Postcolonial Theory and The Specter of Capital
Postcolonial Theory and The Specter of Capital
Postcolonial Theory and The Specter of Capital
Paper
Vivek Chibber
Speaking at a meeting with domestic bankers in the fall of 2003, in the wake of the
calamitous implosion of his countrys economy, Argentine President Nestor Kirchner
announced his intention to rescue the Argentine economy from the ruins of neoliberalism. But, he declared, it is impossible to build a national project if we do not
consolidate a national bourgeoisie.1 In fact, this speech was only one among many he
made following his inauguration in May, stressing the need for a national capitalism.
Kirchner has not been alone in this. In Brazil, the rise to power of Luis Inacio Lula da
Silva and the Workers Party has revived talk of a social pact between labor and capital,
and the possibility of carving out a space for Brazilian development through an alliance
with national industrialists represented, most pointedly, in the choice of textile
magnate Jose Alencar as Lulas Vice-President. And both Kirchner and Lula follow in
the wake of Venezuelan President Hugo Chavez, who, in the face of open hostility from
the United States, has railed against neo-liberal orthodoxy, exhorting developing
countries to reclaim the legacy of national development models.
All this talk of national capitalisms and social pacts alludes to an era that appeared
to be buried, once and for all, under the weight of the Washington consensus. This was
the half-century of developmentalism, spanning the years of the Great Depression to
the debt crisis of the 1980s. In the immediate aftermath of the debt crisis, it did seem that
the drive toward liberalization and privatization had acquired an irresistible force in the
developing world. There was an ineluctable quality to the dismantling of the policy
apparatus handed down from the years of development planning, enough to make even
the mention of national projects seem somewhat quaint. But matters are different today.
After the dismal economic record of the quarter-century under neo-liberal hegemony, the
experience of the 1950s and 60s has gained respectability as indeed it should. For
despite its somewhat ignominious end, the developmentalist era out-performed its
successor on most every measure.2 Politically, the dismal record of neoliberalism has
meant a steady loss of legitimacy in the South. Thus, it is not altogether surprising to find
a revival of the ambition to construct national development.
The call for a return to a kind of developmentalism is not only to be found
among political elites. It also emanates from a powerful and articulate wing of the antiglobalization movement critical intellectuals, NGOs, and trade unions. In a period
when free market policies have little credibility, but labor is not strong enough to pose a
serious challenge to private property, some kind of statist development project appears to
many to be the transitional programme of our time. Defending a space for national
capitalist development, under the direction of domestic groups, at least seems consistent
in principle with conscious direction of the economy even if under the hegemony of the
national bourgeoisie.
This nostalgia for the bygone era is certainly understandable. In many respects, I
am sympathetic to it. But we also have behind us a half-century of experience with just
such models of development, models which relied upon, and fostered the growth of,
domestic capitalists. It may, therefore, be of some relevance to turn to the historical
record, in order to examine closely the political preconditions for, and consequences of,
developmentalist projects.
I have already noted that in many crucial respects the record of the
developmentalist years is superior to that of the years that followed. But any
acknowledgement of its successes must also take account of its internal contradictions
since these contributed powerfully to the models eventual disintegration. In fact, I will
argue that the economic weaknesses of the model can in large measure be explained by
kind of political alliance that was required to support it; in particular, by the ways in
which capitalists were able to impose limits on the scope of state power. Further, the
political conditions which made the developmentalist alliance possible at all required
concessions from workers which may, in current conditions, well be unacceptable.
Hence, even if national development projects of the kind alluded to may be possible, they
may not be desirable at least not to progressives. The whole matter turns on the nature,
the interests, and the power of the class to which Kirchner made his overture upon taking
office in 2003 the national bourgeoisie.
Three sets of expectations have traditionally been associated with national
capitalists, especially within the Marxist tradition, where they are sometimes elevated to
the status of historic missions. The main expectation is that, because they derive their
profits from the domestic market, national capitalists have an interest in the expansion of
capitalist relations, and in rapid economic growth; hence their status as the linchpin of
national development strategies in the modern era. Deriving from this are two other
putative interests. They are expected to spearhead, or at least accede to, the abolition of
pre-capitalist relations, since this is the precondition for the spread of capitalism. This
was the basis for the expectation, among Marxists of the Third International, that the
bourgeoisie was a natural ally in the anti-feudal stage of the national liberation
movements. A final expectation was that this class would also have a natural interest in
opposing imperial economic encroachment - again, because of its dependence on the
domestic market. In this, the national bourgeoisie was inevitably contrasted with the
local compradors, who, because of their links with metropolitan firms, were seen as
irredeemably tied to imperial interests.
