The Development of Development Theory

Author(s): Bjrn Hettne

Source: Acta Sociologica, Vol. 26, No. 3/4 (1983), pp. 247-266
Published by: Sage Publications, Ltd.
Stable URL: http://www.jstor.org/stable/4194484
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Acta Sociologica 1983 (26), 3/4:247-266

The Development of Development

Theory
Bjorn Hettne
Department of Peace and Conflict Research, University of Gothenburg
The article summarizes the development of development theory from its
early economistic and eurocentric phase to the present more interdisciplinary

and global debate, particularly in the wake of the so-called dependency

school. In this context a number of contemporary theoretical trends are

distinguished and their relevance is briefly discussed. It is shown that many

of these trends take as their point of departure the dependency problematique, and the article concludes that the questions raised by the dependency

school were and still are relevant, although the answers and remedies

sometimes were less than adequate.

Introduction

The process of societal change has always attracted 'social scientists' of various
persuasions, even before the social sciences, as we know them, were born. Modern
social science in fact emerged as European society transformed from 'tradition' to
'modernity' and this gave a distinct mark to classical social science. In the 20th
century, as the industrial system became consolidated, the evolutionist perspective
took over from functionalism and equilibrium theories, and the tradition of Grand

Theory from specialization, compartmentalization and positivism. A renewed

interest in the development of so-called backward areas after World War II gave
rise to new theoretical and methodological concerns, which at least superficially
bore a certain resemblance to classical social science. It is this 'third phase' of social
science development that we are concerned with here. Thus, development theory,
as here confined, refers to social science traditions which have tried to tackle the
problem of 'underdevelopment' and in doing so have been significantly changed
in the process.
This article presents an overview of the development of development theory
from its early economistic and eurocentric phase to the present more interdisciplinary and global - but also rather confused - debate in which several more or less
contradicting trends can be distinguished. The relevance of these trends will be

discussed and, in particular, we shall see how they relate to the dependence
problematique, a major concern for development theorists in the 1970's. The

theoretical weaknesses of the dependency school have led to some over-reaction

and it is the main argument of this article that the problem of dependence as well
as the strategy of self-reliance have in no way lost their importance in the 1980's.
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Development economics and the beginnings of development theory

The major recastings of economic thought have always been responses to changing
political conditions (Myrdal 1968:9). Thus the study of development which emerged
in the early fifties did not spring from an autonomous progress of social science
theory, but from Western preoccupation with the 'new' nations in the context of
an emerging cold war (Hermassi 1980). In this perspective the 'developing countries'

were seen as potential allies by the two super powers who held up their own
experiences as the paradigm of development. There was, however, very little
concrete knowledge about the problem of 'backwardness'.
The dominant paradigm in development economics is summarized by Nugent
and Yotopoulos as follows:
The ruling paradigm of the economics of development rests on the classical-neoclassical
view of a world in which change is gradual, marginalist, non-disruptive, equilibrating,
and largely painless. Incentives are the bedrock of economic growth. Once initiated,
growth becomes automatic and all-pervasive, spreading among nations and trickling
down among classes so that everybody benefits from the process. (Nugent-Yotopoulos

1979:542)

The neo-classical growth paradigm was thus an optimistic one in comparison with
not only the classical economists but also with Schumpeter and Keynes who in
different ways worried about and came up with all kinds of gravediggers of progress
(Singer 1978:2). Although neo-classicism provided the dominant outlook, all these
traditions merged into development economics in a not always consistent manner.
Since the problems of underdevelopment are radically different from those of
depression, Keynes did not directly contribute to the theory of economic development. Those long-term aspects, which Keynes intentionally disregarded, were
instead developed by other economists. In the famous Harrod-Domar model, for
example, each increase in output provides the basis for further growth because
part of the increased output is reinvested. At higher income levels the marginal
propensity to save increases, and therefore economic growth, once the process has
started, will be self-sustaining. Thus the problem of development was how to break
loose from the fetters that prevented the underdeveloped countries from marching
along the growth path, mathematically symbolized in the Harrod-Domar model.
Before Rostow's famous aeronautic metaphor of 'take-off into 'self-sustained
growth' carried the day, there were several models illuminating various 'traps' and
'vicious circles' which these countries were struggling with. Population growth was,

for example, seen as an important restraint (a 'population trap') on economic

growth by several authors, e.g. H. Leibenstein (1957). Since a moderate level of
growth was eaten up by the population increase, a 'critical minimum effort',
normally conceived of as some external stimulant, was needed. In a similar vein,

Paul Rosenstein-Rodan (1943 and 1961) and Ragnar Nurkse (1953) made the

observation that in an underdeveloped economy, characterized by a 'vicious circle

of poverty', the investment programme must be both massive and balanced for
growth to occur. The idea of a 'trap', which certainly bears resemblance to Keynes's
low level equilibrium, provided a rationale both for foreign aid and an active state
as the keys to economic development. Structural factors, internal or external, were
rarely considered. The basic idea was growth as a unilinear process which would
continue eternally once momentum was gained.
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This perspective was articulated in different ways. W. A. Lewis in an early

article, dealing specifically with West-Indian industrialization, used a snowball
metaphor:
Once a snowball starts to move downhill, it will move of its own momentum, and will
get bigger and bigger as it goes along . .. You have, as it were, to begin by rolling your
snowball up the mountain. Once you get there, the rest is easy, but you cannot get it
there without first making an initial effort (Lewis 1950:36).

