Imperialism and Development
by Diarmuid Flood
If the free-traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another. Karl Marx [1]
In Imperialism: The Highest Stage of Capitalism, Lenin outlined that world capitalism was moving towards a scenario in which monopolist imperialist associations would divide the world among themselves, carving it up and vying for control of the spoils. [2] While it is abundantly clear in the modern age that the major imperial powers are seeking to exert their influence across the world, it is also indisputable that these nations form part of a global system of trade, the dynamics of which play an important role in establishing and upholding the relationship between rich and poor nations.
Article originally published in Issue 8 of Rupture, Ireland’s eco-socialist quarterly, buy the print issue:
Contrary to the views espoused by orthodox capitalist economists, who argue that ‘developing' nations need only catch up with ‘developed' ones, it seems clear that poor nations are instead locked into a subordinate position. Through this, the working class of these nations are both exploited by a domestic capitalist class operating within national borders, and also subject to an international system which operates to bolster and reinforce this exploitation. Understanding this dynamic is crucial for those who wish to overthrow the imperialist system in favour of the working class and oppressed of the world.
In order to develop such an understanding, it is beneficial to trace the evolving analysis of imperialism and development.
Classical Economics and Modernisation Theory
In the 18th and 19th Centuries, the classical economists - Adam Smith, David Ricardo, and John Stuart Mill, among others - developed the framework which would underpin much of capitalist thought even to this day. They outlined a theory of development based on market economics and free trade. They argued that a flourishing of trade would lead to the flourishing of the nation both domestically and internationally. This was based on a view of market economies as self-regulating systems. As Smith outlined, the ‘invisible hand of the market’ would guide traders towards socially desirable ends and lead to the mutual development of all involved. [3]
Building on these theories, David Ricardo, in his 1817 book ‘On the Principles of Political Economy and Taxation’, went a step further and outlined the theory of ‘Comparative Advantage’, which stated that specialisation was key to a country’s development and integration into the world market. Following this, a nation should identify its place in the international division of labour and specialise in those goods it holds in abundance or crafts it has mastery over which other nations desire. [4] This generally meant that ‘developing nations’ would derive benefit from the export of ‘primary commodities’ such as crude oil, coal, minerals, and agricultural products to ‘developed nations’ which would, in return, export the manufactured goods they were more suited for (based both on their level of economic development and supposed ‘cultural and intellectual’ character). The analysis developed by these classical economists formed the basis of the position held by capitalist commentators until the early-20th century.
However, after the First and Second World Wars, this was refined further into an outline of what is known as Modernisation Theory. This stated that in order for a developing or ‘backward’ country to modernise, it would have to focus on developing particular sectors of its economy. The idea was that assistance targeted at particular aspects beneficial to development would lead these countries to catch up with their advanced counterparts who were merely further along in the process.
This linear growth model found some popularity as an explanation for the rapid industrialisation of economies during the world wars and also in the success of the 1948 Marshall Plan in rebuilding Europe. It was commonly declared that an injection of capital coupled with intervention from the public sector would lead to prosperity. A popular outline of this framework can be seen in the theories of American economist Walt Whitman Rostow who outlined five stages of economic growth, each of varying length, but applicable in all cases. Under this model, so-called ‘traditional societies’ (i.e. poor nations), through economic and social reforms, and by focusing development on one key sector (generally industry), would be able to carry forward development broadly. [5] While not all modernisation analysis takes such a rigid form, the throughline is the idea that underdeveloped countries are held back by their unwillingness to adopt the correct path forward, cultural hang-ups, or intellectual limitations.
While these theories presented a neat explanation for the subordinate role played by countries in the global south, they did not stand up to scrutiny by those who probed deeper into the roots of underdevelopment.
Structured Stagnation
In the 1940s, a host of Latin American theorists sought to dive deeper into the structural aspects of global trade which impeded the economic development of poor nations. The framework they developed, referred to as ‘Structuralism’, identified that global economic inequality and distorted development were inherent structural features of international exchange and the global division of labour.
The Argentine and German economists Raúl Prebisch and Hans Singer developed the Prebisch-Singer Hypothesis, which outlined that the price of primary commodities (outlined above as minerals and foodstuffs) declined over time in comparison with manufactured goods, which maintained their value. As incomes rise, the demand for manufactured goods increases, while that of primary commodities tends to stabilise. Over the long term this leads to a deterioration of the terms of trade for countries exporting mainly primary commodities, locking them into a subordinate position. [6] This analysis, which began the necessary work of identifying the material barriers to development placed on poor nations, was then taken up by many thinkers associated with the United Nations’ Comisión Económica para América Latina y el Caribe (CEPAL) / Economic Commission for Latin America and the Caribbean (ECLAC).