Political and economic developments over the past decades have called all this
into question. National capitalists showed very little inclination to participate in
attacking feudal landed classes. Further, thatthere was a clear separation between the
national and comprador wings of the domestic bourgeoisie has also been called into
question. No doubt, there were distinct interests associated with different relations to
metropolitan firms. But capitalists seem to have been happy to play both roles
simultaneously trying to protect their domestic market, while striving for lasting ties
with metropolitan firms. Interestingly, while both of these roles have been thrown into
doubt, the fount from which they spring the assumption that national capitalists are a
natural ally for initiating rapid development has not been questioned. If anything, the
trend in recent scholarship - in the work of Peter Evans and others - has been to press it
into service even more.3 And it is present in many of the declarations of the antiglobalization movement.
It is this assumption about the national bourgeoisie its status as the natural social
force for rapid development that needs to be challenged. Over the past decades a quite
powerful set of myths has come to obscure the real experience of twentieth century
capitalism in developing countries, papering over the actual dynamics, the roles played
by key actors, and their interests. This essay aims to make a start in clearing away some
of these myths. If developmentalism is to be revived, these are myths from which it need
to be free.
capitalists are taken to have abdicated some of their autonomy to state managers, in
recognition of their need for the latters guidance and assistance in the industrialization
process; in others, they are simply seen as being in no position to resist when planners
and political elites impose the new strategy upon them. In this case, the state is seen as a
paternalistic agent, shepherding local entrepreneurs onto an accumulation strategy which
is, in any case, consistent with their interests.
The notion that rapid industrialization strategies were state-led is arguably one
of the pillars of development literature. What is difficult to reconcile with this view,
however, is the indisputable fact that, over the course of the developmentalist era, these
states found themselves struggling to achieve what they had taken to be their central
mission -- directing the flow of domestic private investments into sectors with high social
returns, and away from those in which returns on investment may have brought enormous
private profits, but were of less developmental significance. In South America, the
Middle East, and South Asia, state-led strategies did bring about a transformation of the
economy in the generally desired direction. But this was achieved haltingly, at enormous
public cost, with much of the work being done by public enterprises, and often resulting
in highly inefficient private sectors. The most visible signs of the expense at which it
was achieved was the expanding fiscal burden on these states -- as they had to absorb
much of the losses incurred by the private sector, while at the same time continuing to
funnel public resources to the private sector in the form of subsidies; and a growing
imbalance on the external account as the enormous inflow of imported capital goods
was not balanced by a flow of investment into exportable lines, with which the external
debit could have been balanced.
The question therefore arises: if the developmentalist era was indeed state-led,
then what explains these states weakness relative to the tasks at hand leading to the
eventual collapse of developmentalism, and its replacement by neoliberalism? Why was
the quality of state intervention so much below what was needed to push local industry to
the technological frontier? The most compelling answer would appear to be that, if state
managers did not succeed in their mission, it was because they lacked the capacity to do
so. And this is plausible. Industrial policy requires a certain level of institutional
capacity on the part of the policy apparatus. There is no warrant at all to assume that
states come equipped with this, especially in developing countries. Simply embarking on
an interventionist development strategy does not, therefore, mean that the state will have
the institutional muscle to succeed. So perhaps the reason industrial policy met with at
best patchy success was that political elites were not able to equip their states with the
right kind of policy apparatus.
It is indisputable that developmental states in much of the South lacked the
institutional capacity needed for industrial policy to fully work. This has been the main
discovery of a veritable avalanche of case studies over the past decade or so. But this
simply raises the next, and quite obvious, question. If dirigisme requires some degree of
state-building, then why did political elites not build the necessary institutions? I will
argue that the main source of resistance to building strong and supple policy apparatuses
turned out to be the national bourgeoisie itself. I should make clear at the outset that I am
using this term in the sense handed down by its originators, the Marxists of the Second
and especially the Third Internationals: it refers to the segment of local capitalists who
are oriented to the domestic market, seek autonomy from metropolitan control, and ally
with the state around industrialization.
