It’s fairly standard practice in A level sociology to teach that transnational corporations are basically evil and harm developing countries. I subverted this a little bit today and got students to make presentations assessing this view.
The instructions were quite simple:
Outline four case studies of corporations harming developing countries.
Outline three to four imitations of the above evidence/ criticisms of the view that Corporations harm developing countries.
Suggest what strategies might be adopted to make TNCs more effective agencies of development.
Here are some of the posters they knocked up… there’s some excellent work here!
Dependency Theory claims that Colonialism had a negative impact on the satellite territories in Africa, Asia and Latin America; that neocolonialism keeps the ex colonial master rich and the ex colonies poor, and that in order to develop the ex colonies need to isolate themselves from the capitalist system, protect themselves from the ‘free market’ and develop internally, through socialism for example.
Colonialism made rich countries rich and poor countries poor
Stealing land and resources which decimated local populations through slavery, disease and displacement of local populations.
Increasing ethnic conflict by selecting one ‘pro-European group’ to govern over all other ethnic groups in the territories.
Turning the colonies into mono-crop plantation systems, dependent on low value agricultural exports, which hampered their development post-independence.
MOST IMPORTANTLY (and most difficult to understand and evaluate) – colonialism established a world capitalist system which locked poorer countries into unequal power relations with richer countries – if poor countries wished to develop within the system, they required expensive imports from the industrialised European powers. For this reason, poor countries will always remain poor within this system.
Neo-Colonalism keeps poor countries poor because:
Unfair terms of Trade and unfair trade rules lock poor countries into unequal relationships with the west
Transnational Corporations play a major role in exploiting countries today, not just rich countries
Aid through the World Bank is used by rich countries to promote ‘neoliberal’ policies which make rich countries easier to exploit.
To develop, developing countries need to isolate themselves from the capitalist system (protectionism)
Dependency Theory argued that developing countries should seek to break away from the world capitalist system and find their own path way to development – mainly through socialism – development through socialism means countries focus on their own development, seeking to produce everything for themselves rather than integrating into a global trade system.
ExxonMobil is the world’s largest oil and gas corporation – its main ‘business lines’ involve producing a range of fuels for cars, planes and ships, as well the technologies surrounding the extraction and refining of these fuels.
ExxonMobil: Key Facts and Stats
Registered in Texas, USA.
Assets (2016) – $330 billion
Revenue (2016) – $218 billion
75 000 employees globally
The CEO from 2006 to 2016 was Rex Tillerson, until Donald Trump appointed him as the 69th Secretary of State, a position he formally took up in February 2017. Tillerson has a relatively modest Total Net Wealth of $245 million (although I simply CANNOT believe that’s an accurate figure.)
Rex Tillerson: Putting Oil and Money First?
Criticisms of ExxonMobil
This video outlines a fairly basic criticism of Exxon’s dealings with the ruling family of Equatorial Guinea – which is the richest country in Africa in terms of GDP, but not in terms of social development, because although Exxon pump a lot of oil out of the country, pretty much all of the money from that oil revenue gets pumped into the hands of the ruling family. They’re so rich, that the Vice President (the president’s son) owns a $30 million dollar mansion in Malibu.
Teodorin Obiang – Total Net Wealth of $115 million
NB – Obiang is going on trial in Europe to investigate the obvious corruption that has led to his vast wealth, thanks to the French courts, no thanks to the TNC Exxon.
A second criticism of Exxon is that it could have effectively prevented climate change: its own internal memos show that the company proved the link between burning fossil fuels and global warming in the late 1970s, but then buried the research and instead funded climate change sceptics to spread doubt about man-made climate change, and cynically invested in areas such as the arctic which it thought global warming would open up for further oil extraction.
According to this Guardian article, Bill Mckibben argues that if only Exxon had been honest, we could have taken much early steps to avert global warming.
The most obvious use of the above information is to use it to evaluate the role of Transnational Corporations in Development, summaries of which are provided here:
Glencore is one of the world’s largest commodities companies – it operates in 150 countries extracting natural resources such as iron and copper, but also has interests in coal and oil, as well as numerous agricultural products.
Glencore – key facts and stats
It is registered in Switzerland
Has £128 billion in assets (2015)
Had a revenue in 2016 of $150 billion
Employs 150 000 people globally
The CEO is Ivan Glassenberg, who has a total net worth of around $5 billion.
