Political Economy Students' Journal

Introduction

On December 1, 2024 Donald Trump President Elect of the United States announced that the BRICs economic bloc would face a rise in tariffs if they proceeded with the proposal of a common currency system, used to circumnavigate various economic sanctions imposed on some of the member nations. He stated, “… we require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” (Iyer, 2024). This threat illustrates a changing perception in the movement of globalisation, wherein nations that have often been the bulwarks have now turned their backs to it, illustrating the case that globalisation for all its praise often seeks to limit the speed and level of which developing nations can grow and ‘catch up’ with their advanced counterparts.

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In its nucleic stage, the concept of globalisation was filled with hope, with its supporters often convincing many that it was the only way for the world to come together and function as something beyond the nation-state. However, over the last forty years globalisation has created issues of systematic income inequality and various other discontents in the socio-economic sphere; from the rising tide of nationalism across the world, due in large part to the perceived threats of policy shifts that seek a compromise between domestic policy and global integration (Obstfeld, 2021)- to global issues such as climate change and environmental degradation. In the case of the latter there were global policies that seeked to mitigate its influences such as the Kyoto Protocols’ emissions trading system which ultimately failed.[1]

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Moreover, institutions such as the International Monetary Fund (IMF), World Bank (WB) and World Trade Organization (WTO) have transformed from institutions that encouraged the development of the third world, to institutions guided by the interests of developed nations as to how to and who to aid; thereby making any deal with them a Faustian pact.

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This begs a rather paradoxical question: how does globalisation limit the development of developing nations in the long term? By using the theoretical framework of dependency theory, I outline the ways in which globalisation has been a historically rigged game. This is followed by an example where the chase of globalisation has left it riddled with chronic issues that would have been avoidable. Finally, we outline alternative framework(s) of the game of globalisation that have contested the idealism of western globalisation.

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Limiting Growth Through the Lens of Dependency Theory: A Brief Literature Review

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The literature regarding dependency theory is vast but its roots can be traced to Latin America, i.e. the work of Raul Prebisch who developed the concept of the centre-periphery during his time as the Director General of Banco Central in Argentina (Blomström & Hettne, 1984). It was from here that many began to apply and develop a much more structured framework. Yet, within the field of Dependency theory there have been significant debates.

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It was with the works of Paul Baran and Paul Sweezy that we have seen a neo-Marxist interpretation of dependency theory. Sweezy illustrated that many of the European nations under the capitalist system with the rise of external bodies “found themselves incorporated into the emerging Europe-centered capitalist system as colonies, dependencies…” (Sweezy, 1981), materializing into the North-South/Core-Periphery relationship we know of as today. He argues that European capitalism was born out of the agricultural revolution first and then industrial, but for the periphery it was one where capital was imported before the development let alone the maturity of the agricultural revolution. He argued, “Capitalism could never have put down roots in the center without a sustained increase in the productivity of agriculture and hence also in the agricultural surplus” (Sweezy, 1981). This dichotomy presents a condition that characterizes the core-periphery; one was able to transition between feudalism and capitalism at its own pace and the other had no such luxury.

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Thus, it was with this theoretical foundation in mind that Andre Gunder Frank with Samir Amin applied to the case of the global south. Both pioneered various concepts and gave a much more structured formulation of how to understand underdevelopment and unequal development. The former can be defined as “a natural outcome of interplay of the international capitalist economic system that rests basically on the notion that the development of one country in a system of dependency means the underdevelopment of other” (Udoka 2005).

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More specifically, the metropolis seeks to extract surplus from the satellites as part of its own economic development, which meant that many economic structures inherent to a nation would be altered to fit the rising surplus extraction until there was nothing left in the region. This was not just limited to the external but also the internal policies that were reconfigured towards increasing the capital of those that benefitted from such economic reconfigurations rather than the populace of the region. This was further intensified by the movement of capital, more specifically the forex deficits the satellite states bore when it came to replacement of parts and materials and from the high interest loans taken from the IMF (Persaud, 1987).

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Samir Amin took this a step further and based on the context of sub-Saharan Africa, developed the idea that dependency is a product of imperialism (Udoka 2005). Writing that the core often benefited from a complex economy while the periphery “on the other hand, suffers a paucity of such activities and has high productivity in very few areas” (Persuad 1987). Therein emerged an unequal exchange between the poles “… to an inequality of exchange, because at any level of productivity the periphery worker must work many hours to produce what a core worker produces in a few hours. This unequal exchange is necessary to an expanding world market in which the object is profitability to the Core” (Persaud 1987). This was not just limited to labour but also access to capital “technology diffused to the periphery is determined, controlled and hence dependent on the center… Industries usher the capitalist mode of production into the periphery, stunt local competition, intensify exploitation and unemployment, and result in economic disintegration.” (Persaud 1987).

