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The Critical Political Economy of Development

Susan Spronk
Jody-Ann Anderson

A yellow Coco Taxi in Havana drives by a mural celebrating the revolution in Cuba. Jon Arnold Images Ltd/Alamy Stock Photo

Learning Objectives

• To understand how global inequality is produced in the process of capitalist development.

• To comprehend the similarities and differences between critical political economy approaches, post-development, and mainstream
approaches.
• To learn how Marxist approaches, which inspire critical political economy approaches to development, understand the relationships
between capitalism, patriarchy, and colonialism.

We live in a world of inequalities. In 2018, the cumulative wealth of the richest 26 people exceeded that of over half of the world’s poorest, or more than 3.8
billion people (Oxfam 2019, 6). In White settler states such as the United States, Canada, and Australia, racialized women face disproportionate levels of
poverty and economic insecurity, which can be connected to the combination of gender inequality and racial wealth divisions (Institute of Policy Studies 2020).
Generation Y—young people born between 1980 and the mid-1990s—have increasingly been cut out of the wealth generated in Western societies. The
Guardian (2016) warns: “It is likely to be the first time in industrialised history, save for periods of war or natural disaster, that the incomes of young adults
have fallen so far when compared with the rest of society.” Climate change threatens the safety of billions of people on the planet. These compounding crises
may seem bewildering. Rather than falling into despair, many people are searching for and actively building alternatives.

Mainstream, liberal development theories argue that capitalist forms of development are the best or the most feasible way of creating generalized prosperity,
bringing about gender equality, and advancing human rights. By contrast, critical development theories are much more pessimistic about the possibility that
capitalism can overcome its inherent contradictions. They are optimistic, however, about our collective ability to do better.

This chapter examines critical political economy approaches to development that are inspired by Marx’s critique of political economy. Scholars and activists
who adopt these approaches argue that persistent inequalities among social groups (e.g., workers and owners; women, men, and non-binary people; whites and
racialized peoples; heterosexuals and people who identify as LGBTQ2+); and among countries (e.g., the United States and Niger) are expressive of historically
constituted structures of power and that in the contemporary period, these structures of power are shaped by capitalist social relations. They propose that the
capitalist system is based on inherent contradictions that cannot be overcome because it is a system focused on production for profit rather than for human
need.

Critical political economy approaches are also optimistic about the possibility of alternatives, particularly ones born from the struggles of marginalized people
from below. They aim to provide holistic tools that inform the practice of international development, or what is known as praxis, the idea that it is impossible
to separate theory from practice. This ethos is best captured by the epitaph on the tombstone of Karl Marx, the world’s best-known critic of capitalism: “The
philosophers have only interpreted the world, in various ways. The point, however, is to change it.”

This chapter argues that it is not possible to understand global inequalities without understanding the dynamics of capitalist development and explains how the
capitalist system of exploitation intersects with different systems of oppression (e.g., colonialism, racism, patriarchy, ableism, heterosexism). This chapter
outlines some of the important advances in critical political economy approaches to development and documents how these analytical frameworks have shaped
and been shaped by political movements and liberation struggles over time, while also identifying some of the ongoing challenges to moving beyond mainstream
strategies that aim to “eradicate poverty.”

Rather than focusing our attention on “what is wrong with the poor,” critical political economy approaches to development demand that we also ask “what is
wrong with excessive wealth and privilege?” In other words, to solve these crises, more attention needs to be paid to how wealth is created and how it is
distributed, both among states (e.g., between Global North and South) and within them (e.g., among social groups).
Development, Capitalism, and Industrialization

The idea of development has its origins in the colonial era and is related to the concept of universal progress. The era of European colonialism dates back to the
1400s when the kingdoms of Spain and Portugal expanded their reach into Asia and the Americas. It was only later, in the mid-1600s, that Europeans began
constructing systems of government known as “modern” nation-states, which henceforth set the standard for political governance arrangements. Capitalist
social relations emerged even later. In the 1700s to the late 1800s, the emerging industrial systems in England and eventually the rest of Europe were fuelled
by the products of colonial labour regimes such as sugar, cotton, and tobacco.

PH O TO 4 . 1 The killing of George Floyd by police in Minneapolis, US, in 2020 sparked anti–Black racism demonstrations around the world. Gary Pickburn/flickr

While global in its origins, the meaning of development focuses on European accomplishments. It is often forgotten that these accomplishments, such as the
Industrial Revolution, which were represented in theory as a set of idealized outcomes to be emulated by other countries, also came with massive social—and
often violent—upheavals. Accordingly, in mainstream views of development, the end justifies the means, no matter how socially and ecologically disruptive the
process might be.

The contemporary mainstream notion of development crystalized after World War II. Three historical factors help to explain the rise of what Philip McMichael
(2016) calls “the development project,” which ruled the collective imaginary of powerful people across the world from the 1940s to the 1980s.

First, the Marshall Plan—a multilateral aid and trade deal financed by the US that was successfully passed by Congress in 1948—helped to restore the
European economies that were devastated by war. The success of this plan and the establishment of the Bretton Woods system fuelled optimism that aid and
technology transfer could play key roles in sponsoring economic growth in lagging economies, including those in the former colonies (see Chapter 10).

Second, the modern concept of development is heavily infused with Cold War ideology. The Cold War was a period of geopolitical upheaval between the Soviet
Union and the United States that started in the late 1940s and ended when the Soviet Union was dissolved in 1991. This post–World War II tension was rooted
in ideological differences between these Eastern and Western powers as they sought to gain global influence and dominance over most areas of the world.

