Louis Proyect: The Unrepentant Marxist

September 19, 2008

Paul Baran as dependency theorist

Filed under: economics,imperialism/globalization,Introduction to Marxism class — louisproyect @ 4:21 pm

(This post originally appeared on the Introduction to Marxism mailing list at Yahoo.)

Paul A. Baran

Paul Baran had exactly the kind of credentials shared by fellow MR editors Paul Sweezy and Harry Magdoff. Like Sweezy, who once taught at Harvard, Baran was an established academic who managed to hold on to a teaching job at Stanford until his death by heart attack in 1964 at the age of 54. He was established enough to have even co-authored an article on the consequences of the Allied air assault on Germany with J. K. Galbraith in 1947. Of course, some of their detractors might tend to write off Sweezy and Baran as post-Keynesians to begin with.

And all three had jobs in Roosevelt’s administration. Baran was with the OSS (the forerunner of the CIA!) for two and a half years and then moved on to the U.S. Strategic Bombing Survey (hence the article alluded to above.)

Paul A. Baran was a Russian Jew whose father, a physician and Menshevik supporter, moved the family to Germany in 1920. Paul did his undergraduate work in Germany, but earned his Economics PhD in Moscow in 1928 before moving back to Germany. After Hitler’s rise to power, he found his way to the U.S. and taught at the New School before taking military-strategic jobs in the Roosevelt administration. In 1949 he became a professor at Stanford where he remained until his death.

In 1961, Baran wrote an article for Monthly Review on “The Commitment of the Intellectual” that should serve as an inspiration for everyone:

The desire to tell the truth is therefore only one condition for being an intellectual. The other is courage, readiness to carry on rational inquiry to wherever it may lead, to undertake “ruthless criticism of everything that exists, ruthless in the sense that the criticism will not shrink either from its own conclusions or from conflict with the powers that be.” (Marx) An intellectual is thus in essence a social critic, a person whose concern is to identify, to analyze, and in this way to help overcome the obstacles barring the way to the attainment of a better, more humane, and more rational social order. As such he becomes the conscience of society and the spokesman of such progressive forces as it contains in any given period of history. And as such he is inevitably considered a “troublemaker” and a “nuisance” by the ruling class seeking to preserve the status quo, as well as by the intellect workers in its service who accuse the intellectual of being utopian or metaphysical at best, subversive or seditious at worst.

When Baran wrote “The Political Economy of Growth” in 1955, it was clearly in the spirit of a “readiness to carry on a rational inquiry to wherever it may lead.” This was a year in which the American Colossus straddled the globe even more than it does today. Unlike today, however, the promise of capitalist modernization was far more seductive. With the 10 year expansion following WWII, why would any developing country refuse to follow the development path urged by the U.S.?

In John Bellamy Foster’s excellent review of this book, you can find the historical context for Baran’s challenge to mainstream economics:

The best known mainstream work on development to be published in the early post-Second World War period was W. W. Rostow’s Stages of Economic Growth, significantly subtitled A Non-Communist Manifesto. Rostow described five stages that all countries had to pass through: (1) traditional society, (2) the preconditions for take-off, (3) the take-off, (4) the drive to maturity, and (5) the age of high mass consumption. The key stages in this process were of course the preconditions for take-off, during which the cultural and technological foundations for an industrial revolution were laid, and the take-off itself, which in Rostow’s theory could be explained primarily by the sudden increase in savings from 5 percent to 10 percent. The final result was not in question; the only real issue was when countries would pass through these various stages. The conditions allowing for a take-off could be speeded up, Rostow argued, through the diffusion of Western culture, know-how, and capital, overcoming legacies of economic and cultural stagnation.

If some benighted 3rd world country like Vietnam decided not to follow Walt Rostow’s advice, then there was no other recourse than to force them at gunpoint to do so. As Henry Kissinger once said of Salvador Allende’s Chile, “I don’t see why we need to stand by and watch a country go communist because of the irresponsibility of its own people.”