Taking into consideration these barriers, structuralist theorists advocated protectionist policies, which operated to shield the economies of poor nations from those of developed countries, investment in domestic industry, and the seeking out of trading partners on equal terms. A goal of Structuralism was to end the reliance of an underdeveloped nation on the export of primary commodities and to develop the capacity needed to integrate into the world market.
““Structuralist analysis rested on the idea that poor countries could modernise and integrate into the global market.””
However, while this strategy offered an alternative theory for development, forcing a change in the world market proved to be a difficult task, and these nations found they were still dependent on those who continued to set the terms of trade. At its base, structuralist analysis rested on the idea that poor countries could modernise and integrate into the global market on the same level as their rich counterparts. As these nations failed to integrate, the validity of this view was called into question.
Breaking Dependence
Dependency Theory developed in the 1960s as a response to Modernisation Theory and to the problems faced by Structuralism in adequately explaining the failure of development in Latin America. It was first theorised by Fernando Henrique Cardoso, a Brazilian Sociologist and later president of Brazil. Cardoso outlined the dynamics between states in the capitalist ‘centre’ of the world market and states in the ‘periphery’.
Whereas structuralist thinkers believed development would be possible through an alternative strategy of protectionism and rigorous internal investment, dependency theorists stated that even this was limited by the inbuilt characteristics of the international market. Even after such a process, the peripheral nation remained in a state of ‘dependent development’ without a domestic dynamic and highly reliant on the economic vagaries of states in the capitalist centre. This theory outlined that the underdevelopment of nations was built into the global division of labour, as resources would flow from nations in the periphery to the centre, in which they would be refined, and sold back to the periphery as manufactured goods. This led to an accumulation of wealth and technological advancement in the centre at the expense of the periphery.
Contrasted with Modernisation Theory, the framework of dependency outlines that underdeveloped states do not pass through ‘stages of development’ but are, in fact, prevented from modernising beyond a mode of dependence and subordination. Peripheral nations are not primitive or less developed versions of countries in the centre, but have unique structures locked in place due to their dependent position. Through mechanisms of control, imperialist states in the capitalist centre block the establishment of an independent and dynamic process of development in the periphery. With the backing of these imperialist states, capitalist associations then implant themselves in the peripheral nation, drain profits and resources, and repatriate this surplus back to their countries of origin. This is in contrast with domestic capital, which would instead, at least in theory, reinvest this surplus in domestic development.
Colonisation by Other Means
A handful of theorists have used this analysis to outline the dynamic of dependency in peripheral nations:
Using the framework, the Uruguayan author Eduardo Galeano, in his 1971 book ‘Open Veins of Latin America’, examined the consequences of European and later American imperialism in Latin America along with the ongoing economic exploitation and political domination present in the region. Galeano explained how the transfer of wealth, resources, and labour from Latin America to Europe and the United States undermined development and established a relationship of dependence. [7] Even after formal decolonisation, a political system was established which benefited a layer of society that remained tied to the colonial apparatus. This oligarchy maintained strong links with foreign powers and upheld the dynamic of exploitation in the region. Galeano also highlights how transnational institutions, such as the International Monetary Fund, act to undermine Latin American states in order to establish control of the resources in these countries.
Similar to the work of Galeano, in 1972 the Guyanese Marxist Historian Walter Rodney, in his excellent book ‘How Europe Underdeveloped Africa’, outlined how European Imperialism operated to both develop and underdevelop nations in the African continent. As Rodney outlined in many of these states, there was ‘growth without development’:
There may be more rubber and coffee exported, there may be more cars imported with the proceeds, and there may be more gasoline stations built to service the cars. But the profit goes abroad, and the economy becomes more and more a dependency on the metropoles. In no African colony was there economic integration, or any provision for making the economy self-sustained and geared to its own local goals. Therefore, there was growth of the so called enclave import-export sector, but the only things which developed were dependency and underdevelopment. [8]
““Investment, under neo-colonialism, increases, rather than decreases, the gap between the rich and poor countries of the world.””
Ghanian Marxist Kwame Nkrumah utilised this analysis to develop further the concept of Neo-Colonialism, which is characterised as the continuation of the imperialist rule of one state over another nominally independent state. This often takes the form of the continued economic and political domination of an erstwhile colony after formal decolonisation has ended:
In place of colonialism, as the main instrument of imperialism, we have today neo-colonialism… [which] like colonialism, is an attempt to export the social conflicts of the capitalist countries… The result of neo-colonialism is that foreign capital is used for the exploitation rather than for the development of the less developed parts of the world. Investment, under neo-colonialism, increases, rather than decreases, the gap between the rich and the poor countries of the world. [9]
This understanding of Neo-Colonialism has been used to explain the multifaceted ways in which imperial powers continue to politically dominate and economically exploit subordinate states. For discussion of this concept in an Irish context, see ‘The Saorstát is a Neocolony’ in this issue.