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Finally, we touch on the work of a relatively unknown dependency theorist from Brazil; Ruy Mauro Marini, building on Frank’s theory, argued that dependency is a relation between former independent nations and these relations reproduce to deepen dependency; “the outcome of dependency cannot be anything other than more dependency, and its liquidation necessarily implies eliminating the relations of production it involves” (Marini, 2022). In his analysis of Latin America, Marini notes “What becomes clear, then, is that nations disadvantaged by unequal exchange do not so much seek to correct the imbalance between the prices and value of their exported commodities… but rather to compensate for the loss of income created by international trade, by resorting to a greater exploitation of the worker…”(Marini 2022). Thus, what is born is a super-exploitation of labor that  differs from the concept of surplus labor by being “defined more precisely by the greater exploitation of the worker’s physical strength, as opposed to the exploitation resulting from increasing his productivity, and tends normally to be expressed in the fact that labor power is remunerated below its real value”(Marini 2022).

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Ghana As a Case of Rising Dependency Through Globalisation

In the 1980s Ghana saw itself at the chopping block of global institutions. The Structural Adjustment Policies (SAPs) were a set of “rules” imposed onto the country by international lending organizations such as the World Bank and the IMF.

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The SAPs, as noted by Kraus (1991) had three arguments that eventually left Ghana worse off compared to the pre-SAP years. The policies did not do what they expected it to do. Firstly, it failed to result in the growth that was promised, secondly it attacked the institutions that ensured development and lastly, it was considered a direct attack on their political sovereignty of the country (Kraus, 1991).

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Thus, the SAP ruined Ghana’s chances of development by falling in line with the global order, beginning a strained relationship with the IMF and other global financial institutions, as noted even with preferential access to foreign exchange during 1984-87, IMF credit ceilings made for great difficulty in obtaining credit for imports of inputs and equipment, which steep devaluations have made extremely expensive (Berry, 1994).

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Flash forward to the post-2008, i.e. post the Global Financial Crisis (GFC), when the government of Ghana returned to the IMF for assistance once again due to the need for fiscal consolidation and worsening credit ratings that can impact where, how much and from which international institutions and markets they can borrow from (ActionAid, 2010).

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The cycles of borrowing to fix the country, only to borrow again have set in motion the case of a debt trap. A report published in 2016 stated that “Ghana is in a debt crisis. Despite having had significant amounts of debt cancelled a decade ago, the country is losing around 30% of government revenue in external debt payments each year.” (Debt Justice, 2016). However, the new loans being taken are being used to pay off pre-existing interest on older loans; in essence it has devolved into a quasi-Ponzi scheme.

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This case highlights the fact that institutions that have supported and often encouraged nations by force to become globalized have mostly benefitted by their stagnation or downfall. Applying the concepts highlighted in the literature section we can see the emergence of unequal development and more-over the spiral of dependency into greater dependency.

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The Shift Towards Alter-Globalisation in The Peripheries

A paradigm of the Alter-globalisation movement came in the form of the Bandung Conference which took place in 1955 to represent the interests and build networks between the global south nations, many of them who became newly independent. The Conference was the foundation that showed the world that it was possible to de-link into another bloc, one that was to promise more equal exchange between nations that suffered at the hands of intentional underdevelopment whilst also maintaining internationalism and openness. What came to be its inheritor the BRICs bloc; continuing this line of thought whilst also engaging in multi-lateral trade with other nations. Paving the way towards a more multi-polar world, wherein the US and European dominance was to be contested in terms of trade. Wallerstein wrote

“The offensive within the WTO was stalled at Cancun by a coalition of medium powers of the South-Brazil, India, South Africa, etc.-who put forward a simple demand: free trade that works both ways. If the North wants us to open our borders to them, they said in effect, it must open its borders to us. But the North is basically unable to accept this kind of deal for two reasons. It would result inconsiderably increased unemployment and downsized income in countries of the North, which is politically impossible for governments subject to electoral contests to accept” (Wallerstein, 2005).