Glencore’s total revenue over the last decade = around $1.6 trillion
Criticisms of Glencore
Below are some arguments and evidence that Glencore is an example of a Transnational Company which is not really interested in promoting development in poor countries, but really just interested in extracting as much as it can for as cheaply as possible.
Glencore – extracting commodities from 6 continents
Glencore has been widely criticized because it has made staggering profits by extracting huge volumes of natural resources out of poor countries. To put the size of Glencore in perspective, the annual revenue of the company is 10 times greater than the GDP of Zambia.
The 2013 video below documents how the company struck a deal with Zambia to mine its copper in which it extracts around $1 billion of copper per year but pays only 8% tax to the government, and gets free electricity for its mines into the bargain (paid for by the government).
This report from War on Want estimates that a combination of poor trade deals and tax avoidance costs the Zambian government $3 billion/ year, or 10% of its GPP. The report isn’t limited to just Glencore, it focuses on other mining companies such as Vedanta, none of these companies comes off as effectively promoting development in poor countries.
Glencore has also come under heavy criticisms for poor health and safety conditions in many of its mines, its record on environmental pollution and benefitting from child labour in the DRC.
Further Sources
Students might like to use these sources to assess the role of the TNC Glencore in promoting economic and social development in poor countries.
Is it possible to perceive the making of modern America as a sort of colonial project? One in which the new American capitalist class colonizes the so called American wilderness for the benefit of Capitalism? This is the argument Andrew Brooks makes in his recent book – The End of Development:
On 4 July 1776 the newly independent United States of America consisted of 13 colonies that were formally ceded by Great Britain in 1783. The United States then expanded Westwards, and by the time of the Gadsden Purchase from Mexico in 1853, the modern boarders of the contiguous United States were established.
Formal territorial expansions were legally and politically essential. Annexation first provided new space for capitalism, then new Americans came, conquered and combined land, labour and capital to generate wealth. Fundamentally though it was the direct control and space and the westward advance of Europeans and their conflicts with other Americans that were the real means of making the nation.
The whole history of the United States is one of occupation and land seizure: rather than territorial colonialism abroad, there was unprecedented territorialism at home. Ironically, the American war of Independence (1775 – 1783), far from being a pure anti-colonial struggle, was rather a moment that enabled expanded imperialism led by the European Americans. Once the revolution had freed the settlers, they conquered the res of the North American continent and reorganized the space for capitalism. This meant removing the Native population to make room for an expanding immigrant population, as was advocated by Benjamin Franklin.
The popularization of the notion of ‘wilderness’ was a key ideological tool which promoted this expansion Westwards – the great interior of the new United States was portrayed as wild country which was the antithesis of civilization, full of wild savages, both of which needed to be overcome in order for progress to be made.
(Of course in reality, neither were true, many Native American Tribes had rich cultures which managed the land they had occupied for centuries in a sustainable manner).
In the 19th century, the American capitalist was a colonist at home, enjoying what the European capitalist had to travel to Africa or Asia to achieve: profits were accumulated through imported slaves, and later indentured Chinese labour on the Pacific Coast.
Profit was also accumulated via exploitation of Native Americans through trade. Indigenous peoples exchanged pelts for fish hooks, guns and knives, which benefited whites and forged a relationship of dependency.
Rifles changed the balance of power between tribes, causing warfare between native peoples, as well as intensifying hunting practices. Established cultures and ways of life that had existed for centuries were wiped out in a few short decades. For instance, muskets used by Metis hunters nearly wiped out buffalo in the Red River valley of North Dakota.
Metis indians shipping buffalo bones in North Dakota
Fur trading was one of the first major economic activities, but American capitalism soon diversified and grew as it learnt the lessons of the industrial revolution in Britain, and it was a rapid industrialization as the USA was both unencumbered by old social relations such as Feudalism, and all the necessary resources to fuel industry were on home soil.
Ultimately, Brooks argues that any time Washington, Hamilton, Adams or Jefferson referred to the ‘Federal Union’ in their presidential address, they were really referring to the process of forging an American Empire – except they didn’t need ships to go and do it in far away places, they had plenty of ’empty’ territory right next door.
