Re: standard of living? (fwd)

I find Mr. Beatty's "argument/s" to be a string of one non sequitur after
another.
gunder frank 
also speaking for immanuel wallerstine without 
recently prior consultation or authorization


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
                   ANDRE GUNDER FRANK
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My Personal/Professional Home Page> http://www.whc.neu.edu/gunder.html
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My professional/personal conclusion is the same as Pogo's - 
            We have met the enemy, and it is US 
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

---------- Forwarded message ----------
Date: Mon, 31 May 1999 07:43:33 -0500
From: "Jeffrey L. Beatty" <Beatty.4@osu.edu>
To: WORLD SYSTEMS NETWORK <wsn@csf.colorado.edu>
Subject: Re:  standard of living?

Carl Dassbach writes:


>>>>

<excerpt>I haven't checked my e-mail for some time, so I apologize for
entering this

discussion in the middle. Nonetheless, I intervene precisely becuase
these

observations strike me as inaccurate and downright wrong.



> "Jeffrey L. Beatty" wrote:

>

> > Actually, it's a "zero-sum game" primarily in the minds of people in
the

world-system tradition. The >claim of Andre Gunder Frank and others 
that

development and underdevelopment are two sides of the >same coin and
that,

in effect, what one country gains another loses depends upon the
assumption

that >the total size of the economic "pie" cannot increase, i.e., that

worldwide aggregate growth is impossible.



This is downright absurd, I don't think that AGF or IW or anybody else
who

is even vaguely familar with W-S would maintain that the "economic pie"
can

not increase.

</excerpt><<<<<<<<


I am flattered by attention from one of such distinguished radical
credentials as Carl Dassbach, whose contributions to CSF's "IPE" list I
have always valued.  Nevertheless, I must disagree with his argument.


Note that I said AGF and Wallerstein's argument depends upon the
assumption that what one country gains another loses.  Here is what
Wallerstein himself says on the subject in one of his early essays from
the 1970s (this passage may or may not reflect later views he has
expressed; I have not read the entire corpus of the man's work, which
would be a difficult undertaking indeed):


     To be very concrete, it is not possible theoretically for all
states

     to 'develop' simultaneously.  The so-called 'widening gap' is not an 

     anomaly but a continuing basic mechanism of the operation of the
world-

     economy.  Of course, _some_ countries can 'develop'.  But the some
that

     rise are at the expense of others that decline. . . .  (Wallerstein
1979,

     73).

 

This is all but an explicit statement that global economic development is
a zero-sum game in the sense that all countries cannot grow at the same
time.  Andre Gunder Frank is less clear, and again this may or may not
reflect views he's expressed in his later work, but he uses language that
also strongly implies a zero-sum logic.  


     Economic development and underdevelopment are the opposite faces of
the

     same coin.  Both are the necessary result and contemporary
manifestation

     of internal contradictions in the world capitalist system.  Economic
dev-

     elopment and underdevelopment are not just relative and
quantitative, in

     that one represents more economic development than the other;
economic

     development and underdevelopment are relational and qualitative, in
that

     each is structurally different from, yet caused by its relationship
with 

     the other.  Yet development and underdevelopment are the same in
that

     they are the product of a single, but dialectically contradictory,

     economic structure and process of capitalism. . . . (Frank 1967,
9).


It's clear from these quotations that the core develops at the expense of
the periphery in dependency and world-system theory.  Inasmuch as all
countries cannot grow at the same time, development in one country
requires a loss to another.  Thus there cannot be growth _worldwide_ if
worldwide growth is understood as growth in all countries
simultaneously.


But I think Carl was probably trying to suggest that, contrary to my
statement, the Marxist, dependency, and world-system (hereafter
designated radical political economy) arguments do not imply that there
can be no worldwide aggregate growth, where the latter is understood as
increase aggregate (worldwide) production in goods and services, without
respect to increases in particular countries.  In short, he argues that,
contrary to my suggestion, radical political economists do not argue that
the total size of the pie cannot increase.


