September 21, 2012
Poverty and Development
Modernization, Dependency and the South African Situation
For far too long, Africa has rolled in the muck of poverty, exploitation, and corruption. More specifically, South Africa’s poverty and perpetual comparative underdevelopment makes one wonder if whether it is just slow to develop, or whether it is being actively held back. The Modernization Theory and the Dependency Theory both offer explanations for this problem. Given South Africa’s colonial history, an objective observer will notice that the Dependency Theory provides a better understanding of its economic situation than the Modernization Theory. Yet, any person interested in South African social, political, or economic policy must first wrestle with the immortal monster that Modernization Theory’s neoliberalism seems to be. Despite the consensus of many of those with power, the state of South African society today can best be understood through the Dependency Theory, rather than the Modernization Theory.
Modernization Theory rests on the idea of forward-looking development: the new is always superior to its older foundations. The following quote by Tawney was used as a parable of sorts to explain this hard issue to swallow. “It is possible that intelligent tadpoles reconcile themselves to the inconveniences of their position, by reflecting that though most of them will live and die as tadpoles and nothing more, the more fortunate of the species will one day shed their tails, distend, their mouths and stomachs, hop nimbly on to dry land ,and croak addresses to their former friends on the virtues by means of which tadpoles of character and capacity can rise to frogs.”(Letwin, p. 167). This quote was originally used as a defense for the economic theory of neoliberalism, but this example captures the first two branches of the Modernization Theory, evolutionism and functionalism, quite nicely. Evolutionism refers to societies and how the Modernization Theory states they evolve. Just as the tadpole resigned itself to its “objective” inferiority to the evolved frog, so too should primitive societies submit themselves to more highly evolved modern societies. Functionalism is rather about the subsystems within a particular society and how they interact. According to Parsons it is the meeting of these subsystems, the balance that the economy, politics, cultural and social needs that a society strikes that encompass the values of a society. Again, in the case of modest tadpole, progress is such a highly held value that in this functionalist society, that it would willing undermine itself for the progress of his cousin frog. Both of the first two branches of the Modernization Theory reveal how entrenched the theory is in an ideology that does not appear to be beneficial to individuals.
The third, and most influential, branch of the Modernization Theory is neoliberalism. Again, like the other two branches of Modernization Theory, the economic one presupposes that it is objective, and therefore all economies will eventually be morphed into it. Yet, it has distinct history, within a particular culture; This economic theory’s roots go as far back as eighteenth century, when Adam Smith developed the idea of self-regulating markets. Neoliberalism was molded through trial and error, and the political agendas in modern European and North American societies. Despite Modernization Theory’s guise of objectivity, which claims that Capitalism would eventually develop everywhere, neoliberalism has its own clear beginning within a specific historical context. Graaf argues that the main component of neoliberal economics was suppressing political aim, which as to suffocate the communist leanings during the Cold War. For fear of a global uprising of the proletariat and a global revolution spurred on by Russian and Chinese Communists, governments with Capitalist economies encouraged other countries to adopt neoliberal practices. Even in countries that could not successfully implement neoliberal policies, Western countries, such as the U.S., bought allegiance through foreign aid. Due to its clear historical context and its entrenchment in political agenda, neoliberalism is embedded in various nations’ individual histories and is nowhere near as objective as Modernization Theory would claim.
The foundational pillar that holds the Neoliberal economic theory is the philosophical notion that things function best when they are left to develop on their own accord. Following this idea, if a government wishes to have a strong economy, it should stay as uninvolved in the economy as possible. The one exception to this rule though is the government’s obligatory interference in the economy in the case of spiraling inflation. There is another instance where the government should regulate the economy; the development of a monopoly dominates a certain sector of the market and restricts the “natural” cycle of supply and demand. For the sake of preserving the functionality of neoliberal economics, a government should break up a monopoly and promote healthy competition between companies or service providers. Neoliberalism not only has implications for how the government should interact with the corporate sector, but it also some for social welfare. Sticking to its core belief of lack of involvement promoting growth, the neoliberal state should provide as few services as possible. This trimming back of services allows the state to lower taxes. With the extra funds, individuals will supposedly have enough pocket money to create and fund agencies to help those in need. Also, the ceiling put on taxes also keeps the state from spending too much, which supposedly keeps debt low. With an eye towards maximizing profits and a hand removed from social funding, neoliberalism readily caves into the temptation of exploiting poorer countries for a profit.