One markedly non-Western phenomenon, characteristic of most situations of under-

development, which soon caught the attention of the pioneers in development

theory (still identical with development economics) was the 'dualistic' nature of
underdeveloped economies: the co-existence of an advanced or moder sector with
a backward or traditional sector. This provided the background to one of the more
influential theories of development formulated in the 1950's, namely W. A. Lewis's
strategy of development in an economy characterized by 'unlimited supply of

labour' (Lewis 1954). Lewis combined ideas derived from classical economics,

where the number of unemployed was high and the absorption capacity of agriculture nil. The way out of this impasse was industrialization, financed by foreign
capital (Industrialization by Invitation, as Lewis's critics later termed it). The
process of industrialization would continue with a fixed level of labour cost, so
long as there existed labour with zero marginal productivity in the traditional
sector.

It may appear as if the idea of dualism implied that the unilinear, evolutio
framework, had been abandoned, but this is really not the case. Rather t

sectors, the traditional and the modern, were conceived of as two sta

development, co-existing in time, and in due course the differences between

were to disappear because of a natural urge towards equilibrium.
The barriers to development were thus localized in the traditional secto
as theorizing about development continued in the 1960's, these barriers c
be identified with various sociological, psychological and political factors,
referred to as 'non-economic factors' by development economists. Thus the
saw an interdisciplinary broadening of development theory. The transition
a traditional stage to moder economic growth presupposed changes in att
sometimes defined as 'empathy' (Lerner 1962), sometimes as 'need for achiev

(McClelland 1962), as well as in social and political institutions (Hoselit

Apter 1965; Myrdal 1968). A lot of ground had thus been covered sin

Harrod-Domar model began to be applied to the underdeveloped regions in

late 1940's. However, the basic premise of the emerging paradigm was sti
simple growth equation.

Mainstream development thinking

The Modernization Theory, which emerged in the 1950's, can be seen as a r

to development economics from the other social sciences, particularly soc
Sociology was alone among the modern social sciences to compete with econ
in having a tradition of studying societal change. Just as development econ
to a certain extent rediscovered the classical concern with change in the lo
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development sociologists even more resolutely returned to the old masters:

Durkheim, Weber, Marx. In contrast, political science, being a younger discipline,
born in the stable Western democracies, was mainly concerned with change in a
system, not with change of the system (Huntington 1971:284). The theory of
political development (Almond, Weiner, Powell, Apter) was simply the political
version of Modernization Theory, i.e. it dealt with the modernization of political
institutions. The core of Modernization Theory dealt with the modernization of
social structures and human attitudes.

Modernization Theory is only the most recent manifestation of a central tradition

in Western social thought: evolutionism. This implies among other things that
modernization is a basically endogenous process, the realization of a potential that
lay dormant in all societies. Often there is a need for external factors such as war,
colonialism or environmental change in order to initiate the process, but the process

is nevertheless immanent (Smith 1973; Roxborough 1979).

There is a great confusion in the use of the concept which is due to the fact that
it has three different meanings: (1) an attribute of history, (2) a concrete historical

process, and (3) a certain set of development policies (Smith, op. cit., p. 61).
Possibly it was the mixture of these three meanings that made modernization theory

a paradigm, but this also constituted its weakness as theory.

For all practical purposes Modernization is equivalent to Westernization, since
the Western countries first reached modernity and therefore have served as models
for the rest of the world. Thus development in the 50's and 60's was seen as an
imitative process. This, in turn, has been the most important reason for the strong
criticism of Modernization Theory coming from the Third World; particularly Latin
America.

From the point of view of intellectual history, modernization theory grew out

of Western Development Thinking after World War II, as it confronted the

problems of underdevelopment. To what extent is it possible to speak of a Western
development thinking and what are the links between this thinking and modernization theory?
For analytical purposes we can make the following two distinctions; first between
the general philosophical level of Western 'cosmology' or 'belief-system' on the
one hand, and its more concrete manifestations in contextually and historically
specific development models on the other; second between what may be called the
'mainstream' of Western development thinking and its 'counterpoint'.
According to R. A. Nisbet 'development is one of the oldest and most powerful
of all Western ideas' (Nisbet 1969). The central element of this perspective is the
metaphor of growth. Development is conceived of as organic, immanent, directional, cumulative, irreversible and purposive. Furthermore, it implies structural
differentiation and increasing complexity (Nisbet 1969:7).
Certainly, the emphasis within this perspective shifted as new elements were
added during the history of Western civilization. Thus, the emergence of capitalism,
the bourgeoisie as a ruling class and the industrial system all gave a certain shape
to Western developmentalism. This is the reason why some writers stress the
intellectual movements in 17th century Europe as the cradle of Western development thinking.
The most significant shift in emphasis was the identification of growth with the
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modern idea of progress which was a novel emergent in the Western mind (Bury

1955 [1932]). Growth in Greek and Roman civilization was a cyclical process,
whereas medieval authorities conceived growth in terms of degeneration, decay,
and with a sense of doom; The moder idea of progress, in contrast, implied that
'civilization has moved, is moving, and will move in a desirable direction' (Bury
1955:2). The most explicit expression of this idea may be found in the works of
Condorcet, Saint-Simon, Comte, Spencer and Marx. Certainly different dimensions
of 'progress' were emphasized by different social thinkers. To Condorcet and
Comte the knowledge of Man was in focus, whereas Marx, in contrast, stressed
the progressive movement of the productive forces and stated that new 'higher'

relations of production (i.e. socialism) could not appear 'before the material
conditions of their existence have matured in the womb of the old society'. The
notion of 'underdevelopment' did not therefore exist in the classic Marxist system,
where the more developed country showed to the less developed the image of its
own future. If backward countries suffered from anything it was incompleteness of

capitalist development.
The intellectual climate after World War II was confident and optimistic and
therefore theories of social change with their roots in the Victorian age appeared.
Modernization Theory can thus in a way be seen as a revival of Western Development Thinking as described above, only more optimistic. After all, the classical
preoccupation with the transition was fraught with misgivings about future progress.