Third, after WWII, national liberation movements in the colonies demanded freedom from colonial rule. For example, between the 1950s and the 1980s
throughout the African continent, there were periods of massive unrest and revolts as nations gained independence. During this period, violence and political
turmoil were particularly evident in nations such as French Algeria, Portuguese Mozambique and Angola, the Belgian Congo, and British Kenya (Chapter 2).
Post-independence, the new national leaders hoped that the benefits of technology and trade would integrate these new nation-states into the world market,
although, as we shall see, the terms of integration were very unequal.

In sum, while development has become a much-maligned concept in critical development theory, it is still imbued with the same sense of optimism that
informed earlier ideas of universal progress. Mainstream development economist Jeffery Sachs (2005), for example, argues that the development gap is due to
small differential growth rates between developing and developed countries. By contrast, critical development theories argue that the development gap is due
to the legacies of historically unequal relations, such as those created by colonialism and imperialism. Critical development theories inspired by Marxism focus
on how colonialism and imperialism have been shaped by capitalism.

Capitalism
The debate on the dynamics of capitalism goes back to two very different Enlightenment thinkers: the moral philosopher and liberal political economist Adam
Smith (1776) and the non-liberal critic of political economy, Karl Marx (1867). Writing in the context of the lowlands of Scotland in the late 1700s, Smith
believed that while the state needed to provide security services and basic infrastructure such as roads, it needed to get out of the way of economic
development because it stifled productivity (Chapters 3 and 8). In contrast, writing in the context of the turmoil of the first Industrial Revolution in London,
England, in the mid-1800s and in exile from his native Prussia, Marx argued that the state played a critical role in creating the conditions for capital
accumulation through the violent process of enclosure.

It is important to note that Marx actually never used the term “capitalism,” but it is the common term that we use to describe the socio-economic system that
is dominant today. Marx advanced a class relational view of history, observing that the new form of private property that emerged with the enclosures in the
English countryside set in motion a whole new way of organizing production centred on capital and labour. Marx used the expression “relations of production”
to describe this new way of producing commodities, which has implications for the way that they are distributed and consumed as well.

IMPORTANT CONCEPTS
Box 4.1 Enclosure of the Commons and the Invention of Private Property
In medieval England before the advent of capitalism, most land was held in common. Unlike the form of private property that most of us are familiar with
today, common land was owned by communities. In cases where land was owned by an individual or family, the rest of the community still had traditional
rights to graze livestock or collect firewood. Marx observed that beginning in the early 1600s, the enclosure and dispossession of sheep farmers’ lands in the
north of England created a new form of social property rights—known as “private property”—that was institutionalized and protected by the state through
passing laws and funding security forces over a few centuries. In a series of acts of Parliament between 1604 and 1914, more than 5200 acts were put into
place, enclosing 6.9 million acres of land that used to be held in common. Marx’s observations have great relevance for understanding the origin and
development of capitalism and the dispossession of Indigenous peoples from their lands today (see Chapter 24).

TAB LE 4 . 1 Marxist Theories of Development

Theory/Theme Emergence Thinkers Discipline/Tradition The Problem The Solution

Critique of political 1840s Marx, Engels Marxism Capital-labour Working class liberation, especially
economy/historical relation, private industrial proletariat
materialism property
Dialectical materialism 1880s Georgi Plekhanov Marxism Underdevelopment of State-sponsored industrialization
(Soviet Marxism) productive forces
Imperialism 1920s Lenin Marxism Inter-imperialist Socialism in one country
rivalry & war
Council Communism, 1920s Luxemburg, Trotsky Marxism Uneven and combined Mass strike, world revolution,
Trotskyism development international socialism
Dependency - dualist 1960s Frank, Amin Prebisch-Singer thesis, Economic Unequal exchange Delinking, fully or partially, or
Commission for Latin America socialism
approach, Marxism
Dependency - dependent 1960s Cardoso, Faletto, Economic Commission for Latin “Triple Alliance”; Not prescriptive
development Evans America approach, Marxism class formation
Anti-colonial Marxism 1960s Fanon, Rodney Marxism Racism, colonialism Self-determination, working class
and neo-colonialism liberation
Political Marxism 1980s– Thompson, Wood, Marxism Rules of reproduction Not prescriptive
present Brenner, McNally of capitalism
Critical geography 1990s– Harvey Marxism Accumulation by Right to the city
present dispossession,
financialization
Indigenous Marxism 2010s– Manuel, Coulthard Marxism Racism, colonialism Self-determination, redistribution of
present and neo-colonialism land
Anti-racist, feminist 1990s– Fields, Aruzza, Marxism Colonialism and Decommodification, collectivized
Marxism present Bhattacharya, patriarchy, liberal care, prison abolition, working class
Fraser, Bannerji feminism liberation

The concept of exploitation is central to Marxist understandings of relations of production and development. In capitalist societies, exploitation occurs when
surplus value is extracted from labour during the labour process when a worker sells their labour-power (her capacity to work). Another way to think of
surplus value is “surplus labour time,” which is the part of the working day when you no longer create value for yourself but for your boss (Campling et al.
2016, 1746–7).

A simpler way to think about surplus value is to imagine the following scenario. You work for eight hours during your shift at the campus store. You may be
paid a wage for all of those eight hours that you worked, but you in fact created value for your boss during that time, too, by selling goods and services. Your
boss appropriates some of this value in the form of profit, giving you only a fraction of the actual value that you created. In other words, during your eight-hour
shift, you may have actually produced surplus value worth 16 hours. It is not difficult to see how your boss gets wealthy at a much faster rate than you do,
especially if they have a large number of employees.

