Dependency theory tended to see the ‘root cause’ of underdevelopment as rich world governments (or nation states) – they believed poor countries remained poor following a history of colonialism where powerful countries such as Britain colonised other areas of the globe, for example India and many African countries and took control of these regions politically and economically, running them for their own benefit.
Dependency theory believed the unequal relationship between the coloniser and colonised (or core and satellite) disadvantaged poor countries to such an extent that they were still in a state of dependency when the colonial powers left in the 1950s and 1960s. The ex colonies were effectively turned into the exporters of low value primary products such as Tea, which kept them poor.
HOWEVER, WST points out that today nation states have lost their power to control poor countries, and that there are ex colonies which have developed by becoming semi-periphery countries, or manufacturing – India and Mexico are good examples.
Another criticism WST makes of DT is that rich ex coloniser countries can go down the development hierarchy because Nation States are no longer the most powerful actors in the modern global system controlled more by TNCs and the WTO.
DT still saw industrialisation as the root to development for poor countries, except that it should be controlled by nation states (socialism).
PCD criticises this as horrific things still happened through socialist development – as in Russia and China, and also point out that the nation state may be too large to take into account the diverse wishes of many local communities.
PCD would rather see much more diverse, localised forms of development, decided on by the people, rather than development imposed by nation states.
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.
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.
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 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.
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.
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.
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.
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)
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.
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 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 stage –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.
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/ Examples of it (sort of) Working
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
Firstly, 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.
Secondly, 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.
Thirdly, 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.
Fourth, 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 powe
Fifth, 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
Sixthly, 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.
Post-Script: 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.
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.
Related Posts/ Sources:
Steve Basset has produced an excellent series of vodcasts introducing Modernization Theory and other theories of development:
I found this fascinating Infographic in a recent report by the Resolution Foundation – which shows how people in rich countries tend to be pessimistic about their children’s futures, while people in poor countries tend to be optimistic.
These are only indications of how people feel, and feelings don’t necessarily reflect the actual prospects for children having a better life, but they do capture something of the ‘public mood’ or maybe even the ‘collective conscience’ in these countries, or do they?
Three related questions you might like to think about are:
How valid are these data? Are people in France really THAT pessimistic? And are people in China really that optimistic?
If you believe these stats to be valid, then why the differences? (Are we witnessing the rise of the developing nations and the decline of the developed world?)
Are people in poor countries right to be optimistic, and are people in rich countries right to be Pessimistic>?
Dependency theory and Marxist-Feminists would probably point out that many Transnational Corporations are not interested in helping developing countries. Rather, they simply exploit patriarchal values rather than promoting real equality. They do this through taking advantage of ‘women’s material subordination’ – women put up with worse conditions than men because there is no better alternative other than to return to their roles as mothers and unpaid domestic labourers.
Women’s proportion of global supply chain production workers discloses a range of 65% to 90% women in many global supply chains, most obviously the garment industry, and in some countries it is much higher – in China, 75% of garment workers are women, in Bangladesh the figure is 85%, and it rises to 90% in Cambobdia.
The charity War on Want argues that women workers in ‘sweatshops’ in Bangladesh are exploited by the Corporations that employ them (link), although there is a view that this exploitation is gradually leading to greater emancipation for women (link).
From a Dependency perspective, increased participation in the work force also implies increased hazards for women. Women’s jobs outside the home tend to be the lowest earning, least secure, and most dangerous available in the economy, especially in periods of recession that plague most developing countries.
The following video shows the conditions of women working in Bangladesh. Although they work in hazardous and strenuous conditions, most of these women are willing to work in such environments in order to financially support their families. http://www.youtube.com/watch?v=2wqBRWa0fno
On April 24, 2013, Rana Plaza, a garment factory outside of Dhaka, Bangladesh, collapsed, killing at least 1,127 workers. Over half of the casualties were women. In Bangladesh, the garment industry is the largest employer of women, a majority of whom live in rural areas where employment is scarce. In addition, these women are often supporting large extended families, and working for the garment industry is often the only option other than working as a farm hand. Jobs in the garment industry do much to elevate the status of women, but they are often left powerless in the face of harassment and dangerous working conditions. The Bangladesh factory collapse is a prime example of how women are often required to take jobs in dangerous industries with little to no recourse of their own. (Uddin, 2013) To read more on the Bangladesh factory collapse, visit http://www.globalization101.org/manufacturing-after-the-bangladesh-factory-collapse.