In the 1930's and 1940's social scientists were predominantly pessimistic and the
idea of growth was tainted with ancient and medieval interpretation of growth as
cyclical change and decay. It is significant that theories of decay and decline were
again revived in the late 70's and early 80's.
Mainstream development thinking can be analysed along a continuum running
between two ideological antipoles, socialism versus capitalism.
Much of the political debate in the West has been concerned with State versus
Market, and the relative merits of these antagonistic institutions, in the context of
economic development. Along the horizontal dimension it is possible to identify
Mainstream
/'\

State ( > Market

Counterpoint

several more or less distinct development strategies within the mainstream W

tradition: the liberal model, the state capitalist strategy, the Soviet model, Ke
sianism and neo-liberalism. The liberal market-oriented model has historically
the most important one, but in 20th century capitalism Keynesianism, expre
the increased role of state power, has become predominant. The other develop
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strategies are varieties of the basic paradigm, expressing different historical possibilities and constraints. They differ mainly with regard to means (i.e. the relative

role of state and market) but as far as the ends (the Western conception of
modernity) are concerned, they are all basically similar. The differences as regards
means can largely be explained by the specific circumstances in which the strategies
emerged.
The liberal model is a model sui generis and constitutes, in generalized form, the
English development experience in the era of industrial revolution. The repetition
of this development path became increasingly difficult with the emergence of a
capitalist world economy and the structured division of labour between the participating countries. To become like England was still the goal, but the means had
to be reconsidered in the light of England's superiority as the 'workshop of the

world'.

The state capitalist strategy thus belongs to an early phase of industrial development in continental Europe. It was typically an attempt at enforced development
in primarily agrarian economies, the prime example being the policies of count
Witte in Tsarist Russia. Witte was influenced by the German economist Friedrich
List, who saw industrialization as necessary for nationalist and security reasons
(the 'modernization imperative').
Keynesianism, in contrast, is a manifestation of mature capitalism. Its departure
from the basic liberal model consisted in granting to the state a responsibility for
the stability and continuous growth of capitalist systems. Since the 1930's Keynesianism has been the dominant development ideology in the industrialized capitalist
world, particularly in countries with strong social-democratic parties, eager to

replace their original socialist doctrine with the supposedly more 'scientific'

Keynesianism.
The Soviet model was to a large extent a continuation of the state capitalist policy
of pre-revolutionary Russia, although the ideological inspiration and the political
context differed. Granted that Stalinism, upon which moder Soviet state and
society were built, can be seen as a variety of Marxism, fundamentally corresponding
to the Western tradition of materialism and growthmanship, there should be no
controversy about looking at both the liberal and the Soviet development strategies
as expressions of the Western paradigm of development.
What is striking when one compares the Western development strategies is the
important role given to the state in all cases, except for the pure liberal strategies.
The state-capitalist strategy made the state responsible for capital formation and

investment in strategic areas where spontaneous demand was lacking. In the

Keynesian strategy the controlling agency in the process of economic growth has
been the state rather than the market. In the Soviet model the state completely
replaced the market mechanism and later experiences with profits and prices have
not substantially altered this picture. The more state-oriented strategies turned out
to be more attractive for the 'modern elite' in the Third World, since the elite,
with very few exceptions, has fostered an anti-commercial bias. In practice the
three strategies merged into the development ideology of the ruling class in most
underdeveloped countries. Whether the revival of the long forgotten ideal model
of liberal capitalist development will have the same impact on the Third World
remains to be seen.

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From dependence to interdependence

The Great Depression in the 1930's was a great divide in economic theory in the
industrialized world and it is also in these experiences that we find the roots of a
specifically 'peripheral' theory of economic development. The key figure here is
undoubtedly Rail Prebisch who from 1935 to 1943 was Director-General of Banco
Central in Argentina, a country that was most severely hit by the depression. The
idea of a centre-periphery structure in the world-economy was implicit in Prebisch's

early economic policy-writings concerning Argentina, in which inward-directed

development and industrialization were seen as the remedy (Love 1980:54).
It should, however, be noted that this industrialization drive is a recurrent
phenomenon, which can be structurally explained as the ideology of late-comers
in development. As noted above, it goes back to F. List and the German reaction
to Britain as the workshop of the world, subsequently emerging in other industrializing countries: The United States in the mid 19th century, Russia in the late
19th century, Eastern and Southeastern Europe in the inter war-period, and Brazil,
Chile, Argentina and Mexico in the 30's and 40's. It was the experiences of these

countries which provided the rationale for the import substitution strategy
recommended by CEPAL in the 1950's. The emergence of the 'new dependence'

in the mid 1960's must be understood against the background of this strategy having

exhausted its possibilities.

The interest in dependency theory must also be related to the background of a
changing political situation in Latin America, after the Cuban Revolution. This
was a rather unexpected not to say unlikely event from the orthodox communist
point of view, according to which the Latin American society was still 'feudal' in
nature. Therefore mobilization of the proletariat was premature. In other words,
it was the historical task of the growing bourgeoisie to smash the feudal-imperialist
alliance - a task in which the proletariat was to participate. Only then was a socialist
revolution possible.

