communication from Arno Tausch, 2. part

Tue, 14 Jan 1997 11:49:47 +0100 (MET)

Here are some further materials, perhaps of interest to you. As to the suggested print-out font, I recommend Times Roman 6.0

Transnational integration and national disintegration.

by Arno Tausch, Attaché for Labour and Migration, Austrian Embassy Warsaw1. Opinions expressed in this paper, are exclusively those of the author and not necessarily those of the Austrian Government

'For upward of a thousand years the tendency of the economic centre of the world has been to move westward, and the Spanish War has only been the shock caused by its passing the Atlantic. Probably, within two generations, the United States will have faced about, and its great interests will cover the Pacific, which it will hold like an island sea (...)' Brooks Adams (1900) 'America's Economic Supremacy', as quoted in David and Wheelwright, 1989

'The Ten Duties of Kings are: liberality, morality, self-sacrifice, integrity, kindness, austerity, non-anger, non-violence, forbearance, and non-opposition to the will of the people' (Daw Aung San Suu Kyi, the Buddhist view of responsible kinship)

'Although famines can kill millions of people, they do not kill rulers. Kings and presidents, bureaucrats and bosses, generals and police chiefs - these people never starve' (Amartya Sen)

About a quarter of a century ago, a Chilean social scientist, Osvaldo Sunkel, proposed in a widely received article under the title: 'Transnational capitalism and national disintegration (in Latin America)' the provocative thought, that transnational investment and integration might go hand in hand, under certain conditions, with an increasing relative social polarisation between rich and poor in the host countries of the evolving transnational system and on the international level.
The polarisation effects in relative terms along the welfare borders of the world, which happen to be the outward borders of the economic integration zones, built up by the rich countries, are the basic conflict that confronts the process of transnational integration, and especially European integration today. The second basic conflict is the tendency towards increasing social exclusion in the trasnationally integrated core areas themselves.
Transnational corporations and their foreign investments are the cornerstone of the international system, as Osvaldo Sunkel so correctly foresaw in his penetrating analysis a quarter of a century ago. The outward stock of foreign direct investments of 39000 parent firms in their 270000 affiliates reached $2.7 trillion in 1995. The gross product of foreign affiliates amounted to 8.7% of home country GDP in the countries of the European Union in 1991, the last year with available data. In North America this ratio stood at 6.4%, in the LDCs at 6.5%, and in Central and Eastern Europe at 1.3%. On a world level, the TNCs control 6.4% of the world gross domestic product. In Eastern Europe, too, this relationship is on the rise, with the transnationals now controlling - through their FDI stock - up to 15.6% of the GDP of Eastern Europe, like in Hungary, 1994. The sales of foreign affiliates amounted to 116% of the total of world exports of goods and non-factor-services in 1982; this r!
atio now has risen to 127.9% (UNCTAD, 1996). For ages, economists have warned repeatedly against the danger of monopoly capitalism. Kalecki and Rothschild should be specially mentioned in this context here.
The international system, in addition, is not only a system of social and economic polarisation, it is also a system of recurring international long-run tensions, that erupt along these socio-economic conflict lines. Ever since the days of Akerman's pioneering study, published with Macmillan's before the Second World War, social scientists have studied by quantitative methods the connection between economic long cycles and major wars, among them Modelski, 1987, and Goldstein, 1988. International tension has characterised the world system since 1450 in ups and downs, that have led the world to three catastrophic world wards (Goldstein, 1988). Whether there is room for optimism now, after the end of the so-called Cold War, will be finally decided, among other factors, by the growing tension between the human species and the environment. Each day, 140 species are condemned to extinction; the CO2-content in the atmosphere is 26% higher than at the beginning of the industrial age; !
the earth surface was warmer in 1990 than at any point since the middle of the 19th century, when measurements began; each year, a forest area of the world as big as Finland is being destroyed, and each year, another Mexico is being added to the world's population (World Watch Institute Report, 1992).
Rather than predicting the end of history, the acceleration of history might loom ahead. Sunkel foresaw then, from the viewpoint of his structural economic theory, many of the problems that seem to beset the post-1989 world. In 1993, 76% of the stock of world-wide foreign direct investments were still anchored in the old industrialised countries, and only 23% in the developing countries. Although 40% of all investment flows between 1990 and 1994 went to the LCD's, 4/5 of which to the top ten among the semi-industrialised or newly industrialised nations (China, Singapore, Argentina, Mexico, Malaysia, Indonesia, Thailand, Hong Kong, Taiwan and Nigeria), European leadership towards growth for the European East in an ecologically sustainable way is one of the main tasks of rebuilding the world-economy. Between 1990 and 1994, the share of the 'triad'(US+CND; Japan; EU) in world GNP rose from 50.3% to 50.7%; the share of the rest of Asia rose from 17.2% to 23.1%, while the participa!
tion of Eastern Europe and the ex-USSR in the world economy was nearly wiped out and reduced to half in less than a decade - from 10.9% to 5.3% of world GNP. Will Europe be able to lead to growth for the East, or will - what a bleak, though nonetheless realistic scenario, the stagnation of the East between 1990 and 1994 become the future of the West of the continent (our compilations from Stiftung, 1993, and 1996)?
The gaps between the rich centre in Europe and the surrounding peripheral and semi-peripheral areas are part of the economic, ecological and social history over the last 500 years. They continue to exist today, and if anything, have deepened since the 1980s. In terms of most welfare indicators, as calculated by the UNDP, the East (Eastern Europe and the former USSR) and the southern rim of Europe (the Arab world), are as distant from 'us', the European Union, as the 'Haves' and the have-nots are devided from each other at any welfare border around the world, be it on the shores of the Rio Grande or across the China Sea. At the same time, the population balance, and the balance of military forces shifts in favour of the poorer nations, that surround the rich man's land, the European Union, beset by a growing number of internal problems, like unemployment, drugs, crime, environmental decay, and ageing populations. The following calculation from UNDP-data, 1995, shows the dramat!
ic character of the welfare gap at the outer borders of the Union:

East-West-gap North-South-gap
for the European Union, by around 1995

real purchasing power 1:3.5 1:4
life expectancy 1:1.12 1:1.22
share of world industrial GNP 1:8.5 -
defence expenditures 1:6.1 1:1.8
population potential, 2000 1:0.9 1:1.3
military personnel 1:1.8 1:1
total GDP 1:9 -

The East's challenge to the ageing north-west is its population and thus migration potential, its high military personnel ratio, but the East's unease number one is its low share in world total GDP and industrial GNP. The South's challenge in military terms has been building up over recent years, combined with a rapid population growth and still existing large-scale poverty. Let us hope and work for peace in the Middle East; but if that is not achieved quickly, and development in the Arab world does not reach down to the poorest strata, centuries of unequal exchange, foreign rule and neglect could combine with the archaic weight of religious tradition - then the dar al harb, the world of war and disbelief will be held responsible for 80 million illiterates, for the 73 million poor, for the 12% of resources, spent on arms, for the scarcity of water that affects 55% of the Arabs. If the balance will not be achieved by political and economic means within the next 25 years, then m!
igration and the military expansion of the desperate nations will attempt to redress the balance. With real purchasing power parity rates, the gaps are today:

Japan - East Asia (excl. China) 1:2.6
Europe - Eastern periphery 1:3.5
Europe - South 1:4
North America - Latin America 1:4.1

The professional political optimism of our times in Europe holds, that after overcoming the transformation crisis, Europe will re-unite and catch up with the competing market economic centres. Another vision might hold though that the inability of the East to find a proper niche in the world market might spill over to the West of the continent. Social scientific thought in the long-term policy planning and development research tradition - in Austria of Otto Bauer, Karl Polanyi, Joseph Alois Schumpeter, Kurt Rothschild and many other social scientists, would dare to ask, whether or not the crisis and final collapse of communism, in the end, is the product of the one and single movement in world economic dynamics away from the European landmass and the Euro-Atlantic region towards the Pacific. GDP real growth, p.a., from 1986-95 was:

Asia +7.3%
LCD's in the Middle East and Southern Europe +3.7%
Latin America +2.6%
USA +2.5%
Japan +2.5%
EU +2.4%
Africa +2.4%
Eastern Europe -1.9%
CIS -4.2%

Source: Stiftung Entwicklung und Frieden, 1996

Re-reading Osvaldo Sunkel's penetrating analysis, written over thirty years ago, one is struck by the parallels between the Latin America of yesterday and the Eastern Europe of today. One of the most recurrent predictions of structuralists as Osvaldo Sunkel, Raul Prebisch, and many others would be that a country, specialising in investment goods and other manufactures has a much better chance for long-run and stable development than nations, specialising in raw materials and semi-finished products. Samir Amin and other critics of the Union have maintained, that the structure of trade relations with the outer rim of the Union favours unequal specialisation, and prolongs the periphery's trade in raw materials and semi-finished products. Just that that seems to have been the case from 1980 to 1992:

Graph 1.1: Structural dependence of the European East
Legend: right-hand scale: semi-finished products; left-hand scale: raw materials per total exports. Source: our own compilations from Stiftung Entwicklung und Frieden, 1996

While other regions could advance and received a fairer share of the world market, Eastern Europe was increasingly marginalised. More and more, there seems to be a 'legal' and a parallel illegal core of the world economy. What the legal economy cannot redress, the illegal economy will. The mafias around the world have a turnover of more than $ 500 thousand million a year alone from the narcotics' trade. Each year, $ 85 thousand million in drug profits are 'laundered' through the financial markets. The new, speculative character of the global market economy dictates, that even legal transnationals have to earn much of their profits from speculation on the international financial markets. With that, the basic instability of the international system increases (UNDP, 1994, 1995; Stiftung Entwicklung und Frieden, 1996). Among the most powerful groups, threatening the very fabric of legal society in western countries today, are the following large illegal transnational corporations !
(with their estimated turnover)

