marketing. In agriculture, productivity gains are likely to be less dramatic,
while there is a limit to the market for even so desirable a product as a
banana. Countries that specialize in agricultural and other primary prod-
ucts will be continually running on the spot in order to preserve existing
living standards, let alone improve upon them. Does this argument stand
up? The simple answer is that this is still hotly contested.
Liberal economists
on the whole deny that there is a trend of the sort that Prebisch identifies.
Prices of commodities rise and fall in response to general and particular
factors, and there is no clear trend; moreover, whereas a bushel of grain is
much the same in 1950 as in 2004, a tractor may be a much better product
at the later date, justifying a higher price. Keynesian and (some) Marxian
economists tend to be more sympathetic to the general thesis. As we will
see below, to some extent the argument
has been overtaken by events, as
industrial production has moved South, and, in any event, much primary
production has always been ‘Northern’ – the US, Canada and Australia,
along with Russian Siberia are, and always have been, the most significant
producers of raw materials. However,
none of this really matters, because in
political terms Prebisch has been wholly triumphant. Until very recently,
virtually all Southern governments and informed Southern opinion has been
convinced of the basic truth of his position – that the liberal international
economic order is biased towards the interests of the North and that free
trade is detrimental to Southern interests.
What are the policy implications of this position? In the 1950s ECLA
thinking was statist and nationalist, and summed up by the policy of
Import
Substitution Industrialization (ISI). The thrust of this policy was to protect
and develop local industries in order to allow local suppliers to meet local
demand, importing capital goods and technology but as few manufactured
products as possible. By the mid-1960s there was no sign that this policy
was actually working, and a rather more radical approach emerged – key
names here include André Gunder Frank, Fernando Cardoso, Thestonio
dos Santos, and, later, drawing on African experiences
to support the Latin
Americans, Arghiri Emmanuel, Immanuel Wallerstein and Samir Amin. The
difference between these ‘structuralist’ writers and the proponents of ISI is
the difference between reform and revolution. ISI was designed as a strategy
to improve the standing of the South within the capitalist world economy;
many supporters of ISI, including Prebisch, wanted to overthrow this
system
in the long run, but, as fairly orthodox Marxists, they believed this
could not happen until the forces of production had been sufficiently
developed; until, that is, ‘the time was ripe’. Orthodox, Moscow-leaning
communist parties in Latin America supported local capitalists – according
to them, the bourgeois revolution had to take place before the socialist
revolution could arrive. According
to the structuralists, all parts of the
world economy were already capitalist by virtue of producing for the world
The Global Economy
153
market, hence there was no need to wait for capitalism to develop before
making the revolution. Consequently, they opposed official communism –
except in Mao’s China and Fidel Castro’s Cuba – instead giving their
allegiance to rural guerrilla movements. The aim was to break the chain of
exploitation that bound together the metropolitan
centres and peripheral
satellites of the world system; the world trading system works to transfer
resources from the poor to the rich, from the South to the North, and there
is no way this system can be reformed and made to work in the interests of
the peoples of the South.
From a structuralist perspective the statism and nationalism of import
substitution strategies works to conceal the true
nature of the world politi-
cal economy, which is not, ultimately, about states, but about
classes and
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