For what it's worth, I am not the only one who has interpreted Frank and
Wallerstein as in effect arguing for a "no-growth" economy.  The Marxist
Anthony Brewer comments in what he calls his oversimplified treatment of
Frank and Wallerstein that they describe "capital accumulation. . .not as
a precondition for genuine, qualitative advances in the level and methods
of production, but rather as a _redivision of a fixed magnitude_, a
transfer of resources from the exploited periphery to the centre. 
Development in some areas and the 'development of underdevelopment' in
others are opposite sides of the same coin" (Brewer 1980, 17, italics
added).

  

But I can certainly do better than an argument from the authority of
Brewer.  There are two ways in which the wealth of the world-economy
might increase, given the premises of radical political economy. Growth
_might_ occur, if the core used wealth from the periphery to improve
production methods and increase the amount produced per unit of time. 
>From the point of view of Marxian economics, this would constitute an
increase in relative surplus value produced (Brewer 1980, 35).  From the
point of view of mainstream economics, this would constitute "intensive
growth" requiring technological innovation.  

But if this is how growth takes place, one must explain why the core
requires extraction of wealth from the periphery.  In the language of
growth theory, there must be an explanation of why "endogenous"
(self-generating) growth through technological innovation is not
possible.  In other words, why can't the core simply increase the
productivity of its own factors of production to increase growth?  If
this question cannot be answered, the argument that underdevelopment is a
_necessary_ part of the development of the core would seem to be
undermined.  


One might attempt a Bukharin-esque answer to this question:  as the
productivity of the core increases, industry becomes less labor-intensive
(the amount of socially necessary labor declines).  Since, according to
Marx and Bukharin, only socially necessary labor produces use-value, and,
in turn, exchange-value reflected in the profits of capital, the rate of
profit declines as productivity increases.  The greater organic
composition of capital in the periphery thus entices capital to flow to
the periphery (cf. Brewer 1980, 20, 104).  One might argue that the extra
profits thus obtained allow the core more opportunities for investment
producing technological progress than profits available at home.  Note,
however, that this answer cannot explain underdevelopment, since it
virtually assumes that the periphery is less developed than the core
already (why would the periphery's economic activities be more
labor-intensive than those of the core, and thus contain more organic
content, otherwise?).  This undermines Frank's claim that "even a modest
acquaintance with history shows that underdevelopment is not original or
traditional" (Frank 1969, 4).


Moreover, this answer is at odds with observable patterns in capital
flows.  It does not explain Gilpin's (1975) observation that, Lenin's
analysis of imperialism notwithstanding, most European investments in the
19th century flowed to the "lands of recent settlement" in North America
and Australia, certainly not to the periphery.   Moreover, Lebergott
(1987, 129) finds that U.S. investments abroad between 1890 and 1929 do
not appear to have substantially increased the rate of return on U.S.
capital.  Moreover, it is by no means immediately obvious that, in a
period when U.S. productivity is gaining and when some of the hottest
earnings reports on Wall Street are coming from high-tech sector firms
like IBM (i.e., not necessarily firms producing commodities containing
the highest organic content), that the rate of profit must diminish as
productivity increases.

        

It is difficult, therefore, to explain why technological progress in the
core requires the exploitation of the periphery.  I must conclude that if
radical political economy is to explain aggregate growth as the result of
intensive growth in the core, no satisfactory theory of how this occurs
exists, at least in the work I've cited.


A second possibility for producing aggregate growth exists: growth
_could_ take place if the integration of the periphery into the
world-system resulted in employment of previously underemployed factors
of production extracted from the periphery.  Thus, the extraction of
wealth from the periphery would produce "extensive growth" in the core. 
It is certainly possible that, e.g., slaves relocated from Africa to the
New World were in a state we would normally think of as underemployed
(not working as much as they wished, other things being equal) when in
their homelands.  But if such underemployed factors of production exist
in the periphery prior to their integration, this implies that the
periphery is underdeveloped, at least in a relative sense, in the first
place (why would there be relatively large supplies of underemployed
factors otherwise?).  Once again, Frank's notion that development is not
an original state is undermined.


I therefore consider that I am justified in making the claim that I made,
namely that the argument of world-system and dependency theory that the
core necessarily develops at the expense of the periphery logically
implies that worldwide aggregate growth cannot increase.  There appears
to be no mechanism through which aggregate growth can increase if we
assume periphery and core cannot both develop simultaneously.


