UNDERSTANDING POVERTY

LECTURER: MR. EDWIN OSEBE AGASA

Ph.D CANDIDATE (DEVELOPMENT STUDIES, J.K.U.A.T)

edwinagasa@eaglewingsconsultinggroup.com

www.eaglewingsconsultinggroup.com

WALT WHITMAN ROSTOW

• According to ’The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge’, the process of economic development passes through five uneven phases: traditional society, pre-conditions for take-off, take-off, drive to maturity, and the age of high mass consumption.

• To identify each stage for each country, it was necessary to delve more deeply into historical details. Rostow thought the key lay in identifying features common to each stage. He identified "leading sectors" that first benefited from technical innovation. He examined how production in these sectors as well as the associated management and work attitudes spilled over into other sectors. Investment in production processes and changed attitudes toward borrowing and lending transform the economy, causing changes in prices and the terms of trade between agriculture and industry. The various stages could be identified and even dated by close analysis of disaggregated data.

WALT WHITMAN ROSTOW

• Stage 1 Traditional Society - The economy is dominated by subsistence activity. Output is consumed by producers; it is not traded. Trade is barter where goods are exchanged directly for other goods. Agriculture is the most important industry. Production is labour intensive using only limited quantities of capital. Technology is limited, and resource allocation is determined very much by traditional methods of production.

• Stage 2 Transitional Stage (Preconditions for Takeoff) Increased specialization generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. Entrepreneurs emerge as incomes, savings and investment grow. External trade also occurs concentrating on primary products. A strong central government encourages private enterprise.

WALT WHITMAN ROSTOW

• Stage 3 Take Off Industrialization increases with workers switching from the agricultural sector to the manufacturing sector. Growth is concentrated in a few regions of the country and within one or two manufacturing industries. The level of investment reaches over 10% of GNP. People save money. The economic transitions are accompanied by the evolution of new political and social institutions that support industrialization. The growth is self-sustaining as investment leads to increasing incomes in turn generating more savings to finance further investment.

• Stage 4 Drive to Maturity The economy is diversifying into new areas. Technological innovation is providing a diverse range of investment opportunities. The economy is producing a wide range of goods and services and there is less reliance on imports. Urbanization increases. Technology is used more widely.

WALT WHITMAN ROSTOW

• Stage 5 High Mass Consumption The economy is geared towards mass consumption, and the level of economic activity is very high. Technology is extensively used but its expansion slows. The service sector becomes increasingly dominant. Urbanization is complete. Now, multinationals emerge. Income for large numbers of persons transcends basic food, shelter and clothing. Increased interest in social welfare.

WALTER RODNEY

Walter Rodney’s How Europe Underdeveloped Africa, is a classic of anti-imperialist literature. At the core is the concept of development and contemporary Marxism as the main theoretical underpinning. Both concept and theory is utilized to explore, evaluate and explain the historical exploitation and the damage done to African development.

He denounces the global capitalist system early in the literature by “reinforcing the conclusion that African development is possible only on the basis of a radical break with the international capitalist system,” (Rodney, 1973).

From a historical materialist perspective, Rodney delivers the argument that both European power politics and European economic exploitation and oppression led to the impoverishment of African societies.

WALTER RODNEY

• Under the leadership of Chairman Otto Von Bismark of Germany, the partition of Africa was done in Germany. Following this revelation, Rodney introduces the exploited and oppressed slave trade era and how the slave trade led to the decline of economic and technological development in Africa prior to and during colonization.

• The main theory used for analysis is historical materialism or Marxism. Historical materialists believe power and private ownership based in economic and material production must be abandoned because it leads to the concentration of power among the capitalists, or the elites. It also leads to alienation, the creation of ideology, class structure and social inequality. Karl Marx is the founding father of historical materialism, for his theory would greatly influence Frederick Engels, Antonio Gramsci, V.I. Lenin, W.E.B. Dubois and Walter Rodney. Marx believes man possesses an unlimited capacity to develop and reach his highest potential under social circumstances that are equal (Zeitlin, 2001:140). He believes any social circumstance that represses man’s creative capabilities is virtually harmful and should not be (Zeitlin, 2001:140).

WALTER RODNEY

• As a historical materialist, Walter Rodney focuses on colonialism, imperialism and liberation struggles (Katz-Fishman, Gomes and Scott, 2007:2838). With a Marxist perspective, he states that “power is the ultimate determinant in human society, being basic to the relations within any group and between groups. It implies the ability to defend one’s interests and if necessary to impose ones will by any means available. In relations between peoples, the question of power determines maneuverability in bargaining, the extent to which a people survive as a physical and cultural entity. When one society finds itself forced to relinquish its power entirely, that is a form of underdevelopment,” (Rodney, 1973: Ch.6:115)

WALTER RODNEY

• Rodney utilizes this theory throughout the book. For example, in chapter three: Africa’s Contribution to European Capitalist Development—the Pre-Colonial Period, Rodney lifts up Europe’s assumption of power to make decisions within the international trading system (Rodney, 1973: Ch.3:3). He illustrates that “international law,” which regulated the conduct of nations on the high seas was simply European law and Africans did not participate in its conception and Africans were really exploited, for the law identified them as transportable merchandise (Rodney, 1973: Ch.3:3). These victims known as transportable merchandise came to be known as slaves. Rodney notes that Europeans used the superiority of their ships and cannon to gain control of the world’s waterways, commencing in the 15th century.

