READING-04

The Development of
Underdevelopment (1969)
By-Andre Gunder Frank

In his 1969 work, The Development of Underdevelopment, Andre Gunder Frank argues that
to understand underdevelopment, we must first examine the historical relationship between
developed and underdeveloped countries. Frank critiques existing development theories for
focusing mainly on the experiences of European and North American countries while
neglecting the history of colonial and underdeveloped nations. He highlights that the
colonial past of underdeveloped countries shaped their current economic conditions, and
that development theories based on the experiences of now-developed nations fail to explain
the specific circumstances of the underdeveloped world.

Frank challenges the widely accepted idea that underdeveloped countries are simply at an
"earlier stage" of development, similar to what developed nations once experienced. He
argues that underdevelopment is not a natural or original state but a result of economic and
political relations with the metropolitan (colonial) countries. He also dismisses the belief
that underdeveloped nations will develop by adopting capitalist practices or receiving
foreign investments, claiming instead that real development can only occur independently of
such relations.

Frank also critiques the "dual society" thesis, which suggests that underdeveloped countries
have two separate sectors—one modern and capitalist, and the other traditional or feudal. He
argues that this view is incorrect and that both sectors are interconnected and shaped by the
historical spread of capitalism. Using examples from Latin America, Frank explains how the
colonial metropolis-satellite relationship continues to affect the economic structure, with
local centers of power (provincial capitals) acting as satellites of the national capital, which in
turn is a satellite of global capitalism. This structure perpetuates underdevelopment, limiting
the economic growth of these countries.

In conclusion, Frank calls for a historical approach to understanding development and

underdevelopment, which considers the ongoing effects of global capitalist systems.

In The Development of Underdevelopment (1969), Andre Gunder Frank critiques the

traditional explanations of underdevelopment in Latin America and argues that
underdevelopment is a result of the historical integration of Latin America into the world
capitalist system. He challenges the idea that underdevelopment is due to isolated, feudal
institutions or capital shortages. Instead, Frank emphasizes that underdevelopment is a
consequence of the development of capitalism itself, both globally and regionally.

Frank’s case studies of Chile and Brazil provide evidence for his thesis. In Chile, he shows
that the Conquest not only incorporated the country into global trade but also introduced a
monopolistic metropolis-satellite structure that shaped its economy. Over time, this
structure deepened Chile's underdevelopment. Similarly, in Brazil, Frank analyzes the
expansion of the world economy since the 16th century, which integrated various regions into
export economies. Although these regions saw economic booms, they were not self-
sustaining; they were ultimately left in a state of underdevelopment as global demand for
their goods waned.

Frank proposes several hypotheses based on his findings:

1. Metropole-Satellite Hypothesis: Countries in the periphery (satellites) develop at a

slower pace than the central, developed countries (metropoles) because their
development is limited by their subordinate position in the global capitalist system.
Frank supports this by showing that industrial growth in Latin American metropoles like
São Paulo and Buenos Aires is still dependent on external capital, limiting their
autonomous development.
2. Greatest Development with Weak Ties Hypothesis: Underdeveloped countries
experience their most significant economic growth during periods when their ties to the
global metropole are weakest. Frank cites the periods of crisis (e.g., the World Wars and
the Great Depression) as examples when Latin American countries experienced
significant industrial growth due to reduced external influence.
3. Geographic and Economic Isolation Hypothesis: Regions that were previously isolated
from the world capitalist system had the best chances of initiating self-sustaining
industrial growth. Examples of such regions include São Paulo, Tucumán (Argentina), and
Chilean interior, which thrived when they were less integrated into the world system
before being dominated by global capitalism.

Frank concludes that underdevelopment is a product of the global capitalist system, and the
path to true development lies in breaking free from this exploitative structure. His approach
shifts the focus from isolated local factors to a broader historical and structural
understanding of underdevelopment within the global capitalist framework.

In The Development of Underdevelopment (1969), Andre Gunder Frank explores the roots of
Latin America's underdevelopment, focusing on how its integration into the global capitalist
system has shaped its economic and social structures. His analysis challenges the traditional
view that underdevelopment is due to isolation or pre-capitalist institutions. Instead, Frank
offers several hypotheses to explain the persistent inequality between the metropole
(developed countries) and satellites (underdeveloped countries).