Given this description, it may seem paradoxical to suggest that national capitalists
opposed state-building for rapid development. Certainly, theorists at mid-century did not
expect this, and much of the current literature on developmentalism has taken it as so
unlikely that its very possibility has not been explored. For those coming out of the
Marxist tradition, it was always that other segment of the bourgeoisie, the compradors,
who were the villains of the story. These were the local capitalists with close ties to
metropolitan capital, often based in trading and speculative activities, other times in agriexports, but always suspect in their commitment to national development. The national
bourgeoisie was suspect on labor issues, to be sure and why wouldnt it be? But on
allying around an impeccably bourgeois model of development, they were not only taken
to have been reliable, but were expected to be the pivot on which the whole game turned.
and to ensure that public monies were being utilized in the desired fashion. It was taken
for granted that, in return for the subsidies that were being funneled to them, industrialists
would have to submit to a certain measure of accountability they would have to accept
being disciplined.
For planners, the need to discipline private firms was a natural feature of importsubstitution. For capitalists, however, the incentive structure pointed in a different
direction. As is well known, the immediate effect of import-substitution industrialization
(ISI) is to protect domestic markets from competition from imported foreign products.
But the exclusion of imports meant that in many manufacturing lines local markets came
to be dominated by a small number of producers. This was partly because of the small
size of the local market, but it was also because the scale requirements of modern
manufacture called for larger outlays of fixed capital, and hence, firms with considerable
market power. There was thus an enormous advantage to being the first entrant in any
new line, as it was relatively easy to hold off the threat of potential competitors. Further,
this advantage was reinforced by other peculiarities of ISI, one of which was to
intentionally limit the number of producers in any sector by administrative means -precisely because of the small market, policy makers tended to be wary of the possibility
of excessive or ruinous competition.
The consequence of this state of affairs was that, once the threat of external
competition was extinguished, local capitalists were given virtual monopolistic control
over their markets. And this in turn meant that, for any such dominant firm, the
compulsion to innovate and invest in best-practice techniques dissipated since it had
markets handed over to it. Given this production regime, the subsidies flowing to firms
from the state did not need to be reinvested to upgrade existing plant and equipment.
Market dominance obviated the need to minimize costs. It made better sense, instead, to
use the resources to start operations in altogether new lines and acquire a first-mover
advantage there. What made this especially attractive was that industrial firms in the
leading late developing countries were typically part of large, diversified business
groups, which had expertise in numerous sectors, and maintained diverse investment
portfolios.
For the national bourgeoisie, ISI thus presented the possibility of enormous gains.
The problem was that, in order to maximize these gains, it made good sense to accept
ISIs subsidization components, while rejecting the ambitions of state managers to
control what industrialists did with the subsidies. The critical factor underlying this
resistance to discipline was the attenuation of competitive pressures in ISI. It may be
wondered why firms would resent demands made by the state to perform at competitive
standards, which, in many respects, was certainly in their interests. The reason is that,
with the entry of international competitors blocked by protectionist measures, and with
internal competition muted owing to the small size of the market, firms were under no
systematic pressure to constantly upgrade their operations. With each influx of newly
acquired credit or subsidies from the state, managers felt no compulsion to increase the
efficiency of existing undertakings, since there was no imminent threat of losing market
share. Hence, while state policy agencies granted subsidies to firms on the basis of a
development plan with particular priorities, business houses made their own investment
plans, based on their prognoses and their priorities, which often did not coincide with
those of planners. For this very reason, they regarded the disciplinary component of ISI
as an unacceptable encumbrance; in order to exploit their opportunities fully, firms would
need maximum latitude to make their own decisions as to which sectors they would
expand into, where new investments would be made. The best way to use ISI was to
encourage the states commitment to subsidies, while insisting that private capital should
have the maximum latitude in their actual disposition.
In sum, whereas planners saw ISI and industrial policy as two sides of the same
coin, for capitalists, ISI generated an incentive to reject the discipline of industrial policy.