In order to understand what Modernisation Theory is, it’s useful to have an understanding of what the ‘Industrial Capitalist’ model of development is. The United Kingdom and America, the two leading super powers in the world up throughout the last two centuries, both followed an industrial-capitalist model of development,
There are obviously two bits to ‘industrial capitalism’:
INDUSTRIAL + CAPITALISM
The first requires more explanation….
Capitalism and Development
Capitalism is an economic system based on the private ownership of the means of production (land, raw materials, technology, factories and offices) and where production is carried out for a profit.
Under capitalism, any individual with sufficient capital (defined as resources which are available to be invested rather than saved for emergencies or simply consumed) is free to set up a business and produce a good or a service which can then be sold for a profit in the market.
In theory, Capitalism is the most efficient way of ensuring that people get the goods and services they want at the cheapest price. The reason for this is that if a Capitalist sees someone else making a profit (selling blue widgets for example), they will see an opportunity, and start producing blue widgets themselves, wanting to profit themselves.
This creates competition between the two producers, which should have three effects – competition should drive prices down, because consumers want the cheapest product, and/ or it should also push quality up, because consumers want the best quality for the cheapest price; it should also encourage innovation, as each capitalist receives a lower profit for blue widgets, they might try making fancier or different colored widgets, thus generating new demand.
In reality, what happens is all of the above – capitalist production creates new markets in varying qualities of widgets (different for different people with differing income levels) and innovation – as more producers come in seeking profit through production.
Crucial to the capitalist mode of production is labour power – capitalists buy labour power through paying wages (on the ‘job market’) – in Marxist theory, this is an exploitative relationship as the capitalist extracts surplus value from the workers by paying them less than the value of the goods they produce, but pro-Capitalists argue that it’s a win-win situation, as under free-market Capitalism, anyone is free to sell their labour elsewhere, or set up their own business themselves.
Communism – the ‘opposite of Capitalism’
The opposite of pure, free-market capitalism is Communism – where there is no private property and the state owns and controls the means of production. Under state-communism in Russia during most of the 20th century, the state decided what people and society needed and dictated to factories what was to be produced in five year phases. Thus there was no role for the profit motive or entrepreneurial innovation.
Goods were effectively rationed, and distributed according to need rather than by being sold on the market place.
It follows that in ‘pure communist systems’ people had much less economic freedom than under Capitalism.
NB – the above is a very rough account!
The role of the state in ‘free-market’ capitalist systems
In most European societies today, the state (governments) regulate the ‘free-market’ – so the ‘free’ in the ‘free-market’ is a very relative concept.
For example, there are lots of laws about health and safety, and environmental protection and worker rights (the minimum wage) which restrict the freedoms of capitalists; and there is also taxation which allows the state to provide some services for free to everyone (along Communist lines) – in the UK for example we have free state provided health and education, and security (the police) – so there is a very limited ‘free-market’ in these areas.
Industrialization and Development
Industrialization refers to the process of moving from an agricultural to a factory based economy, which in turn involved harnessing the power of coal, oil and gas to power machines in factories to produce goods rapidly and efficiently.
The best example of the industrial mode of production is Henry Ford’s Ford motor plant, in which he organised the production of cars along a conveyor belt system – where workers would stand in one ‘post’ and progressively add bits onto a car which came past them.
Industrialization went hand in hand with Capitalism, as organizing workers to work in a mechanized factory was the cheapest way to produce massive amounts of goods for sale and thus to maximize profits for individual capitalists.
Fast forward to the present day and many areas of production have been ‘industrialized’ – pretty much all forms of transport, clothing, computers, and even agriculture (thought tractors etc).
So what is the Industrial-Capitalist mode of development?
It basically refers to the past 200 years of economic development in Europe and America, which has since spread to many other parts of the world. The UK went through this phase in the 19th century, the USA in the 20th.
The industrial-capitalist mode of development consists of an economic system which allows (relatively) high amounts of freedom to capitalists to invest and make a profit – it was the Capitalist class (e.g. Henry Ford) who effectively industrialized the production of most goods for example.
This had the knock on effect of creating lots of jobs and secondary business, and eventually a surplus which the government could tax in order to provide a range of welfare benefits to populations for free.
It is this mode of development which Modernisation theory suggests developing countries should adopt in order to develop, thus following in the footsteps of the UK and the USA.