The World System
In the 1970s, American Sociologist, Immanuel Wallerstein used the framework developed by dependency theorists to establish his ‘World Systems Analysis’ (also known as ‘World Systems Theory’). In contrast with theories focused on the nation state, World Systems Analysis asserts that capitalism constitutes a ‘world system’ or ‘world economy’ in which capitalists in the core exploit workers in peripheral zones. Under this framework, Capitalism is organised around an inter-regional and transnational division of labour rather than an international division. Wallerstein defines the concept of ‘world economy’ as follows:
… a large geographic zone within which there is a division of labour and hence significant internal exchange of basic or essential goods as well as flows of capital and labour. A defining feature of a world-economy is that it is not bounded by a unitary political structure. Rather, there are many political units inside the world-economy, loosely tied together in our modern world-system in an interstate system… What unifies the structure most is the division of labour constituted within it. [10]
Wallerstein altered the dependency theorist’s categorisations of ‘centre’ (changing this to ‘core’) and ‘periphery’ and created a third category of ‘semi-peripheral’ nations which exist in a fluid intermediary phase. States could, through a process of development or degeneration, gain or lose core or peripheral status over time. In this framing, the poverty and backwardness of poor countries is caused by their peripheral position in the world system. In a process defined as ‘Unequal Exchange’, core nations, due to their position in the world system and therefore trade dominance, set the terms of exchange and drive down the price of goods produced by nations in the periphery causing a collapse in both wage levels and living standards.
By building on previous theories, the model offered by World Systems Analysis allows us to understand the dynamics of global trade and the effect it has on the economic and political horizons of peripheral nations.
Drawing Out Some Conclusions
From examining further the relationship between imperialism and development, it is abundantly clear that the rules governing global trade are not indifferent but play an important role in locking in inequality. The underdevelopment of nations in Africa, Latin America, or other peripheral states evidently does not originate in an unwillingness to modernise, or in an intellectual or cultural deficiency, but in the barriers placed on them by the international system of trade. While to what degree peripheral nations are locked in is contested, it is without doubt that the balance is set in favour of core nations, who benefit from a position of dominance.
The nature of the global system raises important questions about how a socialist transformation can occur in both core and peripheral nations, and how links of solidarity can be developed across national lines. While an overthrow of the domestic capitalist class is necessary in all cases, it is indisputable that peripheral states will also need to break out of their subordinate position and establish an alternative path for development. Given the failure of previous attempts to establish ‘socialism in one country’, it seems unlikely that such a process of transformation could be achieved within the borders of a single state, and so international cooperation remains a vital step in any process of upheaval. Ultimately, a clear roadmap for revolutionary change remains a necessary, but yet unachieved, goal.
Important in achieving this, and all too often absent, is for socialists to have a sophisticated analysis of the imperialist system as it stands today. This article is hopefully a useful contribution in developing such an understanding.
Endnotes:
Karl Marx, On the Question of Free Trade. Public Speech Delivered by Karl Marx before the Democratic Association of Brussels January 9, 1848.
Vladimir Ilyich Lenin, ‘Imperialism: The Highest Stage of Capitalism’ (1917) marxists.org/archive/lenin/works/1916/imp-hsc/
Adam Smith, ‘The Theory of Moral Sentiments’, 1759
David Ricardo, ‘On the Principles of Political Economy and Taxation’ 1817
Walt Whitman Rostow, “The Five Stages of Growth – A Summary”, ‘The Stages of Economic Growth: A Non-Communist Manifesto’, Cambridge University Press.
Developed in various papers produced by both theorists. Outlined further in Joseph L. Love, "Raul Prebisch and the Origins of the Doctrine of Unequal Exchange". Latin American Economic Review. 15 (3): 45–72.
Eduardo Galeano, ‘Open Veins of Latin America’, 1971
Walter Rodney, ‘Colonialism as a System for Underdeveloping Africa’, ‘How Europe Underdeveloped Africa’, pg. 8, 1972
Kwame Nkrumah, ‘Neo-Colonialism: The Last Stage of Imperialism’, 1965
Immanuel Wallerstein, The Modern World-System as a Capitalist World-Economy, ‘World-systems analysis: An Introduction’, pg 23, 2004