Those institutions intended to further the subsidization process were supported by capital;
but dimensions of state-building aimed at enabling planners to monitor and regulate
firms investment decisions were stoutly resisted. At the surface level, the conflict
between the national bourgeoisie and the economic planners was not always apparent. It
was common to find industrialists joining the chorus calling for planning, economic
management, and the like. But what they meant by this was a process in which public
monies were put at their disposal, and at their behest. To them planning meant the
socialization of risk, while leaving the private appropriation of profit intact. Business
groups in these countries accordingly waged a campaign in which they called for, and
supported, central coordination of economic policy while at the same time fighting
strenuously against measures which would give planners any real power over their
investment decisions.
THR
EE HISTORICAL CASES: INDIA, TURKEY, BRAZIL
These lines were more clearly drawn, and the dynamics were visibly played out,
in the region where the political elite had the clearest and deepest commitment to a stateled development model the Indian subcontinent.5 Under Nehrus leadership, the Indian
National Congress began formulating an agenda for post-colonial planning a full decade
before the departure of the British. The leading lights of the business community, for
their part, not only announced a commitment to participate in post-independence
planning, but even called for it, also before full autonomy was achieved. What became
clear very quickly, however, was that the two groups had very different conceptions of
the appropriate range of power to be enjoyed by the state. Business groups launched an
all-out offensive against all instruments designed to give teeth to the planning apparatus,
while clamoring all the while for more subsidies and more protection. State intervention
in industrial development would be tolerated, but only if it was on the invitation of
business groups not at the discretion of planners. The campaign, waged through an
intense lobbying effort and backed by an investment slowdown, was large effective. The
new government did install a planning apparatus, but one in which the central Planning
Commission had little power to oversee, let alone directly influence, private investment.
The gestation of a planning regime was not nearly as long in Turkey. Whereas in
India the commitment was enunciated more than a decade before its initiation, the turn to
planned industrial policy was rather rapid in the Turkish case, where it was first proposed
at the end of the 1950s, and installed less than five years later. It is true that Kemalist
etatism can be traced back to the 1920s, intensifying in the years after the Great
Depression. But state protection and promotion of industry was rolled back in the 1940s,
so much so that the industrial sectors weight in the economy declined from 18% of
national income at the end of the 1930s to less than 12% by 1952. It was only in the late
1950s that the liberalizing interregnum ended, and import substitution was put back on
the agenda, this time with an eye toward planned development. The movement was
quick. A restructuring of the state apparatus was initiated, somewhat hesitantly, in 1958;
it accelerated in 1960 after a military coup removed the Democratic Party from power,
and was completed before the middle of the decade. As in India, domestic capitalists
were in favour of both ISI and central coordination of economic policy. The new
military junta thus had considerable autonomy to design the institutions for industrial
policy and restructure the state around them
On the advice of well-known experts like Jan Tinbergen and Alvin Hanson, a
State Planning Organization (SPO) was established as a nodal agency for economic
policy. Tinbergen and his supporters within the Turkish state proposed that the SPO
should have powers to not only draw up plans, but also to ensure that all allocative
decisions were in line with plan priorities. They signaled that the direction of investment
would have to be very different from that which firms had been choosing over the past
decade; further, they proposed that state enterprises, which had been used since the
1930s as a milch cow by private firms, should be rationalized in a way that would
pressure the latter to upgrade their own operations. All this pointed in the direction of a
planning regime committed to streamlining accumulation for national capital which
naturally entailed imposing discipline on the proclivity for speculative and short-term
gains.
What immediately emerged, however, was that the industrialists had a very
different conception of planning. Under pressure from business, state enterprise reform
was put in cold storage; proposed tax reforms aimed at enhancing compliance from the
very wealthy and increasing national savings came under violent criticism; efforts to
elicit information from firms regarding their investment plans met with stiff resistance;
and most centrally, initial attempts to steer the flow of investment toward more strategic
sectors and away from those preferred by local firms came to naught. Seeing the writing
on the wall the planners in the SPO issued a collective resignation in late 1962. The
planning apparatus remained formally in place, as in India, but was never given the
power to oversee effective control over local industry. In fact, in studies of Turkish
economic policy, one comes across the argument that the decline of the planning regime
set in as early as 1965 only three years after the SPO was installed!