Disclaimer – I wrote this off the top of my head in 20 minutes!
China’s development over the last three decades has depended heavily on its investment in Africa: it relies on a number of natural resources extracted from Africa, and is also one of the major leasers of land in Africa (which it uses to export crops back to China). In order to facilitate the extraction of natural resources, return, thousands of Chinese workers now live and work in Africa, and the Chinese have developed infrastructure (roads for example) in many African countries.
The Chinese claim that most partnerships between Chinese businesses in Africa are mutually beneficial, a win-win arrangement between the Chinese and the ‘host nation’ – China gets resources, Africans get jobs and development.
Critics, however say that what the Chinese are doing in Africa is just a continuation of colonialism, and another form of neo-colonialism: it is basically a wealthier nation extracting resources as cheaply as possible from desperately poor countries and giving them as little as possible in return.
The three articles below are well worth a read to get an idea about the range of opinion on this matter:
This Global Policy article: ‘The New Colonialism in Africa’ makes the case (as you can tell by the title) that China are basically neo-colonists
This Harvard Political Review article seems to take a more sympathetic view towards China, focusing more on the benefits of development for African nations.
Students might like to read through them, compile a list of arguments and evidence for and against the view that China’s involvement in Africa benefits Africa, rather than just China.
This 2008 Documentary seeks to answer the question of why there is still so much poverty in the world when there is sufficient wealth to eradicate it.
In order to answer this question, the video goes back to 1492, which marks the start of European colonialism and the beginning of the global capitalist system, making the argument that European wealth was built on the back of a 500 year project of extraction and exploitation of the Americas, and then Asia and Africa.
Using various case studies of countries including Venezula, Bolivia, and Kenya the video charts how brutal colonial policies made the colonies destitute while the wealth extracted led to the establishment of global finance, the industrial revolution, and the foundation of a global capitalist system which locked poor countries into unequal relations with rich countries.
Following Independence, a combination of unfair trade rules and debt, managed through global institutions such as the World Bank and the World Trade Organisation have effectively kept these unequal relationships between countries in place, meaning wealthy countries have got richer while many ex-colonies have remained destitute.
This video is quite heavy going, and jumps around from continenent to continent a bit too much for my liking, which, combined with a lot of sub-titles (as many of the people interviewed are not English-speakers) does make it quite hard to follow. Nonetheless, this video does offer a systematic account of a Dependency Theory view of underdevelopment and development, including interviews with numerous politicians and activists from development countries as critical thinkers such as Amartya Sen, Joseph Stiglitz and Naomi Klein, among many more.
The decline of Detroit was alos the decline of Fordism and Modernity.
The history of Detroit, USA from 1900 to the present day present offers an interesting case study in the benefits of industrial modernity in the early 20th century, and the problems caused by modernity’s decline from the 1960s.
Detroit underwent a rapid process of industrialisation in the early part of the 20th century, which led to enormous prosperity and wealth being generated which was, by and large, shared by the majority of the city’s population. Detroit is synonymous with Henry Ford, and the particular model of industrial-capitalism which he basically invented – mechanised production and decent wages and benefits for his workers.
However, the second half the century saw Detroit spiral into a decline of de-industrialisation, state-bankruptcy, inequality, and social unrest.
Detroit – linked to East and West coast USA via river and rail.
The Rise of Detroit: Industrialisation from the 1900s to the 1950s
In its hey day, Detroit represents one of the most successful case studies in Industrialization in world history. The case of Detroit helps us to understand why Modernization Theorists in the 1940s and 50s were so keen on exporting Capitalist-Industrialization as a model of development for other countries: basically industrialization brought about many positive developments and so it seemed logical to export it.
By the late 19th century Detroit’s industry included leading shipbuilding, pharmaceutical and railway businesses. Detroit was successful because it was strategically located near to natural resources and markets via railroads and steamboats, and from the mid 19th century there was no place that better represented American progress and power.
Detroit was the Motor city that helped drive the United States forward, and the most well-known company which was based there was the Ford Motor Company – in 1932, its Rouge River industrial complex was the largest integrated factory in the world, with its own docks, railway lines, power station and plant, and over 100 000 workers, and 120 miles of conveyor belt.
