DEPENDENCY theory emerged in the 1960s and ’70s as a Marxist critique of the ideology of “modernisation” which argued that “poor” countries could “develop” by following the same path as ”wealthy” capitalist states.

Over a century-and-a-half ago, Marx and Engels declared in The Communist Manifesto that “The bourgeoisie […] has made barbarian and semi-barbarian countries dependent on the civilised ones, nations of peasants on nations of bourgeois, the East on the West.”  

In his 1867 preface to Volume one of Capital, Marx wrote: “The country that is more developed industrially only shows, to the less developed, the image of its own future.”  

As Marxist economist Michael Roberts points out, Marx was writing when Britain was at the pinnacle of its economic power and industrial might. He “thought capitalism would spread globally so that other rival capitalist powers would emerge — and he was right. Germany, France and, above all, the US caught up with Britain (in its own ‘image’) by the end of the 19th century.”  

But that process itself involved the economic and military subjugation of a much greater part of our planet. At the height of its power in the early ’20s, the British empire — the largest in the world — covered well over a quarter of the Earth’s surface. Today despite the “ending of empire,” imperialism retains its stranglehold. 

“Modernisation theory” (including the implementation of much “overseas aid”) is a sham, a cover for the systematic exploitation of the greater part of the world’s population. 

Central to dependency theory is the concept of “unequal exchange” — that the “advanced economies” of capitalism’s metropolitan heartlands rely on a large net appropriation of value from the rest of the world, extracted through price differentials in international trade, which do not reflect the labour content of the goods in question. 

Resources flow from a “periphery” of poor and dependent states to a “core” of wealthy nations, enriching the latter at the expense of the former. These flows include not just food and raw materials but also manufactured items and increasingly, services and people.  

During the cold war, ex-colonial, neocolonial and “non-aligned” nations in the Third World were often contrasted with the “advanced” industrialised capitalist First World and the Second (or socialist) world. Since the collapse of the Soviet Union, distinctions have increasingly invoked economic, rather than political, criteria, based not just on income but on infrastructure, sanitation, healthcare and other factors such as demography using terms like “developed countries” (DCs) and “developing,” “underdeveloped” or “less developed” countries (UDCs/LDCs).  

Other terms are also common. Most, like the distinction between “developed,” “developing” and “underdeveloped” countries, are ideologically loaded. The World Bank, for example, classifies countries into four groups, from low to high per capita income. The International Monetary Fund’s typology of advanced, emerging, or developing, adds factors such as export diversification (high per capita GDP countries dependant on oil exports are not considered advanced) and their degree of integration into the “global financial system.”

Increasingly used today are the terms “global South” and “global North.” The “South” is generally held to consist of Africa, Asia (excluding Israel, Japan and South Korea), Oceania (less Australia and New Zealand), Latin America and the Caribbean. The “North” comprises North America, most of Europe (including Britain) and the “excluded” countries above. Russia and today’s remaining socialist states — China, Cuba, Laos, North Korea, and Vietnam — are often excluded from the analysis.  

The North-South terminology initially emerged from the 1980 Independent Commission on International Development Issues, chaired by Willy Brandt (former chancellor of West Germany) — widely referred to as the Brandt report.  

Entitled North-South: A Programme for Survival, it grouped countries based on economic development. Countries of the North were said to be wealthy due to their successful trade in manufactured goods, whereas those of the South suffered poverty due to their low incomes from exports of agricultural or intermediate goods.  

Although written from a humanitarian perspective, the report emphasised “mutual interests” and, together with most analyses today, involves a concept of progressive “modernisation” whereby all countries progress through comparable paths, with poverty representing only an earlier stage of, or failure (due to social or environmental factors) to “develop.” Any obligations of the “rich” nations should therefore be discharged by accelerating that process through investment, technical assistance and integration into the world market.  

This narrative also fits well with neoclassical economic theories of “free trade.”  Countries should focus on producing goods (from sugar to smartphones) in which they have a “comparative advantage” — that can be produced at a lower opportunity cost and sold at a lower price than their competitors — supposedly a win-win situation for everyone.  

Dependency theory rejects this analysis. Sometimes invoking the notions of “core” and “periphery,” it argues that wealth flows from “poorer” nations to the “richer” ones, enriching the latter at the expense of the former. “Poor” nations provide natural resources, cheap labour, a destination for obsolete technology, and markets for developed nations, without which the latter could not have the standard of living they enjoy.  

Dependency theory originated in the early post-war period with papers published in 1940s demonstrating how terms of trade for “underdeveloped” relative to “developed” countries had deteriorated over time: the former able to purchase ever fewer manufactured goods from the latter in exchange for a given quantity of their raw material exports. It was elaborated with a Marxist analysis from the 1950s (sharing a good deal with earlier, Marxist, theories of imperialism by Rosa Luxemburg and Vladimir Lenin) by Marxist economists including Paul Baran, Paul Sweezy and Andre Gunder Frank, particularly in relation to Latin America.  

In the 1970s, dependency theory was developed further in particular contexts. The Guyanese Marxist historian Walter Rodney’s How Europe Underdeveloped Africa emphasises the deliberate restriction of development in most of the continent by European imperialism. Ruy Mauro Marini’s The Dialectics of Dependency describes how, as Latin America came to specialise in the production of raw materials and foodstuffs while importing manufactured goods, a process of unequal exchange took shape that created a transfer of value to the imperialist centres. This in turn encourages capitalists in the periphery to resort to the superexploitation of their own workers. Both books have been recently republished.  

Dependency theory is a central element in the “world-systems approach” of Immanuel Wallerstein and others. This rejects the notion of a “developing world” following a similar but later path of “development” to the “developed” countries.  It argues that within globalised capitalism there is only a single world, in which cheap raw materials and the products of cheap labour are imported from the “periphery” to capitalism’s “core” states from which high-cost capital and consumer goods are exported in an unequal exchange. That exploitation includes the appropriation of intellectual and technical skills, not least of care workers and others (including over one-third of all UK NHS doctors) whose training costs are borne by the dependent countries but who contribute — directly or indirectly — to the production of surplus value in the developed “global North.” 

Underdevelopment and development, like the class relations they engender, are two sides of the same coin.

Today, the attention of socialists and Marxists rightly focuses not just on “unfair” terms of trade (essentially the greater prospects for the extraction of surplus value in low-wage, unregulated economies) but on the global penetration of finance capital, including indebtedness and on the way that endemic crises within capitalism’s metropolitan heartlands are “solved” by transferring the burden to peoples of the “dependent” countries.  

Global capitalism perpetuates a state of dependence by many means, including military domination, political and economic coercion, control of the media, education, culture and even sport. Dependence is the “hidden skeleton of present-day capitalism.”

The Marx Memorial Library and Workers’ School programme continues tomorrow, March 19, with the first of six online classes on British Labour History 1780-1990: Labour, Race & Empire, led by Professor Mary Davis. Details and registration on the MML’s website www.marx-memorial-library.org.uk/events.