La Costa Nostra (USA) 100 thousand million $
Colombian cartels (Colombia) 15 thousand million $
Italian organised crime (Italy) 100 thousand million $
Cosa Nostra
Sacra Corona Unita
Yakuza (Japan) 120 thousand million $

(Source: our compilation from Raith, 1995)

Newcomers, like the Russian Mafia groups, and formally regional groupings, like the Chinese triads, are expanding rapidly as well into the core areas of the world-wide market. By the year 2020, the expansion of these and other criminal corporations will be not a threat, but a reality (Raith, 1995). The core of the transnational economy, Sunkel and many others observed, used to be the legal transnational corporation and the legal transnational bank. From 1991 to 1993, the following growth rates were observed:

world GDP +1.6%
world trade +3.1%
world-wide stock of FDI +8.0%
sales of the foreign affiliates of transnational corporations +20.0%

Source: our own compilations from Stiftung Entwicklung und Frieden, 1996

More than $ 1000 thousand million are shifted around each day by way of international financial markets. The cumulative debt of the developing countries reaches the staggering proportion of $ 1945 thousand million, and will tend to grow by around 1998 to $ 2600 thousand million dollars:

Graph 1.2: The debt crisis of the world periphery
Legend: our own compilations from Stiftung Entwicklung und Frieden, 1996

The problem of international development, to a large extent, is also the problem of underdevelopment and poverty, in which a large part of the malnourished children of this world grow up - 11 - 19 countries, which, in addition, have to shoulder a large part of the world refugee problem as well:

Graph 1.3: The 11 - 19 main crisis points in the world system

refugees in thousandsmalnourished children in millionsIran24951,64Philippines33,024Indonesia28,768China28819,317Vietnam54,413Myanmar2,326Pakistan14809,409India26061,775Nigeria56,975Bangladesh19910,994Ethiopia2484,749Rest LDCs680523,55Country estimated number of poor people according to the capability-poverty-measurement-scaleMexico14,5847Brazil15,16Turkey12,1264Thailand11,6894South Africa11,8256Philippines18,3744China204,8725Iran17,8502Algeria12,672Indonesia79,3971Morocco12,7729Egypt23,4232Pakistan73,872India530,5605Tanzania10,5986Zaire17,2542Nigeria57,8436Bangladesh89,5116Ethiopia36,0314Rest172,2797Source: our own calculations from UNDP, 1996 and the data-base of this workGlobalisation negatively affected the lives of around 1.5 thousand million people on earth, whose per-capita incomes were lower than in earlier decades. These 1.5 thousand million people live in around 100 countries; while 15 nations experienced rapid capitalist development over the last decade. Among the w!
orld's desperate nations, 43 countries had a per-capita income which was lower - in real terms - than that of the 1970s. The poorest 20% of the world saw their share in global product reduced from 2.3% to 1.4% over the past 30 years. The share of the richest 20% rose from 70% to 85%, with the differences between these two rising from 30:1 to 61:1 (UNDP, 1996). In the developed core countries of the world economy alone, 100 million people are categorized as poor, and 30 million are homeless. In the Federal Republic of Germany alone, 900000 people are homeless, and 7.5 million are poor (Orientierung, 60, 1996: 204). 385 persons on our globe - 358 billionaires- have an income that is greater than the yearly income of the combined poorest 45% of our globe. The wave of the world recession - or as we prefer to say, the Kondratieff B-phase - first hit Africa in the 1970s, and rolled on to hit Latin America and the Arab world in the 1980s and Eastern Europe in the 1990s. Even in the h!
ighly industrialised countries, capitalist development became more and more

(i) jobless: in the countries of the European Union in 1993, there were 16.86 million unemployed people. In the industrial countries as a whole, there are 30 million people out of work.

(ii) ruthless: global GNP grew by 40%, but the number of poor grew by 17%. In the European Union, the ratio between the richest 20% and the bottom 20% is now 7.5 in France, 9.6 in the UK, 7.1 in Denmark, 5.8 in Germany, and 6.0 in Italy. Each year, damage to forests due to air pollution leads to economic losses of about $35 billion - about the annual GDP of Hungary. In Europe, the number of poor people increased within half a year from 50 million to 80 million (Afheldt, 1994)

(iii) voiceless: human and political rights performance on a global scale has deteriorated in many countries according to the well-known Freedom House data series (Stiftung, 1996); even in the countries of the European Union, the following performances in 1993 were below the maximum value '1'

Germany: civil rights 2
France: civil rights 2
Greece: civil rights 3
Great Britain: civil rights 2
Northern Ireland-political rights 5
civil rights 4
Irish Republic: civil rights 2
Italy: civil rights 3
Spain: civil rights 2

More than 100 million people live below the official poverty line in the industrial countries, more than 5 million are homeless. The poorest 40% receive only 18% of total incomes. Women receive on average only 2/3 of the income of males; and hold only 12% of parliamentary seats