In India and Turkey capitalists attacked, and then rolled back, what were rather
radical designs at state restructuring. The Brazilian experience was different, in that the
political leadership never had the same level of commitment to planning, and hence never
drew up comparably ambitious blueprints to which capitalists had to respond. Import
substitution was consolidated after 1930, under the first Vargas regime. But the post-war
10
able to accumulate was severely limited, and it was limited because of a very firm
hostility on the part of national capitalists. Planners could very well funnel resources to
firms, and attach to them stipulations and conditionalities regarding their use but they
had little chance of ensuring their enforcement. Capitalists were able to divert funds
away from targeted sectors and into their own preferred lines. To give just two examples:
a survey of Turkish planning from 1968 to1980 revealed that, of the total subsidies
received by firms, less than 20 per cent was invested in accordance with plan directives.8
Similarly in India, at the height of planning, not only were plan targets consistently
under-fulfilled, but no less than 25% of all subsidized investments ended up in lines that
had been banned outright by the planners.9 The only sectors to which investment did
flow readily in these countries, and in fact exceeded plan targets, were consumer goods
which were typically a low priority for the planners. State managers could go on making
their forecasts and draw up plans with high-minded rhetoric, but the fact was that they
had very little ability to ensure their actualization. Capitalists, on the other hand,
comfortably ensconsed in a protected and highly subsidized environment, could take the
money and divert it to the sectors that they favored.
This generated a political economy in which accumulation proceeded at a fairly
rapid pace for close to four decades. But it did so in a fashion that progressively
undermined the conditions of its own existence. On the one hand, state expenditures
grew at a faster pace than incoming revenue, a direct consequence of the asymmetry
between subsidization and planning in ISI. Not only was the state expected to continue
its commitment to subsidies and transfers to private firms, but, as the latter ignored plan
signals and diverted investment elsewhere, the slack had to be taken up by state
enterprises, which increasingly came to embody a safety net for the private sector:
providing cheap inputs, purchasing private sector products at inflated prices, and moving
into lines capitalists considered unattractive. All this was supported, in the last analysis,
by a continual drain on the public exchequer. Hence, even when the economy grew at an
impressive clip, it was in a race with the fiscal deficit, which often grew even faster.10
The fiscal drain was paralleled by an increasing imbalance on the external
account. Although ISI is today pilloried by neoliberals as a withdrawal from the world
economy, the fact is that its onset generated a further integration into world markets
ironically, by an escalation of imports. It is true that imports of consumer goods were
blocked, but the acceleration of domestic production in turn required a growing inflow of
imported capital goods. In principle, however, the upward trend in capital imports was to
be balanced by commensurate increases in exports. Here again, we encounter a pervasive
myth among exponents of the Washington Consensus, viz. that ISI consistently ignored
the importance of exports. In point of fact, by the late 1950s a large number of importsubstituting countries implemented export promotion programs, in explicit recognition of
the importance of exports for further growth. Indeed it was none other than Raul
Prebisch, the apostle of ISI, who stressed this as an imperative at the close of the
decade.11
The problem was not resistance from planners, but from firms. The strategy in
ISI was to oversee a transformation of the industrial structure, and as a part of that, to
11
12
ISI could ignore the demand for investing at peak levels of efficiency, their counterparts
in ELI could not, for fear of losing position in export markets, where competition was far
more severe. So while firms in ISI had an incentive - once they had already taken the
states money - to resist state demands for productivity enhancing investment, those in
the latter had an incentive to comply with such demands, precisely in order to survive in
export markets. Further, the Korean chaebol needed the states assistance to unpack
technology, coordinate investments between complementary sectors, impose uniform
quality standards, and so on, without which export success would have been highly
unlikely. So unlike the case in ISI, firms in ELI had an incentive to abide by the statebuilding project, for a strong state was an important ingredient in acquiring success in
export markets.