The dearth of labour laws, or ignorance and lack of enforcement of the labour codes in practice, allow for the exploitation of women. In Guatemala, women constitute 80 percent of the textile factory sector, and thousands of mostly indigenous women provide services as domestic servants. In both sectors, women have only a precarious claim on the rights to Guatemala’s legally mandated minimum wage, work-week length, leave time, health care under the national social security system, and privacy protections. Often, they are subject to physical and/or sexual abuse, according to Human Rights Watch (Human Rights Watch, 2012).
Unfortunately, even the global nature of business does not confer universal rights for these women. Many U.S.-based companies, such as Target, The Limited, Wal-Mart, GEAR for Sports, Liz Claiborne, and Lee Jeans, have contracts with Guatemalan factories and continue to honor them even if the factories break explicit company policy, such as physically examining women to determine if they are pregnant and denying health care to employees. According to Human Rights Watch, strengthening legal protection for women labourers and increasing their access to legal recourse might cement increased participation in the work as a positive development for women.
The New Rulers of the World (2001) by John Pilger provides a good example of a Dependency Theory analysis of the consequences of neoliberal globalisation, focusing on Indonesia as a case study.
The fact that this is a dependency view of development is quite clear from John Pilger’s own summary of the documentary:
“There’s no difference between the quite ruthless intervention of international capital into foreign markets these days than there was in the old days, when they were backed up by gunboats…. The world is divided between the rich, who get richer, and the poor, who get poorer, and the rich get richer on the backs of the poor. That division hasn’t changed for about 500 years” (the link above will take you to this quote)
Below I provide a brief summary of the documentary. The documentary is 15 years old now, but it provides a very useful introduction to the following concepts within global development.
It provides an unambiguous example of a Dependency Theory analysis of underdevelopment in one country – Indonesia
It’s an especially useful analysis of neo-colonialism – how economic institutions now work to extract wealth from a poor country.
It introduces you to the role of the World Bank and the International Monetary Fund in an accessible way.
NB this documentary is now over 15 years old, so you might like to think about the extent to which it still applies to Indonesia 15 years on, and the extent to which you can generalise this analysis to other countries today.
(NB – the headings below are my own, not from the documentary)
John Pilger – The New Rulers of the World – intro section
In recent months, millions of people around the world have been protesting against a new economic order called globalisation.
Never before has the human race enjoyed such enormous capacity to create wealth and reduce poverty, but never before has inequality been so great.
A small group of individuals controls more wealth than the billion people in Africa, and just a handful of corporations dominate a quarter of the world’s economic activity – for example General Motors is now bigger than Denmark.
The famous brands of almost everything are now made in poor countries, with wages so low it borders on slave labour.
Tiger Woods is paid more money to promote Nike than the entire workforce in Indonesia are paid to make Nike products.
Is this the new global village we’re told is our future, or is this an old project, that used to be run by the divine right kings, but is now run by the divine right of corporations and the government s which back them?
This film is about the New Rulers of the World – and especially their impact on one country – Indonesia.
Indonesia –history/ background
Indonesia is where the old imperialism meets the new. This is a country which should not be poor as it is rich in natural resources such as oil and gold, copper, timber and the skills of its people.
It was first colonised by the Dutch in the 16th century, and plundered by the west for hundreds of years, a debt which is yet to paid back.
Pramoedayo Ananta Toer (ex political prisoner)
“For hundreds of years Indonesia and many other countries were sucked dry by the European countries, who became strong, and the masters of finance and commerce, and now they are dictated to by the World Bank and the IMF – Indonesia has been turned into a country of beggars because its elite is spineless.
George Monbiot (well-known environmentalist)
“We’re told that globalisation is going to bring us all together and help combat poverty but what we’ve actually seen is the opposite – the poor are becoming poorer, and the wealthy are becoming staggeringly wealthy”.
Rich and poor in Indonesia
The World Bank famously called Indonesia a ‘model pupil’, a success story of economic growth.
To illustrate this success the video now cuts to a lavish wedding between two merchant families – these are the elite who have reaped the benefits of globalisation –the freedom to earn money and let that money make more money.
However, Indonesia is also a very unequal country and only a relatively few people have benefited from this economic growth: 70 million people live in extreme poverty – and they’ve calculated that it would take one of the waiters working at the wedding 400 years to pay for such a wedding.
The lavish wedding is contrasted to an Indonesian labour camp less than 5 miles way where young people make the cheap consumer goods we consume in the west.
This is the backyard of global capitalism, the side we don’t see, the human price we pay for the cheap goods we buy. The average worker here gets £0.72 a day, the minimum wage in Indonesia, just over half a living wage (according to the government).
Dormitories are made from breeze blocks, they flood when it rains, and open sewers spread diseases which kill children.
