Is Development Possible In Capitalism?

By Douglas McDonald [re-blog from NSER]

Last Friday was the Debating Development conference, organized by the titular scholars of INET’s Young Scholars Initiative, a group coordinated by NSSR’s own Ingrid Kvangraven. The conference put many scholars of different regions and different theoretical perspectives in conversation. Although it was titled “debating development,” as NSSR economics professor Sanjay Reddy noted in his opening remarks, most of the perspectives presented were more intersecting than mutually exclusive, so the conference could also be understood as a means to compound or complexify perspectives, rather than adopt or discard them.

Ingrid Kvangraven of the Young Scholars Initiative and the NSSR introducing the conference
Ingrid Kvangraven of the Young Scholars Initiative and the NSSR introducing the conference 

Commodity Cycles and Pink Tides

The presenters in the first part of the conference were:

  • Rex McKenzie of Kingston University
  • Sanjay Ruparelia of the New School
  • Jennifer Olmstead of Drew University
  • Marcos Vinicius Chiliatto Leite of the Inter-American Development Bank

The presenters critiqued mainstream narratives of capitalist (non-)development for their irrational exuberance (to repurpose the phrase) and discussed the institutions of imperialism in Africa, and whether the BRICs countries would constitute a paradigmatic shift or a continuation of the imperialist status quo. Jennifer Olmstead discussed the underrepresentation of women in the economics profession and in economics statistics, and asserted the necessity of an interdisciplinary discourse that included things like political conflict in economic theories of development.

Rex McKenzie and Marcos Leite’s talks were particularly interesting in conjunction with one another, as they both presented the political stakes of the commodity cycle. By ignoring changes in commodity prices, the capitalist press can present basically arbitrary developments as unequivocal successes of different political regimes: an upswing in commodity prices is latched onto as evidence of capitalism’s success, while a downturn is transformed into a rhetorical cannonball to sink the ship of socialism.

We saw this first and most clearly in Rex McKenzie’s discussion of the “Africa Rising” narrative, a perspective advanced in The Economist and the financial press beginning in 2011 that advanced a picture of impending developmental successes in states across Africa. Professor McKenzie showed that the upswing in growth rates that underpinned this narrative was due almost entirely to the upswing of the commodity cycle — as the price of raw materials exported from Africa increased, so too did the growth rates of exporting countries. But as commodity prices fell during the downturn of the commodity cycle, those African countries returned to stagnation. Indeed, the “Africa Rising” narrative was discarded by its proponents by 2015 and lives on more as an example of the financial press’ inclination to put capitalism “in its best light” rather than as a compelling or well-considered perspective.

Leite discussed the political possibilities presented by the upswing of the commodity cycle that coincided with the “Pink Tide” in Latin America . As raw material exports from Latin America increased in price, leftist regimes gained sizable current account surpluses and were able to accomplish a number of social projects that increased the education level, decreased poverty, and decreased economic inequality. However, they did not succeed in altering their economy on a structural level, remaining dependent on commodity exports and vulnerable to the impending downturn of the commodity cycle.

Taking these presentations together we see the double standard maintained by the mainstream press, which allocates blame to left regimes during downturns of the commodity cycles, and credits free-market capitalism for its upturns. In “Africa Rising,” a retreat from socialism is credited for growth, but leftist Latin American regimes are lambasted as unmitigated disasters for the falling GDPs during the twenty teens. Of course, both cases can be more aptly explained by rising or falling prices of exports.

Political Possibilities

The second part of the conference was dedicated to presentations of theoretical frameworks with which to approach the study of development. The presenters were:

  • Anwar Shaikh of the New School
  • Jamee Moudod of Sarah Lawrence College
  • Ian Taylor of the University of St. Andrews
  • L.H.M Ling of the New School

As the first presenter and NSSR economics chair began his talk, “Development cannot just be a series of vignettes.” Industrial espionage, works councils, and industrial policies can account for some, but their repeated description cannot produce a theory of development, let alone of capitalism.

The discussion that followed these presentations became quite heated as the presenters vied to articulate the degree of flexibility and rigidity belonging to capitalism as a system. Shaikh was the most vocal proponent of the “basically rigid” school, while Ling hotly controverted him to emphasize its flexible aspects. The example of China was frequently returned to — did aspects of Chinese culture or its Communist past open up new room to maneuver within capitalism, or was China now simply capitalist, and would act basically similarly to any other capitalist country?

L.H.M. Ling presenting on post-colonialism
L.H.M. Ling presenting on post-colonialism

The implications of Shaikh’s “basically rigid” thesis were addressed with some difficulty and emotion. Because it would follow from its rigid structural tendencies that capitalism cannot be adequately reformed in the long run, the domain of political possibilities open to the concerned citizen can only consist of a) revolutionary praxis and b) political quietism. An emotional audience member cited the repentant slaveship captain who wrote “Amazing Grace” and joined the abolitionist struggle in England as someone who “made a difference” without overturning the system, but the panel seemed to agree that the end of slavery in England was much more due to developments in the British economy, such that slavery was no longer optimal economically, seemingly continuing to denigrate the possibility of reforming capitalism against its structural tendencies.

In the wake of Ian Taylor’s presentation on dependency theories, the examples of Japan and North Korea were brought into this discussion of autonomy and flexibility within capitalism. If capitalism was basically rigid, and the persistent co-existence of both development and underdevelopment is one of its structural features, then how did these countries manage to so magnificently develop?

The consensus emerged that these countries were indicative of both rigid tendencies and wiggle room: The USA needed strong capitalist bastions to stem the spread of Communism and so extended its domestic market instead of its military to Japan and South Korea (that is to say, Southeast Asian development was consistent with, not exceptional from, imperialism as a tendency within capitalism). At the same time, autonomous national actors determined the form and permitted the incredibly impressive speed with which Japan and South Korea industrialized.

The attribution of determinism to capitalism was further tempered with developments in the discussion later on, when Jamee Moudod and Anwar Shaikh differentiated between “capitalism” and “the capitalist class.” Professors Moudod and Ling noted how disimilarities between segments of the capitalist class can open space for progressive struggle; as an example, Jamee Moudod cited the history of mandatory seatbelt laws in America: Insurance companies sided with progressive regulators against the automobile industry, and mandatory seatbelts in cars became an embedded fact of American capitalism. Social movements, it was additionally agreed, can exert a great deal of pressure and accomplish significant political change within capitalism. As Shaikh put it, “The history of capitalism is the history of social movements.”

Sanjay Reddy, following the conference, expressed a little disappointment that the conference veered from short-term pragmatic concerns to a focus on transcendent structural tendencies. In addition to understanding the tendencies of capitalism and the degree of their inexorability, development economics must also approach definite and solvable problems in specific and varied contexts. This aspect was underaddressed in his eyes in the second half of the conference. At the very least, the perspectives presented on Friday established the breadth of what development economics can be.

Editor’s note: A previous version stated that the U.S. extended its export market to South Korea. This has been changed by the author to “domestic market.”

This article was originally published on the New School Economic Review blog (April 29th 2016)

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