Dependency Theory takes a more sympathetic stance towards underdeveloped countries than Modernization Theory does; it contends that underdeveloped countries are actively improvised by the developed countries that make use of their resources. Unlike Modernization Theory, Dependency Theory holds that underdeveloped countries were not simply lacking in sociopolitical, and economic sophistication, but rather they were victimized and abused by countries with more resources. This victimization played out through colonialism and also through unequal trading practices that sometimes came hand in hand with it. Upon interaction with colonial powers, underdeveloped countries were encouraged to buy into the Modernization Theory. Faced with their comparative technological disadvantage, which created a lack of “objective” wealth, many countries sold whatever resources they had in the hopes of getting a competitive economic edge. Western countries, lacking in the natural resources of many modern day “Third World” countries, bought raw materials from the less developed countries. After using their more developed technology, they processed and manufactured goods from the raw materials, which they later sold back to the less developed countries. Any impression of fair trade fades when Graaf explains how, “the prices of primary goods (agriculture and mining) tend to fall over time, whereas the prices of manufactured goods tend to rise.” (Graaf, p.38). These falling returns combined with the abundance of cheap labor, due to a lack of formal education, leads underdeveloped countries into a spiraling cycle of impoverishment. Dale L. Johnson describes dependency in terms of issues of power; “Under conditions of dependence, power and decision making are removed from national societies; constraints of extra- national origin are many and severe; dependency is a severely limiting situation and nation-states and local power wielders must negotiate the conditions of their dependence, and the terms of negotiation are continually shifting.”( Johnson, p.113) Even as dependent countries scramble to regain control, developed countries continue to exploit them. Dependency Theory states that with the sole interest of their resources in mind, developed countries created a system by which they can keep poor countries poor poor, so as to buy their resources as cheaply as possible.
Before examining why the Dependency Theory provides a more accurate portrayal of South African society, one must examine exactly why Modernization Theory does not work. First off, Modernization Theory upholds the belief that if certain economic steps are taken, certain historical benchmarks achieved, then all societies will end up in the same situation. S.N. Sangmpam thoroughly describes in his “Sociology of ‘Primitive Societies,’ Evolutionism, and Africa” the complexity of the African political, economic and social systems. He ultimately argues that by imposing a Western understanding of “conventional development,” it delegitimizes the uniqueness of African subsystems (Sangmpa, p. 610). Therefore the convergence of societies into the one system that Modernization Theory calls for seems impossible, since European feudalism can no longer be neatly imposed over pre-colonial Africa. Trade with non-African foreigners began in South Africa at the eve of European colonial power. Ever since then South Africa has had a legacy of unequal trade relations with the West. While many strong believers in neoliberal economics assert that the continuance of those same skewed practices will bring modernity and prosperity, the reality of South Africa’s forced dependency continues to stand as a witness against their ill-founded appeals.
During the negotiations under the Apartheid Regime the International Monetary Fund and World Bank were very involved in helping the incumbent government build its economic policies; while these policies helped elevate the South African economy they also entailed many costly repercussions. These organizations, both historically strong upholders of neoliberal economics, helped provide the foundational theory to help South Africa open up to more foreign trade and investment. As S. Gelb describes, “Both economic and political imperatives pushed economic policy toward international openness.” (Gelb, p. 368). Since the 1980’s, several countries had put sanctions on South Africa, in the hopes of discouraging the racist practices of the Apartheid government. For years, there was “no capital inflows to finance the deficits” and after prolonged isolation, building strong relationships with foreign traders and investors was first on the new South African government’s agenda. In order to achieve this long term goal, South African businesses needed to be stable and trustworthy; “With the ascendance of big business, which ironically had occurred in the context of economic decline and greater class differentiation, business’s support was critical in reach the point of transition.” (Gelb, p.368) Of course, something that was just as important as reviving the economy was promoting racial integration in all sectors of society. Given the education provided to colored, black, and Asian South Africans for centuries, this shifting of leadership would by no means be an easy transition. Instead of fully and solely adopting the Neoliberal policies advised by the IMF and World Bank, the new South African government created Black Economic Empower to help during this social transition. This movement created a quota for nonwhite workers in businesses, especially in higher leadership positions (Gelb, p.369). Unfortunately, these good intentions did not mend all the social fragmentation. The government ignored the labor movement, “an active constituent in the ruling alliance,” and since then, there has been continued strife between the labor movement and the government. Far too many voices have gone unheard, and despite some of the positive results from the adoption of neoliberal policies, poverty in South Africa continues to fester as a result of ignoring the needs of the South African people.