Second Hypothesis: Latifundia as a Commercial Response

Frank argues that the latifundia (large estates) in Latin America were not feudal holdovers
from colonial times, but commercial enterprises created to respond to market demands.
These estates expanded when the global market required more goods, increasing the demand
for land, labor, and capital. However, when these markets diminished, the estates could no
longer generate sufficient wealth, and their economies became isolated, feudal-like, and
reliant on subsistence farming. For example, in Brazil, Mexico, and Argentina, the rise of
latifundia was closely tied to commercial demand, not colonial feudalism. Over time, as
market demand fell, these regions turned inward, facing economic decline and becoming a
core example of underdevelopment.

Third Hypothesis: Regions Dependent on Exports

The third hypothesis focuses on regions that were heavily involved in exporting goods to the
global market. Frank explains that areas with the closest ties to the metropolis—such as the
sugar-exporting West Indies, Northeastern Brazil, and former mining regions like Minas Gerais
—experienced the worst underdevelopment once the demand for their products dropped.
These regions once fueled the global capitalist system with commodities like sugar and silver,
but when their markets collapsed, they were abandoned by the metropole. The existing
economic and social structures, shaped by export-driven capitalism, were unable to generate
autonomous development, leaving these areas impoverished and trapped in a cycle of
underdevelopment.

In conclusion, Frank's second and third hypotheses emphasize that regions that were once
thriving export economies, directly integrated into the global capitalist system, are now
among the most underdeveloped. These areas became dependent on the global market, and
once those markets faded, they were unable to develop independently. The decline of the
export economy left them stranded in a state of underdevelopment, unable to break free
from the long-lasting impact of global capitalism.

The Rise and Future Demise of the

World Capitalist System: Concepts
for Comparative Analysis (1979)
by-Immanuel Wallnerstein

Immanuel Wallerstein’s 1979 article, The Rise and Future Demise of the World Capitalist
System: Concepts for Comparative Analysis, examines the evolution of the capitalist world-
economy and critiques traditional views on social development. Here are the key points:

1. Industrial Revolution and Progress: Wallerstein discusses how the industrial revolution in
the 19th century was seen by thinkers like Saint-Simon, Comte, Hegel, Weber, and
Durkheim as a natural process of human progress. These thinkers believed
industrialization was a final stage of development. In contrast, Marx viewed it as a
transitional phase leading to a classless society through a revolutionary transformation.
2. Critique of Ideological Models: Wallerstein praises Marxism for being a critical framework
that highlights the contradictions within capitalism and its ideologies. Marxists
questioned abstract models of social change, which often ignored historical realities.
Wallerstein argues that Marxism had the strength to challenge the established social
structures, though, over time, it became more dogmatic when adopted by states.
3. Critique of "Stages" of Development: Wallerstein critiques the idea of "stages" used to
explain historical transitions, such as the move from feudalism to capitalism. He argues
that these stages are misleading because they reify parts of the social system into
discrete units. He highlights the false idea of dual economies and the mistaken
comparison of different stages like "feudal" and "capitalist" societies.
4. The World-System Approach: Instead of looking at individual stages or countries,
Wallerstein emphasizes the importance of studying the world-system, which consists of
multiple political and cultural entities that are economically interconnected. He argues
that there are two types of world-systems: world-empires, which are politically unified,
and world-economies, which have multiple polities but a single division of labor. The
capitalist world-economy that emerged in 16th-century Europe is an example of the
latter.
5. Underdevelopment and Dependency: Wallerstein critiques Frank's theory of
underdevelopment, which argues that underdevelopment is a product of the global
capitalist system, rather than an earlier stage in development. He stresses that
underdeveloped countries are integral parts of the capitalist world-economy, not
isolated entities that can develop on their own.

In summary, Wallerstein argues that to understand global economic systems, we must focus
on the interconnected world-economy rather than outdated concepts of stages and
individual countries.

In 1961, the 22nd Congress of the CPSU introduced a fourth stage in the process of socialism,
claiming that the USSR had reached a "state of the whole people." This new stage was
described as a classless society where no internal class struggle existed. The USSR was said
to have overcome class domination and suppression. However, Mao Tse-Tung rejected this
view, arguing that class struggle continued even in socialist states. He emphasized that, even
after the revolution, struggles were still needed in the political and ideological spheres,
especially to develop Marxism. Mao’s view became central during the Cultural Revolution,
where he insisted that socialism was a process, not an event. He argued that class struggle
would continue for a long time within socialist society.