The importance of Walt Rostow in the mid 1950s cannot be minimized. In the latest issue of the Nation Magazine, there’s a review of several books under the title “Mandarins, Guns and Money,” including David Milne’s “America’s Rasputin: Walt Rostow and the Vietnam War.” Reviewer Mark Mazower writes:

Theory alone guaranteed nothing, unless politicians and their staffers listened. Rostow’s connections boosted his advancement. From his Yale undergraduate days he knew Richard Bissell (the Bay of Pigs and other CIA achievements still before him) as well as the man who brought him to MIT, his old friend Max Millikan. Like Rostow, Millikan had been involved as an economist in the European reconstruction effort of the late 1940s–in his case as assistant to the Marshall Plan administrator Paul Hoffman. Between joining MIT and setting up the Center for International Studies, Millikan also served briefly as assistant director of the CIA under Walter Bedell Smith. All these connections proved vital. The center grew out of Project Troy, an early State Department commission to research radio jamming and psychological warfare against the Soviet Union. When State’s money dried up, Millikan turned to his old employers, the CIA, and to the Ford Foundation (by now run by his former boss Hoffman). Harvard stood aloof; led by sociologist Talcott Parsons, its social scientists were engrossed in the loftier goal of creating an entirely new theory that would unite all the social sciences. MIT was happy to do the nitty-gritty problem-solving for the government, and it got the loot. In 1953 Ford assured the center’s future with an enormous $1.8 million grant. For MIT it was a bargain: it put in almost no money and got terrific input into the shaping of foreign policy.

Millikan had wanted Rostow at the center because they basically agreed on what America needed. In the early 1950s the cold war suddenly became a global competition for influence in the decolonizing world, and many felt that Washington needed to compete much more aggressively. In 1954, a week after the battle of Dien Bien Phu, Rostow and Millikan took part in a conference to generate a “world economic plan” that would ensure the triumph of freedom. The two men wrote the resulting report, forwarded to Eisenhower, emphasizing development aid as the key to securing American foreign policy goals: it had worked in Europe, and now America needed to spend in the Third World. This got nowhere with Ike: he was too much of a fiscal conservative, and his inner circle disliked Rostow’s boosterish tone. But others were listening, especially a young senator from Massachusetts. Rostow wrote some speeches for Kennedy, then joined his Administration, whose Alliance for Progress, the centerpiece of what Kennedy proudly proclaimed to be the Decade of Development, marked the modernizers’ moment. In Washington, as assistant to McGeorge Bundy–Kennedy’s national security adviser–Rostow was given special responsibility for Southeast Asia. Vietnam was his bailiwick, a chance to show what modernization theory could do to win the cold war. After Kennedy’s death, Rostow replaced Bundy as Johnson’s national security adviser–“my goddamn intellectual,” the Texan growled. Rostow’s hour had come. No wonder Professor Pool was gung-ho.

(The review can be read in its entirety at: http://archives.econ.utah.edu/archives/marxism/2008w37/msg00278.htm)

So, as you can see, Paul Baran had his work cut out for him when he challenged the idea that every country could become prosperous simply by following sound free-market principles. The core of his idea around this question can be found in Chapter 5 of “Political Economy of Growth”. It is titled “On the Roots of Backwardness” and can be read on the Introduction to Marxism mailing list at Yahoo. It is one of those seminal texts that can only be read by getting one’s hands on the book either from MR Press (that I strongly recommend) or from your better local library. Chapter five introduces the remainder of the book, which is basically an examination of the failure of Rostow’s and other such capitalist economics formulas in the real world.

It was the first significant challenge to bourgeois “development” economics and as such had an enormous influence on United Nations economists such as Raul Prebisch and Andre Gunder Frank. It would eventually serve as the core of what became known as “dependency theory”, a debate over which began to rage in the 1970s and persists until today. Like John Bellamy Foster, I agree with this theory despite seeming evidence to the contrary such as Brazil in the 1960s and China today.

Baran poses this question this way:

The question that immediately arises is, why is it that in the backward capitalist countries there has been no advance along the lines of capitalist development that are familiar from the history of other capitalist countries, and why is it that forward movement there has been either slow or altogether absent? A correct answer to this question is of foremost importance. It is indeed indispensable if one is to grasp what at the present time stands in the way of economic and social progress in underdeveloped countries, and if one is to understand the direction and the form which their future development is likely to assume.