Korea was not alone in putting greater emphasis on exports at this time. This
change was attempted in a number of countries in the early 1960s, but it failed time and
again, against resistance by local producers. Why should they hazard the highly
competitive export markets, when they had a comfort of guaranteed profits at home? The
shift was made possible in Korea by a highly fortuitous circumstance, which brought
together factors unavailable to other countries. First and perhaps most importantly,
Japanese firms were entering Korea at this time to set up partnerships with Korean
producers around an export strategy. They brought with them extensive sales and
marketing networks, as well as plentiful lines of credit precisely what firms in India,
Turkey, and Latin America lacked. Korean capitalists thus had a critical entry barrier
removed, as they were shepherded into lucrative export markets, with networks of clients
ready and waiting. But while partnership with the Japanese firms could offer them entry
into U.S. markets, surviving in those markets required more it needed the helping hand
of the Korean state, in the manner described in the preceding paragraph. Park Chung
Hees ascension brought to power a ruthless regime, but one which, to Korean capitalists,
was desirable precisely because it was committed to building a state capable of
coordinating their success in export lines. When Park signaled thathe was going to push
for an export strategy as well as for a developmental state, he found a ready ally in the
Korean national bourgeoisie.
With this partnership secure, the results of Korean developmentalism were very
different from those elsewhere. Because the state was able to effectively steer the flow of
private investment and to ensure its effective utilization, state enterprises did not have to
pick up the slack as they did in Latin America and India. Further, because of the
effectiveness of state intervention, industrial growth was very rapid, making for a
spectacular rate of economic growth, which kept state revenues high. These two factors
contrasted with the outcomes in our other cases, and in turn greatly eased the fiscal
burden. Hence, while state expenditures in Korea expanded rapidly, this rarely resulted
in high deficits, since revenue expansion was able to keep pace. On the external front,
again, the state was able to steer investment toward newer, high value lines, and in
particular, toward tradable goods. This made for a very different outcome than in Latin
America; in Korea the import bill and external debt rose very rapidly, but export rates
increased even more rapidly, allowing the country to escape constraints on its external
and financial sectors.13
13
The arrival of the Japanese was crucial in inducing Korean capitalists to turn to
export markets, which in turn made them willing to abide by Parks switch to ELI, which
in turn made them ally with Park around building a developmental state. Capitalists in
India, Turkey, or Brazil did not have the benefit of patrons like the Japanese firms.
Indeed, foreign investors in India mainly British and U.S. multinationals went out of
their way to discourage exports, reinforcing reliance on domestic markets. The secret of
Korean success in building a powerful developmental state is thus the anterior switch to a
different accumulation model, export-led industrialization, which created an incentive for
the bourgeoisie to accept the state-building project. In India and elsewhere, conditions
conspired to present ISI as the only viable accumulation model; the cost of this was that
the model undermined the conditions for effective state intervention, since it pitted
capitalists against the state. The conditions which allowed Korean capitalists to make
the switch, and hence accept a developmental state, were simply not available elsewhere.
14
register that, on the issue that divided the bourgeoisie and the state, this generation of late
developers differed a great deal from those of the twentieth century. State intervention in
Germany, Japan, and others of the Victorian era had very few measures aimed at
regulating and monitoring the investment activities of private firms. The role of the state
was far more passive, having been confined basically to the tasks of subsidization and
protection. The politics of state-building therefore differed commensurately, focusing on
the accretion of institutional capacity for raising revenue, and not for disciplining capital.
Naturally, in this context the ties between planners and industrialists were not nearly as
strained. When theorists as late as mid-century considered the likely dynamics of
development planning, they had behind them a historical experience which simply did
not offer a good guide as to what they should expect.
There was also a second weakness in Marxist thinking on this matter, however,
which had to do with political theory. Early theorists of development worked with a
fairly one-sided understanding of the state and its relation to capitalist interests. For this
generation, the capitalist state was an institution which basically reflected ruling class
interests it was a state at the service of the rising capitalist class. It posed a problem
and a potential threat to capitalists only if it was under the influence of another class
declining landlords trying to shore up their power, a growing and mobilized working
class, colonial or imperial rulers, etc.. In these scenarios, it would be natural for the
bourgeoisie to cavil at any strengthening of state capacity, in that it would be at the
service of forces hostile to them. The states orientation was taken to reflect this the
balance of political forces. It is not surprising, then, to find that Marxists gave little
consideration to the tensions that state-led development would actually give rise to. The
national development project was supposed to be led by and in the interests of the
national bourgeoisie. There was thus, on this theory, no room for tensions between them
and the state after all, it was their state.