Marx also observed that “the market” is never neutral. It can be manipulated to gain, maintain, and exert power. Therefore, the market is an arena of political
and social contestation in which different actors come together to buy and sell but also to define the rules of the game, or what historian Robert Brenner (1993)
calls “rules of reproduction.” It is not a neutral space of fair dealing. The poor do not have the resources necessary to play the game and have very little
influence over setting its rules.

This class relational approach of Marx stands in contrast to stratification perspectives that dominate the contemporary social sciences. The stratification
perspective is primarily associated with another founder of modern sociology, Max Weber. Weber’s understanding of social class is expressed in the measures
of income used by multilateral and global institutions. For example, the United Nations and the World Bank present figures representing the material
conditions of labour without any reference to the process of exploitation. According to Marxists, this narrow definition of class is more accurately labelled socio-
economic status, since this measure does not tell us how wealth is being created and by whom.
We can only understand how class works when we look at the whole system, not just at the individuals within it. As critical geographer David Harvey (2010,
232) explains, “Class is a role that we play, not a label that attaches to persons.” For example, imagine that in 10 years’ time, you are still working at that
campus store but you now have a mortgage, a pension, and investments in the stock market. Possessing these assets does not make you a “capitalist,” since you
are not exerting control over others’ labour in order to make a profit.

It can be difficult to see where informal workers such as small farmers in rural Nepal or children who sell gum in the streets of Managua, Nicaragua, fit in this
relationship. They may not work for a wage and appear to own their means of production. Are they “capitalists”? Marx would say no. They are “simple
commodity producers,” an intermediate status that typically does not have much power in the circuits of capital. The main point is that class is not a thing; it
must be understood as a social relation.

Class relationships are inherently conflictual. The work processes under capitalism are controlled by the bosses to ensure that workers continue to produce
value and profit. Bosses tend to try to speed up production and drive down wages. Workers find this situation unfair, so they organize trade unions to press
for more favourable conditions and to gain a greater share of the profit they produce. Far from being docile, trade unions tend to be very militant in new zones
of capital accumulation, such as the trade unions that helped to end authoritarian rule in the 1980s in Brazil and struggled against apartheid in South Africa
(Seidman 1994; Silver 2003).

Since trade unions have been the most active organizations defending workers against the onslaught of the bosses, the elements of the working class organized
in trade unions (e.g., the male, industrial proletariat) were seen as the key social agents in much of Marxist thinking for most of the 1800s and 1900s. It is
important to note, however, that the “working classes” have always been diverse with respect to gender, race, ability, etc., but not all workers are represented
by unions. Trade unions also tend to replicate the oppressive relations witnessed in the wider society, since bosses tend to hire along racial and gender lines
(Spronk 2017).

There is no question that the capitalist form of organizing production has created enormous social wealth and inspired unprecedented rates of technological
change. The difference between mainstream and critical political economy of development theorists is their belief as to whether the benefits of this way of
producing and distributing wealth can ever be distributed fairly or somewhat equitably at any level. For example, mainstream development theorists will
emphasize that China has experienced world-historic rates of economic growth since 2000, which demonstrates that “catch up” is possible (Chapters 1 and 14).
Critical political economy of development approaches point out that while it is true that China has achieved impressive economic growth and levels of
development, socio-economic inequality within China has also risen exponentially (Chapter 7) and the ecological consequences are dire. They will also say that it
is unlikely that this option of “catch up” is possible for all but a few, very select countries due to the uneven dynamics of capitalism and the relationships of
colonialism and imperialism.

Colonialism
Colonialism is the practice of domination and control by one nation over another. It is underpinned by the ideology of imperialism, which is the formal or
informal command of one nation over another politically or economically. In other words, in the Marxist view, imperialism is the idea, and colonialism is the
practice.

Colonialism and capitalism are also related concepts. Critical political economy of development theorists emphasize that the development and maintenance of
industrial capitalism was made possible by violent processes of dispossession and extraction: “the plunder of Indian gold and silver from the Americas, the
wholesale theft of Indian land by force of arms and the resultant 50–100 million deaths from war, overwork, overcrowding, economic ruin, starvation,
malnourishment and related diseases; by the slave trade (1500–1869) which resulted in the deaths of perhaps 20 million Africans, the loss of up to 100 million
Africans from their homeland and hundreds of years of agonizing toil, wanton mistreatment and early death” (Ness and Cope 2016, vii–viii).

According to the class relational view, colonialism pre-dates capitalism. The invasion of the Americas by the Spanish and Portuguese took place in the late
1400s, a bit more than a century before the enclosures in the British countryside. Ellen Meiksins Wood (2003) argues that we must also understand what is
happening in the imperialist countries (the “home” countries) in order to understand the form that colonialism takes.

For example, the French, who were involved in the fur trade, established partnerships with the local Indigenous populations of the Americas (see Chapter 24).
France at the time was not capitalist; they had a massive peasantry at home. They created semi-feudal seigneuries and pursued a policy of integration; French
men even married Indigenous women. The English, by contrast, had masses of property-less workers emerging in the wake of the Industrial Revolution and
needed somewhere to put this surplus population. Wood (2003, 102–9) argues that these differences help to explain why the English were therefore much
more intent on clearing the land. Her point is that we need to understand these differences to better recognize and understand contemporary relationships of
colonialism and imperialism.

In their work on the new imperialism, Wood (2003) and Harvey (2005) argue that while it seems rather obvious to us today that the earlier forms of European
colonialism were direct, coercive, and violent (e.g., Spain and Portugal in the Americas), contemporary forms of colonialism (otherwise known as neo-
colonialism) rely more on the coercive role of the market. Since the mass decolonization movements in Africa and Asia after World War II, it has become less
common to directly occupy territory. As Wood writes, the US, which is “the first, and so far the only, capitalist empire” (2003, x), uses military force upon
occasion, but unlike the earlier European powers, it prefers not to occupy the territories under its rule (with the exception of Puerto Rico). “Economic coercion,”
she writes, “is imposed not by men but by markets” (2003, 3). Rule by the market is less costly, more stable, and therefore more profitable.