He begins by referring obviously to the Sweezy-Dobb debate over the origins of capitalism, but without referring to either principal by name. It should not come as any great surprise that Baran lines up with his long-time collaborator Paul Sweezy who saw the “European miracle” as very much a function of global trade and/or plunder:

In Western Europe, mercantile accumulations were particularly large, and, what is of considerable significance, highly concentrated. This was partly due to the geographical location of the Western European countries which gave them the possibility for an early development of navigation, and with it of a rapid expansion of maritime and riparian commerce. It was caused secondly–paradoxically enough–by Western Europe’s being in terms of natural resources poorer and in terms of its economic development at the relevant time in many respects more backward rather than more advanced than the parts of the world which were the objects of its commercial penetration. Hence the drive to procure tropical produce of all kinds (spices, tea, ivory, indigo, etc.) that could not be obtained nearby, hence also the effort to import valuable products of Oriental skills (high quality cloth, ornaments, pottery, and the like), and hence finally the wild scramble to bring back precious metals and stones that were in short supply at home. The resulting far-flung trade, combined with piracy, outright plunder, slave traffic, and discovery of gold, led to a rapid formation of vast fortunes in the hands of Western European merchants.

Despite the tendency of many who took Dobb’s side in this ongoing debate (Brenner and Wood come to mind first and foremost) to represent Sweezy as outside of Marxism at least on this point, Baran’s analysis is pretty close to Marx’s himself as expressed in chapter 31 of V. 1 of Capital:

The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre. It begins with the revolt of the Netherlands from Spain, assumes giant dimensions in England’s Anti-Jacobin War, and is still going on in the opium wars against China, &c.

Baran claims that left to their own devices, India, China and other countries where what Jim Blaut referred to as “proto-capitalist” institutions existed (particularly in large trading entrepôts such as Calcutta), capitalist development would have taken place through the impact of “the rising bourgeoisie everywhere [that] shook the foundations of the pre-capitalist order.” In other words, there was no particular European “genius” or “exceptionalism” at work.

Unfortunately for countries on the cusp of capitalist transformation, the penetration by European colonialism interfered with the natural economic development taking place and introduced distorted class relations inimical to capital accumulation. The classic example of this was British textile exports into India, which destroyed the local handicraft industry that could have served as a “take-off” point for manufacturing just as it did in Great Britain in the 1700s. Instead you ended up with Great Britain prospering at India’s expense. Baran notes: “The volume of wealth that Britain derived from India and that was added to Britain’s capital accumulations has to my knowledge never been fully assessed. Digby notes that estimates had been made according to which between Plassey and Waterloo–a period of crucial importance for the development of British capitalism–between 500,000,000 and 1,000,000,000 pounds worth of treasure was taken by Britain from India.”

So countries like India ended up neither with feudalism or capitalism but a wretched mixture of the two social systems as Baran put it:

Thus the peoples who came into the orbit of Western capitalist expansion found themselves in the twilight of feudalism and capitalism enduring the worst features of both worlds, and the entire impact of imperialist subjugation to boot. To oppression by their feudal lords, ruthless but tempered by tradition, was added domination by foreign and domestic capitalists, callous and limited only by what the traffic would bear. The obscurantism and arbitrary violence inherited from their feudal past was combined with the rationality and sharply calculating rapacity of their capitalist present. Their exploitation was multiplied, yet its fruits were not to increase their productive wealth; these went abroad or served to support a parasitic bourgeoisie at home. They lived in abysmal misery, yet they had no prospect of a better tomorrow. They existed under capitalism, yet there was no accumulation of capital. They lost their time-honored means of livelihood, their arts and crafts, yet there was no modern industry to provide new ones in their place. They were thrust into extensive contact with the advanced science of the West, yet remained in a state of the darkest backwardness.

Baran concludes his chapter with an interesting discussion of Meiji Japan, a kind of bourgeois revolution “from above”. Baran explained why it succeeded:

The answer to this question is extraordinarily complex and at the same time extraordinarily simple. It is simple because, reduced to its core, it comes down to the fact that Japan is the only country in Asia (and in Africa and in Latin America) that escaped being turned into a colony or dependency of Western European or American capitalism, that had a chance of independent national development. It is complex because it was only a felicitous confluence of a large number of more or less independent factors that gave Japan its lucky break.