The 'neo-marxists' generally associated with the North American magazine

Monthly Review and its editors (Baran and Sweezy in particular) took a different
position. In his classical work The Political Economy of Growth, Baran abandoned
the diffusionist view of capitalist expansion. Rather than being an original state,
underdevelopment was created by the development of the centre. This idea, which
constituted a clear break with classical Marxism, was more or less implicit in Baran's
analysis. It was brought to its logical conclusion by Andre Gunder Frank and the
Latin American dependentistas.
The 'dependency school' was never a uniform doctrine shared by all the dependentistas: Cardoso, dos Santos, Sunkel, Marini, etc. It is therefore necessary to
analyse their works in relation to different theoretical dimensions (BlomstromHettne 1981). Certain ideas, however, are common to most of the dependentistas:
- The most important obstacles to development were not lack of capital or entre-

preneurial skills. They were external to the underdeveloped economy - not

internal.

- The international division of labour was analysed in terms of relations between

regions, of which two kinds - centre and periphery - assumed particular

importance.

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- Due to the fact that the periphery was deprived of its surplus, development in
the centre somehow implied underdevelopment in the periphery. Thus development and underdevelopment could be described as two aspects of a single
global process. All regions participating in the process were capitalist, but a
distinction between central and peripheral capitalism was made.
- Since the periphery was doomed to underdevelopment because of its linkage to
the centre it was considered necessary for a peripheral country to disassociate
itself from the world market and strive for self-reliance.

Dependencia was not strictly a theory, rather a new perspective or a paradigm.

Therefore there was a basic agreement on a high level of abstraction, while theorists

engaged in 'normal science' differed in emphasis when it came to more concrete

issues. As soon as this perspective was accepted, much of the previous approaches
in social science drastically lost relevance. With respect to the content of development, however, the difference between the dependency theory and moderniz-

ation approaches was slight. Dependencia was basically a paradigm of under-

development and as far as development is concerned one gets the impression that
the approach was fairly conventional.
The Latin Americans are thus the ones to be praised or blamed for having given
us - the rest of the world - the dependency approach. But how uniquely Latin
American was this phenomenon? Were not the other Third World countries also
dependent, and did not this dependence affect their intellectual production? In
fact there was a strikingly similar discussion in India as far back as the end of the
19th century. I'm referring to the famous 'drain theory' of Dadabhai Naoroji (1969
[1901]). The thrust of his argument was that Britain secured a yearly 'tribute' of
enormous proportions from India. This unjust transfer of capital robbed India of
her development potential in terms of infrastructure, education, etc. In fact Indian
economists have stressed the similarity between the 'drain theory' of Naoroji and
the Prebisch thesis (Minocha 1970:37). But parallels do not end here.
The dependency perspective can, as we have seen, be derived from Baran. Since
his major example was India, one is tempted to think that the 'drain theory' could
have been a source of inspiration. Baran did not refer directly to Naoroji, but
quoted contemporaries such as R. Palme Dutt and William Digby who had expressed
a very similar position, obviously under his influence. Thus, to formulate a daring
hypothesis, the Indian debate on dependency could have had an impact on the
Latin American debate through Paul Baran!
At present, however, the dependency approach is less popular in India, which
probably has something to do with the fact that many Indian intellectuals now feel
that India's economic problems constitute much more the external exploitation.
This is in contrast to other parts of the Third World, e.g. Africa and the Caribbean.
It has been asserted that the dependency concept in the latter area was an autonomous theoretical development (Girvan 1973). This, however, has been questioned
by others who stress the Latin American impact (Cumper 1974). It is not possible
to prove any of these positions, since both external influences and internal factors,
by themselves sufficient for a theory of dependency to develop, did play a part.
Among the latter one could mention: (1) a history of extreme dependence resulting

in the so-called 'plantation economies' (Beckford 1972), (2) a fairly developed

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academic infrastructure, (3) a well-known scholar in W. A. Lewis to be influenced

by and to react against by a younger generation of economists, and (4) political
conditions conducive for the concept of dependency to develop, particularly during
the Manley regime in Jamaica (1972-80).
It is possible to trace the dependency approach back to the formation of the

New World Group in 1962 in Georgetown, Guyana and to its journal the New
World Quarterly (NWQ) which later moved to Kingston, Jamaica. Among radical
economists associated with NWQ were Lloyd Best, George Beckford, Havelock
Brewster, Alister McIntyre, Clive Thomas, and of course the two editors: Norman
Girvan and Owen Jefferson. Certainly their writings on dependency and underdevelopment are in terms of theoretical strength quite comparable to what the
Latin Americans produced. In one respect they differ though. The non-European
cultural elements seem to be stronger and so also the emphasis on indigenous forms
of development (Nettleford 1978). Beckford considers phenomenon such as Ras-

tafari and Reggae as 'embryonic advances towards an indigenous social living'

(interview, Kingston Dec. 1979). For Walter Rodney, dependency was primarily
white supremacy, the remedy being Black Power. This most explosive analysis
forced him into exile and ultimately assassination.
Rodney may serve as a link between the Caribbean and the African debate and
as an illustration of the fact that the African debate was to a large extent a debate
on Africa, in Africa, by non-Africans. Rodney, like Clive Thomas (of African
origin though), introduced Caribbean dependency theory in East Africa, whereas
Colin Leys, Lionel Cliffe and John Saul represented the European School. Samir
Amin (originally from Egypt) worked from his IDEP base-in Senegal, where many
African administrators received their training. For language reasons Amin's influence was greater in French-speaking West Africa than in English-speaking East
Africa. In English-speaking West Africa dependency theory hardly rooted itself
before the critical wave made it unfashionable. In Ghana the concept of selfreliance was compromised by the Acheoampong regime, although it has become
a sheer necessity because of the decline of the export sector (Hettne 1980). As for
oil-rich Nigeria, there are of course no plans to close the borders; the strategy will
be more one of 'diversified dependency' (Uchendu 1980).
According to Frank (1977:357) 'dependence has now completed the cycle of its
natural life'. The reason is the crisis of the 1970's. Amin also devotes most of his

