Debate on the Left in the last decade over the origins and present nature of Latin American societies has focused on the problem of whether they should be seen as feudal or capitalist in character. A complex and lengthy discussion has taken place whose importance is not diminished by the conceptual confusion which has often accompanied it. Its significance, moreover, has not been confined to theory, since different theories have led to different political conclusions. Those who maintain that the Latin American societies were historically constituted as feudal in character and have remained so ever since, wish to emphasize that they are closed, traditional, resistant to change and unintegrated into the market economy. If this is the case, then these societies have still not yet reached a capitalist stage and are, indeed, on the eve of a bourgeois-democratic revolution which will stimulate capitalist development and break with feudal stagnation. Socialists should therefore seek an alliance with the national bourgeoisie, and form a united front with it against the oligarchy and imperialism. The advocates of the opposite thesis claim that Latin America has been capitalist from its inception, since it was already fully incorporated into the world market in the colonial period. The present backwardness of Latin American societies is precisely the outcome of the dependent character of this incorporation and they are in consequence fully capitalist. It is therefore meaningless to postulate a future stage of capitalist development. It is, on the contrary, necessary to fight directly for socialism, in opposition to a bourgeoisie that is completely integrated with imperialism, forming a common front against the masses.footnote1

In this article I hope to contribute to a clarification of the basic terms of the polemic. For despite their contradictory appearance, both the positions first cited coincide in one fundamental respect: both designate by ‘capitalism’ or ‘feudalism’ phenomena in the sphere of commodity exchange and not in the sphere of production, thus transforming the presence or absence of a link with the market into the decisive criterion for distinguishing between the two forms of society. Such a conception is clearly alien to Marxist theory, which maintains that feudalism and capitalism are, above all, modes of production. Andrew Gunder Frank is one of the best-known defenders of the thesis that Latin America is and always has been capitalist.footnote2 For this reason the present essay will concentrate on his work since it raises the theoretical issues at stake in the debate in their sharpest and clearest form.

Frank’s theoretical perspective can be summed up in the following theses:

1. It is false to suppose that economic development occurs through the same succession of stages in each country or that the underdeveloped nations today are at a stage which has been long surpassed by the developed countries. On the contrary, today’s developed capitalist countries were never underdeveloped in this way, although there was a time when they were undeveloped.

2. It is incorrect to consider contemporary underdevelopment as a simple reflection of the economic, political, cultural and social structures of the underdeveloped country itself. On the contrary, underdevelopment is in large part the historical product of relations between the underdeveloped satellite and the present developed countries. These relations were, moreover, an essential part of the structure and evolution of the capitalist system on a world scale. Thus Frank declares: ‘To extract the fruits of their labour through monopoly trade—no less than in the times of Cortez and Pizarro in Mexico and Peru, Clive in India, Rhodes in Africa, the ‘Open Door’ in China—the metropoli destroyed and/or totally transformed the earlier viable social and economic systems of these societies, incorporated them into the metropolitan dominated world-wide capitalist system, and converted them into sources for its own metropolitan capital accumulation and development. The resulting fate for these conquered, transformed or newly acquired established societies was and remains their decapitalization, structurally generated unproductiveness, ever increasing misery for the masses—in a word, their underdevelopment’.footnote3

3. The conventional ‘dualist’ interpretation of Latin American societies must be rejected. The dualist analysis maintains that underdeveloped societies have a dual structure, each one of whose sectors has a dynamic of its own, largely independent of the other. It concludes that the sector which is under the sway of the capitalist world has become modern and relatively developed, while the other sector is confined to an isolated, feudal or pre-capitalist, subsistence economy. According to Frank, this thesis is quite erroneous; the dual structure is wholly illusory, since the expansion of the capitalist system during the last centuries has effectively and completely penetrated even the most apparently isolated sectors of the underdeveloped world.

4. Metropolitan-satellite relations are not limited to the imperial or international level, since they penetrate and structure economic, social and political life in the dependent Latin American countries, creating sub-metropoles within them to which the interior regions are satellites.