(iv) rootless: 10000 cultures of humans and millions of species are on the verge of disappearance world-wide; local human dialects, cultures and accents, disappear also in Europe at a rapid pace. Nationality conflicts and regional conflicts have increased in many countries of Europe over the last decade. Low-quality satellite TV more and more substitutes national TV output; the transnational economy dominates more and more domains of radio, TV, and the press. Even in EU countries, nationally made films amount from only 2% (Greece) to 34.9% (France) of all films shown in cinemas. The US film industry holds a market-share of 2/3 or ¾ and more. At the same time, social deviance increases in the age of rootless growth or stagnation. In the European Union, there were 77 prisoners per 100 000 people in 1987; now there are 87. The intentional homicide rate is Union-wide 7.7 per 100 000. 44% of all male EU adults smoke (women: 25%), alcohol consumption is 9.6 litres per capita and yea!
r, and the male cancer rate is 235, the female cancer rate is 171 Union-wide. Television takes up now some 40% of the free time of the average American, and participation in voluntary associations such as the Red Cross has declined by 25-50%. The basic networks, necessary for the functioning of democracies, are on the retreat around the globe. Trade Union membership rates declined in the Netherlands from 39% in 1978 to 25% in 1991; from 30% to 15% in the USA et cetera. In the Union as a whole, trade union membership declined from 37% in 1970 to 33%; in Austria and in many other countries, the decline was even more dramatic (from 62% to 46%). Nearly 130000 women are reported annually to be raped in the industrial countries.

(v) futureless: annual fresh water withdrawals amount to 862 m^3 in the Union. Commercial energy use in oil equivalents is 3588 kg per capita in oil equivalents, and each year, the Union produces 15.13% of the world's greenhouse gas emissions, 3373 metric tons of heavy metal from nuclear reactors, 48220 tons of hazardous highly-toxic waste. The average Union citizen produces 399 kg of municipal waste a year, and recycles only 45% of his or her paper and 52% of his or her glass. 2 million people are already affected with HIV.

In the developing countries, despite the increases in life expectancy over 1960-93, the spectre of poverty is still overwhelming. 1.3 billion people are to be classified as poor, 800 million people do not eat enough food, and 500 million are chronically malnourished. Each year, 20 million hectares of tropical forests are degraded or completely cleared; there are now 11 million refugees in the developing countries, and entire regions are affected by destabilisation and war, most notably the lake region of East-Central-Africa, wide areas of Central Asia, and some countries of West Africa.
Instead of an end of history, global or regional anarchy in countries like Kampuchea, Somalia, Yemen, Afghanistan, Tajikistan, Georgia, Liberia, Sudan, Bosnia, Ruanda, Burundi, Angola, and Mocambique seems to be likely. In a very brilliant commentary, Rudi Dornbusch thinks that another Mexican crisis - or rather Peso desaster for the world economy - is likely (Dornbusch, in Business Week, November 25, 1996). The capacity of the US to act as a global policeman under such circumstances is severely constrained by the secular balance of trade deficit of the US economy, not being offset by an enough positive balance of services and payments.
The contradictions of capitalism today are truly global: during 1965-90, world merchandise trade tripled, and financial cross-border flows exceed a trillion US $ a day. In the light of the empirical research results of macroquantitative social sciences, we have to start from the assumption here, that MNC penetration, i.e. the relationship between MNC investments and the size of the economy of the host country, has unfortunately a long-term structural negative effect, that goes beyond the earlier Kondratieff-cycle that ended by around 1982; affecting development in the contemporary, post-1982 world. The main reason for the short-term dynamic, but long-term structural negative effects of FDIs have been often seen by economists and other social scientists to be the structural inability of the host country to achieve a process of their own proper savings, and positive trade and current account balances. The negative effects of transnational foreign investment dependence on the mor!
e long-term growth of societies in the world system are demonstrated by the effects of the UNCTAD variable 'share of inward FDI stock in gross domestic product' by around 1985 on subsequent growth and redistribution.
As it is well-known, the current account balance is the broadest measure of a nation's trade and world market performance. For the neo-classical economists, this is mainly so, because import substitution and market imperfections are at work in the highly penetrated countries, while for the dependency-schools, the monopoly situation of large corporations alongside a backward or semi-backward business environment create outflows due to transferred profits and royalties, that are much higher than inflows in the long run.
The internationally comparable economic and social data from the World Development Report 1996 by the World Bank make this point for the transition economies very clear. Poland, with its recent spurt of economic growth already often termed the 'European tiger', achieved a per-capita-income in internationally comparable $ of 5480 $. The current account balance before official transfers amounted to -3.1% of GNP in 1994, and the net value of the external debt amounted to 37% of GNP. On the positive side for Poland, official development assistance amounted in 1994 to 2.0% per GNP, the highest value for all the transformation countries in Europe with complete data except Albania. But the 27% of population, who live from agriculture, just receive 6% of the total GNP - an expression of the perennial structural heterogeneity of Polish society, that characterises the country from the Long 16th Century onwards.