CRITICAL ISSUES
Box 4.2 Walter Rodney on How Europe Underdeveloped Africa
Walter Rodney was a prominent West Indian scholar and activist who was assassinated in 1980, aged 38. A trailblazer of his time, posthumously his
scholarship continues to make significant contributions to the understanding of African history and the structures of racism and colonialism that hindered the
development of the continent. His seminal work, HowEurope Underdeveloped Africa , directly connected the capitalist exploits of Europe in the form of
colonialism to the underdevelopment of Africa, a process that conversely facilitated the development of Europe. His position challenged the mainstream
narrative that purports that colonialism was beneficial to the African continent because it brought infrastructure, economic growth, and sociological modernity
to a largely “traditional” people. Using a “balance sheet of colonialism” to analyze the impacts of the approximately 70 years of colonialism in Africa, Rodney
concluded that the bad outweighed the good. For Rodney, colonialism’s banditry is evident in the fact that infrastructure built by the colonial powers was
geared primarily toward facilitating export of primary goods from the colonies to Europe.

Economic justifications for empire, however, are never enough. Colonial and imperialist powers have also used ideologies of racism to justify their interventions,
often in the name of development (Chapter 2). It is important to note that the contemporary concepts of race and racism are not trans-historical phenomena
but have their origins in the context of the establishment of slavery in the Virginia colonies (now known as the southern US) in the 1700s. In the early days
after settlement, both African slaves and European descendants performed indentured forms of labour in the cotton fields. After Bacon’s Rebellion of 1676,
however, indentured forms of labour performed by descendants of European settlers disappeared, leaving only the slaves of African descent unfree by the
early 1700s. For the first time, freedom and equality appeared to be the “natural” condition of humans (at least to European descendants)—requiring a notion
of intrinsic and permanent difference to explain why Black slaves remained unfree. Hence, the concept of race emerged to explain these differences (Fields
1990).

When New World slavery was abolished in the 1800s, race and racism did not disappear. Rather, different groups of people have been considered to be
superior or inferior over time (Post 2011). This dynamic nature of these classifications is why critical race theorists talk about “racialization” and
“racialized” peoples. Racialization is a continuing process, and it is not strictly related to skin colour. For example, Irish migrants to the United States were
racialized by other White settlers in the late 1800s before graduating up the socio-economic hierarchy (Roediger 2007). Similarly, English settlers racialized
French settlers in the 19th century in British North America and then in Canada (Scott 2016). Similar to the way that slave owners viewed their slaves as
ungrateful, untrustworthy, and less intelligent, today’s bosses often view their racialized wage workers as undisciplined, irregular, and lazy (Martinez HoSang
and Lowndes 2019). And to this day, the supposed inability and/or unwillingness of Indigenous peoples to “improve” agriculture or develop mineral or oil and
gas reserves justifies the appropriation of land and resources by the colonizers (Manuel and Derrikson 2017).

IMPORTANT CONCEPTS
Box 4.3 Arthur Manuel
When the term “colonialism” is used, Canada is usually not one of the first countries that come to mind. However, Canada’s history is interwoven with
experiences of internal colonialization of its Indigenous people, which have manifested in Indigenous struggles against systemic oppression in the
contemporary era (see Chapter 24). Arthur Manuel was a noted First Nations activist, a survivor of Residential Schools, and a political leader from the
Secwepemc Nation in the jurisdiction known as British Columbia. Up until his death in 2017, he unwaveringly advocated for Indigenous peoples’ rights to
acquire and control their traditional lands in Canada. In The Reconciliation Manifesto (2017), he connects present concerns of the Indigenous people with
Canada’s colonial history and sees self-determination as the solution for fostering reconciliation and addressing challenges such as Indigenous poverty. For
Manuel, self-determination is the right for Indigenous people to establish and run their own political, economic, social, cultural, and religious systems—
essentially, complete autonomy. In order to achieve this change, he promoted having a thorough understanding of the legal system, the engine through which
transformation can be produced. But he further argues that the only way that Indigenous communities will overcome their poverty is for Canada to give back
more control over the land. First Nations peoples have been forced to live on reserves that represent only 0.2 per cent of their traditional territories (Manuel
and Derrikson 2017, 59). This challenge has been echoed by other First Nations scholars such as Leanne Betasamosake Simpson (2014), who promotes
the transformation of the colonial education system based on “land as pedagogy.”

“High” Imperialism and Anti-imperialism

Colonial powers in both the past and the present attempt to improve their practices through piecemeal reforms. At the end of the 1800s, colonial powers made
some attempts to improve their administration in order to appease colonialized peoples who fought back against the harshest forms of exploitation. However,
these practices were accompanied by new justifications for colonialism, now re-imagined as a mission to bring progress and civilization to non-Europeans,
known as the White man’s burden.

Imperialist ideology has its promoters; it also has its critics. Vladimir Lenin (1917) was one of the leading critics of imperialism in the early 20th century.
Drawing from the works of liberal political economists such as Hobson (1902), Lenin argued that imperialism was a “stage” in the (apparently unavoidable)
evolution of capitalism, emphasizing the connection between imperialist rivalries and war (see Chapter 2). The Hobson-Lenin thesis created a lot of debate,
even among fellow Marxists.

