Emerging Countries:
The Marxism-Institutionalism Controversy
Sergio Ordóñez
Alternative Explanation of the Differences Between “Successful”
and “Lagging” Developing Countries ( ...continuation )

Asian countries such as Korea and Taiwan implemented radical agricultural reforms in the 1940s and 1950s, which dismantled class structures centered on landowners, redistributed land among small capitalist farmers and contributed to reconverting a fraction of old landholders into the new industrial and commercial bourgeoisie, in a situation in which there essentially was no agro-mineral bourgeoisie tied to rents and land ownership. This allowed those countries to undertake a type of isi farmer path35 without the social residuals from the post-colonial period that Latin America has, which configured the region as a yunker path.36 The farmer path of the Asian countries allowed them to move towards export substitution in the 1970s, without needing to undo the historical knot of the hegemonic groups, as would be required for Latin American countries, due to the fact that at the beginning of the isi in the 1950s, the new industrial bourgeoisie constituted a hegemonic group, in a situation of substituting the class for the State. This allowed the ruling classes and groups of the Asian countries to take full advantage of the development opportunities offered by the Fordist-Keynesian stage, which implied full development of export substitutions as a culminating stage of isi that extended until the 1980s in those countries, which was translated into the formation of an internationally competitive manufacturing industry that included a capital goods sector, as well as large industrial groups (chaebols in Korea), situated in new industries.37

Thus when a “lower” social overflow of the historical block took place in those countries that questioned military authoritarianism, the lack of economic compensation for subordinated classes and groups, and the lack of democratic liberties, the historical block crisis could be resolved with relative ease by installing civil regimes, opening democratic spaces, developing the civil society and establishing a new commitment with subordinated classes and groups that recognized their organizations and resolved the social conflict revolving around the distribution of economic surplus, a result of increased labor productivity.

As a result, the conditions by which Asian and Latin American countries arrived to neoliberalism as the predominant world development path for knowledge capitalism are completely different. Ruling groups and classes in the Asian countries managed to take advantage of all the potential of development offered by the Fordist-Keynesian phase and move entirely to export substitutions as the culmination of the isi, which resulted in the formation of an internationally competitive manufacturing industry that included a capital goods sector, as well as large industrial groups situated in these new industries, which made possible the solution to the historical block crisis with “lower” overflow, through the expansion of the hegemonic function for subordinated classes and groups. Latin American countries were unable to move to export substitution, and thus faced consequent “incomplete” development of the isi, while the corporate historical block crisis, expressed in “upper” and “lower” social overflow, remains unresolved, with a resulting hegemonic crisis.

When Latin American countries had to go to the imf to pay their international debts in the 1980s, once the neoliberal course was in place, promoted by that institution, the World Bank, and the us Treasury Department, ruling classes and groups of those countries lacked the hegemonic capacity to incorporate allied groups and, above all, subordinated classes and groups, in the process of economic restructuring that began by signing treaties with the imf “making it an excluding path by definition,” which resulted in the known processes of commercial openness and growth based on industrial exports, economic deregulation and decreased state intervention.

35 Marx distinguishes between the farmer (progressive) path of capitalist development, based on the dissolution of large property ownership and the formation of small capitalist property, used by England or the United States, and the yunker (reactionary) path, characterized by the transformation of large property ownership into large capitalist ownership, accompanied by more active and coercive State intervention (substitution of class by the State) in accumulation, used by countries like Germany, and later, Russia.

36 Mexico is a specific case in Latin America, due to the long period from 1910 to 1940, known as the “Mexican Revolution,” which brought about the disappearance of large landowners within the historical corporate block of the hegemonic group “as a direct result of Cardenist agricultural reform.” As such, the hegemonic group is made up of the new industrial bourgeoisie in alliance with the agro-mineral-exporting bourgeoisie, under management of the former, during the first and second stages of isi development (1929-1945 and 1945-1955), while moving into the third stage implies undoing the terms of the relationship of hegemonic groups in favor of the agro-mineral-exporting bourgeoisie, due to the new importance of foreign investment, access to credit and high costs of investment implied by developing heavy industry, which put this fraction of the class in a preponderant position compared to the new industrial bourgeoisie which arose I the 1940s and 1950s (Ordóñez, 1994 and 2002).

37 For Korea and Taiwan, the United States’ ruling classes and groups, in the context of the Cold War, were an additional and important support for national ruling classes and groups and made possible the intensification and acceleration of the farmer path of the isi. Countries like China and India, more recently, have managed upward processes without the existence of an external threat, nor the support of any power.