The Political Economy of Global Development

• In what ways has colonialism influenced the making of the Third World?
• Does the colonial legacy still matter?
• Is the concept of neo-colonialism valid when examining North-South relations in the 21^st century?
  

Ray Kiely (chapter 2):

-         Capitalism is often defined as the expansion of production for the market. It represents a form of quantitative progress, where there is a development towards production for exchange, not production for use. This develops to the point that market competition comes to dominate economic behaviour.

-         Marxists reject this definition. The market represents an opportunity for diversifying consumption or merchant profit.

-         Liberal historians argue that capitalism and colonialism were progressive developments in history.

-         Three periods of international capitalist development: mercantile, free trade and classical imperialism era.

-         Effect of trade in different parts of the world will depend partly on social relations in those parts.

-         Colonial plunder was turned into capitalist investment by countries where capitalist social relations were most developed. E.g. England’s plunder of the New World was at times used to facilitate further investment.

-         Assigning causality to trade is problematic as it differs depending on social relations of production for each country.

-         From 1688 to 1815, exports from Britain increased, and the Americas, Africa and Asia became major markets for British manufactured goods. This led to new ports, networks of merchant activity, new supplies of food and raw materials, markets for British manufacturers.

-         Thus, colonizers prospered – normally exploiting labour and resources and placing tariffs and import laws on the peripheries, creating underdeveloped countries/Third World. Also meant peripheries were entirely dependent on their cores for exports.

-         Colonial encounter forged development of British hegemony, developing its fiscal-military state and dominant naval and sea power. Development of state power was intimately connected with colonialism. E.g. Britain had power over India and therefore could carry out these trade agreements.

-         European contact with the periphery did not lead to its ‘development’.

-         19^th C free trade imperialism applied to Britain only.

-         David Ricardo’s theory of comparative advantage – specialization and free trade could increase world output, therefore any countries entering the world market could mutually benefit from trade.

-         Richard Cobden argued that free trade could lead to the replacement of the mercantilist IR of war with a new form of IR based on mutually beneficial commerce and therefore peace. TF linked to cosmopolitanism and promotion of universal interest of all humanity.

-         Increase in exports to the periphery led to de-industrialization. While Europe and US protected themselves through high tariffs on British imports, India was not allowed to pursue such a policy.

-         E.g. Latin American independence initially made things worse – British pressure opening up Latin America’s markets to cheap imports from European, especially British producers.

-         Colonies essentially rested on relatively stagnant production – that of peasant or forced labour.

-         Colonial states often intensified pre-colonial social hierarchies. E.g. Rwanda – Hutus and Tutsis. The colonial power consciously favoured one social group over another. This meant that colonies were far more dependent on the metropoles than vice-versa.

-         The incorporation of the developing world into the world economy was done in a way that promoted inequality. This left a legacy in the periphery of racialized state structures, poverty, and dependence on the export of one or two primary goods.

-         Developing countries faced a “catch 22 situation” – in times of boom they earned income from exported products to developed world (but not enough income to develop their economies), in recessions they suffered from lack of demand in the developed world.

-         Unequal international division of labour led to increase in divergence in income between rich world and the poor.

-         Capitalist expansion and imperialism did not lead to the progressive diffusion of capitalism (and thus help developing countries).

Ray Kiely (Chapter 3):

-         Bretton Woods (where IMF, UN, GATT (WTO) and WB were established) in 1944 intended to avoid the instability of the 1930s. Keynes argued for an international currency (the bancor) which would provide stability and promote international trade – redistributed finance automatically from countries that had a surplus in traded goods to those that had a deficit. US rejected these proposals and instead used “dollar-gold standard”.

-         WB is meant to carry out programmes of development assistance or aid (essentially a loan to a country at concessional or zero rates of interest). However, much of aid dispensed was tied to the purchase of donor goods, so was effectively a way of subsidizing domestic industries of the rich countries. Political left views it as a form of imperialism designed to keep the developing countries in a dependent relationship.

-         US supported national liberation for the colonies, promoting ‘development’ for the ex-colonies. President Truman in 1949: “What we envisage is a program of development based on the concepts of democratic fair dealing… the old imperialism – exploitation for foreign profit – has no place in our plans.”

-         Truman’s description of imperialism exploiting the countries it took over came to be used as the description for the Third World.

Desai & Potter (1.1):

-         Third World countries that, through colonialism, had remained extremely poor, immersed in damaging civil wars and damaged by corrupt dictatorships were used by the Cold War to be exploited as the rich countries sought to extend ideological and economic influence.

-         Brandt Commission in 1980 & 1983 depicted the world as divided between rich North and poor South.

-         The 1996 IMF initiative was designed to promote debt relief for a select number of HIPC (highly indebted poor countries). However, it was criticized for demanding a range of measures like privatization in return for modest debt cancellation. This has led to accusations that these agencies are exercising a neo-colonial influence on countries in the South.

Allen & Thomas (13):

-         Militarization in many former colonies has been a lasting legacy of colonialism. E.g. British did not leave India, Kenya or Aden until intense and sustained opposition. The French created confrontation in Vietnam and Algeria, the Portuguese in Mozambique and Angola.

-         Minority representation of developing countries at Bretton Woods (18/44) was unequal, as was the fact that developing countries saw commodity prices as the key trade issue – yet US would not reach an agreement. GATT did little to improve commodity price stabilization.

-         The dependency ‘school’ viewed underdevelopment not caused by low productivity and poverty, but instead caused by a historical condition of blocked, distorted and dependent development.

Notes on Seminar:

-         English Empire bequeathed infrastructure (railways) & language.

-         Export-orientated advantages – self interest.

-         Educated small elite to administer the country for them – wide area of control.

-         Practical empire – money enterprise.

-         Enlightenment was seen as reason, rationality.

-         French Empire – more of a civilizing mission – to enforce French identity.

-         This was down to French Revolution – Enlightenment was connected with emotion.

-         Didn’t want to leave (unlike British practical thought – could leave easy when no longer economically viable).

-         Africa still speaks French.

-         French’s position after WWII – had been defeated and wanted to prove their power.

-         Paternalistic approach to Africa.

-         Japanese Imperialism – Taiwan & S. Korea were colonized by Japan (which aided these countries development) – these were the only 2 countries that went from developing to developed countries in the past 60 years.

-         Started industrialization in these countries.

-         Created centralised bureaucracy – strong state apparatus.

-         Killed land-owners to redistribute the land – creates power.

-         Artificial states are geopolitical flash-points – Israel, Pakistan & Iraq.

-         Zimbabwe – Mugabe tried to redistribute land & power by using land reform and inflation.

-         The Lancaster House Agreement – 10 years up to the 90s, white farmers will have the land and then state will buy it back & redistribute it (this would be funded by the British). British then decided not to – but Mugabe still needs to redistribute the land.

-         New colonization occurs without territorial occupation.

-         Film to see: Battle of Algers