interest to the current crisis in the world economy, which in his view is different
from the past crises of post-World War II. A new situation calls for new theoretical
approaches and the abandonment of old.
The preceding discussion dealt with theoretical attempts at coming to grips with

two major biases in development theory, endogenism and exogenism. Both

approaches are, if carried to their extremes, equally misleading. The obvious

remedy would therefore be to transcend this dichotomy and find the synthesis. In

the real world no countries are self-reliant, nor do they develop merely as a
reflection of what goes on beyond the national borders. All countries are dependent
on each other and on the system of which they form part, but there are of course
different forms of dependence, both in kind and in degree.
This is often described in terms of 'interdependence', a concept that lends itself
to different interpretations. To some it is a refined form of dependency theory,
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expressing a more complicated structure of the world-economy than suggested by

the simple centre-periphery dichotomy. Examples of this complexity are for example

the rivalry within the 'centre' (Western Europe being more dependent than the
U.S., Eastern Europe more than the Soviet Union), the industrialization of the
centre (as exemplified by the NICs and Great Britain), and the emergence of new
regional powers (Brazil, Mexico, India, Nigeria). To others the idea of interdependence suggests a common predicament for the peoples of the world ('We are
all in the same boat'). The latter interpretation of interdependence thus fulfils an
ideological purpose, commonly disregarding the fact that the passengers in the boat
(if we may continue the marine metaphor) do not travel in the same class, nor do
they have equal access to the insufficient lifeboats. For this reason the concept of
'interdependence' must be regarded as an.ambiguous innovation. It may nevertheless serve the purpose of underlining the fact that most theoretical departures
beyond dependency tend to assume the existence of one strongly integrated world.
During the 1970's several manifestations of a new global consciousness could be
noted. Theories of the 'world system' were developed, 'global modelling' became
popular, 'world order models' were again considered a legitime academic concern.
On a more diplomatic level, a New International Economic Order and later the
Brandt report were intensely discussed. Obviously the problem of development
now has to be seen in a world context.

Contemporary trends in development theory

Judging from the current debate in development theory the dependency school is
no more. Its demise has left an awkward thoretical vacuum. The critics are generally
less successful in pointing out new theoretical directions. In what follows I briefly
summarize some alternatives and try to assess their relevance.
Fundamentalist reactions

As fundamentalist reactions I consider the revival of those theoretical traditions

which were the main targets of the attacks from the dependentistas: the modernization paradigm and orthodox Marxism. It is only natural that the weakening of
the dependency paradigm should pave the way for neo-liberalism and neo-classical
Marxism. As an example of the first trend we could mention the monetarist school,
which since 1973 has re-established itself in Chile. Of course 'monetarism' properly

refers to a rather technical discussion regarding causes of inflation, but in the

context of development strategy it has implied an extreme market orientation, as
in the declaration of the Chilean Junta: 'Our concern is to transform Chile not into
a nation of proletarians but into a nation of proprietors'. At the Cancun meeting
in October 1981 this philosophy was translated into 'global Reaganomics', and the
Keynesian strategy of the Brandt report (which was originally meant to provide
the framework for the discussion) was tacitly buried. Instead the developing
countries were advised to liberalize their economies, encourage their entrepreneurs
and find out their comparative advantages. The present crisis in Chile makes it
difficult to point to this case as the model of monetarist policies. After a slow start
the country did experience a recovery during 1977-1981, but the last two years

have been disastrous and at present Chile's economy is in ruins. Argentina's

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experiences have been similar. For some reason this has not reduced the popularity
of monetarism as much as one would have expected. Perhaps monetarism serves
strong ideological interests?
As an example of what has been called neo-classical Marxism one first of all
thinks of Bill Warren's brave effort to revive the original Marxian idea of imperialism

as the pioneer of capitalism (Warren 1980). This perspective not only contradicts
the whole dependency and underdevelopment tradition, but also much of what
Lenin wrote about imperialism. Warren in straight Marxian terms restated the
conventional wisdom of the 1950's and 60's, namely that the industrialization of
the West initiated and accelerated modem development in the rest of the world.
Thus the least industrialized countries of today can see in the so-called newly
industrialized countries an image of their own future.
This argument was supported by statistical data on industrialization in Third
World countries, which completely destroyed the stagnationist thesis of some
dependency writers. Whether these data also support what has been known as 'the
Warren thesis' is open to debate. Dudley Seers has pointed out that a number of
assumptions are common to both the neo-classical school and 'the Warren thesis',
for example the treatment of economic growth as development, the emphasis on
capital accumulation, and the lack of interest in social, political and cultural - not
to speak of ecological - factors. It is interesting that both schools also enthusiastically

look for empirical support in countries which during the 1970's defied the
recommendations of the dependency school and opted for export-industrialization
and enforced modernization.

This urge for modernization along rather conventional lines (a revival of the
modernization paradigm) is most intensely felt in the capitalist miracles of East
and South East Asia. First of all Japan, secondly the 'four little dragons': South
Korea, Taiwan, Hong Kong and Singapore, thirdly the more doubtful cases of
Malaysia, the Phillippines and Indonesia. They are doubtful because the contradictions of the capitalist path are more obvious and the bright future of that path
less certain.