Rosa Luxemburg (1913/1951), a Polish-German revolutionary and agitator, disagreed with Lenin. Writing from prison in Warsaw, she argued that imperialism
was not the “highest” stage of capitalism but rather a stage of “primitive capitalist accumulation,” similar to what Marx described in his work on the enclosures.
Luxemburg helped to challenge Lenin’s “stagist” view of history that suggests that capitalism must develop within one place before it moves outwards and
extends its influence elsewhere in a series of automatic stages. She argued it is much more dynamic.

Another activist and intellectual who rejected the stagist view of history was revolutionary activist and intellectual Leon Trotsky (1932). He argued that
capitalist development is always uneven and combined. It is uneven because different capitalist classes accumulate wealth at different rates in different zones of
the world economy. It is combined because each nation has its own cultural characteristics and particularities.

Although debate continues on the relationships between colonialism and imperialism, contemporary theorists of critical political economy observe that the most
developed zones of the world economy today are overwhelmingly in locations where capitalism developed first, such as the United Kingdom, the United States,
and other parts of Europe, although there are newer zones of rapid accumulation the world over, particularly in Brazil, Russia, India, and China (the BRIC
countries).

Imperialism is best understood in the context of opposition and struggles against it (Ness and Cope 2016). In the West, anti-imperialist struggles led to the
dissolution of the Austro-Hungarian, German, Ottoman, and Russian empires following World War I. Its momentum grew following the Russian and Chinese
revolutions as well as because of the disintegration of some European empires after World War II. Likewise, in the English-speaking metropoles, Black
Americans and the Irish have struggled against colonialism for decades, as have the Palestinians. These struggles have contributed to the popularization of anti-
imperialist resistance. Since the 1990s, the dissolution of the Soviet Bloc, complemented by the imposition of neoliberal systems globally, contributed to the
shift of struggles from between East and West to primarily between North and South. Furthermore, many of these struggles confront a more covert type of
empire in the form of neo-colonialism, exposing the abject divisions of income and opportunity within the world market.
PH O TO 4 . 2 Development should be about the redistribution of wealth. WUERKER © 2014 Politico. Dist. By ANDREWS MCMEEL SYNDICATION. Reprinted with
permission. All rights reserved.

Dependency School of Thought

One of the most popular bodies of critical development theories that try to understand how colonialism and imperialism have shaped the world market is the
dependency school of thought. Dependency approaches are not a unified body of theory but a number of conflicting theories that emerged in the Global South,
primarily as a reaction to and critique of modernization theory (see Chapter 3).

The dependency tradition inspired a lot of excitement among progressive intellectuals and even became a dominant perspective in policy circles and in
university research centres in the 1960s and 1970s. It was appealing because it appeared to describe the widening inequalities that were emerging among the
core and peripheral countries in the wake of World War II. And it was unique insofar as it was the first major body of thought on capitalist development to
originate with thinkers from developing countries.

Critical political economist of development Jorge Larraín (1989) argues that there are two main approaches in the dependency tradition. On the one hand,
theorists such as Raúl Prebisch, André Gunder Frank, and Samir Amin conceive capitalism as a world system characterized by inherent duality—a centre–
periphery dichotomy—which supposedly determines two radically different development possibilities. While this group of theorists are diverse, they are united
by a central idea that unequal exchange in the international market system contributes to the transfer of resources from peripheral nations to core nations
under terms that are more beneficial to the latter (Larraín 1989).

The concept of unequal exchange was first introduced by Raul Prebisch (1950) and the Economic Commission for Latin America (ecla) to explain the
supposed concealed exploitation in international trade between developed and developing nations. Prebisch saw considerable differences between the
developed centres and developing peripheries in terms of who were the producers of manufactured goods and who were the producers of primary commodities.
He theorized that in the world trade system the relative price of a unit of a primary commodity tends to decline over time compared to the price of a unit of
manufactured product. These “declining terms of trade” mean that most of the value-added is produced in the rich countries that industrialized first.
Countries that produce primary commodities have to extract more and more, faster and faster, in order to maintain the same standard of living, that is, to be
able to purchase imports. As such, writing in the 1950s, Prebisch observed that industrialized nations rather than developing countries receive the lion’s share
of benefits of international trade.

André Gunder Frank and Samir Amin are two of the best-known dependency thinkers of a more radical bent. Gunder Frank posited a theory of
underdevelopment in which the “core” regions actively underdevelop the periphery, although he never made clear by what mechanism wealth was transferred.
Later dependency theorists such as Samir Amin framed unequal exchange in terms of the transfer of value from peripheries (developing countries) to centres
(developed countries) as a result of the differences in the price of labour. In this regard, the unequal gains from trade resulted in unequal development.
Importantly, Gunder Frank and Amin posited that since “normal” capitalist development was impossible in the peripheral countries, the only way to escape the
trap of underdevelopment was through delinking from the world economy, preferably through socialist revolution.

Another important contribution to dependency thinking is the “world systems” school of Immanuel Wallerstein, who, while still advancing a theory of unequal
exchange, conceived of the relationships of core and periphery in a less mechanistic fashion than some of his peers. Rather than a duality, Wallerstein proposed
that the “world system” was characterized by a tripartite system composed of the core, periphery, and semi-periphery in which a select group of nations—the
Newly Industrializing Countries, such as the Asian Tigers—were able to achieve a limited degree of development through industrialization.

In contrast to the first group of dependency scholars, Larraín (1989) argues that there is another body of class relational, dependency scholars such as
Fernando Henrique Cardoso, Enrique Faletto, Osvaldo Sunkel, Celso Furtado, José Gabriel Palma, and Peter Evans, who propose that the capitalist world
system has a conditioning influence on political choices available to different states and that these choices must be specifically and historically analyzed within
concrete social formations and national boundaries. These scholars tend not to emphasize international market relations and transfer of resources through
trade as the decisive basis of exploitation but look instead into the internal relations of production and class conflicts as crucial elements to determine how
external influences operate and are internally redefined. These authors can be broadly categorized within the tradition of “dependent development” and argue
that some economic development, albeit exclusionary of the poor, is possible within the broader context of dependency.

