For countries, the core of the process of becoming wealthy is development. A developed country
is always wealthier than an undeveloped country.
What is Development?
Development can be defined as progress. Progress is improvement – people’s lives are improved
Human development is development on the micro-level. We are thinking of humans not as a
species, but as individuals.
- Infant mortality rate and literacy are examples of human development.
Equitable development examines the distributive consequences of development.
- Economies may grow 10% a year, but if households are not earning more money from
this growth, it is not helpful for people.
- Income is distinct from wealth. Income is the actual salary a person takes home. Wealth
includes all stock and shares, etc.
- Life chances – will you have opportunities to move up in life?
- Gender – one of the clearest markers of structured equality in society.
Capacity: the capacity of a country to upgrade and develop.
- How accessible is education? Is it available to all for a reasonable price? Is it available at
the university and professional level?
- Are you able to develop the technical and management skills that will allow you to
Sustainable development is development that occurs over the long term.
- Environmental impact – are resources being depleted at an irreplaceable rate?
Political development concerns democracy, human rights, and the rule of law. - Political development is the pinnacle of development. As countries move from being
agricultural to becoming industrial, they become more interested in politics and equality.
Aggregate economic growth
A Theoretical Conversation: The Cosmopolitical View
Adam Smith: The most efficient way for a market to work is for the government to leave it
alone. Free commerce.
- Under a system of free commerce, each country naturally devotes its capital and labor to
such employments as are most beneficial to each.
Specialization: Focus on producing the things you can make well, let other people
produce what you cannot make.
The cosmopolitical view is a theory of individualism: it is about what you are good at making
and what your individual comparative advantages are.
- It is only under this system that we see a productive global capitalist system form. This
leads to prosperity and peace for everyone.
- The invisible hand of the market – the positive sum theory. If you just allow markets to
work, everyone will benefit.
The Mercantilist View
Economic hegemonies would benefit the most from free markets because they have the most
advanced industries in the world.
List: Nations matter. It does not matter that you are a textile producer, it matters that you are an
English textile producer.
- The world is inherently unfair, and there can be no positive sum relationship; rather, the
world is a negative sum relationship. Global capitalism disproportionately benefits some nations
Were the United States to have specialized in its early days, it would have become no more than
an agricultural nation.
- It would be impossible for a new country to challenge an old and rich country while
relying solely on the invisible hand of the market. What is needed in the market is government intervention. You need the visible hand of the state
to provide policy and productive intervention.
- You need governments to create or to help create comparative advantages. Because you
are not endowed with advantage, you must create advantage.
Government intervention creates comparative advantages for otherwise disadvantaged nations.
Manipulating exchange rates, imposing tariffs, and implementing market policies are among the
ways a state can create their own advantages.
The Leninist View
Lenin holds a theory inspired by Marxism. It was, however, less of an analysis of the
contradictions of capitalism and more on the consequences of capitalism.
Imperialism is “the substitution of capitalist monopolies for capitalist free competition…
Monopoly is exactly the opposite of free competition… Monopoly, which has grown out of free
competition, does not abolish the latter, but exists over it and alongside of it, and thereby gives
rise to a number of very acute, intense antagonisms, frictions and conflict.”
Because of the need for monopolies to keep growing, their capital becomes transnational.
- A big company cannot remain in one nation. It has to expand, and by expanding, it grows
in new countries and becomes transnational.
From this, we see imperialism: first-world countries colonizing other lands simply
because the monopolism of capitalism requires them to go out and extract more capital.
Capitalism does not erode itself; capitalism requires imperialism.
- Capitalism has to be exploitative to survive.
World Systems Theory
World systems theory is not a theory of imperialism, but a theory of the consequences of
- Capitalism is a system that is inherently unequal and requires exploitation.
- Capitalism is not a national phenomenon, but a global phenomenon. - Capitalism creates a certain structure to the global economy.
World systems theory is a systemic view of global capitalism.
The world is dominated by a liberal ideological hegemony.
- For all the efforts of mercantilists, we see a world dominated by free trade.
In the global capitalist system, we see the rise of monopolistic producers (often knows as
multinational corporations). They must become transnational because capitalism requires it.
- These corporations are massive conglomerate firms, which is far from the small producers
that Adam Smith predicted and dealt with in his theories.
Along with monopolistic producers, there are monopsonistic purchasers. These purchasers buy
goods made by the monopolistic producers.
- The monopsonistic purchaser decides how much he will spend to buy what monopolistic
producers create. If a producer says he will sell his goods for a dollar, the purchaser has the
power to say that he will only buy it for fifty cents.
Dependency theorists say that most of the poor countries in the world are post-colonial
societies. Colonialism ruined their economies and left no industry or infrastructure for these
nations to develop.
“Structure” of Global Capitalism
Global capitalism’s structure is made up of a dominant “core” versus a dependent “periphery”.
- The core is made up of the first-world nations, such as America and Europe.
- The peripheries are the underdeveloped nations, such as South America and Africa.
The peripheries are dependent on singular, low-value exports. They can only sell what they
produce well, and they must accept what the core nations will pay for it, however low the price is.
- As such, peripheral countries are dependent on the North.
Peripheral countries are locked in their structural dependency to the co