Carl continues:


>>>>

<excerpt> One merely has to look at history. In fact, this has never

been an issue. The issue is that the pie is ALWAYS divided unequally in

such a matter that certain regions of the world economy accumulate
surplus

wealth, if you will, wealth over and above that which is created in the

region, by transferring it from other regions. Historically, the

mechanisms and means of transfer have varied and ranged from
colonialism,

through the slave trade and unequal exchange to massive loans made by
core

banks to the "Third World", but the end result is that a susbtantial part
of

the wealth that accumulates at one pole or region of the world economy,

i.e., the core, is derived from other regions of the world economy. At
the

same time, transfer of wealth out of the periphery has historically
stunted

and perverted ("underdeveloped")the periphery (as opposed to an image of
the

periphery or "less developed countries" as "undeveloped.)

</excerpt><<<<<<<<


This argument can hardly claim to have been demonstrated by 'history', as
Carl claims.  As I've noted already,  at least some scholars who have
investigated the question empirically have failed to substantiate it.



>>>>

<excerpt>






>This argument, in turn, depends upon the assumption that the
productivity

of a finite set of factors of >production cannot be increased by

technological change. Is anyone willing to argue that technological
>change

increasing productivity never occurs? If so, is there any economic
theory

that can explain why or >in what sense it never occurs?>



This merely illusrtates that you can't see the forest for the trees.
Again,

no one in their right mind would argue that produvtivity is fixed. This
is

not the issue. For W-S as for Marx, the issue is not that there is any

fixed limit or cap on the ability of humanity to generate wealth but
rather

how this welath is divided. AS the bourgoise exploits the proletariat,
the

core (in W-S lingo) exploits the periphery. BTW, I think this point was


</excerpt><<<<<<<<



Obviously, Marx and the rest of radical political economy is aware of the
possibility of increased productivity.  I submit however, that my
argument above suggests that the Marxist economics underlying much of
radical political economy makes it difficult to understand technological
progress, and thus increased productivity.  Recapping briefly,
technological progress is supposed to result in a diminishing rate of
profit.  That profits have diminished is not self-evident, by any means. 
Moreover, the diminishing rate of profit is supposed to impel
exploitation of the periphery as capital seeks superprofits there.  But,
as I've argued, this theory fails to explain observable capital flows.



<center>REFERENCES

</center>

Brewer, Anthony.  _Marxist Theories of Imperialism:  A Critical 
Survey_.

     London and New York:  Routledge and Kegan Paul, 1980.


Frank, Andre Gunder.  "Capitalist Development of Underdevelopment in
Chile."           

     Chap. in _Capitalism and Underdevelopment in Latin America: 
Historical

     Studies of Chile and Brazil_.  New York and London:  Monthly 
Review

     Press, 1967. 


Frank, Andre Gunder.  "The Development of Underdevelopment."  Chap. in
_Latin

     America:  Underdevelopment or Revolution:  Essays on the Development
of

     Underdevelopment and the Immediate Enemy_  New York and London: 
Monthly

     Review Press, 1969.


Gilpin, Robert.  _U.S. power and the multinational corporation : the
political           

     economy of foreign direct investment_.  New York : Basic Books,
1975.


Lebergott, Stanley.  "The Returns to U.S. Imperialism, 1890-1929."  Chap.
in

     _International Political Economy:  Perspectives on Global Power 
and

     Wealth_, ed. Jeffry A. Frieden and David A. Lake.  New York:  St.

     Martin's Press, 1987.

 

Wallerstein, Immanuel.  "Dependence in an interdependent world:  the
limited          

     possibilities of transformation within the capitalist
world-economy."                      Chap. in  _The capitalist
world-economy: Essays by Immanuel Wallerstein_.                     
Cambridge and Paris:  Cambridge University Press and Editions de la
Maison                     des Sciences de l'Homme, 1979.




--


Jeffrey L. Beatty

Doctoral Student

Department of Political Science

The Ohio State University

2140 Derby Hall

154 North Oval Mall

Columbus, Ohio 43210


(o) 614/292-2880

(h) 614/688-0567


Email:  Beatty.4@osu.edu

___________________________________________________


"Sometimes a scream is better than a thesis."  

                         Ralph Waldo Emerson