Economists who were inspired by the dependency tradition argued that the solution to these inequitable terms of trade is for less developed nations to embark
on import substitution industrialization and lessen their reliance on industrialized nations as purchasers of primary commodities. Like the early stages of
industrialization and economic development in developed nations, they recommend that the governments of developing countries in the periphery of the world
economy use protectionist strategies and subsidize producers in various ways in order to protect their local industries. One of the most celebrated examples of
this kind of dependency thinking is Peter Evans’s (1979) analysis of the “triple alliance” in Brazil during that country’s economic miracle in the 1960s. Evans
described a three-way alliance organized by the state and which included foreign multinationals and large local firms that was able to push into more complex
forms of local industrial production like petrochemicals and automobiles.

CRITICAL ISSUES
Box 4.4 Cuba: An Example of Delinking?
The Cuban revolution is one of the longest standing experiments in “delinking” from the world economy. In 1959, Fidel Castro, his revolutionary 26th of July
Movement, and its allies won a victory against the military dictatorship of Cuban President Fulgencio Batista. After the revolution, tension between the
United States and Cuba escalated as the government confiscated and nationalized American-owned refineries in Cuba. In response, the United States
placed an embargo on exports to Cuba. This embargo has never been lifted.
Delinked from the US, the Cuban government was supported by the Soviet Union, which supplied the island with essential supplies such as energy (e.g.,
oil and gas) and fertilizer in exchange for tobacco and sugar and other primary commodity exports. When the Soviet Union fell in 1991, the Cuban economy
nearly collapsed. Cuba entered into what is known as the “Special Period” between 1991 and 2000. During this time, the distribution of basic goods was
severely restricted. Many Cubans left the island on makeshift rafts known as “balseros” and ended up in the United States. Thanks to tourism, the Cuban
economy has since recovered.
Although the Cuban economy has been isolated from the world economy, it has managed to achieve impressive scores on the Human Development
Index despite its high level of poverty. The Cuban health system has won particularly critical acclaim. Centred on the delivery of primary (or preventative) care
in communities, it is one of the most cost-effective in the world. In terms of health outcomes, Cuba ranks the highest among the countries of Latin America
and the Caribbean.
The Cuban model raises a critical question about the role of the state in development. The Cuban experience demonstrates that there is no perfect
model of “development.” Like China, the Cuban government has been criticized for the violation of human rights. But its government is “effective” depending
on how it is being judged. For example, when Hurricane Katrina hit the southern US in 2005, an estimated 1800 US citizens—most of them Black—lost
their lives. The same year, Cuba was hit with an even stronger hurricane, but only 15 people lost their lives. The state stepped in to coordinate an emergency
response. Comparing the examples of the roles of the US-American and Cuban states in disaster relief prompts the question: what is the role of the state in
securing the health, safety, and well-being of its citizens?

The Impasse Debate and Neoliberalism

While scholars inspired by the dependency tradition made rich contributions to our understandings of inequality in the world market today, this school of
thought eventually declined as a result of three historical developments: (1) the collapse of the dualist tradition of dependency with the rise of the Newly
Industrializing Countries, (2) the rise of neoliberalism, and (3) the fall of the Soviet Union and the Eastern Bloc.

First, the dualist tradition argued that “normal” capitalist development was impossible in the periphery unless the country’s economy was “delinked” somehow
because of war or another form of market restriction, including socialist revolution. The problem, according to Marxist historian Robert Brenner (1979), was
that the scholars of the dualist approach to dependency did not understand the social relations of capitalism correctly, simply focusing on the way that
commodities circulate (through international trade) rather than how they are produced. Brenner observed that capitalist development is as impossible to
achieve everywhere as it is unlikely, given its combined and uneven nature as described above. His basic point was that we should not expect capitalist social
relations to thrive everywhere, since the production of social wealth under capitalism depends on mass immiseration. But nor should we expect that it is
impossible for capitalist social relations to develop elsewhere, as the industrialization of countries such as Mexico, Turkey, Brazil, India, and China demonstrate.
Indeed, the relocation of manufacturing activities to low-wage zones of the world economy has led to deindustrialization in the Global North.

Second, in the historical context of the fall of the Berlin Wall, the critical political economy approach of development studies also faced an “impasse” (Booth
1985). Since the dependency tradition was dominated by the dualist conceptions, many scholars began to argue that the theories of underdevelopment and the
world system left little room for the agency of developing countries. But instead of returning to classics such as the class relational approach of Cardoso and
Faletto and others, most retreated from talking about class altogether, abandoning the idea that it was possible to understand any “grand narrative” at all.
This intellectual movement gave rise to what is sometimes called “post-Marxism” and post-development theory (Chapter 5), which shares much with Marxism
in terms of the criticism of capitalism but tends to differ in terms of the means to construct alternatives. While Marx and Marxists tend to argue that “old”
social movement actors such as trade unions and socialist political parties remain important actors in struggles to achieve alternatives to capitalism, post-
Marxists and post-development scholars argue that power in those organizations is too centralized and we need “new” social movements and a “movement of
movements” along the lines of the World Social Forums (see Chapters 5 and 7).