Basic among them–reminiscent of the paradox presented by Western Europe and in particular by Great Britain–was the backwardness and poverty of the Japanese people and the paucity of their country’s natural resources. “Japan had very little to offer either as a market for foreign manufactures or as a granary of raw materials for Western industry.” Consequently the lure of Japan to Western European capitalists and governments came nowhere near the irresistible attraction exercised by the gold of Latin America, the flora, fauna, and minerals of Africa, the fabulous riches of the Indies, or the supposedly bottomless markets of China.

No less important was the fact that in the middle of the nineteenth, century, when Western penetration of Asia reached the highest degree of intensity, the resources of the leading Western European countries were already severely taxed by other undertakings. Especially Great Britain, the world’s leading colonial power, had enough on its hands in Europe, the Near East, India, and China without becoming involved in a militarily most uninviting campaign for the conquest of Japan. This strain on Britain’s expansionist capabilities accelerated the far-reaching change in the nature and orientation of its colonial policy that was afoot from the middle of the nineteenth century. Although veiled by a political debate that appeared to be mere shadow boxing–with the Tories fully accepting the essence of Palmerston’s foreign policies–it actually implied the transition from old-fashioned piracy characteristic of the mercantile phase of capitalism and of primary accumulation of capital to the more subtle and complex strategy of modern imperialism.

But what decisively affected the position of Japan was another characteristic of modern imperialism: the growing rivalry among the established imperialist whales, and the arrival on the world stage of a new imperialist power, the United States. It was that rivalry, with the resulting checks and balances in international power politics, that had much to do with preventing Britain from meting out to China all of the punishment that was suffered by India; and it was this very same international jealousy that rendered it impossible for any one imperialist power to attempt the conquest of Japan. Although in the case of Japan it was the United States that carried out the initial opening-up and that imposed upon it its first unequal treaty, neither the stage reached in the development of American capitalism nor its international status allowed the United States as yet to try to establish exclusive control over Japan. “The proximity to China gave Japan extraordinary strategic importance. The powers that forced upon Japan the unequal treaties watched jealously lest any one of them gain predominant influence in Japan, let alone be able to convert it into its colony and thus into a staging area for further advance into China.”

For further reading on the evolution of capitalist Japan, I can strongly recommend Jon Halliday’s “A Political History of Japanese Capitalism”, a 1975 MR book. As many of you know, Halliday has become a rabid anti-Communist, his most virulent work being “Mao: the Unknown Story” co-written with his wife Jung Chang. Despite this evolution, Halliday was a very sharp thinker 33 years ago and his work from that period stands the test of time.


  1. thanks Louis. . .I loved baran. . .you are like him. . .Best, Brian

    Comment by Brian McKenna — September 19, 2008 @ 4:37 pm

  2. Hello. I’m awaiting Bush’s pitch to the nation 9.24.08 for the $700 billion bailout and I recall reading many years ago Baran and Sweezy’s Monopoly Capital. I have a vague recollection that its’ theory was that under monopoly, capitalism extracts so much surplus that eventually, in a sense, it chokes on the surplus, being unable to profitably reinvest it all.

    I’m writing to ask if you can direct me to any references to any application of the theory in Monopoly Capital to the current stock market crisis, e.g., whether the explosion of credit derivatives was some sort of surplus absorption process and we are now at the choking point, or whatever.

    Thank you, Robert Cogan

    Comment by Robert Cogan, Ph.D. — September 25, 2008 @ 12:24 am

  3. thanks Louis. . .I loved baran. . .you are like him. . .Best, Brian

    Comment by amir — September 26, 2008 @ 12:23 pm

  4. i strongly believe that though colonialism dealt badly with 3rd-world countries especially African countries physically, socially, Economically etc. i also agree that the Europeans left several tears in the ees of many. my worry howere is that we are still groping in the dark. let Arica and Africans start thinking of How she kind soul

    Comment by kenneth Aba — February 4, 2011 @ 10:57 pm

  5. […] Proyect  Louis (9th of September 2008), Paul Baran as dependency theorist. Retrieved October 30th 2011 from https://louisproyect.wordpress.com/2008/09/19/paul-baran-as-dependency-theorist/ […]

    Pingback by On development trajectories, and possible futures | forthefuturenow — February 3, 2012 @ 6:44 pm

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: