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Lecture 6

Lecture 6: Modernization, Dependency, World System Theories

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McGill University
International Development
INTD 200
Warren Allmand

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 industrialization • trickle down of wealth • Capitalism reorganized society • Society was less personal, less focused on relationships between people • 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 benefit 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 control 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) • 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 economy • Debt was good, could pay it back in good times W. Arthur Lewis: Economic development with unlimited supplies of labour (1954) • 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 development. 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 § Agriculture more commercialized o Stage 4: Drive to Maturity § Improved technology § More diversification § Decreased imports o Stage 5: Age of High mass consumption § Modeled after the US § Increased importance of consumer goods and services § Rise of the welfare state • Critique: uni-linear, Eurocentric, sequential economic growth vs. development o Simplistic o Based on the European model o Doesn’t have human welfare in mind Talcot Parsons: The
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