If we move from this instrumentalist view to one which allows for some
independence of the state from capital, the conflicts surrounding developmentalism
become less mysterious. The very fact of the states relative autonomy meant that its
powers were not under the direct control of the national bourgeoisie. The state of the midtwentieth century was also very different from that of the mercantilist era, or of the
Victorian years. It was endowed with a set of technical and administrative instruments
which made an interventionist strategy far more worrying to domestic capitalists. The
distinctive feature of development planning, what distinguished it from interventionism
of the nineteenth century, was that it was aimed at directly reducing industrialists
autonomous power over investment. If instrumentalist state theory were true, then this
would not have posed a problem capitalists would, through their control over the state
apparatus, ensure that intervention was restricted to those instances where they called for
it, and they would ensure that its claws were never drawn against them. But precisely
because of the states genuine, albeit limited, independence from their control, capitalists
regarded the whole enterprise as fraught with danger. They therefore adopted the
strategy of encouraging and fostering the broad developmental agenda, while at the same
time pruning away the elements which might encroach on their investment prerogatives.
15
Given these liabilities the difference between first and second generation
developmentalism, and the commitment to an overly simplistic understanding of the state
initial arguments about the national bourgeoisie were unable to anticipate its
contradictory position in the development process. What is interesting that it was not
simply the theorists of development who missed the structural basis for this conflict.
State managers too seemed to have labored under the impression that, since their agenda
was devoted to strengthening national capitalism, it would elicit the support of national
capitalists. Of course, they did not believe the instrumentalist story about state power,
since they were quite aware of the independence of their initiative and often regarded
capitalists with quite a bit of disdain. But they do seem to have thought that, given the
bourgeoisies own declarations in favor of rapid development, they would cede to state
managers the autonomy they needed to build the needed policy instruments, and then to
use them. This is one reason political elites moved with such alacrity to marginalize and
demobilize labor. It was only partly done to gain the confidence of their business classes;
the other reason was that it was just taken for granted that the active and hegemonic
members of the modernizing bloc would be the state and capital, the natural partners in
the venture.
Capitalists had a very different idea. Rather than ceding to state managers the
autonomy to build a powerful planning apparatus, they set about decreasing it. This was
what the attack on state discipline was all about. If elites were to in fact build the
appropriate policy instruments, they would have to usurp the needed autonomy having
it ceded to them was not on the cards. The irony is that the very force which might have
boosted their power over capital, and generated enough independence from it to push
through their reforms, was the very force that they took pains to demobilize labor.
CONCLUSION
Looking back today from the ruins of the neoliberal revolution, it is
understandable that there may be a certain nostalgia toward the developmentalist era, and
toward that storied class, the national bourgeoisie. The intervening years seem to have
left us with a sturdy mythology about that period, one in which states had the power and
the vision to navigate a path to autonomous development, in which the business class
hitched its wagon to the national project, and labor had a place at the bargaining table.
There is some truth to this story. Considerable progress was in fact made by the
developing world in the era of developmentalism, much more than in the quarter century
of neo-liberalism. States did play an important role in this, and national capitalists did
collaborate with policy-makers to some degree in planning a development path. Nothing
in this essay is meant to question that.
What is important to recognize is that, while there was a social bloc that cohered
around developmentalism, the fate of the whole project cannot be understood if we ignore
the enormous contradictions and costs that it brought in train. Capitalists simply would
not countenance the installation of policy instruments that would have enabled planners
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to hold firms accountable to plan priorities. And in the absence of such instruments, state
guidance turned out to be a quite different creature than originally intended. Instead of
being the embodiment of capitals commitment to national development, it became a
conduit for a monumental transfer of national resources into the pockets of local
industrialists. Industrial structures did change slowly, but not at a pace or in a direction
that would offset the growing drain on the exchequer, or which would bring in revenues
fast enough on the external account. Slowly, the project unraveled as an accumulation
model but at little cost to national capitalists.
