Volume 43, Number 171,
October-December 2012
Theories of Capitalist Development.
A Comparative Evaluation
Ignacio Trucco
The Response to Underdevelopment:
From Industrialization to the Dialectic of Dependence

The idea that societies go through stages in a process of secularization of the treatment of modern technology and thus initiate a self-centered accumulation process in such a way that they converge was intensely questioned during the 1960s and 1970s.

Albert Hirschman and Gunnar Myrdal were the paradigmatic authors of this criticism and generated a reading of social dynamics that predicted increased asymmetry between countries. The optimism implied in Rostow’s work was thus put into doubt. Hirschman summarizes these two contributions:

Gunnar Myrdal invoked the principle of cumulative causation in seeking to understand the reason for persistent and increasing income disparities within countries; but the notion was easily extended to contacts between countries [...] Independently of Myrdal, I had developed similar ideas: Myrdal’s “backwash effect” — the factors making for increasing disparity — became “polarization effect” under my pen, whereas his “spread effect” — the factors making for the respreads of prosperity from rich to poor regions — was named by me “trickling down effect.” (Hirschman, 1981: 16-17)

The idea that there is a set of forces that determines the trajectory of a society and that these forces, once set in motion, have an inherent set of dynamics that reinforce themselves and the results are thus polarized, is essentially the essence of the Myrdal-Hirschman interpretation.

The models are presented as a description of integrated spatial dynamics, able to capture the differences between spaces, but the analysis does not reject the abstract forms of traditional models. On the contrary, Myrdal-Hirschman try to show situations of imbalance and the possibility of incorporating qualitative dimensions into the analysis, but they implicitly uphold the substantive importance of the general form of the model over the specific content it acquires.

Myrdal succinctly expresses this general form of the cumulative circular causation:

If either of the two factors should change, this is bound to bring a change in the other factor, too and start a cumulative process of mutual interaction in which the change in one factor would continuously be supported by the reaction of the other factor and so on in a circular way. (Myrdal, 1963: 16).

The general form of the argument ends up having a particular influence on the so-called “economy of industrial localization.” The New Economic Geography will study dynamic models of localization from which the idea of accumulative and circular causes that define spatial structures characterized by growing asymmetry is taken (see Fujita, Krugman and Venables, 1999). These models focused on form and their circular explanations have tended to be almost tautological (Moncayo Jiménez, 2001:14). The arguments have been presented in the following way: given the differences, it is possible that they are not corrected, but rather expanded. This conclusion can be seen as implicit in the premises of this model, as it is, above all, a description of its dynamics.

The New Economic Geography models systematically ended up as results characterized by multiple equilibriums in geographic structures, and with this, specific locations end up as “a historical accident,” and to a certain extent risky (Moncayo Jiménez, 2001), as it is a significant weakness that Krugman himself criticized in his predecessors, such as Von Thünen, Lösh and Christaller. In this sense, Krugman himself gives this example: “If somehow Philadelphia rather than New York had become established as the centre of the financial industry in 1860, that leadership would be just as self-sustaining today as the one we actually see” (Krugman and Fujita, 2004: 143). This approach has substantial limits, as it ends up reducing the entire problem to the conditions of origin.

But it should be pointed out that these approaches have an important impact on the field of public policy, as they open a window to intervention with a probability of success for the government. Paradoxically, this comes from the very indeterminate nature of the models; if all spatial structures are possible, state action has a significant margin for maneuvering, and twisting the dynamics is within its power.

Hirschman writes: In any event, both Myrdal and I looked at the polarization effects as forces that can be opposed and neutralized by public policies” (1981:17). Although these theorists have focused on the general form, others have been based on specific content whose impact largely transcends the limits of economic theory. Two authors are probably the most recognized regarding the origins of a theoretical-practical discussion that framed underdevelopment based on the specificity of the development-underdevelopment relationship.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 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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