While South Africa’s various business sectors have shielded it from becoming a one-commodity export country, similar to many other African countries, the weight it bears from exporting of its natural resources and skewed trade relations that this trade is entrenched in, results in factors that are not conducive to development through the Modernization Theory. South Africa’s resources such as gold, diamonds, and oil have been, and continue to be, exported predominately through and to foreign countries. With colonialism came highly unequal trade relations, and many European companies were established to help remove South Africa’s resources and bring them to their foreign homelands. Bond asserts an important point; “The central question is whether any of the financial capital that returns to Africa- by way of royalties on minerals or profits to local shareholders (still significant in the case of South Africa) is reinvested, or merely becomes the source of further capital flight.”(Bond, p. 102). Given the wealth of natural resources found in South Africa and its ongoing poverty, it is safe to assume that they due payment for these resources is not reaching those to whom it’s due. Although lower in South Africa, the following statistic exemplifies the heavy emphasis on exports in Africa compared to the rest of the world; “Overall primary exports of natural resources accounted for nearly 80% of African exports in 2000, compared to 31% for all developing countries and 16% for the advanced capitalist economies.” (Bond, p.88-89). Even after colonialism and the end of the Apartheid, South Africa’s main trading partners continue to be with non-African countries. As long as this system is in place, African wealth will continue to flow outwards. Also, as long as major South African companies are run by foreigner and even in foreign lands, the South African economy will stagnate.
After a long struggle with neoliberal economic policies, the Dependency Theory explains why the benefits of neoliberal economics are not panning out as they claim they should. Ever since the beginning of Dutch colonization, neoliberal policies (even in their embryotic form) have actively disadvantaged South Africans. Many Dutch colonizers became farmers and claimed more land than they would tend to. They therefore hired out labor to black South Africans. Instead of treating them as equals, the Dutch treated them as subordinates, highly controlling their labor practices and generation of income. As Miles writes “These regulations were intended to prevent labourers from either establishing themselves as independent producers or from gaining access to the means of resistance, and hence to bind them to the landowner infinitely.” (Miles, p.123). Even in areas where labor was not essentially demanded out the locals, South African did not fair much better. “Thus where African labour power was not required the communities were marginalized. This reflected the weak economic condition of the region: African communities produced little or no surplus which could enter international exchange.” (Miles, p. 124). Colonizers continued to use labor for their individual farms, but later recruited them for the extraction of raw materials. The mining industry developed in South Africa during the mid-nineteenth century after the discovery of gold and diamonds. As it grew and various mining companies became bigger, the labor practices common to farming were incorporated into this more professional job. “The consolidation of mines meant that this master/servant relationship became on between a management hierarchy and a large number of labourers rather than between a single individual and a few labourers.” (Miles, p. 129). Clearly, South Africans were manipulated and stolen from. Clearly, they were dragged into poor economic conditions, rather than establishing them for themselves. Whatever wealth and resources South Africans did have were coopted by colonizers, which created poverty and subsequently a system of dependency on “First World” countries, which still exists today.
The ultimate fruitlessness of the Modernization Theory’s claim that if a government stays out of its economy, the laws of supply and demand will allow natural sources of wealth to arise, which will build a strong economy, exemplifies how, as the Dependency Theory describes, South Africa has become entrenched in first world rule. For years, South Africa has sold and exploited its natural resources in the hopes gaining the competitive edge, and still today this proves to be not only disappointing, but also harmful. Bond expresses, that “In particular, the denial of African’s access to food, medicines, energy and even water is a common reflection of neoliberal dominance in social policy, as people who are surplus to capitalism’s labour power requirements find that they had better fend for themselves- or simply die.” (Bond, p.86). While neoliberal policies are no longer directly imposed on South Africa by individual Western, developed countries, institutions such as the IMF, continue to manipulate South Africa into compliance. “The International Monetary Fund (IMF) and other international institutions, reflecting this change in policy, attached the reduction of public expenditure and the commitment to a free market as the conditions for major loans and structural adjustment programs. The IMF "seal of approval "is necessary before private and government creditors give additional credits.” (Bayna and Elu, p. 17). Even after colonial rule has left South Africa, it continues to be pushed down and impoverished by Western organizations. The result cannot be summarized as simply social poverty. The stealing of resources that has, and continues to happen, drains South Africa of its natural wealth, and in the process has created harmful and costly pollution. Neoliberal institutions that influence, and sometimes dictate, policies and their encouragement of a free market, has kept South Africa from creating regulations to defend their wealth and protect their people from exploitation.
Tempted by the possibility of wealth and prestige, South Africa has been manipulated into believing the lie that the Modernization Theory and neoliberal economic policies will bring wealth. Throughout its long history of colonization and beyond, South Africa has been left in a place of such dependency, that it is open to manipulation and corruption. While the Dependency theory may not offer as concise of a solution to underdevelopment as the Modernization Theory does, it does leave room for a little hope. If South African’s can regain control of their own resources and the companies that deliver them, it will grow in economic power and political influence. Only then will it be able to escape the ever looming demands of Western Neoliberal institutions such as the IMF and the World Bank.
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