The labour camp is set in an economic processing zone, which is basically a vast area of sweat shops.
Investigating Poor Working Conditions in Indonesia
The documentary crew posed as fashion buyers to gain access and secretly filmed in one factory, and also conducted dozens of interviews with workers in these factories.
Working conditions are claustrophobic, frenzied, the workers fatigued, and working under strip-lighting in temperatures of up to 40 degrees (the management however have air conditioned offices.
They also have horrendous working hours – which can be upped when deadlines for orders are due. The workers are typically young women and one worker is on camera saying that she once worked a 24 hour shift with no breaks. She says she is too scared to refuse or even question the working hours.
These factories are owned by Taiwanese and Korean contractors who take orders from companies such as GAP (whose products were made in the above factory where the workers are paid extremely low wages).
GAP has codes of conduct which are supposed to apply to working conditions globally, and GAP representatives do visit the factories, but the workers interviewed say they are warned by management to not tell them about forced overtime.
Dita Sari – Trade union leader
Points out that codes of conduct are meaningless in a country like Indonesia because there is high unemployment and terrible poverty, so the people are desperate enough to put up with dismal working conditions, and the government is unwilling to enforce the codes because they want Indonesia to be as attractive as possible to international companies (which means keeping labour cheap).
If you pay £8.00 for a pair of boxer shorts, then an Indonesian worker will receive approximately £0.04 pence of that.
In the previous year, the profits of gap were just short of £2 billion, and the CEO ‘earned’ £5 million, figures typical of many multinational companies.
For the sake of the documentary, they had to keep the factories anonymous, because the workers would have Victimisation from contractors and violence from anti-unionists.
Barry Coats – World Development Movement
We should aim to be better informed as consumers – when we buy something, we need to ask the company where it was produced and to give assurances that the workers are treated fairly.
The secret history of globalisation in Indonesia
In the 1960s General Suharto seized power in Indonesia secretly backed the United States and Britain.
Suharto removed from power the founder of modern Indonesia, Sukarno – a nationalist who believed in economic independence for the country. He had kept the Transnational Corporations and their agents, the World Bank, and the IMF, out of the country, but with Suharto coming to power they were called back in to ‘save’ Indonesia.
This regime change was one of the bloodiest mass murders in post WW2 history, with more than a million people estimated to have died in the process. Suharto took brutal steps to consolidate his power by rounding up thousands and thousands of civil servants, school teachers and basically anyone with communist leanings and murdering them.
He did this with the support of the CIA, who provided a list of 5000 people they wanted dead, and the British ambassador at the time suggested a little shooting was necessary to ease the transition, while British war ships played a supporting role in protecting Indonesian troops.
Within a year of Suharto’s coming to power the economy of Indonesia was effectively redesigned, giving the west access to vast natural resources, markets and cheap labour, what Nixon called ‘the greatest prize in Asia.
The American press reported these events not as a crime against humanity, but in terms of ‘The West’s best news for years’.
In 1967 – a conference in Switzerland planned the corporate take-over of Indonesia, with most of the world’s large international companies represented, such as ICI, General Motors and American Express. For western business this was the start of the gold rush which later became known as globalisation, and barely anyone mentioned the million dead Indonesians.
Professor Jeffrey Winters
Has never heard of a situation like this where global capital holds a meeting with the state and hammered out their interests. The conference lasted for three days – and the companies present hammered out policies which would be acceptable to them on a sector by sector basis. They basically designed the legal infrastructure for investment in the country.
It basically becomes clear from a series of interviews, despite their evasiveness, that the international business community new they were dealing with a nepotistic mass murderer.
Globalisation – the British arms connection
Globalisation began in the 1980s when Margaret Thatcher dismantled manufacturing and poured billions of pounds into building up the arms industry. Suharto was an important customer for the UK arms industry at that time, and sales to Indonesia were supported by ‘export credits’, in other words, a large part of Suharto’s arms bill was paid for by the British tax payer.
So important was Suharto to British arms exporters, that he was welcomed to London by the Queen.
The World Bank and the IMF – The New Rulers of the World
Who are the new rulers of the world? Their empire today is greater than the British Empire ever was. Basically they are the World Bank, and the International Monetary Fund, two bodies which are the agents of the richest countries on earth, especially America.
Initially set up to help rebuild European economies after WW2, they later they began offering loans to poor countries, but only if they privatised their economies and allowed western companies free access to their raw materials and markets.
Debt has been used by an instrument by the World Bank and IMF to get their policies implemented. The poorest countries are in a cycle of poverty, and current debt-reduction (not forgiveness) is not sufficient to allow them.
