Political Econ of Growth

Paul A. Baran

• Publisher: Monthly Review Press
• Year: 2019
• ISBN:
  9781583678022
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

One of the most influential studies ever written in the field of development economics, this book has, since first publication in 1957, bred a whole school of followers who are producing further works along the lines indicated by Baran. Concerned with the generation and use of economic surplus, it analyzes from this point of view both the advanced and the underdeveloped countries. A work in political economy rather than solely in economics, this book treats the economic transformation of society as one facet of a total social and political evolution.

SEVEN

Towards a Morphology of Backwardness, II

WE may now try to complete our rapid survey of the mode of utilization of the underdeveloped countries’ economic surplus, dealing simultaneously with the last of the earlier listed arguments in favor of foreign enterprise. For this we must inquire briefly into the use made of such economic surplus as is appropriated by its fourth claimant outside of agriculture: the state. The amounts involved obviously vary from country to country. In some countries they are as small as, say, in most of Latin America or in the Philippines; in others they are as large as, for instance, in Venezuela and some of the Near Eastern petroleum areas. The variations are no less pronounced with regard to what we have called the economic locus of the government revenues, and to the (closely related to it) methods of their collection. In a number of countries—again typically in the petroleum-producing areas—the government receipts constitute easily identifiable transfers of economic surplus; elsewhere they form additions to the economic surplus based on a corresponding curtailment of the share of total output available for mass consumption. In the former cases they stem for the most part from taxes, export duties, and royalties paid largely by foreign enterprise; in the latter, their sources are various, mainly indirect levies imposed upon the population either via tariffs on imports and excises on mass consumption goods or via inflationary issuance of currency.¹

While there are also considerable differences in the manner in which revenues are spent by the individual governments, the diversity in this respect is very much smaller. In fact, the countries in question can be easily grouped under three broad headings: first, the vast colonial territories that are directly administered by the imperialist powers (nearly all of Africa, parts of Asia, and a few, relatively small, areas in America); secondly, the overwhelming majority of the backward countries ruled by regimes of a clearly pronounced comprador character; and thirdly, a few underdeveloped countries having governments of what might be called a “New Deal” orientation—principally India, Indonesia, and Burma.²

As far as the first group is concerned, there has been since the end of the war a great deal of publicity to the effect that the current administration of the colonies on the part of the imperialist powers is altogether different in spirit, purpose, and outcome from what it used to be in the now allegedly liquidated past. Indeed, as President Truman in announcing the celebrated Point Four of his 1949 Inaugural Address promised “to supply the vitalizing force to stir the peoples of the world into triumphant action, not only against their human oppressors, but also against their ancient enemies—hunger, misery and despair,” so the governments of Britain, France, Belgium, and Portugal were advertising ten-year plans of colonial development the professed purpose of which was the advancement of the health and welfare of the peoples inhabiting the territories under their control.

Yet, the strategies of the United States’ activities under the Point Four program and of the Western European powers’ efforts under the colonial development schemes were inspired by kindred spirits. In the Point Four program “particular emphasis … is given … to the stimulation of a greatly expanded flow of private investment.”³ Similarly the Western European governments pledged that “every effort is being made, and will continue to be made, to encourage the inflow of private capital. It is to be hoped that private investors will fully realize the advantages that investment in the territories can offer.”⁴ In fact, it would seem that the maximization of those advantages is what has been primarily on the mind of the architects of Point Four and of the Western European colonial planners. Apparently still interested—to use Cecil Rhodes’s famous saying—“in land, not niggers,” the blueprints of “triumphant action” in the colonies place their main accent on the development of raw materials. That such is the case with regard to the Point Four program is clearly stated by the agency entrusted with its administration: “Location, development and economical processing of mineral and fuel resources is a major aspect of the program of technical cooperation for economic development of underdeveloped countries”—presumably because “many underdeveloped mineral resources in the areas which will participate in the cooperative effort are of considerable importance to the more highly developed nations of the world, including the United States.”⁵ And that nothing different is intended by the Western European benefactors of the colonies is certified by the Organization for European Economic Co-operation: “Within the present programme of development, the territories can make an important contribution to the defence of the free world to which they belong [sic!] particularly by increasing their production of raw materials.”⁶

Yet the required profitability of private exploitation of raw materials is predicated upon the presence of various “auxiliary facilities”: railways, trunk roads, harbors, power stations, and the like. Their construction, however, has but rarely attracted private capital.⁷ As we know, “free enterprise” has never begrudged that part of the job to the public treasury, and accordingly more than three fourths of all projected expenditures in the French territories are earmarked for the creation of such sources of “external economies” to raw materials enterprise, while the corresponding proportion of the Belgian outlays is approximately two thirds, and of the British about one half.⁸

To be sure, the balance is to be spent on so-called “social services,” that is, improved nutrition, medical care, education, and the like. But even this spending is essentially governed by considerations of Western capital’s “enlightened self-interest,” and is oriented towards providing raw materials business with improved human sources of external economies. What Professor de Castro says about this matter deserves to be quoted at length:

The European colonizer, when he offers the Negro a larger quantity of food than is normally available in the native village, is merely trying to attract workers, and to provide them with a quantity of energy which he expects to get back in the form of productive work. What he is really providing is not better nutrition, but merely an abundance of fuel. The same thing is happening in Africa, right now, that happened in tropical America in connection with the feeding of Negro slaves. The slave owners, anxious to get as much production as possible, always took care to provide them with … a diet that kept the slaves in apparent good health, and made possible the hard agricultural labor demanded of them. This policy of the plantation owners of Brazil and the Antilles … led to the mistaken conclusion that the Negro slaves were one of the best-fed groups in the colonial population. This was never true. The slave’s diet was bulky, but it was always bad. The so-called full-belly policy greatly worsened the nutritional situation of the Negro in Equatorial Africa.… the Negro showed much more frequent signs of dietary deficiency … after entering the service of the colonizers than he had before.… The nutritional situation is especially precarious in the mining districts, where fresh foods are practically unknown.⁹

Nor can there be any doubt that it is still the full-belly policy that guides at the present time the spending on social services on the part of the colonial administrations of the imperialist powers. The British Secretary of State for the Colonies said in the House of Commons on May 27, 1949, that “a large part of the outlays falling under the heading ‘social services’ are regarded as an ‘economic expenditure for promoting the greater efficiency of the worker and preventing a great deal of waste.’”¹⁰ And that the same motivations inspire the American well-wishers of the colonial peoples can be gleaned from the following passage in the previously mentioned Report by Messrs. Nelson Rockefeller and associates: “Absenteeism on the Vitória-Minas railroad was cut dramatically by effective malaria control. This has made it possible to reduce maintenance crews by one-third, which, in turn, has cut the cost of extracting and transporting iron ore and mica from the Rio Doce Valley.”¹¹

That this “renewed drive to find cheap raw materials, new sources of mineral wealth, fresh supplies of food for export from countries which themselves are desperately underfed”¹² represents a flagrant disregard for the developmental requirements of the colonial areas calls for no elaboration. This is obvious in the light of the entire historical record as well as in view of all the theoretical considerations pertaining to economic and social development of underdeveloped countries via foreign exploitation of their raw materials. It is expressed with admirable precision in the United Nations report referred to above: “Investment in the developed sector of the economy is concentrated on the production of primary products for export.… Practically all of the capital upon which this production has been developed had to be imported from outside Africa, and, with the exception of the Union of South Africa and parts of North Africa, this investment has had a relatively small effect in generating secondary incomes and investment. Gross exports receipts, in considerable proportion, are transferred as incomes abroad in the form of loan charges and dividends on invested capital.”¹³

II

Nor is the situation in any better shape when we consider the second group of the underdeveloped countries, those that are no longer outright colonies of the capitalist powers but are managed for them by local comprador administrations. The most important among them are the oil-producing lands in the Middle East and Latin America as well as a number of Latin American countries yielding valuable minerals and foodstuffs. The difference between these two groups that most concerns us in the present context is that the raw materials exploitation in the first group—the colonial territories—has not reached as yet a very advanced stage, while the output of raw materials in the second group of countries has already attained a tremendous volume. To be sure, this difference is of recent origin, and even where it has been pronounced for a longer period of time it has not much affected the situation of the respective countries. With the exception of Iran it was not until the interwar period that oil production assumed major proportions, and it was not until the end of the Second World War that the governments of the source countries were able to lay their hands on significant sums of money resulting from oil proceeds.¹⁴

Since then, however, the administrations of nearly all oil-producing countries have succeeded in securing greatly improved contractual arrangements with the companies exploiting their oil resources.¹⁵ Although the actual remittances from the foreign corporations in question do not necessarily correspond to the proportion of their revenues due to the local governments under the now prevailing terms of the concessions,¹⁶ the amounts currently obtained by the national authorities, while varying from country to country, are very large in nearly all oil-producing parts of the world. Indeed, they are stupendous however one looks at them, whether in terms of aggregates or in terms of receipts per capita of the population.

In the Middle East, six areas—“country” would hardly be an appropriate designation for some of them—inhabited by 30 million people contain 64 percent of the world’s known oil resources and account for approximately 20 percent of the total world production of petroleum. In the 1954 order of output they are Kuwait, Saudi Arabia, Iraq, Qatar, Iran, and Bahrein. In the nine years after the end of th...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Preface to the First Edition
• Foreword to 1962 Printing
• One: A General View
• Two: The Concept of the Economic Surplus
• Three: Standstill and Movement Under Monopoly Capitalism, I
• Four: Standstill and Movement Under Monopoly Capitalism, II
• Five: On the Roots of Backwardness
• Six: Towards a Morphology of Backwardness, I
• Seven: Towards a Morphology of Backwardness, II
• Eight: The Steep Ascent
• Index