The disagreement between the CPSU and CCP also involved the gradual transition to
communism. The CPSU believed each socialist state would transition separately, while the
CCP argued that the transition should happen simultaneously across all socialist states.
Mao's position focused on viewing communism as a characteristic of the world-economy, not
just individual nation-states.

An important counterpoint was made in the USSR, where scholars claimed that socialism had
expanded beyond national boundaries to become a world-system. They argued that
socialism was growing into an integrated world system, like capitalism had in the 19th
century. However, these scholars saw the socialist world as divided, politically, rather than
united economically.

Wallerstein critiques these debates using the concept of world-systems, focusing on the
capitalist world-economy, which has existed for about four or five centuries. He explains that
the capitalist system is based on the production for profit in a global market. He argues that
the capitalist world-economy is not just about industrialization but involves a broader
system, where regional specialization and the role of states in creating or disrupting market
forces are crucial to understanding its operation.

This detailed analysis contrasts different views of socialism and capitalism in the global
context, emphasizing that understanding these systems requires focusing on the world-
system rather than isolated nation-states.

Immanuel Wallerstein, in his work on the modern world-system, argues that capitalism has
always operated on a global scale, not confined to individual nation-states. He critiques the
idea that capitalism only became "worldwide" in the 20th century, emphasizing that it has
always been a world-economy.

The world-economy is structured into three distinct roles:

1. Core States: These are the economically dominant, militarily strong, and politically
powerful states. They control most of the wealth and power in the global system.
2. Peripheral States: These are weaker states that are often exploited for their resources
and have less economic control.
3. Semiperipheral States: These sit between the core and periphery, often having some
economic power but not as dominant as the core. Wallerstein argues that the existence
of semiperipheral states is crucial for the smooth functioning of the capitalist system as
they act as a buffer between the core and periphery.

Wallerstein explains that core states (e.g., those in north-western Europe) developed strong
bureaucracies, centralized economies, and militaries to control global trade. Meanwhile,
peripheral states were weaker, with economies controlled by external merchants, hindering
their ability to develop strong state institutions. Over time, some peripheral states, like
Japan, shifted to semiperipheral status due to their military strength or industrialization.

The capitalist world-economy is sustained by three key mechanisms:

1. Military Power: The dominant states use military force to maintain control.
 2. Ideological Commitment: The elites within the system have a vested interest in
maintaining the global order.
3. Social Structure: The division of society into upper, middle, and lower strata prevents
revolutionary challenges by maintaining a balance of power.

Wallerstein traces the evolution of the world-economy, beginning with the European
expansion in the 16th century, leading to industrial capitalism in the 19th century. This
expansion required global markets and raw materials, and it incorporated regions like Africa,
Asia, and Latin America into the periphery.

Overall, Wallerstein’s theory challenges the idea of isolated national economies and offers a
framework to understand the global interconnectedness of capitalism.Immanuel
Wallerstein's analysis of the capitalist world-system highlights significant transformations in
core states (the most powerful and wealthy nations) during industrial capitalism.
Industrialization in core states, such as England, meant a shift away from agriculture, with
fewer people working the land. By 1900, less than 10% of England's population was involved
in farming. Initially, core countries like Britain traded manufactured goods with peripheral
regions, supplying manufactured products in exchange for raw agricultural materials.
However, by the late 19th century, the rise of competition from semiperipheral states (such
as France, Germany, and the U.S.) prompted Britain to focus more on providing machinery
and infrastructure (e.g., railroads) rather than manufactured goods alone.

The industrial revolution also led to the creation of a large urban proletariat (working class),
sparking the rise of trade unions and socialist parties, which challenged the stability of
capitalist states. At the same time, agricultural production outpaced market demand,
creating an economic crisis. To resolve this, the industrial proletariat in core nations was
given higher wages, which both stimulated consumption and alleviated social unrest.

Wallerstein’s analysis also considers the Russian Revolution of 1917, which reversed Russia's
decline towards peripheral status, leading to its later rise as a semiperipheral power within
the world economy. By the end of World War II, the United States briefly held the same global
dominance as Britain once had.

Wallerstein concludes that capitalism, while dominant, faces contradictions. The need to
extract profits from workers conflicts with the need for widespread consumption to sustain
growth, creating systemic crises. He argues that socialism would require a new kind of world-
system, not just a reform of capitalism.