It is true that the development policy of these countries seems quite unconcerned
about the problem of blocked development supposedly associated with a dependent
position. As is well known, they have been referred to as cases contradicting the
basic thesis proposed by the dependency school. A closer look at them, however,
suggests that their experiences are not easily generalizable, and that, furthermore,
they differ quite substantially among themselves. Hong Kong and Singapore are
city-states, and therefore completely atypical. Hong Kong derives is prosperity
from being the key to the Chinese market, but the uncertainty of its political status
after 1997 is already affecting the confidence of the business community. Regardless
of the outcome of the British-Chinese negotiations, Hong Kong illustrates the

problems of dependence rather than the opportunity of indigenous capitalist

development. Much the same can be said about Singapore, although the political
situation of this city-state is more secure. In spite of this, the military component
in the Singapore miracle is becoming more and more conspicuous, and the future
progress of this city-state is becoming dependent on arms exports. Again not a
solution open to every country.
South Korea and Taiwan must be taken more seriously as possible models of
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development, although the non-repeatable features come out quite clearly on closer
scrutiny. For example, both countries have been favoured by strategic considerations as 'free world' bastions in a highly sensitive area. Furthermore, their closeness

to Japan has made them participants in the Japanese growth process, although it
would be an exaggeration to say that South Korean development merely reflects
the Japanese miracle. However, the South Korean control of the situation is of
course not unrelated to its political system - a repressive military regime whose
popularity among the proponents of free market forces is hard to understand.
When one turns to the 'emulators', as distinct from the 'prototypes', the question
marks multiply. Countries like Malaysia, the Phillippines and Indonesia are very
far from repeating the NIC-model, which basically reflects a structural change in
the world-economy - a re-location or out-location of industrial production. The
success stories are to a large extent only an indication of the fact that some countries

have been the chosen ones because of their geographical location, hospitality and
stability. This underlines the fact that the NIC-phenomenon must be analysed in
the context of the changing world-economy. Was this not the problematique that
the dependency school brought to the fore?

Cooptation and reabsorption

In the second category are those theoretical traditions within which the dependency
perspective has been incorporated in their own frameworks. There are for example
efforts at Marxification of dependency, such as Geoffrey Kay's use of the distinction

between industrial capital and merchant capital. Merchant capital was provided a
sanctuary in the periphery and at the same time was subordinated to industrial
capital in the centre. According to Kay this was the reason for the persistence of
underdevelopment. Thus the distinction between the two forms of capital roughly
corresponds to the polarization between development and underdevelopment in
dependency theory. Other Marxists use the recently discovered Marxian distinction
between real versus formal subsumption of labour to capital, a terminology that
also contains the old dependency problem, but in more Marxian dress.
A different example of the process of cooptation is represented by current
developments in the structural tradition originally initiated by Myrdal, Seers, Singer

and Prebisch. A good example of this neo-structural approach is Osvaldo Sunkel's

and Edmundo Fuenzalida's research on what they call the 'transnational capitalist
system'. This approach can be regarded as dualism at the global level since the
most striking feature of the system is the polarized development of transnationalization, on the one hand, and national disintegration, on the other. To start with
the first aspect, the capitalist system is in the process of change from an international

to a transnational structure with the transnational corporations as the most significant actors. Turning to the other side of this dual global structure, the national
societies, as a consequence of the transnationalization process, undergo a process
of disintegration, implying a disruption of indigenous economic societies and a
concentration of property and income.
New directions in Marxism

Both the previous categories contain Marxist contributions of some sort, but to the
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third category we refer to genuinely new Marxist theorizing, for example the mode

of production analysis. The relevance of this approach for the problem of underdevelopment was indicated as early as in Laclau's 1971 criticism of dependency
theory for being 'circulationist'. The mode of production analysis, by contrast,
takes the point of departure in production. By identifying various modes of production at the abstract level it claims to give a theoretical explanation of the
coexistence of different modes, such as capitalism and feudalism, and how they
together form a specific economic system. It is obvious, however, that the assumption of blocked development is retained in this approach, since imperialism rather
than pioneering capitalism could preserve archaic modes of production.
If the mode of production analysis starts from the national economy and puts
emphasis on internal factors, another major Marxist alternative has a more global
scope. This approach could be called the internationalization of capital. The task
of political economy today should be to explain the emergence of the total international capitalist economy, rather than the backwardness of one particular part of
the world. This approach differs from mode of production analysis in stating that
the dynamics of the world capitalist economy cannot be understood with reference
to a single nation.
Somewhere between these two Marxist approaches we could perhaps place the
one that takes the state as its principal focus as mediator between local level and
global forces. Since the state has been a rather neglected phenomenon in earlier
Marxist theorizing, we may regard also this as a new departure. Of course the
importance of the state was also stressed by some dependentistas, but the Marxist
approach would put the study of the state more firmly in the context of class
analysis. The role of the state in developing countries is ambiguous since it cooperates with transnational corporations while at the same time tries to maintain a
certain autonomy. In analysing this contradictory process, dependency theory and
Marxist theory certainly have a meeting-ground where old frontiers may be
transcended.

As examples of the strong empirical interest in actual development processes,

as well as the theoretical and political implications of these empirical findings, one
could mention the vigorous Marxist debates on the development of capitalism in

India (mainly in Economic and Political Weekly) and in Kenya (mainly in the

Review of African Political Economy).

Continuity and elaboration

The fourth category contains approaches that have a strong continuity back to the
dependency school and could be seen as elaborations. Both Frank and Amin for
example have moved from the analysis of dependency to the analysis of global
accumulation or world-accumulation. The most well-known example of this type
of world system analysis today, however, is that of Immanuel Wallerstein. This
approach maintains some of the dependency thesis, for example that the world is
capitalist and that part of it has been so since the sixteenth century. From this time
onwards there emerged a world-system incorporating a growing number of previously more or less isolated and self-sufficient societies into a complex system of
functional relations (Wallerstein 1974, 1980). The result of this expansion was that
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a small number of core-states transformed a huge external arena into a periphery.

