Volume 43, Number 171,
October-December 2012
Theories of Capitalist Development.
A Comparative Evaluation
Ignacio Trucco
BRIEF COMMENTS ON THE NEOCLASSICAL TOUR
FROM THE BEGINNING OF THE TWENTY-FIRST CENTURY:
BETWEEN THE MARKET AND INSTITUTIONS

The course of development theory, and especially dependency theories, maintains a clear relationship with the institutional transformations that took place on a global level and that Jessop summarizes in his description of the formation of the Schumpeterian Competition State (Jessop, 2008: 169-170), and which came about following the crisis that Jessop himself calls the Keynesian National Welfare State (Jessop, 2008: 216-219).

In this context, development theory starts to redefine itself in terms of the dominant paradigm, and was rewritten based on the recovery of neoclassical assumptions on capitalist society and its inherent methodology.

In this sense, for example, Fine (2006) writes that with the arrival of neoliberalism, the old development economy (in other words, the economy developed in the second half of the twentieth century) “was swept,” which brought with it a few unsurprising consequences.

These theoretical postulations go back to the hypotheses analyzed in the Harrod-Domar growth model case. Moreover, these models exaggerate some ideas, such as the free movement of factors and goods, perfect competition, full occupation of all factors, equilibrium stability and as such the superfluity, inconvenience and impotence of the State in trying to modify “naturally” obtained results. Paradoxically, what these models do not express is the nature of the societies they study. This nature is lost in a series of strong anthropological principles (in the sense that they invoke a non-realistic human nature). In fact, if a liberal critique is carried out on these approaches, such as the critique by the Austrian School, it will be revealed that its praxeology is above all critical of the man who maximizes his utilities and the notion of the market that neoclassical economics assumes.

It should also be highlighted that the variety of economic policies inspired by this concept was its main institutional expression, and the social and political crisis set off in these underdeveloped countries led to a critical evaluation of this “consensus.” This critical evaluation gave rise to what Fine called the post-Consensus.

The theoretical relationship that this post-Consensus brought with it was concentrated mainly on the unreality of the assumptions of perfect competition and market functioning, and launched an institutionalist critique on the limits of the mercantile contract, while maintaining the fundamental assumptions of the neoclassical tradition on man and the primary principle of socialization: the mercantile contract.

CONCLUSIONS

The different approaches highlighted in this work converge, more or less, with common theoretical difficulties: the inability to directly investigate the nature of the modern capitalist society and its spatial-temporal deployment.

In general, this work showed how fundamental parts that make up the main problem of the formation of modern capitalism and its reproduction through time and space are hidden in the majority of models, as their suppositions are not made explicit. As a result, much of what these models try to say in these suppositions ends up as a tautology.

It is extremely important to underline that during the twentieth century the different theories have tried to surpass each other in the way laid out in this work. Rostow tried to set in motion an interpretation of History that remained static in Harrod-Domar, who also tried to make the Keynesian models more dynamic. Germani and Medina Echavarría tried to overcome the limits of Rostow’s determinism by going more in-depth into clarifying the political component of the base of capitalist modernity. Hirschman and Myrdal make explicit a model that sets into motion the spatial diverges, forming a common level of analysis for all spaces in this way, despite the fact that Hirschman himself proposed that the “effects of dispersion and polarization” constituted a break with orthodox economics. The Prebisch-Singer hypothesis contributes to this by highlighting a historical condition (the secular fall in the terms of trade) as a principle to interpret the spatial-temporal dynamic of capitalist development, trying to prioritize content over form. However, this specificity still has not quested the fundamental elements of capitalist societies. Furtado proposes a reconstruction with the explicit goal of giving it a historical character, but his tendency to prioritize the strength relationships between groups of power that fly ideological flags on the fate of nations distracts him from the dialectic sense upon which modern society is imprinted, and brings him closer to socio-political methods of interpretation, which are also static.

The change in the balance of power on an international level and the establishment of a new mode of accumulation with new regulatory forms encouraged intense changes in the perspectives on development that went back over the critique developed in the twentieth century by making the accusation that it constituted a set of moral and political recommendations dissociated from the positive statements that corresponded to modern science. The new development theory based on neoclassical economics exacerbates the difficulty highlighted at the beginning: the hiding of substantial suppositions, supposition of the fundamental problems that must be resolved, and tautological or inverted conclusions.

The different development theories are largely exposed to intense criticism, above all because given that capitalist development is its explicit object of analysis, this is still often lost in the modeling and in the form. This absence is covered, in many cases, by standardizing recommendations and political valuations that further distort the theoretical difficulties.

The non-historical nature of development models is almost a paradox, but at the same time, it is a condition from which these models cannot escape if they do not propose important changes to their especially ontological foundations. Development theory should make clear that what it is studying is man and society and the way in which man and society tie their existence to purposeful evolution. Dialogue with philosophy should not be discounted, as philosophy has served as the basis for developing profound systems that try to penetrate the thinking of man, society and their transformations through space and time. Perhaps the most important system, and one of the most polemical interpretations, is Hegel’s system, to which Furtado paid special attention at the time.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 193, April-June 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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