Bill Warren’s article Imperialism and Capitalist Industrialization in nlr 81 is a very important text, although I believe his fundamental line of argument to be misconceived. There is no doubt that he draws attention to many aspects of the vexed question of development in the Third World that are too often ignored, by Marxists as well as by bourgeois economists. However some of his theses are perhaps less surprising than he imagines. Warren’s insistence upon the relatively high industrialization rates experienced in recent decades by underdeveloped countries is certainly no great shock to the present writer. In my book Unequal Exchange I give due acknowledgement to the recent ‘wave of industrialization’ in the Third World and to the fact that annual growth rates of industrial production in some of these countries are ‘higher than those prevailing in the advanced countries (which are) themselves higher than had ever been known before’. footnote1 Bill Warren is also quite correct to attack the ‘ambiguities in current Left analyses’ conceived of in terms of ‘dependence’, ‘backwardness’ and ‘underdevelopment’—understood not simply as a quantitative gap but as an undefined qualitative distortion. On this point I would indeed go somewhat further than Warren and add that the concept of ‘domination’ which he accepts is no less elusive than that to which he takes exception, as soon as direct colonial rule is no longer involved. If it is not specified whether it is political domination which entails economic domination or the other way round, reference to it involves familiar circular reasoning. In the peripeteia of the recent oil crisis and the inglorious response of some of the imperialist powers to this major challenge to their most vital interests—with their representatives queueing up in the ante-rooms of the Middle Eastern princes—it would not be difficult to find empirical material for an article no less iconoclastic than that of Warren. It is certainly the case that current Left literature underestimates the significance of formal independence, of economic—I would even say of political—nationalism, and of the ability of small countries, and of some rightist regimes of the periphery to avail themselves of inter-imperialist rivalries and to get the best out of capitalist bargaining, up to and including the use of punitive actions against foreign companies.

It is also quite true that current Left-wing criticism does not distinguish clearly between development within the framework of capitalism on the one hand, and socialist revolution, on the other. It denies any progress of the former just because of the absence of the latter. I expressed much the same view in my own book, pointing out the absurdity of blaming imperialism for not having betrayed its own principles and having promoted state planning and the socialist path of development, and for ‘not having lavished all sorts of benefits on its victims’. footnote2

The overall improvement in the bargaining position of host countries vis-`-vis foreign resource companies, outlined by Warren is, of course, an obvious fact of the contemporary world, and it would need a rather large dose of dogmatism to remain unaware of it. Moreover, the conventional argument that underdeveloped countries suffer from the implantations of unsuitable—excessively labour-saving—technology is not only a gratuitous assertion, as Warren rightly observes, but constitutes an unconscious reinstatement of the basic neo-classical theory of the international division of labour, that of Heckscher-Ohlin, and the crudest rejection of the traditional Marxist position on this issue. For bourgeois doctrine has always taught that each country specializes in those branches, and chooses those techniques within these branches, which make the most use of its most abundant factor—assumed to be also the cheapest one—thus bringing about a maximization of its own output and an optimization of the international division of labour. Marxists have always contended that it is indeed by so doing that free enterprise blocks development in undeveloped—and consequently low-wage—countries, since it relegates them to the ghetto of labour-intensive production techniques (agriculture, light industry, etc), that is, production with the lowest technology and productivity, which, in their turn, keep wages low and reproduce the same conditions. But today, all of a sudden, socialists blame multinational corporations for breaking this vicious circle of the ‘specific imperialist international division of labour’, by doing exactly the opposite: introducing into cheap-labour countries labour-saving plant and processes! I doubt whether multinational corporations have really adopted such uncapitalist behaviour on any significant scale. If, by any chance, they were to do so, their practice would constitute an unexpected proof of Warren’s belief in the ‘self-destructive’ character of imperialism.

So far as the ‘dependence’ of the Third World in general on foreign technology of any kind is concerned, I would argue that under present circumstances, where the cultural infrastructure in capitalist countries is financed by the State and put free of charge at the disposal of scientific research, ‘indigenous’ technology costs too much to be preferable, whereas licences and patents are one of the rare categories of goods imported by underdeveloped countries, perhaps the only one, which are artificially undervalued, in so far as part of their cost of production is defrayed by the seller’s state.

Finally, I myself do not equate ‘debt with a debt problem’ and even less with a draining of surplus from the periphery to the centre, so I find Warren’s comments on this subject very sensible indeed. In some cases, debt must be equated with a draining of surplus in the opposite direction, from the creditor to the debtor. This is currently the case of Eurodollars, which represent a huge volume of real values supplied to the United States by the rest of the world, against an American ‘debt’. To be sure, the underdeveloped countries do not have the same power as the United States of monetizing their debt—more plainly, of not servicing it—but in a period when all currencies are losing between 5 and 10% of their value each year, I would strongly recommend any individual or any state to run into debt up to the extreme limit of their lenders’ readiness to oblige, notwithstanding any apprehension about future servicing.

However, despite these merits, Warren has attempted to prove too much. On the assumption that development implies industrialization, he jumps to the unwarranted conclusion that industrialization (eventually just ‘manufacturing’) and development are one and the same thing. It follows that the same data lead Warren and myself in two opposite directions. The very fact that manufacturing labour and manufacturing output, as percentages of total labour force and total output, are roughly the same in Argentina as in usa, 25·1% and 28% as against 26·5% and 28%, and considerably higher than that, 41·4% and 38%, in Hong Kong, proves in my view that mere industrialization is by itself not a good gauge of development; for it would logically compel Warren to admit that Argentina is as highly developed as the usa, and Hong Kong 50% more so! footnote3

I have explained at length, in an appendix to my book Unequal Exchange, my own view of the prevalent confusion between industrialization and mechanization, and shall not go over these arguments afresh. It can be said, however, that if we really want to de-mystify the concept of economic development we must, first and foremost, acknowledge that the only conceivable purpose of development is to improve men’s material well-being, and that it is only on this account that it is of interest to economists. Industrialization, manufacture, mechanization and so forth, can only be means to attaining this end, and it would be absurd and ridiculous to regard them as ends in themselves.