Graph 1.4: The demand side of the distribution of gross domestic product in a Tiger economy and in a successful transformation country - Singapore and Poland compared

Legend: our own compilations from World Development Report, 1996, World BankThe following comparison might again be dramatic, but it tries to drive home an important point: Europe is too restrictive in its economic relations with its periphery. The annual growth rates of exports and imports after transformation also clearly show the difference between Europe's restrictive interaction with its peripheries and the East Asian growth model, based on labour-intensive exports:

Poland Singapore

export growth, 1980-90 +4.8% +12.1%
export growth, 1990-94 +3.9% +16.1%
import growth, 1980-90 +1.5% +8.6%
import growth, 1990-94 +26.3% +12.1%

The policy approach, that is at the basis of this study, realistically assumes that the following determinants will be of the utmost importance for the success or failure of the project of European integration and European unity:

(i) Europe is characterised by the typical 'mix' of countries that are doomed to stagnation

(ii) Europe must come to terms with the 'new' social problems arising from the contradictions of the process of global environmental destruction, to which Europe as one of the main regions of world industry and traffic disproportionately contributes, and Europe must find a proper way for gender empowerment

(iii) Europe must come to terms with the contradictions of world cultures and world cultural conflict, global anarchy and global decay

(iv) Europe must come to terms with the contradictions between Europe, the developed centre, and its Eastern European periphery, and the problems of political instability, nationalism, and unequal development, that the present form of interaction between the centre and the periphery bring about

(v) Europe must come to terms with the contradictions of the process of the ageing of democracies, especially phenomena which one might term sclerosis bruxelliana and sclerosis Europea

Development is seen here as a multi-dimension process in the tradition of recent UNDP-centred research. Apart from per capita income growth, our indicators also analyse the maintenance of growth during the changing conditions of the post-1980 world as compared to the development experience from 1965 to 1980. Our measurements of development include, among others, life expectancy, life expectancy increases, political rights violations, human rights violations, the UNDP human development index, the UNDP gender-related development index, the UNDP gender empowerment index and, last but not least, the UNDP greenhouse index as an indicator of pollution. The human development index weights longevity, income, knowledge and standard of living. It is composed of per capita incomes, education and life expectancy variables. We also control for the effects not of internal, but international distribution coalitions as a co-determining factor of ascent and decline in the world system. These i!
nternational distribution coalitions are closely linked to the number of years that a country is member of the UN.


3) The international environment is basically unstable. A survey of the contemporary research methods for the study of changes in the world system since 1989

International social science since the mid-1960s studied patterns of international development in a cross-national perspective. This movement towards retrievability of research results, based on statistical analysis with internationally available and recognised data, which was initiated, amongst others, by the late Karl Wolfgang Deutsch from Harvard University, had important implications for international social policy. It allowed for the rigorous testing of hypothesis, contested in the political arena in an often passionate fashion.
Our attempt to estimate the determinants of world economic and social development from 1980 onwards tries to be based in this tradition. The UNDP Human Development Reports, our main new data source, emerged over the years as one of the leading socially scientific relevant data collections for cross-national research; the wealth of data contained in them shows concern for the global environment and for social decay and by far exceeds in quality other comparable products on the market today. The choice of the time period corresponds to the Kondratieff-type long cycle theories, that are presented below. Our data collection goes on to use some materials which are relevant for the description of the long-run position of a society in terms of ownership of the means of production (public investment, transnational investment), the social security programme experience, and ethno-linguistic fractionalisation from the Bornschier/Heintz data collection. In combining the new UNDP data with!
these older materials from Bornschier/Heintz and the World Handbooks of Political and Social Indicators, I-III, pertaining to the earlier Kondratieff cycle, we fully integrate the new knowledge about cycles into our hypotheses.
Our data sources relied at least in part also on Fischer Weltalmanach; Nohlen; Seager and Olson and Stiftung Entwicklung und Frieden, which are excellent data handbooks for the study of international relations. Some data were also cross-checked with Tausch, 1993, 1994; UNECE; UNICEF (Cornia, 1993 and 1994); and the World Bank WDR and other sources. Our main sample of 123 nations comprised all the countries for which UNDP reports economic growth rates and life expectancies at two different periods. The countries of the ex-USSR are not being included for the reason of data limitations, while other 'real socialist' or ex-'real socialist' nations, like China and Hungary, at any rate integral parts of the conceptualisations of the capitalist world economy today, do form part of our main 123 countries' investigation.
Our leading, but not exclusive indicator of the process of dependence and globalisation is the legacy of MNC (multinational corporation) penetration of a country in the earlier Kondratieff-cycle (Tausch/de Boer, 1996) or the effects of the share of inward FDI stock in the gross domestic product of the host countries of MNC penetration. The MNC-penetration-concept was first contained in the very widely used publication by Bornschier and Heintz, reworked and enlarged by Ballmer-Cao and Scheidegger, later on widely popularised by the book publication Bornschier/Chase Dunn, 1985. The emphasis was on MNC investments, 1967 and 1973, weighted by population and total capital stock, and on the more recent UNCTAD concept of the share of FDI stock in total host-country GDP. That is to say, available measurements correspond to the value of the indicator during the B-phase of the earlier long economic cycle. The more dependent a country is in the system of the world-wide market economy, th!
e greater will be the penetration of its economy by transnational capital. Dependency theories (Cardoso/Faletto, 1971) hold, that the countries of the periphery were integrated into the world-economy in the following sequence of events

