Volume 43, Number 168,
January-March 2012
Back to Development
Jaime Ornelas
FAILURE AND CRISIS IN DEVELOPMENT
DEPENDISTA AND eclac 7 CRITICS

Economic policy inspired by Keynesian ideas and ISI experience, driven by eclac, enabled most of the obstacles to development attributed to traditional society to be eliminated, eclac regarding unequal exchange as a factor in underdevelopment. However, new problems and tensions were also created that prevented the growth achieved being translated into social wellbeing and underdeveloped being overcome.8

At the same time, the United Nations (un) warned that life expectancy at birth "reflected profound inequalities." For example, while life expectancy in central countries was 70 years, it was 45 in Haiti and 49 in Guatemala. Anyone born in an undeveloped Latin American country at the higher end of the income scale could expect to reach an average age of between 65 and 70 years, while those born into the lower income group barely lived 30 to 45 years (Handbook of International Statistics. UN, 1972, cited by Sidicaro, 1975: 10).

So the failure of Developmentalism was apparent at the beginning of the 1970s, for its different forms assumed "that the economic and social problems afflicting Latin American social learning were due to insufficient capitalist development and that increasing this was all that was needed to make these problems disappear" (Marini, [1973] 1977: 57).

The crisis in Neoclassical and Keynesian theory, as much as the social situation in Latin America, gave rise to criticism of developmentalism and one of the first theories to do so was the theory of dependency. In effect, writes the Brazilian Theotonio Dos Santos:

Dependency was born from crisis as a possible explanatory factor in this paradoxical situation. It is a matter of explaining why we have not developed in the same way as developed countries. Our development is determined by international relations which are defined as relations of dependency. Development is then subject to specific laws which classify it as dependent development (Dos Santos, 1974: 31).

Reality in Latin America at this time showed that underdevelopment was not caused by insufficient capitalist development and therefore conclusions had to be drawn. One of them was to recognize that underdevelopment did not mean a lack of industrialization. Industrialization might be present.

If industrialization permits a certain diversification of production structure, it also reproduces and strengthens the determining factors of dependence. The following are among them: asymmetry in relations with central countries; control of the economy by foreign capital; a lack of autonomy among the internal ruling classes; the deterioration of living conditions among the population; the strengthening of regional inequality and an increase in income concentration. All of this, as a consequence, generates unequal exchange, the removal of increased economic surplus and non-peaceful resolution of conflict between the classes.

Furthermore, for the dependistas, historical conditions at this time did not correspond to those that gave rise to the classical industrialization model. In consequence, the concept of development lacked scientific sustenance because the Neoclassicists and Keynesians did not understand it as a "historical process" and therefore proposed outdated practices, ceasing to analysis it as a specific experience that occurred under particular historical conditions (Dos Santos, 1974: 12). In this respect, Theotonio Dos Santos stresses:

The historical experience of developed capitalist societies has been completely transcended; their basic source of private capital formation in foreign trade, the incorporation of vast masses of workers in industrial production, their indigenous technological development, constitute options no longer available to underdeveloped countries (Dos Santos[1974] 1983: 51 ).

Dos Santos' vision of development as a unique and unrepeatable process in no way pretends to be a kind of metaphysical idea. Rather his intention lies in rejecting imitative tendencies and the viability of historically determined routes, all the while observing the positive experiences of more industrialized nations. Their development is bound by specific historical experiences, overcome as much through capital from foreign trade as through the incorporation of vast masses of workers in industrial production, and internal technological expansion.

In short, for the dependentistas, neither development nor underdevelopment are considered stages that can be overcome with specific acts of economic policy or by following a previous model, but rather through historical processes that emerge from concrete historical situations. For Dos Santos therefore:

Development is not a technical question, nor a transition led by technocrats or bureaucrats towards a society defined by models more or less based on formal abstraction or passed experiences. Development is an adventure of the people and can be defined and studied with an ample vision and a focus that exceeds the limits of the technicians, bureaucrats and academics (Dos Santos, 1974: 13).

According to eclac, the classic theory of international trade offers a hypothesis that is not supported. Nations do not benefit from the advantages of international trade based on the specialization and international division of labor.

On the contrary, in international commerce the cost of primary commodities remains low. These are brought onto the world market by periphery countries, relative to manufacturers’ prices, then produced and commercialized by the central economies. This means there is a transfer of surplus from agricultural export economies to the industrialized one. Owing to the low incomes of the population trade between nations brings about a decline in corresponding salaries and standards of living, a situation determined by reduced productivity indices in the periphery economies.

According to Raul Prebisch, who was one of eclac’s most influential theorists, classical international trade theory condones periphery nations to being forever more underdeveloped, that is to say, primary exporters, poor and dependent. As Prebisch notes:

7 Economic Commission for Latin America and the Caribbean (eclac)

8 According to figures provided by Celso Furtado, sourced from data provided by eclac between 1960 and 1970, Latin America’s Gross Domestic Product (gdp) grew at an annual average rate of 5.6%; in the same period nine countries experienced growth equal or greater than the average: Bolivia (5.6%); Brazil (6.0%); Columbia (6.2%); Costa Rica (6.8%); El Salvador (5.8%); Mexico (7.1%); Nicaragua (7.3%); Panama (8.1%) and Venezuela (5.6%) (Furtado, 1971/2001: 79).

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 48, Number 191, October-December 2017 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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