Baran-Frank's Dependency Thesis:

Baran-Frank's Dependency Thesis:

For BARAN:

Basis: He views the underdevelopment from a global perspective. Thus, the theory is based on

• monopoly capitalism
• the theory of imperialism.

His world is a totality of advanced and backward capitalist countries and socialist countries which interrelate with one another. In a world of an unequal capitalist system, underdevelopment is a condition which arises in the course of capitalist development.

THE THEORY: Underdevelopment or backwardness of any country is viewed as an externally induced phenomenon. It is evaluated in terms of imperialism. He is in favor of the argument that capitalist development of LDCs is impossible as these countries can't break out of a state of economic dependency.

Economic surplus & Exploitation: The concept of economic surplus is important In the process of economic development. For the existence of the capitalist order, existence and generation of surplus is indispensable.

However, in this case, relationship between developed &underdeveloped capitalist countries is one of exploitation. Surplus and generated in backward countries is siphoned off to developed capitalist country through various ingenious economic techniques of imperialism.

The three techniques of imperialism employed by Western European powers were

• economic aid,
• foreign investment,
• trade.

Far from being assistance for development; aid, investment and trade are different forms "of disguised redistribution of income to certain capitalists".

Anyway, surplus pumped out of LDCs is a sufficient condition for the "impossibility" of development of LDCs".

According to Baran, 20th Century monopoly capitalisn had a vested interest in maintaining backwadness and dependence in the periphery.

Thus, development in one part needed underdevelopment in the other.

The impact:

To have an aggressive and expansive monopoly capitalism, Baran places importance on the elite wealthy classes or clientele classes of LDCs. This is a class that either cannot or will not develop into an autonomous bourgeoisie and is, thus, incapable of establishing the capitalist mode of production.

Thus, exploitation of LDCs continues. Capitalism - without any accumulation of capital- prospers.

FOR FRANK:

Basis: He argues that it is quite absurd to look to western capitalism to sponsor development for LDCs. In this view, development and underdevelopment are 2 of the same global capitalist coin.

Contemporary underdevelopment is peculiar to its unique type of socioeconomic structure that results from the dependency of LDCs on DCs. Thus, "development of underdevelopment " is the direct result of incorporation Of LDCs into capitalist system on a world scale as a whole.

Development of underdevelopment:

By development of underdevelopment, Frank means a continuous process by which capitalist contradictions as well as capitalist development generate underdevelopment in the periphery.

Expropriation: Metropolitan capitalism depends on the expropriation of the surplus generated in the peripheral satellite countries. In this process of expropriation of surplus, he argues that the old style colonialism has simply given way to neocolonialism dominated by the IMF, the World Bank, MNCs and MNCs & TNCS.

Contradictions :

The contradictions that Frank refers here are two:

• expropriation/appropriation of the surplus
• the metropolis-satellite polarization.

Frank then goes on arguing that the structural essentials of economic development and underdevelopment are continuous and ubiquitous throughout the expansion and development of the capitalist system. Though there have been historical changes in different parts of the global economic system, the situation of underdevelopment persists even for centuries.

Major points:

Two major points are:

1. Latin American bourgeoisie is incapable of launching a democratic political system and independent national development. Frank calls them 'lumpen bourgeoisie' – a class which is Passive or active tool of foreign commerce and industry and whose interests are thus identical to those of metropolitan capitalists.
2. Secondly, underdevelopment is not due to the survival of archaic Institutions in Latin American society. Underdevelopment, according to him, was and still is generated by the very same historical process which generated economic developmenit: the development of capitalism self.

Thus, the Frank's thesis contradicts not only orthodox but also Marxist notion of pre capitalist modes of production which gave birth to capitalism.