Humanist and Neo-Marxist Explanations of the Failure of Economic Development

Essay, 2011

20 Pages, Grade: 2:1


Humanist and Neo-Marxist Explanations of the Failure of Economic Development

Kaia Smith

Although Robert Klitgaard’s book Tropical Gangsters is a “compelling and entertaining account of the author’s two-and-a-half year adventure in Equatorial Guinea,” its deeper exploration of the failure of economic development offers a realistic and in-depth description of the difficulty in transferring the Western model of economic theory to the developing world. From this book, one can draw various conclusions in reference to the reasons for this failure; the possibility of these criticisms is founded upon Klitgaard’s own neoclassical explanations and other alternative economic theories in reference to conditions of the country’s life and political processes. Although the neoclassical reasoning prevails, as it does in all other IMF and World Bank policies, the general lack of variety in global developmental approaches brings up the possibility of more significant and complex factors than traditional theory proposes. Both neo-Marxism and humanism offer points of view that address some of these overlooked issues. The former stresses the significance of ulterior motives of such aid organizations as the IMF and World Bank; the latter delineates the importance of non-traditional economic variables and outcomes in the overall success of economic development. In regard to the explanatory and prescriptive power of both of these policies, I find that humanism portrays more clearly the problems within the current paradigm of economic development and shows potential correctives for the future in order to increase effectiveness of foreign development efforts.

Neo-marxism is an extension of the Marxist school of thought, which includes its basic tenets but extends its modern applicability through analysis of the current relationship between developed and developing countries. Within the neo-Marxist school, it is believed that capital accumulation is only possible through the exploitation of a lower social class of workers, or the Third world, by the dominant and capitalist developed world. Wages are kept low and workers are exploited so that profits can be maximized by the capitalists, which do not get reinvested but rather are used for the further empowerment of the dominant class; thus, all surplus value is transferred from the undeveloped South to the North.

The neo-Marxist view would argue that complete industrialization and ability to compete with developed countries is impossible because of the South’s role in reinforcing the intentional superior position of the North. This position is further held in place with the help of national elites within developing countries who receive gains in order to reinforce the transfer of exploitative action upon the working class within their own country (Contreras 2010). These “satellites” serve to “suck capital or economic surplus out of [their] own satellites” which then flows to the main “world metropolis”; these countries transition from being undeveloped and independent to underdeveloped and dependent (Frank 1966). Thus in order to escape exploitation, the working class must unite in a revolution to overthrow those who are in control so that a socialist economic system can be started.

The neo-Marxist perspective can be used to demonstrate a shift in normative values in relation to the current state of developing countries. First, exploitation is an inevitable factor within the capitalist system, be it simply economical, social, cultural, environmental, etc., as long as an economic gain is achieved by the North at the expense of the South. Although it can be argued that international norms have transformed into a universal rejection of colonialist attitudes and practices, it is important to consider the tendency of norms to shift over time rather than completely transform. Especially for the case of Equatorial Guinea, whose time gap between decolonization and structural adjustment reform was less than twenty years, we must ask ourselves if within such a short time period such profound exploitative motives of colonialism could have completely disappeared. Have norms truly moved from one extreme end of the scale to the other? It seems more relevant to consider instead moderate shifts towards further evolved, post-colonial attitudes. Although the traditional institutions brought about by colonialism may have become less fashionable, the self-interested motives behind such practices have found more modern ways to express themselves. In today’s globalized world, economic interactions have become more intense and multi-faceted, thus increasing the opportunities for exploitation.

The inevitability of self-interest and greed of developed countries is a focal point within the neo-Marxist school of thought. Because capital accumulation leads to profit-seeking behavior, the only true motive capitalists have is to exploit any surplus they can in order to maximize their own gains; as Marx said, “the only wheels which political economy puts in motion are greed and the war among the greedy, competition” (cited in Morgan 2005, 1086). Therefore, although countries and organizations may claim to have altruistic intentions in their relations with lesser-developed countries, a hidden, self-interested agenda is always in place.

Within this school of thought the prospects seem dim when it comes to economic development for the South. The archetypal norm of a dominating North, which is an inevitable facet of the capitalist economy, suggests a never-ending story of inequality for the exploited South; the top players will always be the victors of their own game. As Dudley Dillard explains, “Since labourers do not possess the means of production for self-employment, they must, of economic necessity, offer their services on some terms to employers who do control the means of production” (1972, 85). Thus, development is only possible outside of the satellite-metropole relationship (Frank 1966). The only possible exit from this system is revolution because of the immense population of the “working class”; if they can find a way to unite themselves effectively under one single political goal, they can disturb the balance of power within the capitalist system, exit from its shackles and thrive separately as a non-capitalist institution.

