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POLS 2080 (26)
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Chapter Three Summary

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Department
Political Science
Course
POLS 2080
Professor
Adam Sneyd
Semester
Fall

Description
POLS*2080: Chapter Three Theories of Development Introduction  A new phase of capitalist development (consisting of three stages) has begun [caused by the economic crash]: o The crash has discredited neoliberalism, as lack of regulation is what caused the abuse of power o The boom of “developed” countries has ended  Some of the developing countries have enjoyed impressive growth rates o The emergence of leftist policies in Latin America  Flout the tenets of neoliberalism and put welfare at the centre of development  Development theory must now undertake: o Assimilating the experiences of today‟s fast-growing economies and centre-left governments o Rethink development in a longer term historical perspective (as something ongoing and existing since colonial times and even before) o Reconsider the actual goals of development (what does “catching up” mean?)  It is generally accepted that the creation of rich and poor countries occurred with the emergence of capitalism and the accompanying imperialism and colonialism o Industrialisation caused the wealth gap to widen o This caused the “development project” to come about after WW2 (the gap is higher today than it was in the 40s and 50s –rich countries 23 times richer than poor countries as of 2000)  Development suffered setback because o the gap between the rich and poor continued to widen o whatever gains development made were rolled back due to neoliberalism (free markets, no interference) o development has been sidelined by globalization o of the modest reforms of the UN Millennium Development Goals.  The post-development currents flatly reject development as a plausible goal for us to have  The PPP (purchasing power parity) made underdevelopment appear to be a statistical illusion o This suggested that the low wages in certain countries actually weren‟t that bad because the people could buy more with those low wages compared to those in developed countries Development Avant la Lettre  The western idea of progress became widely accepted during the industrial revolution o European countries progressed very quickly o Before this economic and social changes had been slow, easily reversed, and at the expense of others o The IR took place in a capitalistic world –something new  Capitalism: o It organized production units whose private owners had the capital to buy the means and materials of production and those who had no other means but to sell their labour and power on the market o Before capitalism markets had little influence over social product: it had been controlled by authoritarian rulers and social customs o Production and human productive capacity underwent an expansion with the focus of preserving capitalism in all countries o We saw a shift from agriculture to industry  Limitations of capitalism o No increase in demand due to workers‟ low wages o Required a constantly expanding world market through commerce or conquest o Created wealth in some societies and poverty in others o Subject to cyclical crises  Seen with the Depression and Recession o Unjust, impersonal, and uncontrolled governance by institutions (i.e. businesses)  The current idea of “development” comes from the idea of prosperity that capitalism promised and the failure of it to produce prosperity for most people in the world o All credible and realistic sources of political thought look at capitalisms double-sidedness  Regulation of capitalism o Adam Smith –society‟s morality should guide the markets (which he saw as an “invisible hand” that combined private efforts) o Hegel –the state is an indispensable actor in correcting and opposing market forces o Regulation doesn‟t inherently mean it‟s socialist thought  The market fails so often in capitalism that the state has to be involved sometimes o Polanyi –market failure is endemic to capitalism [since it treated land, labour, and capital as commodities] therefore markets are unable to and have never been able to successfully manage economies  Capitalism and the emergence of nation-states o Nations are the outcome of the uneven development of capitalism o Uneven capitalist development, reinforced by imperialism, brought not development but deprivation, imposition, domination, and exploitation to less powerful peoples o The United States, Germany, and Japan became national states by refusing Britain‟s economic and political domination. They also rejected the British free trade ideology o National states resorted to politics to manage trade, protect key industrial sectors, and modernize the agricultural sector o Politics became the means to reform the international division of labour o Today, developing countries criticize imperialism as an obstacle to development The Moment of Development  Before WW2 the main reason to support development was the quasi-racist view of the “white man‟s burden”, civilizing missions, etc.  Afterward the view of development shifted to the recognition of the exploitation and oppression and the desire to help poor countries “catch up” to the status of the industrialized countries  Three massive changes produced and defined the moment of development o The US emerged as the most powerful capitalist nation in the world  Came to account for half of the world‟s production by 1945 (aided by the destruction in Europe after the two world wars)  The US began to sponsor development programs in order to cut imperial powers down to size and to develop the capitalist world economy (which would benefit them) o The Soviet Union emerged as an industrial power  Communism (and their state planning/involvement) helped them when the rest of the world floundered  This forced the US to alleviate the poverty so that communism didn‟t appeal to the poor countries o The push toward liberation and decolonization  The US consistently supported the end of decolonization after WW2 to cut down its rival powers and act against the communist powers o Countries such as Korea, Cuba, and Vietnam were the places where the US tried the hardest to eradicate communism [the cold war turned hot]  State direction of the industrialization process was vital to the development agenda o This is important to note as populist, post-modern, and neoliberals often portray industrialization as negative to poor countries  Development happened because of the confrontation between capitalism and communism (as well as their interaction) o The failure of capitalism and the success of communism during the Depression  Interwar Consensus o The ills of capitalism could be remedied by planning, state ownership, a large state role in the economy, and by making it more egalitarian through welfare measures  Keynes believed that the government should be involved in the economy only during the downturns –bolster the economy through spending and social programs o Less radical than the Soviet-style involvement  New trade and finance governance was created through the IMF, World Bank, and the General Agreement on Tariffs and Trade (GATT) o Designed to enable the national economic management required for welfare states as well as development  Why call it third world? o Balance between the developed, capitalist world (first) and the communist (second) in international politics o Balance between the political weakness of capitalist forces and the strength of leftist movements domestically Disputing Development Development Economics  The first theory of development (in a long line) that followed WW2  Mainly marked by Keynesianism o Saw capital crises as products of cyclical deficits of demand o acceleration of growth through foreign capital and macroeconomic policies o Increasing the level of state spending and credit at the beginning of the downswing to keep investment consistent and to even out any decline that may occur o The larger role of the state to provide social services for citizens and the ownership of key industries  W. A. Lewis: as agrarian economies with a surplus of labour industrialize, labour becomes scarce and wages higher  “launching a country into self-sustaining growth is a little like getting an airplane off the ground” Modernization Theory  While most developing countries grew none of them were projected toward self-sustaining growth  Modernization theory supplemented economics with sociological and political theorization in order to understand the preconditions and obstacles for development o Changed focus from just economics to modernization of traditional societies  Walt Rostow’s Stages of Economic Growth was an historical interpretation of industrializationSocieties went through five stages: 1. traditional society: low levels of technology 2. pre-conditions for take-off: creation of a national state, trade expansion, and increases in investments 3. take-off: higher productivity in in
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