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ANT204H1 Lecture Notes - Marshall Plan, Global Industrial, Walt Whitman Rostow

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Leslie Jermyn

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Tuesday June 16th, 2009
Poverty, Development and Globalization
1. Poverty Problematized
a. 1945 UN
b. 1949 Truman
c. 1951 UN
d. Marshall Plan
2. Modernization Theory
3. Development in Action: Green Revolution
4. Turbo-Capitalism
5. Surplus People
6. Poverty is Local and Global
-Last week we looked at debt and how third world debt was created, and the consequences of SAPs
-Debt is growing into a big problem, and at the same time, a biunch of development things are going on in
order to develop the third world
oThis impulse to develop arises out of the post-war effort to avoid economic chaos leading to
political chaos
-Development form the start was primarily perceived as poverty eradication
-Development Economics – when it first emerges as a discipline this is what it is called
o“The discipline interested in eradication poverty”
oPoverty is defined as things or conditions which are not present. SO poor people don’t sufficient
have water, land, health, etc
oThere is a while mini industry in determining when you become poor. I.e. World Bank says if you are
less than a dollar a day you are extremely poor; OR for example, LICO in Canada
oSuggests you are poor if you lack x
oThis way of diving the poor only became widespread after the second World War
-Only in post-colonial era they started looking at them as the third world. Before this, people were not defined
through what they have.
-Dr J will suggest that in the 40s and 50s, there are 4 things we want to take account of
1945 – Creation of UN
-Charter of UN joined all members to strive for global social progress. As part of their membership, countries
all had to provide national accounting statistics. You can find these on websites like Statcan. Things like
GDP, GNP, population, imports, exports, what was being produced, what was bring consumed, how many
miles of roads etc
-Beginning of national statistics and the impulse to social progress – people began to think we have to strive
for social progess, so people began to figure out what this progress would look like while they saw these
numbers. Their solutionw as that the easiest way to tell which country is rich and which is poor, is per capital
oDivide nation’s GDP into population of country
-When these numbers were calculated, the arbitrary number they picked was $1 a day. If you made less than
that, you were defined as poor
-This had raised to $2, but Dr J argues that the fact that they can reasonably still say that $1/day means poor
even 60 years later
-This type of calculation then started to define social progress.
oALL social implications of poverty were mushed into the idea of dollars.
oMoney being exchanged does not represent social progress. There is no logic in the argument that
more money being exchanged means more social progress
1949 Truman

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-He addresses Congress and in point 4 he says the industrialized countries should use the fruits of their own
economic progress to develop the poorer states around the world
-Truman suggests that one way to increase other Per Capita Income, is with rich countries who will contribte
some of their money to other poorer countries
-Context – Era of Cold War, it is part of the whole, ‘we wanna make sure the other countries don’t turn
socialist’ stuff
1951 – UN Report
- Suggests that living standards (which actually meant INCOME) could be raised if states took action to raise it
-Suggests that development is not something to happen on its own, states have to intervene
oImportant because it is a shift from CLASSICAL economic thought, to the thought that states should
oDEVELOPMENT INDUSTRY – States should intervene
oPart of the process of development must include state intervention
Marshall Plan
-It proves that somehow, all of the above things work.
-It was a huge injection of aid money and material wealth from the USA to wartorn countries in Europe and
Japan. It also involved sending construction materials and teams of marines to help build ports and stuff
-Countries who got this, did not incur debt. It was a free gift.
-Congress asked George Marshall why USA should give them so much money without loans. Goerge Marshall
said no
o1. You get yourself in the same position that Germany has
o2.Economically, giving it for free is the sounder decision. His argument: By the end of WWII< USA
was basically the global industrial powerhouse. It had produced throughout the war, industrially, it was
very powerful. Soldiers come home, looking for jobs, the USA has a real cirisis. Without the war,
some industrialization is going to have to go down if they don’t have anyone to sell it to. So MArhsall
says, if you want to retool the peacetime, and employ returning soldiers, AND have somewhere to sell
the stuff, the pimary countries will be those who were most developed before the war. (I.e. Europe and
oMarshall said if we put them back on their feet, they will become our primary markets
-The Plan was a success, and in a few short years, Germany becaomes and economic powerhouse, and Britain
is off its rations and on its feet again
-First concrete example that this business of devlpoment might work
-First coherent model of how all of these elements can be combined Modernization Theory
Modernization “Theory”
-Most famous theorist here was Walt Rostow, and he called his model the take-off model
oGet to a certain point and economy will take off
-They were not as much theories as they were models. Models show you on the ground how things will happen
-There were different versions of what the Theory was, we will examine a blend of all of them; They all had
common elements:
oState intervention: All of them were preficed that states and governments had to be involved. States
were encouraged to take a hand in developing their economies
oProposed that they key shift in economy had to be from agriculture to industry: Said all poor
countries are predominantly agricultural. In Western countries, the primary motives of the economy
were industry and consumption goods. So they thought that industrialization would mean an increase
of per capita income. They came to the conclusion that if rich coutries were industry based, and poor
countries were agriculturally based, poor countries had to make the shift from agriculture to industry
Subsistence Production: That means you are producing primarily for your own consumption.
Most of it remains out of the cash economy, which means little contribution to GDP.
Said you have to produce more fot the economy – two ways
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