Third, more and more scholars and practitioners began to question dependency approaches in the events that led up to the fall of the Berlin Wall in 1989 and
the subsequent dissolution of the Soviet Union and its satellites (with the exception of Cuba and North Korea). While there are many debates about the
relationship between Marx’s original theories and the way that others have tried to interpret and practise them (that is, “actually existing socialism”), suffice it
to say that even Marx toward the end of his life wrote that “what is certain is that [if they are Marxists], [then] I myself am not a Marxist” when he read how
other people interpreted his work. Indeed, while Marxism is often presented as a homogenous body of thought, the Marxist tradition is as diverse as other
intellectual and political traditions such as liberalism (compare, for example, Friedrich Hayek, John Stuart Mill, and Mary Wollstonecraft). The Marxist
tradition has become increasingly distanced from the Stalinist interpretation that dominated Marxist policy and practice in the global North and South during
the reign of the Soviet Union. Since the early 2000s, pro-democratic, feminist, anti-colonial, anti-racist, and pro-queer interpretations of Marxism have
flourished.

With the rise and fall of neoliberalism, however, particularly in the wake of the financial crisis that struck the heart of “the Empire” in 2007–8, more and more
scholars and activists are also returning to the classics to try to understand the contours of capitalism and to inspire plans of how to get beyond it.
New Directions in the Critical Political Economy of
Development

The critical political economy of development remains a vibrant field of research. While Marxist analyses fell out of
favour with the fall of the Berlin Wall and the rise of the Washington Consensus in the 1980s, “socialism” was the
most searched term in 2015 in the Merriam-Webster dictionary. There are many exciting areas for research and
activism. Two are highlighted here.

Privatization as Accumulation by Dispossession

David Harvey has developed an influential interpretation of capitalist development highlighting the concept of
“accumulation by dispossession.” Drawing on an earlier interpretation of Rosa Luxemburg (1913/1951), Harvey
argues that Marx rightly highlights processes of capital accumulation “based upon predation, fraud, and violence”
but incorrectly imagines them to be exclusively features of a “primitive” or “original” stage of capitalism. Harvey
points to the continuity of predatory practices, which is better captured in the concept “accumulation by
dispossession” (Harvey 2003, 144).

Harvey is particularly concerned about the neoliberal process of privatization, which entails the release of a set of
assets “at very low (and in some instances zero) cost” formerly owned by the state, which can then be seized by
private capital and used for profit (2003, 149). Examples include the privatization of infrastructure and services
that were previously provided on a not-for-profit basis for little to no cost, such as health, education, housing,
water and sanitation, electricity, recreation, communications, and security services. According to Harvey, this more
contemporary form of “accumulation by dispossession” became mainstream through a US-led neoliberal ideology
that repurposed the role of the state and was administered by powerful multilateral institutions such as the World
Bank and the International Monetary Fund (imf) through processes like structural adjustment programs.
Therefore, “accumulation by dispossession” goes beyond the privatization of state or public resources and instead
speaks to their acquisition by corporations with headquarters in the US and other core economies.

Harvey (2003, 162) further argues that accumulation by dispossession in the neoliberal age produced various
struggles with new characteristics. These include struggles by the Ogoni people against Shell Oil, environmental
campaigns, and the many anti-IMF austerity riots of the 1980s. These social movements often do not occur under
the auspices and leadership of trade unions and other working-class entities; rather, they come from a “broad
spectrum of civil society.” As such, these struggles often consist of participants with varying social interests and
aggregate in “a less focussed political dynamic of social action”—for example, the revolutionary socialist movements
of the post–World War II period throughout the developing world.

Harvey recognizes the potential of these struggles to generate revolutionary changes and “reclaim the commons”
(see Box 4.1 on enclosures) because they are engrained in the fabric and experiences of daily life. He notes that
although a “danger lurks that a politics of nostalgia for that which has been lost will supersede the search for ways
to better meet the material needs of impoverished and repressed populations … it is often relatively easy to effect
some level of reconciliation” between traditional struggles (e.g., as advanced by trade unions and socialist political
parties) and the more contemporary fight against accumulation by dispossession. As he writes, solidarity is never
guaranteed but must be fostered intentionally: “The connectivity between struggles within expanded reproduction
and against accumulation by dispossession must assiduously be cultivated” (2003, 179) by linking together
particular struggles into an anti-capitalist framework.

While Harvey’s work has helped to open up new questions about the continuities and differences between the past
and present forms of accumulation, his work has been the ground for fertile debates on the contours of
contemporary capitalism. For example, in his book Red Skin, White Masks, Indigenous scholar from the Dene
nation Glen Coulthard (2014) emphasizes that we must also see the continuing occupation of Indigenous land as
part of the ongoing process of capitalist accumulation by colonial dispossession. Harvey’s insights can also help us to
understand how struggles over public goods such as public transportation, education, and health care can erupt
into mass movements for political change.
 CRITICAL ISSUES
Box 4.5 How a Transit Fare Increase in Chile Began a Mass Struggle against Inequality
Chile has been touted as the neoliberal success story of Latin America because it has experienced significant
increases in its gdp over the past 30 years. However, the benefits of economic prosperity have not been
shared equally, with great disparity between the elites and the masses. In October 2019, following the
announcement of a 30 Chilean pesos transit fare increase (about five cents Canadian), as a form of protest
young people began jumping turnstiles, evading payment, and shouting slogans to oppose what they believed
to be an unfair decision. Over the ensuing days, more people joined mass protests all over the capital city
Santiago, particularly in Plaza Italia, which saw more than a million people gathered in one of the country’s
largest demonstrations in all its history. Chileans concentrated their anger at the perceived profit-seeking
metro, formerly a source of pride for the nation, which had become a symbol of a fragmented city built on
classism and inequality. As the government refused to revoke its decision, some protests became disruptive—
dozens of transit stations were severely burnt and buses, trains, and other infrastructure damaged. Additionally,
police clashed with protestors, resulting in loss of life, injuries, and unquantified damages. Why did a seemingly
insignificant fare increase spark such a massive movement? The fare increase was just the tipping point after
years of frustration of living in an unequal society where wealth was present yet privatized benefits such as
pension schemes left many elderly persons living in abject poverty, an example of a system that only benefitted
the few. While the Chilean government has proposed legislative reforms to address the demands raised by
demonstrators, most notably the possibility of rewriting the national constitution imposed by the country’s pro-
business dictatorship in 1980, protestors have continued to press for broader, system-wide changes in areas
such as health, education, and inequality reduction. History will tell if this continuous pressure from the masses
will result in lasting structural changes in Chile.