WALTER RODNEY

• This ownership and power eventually leads to domination of the seas, transforming several parts of Africa and Asia into economic satellites (Rodney, 1973: Ch.3:3). Rodney also utilizes Marx’s labor theory of value throughout the book. For example, chapter five: Africa’s Contribution to the Capitalist Development of Europe—the Colonial Period, Rodney highlights colonialism as not simply a system of exploitation, but a system whose essential purpose was to return the profits to the “mother country” (Rodney, 1973: Ch.5:1). Earlier in the chapter he states that “the exploitation of land and labor is essential for human social advance, but only on the assumption that the product is made available within the area where the exploitation takes place,” (Rodney, 1973: Ch.5:1). However, in Africa, this did not occur. Yes, there was ongoing expatriation of surplus produced by African labor out of African resources. Yet, “it meant the development of Europe as part of the same dialectical process in which Africa was underdeveloped” (Rodney, 1973: Ch.5:1).

IMMANUEL WALLERSTEIN

• According to Wallerstein, the modern nation state exists within a broad economic, political, and legal framework which he calls a “worldsystem.” Just as individual behavior cannot be understood without reference the sociocultural system in which they are members, individual societies or nation states cannot be understood without reference to the world-system in which they are embeded. Modern nation states are all part of the worldsystem of capitalism, and it is this worldsystem that Wallerstein seeks to understand.

IMMANUEL WALLERSTEIN

• Wallerstein believes that there are only three basic types of social systems.

• Mini-Systems

• World Empire

• World Economies

IMMANUEL WALLERSTEIN

• Mini-Systems ; These are the small, homogenous societies studied by anthropologists. Hunting and gathering, pastoral, and simple horticultural societies are relatively self-contained economic units, producing all goods and services within the sociocultural system itself.

IMMANUEL WALLERSTEIN

• World Empire; This system has an economy that is based on the extraction of surplus goods and services from outlying districts. Much of this tribute goes to pay for the administrators who extract it and for the military to ensure continued domination, the rest goes to the political rulers at the head of the empire.

IMMANUEL WALLERSTEIN

• World Economies; Unlike world-empires, the world-economies have no unified political system; nor is its dominance based on military power alone. However, like a world-empire, a world-economy is based on the extraction of surplus from outlying districts to those who rule at the center.

IMMANUEL WALLERSTEIN

• From the start, Wallerstein argues, capitalism has had a division of labor that encompassed several nation state. The capitalist worldsystem began in Europe in about 1500 and under the spur of the accumulation of capital, expanded over the next few centuries to cover the entire globe. In the process of this expansion the capitalist world system has absorbed small mini-systems, world-empires, as well as competing world-economies. The capitalist world-economy was created by establishing long-distance trade in goods and linking production processes worldwide, all of which allowed the significant accumulation of capital in Europe.

IMMANUEL WALLERSTEIN

• But these economic relationships were not created in a vacuum. The modern nation state was created in Europe along with capitalism to serve and to protect the interests of the capitalists. What was in the interest of early European capitalists was the establishment of a world-economy based on an extremely unequal division of labor between European states and the rest of the system. Also in the interest of early European capitalists was the establishment of strong European states that had the political and military power to enforce this inequality.

IMMANUEL WALLERSTEIN

• For Wallerstein, the capitalist world-economy is a mechanism of surplus appropriation that is both subtle and efficient. It relies upon the creation of surplus through constantly expanding productivity. It extracts this surplus for the benefit of the elite through the creation of profit. The capitalist world-system is based on a twofold division of labor in which different classes and status groups are given differential access to resources within nation states, and the different nation states are given differential access to goods and services on the world market. Both types of markets, both those within and those between nation states, are very much distorted by power.

IMMANUEL WALLERSTEIN

• CAPITALIST WORLD ECONOMY; Wallerstein divides the capitalist world-economy into:

• Core states

• Semi-peripheral

• Peripheral areas

IMMANUEL WALLERSTEIN

• The peripheral areas are the least developed; they are exploited by the core for their cheap labor, raw materials, and agricultural production. The semi-peripheral areas are somewhat intermediate, being both exploited by the core and take some role in the exploitation of the peripheral areas. In the recent past they have been expanding their manufacturing activities particularly in products that core nations no longer find very profitable.

IMMANUEL WALLERSTEIN

• The core states are in geographically advantaged areas of the world—Europe and North America. These core states promote capital accumulation internally through tax polity, government purchasing, sponsorship of research and development, financing infrastructural development (such as sewers, roads, airports—all privately constructed but publically financed), and maintaining social order to minimize class struggle.

• Core states also promote capital accumulation in the world-economy itself. These states have the political, economic, and military power to enforce unequal rates of exchange between the core and the periphery. It is this power that allows core states to dump unsafe goods in peripheral nations, pay lower prices for raw materials than would be possible in a free market, exploit the periphery for cheap labor, dump in their environment, abuse their consumers and workforce, erect trade barriers and quotas, and establish and enforce patents.

IMMANUEL WALLERSTEIN

• It is the economic, political, and military power of the core that allows significant capital to be accumulated into the hands of the few, the capitalist world-system that produces and maintains the gross economic and political inequalities within and between nations.

• As with capitalism within nation states, this unequal power between nation states is not uncontested. It is the subject of struggle. There are internal contradictions that with the passage of time cause political and economic instability and social unrest. Eventually, according to Wallerstein, a world wide economic crisis will be reached and the capitalist world-system will collapse, opening the way for revolutionary change.