Raw materials including iron ore and coal arrived by barge and rail and completed for Model Bs rolled off the end of the vertically integrated production lines.
Ford’s River Rouge Industrial Plant
In 1932 Henry Ford’s son commissioned the famous Mexican artist Diego Rivera to paint scenes of the nearby Ford factories, which can today be viewed in the Detroit Institute of Art. Rivera’s murals captured the heat, energy and dynamism of the factories, but also the political and social tensions of time. Rivera was a communist, while Ford was a staunch opponent of labour organisations, and Rivera’s murals show workers working in harmony with machines, but also hint at the struggles between management and employees, which would become much more marked in the following decades.
One of Rivera’s murals commissioned by Ford
Through industrialisation, both the human bodies of the workers and the landscape came to serve the needs of industrial capital, and women and men experienced this in very different ways, with men working in the factories, and women, by and large, staying at home, restricted to the private sphere.
The Ford family grew incredibly wealthy through their mastery of technology and production lines and their extraction of surplus value from the labour of workers. Mass production was perfected by Ford – his famous Model T was launched in 1900, and by 1918, half of all cars in America were Model Ts.
Ford not only transformed the economic organisation of society, he also helped transformed its social organisation – he invested much of his profit into social welfare – by establishing an art institute and the Henry Ford Hospital, for example, while the relatively high wages he paid to his workers helped them to increase their consumption and enjoy new leisure opportunities, helping to forge a new consumer culture. This compromise between capital and labour is known as Fordism.
The Henry Ford Hospital
In the 20th century, Detroit became a booming metropolis. The Ford Factory was only the largest of 125 motor factories in the city in the early 20th century, and there were many other industries to. The population of Detroit soared from under 80 000 in 1870 to over 1.5 million in 1930, making it the fourth largest city in America at that time.
The assembly lines and the rhythms of work gave new arrivals a purpose and set in motion a relentless movement towards modernity and progress. Mass production would lead mass employment and in turn enable mass consumption. Detroit was the world’s greatest working-class city in the most prosperous nation on earth. The automotive industry and the giants such as Ford and General Motors and Chrysler that dominated Detroit were what California’s Silicon Valley and the tech monopolies of Apple, Google and Twitter are to today’s era of smartphones, software and social media.
The Great depression of the 1930s struck a devastating blow as automobile sales fell rapidly, but the city was revitalized by the Second World War as car factories were rebooted to produce tanks and planes for the US military and its allies. Detroit became the ‘arsenal of democracy’.
Following victory the whole American economy was booming and a second great period of Fordism surged forwards as mass automobile ownership spread across the United States. Great chrome Cadillacs and luxury Lincolns sailed off the production lines in the 1950s like polished ocean cruisers….
Cars manufactured in Detroit in the 1950s transformed America
However, from the late 1960s onward, a combination of the growth of industrial competition from abroad and underlying social and ethnic tensions in Detroit would lead the city into a spiral of de-industrial decline…..
The Decline of Detroit
Beneath the gloss of mass consumption Detroit always hid inequalities.
On July 23 1967 police busted an illegal after-hours salon in a black neighbourhood. 85 people were arrested and tempers rose between the detainees and the officers. A five day riot ensued which was quashed by 17000 police, national guard and troops resulting in over 7000 arrests.
Black people were expressing their resentment over limited housing and economic opportunities and a history of racial discrimination and violence. Detroit increasingly became a black majority city as the white working classes moved to the suburbs (80 000 left in 1968 alone), leaving Detroit city in a decline of mass unemployment and rising crime.
A downward spiral continued into the 1970s as American manufacturers faced increasing competition from abroad and moved production to cheaper locations to cut cost, leaving further unemployment in their wake.
Downtown Detroit 1991
Detroit city further suffered because remaining managers and workers moved out to the suburbs or smaller towns just outside of the city – because tax revenue was heavily reliant on property taxes, Detroit city lost a considerable amount of its tax revenue, while the administrative centres around Detroit were well funded by the relatively well off workers who had moved to them. Detroit became a divided city – with wealthy, well funded suburbs and a declining, underfunded central city authority with massive social problems.
The 2007/08 financial crisis shook the auto industry to its core – but companies such as Chrysler and General Motors were bailed out by the Federal government, and have since recovered – Across metro Detroit half a million people still work in manufacturing, 130 000 in the auto industry, and they earn 75% above the state average salary.
