INTD 200 Lecture Notes - Lecture 6: Nationstates, Walt Whitman Rostow, Mixed Economy

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Lecture 6: Modernization, Dependency, World
System Theories 12/16/12 9:22 AM
Industrial Capitalism
Restructuring social relations in Europe
all countries could ‘develop’ along the lines of European
trickle down of wealth
Capitalism reorganized society
Society was less personal, less focused on relationships between
Land, technology, capital
Increase in class inequity with capitalism: owners and peasants
Pockets of wealth and pockets of poverty
o Happens within countries and among countries
Classical Economic paradigm
Adam Smith: Wealth of Nations (1776)
o Laissez Faire Capitalism: the market will manage itself
o Hidden hand
o Ingenuity and creativity
o State out of the market
o If individuals pursued their own interests, society would
o Did recognize that societies couldn’t be ruled by markets
alone, did need some government intervention
Alfred Marshall: Principles of Economics (1890)
Later—Karl Polanyi: The great transformation (1944)
o Critique of laissez faire capitalism
o Fictitious commodities
o Double Movement: with the spread of market society, you will
have a counter movement which will be resistance to market
o Societies protect themselves
o Role of the State
o Exploitation of nature
Development Economics/Neo-Classical Paradigm (Early 1950s)
John Maynard Keynes (1883-1946): General theory of employment, interest,
and money (1939)
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Mixed economy, increased role of state in regulating markets
Would increase employments
Governments should spend in bad times and save in good times to
regulate the economic ups and downs
Calling on governments to take loans and pump money into the
Debt was good, could pay it back in good times
W. Arthur Lewis: Economic development with unlimited supplies of labour
Dual Economy: capitalist/modern and subsistence/traditional
Need to have a growth of the modern sector at the risk of the
subsistence sector
The subsistence sector was not as economically productive,
therefore did not put as much money back into the economy
Critique: didn’t recognize the importance of small scale agriculture
in development
Modernization Theory (late 1950s)
Came in response to the failure of developing countries to sustain
Walter Rostow (1960): The Stages of Economic Growth
A non-communist Manifesto
5 stages through which all countries pass in process of economic
growth (towards capitalism)
o Stage 1: Traditional Society
! Hierarchal social structures
! Personalized relations
! Not abstract
o Stage 2: Preconditions for take off
! Improvement of technology and transport
! Emergence of economic elites
! More centralized nation-states
! Education and institutions
! Banks
! Traditional alongside modern economic institutions
o Stage 3: Take off
! Obstacles to economic growth are removed
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