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Wallerstein proposed an interesting question after reflecting on the changing tide of the world and academic sphere shifting its language from developmentalism till the 1980s to globalisation, asking what is next? If the dream of every nation becoming like Denmark in terms of quality of life, “where is the surplus value to come from that would permit 50% of China's population to consume at the level of 50% of Italy's population, while all the rest of the world consumes at a level at least as high as at present? Is this all supposed to come from the so-called greater productivity of world (or Chinese) production?” (Wallerstein 2005). Development has always sought to promote the accumulation of surpluses through monopolization of production; this was the case of the US. However, as time went on, they realized that the peripheries are useful to reduce the costs of production due to largely untapped labour and still allow for accumulation and at the same time; solving the problem of having the cake and eating it too. The Globalisation through expansion of production networks has what he dubs an Achilles heel “The world is running out of new zones into which to relocate” (Wallerstein, 2005).

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We have seen a financialization of the means of development and in turn a last-ditch effort in globalisation, yet these have the same impact and effects especially in the investment of infrastructure to encourage globalisation (Gabor, 2021).

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Globalisation was beneficial to the core largely through the means of dependency and unequal development. Ensuring that there were enough resources to maintain their standards of living while leaving the scraps for the periphery or worse by cajoling further exploitation in hopes of these nations reaching the standards of the core.

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Yet, the dominance of the global north slipped and now with the advent of a multipolar world have we seen an antagonism emerge from the very bulwarks of development.

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Conclusion

The essay takes a stand that globalisation has often been a game where there have been clear winners and losers. The bulwarks and defenders in the fight for greater globalisation i.e. core regions, have slowly seen the benefits of globalisation slip into the hands of the periphery, encouraging their betrayal to the very ideals they instituted through various means. Many of which are a result of constant power struggles in the world. Like children in a playground, when in the wrong they begin to throw a hissy-fit complaining that the world is unjust and fair, whilst the others are finding other ways to make do with what they have.​  

 

The future is uncertain as to how it will play out, in the words of Gramsci “The old world is dying, and the new world struggles to be born; now is the time of monsters” (Gramsci, 1933).

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Notes

 [1] The failure of the Kyoto Protocool has been extensively studied for further readings refer to https://onlinelibrary.wiley.com/doi/pdf/10.1111/polp.12105, https://www.climateforesight.eu/articles/success-or-failure-the-kyoto-protocols-troubled-legacy/ and https://www.climateforesight.eu/interview/ralph_winkler_kyoto_protocol_failures/

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References

• Iyer, K. (2024, December 1). Trump threatens 100% tariff on BRICS countries if they pursue creating new currency. CNN. https://edition.cnn.com/2024/11/30/politics/trump-brics-currency-tariff/index.html

• Obstfeld, M. (2021). Globalization and nationalism: Retrospect and prospect. Contemporary Economic Policy, 39(4), 675–690. https://doi.org/10.1111/coep.12527

• Blomström, M., & Hettne, B. (1984). Development theory in transition. The dependency debate and beyond: Third World responses.

• Sweezy, P. M. (1981). Four lectures on Marxism (Vol. 36) chp.3. NYU Press

• Udoka, I. A. (2005). History and the Challenge of Underdevelopment in the 21 St Century Africa. Journal of the Historical Society of Nigeria, 16, 72–80.

• Persaud, N. (1987). Conceptualizations of Development and Underdevelopment: The Works of Frank and Amin. International Review of Modern Sociology, 17(2), 337–359.

• Marini, R. M. (2022). The Dialectics of Dependency (A. Latimer & J. Osorio, Eds.). NYU Press. http://www.jstor.org/stable/jj.17102148

• Kraus, J. (1991). The Struggle over Structural Adjustment in Ghana. Africa Today, 38(4), 19–37

• La Verle Berry, ed. Ghana: A Country Study. Washington: GPO for the Library of Congress, 1994.

• Implications of IMF Loans and Conditionalities on the Poor and Vulnerable in Ghana | ActionAid International. (2010, November 1). https://actionaid.org/publications/2010/implications-imf-loans-and-conditionalities-poor-and-vulnerable-ghana

• Justice, D. (2016, October 9). The fall and rise of Ghana’s debt: How a new debt trap has been set - Debt Justice. https://debtjustice.org.uk/report/fall-rise-ghanas-debt-new-debt-trap-set 

• Wallerstein, I. (2005). After Developmentalism and Globalization, What? Social Forces, 83(3), 1263–1278. http://www.jstor.org/stable/3598277

• Gabor, D. (2021). The Wall Street Consensus. Development and Change, 52(3), 429–459.

• Prison Notebooks Volume II, Notebook 3, 1930, (2011 edition) SS-34, Past and Present 32-33