In order to realize the possibility of independence, it is important that one take into consideration the differences not only between Western and non-Western cultures and experiences but also between economic histories. Basing comparisons of the current state of poor countries with the underdevelopment of the West centuries ago is neither relevant nor realistic. The relevance of capitalism to Western society is based on cultural factors that have developed along with this economic system for centuries. For example, religious traditions within Protestantism allowed for the cultural acceptance of capitalism during its formative period (Dillard 1972); however, countries without similar histories and cultures are not fit for the difficult implementation of capitalism and the consequences of its freedom to seek profits. Not only are contexts different, but poor countries are also under pressure to “develop” too quickly: “In advanced countries […] the economically ascending middle classes developed […] a new rational world outlook. […] The poor underdeveloped countries sought nothing but accommodation to the prevailing order […] and what industry and commerce developed […] was rapidly moulded in the straitjacket of monopoly […] blocking all possibilities of economic growth” (Baran 1952, 102). It is also important to highlight the historical differences of progression and the lack of and need for gradual transition; the rapid assimilation of capitalism has led to elites that do not reinvest as neoclassical models suggest. Maintaining luxurious lifestyles and their favorable positions within the metropole-satellite relationship become the focal point, so there is no regard to long-term efforts (Baran 1952). Therefore developed countries must recognize their ability to exist independently of the capitalist system; there are grave effects in trying to fit into the system when their structures may not be capable of such a transition. We can see an example of this idea in the satisfactory quality of life in El Salvador before colonization, and the class conflicts and monoagricultural and thus dependent status of this country after subordination into the world economy (Burns 1984).

Humanism is an alternative lens through which one can look at the situation of economic underdevelopment. This approach claims to address a wide range of fundamental issues related to development, many of which are neglected in traditional theories of economic development; humanism focuses on choices and well-being rather than numerical data and general macroeconomic representations of society. Thus more relevant considerations of economic development are needed in order to obtain successful outcomes. The most important idea within this school of thought is that wealth, rather than being the goal per se, is a means toward the end of general well-being. Therefore, GDP as an indicator of economic development is insufficient and irrelevant. This is because “different people and societies typically differ in their capacity to convert income and commodities into valuable achievements” (Clark 2006, 2). Also, goals and desired outcomes are not adequate in defining the traditional indicator of utility; maximizing utility is only one of the many aspects of a fulfilled human existence, which also includes attainment of freedoms and available opportunities.

Thus to expand these capabilities, the ability of individuals to participate in governmental decisions that affect their freedoms is essential. Equality of participation is essential because this determines equal access to outlets of well-being and is indicative of a country’s level of justice in general. Inequalities in these domains not only diminish a country’s average level of well-being but also further reduce the well-being of the marginalized because of the significance of relative, rather than absolute, equality.

The emphasis on relative equality, which addresses the amount gained (or lost) in relation to others who are gaining (or losing) at the same time, is especially important for the study of economic development. For example, this approach does not purport that person A will benefit just as much value from an x percent gain if person B gained nothing as opposed to the same percentage (which would constitute the idea behind absolute equality). Rather, person A’s perceived well-being is higher in the situation where person B gains nothing because they feel as if they are better off relative to their previous situation. The “temporary” inequality brought about by shock therapy and policies such as structural adjustment are not supported by the humanist approach because of the misery that certain parts of the population must live with. Thus, the inequalities of a society not accounted for by GDP are an important factor to recognize if we are seeking to reach as many people as possible with economic development policy.

This approach underlines the importance of distinguishing between different contexts and “acknowledging that different people, cultures and societies may have different values and aspirations” (Clark 2005, 5). Thus, applying a universal and formulaic approach to tackle the issue of underdevelopment, as the World Bank’s Structural Adjustment Program aimed to do, is neither progressive nor relevant. General data uses information that represents only certain members of a nation’s society, such as a single social class or gender; thus, deeper structural and social issues must be recognized and used when preparing development strategies. Cecile Jackson’s work on gender analyses addresses the importance of using individual-level field experience that the social sciences use in order to deal with social justice and to realize its importance within the domain of economic development (2002). It is therefore important to go about this issue with a bottom-up, rather than top-down, outlook that takes into account the many facets of social structures.


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Humanist and Neo-Marxist Explanations of the Failure of Economic Development
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Kaia Smith (Author), 2011, Humanist and Neo-Marxist Explanations of the Failure of Economic Development, Munich, GRIN Verlag,


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