According to Barry Clark, there are two perspectives that explain underdevelopment that are based on the writings of Marx: the diffusion theory and the dependency theory. Both involved the role of capitalism in limiting the distribution of resources to countries and the growth of the capitalist class who are the primary actors that prevent development.
Diffusion theory recognizes the role of capitalism in fulfilling the role of mobilization of resources and destruction of traditional social and political structure in favor of modernization. Karl Marx believes that it will promote economic development through innovations and cost-cutting measures. This phenomenon, then, would create the basis of a system that will eliminate poverty from the society.
Clark discusses the symbiotic relationship between industrialized countries and the least developed countries (LDCs). Due to capitalism, the mobilization of resources and goods from the developed nations spread across the world. The LDCs, then, are integrated to the ever-expanding global economy which would bring them the necessary tools to stimulate development. This will eventually turn into a worldwide industrial development which would create the foundations of the emancipation against capitalists.
Marx, during his time, argued that some states, particularly in Asia, suppressed the potentials of industrialization due to underdeveloped infrastructure that is vital to the development of industries. Calling this “oriental despotism” or the “Asiatic mode of production,” this avoids the penetration of capitalism into Asian countries, then preventing the vision of Marx for a worldwide industrial development.
Dependency theory involves the importance of an underdeveloped “periphery” of nations to serve as markets for excess goods and source of capitalist resources. This was both observed by Marx and Lenin about the attitudes of Western economies towards the East during the colonial period where most of the surpluses were placed to be sold. The theory was also confirmed by the collaborative practices of Western capitalists with the feudal landowners and owners of means of production in Asia, Africa, and Latin America. Various theories on “unequal exchange” and world systems also contextualize dependency theory on the lack of development by LDCs because of capitalism.
These two theories propose different development policies that distinguish them from each other. Diffusion theorists support the idea of building up the business class in LDCs to overthrow feudal oligarchs, making a worldwide proletariat revolution. On the other hand, dependency theorists are in favor of national autonomy of economy, collective economic self-reliance of states, economies being more domestic market-oriented, and a New International Economic Order. Radical view on free trade varies, ranging from imposition of protectionist policies for LDCs to elimination of such in order to build an industrial class.
The developmental state model provides an example of diffusion theory. Some of the main characteristics of the model include the primacy of economic development in the movement of the state, formulation of concrete objectives in terms of development and competence through observance of external economies in order to serve as bases for emulation, and rigid constriction of state intervention in accordance with preference over private property and the market.
Consequently, the formation of the Philippine economy as a vital base for the Western market proves the dependency theory. During the Spanish colonization, Manila became an entrepot for the Mexican galleon trade. This scheme was relied on so heavily by the Spanish-controlled economy that when it was halted, the local economy was shaken up. Meanwhile, the American occupation commercialized the Philippine agricultural sector to be able to produce cheaper products for the colonial masters. Such activities are still persistent as some of the biggest agricultural plantations in the country depend heavily on the foreign market. This is why the Western economic recession affected the growth of the Philippine agricultural sector within a certain degree.
Image source: Joseph Roger Clark