(i) desarrollo hacia exterior (development to the outside)
(ii) desarrollo hacia adentro (inward-looking development)
(iii) transnacionalizacion de los mercados internos (internationalisation of the internal markets)

Starting from the late 1950s, the transnational system increasingly dominates the industrialisation process of the periphery and the semi-periphery (phase iii). The penetration of the host countries by transnational investment becomes the most important scientific yardstick of dependency (Bornschier/Chase-Dunn, 1985).
The long cycle literature, largely overlooked by macroquantitative development studies, tells us, why there is a recurrent pattern of instability in the social orders both at the level of national society as well as at the level of the international system itself. It also explains the often puzzling aspect, how different studies, using different time perspectives, reach different results. Long cycles by themselves are quite a strong argument in the debate about the long-run viability of the world-wide market economy: the recurrence of cycles, depressions and wars was thematically portrayed, amongst others, by Goldstein (1988) in a very far-reaching empirical study of world development from 1450 onwards, leading him to the conclusion that the capitalist world systems tends continuously towards wars and violent conflicts:

Graph 3.1: the tendencies of the capitalist world economy towards Kondratieff cycles

economic growth (left hand scale) and war intensity (right-hand scale) in the world economy. Moving 9-year averages, calculated with EXCEL 5.0 from Goldstein's original data.war intensity = nat. logarithm from (1 + battle fatalities from great-power wars ^0.10)The recurrence of major power wars in the capitalist world economy from 1495 to the present is one of the most intriguing features of the international system. Each world political cycle up to now corresponded to a 'W'-pattern of war intensity. The x-axis in our graph is the number of years after the end of the major power wars, i.e. 1648, 1816, and 1945.

economic growth in the world system since 1740; adapted from Goldstein, 1988 and UN ECE/Fischer Weltalmanach, current issues. 5 and 9-year moving averagesFrom Goldstein's data series, it is possible to derive - without any smoothening of the data - at the following cycles of war in world society since 1495, using 6th order polynomial expressions:

Graph 3.2: The war cycles since 1495

1649-18161817-19451946 - annual battle fatalities from major great power wars in thousandsEach such long cycle of world politics is characterised, according to Modelski, by a dominant world economic power and it's challenger. Goldstein has very aptly described these world political cycles in great detail, so there is no need to repeat his reasoning here. The simple statistical evidence to support his theory on the basis of his own original data is surprising, though. Our tests use a very common software, available on millions of home micro-computers around the world (the EXCEL 5.0 programme). The R^2 for the test series is between 31% and 91%; no transformation of the data was performed. The W-structure of conflict emerges neatly from all the tests. And each time, the challengers for world hegemony of a dominant sea-power were former members of the ruling coalition (France, Germany, Russia + China?), while the challengers in the world wars (Thirty Years War, Napoleonic Wars, G!
erman Wars of our century) always were continental powers (the Hapsburgs, France, Germany) (see also: Modelski, 1987; Goldstein, 1988).
Ever since the days of Schumpeter, economists and sociologists were inclined to see also more short-term cycles at work, namely the Kitchin cycles, lasting three and a half years, the Jugar cycles lasting 8-10 years, and the Kuznets cycles between 18 and 25 years. The intense controversy about cycles should only be mentioned briefly here; for the policy-maker perhaps more important is the fact, that after the economic crisis of 1825, the stock exchange collapse of 1873, the Black Friday of 1929 and the world recession starting in 1973/75, world capitalism has experienced quite severe downswing-phases, that hit with elementary weight especially the countries of the periphery and the semi-periphery. The Kondratieff cycles of approximately 50 years duration and the Kuznets cycles, 20 years long, are especially relevant for our understanding of the ups and downs of world economics and politics: our data series, constructed from Goldstein's original data, is explained quite markedl!
y by the application of the Kondratieff and Kuznets-cycle hypotheses, even when there are now data filtering or smoothening operations being performed:

Graph 3.3: Kuznets-cycles in the world system, 1756 - 1975

Three Kuznets cycles make up one Kondratieff cycle; three Kondratieff cycles up to now led the world economy in a W-shaped pattern towards the major global wars.
The 'filtering' of the very short-term economic fluctuations plays an important part in the debate about the existence of Kondratieff-cycle fluctuations. It should not be denied here, that Kondratieff cyclical movements in the world economy are seen to be highly controversial, with a large tradition in economic literature, like Eklund and Kuznets, denying the existence of such cycles. Other social scientists from a variety of theoretical camps, only some of them, like Mandel, Marxists, others, like Forester, W. W. Rostow, also took up the challenge of long-wave research. Filtering out the very-short-term Kitchen-cycle fluctuations by applying 5 year moving averages and then to explain these moving averages by a Kondratieff cycle hypotheses from 1756 seems to be a reasonable new research strategy. The results for such a procedure are being reprinted below:

Graph 3.4a: New evidence regarding the Kondratieff cycles, 1740-1975, based on 5-year moving averages

Graph 3.4b: Kondratieff cycles, based on 10 year moving averagesThus, we achieved here a structural differentiation of the time periods, and it will be easier to correctly evaluate the cross-national evidence from different periods in the history of the evolution of the world economy. Throughout this work, the following statements hold:Regression coefficients at the level of error probability < or = 5% are printed in bold type. The following further conditions do hold:

Concepts: growth always refers to per capita income growth in real terms, if not specified otherwise

Time period: 1980s and beyond (if not specified otherwise)

Missing values: mean substitution, if possible, by known values for the economic or geographic region (like: countries with low human development, excluding India et cetera)

It should be explained here, what is meant under the term 'structural adjustment': the empirical measurement (and not normative concept) of adjustment compares the GNP per capita growth rates in two subsequent periods with a regression-based residual analysis. In other words: we try to answer the empirical, and not normative question, which countries accelerated their economic growth compared to the earlier cycle, and which countries adapted badly to the new conditions. Our measurement concept compares growth rates predicted for the period of the new Kondratieff cycle (post 1980/82)(^Yi) upon knowledge of the performance during the earlier Kondratieff B-phase (1965-80) with the actual growth rates Yi during the new Kondratieff cycle from 1980/82 onwards:

(3.1) adjustment i = Yitn-^Yitn
Y = economic growth
Ytn = a + b1 * Ytn-1

Changes in the underlying logic of ascent and decline in the world economy will be especially observable at a time of comparison between the logic of a waning Kondratieff cycle and the emerging laws of a new cycle. Thus, adjustment will be a theoretically especially relevant phenomenon.
Next, we should deal with the trade-off between development level and performance. Policy planning must, in order to avoid spurious results, under any circumstances properly specify such trade-offs. Poor countries increase rapidly their average life-expectancy or economic growth and they quickly reduce their income inequality; prima vista there will be a spurious and very high, but absolute non-sense correlation between, say, the number of shanty-town dwellers per total population and life expectancy increases. The reduction of the infant mortality rate, the acceleration of growth or the redistribution of income over time will all dramatically and positively be influenced by the number of people still living in shanty towns. If we do not properly specify development level as an intervening variable, our results will be biased extremely.
The curve-linear function of growth, being regressed on the natural logarithm of development level and it's square, is sometimes called the 'Matthew's effect' following Matthew's (13, 12):

'For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, for him shall be taken away even that he hath'

Social scientists interpreted this effect mainly in view of an acceleration of economic growth in middle-income countries vis-à-vis the poor countries and in view of the still widening gap between the poorest periphery nations ('have-nots') and the 'haves' among the former Second and Third World (Jackman, 1982):

(3.2) economic growth/adjustment success = a1 + b1* ln (PCItn-1)-b2* (ln(PCItn-1))2

The same function is also applied to income inequality, following a famous essay published by S. Kuznets in 1955. Redistribution gets underway after 1000 $ per capita income is reached; the share of the richest 20% diminishes from approximately 55% to around 40%. Growth and adjustment accelerate with redistribution.
Now, we should turn to basic human needs satisfaction and hence, life expectancy: it is very difficult to arrive at valid propositions about social conditions and development as a dependent variable on the basis of income distribution data alone. There are comparable World Bank income distribution data for only 65 countries, while basic human needs satisfaction data are available from many more countries. Studies about the determinants of basic human needs satisfaction, and hence, poverty are of a more recent date (Stokes and Andreson, 1990; Tausch and Prager, 1993; furthermore: Moon and Dixon, 1992; Ragin and Bradshaw, 1992). The idea to link life expectancy to energy consumption levels or dollar income levels, that is to say, to patterns of civilisation, that exploit mother earth and lead to the self-destruction of life chances of the human species, is still somewhat revolutionary, although there has been quite an extensive debate among different researchers from the ILO, th!
e World Bank and other researcher institutions, most notably Goldstein, 1985b and Russett, 1983b, on the proper specification of the development-basic-human-needs trade-off. Among the decision makers of our time, US vice-president Gore formulated such 'green' philosophical apprehensions in the most stringent fashion (Gore, 1994). It is difficult to design a single indicator of the civilisational malaise constituted by the environmental crisis caused by the industrial mode of production. But the energy consumption-life expectancy trade-off offers a very clear, mathematical expression. The prime success measure of a society should be, how much energy can be saved in achieving a given quantity of life of the population and to avoid premature death. The limited resources of our planet, so clearly foreseen by Polanyi, dictate, that as little as possible energy is being used. The social demands and moral convictions of civilisations dictate, that premature death should be avoided. T!
hus, eco-social reasoning taking into account the performance scores of the energy consumption-life expectancy trade-off would hold, that the energy consumption of a society should be minimised and life expectancy maximised. One recent formulation of this position, reported in Tausch and Prager, 1993, that contains a reference to the extensive earlier debate at the World Bank and at the ILO about this trade-off, arrived at the conclusion that using very common deviates of the natural constants e (2.7) and pi (3.1) reproduce this important trade-off in an optimal fashion, although most other published mathematical formulations boil down to similar strong curve-linear functions. It is also imperative to consider the effect of already achieved levels of life expectancy on the subsequent life expectancy increase: a poor society with, say, 40 years life expectancy, will find it easier to expand the well-being of the population to 50 years average life expectancy than a society that!
already reached the level of a 75 year-average.