The difference between Tanzania and Goldman Sachs
Tanzania – is a country with a GDP of $2.2 billion shared among 25 million, Goldman Sachs is an investment bank with profits $2.2 billion dollars shared among 162 partners.
The World Bank says its aim is to help poor people, calling this gobal development. It’s an ingenious system, a sort of socialism for the rich and capitalism for the poor – the rich get richer on running up debt, cheap labour and paying as little tax as possible, while the poor get poorer as their jobs and public services are cut to pay just the interest on the debt owed to the World Bank.
Here in Indonesia, the hand-outs to the rich have been extra-ordinary, internal documents from the World Bank confirm that up to a third of the banks loans went into – around $8 billion.
The 1998 Financial Crash, the End of Suharto and Indonesian Debt Repayment
Globalisation means that capital (big money) can be moved anywhere at any time, without warning.
In 1998 short-term capital was suddenly pulled out of Asia, collapsing the miracle economy overnight. This actually benefitted Nike in Indonesia, because they ended up labour costs were cut to 25% of what they had been previously.
With the economy collapsed, and Indonesia on the verge of revolution, Suharto was forced to step down, having already stolen an estimated $15 billion.
During his reign of more than 30 years, Suharto had handed out public utilities to his family and cronies, driving from Jakarta airport, you actually paid a toll to Suharto’s daughter.
The bank presents itself as an economic development agency, focusing on poverty reduction, but in fact, the bank operated during the entire cold war as an institution which distributed money to mainly authoritarian regimes in the third world that supported the West in the Cold War.
The Indonesian elite instigated many development projects with World Bank loans during Suharto’s 30 year reign, and many of them were seen as opportunities to skim money for themselves. In total, $10 billion remained unaccounted for out of $30 in loans. Of course the debt remained, and still had to be paid back to the World Bank.
According to the auditor general of the World Bank, if the citizens of Indonesia made a legal challenge against the World Bank over the remaining debt (given that they never received the money), the World Bank would be bankrupt, because this has gone on the world over.
Interview with Chief Economist of the World Bank – Nicholas Stone
In response to the question of how the World Bank didn’t realise that $10 billion of aid money to Indonesia had gone missing, his response was firstly to deny any knowledge of the $10 billion figure, then (on having been shown the World Bank’s own report) to say that figure was made up. He finally argued that progress had been made during Suharto’s regime if we look at literacy and infant mortality figures, even if the numbers in poverty had doubled from 30 million to 60 million.
When asked why there was such a silence over the atrocities of Suharto, he simply said the World Bank got it wrong, and they will get it wrong in the future too.
Globalisation creates debts, creates misery, creates crisis, and creates privatisation, which pushes up the prices people have to pay for basic goods. In effect the money stolen by the Suharto regime is being paid back by the people who never benefited from that money.
Debt and the International Monetary Fund (IMF)
Every day nearly $100 million is transferred in debt repayments from the poorest countries to the richest, it is a debt that can never be paid back, given that half the world’s population live on less than $2 a day.
Interview with Stanley Fischer, from the International Monetary Fund
John Pliger asks whether debt cancellation should be a priority if we are to alleviate poverty, given that some countries spend half their GDP on debt repayments.
Fischer argues that we should not necessarily cancel their debt – we should rather look at the policies on education and health, and look at what sort of economies they run – do they integrate into the world economy, or do they run corrupt economies.
Fischer basically argues that countries need to repay their debts because they need to keep more resources flowing into their countries, and if they don’t repay them, they’ll never be leant to again. He sees debt as a ‘normal’ part of expanding enterprise and increasing economic growth.
NB – The subtext to the interview is that Western financial institutions depend on the debt repayments being kept up too.
(In order to keep up debt-repayments) the government, as recommended by the IMF. has cut subsidies on electricity, water and education, which means that the workers have to pay more their children through school.
Now people now eat two meals rather than three meals a day.
Protests at the World Trade Organisation
Two years ago, protestors from all over the world converged on Seattle at a meeting of the World Trade Organisation….
Evaluation – How Valid are the Findings of this Documentary Today?
The documentary makes the following claims, all of which are worth investigating to see if they are still true today….
The rich are getting richer and the poor are getting poorer
200 Corporations control 25% of world economic activity
The World Bank and the IMF dictate economic policy to poor countries
These economic policies are shaped by the 200 (or so) largest global corporations and work in their interests, not in the interests of the majority of people in poor countries.
There is a small elite in poor countries which benefit from these economic policies and enforce them, against the interests of the majority.
I’ll provide a summary of the rest at a later date… In the meantime, you might like to actually watch the rest of it!
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