Korea was unusual in escaping this route. But here too, it was the internal
dynamic of the accumulation model which led to a turn to neo-liberalism. An
exceptionally united capitalist class had, by the early 1990s, outgrown its need for state
support as a condition for export success. The partnership that had supported the
developmental state therefore dissolved, and the chaebol began calling for a dismantling
of the planning apparatus. The end of the developmental state was not brought on by the
IMF or the U.S. in the aftermath of the 1997 crisis. That was only a denoument to the
critical events. The old apparatus had fallen into disrepair much earlier under the
pressure of the chaebol, and it was in fact its prior dismantling that brought on the crisis.
The point worth noting is that even in Korea, where there was some kind of business
support for a national development project, indeed, where this partnership with capital
was crucial to the projects success, capitalists remained in the alliance only so long as
state intervention was a central precondition to their profitability.
For most countries, a key political consequence of the project was the
organizational enfeeblement of the labor movement. This was in some measure
engineered by political elites, partly because of their own paternalism toward, and distrust
of labor; it was also demanded by capitalists as a condition for their (promised)
cooperation with the interventionist regime. But it is impossible to ignore the fact that
this whole process was hugely enabled by labors own seduction by the rhetoric of
national development and planning. Too often, unions reposed an altogether unwarranted
confidence in the states ability to protect their interests, to discipline the capitalist class,
and to manage class conflict through an adroit manipulation of plan priorities. Labor was
in many cases too eager to take its place at the table, so to speak, and to agree to the
corporatist structures that are common to industrial relations in developing countries.
The long-term consequence of this demobilization was a steady enfeeblement of the
working class as a political actor. Hence, when the turn to neo-liberalism came, labor
lacked the organizational muscle and experience to fight effectively against it.14
Ironically, it was the very absence of such opportunities for inclusion that may have
contributed to the Korean labor movements extraordinary development and
radicalization. Whereas unions in many countries coming out of ISI remained dependent
on state support, the Korean unions established a militant independence early on, and
mobilized at a level that has few parallels in the developing world. While they were
unable to block the onset of liberalization, they have been able to intervene in the
transition to a new accumulation model with considerable force.
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So while the nostalgia for the developmentalist era is, to some extent,
understandable, a more sober assessment suggests different lessons. The last time
political elites and subaltern classes looked to the national bourgeoisie for spearheading a
development project they got something less than they wanted, and much less than they
deserved. If left to its devices, there is no reason to think capital will react differently on
another occasion. Indeed, if the reasoning of this essay is correct, the resistance to state
intervention will most likely be even stronger in future.
It is not clear how the ongoing process of economic integration affects the very
possibility of national projects. For some, globalization makes any such idea quite
implausible, since it has so completely integrated domestic firms with multinational
corporations. But while the fact of cross-national integration is indisputable, its extent is
very much a matter of debate. It is even less clear whether this process, even where it has
progressed considerably, makes national projects unworkable. What this essay has
argued is that, to the extent that developmental projects are possible, their advocates will
be well advised to take a hard look at the experience of their predecessors. Future
national development strategies will have to generate a new kind of politics capable of
extracting concessions that were rarely even demanded last time around concessions
over investment flows, the movement of capital, labor standards, and much else. In an
era where the political momentum is in precisely the opposite direction, this is no mean
task. But that is no reason to continue laboring under the influence of myths that are
demonstrably false, and with hopes that are sure to be dashed.
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Endnotes
1
For a good comparison of the two periods, see Mark Weisbrot, Robert Naiman,
and Joyce Kim The Emperor Has No Growth: Declining Economic Growth Rates in the
Era of Globalization, Center for Economic and Policy Research Briefing Paper, May
2001.
3
Hamza Alavi, The State in Post-Colonial Societies, New Left Review 74, JulyAug. 1972.
5
10
For Latin America, see Christian Anglade and Carlos Fortin, The State and
Capital Accumulation in Latin America, vols. 1 and 2, (Pittsburgh: Pittsburgh University
Press, 1985 and 1990).
11
19
13
For a good account of this dynamic, see Nicola Christine Pratt, The Legacy of the
Corporatist State: Explaining Workers Response to Economic Liberalization in Egypt,
University of Durham, Centre for Midle Eastern and Islamic Studies, November 1998.
20