Detroit city, on the other hand, did not fare so well during the financial crisis and in 2013 underwent the largest municipal bankruptcy in US history.
To emphasize the inequality in Detroit:
In Livingstone county, which is 96% white, the median household income is $73000
In Detroit City, which is 82.7% black, the median household income is $26, 000 and nearly 40% of people live in poverty.
Detroit south of the 8 Mile boundary – made famous by Eminem’s 8 Mile movie, is considered to have one of the highest murder rates in the country, and there are over 100 000 empty properties.
There are some positive development projects going on in Detroit, but the stark difference between rich and poor in the wider region is plain for any observer to see.
Lessons from Detroit
Detroit is important because it is a signal case for what is happening in many industrialized countries around the world – across the rust belt in America and mirrored in Southern European countries and northern England as well.
It reminds us that impoverishment is not just limited to the global south.
Signposting and Relevant to A-level Sociology
The decline of Detroit is a useful case study which indicates the decline of Modernity (for example with Fordism dyeing out) and the move to Postmodernity.
Detroit is very much a casualty in shift to postmodernisation.
By the end of the Second World War many of the countries in Africa, Asia and Latin America had failed to develop and remained poor, despite exposure to capitalism. There was concern amongst the leaders of the western developed countries, especially the United States, that communism might spread into many of these countries, potentially harming American business interests abroad and diminishing U.S. Power.
In this context, in the late 1940s, modernisation theory was developed, which aimed to provide a specifically non-communist solution to poverty in the developing world – Its aim was to spread a specifically industrialised, capitalist model of development through the promotion of Western, democratic values.
Modernisation theory thought the ‘third world’ should develop like the ‘first world’
There are two main aspects of modernisation theory – (1) its explanation of why poor countries are underdeveloped, and (2) its proposed solution to underdevelopment.
Modernisation theory explained the underdevelopment of countries in Asia, Africa and Latin America primarily in terms of cultural ‘barriers’ to development’, basically arguing that developing countries were underdeveloped because their traditional values held them back; other modernisation theorists focused more on economic barriers to development.
In order to develop, less developed countries basically needed to adopt a similar path to development to the West. They needed to adopt Western cultural values and industrialise in order to promote economic growth. In order to do this they would need help from Western governments and companies, in the form of aid and investment.
Modernisation theory favoured a capitalist- industrial model of development – they believed that capitalism (the free market) encouraged efficient production through industrialisation, the process of moving towards factory based production.
Industrial –refers to production taking place in factories rather than in the home or small workshops. This is large scale production. (Think car plants and conveyer belts).
Capitalism – a system where private money is invested in industry in order to make a profit and goods are produced are for sale in the market place rather than for private consumption.
Modernisation theory thought industrialisation could drive development in poorer countries
There are alternative systems of production to Capitalism – subsistence systems are where local communities produce what they need and goods produced for sale are kept to a minimum; and Communism, where a central authority decides what should be produced rather than consumer demand and desire for profit. (Need drives production in Communism, individual wants or desires (‘demand’) in Capitalism)
Modernisation Theory: What Prevents Development?
According to Modernisation Theorists, obstacles to development are internal to poorer countries. In other words, undeveloped countries are undeveloped because they have the wrong cultural and social systems and the wrong values and practices that prevent development from taking place.
The Caste System in India is a good example of an ascribed status system based on traditional values
Talcott Parsons (1964) was especially critical of the traditional values of underdeveloped countries – he believed that they were too attached to traditional customs, rituals, practices and institutions, which Parsons argued were the ‘enemy of progress’. He was especially critical of the extended kinship and tribal systems found in many traditional societies, which he believed hindered the geographical and social mobility that were essential if a country were to develop (as outlined in his Functional Fit theory).
Parsons argued that traditional values in Africa, Asia and Latin America acted as barriers to development which included –
Particularism – Where people are allocated into roles based on their affective or familial relationship to those already in positions power. For example, where a politician or head of a company gives their brother or someone from their village or ethnic group a job simply because they are close to them, rather than employing someone based on their individual talent.