Intersectionality: Gender, Class, Race

Critical political economy of development theorists inspired by anti-colonial Marxism and feminism argue that
capitalist forms of development will not lead to equality between women and men (and non-binary individuals) and
that overturning heteronormative patriarchy will require feminist, socialist, and anti-colonial struggles. According
to this view, there is no such thing as a natural division of labour within the working classes, such as those that we
experience based upon our genders, ethnicities, “races,” religions, (dis)abilities, or sexual orientations. Rather,
these divisions both pre-existed the arrival of capitalism (e.g., on caste and class system in India, see Singh 2014)
or were imposed by capitalism (e.g., on the patriarchal social relations that were imposed on the matriarchal First
Nations by the British and French colonizers in Canada, see Maracle 2017). Crucially, capitalist exploitation also
depends on unpaid work in the domestic sphere—performed largely by women—including the nurturing of
children, housework, the refuelling of labouring bodies, and caring for the sick and elderly. These activities—known
as social reproduction—are integral to the process of exploitation.

This critical view also exposes that many of the advances brought by gender mainstreaming have tended to benefit
a few women at the top of global hierarchies (e.g., female-identified bosses) rather than the majority of women. For
example, the most intimate class divide is found in the homes of the wealthy families the world over. Wealthy
families buy the services of others—usually women—to do social reproductive labour. Wealthy women therefore
may be better able to compete with men at work and become chief executive officers of major corporations or
heads of state because they can afford to hire a nanny, a cook, and/or a gardener (Ehrenreich and Hochschild
2003). This form of mainstream, liberal feminism increases the social distance among women (including cis and
trans women) rather than promoting greater equality, in all but legal forms.

CRITICAL ISSUES
Box 4.6 The International Women’s Strike
The International Women’s Strike or Paro Internacional de Mujeres is a movement that was born out of local
 struggles in South America and Europe in late 2016 to oppose the gamut of challenges women faced daily.
For example, women in Argentina staged various protests against the increasing levels of gender-based
violence after the rape and murder of a teenaged girl, while in Poland women went on strike to oppose the
government’s decision to criminalize abortions. These local struggles were propelled on the international stage
when women in Poland and Argentina began virtually coordinating joint protest actions such as strikes and
rallies, which in 2017 became formally known as the International Women’s Strike. Coinciding with
International Women’s Day on 8 March, women from more than 50 countries took to the streets under the
theme “Solidarity is our weapon,” as well as joining in solidarity with other women on the International Day for
Elimination of Violence against Women, among other joint ventures. This non-violent approach to achieving
social change was used in early struggles by women in Iceland to win equal pay for equal work. Despite the
fact that 90 per cent of women went on strike for one day in Iceland to achieve this victory in 1961, only very
recently has the legislation been enforced.

Socialist feminists embrace legal forms of equality but also struggle to create the conditions under which these legal
rights can be enjoyed by all women. They argue that this can only be done by decommodifying basic services such
as health care, housing, childcare, and water and sanitation. This is why socialist feminists tend to argue that the
mainstream concept of intersectionality, which considers how different forms of oppression overlap, is simply
inadequate. It fails to explain how the relations of oppression and exploitation relate to each other. Although these
different social locations are experienced together and cannot be separated in our experiences (i.e., in the same
way one cannot separate the milk from the coffee once it is poured), Marxist feminists such as Himmani Bannerji
(2005) argue that relations of oppression such as gender and race are mediated by the class relation in capitalist
societies. For a full vision of an intersectional, anti-capitalist feminism that takes class seriously and leaves no one
behind, see Feminism for the 99% (Arruzza, Bhattacharya, Fraser 2019). In this manifesto, the authors argue that
mainstream, liberal feminism is in decline and that we need more than a feminism that aims to break the “glass
ceiling.” They ask provocatively of that form of feminism: “Who is picking up the glass?”
Summary

This chapter has presented critical political economy approaches to development that are inspired by Marxism.
These theories are united by a fundamental questioning of the idea that capitalist forms of development are
sustainable over the long term or deliver justice and equality. The chapter dealt with critical political economy of
development approaches’ central arguments: the relationships between capitalism, colonialism, and imperialism
and how the class relations of exploitation intersect with other forms of oppression. We also encountered some of
the debates that have taken place among critical political economy theorists, such as debates within and about the
dependency school of thought and the relationships between Marxism and “actually existing socialism.” We also
sought to explain why Marxist-inspired development theories fell out of favour with the collapse of the
development project in the 1980s and the rise of post-development theory and why Marxist-inspired theories may
be on the rise again. We also learned that there are numerous anti-colonial, anti-racist, feminist, and pro-queer
movements all over the world—both past and present—that have been inspired by Marxism. Finally, we outlined
two different themes that deserve future exploration: accumulation by dispossession and the relationships
between class, race, and gender. In sum, critical political economy of development theories aim to provide a
historically situated explanation of global inequalities and argue for new mode(s) of production that produce for
human need rather than for profit. And as award-winning novelist and eco-socialist activist Arundhati Roy (2002)
argues, “Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”