Between the core-states and the periphery the world-system theorists identify
semi-peripheries.
Thus the centre-periphery model is still considered valid by world-system theorists
and their view on strategies for development is pessimistic. Whereas the possibility
of breaking with global capitalism and constructing nationally based socialist systems
was implied in much theorizing on dependency, this development path is bluntly
ruled out in the world system perspective. According to Wallerstein we are now
living in the historic world transition from capitalism to socialism, but it will take
a good 100-150 years yet to complete it. From this perspective there exist today
socialist movements controlling certain state-machineries, but no socialist national
economies within the framework of the world economy. No reforms, however
radical, can establish 'socialism in one country' because the rest of the world system
is not prepared to let it happen. There are only three strategies open for development: the strategy of seizing the chance, the strategy of promotion by invitation
and the strategy of self-reliance. The first solution is a classical one, roughly identical
with the state capitalist strategy, since it involves aggressive state action to transform
the structure of comparative advantages. Of course not all countries can seize the
chance. Development by invitation is based on existing comparative advantages,
such as low wage level and a general hospitability. Of course not all countries will
be found hospitable enough. Self-reliance deviates from both of these strategies
by its inward orientation, but in the context of the present world system it is the
strategy which is most unlikely to succeed.
What then are the main differences between the world system approach and the
Marxist conception of the world system. The most controversial issues in the
polemics between the two schools seem to be the very definition of capitalism
('circulationism' versus 'productionism'), class analysis, and the concept of mode
of production. The 'circulationist' versus the 'productionist' view seems to be the
major dividing principle between the two schools. It should, however, be noted
that the difference is more subtle than the Marxist critique would make us believe.
As soon as capitalism is analysed as a world system, exchange that takes place
between various production zones cannot be equated with 'trade', and therefore
Brenner's reference to 'neo-Smithianism' is not overwhelmingly pertinent (Brenner
1977). The choice to analyse capitalism as a world system is a methodological one
and will have deep-going consequences which can be seen in the field of class
analysis. Here the Marxists, not without justification, feel that class analyses are
abandoned altogether. Similarly the concept of mode of production is rendered
rather meaningless in world system analysis, since there can only exist one mode
of production, i.e. the capitalist world system.

Another Development and the Counterpoint

Another Development is a preferred type of development suggested by problems
created by orthodox strategies: poverty, dependence and pollution. Hence development ought to provide for Basic Needs, strive for Self-Reliance, and be sustainable

in terms of finite resources and ecology (ecodevelopment). This fundamental

rethinking on development also signifies a breakthrough of normative development
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theory, by no means an altogether new phenomenon. Previous approaches were

based on the assumption that 'development' was an inherent quality in all societies,
and that development was a good thing that should be promoted by removing
obstacles to development, whether constituted by obsolete social structures or

external dependence. In contrast Another Development would be a process in

accordance with contextually defined human needs and values. But which human
needs and what values?

First it should be noted that the various ideas contained in the concept of Another

Development (e.g. Basic Needs, Self-Reliance, Ecodevelopment) are not completely new. The idea of Self-Reliance, for example, is closely associated with
prominent Third World thinkers such as Mahatma Gandhi, Mao Zedong and Julius
Nyerere. The Basic Needs Strategy in various forms has been incorporated in an
even wider range of national development plans, both socialist and non-socialist.
In terms of practical results, however, these efforts have been less successful in
most cases. Ecodevelopment is a later concept which, according to Ignacy Sachs
(1974), calls for specific solutions to particular problems in particular regions in the

light of cultural as well as ecological data - an extreme form of multilineal

endogenism.
At present, the appeal of Another Development in the Third World (never very
great) seems to be on the decline. The NICs have quite different development
plans in mind. China has started the Long March towards Modernization and away
from Self-Reliance. In India the Gandhian strategy of the 1978 Janata Government
(perhaps the last opportunity of implementing Gandhism) was a complete failure

(Hettne 1981a).
A paradox to be explained here is, therefore, why the concept of Another

Development, implying small-scale solutions, ecological concerns, popular participation, etc., has met with some enthusiasm in the rich countries, while is more
or less rejected in the poor. The reasons for the latter part of the paradox are not
far to seek. Small may be beautiful, but it does not entail power (social power,
state power, military power). The masses in the Third World will never reach the
standard of living at present maintained in the West (and by Third World elites)
but the urban middle classes in some areas may, at least theoretically, achieve this.

Consequently they do not intend to be fooled into some populist cul-de-sac.

Furthermore, the ruling elites in the more industrialized countries in Latin America,

Asia and Africa are growing increasingly antagonistic in their competition, and
therefore strongly feel the need for continued modernization. In this they are of
course supported by the military as a political group. Another Development does
not seem to be on the agenda in Third World countries today.
Why then this interest for Another Development in the West? My answer to this
would be the suggestion that the collective consciousness of the industrially advanced
countries is now going through a process of transformation. I have elsewhere
analysed Western development thinking as a dialectical process between a Mainstream (or Dominant Development Paradigm) and its Counterpoint (Hettne 1981b).
In terms of this framework the Counterpoint is now gaining ground, whereas
spokesmen for the Mainstream are desperately looking for a solution consistent
with the worldview of automatic growth and progress. Some elaboration is perhaps

needed to make this thesis more substantial.