Collectivism – This is where the individual is expected to put the group (the family or the village) before self-interest – this might mean that children are expected to leave school at a younger age in order to care for elderly parents or grandparents rather than staying in school and furthering their education.
Patriarchy – Patriarchal structures are much more entrenched in less developed countries, and so women are much less likely to gain positions of political or economic power, and remain in traditional, housewife roles. This means that half of the population is blocked from contributing to the political and economic development of the country.
Ascribed Status and Fatalism – Ascribed status is where your position in society is ascribed (or determined) at birth based on your caste, ethnic group or gender. Examples include the cast system in India, many slave systems, and this is also an aspect of extreme patriarchal societies. This can result in Fatalism – the feeling that there is nothing you can do to change your situation.
In contrast, Parsons believed that Western cultural values which promoted competition and economic growth: such values included the following:
Individualism – The opposite of collectivism This is where individuals put themselves first rather than the family or the village/ clan. This frees individuals up to leave families/ villages and use their talents to better themselves ( get an education/ set up businesses)
Individualism should promote competition and drive economic growth
Universalism – This involves applying the same standards to everyone, and judging everyone according to the same standards This is the opposite of particularism, where people are judged differently based on their relationship to the person doing the judging.
Achieved Status and Meritocracy – Achieved status is where you achieve your success based on your own individual efforts. This is profoundly related to the ideal of meritocracy. If we live in a truly meritocratic society, then this means then the most talented and hardworking should rise to the top-jobs, and these should be the best people to ‘run the country’ and drive economic and social development.
Modern education systems embody universalism and meritocracy
Parsons believed that people in undeveloped countries needed to develop an ‘entrepreneurial spirit’ if economic growth was to be achieved, and this could only happen if less developed countries became more receptive to Western values, which promoted economic growth.
Rostow’s five stage model of development
Modernisation Theorists believed traditional societies needed Western assistance to develop. There were numerous debates about the most effective ways to help countries develop, but there was general consensus on the view that aid was a good thing and if Developing countries were injected with money and western expertise it would help to erode ‘backward’ cultural barriers and kick starts their economies.
The most well-known version of modernization theory is Walt Rostow’s 5 stages of economic growth. Rostow (1971) suggested that following initial investment, countries would then set off on an evolutionary process in which they would progress up 5 stages of a development ladder. This process should take 60 years. The idea is that with help from West, developing countries could develop a lot faster than we did.
Stage 1: Traditional Society
Traditional societies whose economies are dominated by subsistence farming. Such societies have little wealth to invest and have limited access to modern industry and technology. Rostow argued that at this stage there are cultural barriers to development (see sheet 6)
Stage 2: The preconditions for take off
The stage in which western aid packages brings western values, practises and expertise into the society. This can take the form of:
Science and technology – to improve agriculture
Infrastructure – improving roads and cities communications
Industry – western companies establishing factories
These provide the conditions for investment, attracting more companies into the country.
Stage 3: Take off
The society experiences economic growth as new modern practices become the norm. Profits are reinvested in infrastructure etc. and a new entrepreneurial class emerges and urbanised that is willing to invest further and take risks. The country now moves beyond subsistence economy and starts exporting goods to other countries
This generates more wealth which then trickles down to the population as a whole who are then able to become consumers of new products produced by new industries there and from abroad.
Stage 4: The drive to maturity
More economic growth and investment in education, media and birth control. The population start to realise new opportunities opening up and strive to make the most of their lives.
Stage 5: The age of high mass consumption
This is where economic growth and production are at Western levels, which should have happened after 60 years according to Rostow.
Variations on Rostow’s 5 stage model
Different theorists stress the importance of different types of assistance or interventions that could jolt countries out their traditional ways and bring about change.
Hoselitz – education is most important as it should speed up the introduction of Western values such as universalism, individualism, competition and achievement measured by examinations. This was seen as a way of breaking the link between family and children.
Inkeles – media – Important to diffuse ideas non traditional such as family planning and democracy
Hoselitz – urbanisation. The theory here is that if populations are packed more closely together new ideas are more likely to spread than amongst diffuse rural population
Strengths of Modernisation Theory
Below are some examples of the theory working in practice, sort of!
