DEVELOPMENT AND UNDERDEVELOPMENT A MARXIST ANALYSIS

DEVELOPMENT AND UNDERDEVELOPMENT A MARXIST ANALYSIS

Also by Geoffrry Kay THE POLITICAL ECONOMY OF COLONIALISM IN GHANA (with Stephen Hymer)

Development and Underdevelopment: A Marxist Analysis GEOFFREY KAY Lecturer in Economics The Ciry Universiry, London Palgrave Macmillan

ISBN 978-1-349-02064-5 ISBN 978-1-349-02062-1 (ebook) DOI 10.1007/978-1-349-02062-1 Copyright 1975 Geoffrey Kay Softcover reprint of the hardcover 1st edition 1975 All rights reserved. For information, write: St. Martin's Press, Inc., 175 Fifth Avenue, New York. N.Y. 10010 Library of Congress Catalog Card Number: 74-22889 First published in the United States of America in 1975 AFFILIATED PUBLISHERS: Macmillan Limited, Londonalso at Bombay, Calcutta, Madras and Melbourne

TO ROGER GENOUD STEPHEN HYMER ROBERT SERESWESKI

Contents Preface Introduction ix I. PRODUCTION, CONSUMPTION AND SURPLUS 13 I. The law of social reproduction 15 2. The circuit of production and consumption 19 3 The social relations of production 21 2. SURPLUS VALUE AND PROFIT 26 I. Commodity and value 26 2. The circuit of capital 30 3. The magnitude of value 33 4. Profit 39 5. Surplus value 44 6. Wages and the circuit oflabour 47 7. Real wages and the value of wages 50 3 THE ACCUMULATION OF CAPITAL 56 1. The pursuit of pure quantity 56 2. Accumulation and money 60 3 Accumulation and simple commodity production 63 4 Commodity production and capitalist production 67 5 Accumulation and the socialisation of labour 72 6. Accumulation and the socialisation of capital 75 Note: Social capital and the transition to communism 82 4 PRODUCTIVE AND CIRCULATION CAPITAL 86 I. ltnequal exchange 86 2. Circulation capital in capitalist society 89 3 Circulation capital in non-capitalist society 93 5 MERCHANT CAPITAL AND UNDERDEVELOPMENT 96 I. The transition to industrial capitalism 98

viii Development and Underdevelopment: A Marxist Ana?Jsis 2. British colonialism 105 3. The theory of unequal exchange 107 4. Merchant capital and the development of underdevelopment II9 6. INDUSTRIAL CAPITAL AND UNDERDEVELOPMENT 125 I. Fixed and circulating capital 130 2. The effect of turnover on the rate of profit 137 3. Turnover and employment 145 4. Accumulation and employment 148 5. The formation of the proletariat 153 7. THE ACCELERATION OF CAPITAL 157 1. The intensification oflabour 157 2. Fordism 167 8. CRISIS AND RECOMPOSITION 172 I. Crisis 172 2. Recomposition 178 3. Democracy and repression 184 List oj Works Cited 188 Index 190

Preface Since 1968, the myth that Capital is unreadable has been exploded. Marxist literature, including Marx's own writings, now proliferate as never before. This recrudescence has a real basis in developments during the sixties: the collapse of consensus politics; the decomposition of the affluent society and the failure of the Americans to win a decisive victory in Vietnam. It also has ideological roots, for as the world has moved on academic social science has stood still. Economics is no exception. Faced with developments they cannot grasp, the economists have retreated behind a veil of obscurantism and statistics vainly hoping that by measuring and correlating the appearance of effects they will get some clue as to causes. As their conventional orthodoxy, neo-classical theory, has collapsed under the weight of its own internal inconsistencies, economists have desperately appropriated terms and methods from the natural sciences in the hope that this guise of science might be mistaken for the real thing. Some students may be taken in by it, but many are bored and frustrated. Those students who turn to economics in the hope of finding some explanation of the developments they see around them: developments such as rising affluence and increasing stringency; growing wealth and grinding poverty; not to mention urban decay, pollution and underdevelopment - developments, in short, which threaten the very existence of civilisation: these students are still taught the key to analysis lies in understanding the way an isolated individual chooses whether to buy an overcoat or spaghetti. The study of underdevelopment, it is true, has always been broader than that of other problems, and even orthodox development economists have been forced to take other socalled non-economic factors into account and recognise a historical dimension. But this has only highlighted their ideological prejudices. As I argue in the Introduction, orthodox development theory was never more than elaborate apology for

x Development and Underdevelopment: A Marxist Ana[ysis colonialism, and for this reason quickly came under attack from the supporters of the nationalist movements that spread so rapidly around the underdeveloped world. This criticism was soon generalised against an even more fundamental proposition of orthodox theory, that underdevelopment was an original condition for which capitalism could not be held responsible. By the mid-sixties a whole school of radical development economists had emerged which held the opposite view. Glaring inconsistencies in orthodox theory were brought to light and historical studies were produced to show how important capitalist penetration had been. But this is as far as it went. As none of the major works produced by this school was firmly based on the law of value which Marx discovered and elaborated, little progress could be made beyond this point. The radical critics of orthodox development theory were so keen to prove the ideological point that underdevelopment was the product of capitalist exploitation, that they let the crucial issue pass them by: capital created underdevelopment not because it exploited the underdeveloped world, but because it did not exploit it enough. I have written this book with the intention that it should be understandable to readers with no previous knowledge of Marxism or economics. The opening chapters consist of an introduction to Marx's economic thought and all the concepts that are subsequently used in the later chapters are explained sufficiently for even the technical sections of chapters 5 and 6, which contain the heart of my argument to be followed. If this work achieves its goal of comprehensibility without compromise to the complexity of its subject, much of the credit must go to Susan Bennett who took the time and trouble to work through it with me on a line by line basis. I should also like to thank Antonio Bronda, Charmian Campbell, Peter Cusack, Feruccio Gambino, Alex Macdonald, John Merrington, Roger Murray and Ian and Beryl Tolady for their intellectual and moral support. My colleagues at The City University eased my teaching load at a crucial time and Marian White and Mary Keane worked wonders with a ragged manuscript. The City University, London, December 1973 GEOFFREY KAY