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Opposed against and dialectically related to the predominant development

paradigm, there has been a Counterpoint articulating diverse interests in varying

historical contexts. The Counterpoint protest has more and more become an
ideological phenomenon as the moder complex was institutionalized in structures
such as the state and the bureaucracy, the industrial system, the urban system, the
professional elite, the techno-scientific system, the military-industrial complex, etc.
These structures dominate the industrial societies, whether socialist or capitalist,
and the vested interests in them are of course immense. What the Counterpoint
position can hope for is therefore a gradual weakening of the moder complex as
its maintenance costs increase and the economic growth it is supposed to guarantee
fails to come about. The Counterpoint position is hard to describe and as soon as
one tries it tends to get dissolved in abstractions or trivialities. However, taking
our point of departure in a negation of the modern complex, a society organized
according to Counterpoint ideals would be physiocratic in the sense that the earth
and the natural resources constitute the ultimate preconditions for human existence,
ultrademocratic in the sense that people exercise control over their own situation,
and structurally undifferentiated in the sense that the division of labour is within
man rather than among men.
This Counterpoint may be traced back to pre-modern structures, but should not
be interpreted simply as nostalgic conservatism, even if this is one of its manifestations. We may find typical expressions in romanticism, anarchism, utopian socialism and other ideologies reacting against 'modernity', i.e. industrialism, urbanism,
centralism, professionalism, etc. Perhaps the clearest manifestation of the Counterpoint is the populist tradition.
In fact Russian populism, Third World populism and the present upsurge of
neo-populism in the West may be seen as an example of a constructive intellectual
interaction between 'developed' and 'developing' societies. Regardless of how one
feels about the often misunderstood concept of populism, it is a most significant
fact that there exists one intellectual trend which is rooted both in Western and

non-Western traditions, and that this type of development thinking is drawing on

contributions from both Western and Third World thinkers. This, I believe, is the
wider ideological background to the current interest in Alternative or Another
development.

Conclusion

One thing that comes out clearly from this review is that it has taken a long tim
to realize that development in different parts of the world is strongly influence
by the dynamics of the total world economy. This has subsequently led to a fairl
widespread understanding of the fact that each country has its own, unique deve
opment problems that are dictated by both external and internal conditions. Anothe
observation is that the discipline of economics initially assumed a dominant position
vis-A-vis the other social sciences in so far as theories about the problems of

development and underdevelopment were concerned. Today, most development

theorists find it quite natural to think of these not just as economic, but also as
political, social and cultural problems. Therefore the theory of development is no
thought of as an interdisciplinary field of research. It is in fact not that differen
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from classical social science and its concern for 'the original transition' in Europe
- except for its gradually becoming less Euro-centric.
The dependency school was the first real Third World contribution to the social
sciences, and as such it strengthened the latter in many ways. This increased the
self-confidence of the Third World social scientists who, until then, had been
imitating the social science of the Western World. Western dominance in the field
of development research has thus declined noticeably. This is not only a result of
the rise of the dependency school, but it did play an important role in the intellectual
change which has been outlined here.
Furthermore, it has had a lasting effect on the theoretical debate on development.
The mechanical evolutionism which, in a way, was characteristic of not only the
conventional, but also the orthodox Marxist theory of development was practically

demolished by criticisms which often came from dependency theorists. The

modernization paradigm is not likely to return to its former position, at least not
in the unilinear and evolutionist form of the fifties. Although the dependency school

exaggerated the importance of the external factors the questions raised were
relevant and will remain so, even though the answers and remedies were sometimes
less than adequate.
It is therefore quite easy to trace the effects of the dependency school in several
contemporary development theoretical currents. The world system approach is of
course the,most obvious heir to the dependency school, since its analysis is also
based on the centre-periphery model. However, attempts are made to circumvent
the traps into which many dependency theorists were lured, such as the theoretical

difficulty of operating with two kinds of capitalism (one 'central' and one
'peripheral'), as well as the similarly awkward attempts to analytically explain the
'external' and the 'internal' factors affecting the process of development. It is
obvious that Marxist development theorists now struggle with problems which the
dependency school brought to the surface - problems which a euro-centric and
basically evolutionist Marxism, whose interest in the concrete development problems of the Third World long had been minimal, saw as a challenge. The situation
is somehow different today. There are several important Marxist contributions
which analyse the problems of development in a less biased fashion, although their
theoretical emphases differ. However, they all have in common their use of the

conceptual apparatus and basic method of classical Marxism, as well as their

rejection of Neo-Marxism. The new approaches are, nevertheless, far from unproblematic, and a long critical debate should be expected.
More distant from the dependence problematique are both what I have called
the fundamentalist reactions and the normative trend summarized in the concept

of Another Development. The former signify a return to the Modernization

Paradigm as well as the classic Marxian perception of progress. They both derive
their present importance from the success stories of capitalist industrialization, but

whereas the 'neo-modernists' are betting on the capitalist entrepreneurs, the

'neo-classical Marxists' stress the importance of a politically conscious and wellorganized working class. The political importance of these groups was obviously
underestimated by the dependentistas, and it would certainly be unwise to rule out
capitalist scenarios in the Third World today. However, if the 'green' analysis
implied in Another Development has something to it, this is a course that very few
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countries can follow, since the ecological and social limits to growth in no way
have disappeared. Furthermore, world system analysis tells us that the structure
of the world-economy will permit only a limited number of countries to advance.

The lesson of Iran illuminates the social and political reactions provoked by
excessive modernization, and a number of countries, such as the Philippines,
Malaysia, Sri Lanka, Chile (after Allende), Jamaica (after Manley), Puerto-Rico,
are now learning the unrepeatability of the NIC-strategy. Thus, the relevance of
self-reliance (as a well thought-out strategy rather than as a nationalist ideology),
implied in the dependency approach and elaborated by the Another Development
School, is not reduced by the setbacks of this strategy in the 1970's. What has been
demonstrated, however, is the need for a development theory that accounts for
both varying internal preconditions (size of the country, endowments with natural
resources, social and political forces, etc.) and different positions in the world
system hierarchy.

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