To avoid problems of collinearity, increases in life expectancy over time are being calculated by differences in logarithms 10, i.e.

(3.3) DYN LEX = ((log 10 (LEX tn)-log 10 (LEX tn-1)) * 100

Let LEX denote life expectancy or other basic human needs indicators, PCI per capita incomes, ENCONS p.c. energy consumption rates per capita and year in kg oil equivalent, and DYN rates of increases of basic human needs satisfaction. On a world scale and for different groups of countries, levels of human development and increases in terms of human development, reductions in infant mortality et cetera will always significantly correspond to the following function and the first derivate:

(3.4) LEX = a + b1 * (ENCONS p.c.)^(1/(e^2)) - b2 * (ENCONS p.c.)^ln(pi)

R2 = 72.4%; F = 157.63; df. = 120; alpha (one-tailed) 5% > 1.289

(3.5) DYN LEX(tn) = a - b1 * LEX (tn-1) +-

b2 * (PCI)(tn-1)^((1/(e^2))-1)-b3 * (PCI)(tn-1)^(((ln(pi))-1)))

R2 = 69.8%; F = 91.85; df. = 120; alpha (one-tailed) 5% > 1.289
predictors b2 and b3 only: R2 = 43.3%; F = 45.89; df. = 120; alpha (one-tailed) 5% > 1.289. Formulation also possible with ENCONS p.c., but the PCI data series is more complete

Based on UNDP (1993) data for all the countries that report economic growth rates for the periods 1965-80-90, equation (3.4) explains 72.4% of total variance of life expectancy; equation (3.5) - even without life expectancy in 1960 as an additional control variable - explains 45.9% of total variance.
Equation (3.2) can also be applied to human development, the world gender issues and democratisation:

(3.6a) human development or gender development or gender empowerment = a1 - b1* ln (PCItn-1) + b2* (ln(PCItn-1))2


(3.6b) political rights violations or civil rights violations = a1 + b1* ln (PCItn) - b2* (ln(PCItn))2

Human development, and the growing participation of women in society, are a clearly rising function of achieved development level, while political and civil rights violations decrease along the course of development. No result is weaker than roughly 2/5 of variance explained; and all results show - per se - an optimistic perspective for human development, gender justice and democratisation: the human development index, the gender development index, the gender empowerment index (ranging from 0.0 to 0.999 each), political rights violations and civil rights violations (ranging from 1.0 to 7.0) are all to be represented as a function of achieved development level in 1990 (expressed in purchasing power parity rate). For the calculation of the gender empowerment (GEI) function, the following procedure to estimate missing data was followed: means of country groups with available data were taken to substitute missing values. The following groups were used: industrial countries (UNDP d!
efinition, 1993; GEI = 0.56); developing countries with a higher human development index (UNDP 1993 list - Barbados through to Saint Lucia; GEI = 0.391); developing countries with medium human development (UNDP 1993 list - Turkey through to El Salvador; GEI = 0.347); developing countries with low human development (UNDP 1993 list - Maldives through to Sierra Leone; GEI = 0.27). The following statistical properties of the functions hold:

human development index R^2 = 82.4%; F = 281.0
gender development index R^2 = 80.1%; F = 240.8
gender empowerment index R^2 = 60.0%; F = 90.0
political rights violations R^2 = 38.0%; F = 36.8
civil rights violation R^2 = 40.0%; F = 39.9

Gender empowerment itself is a very strong non-linear function of achieved development level. The above functions will be used in the following chapter to evaluate the validity of different development theories to explain the dependent variables under due consideration of these general development functions. To exclude them will lead to spurious results. The capability poverty measure, in turn, is being determined by the following function of real purchasing power of a society:

Graph 3.5a: capability poverty as a function of real purchasing power - the results at the level of the semi-periphery and periphery countries

Graph 3.5b: capability poverty as a function of real purchasing power - the results at the level of the semi-periphery and periphery countries with a real GDP per capita between 4000 $ and 8500 $

Finally, we summarise the critical values of the t-test, applied in this work, at the 5%-level in Graph 3.6:Graph 3.6: critical values of the t-testLegend: the x-axis symbolises degrees of freedom, the y-axis critical values of the t-test at the 5%-level according to Kriz, 1978