ONE – Indonesia – partly followed Modernisation theory in the 1960’s by encouraging western companies to invest and by accepting loans from the World Bank. But, their President Suharto (Dictator) also maintained a brutal regime which a CIA report refers to as “one of the worst mass murders of the 20th century,” comparable to those of Hitler, Stalin, and Mao. However, the World Bank praised Suharto’s economic transformation as “a dynamic economic success” and called Indonesia “the model pupil of the global economy,” while Bill Clinton referred to Suharto as “our kind of guy.”
Two further examples of where western expertise has helped solved specific problems in a number of developing countries are the green revolution and the eradication of smallpox, but neither of these lead to ‘the high age of mass consumption’ as Rostow predicted
TWO – The Green Revolution: In the 1960s, Western Biotechnology helped treble food yields in Mexico and India.
THREE – The Eradication of Smallpox… In the early 1950s 50 million cases of smallpox occurred in the world each year, by the early 1970s smallpox had been eradicated because of vaccine donations by the USA and RUSSIA
Criticisms of Modernisation Theory
There are no examples of countries that have followed a Modernisation Theory approach to development. No countries have followed Rostow’s “5 stages of growth” in their entirety. Remember, “Modernisation Theory” is a very old theory which was partly created with the intention of justifying the position of western capitalist countries, many of whom were colonial powers at the time, and discrediting Communism. This is why it is such a weak theory.
Modernization Theory assumes that western civilisation is technically and morally superior to traditional societies. Implies that traditional values in the developing world have little value compared to those of the West. Many developed countries have huge inequalities and the greater the level of inequality the greater the degree of other problems: High crime rates, suicide rates, poor health problems such as cancer and drug abuse.
Is the collectivist culture of Anuta really inferior to the individualised culture in the West?
Dependency Theorists argue that development is not really about helping the developing world at all. It is really about changing societies just enough so they are easier to exploit, making western companies and countries richer, opening them up to exploit cheap natural resources and cheap labour.
Neo-Liberalism is critical of the extent to which Modernisation theory stresses the importance of foreign aid, but corruption (Kleptocracy) often prevents aid from getting to where it is supposed to be going. Much aid is siphoned off by corrupt elites and government officials rather than getting to the projects it was earmarked for. This means that aid creates more inequality and enables elites to maintain power.
Post-Development thinkers argue that the model is flawed for assuming that countries need the help of outside forces. The central role is on experts and money coming in from the outside, parachuted in, and this downgrades the role of local knowledge and initiatives. This approach can be seen as demeaning and dehumanising for local populations. Galeano (1992) argues that minds become colonised with the idea that they are dependent on outside forces. They train you to be paralysed and then sell you crutches. There are alternative models of development that have raised living standards: Such as Communist Cuba and The Theocracies of the Middle East
Industrialisation may do more harm than good for many people – It may cause Social damage – Some development projects such as dams have led to local populations being removed forcibly from their home lands with little or no compensation being paid.
In the clip below, Vandana Shiva presents a useful alternative perspective on the Green Revolution, pointing out that many traditional villages were flooded and destroyed in the process:
Finally, there are ecological limits to growth. Many industrial modernisation projects such as mining and forestry have led to the destruction of environment.
Neo-Modernisation Theory
Despite its failings Modernisation theory has been one of most influential theories in terms of impact on global affairs. The spirit of Modernisation theory resulted in the establishment of the United Nations, The World Bank and the IMF, global financial institutions through which developed countries continue to channel aid money to less developed countries to this day, although there is of course debate over whether aid is an effective means to development.
Would we have the Millennium Development Goals without Modernisation Theory?
Furthermore, the ‘spirit of Modernisation theory may actually still be alive today, in the form of Jeffry Sachs. Sachs (2005) is one of the most influential development economists in the world, and he has been termed a ‘neo-modernisation theorist’.
Sachs, like Rostow, sees development as a ladder with its rungs representing progress towards economic and social well-being. Sachs argues that there are a billion people in the world who are too malnourished, diseased or young to lift a foot onto the ladder because they often lack certain types of capital which the west takes for granted – such as good health, education, knowledge and skills, or any kind of savings.
Sachs argues that these billion people are effectively trapped in a cycle of deprivation and require targeted aid injections from the west in order to develop. In the year 2000 Sachs even went as far as calculating how much money would be required to end poverty – it worked out at 0.7% of GNP of the 30 or so most developed countries over the next few decades.
