the policies
are not really new or that they are not
incompatible with the pursuit of socialism.
Other radicals are highly critical of Mao's
great leap forward (1958-1960) and the
cultural revolution (1966-1969, with ele-
ments continuing to 1976), and they, for
the most part, applaud the recent turn
toward what they consider to be a more
rational set of policies. These analysts be-
lieve that China has now returned to the
road leading to a more developed social-
ism. MarkSelden, for instance, states that,
during the great leap, Mao pressed the
system to the point of rupture, that the
cultural revolution "dimmed the pros-
pects for further expansion of the pro-
ductive forces and peasant incomes and
intensified conflicts among state, collec-
tive, and individualin ways which strained
the cooperative fabric to the breaking
point" (Selden and Lippit 1982, pp. 86-
87). He believes that Mao, during the late
1950s, set back the prospects of socialism
by divorcing policy from economic reality,
exaggerating rural class struggles, weak-
ening the democratic and popular founda-
tions of rural cooperation, unduly increas-
ing state manipulationof the peasants, and
in several other ways. Selden approves of
the renewed emphasis on production and
economic progress, although he is aware
of the dangers this might pose to socialism
if carried out in a one-sided way-that is,
if social transformation receded too far
into the background.
Victor Lippit alleges that Mao's China
departed from the "pure socialist model"
in at least two principal ways: by holding
almost constant the living standardsof the
peasantry and others for too long a time,
and by allowing hierarchies and excessive
centralization to develop, especially
within the state-party structures (Selden
and Lippit 1982). Although Lippit appre-
ciates the substantial gains that China
made under Mao-in health care, income
security, industrialization, social and eco-
nomic equality, and in other areas-he is
convinced that China's lapses seriously
limited its realization of socialism. In fact,
he asserts that, if Mao's extreme policies
had been "allowed to congeal, there is no
way China could have effectively carried
out the transition to socialism" (p. 154).
Consequently, the policy reversals after
Mao's death, Lippit believes, were neces-
sary for China's successful pursuit of a so-
cialist society, even though there remains
the danger of the new leaders moving to
extremes opposite of the previous ones.
Sweezy and Magdoff (1979) have criti-
cized the tendency of some Chinese lead-
ers in recent years to rely on "objective
laws of socialist economic development,"
which China presumably has to obey,
come what may. Sweezy and Magdoff ar-
gue that there are no such laws; there are,
instead, choices or policy decisions to be
made at every stage along the way. These
critics believe that the doctrine of objec-
tive economic laws of socialismis an exam-
ple of false consciousness, an ideology.
The most vigorous defense of post-Mao
policies, coupled with criticisms of Mao's
great leap and cultural revolution, has
been offered by Xue Muqiao(1981), a Chi-
nese economist who has held high posi-
tions in government economic bodies.
Xue argues that China is in the elemen-
tary stage of socialism, definitely on its
way toward a mature socialism and even-
tually will reach communism. He alleges
that China'slow level of productive forces
and the people's inadequate awareness of
communist principles (which is itself de-
termined by the level of productive
forces) call for compatible low levels of
social relations. These relations still bear
the mark of China's previous society-a
semicolonial and semifeudal one. Differ-
ences in the level of productive forces,
Xue claims, account for state enterprises
1136 Journal of Economic Literature, Vol. XXIII (September 1985)
in industry and merely collectives in agri-
culture; production teams as basic ac-
counting units in some areas and produc-
tion brigades in more advanced areas;and
so on. Xue, in fact, uses China's economic
backwardnessto justify all sorts of capital-
ist institutions and practices-free mar-
kets, private plots, piece-rate wages, pri-
vate employment, inequalities, decontrol
of decisionmaking, and much more.
It requires a lengthy process to rid the
society of feudal and capitalist legacies
and to implant fully socialist and ulti-
mately communist relations. Indeed, Xue
states, "the period of socialism may last
several hundred years"!(p. ix). This transi-
tion from feudal-capitalist to communist
relations will comprise at least three sub-
stages: the transition from individual to
collective ownership, from the latter to
socialist ownership by all the people, and
from the latter to communist ownership
by all the people. The attainment of the
second sub-stage of mature socialism re-
quires the modernization of all sectors, the
transformation of most collectives into
production units owned by everyone, eco-
nomic abundance, higher educational
achievements, and widespread socialist
democracy (pp. 16-17).
Xue implies that the test of whether the
social relations are too advanced lies in
the performance of real output. If real out-
put fails to grow, the relations of produc-
tion are probably too far ahead of the
productive forces. If, on the other hand,
real output is growing adequately, the so-
cial relations are correct or perhaps even
too backward.
Finally, Xue cautions against undue
concern with class struggles. The bour-
geoisie, he writes, no longer has the mate-
rial basis for its existence. It is a remnant,
not a vital, strong force. China'semphasis,
therefore, should be on production, even
though bourgeois ideology lingers on, for-
eign bourgeoisie oppose China, and small
producers within the country exist and
generate petty-bourgeois influence.
A Final Word
It is clear that there is much disagree-
ment and indecisiveness among the radi-
cals regarding whether the Soviet Union,
China, or some other country is truly so-
cialist in the Marxiansense. Although most
radicals, in testing such a proposition,
would properly look first at who has politi-
cal power (i.e., which class controls the
state-the bureaucracy and the military),
there is increasing discordance beyond
that. How much private enterprise (as op-
posed to social ownership) can a society
allow and still be socialist?How much reli-
ance on markets (as opposed to central
planning)?How much income and wealth
inequality? How much reliance on the
capitalist incentive of individual payment
for individual work (as opposed to moral,
group, and social motivations, or payment
according to need)? How much emphasis
on the capitalist values of winning and
keeping (rather than participating and
sharing)?And how much dedication to na-
tionalist concerns (as opposed to proleta-
rian internationalism)?
Why are there such discordant radical
tones on these issues? Under the best of
circumstances, these are difficult prob-
lems, and one should expect sharp differ-
ences of opinion. But the basic reason for
the disarray,it seems to us, is that radicals
do not have a useful theory of long-term
global socialist development that informs
them of the characteristicsof socialistsoci-
eties in their early, middle, and later
stages of development. Radicals do have
such a theory about capitalist develop-
ment-that it evolved from a commercial-
mercantilist to an industrial stage, in the
latter from competition to monopoly,
from monopoly capitalism to imperialism
and a global system, from that to state mo-
nopoly capitalismand neocolonialism, and
so on. And in each stage of development,
capitalismis said to have exhibited certain
definite traitsin its productive forces, rela-
tions of production, as well as political and
 Griffin and Gurley: Imperialism, the Third World, and Socialism 1137
cultural superstructure. But when it
comes to socialist development, it appears
as though many radicals expect newly-
formed socialist nations, even in their in-
fancy, to display right away all the pure
and perfect attributes of an ideal Marxian
society. If any does not, it is in effect
drummed out of the brotherhood. Proba-
bly for most radicals today there is no
country in the entire world that they can
proudly call socialist.
Now, radicals may be right about that,
but an analytical framework is needed be-
fore an opinion issuing from personal pref-
erences can be replaced by a more scien-
tifically-based finding. This task, too,
should be high on the agenda of radicals
over the next few years.
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