Kay's appraisal of conventional development theory, and of the dependence response

To an extent, all the major theorists of dependence place the initial responsibility for underdevelopment on merchant capital. The degree of emphasis differs from one writer to another, but we can note that some dependence-oriented historical studies (Rodney, 1972; Amin, 1972) have dwelt on this more than the purely theoretical ones. We also find that Baran (1973), who is sometimes considered to be one of the sources of the dependence framework, placed more emphasis on the role of merchant capital in underdevelopment than was done by dependence theorists. This is not surprising, since he had an entire chapter devoted to tracing 'the roots of backwardness'. However, both Baran and the dependence theorists saw merchant capital as a specific historical stage of capital. Its operation in what is now the Third World occurred when there was a purely commercial contact between the then mercantile Europe and other parts of the world. As we shall see, Kay's understanding of merchant capital differs from this, and he is more explicit about its responsibility for 'underdevelopment'.

Firstly Kay states that the conventional development framework dominated development studies and was its only framework before the advent of the dependence outlook. He also states that the fram ework saw 'underdevelopm ent' chiefly as an original condition in which all countries once existed - characterized by such

things as poverty, low labour productivity, inadequate equipment and a heavy dependence on a primitive agrarian sector. The ideological point arising from this conventional development argument, according to Kay, was that in this way the responsibility for underdevelopment could not be attributed to any country or social class, and colonialism was exonerated.5 Kay then shows that just as no single body of knowledge can have a secure existence w ithout a scientific basis, the conventional developm ent framework had its scientific basis too. To demonstrate how wrong a body of knowledge is, it is important to identify and examine its scientific basis. Kay identifies the scientific basis of the conventional development framework as neo-classical economics. The important elements of neo classical economics in a simplified summary include among others the following arguments.

(a) There is a universal problem, scarce means and unlimited ends, and therefore the object of (economic) study is the allocation of scarce means to unlimited ends. Kay argues that this element accounts for the preoccupation of much of economics, by implication conventional development analyses as well, with quantitative data.

(b) The three factors of production, land, labour and capital are socially equivalent to each other and rewarded according to their contribution in production. The ideological position which this element produces, according to Kay, is that there is no exploitation at all.

(c) The property relations of capitalism are universal and desirable. The ideological position in support of capitalism is obvious here, according to Kay. Furthermore, this element, together with the concept of universal scarcity is the basis for the lack of history, and

the dominance of static notions, in neo-classical economics as well as conventional development analyses (Kay, 1975: 1-12).

Kay goes on to show how it is possible to move from the neo­ classical economic categories to the concepts of a dual society in the Third World - one traditional the other modern, the object of development being essentially the diffusion of modernity into the traditional society. The strictly economic variant of this diffusion of modernity is the diffusion of capital. A good part of Kay's work is then devoted to refuting the assum ptions of neo-classical economics, which takes him to the categories employed by Karl Marx, the most important of which, according to Kay, is the law of value.

It is the law of value, at least Kay's interpretation of it, which leads him to place responsibility for 'underdevelopm ent' on

m erchant capital while crediting p r o d u c tiv e c a p ita l with development. His position is a significant alternative to both conventional development theory and dependence, at least in the realm of theory, allowing Kay to agree with both in one respect, and to disagree with them in another. He agrees with dependence theorists for placing responsibility for 'underdevelopment' on capitalism and disagrees with them for saying or implying that capital is not the source of development. In turn he agrees with conventional development theorists that capitalism is the source of development while disagreeing with them for saying that it is not responsible for 'underdevelopment'. Of greater interest to us here, however, is Kay's basic disagreement with the dependence outlook and the logic of his alternative theory.

Kay commends the dependence theorists for having shown that the phenomenon of 'underdevelopment' is a result of the same

process which accounted for development elsewhere, such as Europe. In this way the dependence outlook countered the ideological and often chauvinistic stance prevalent in the conventional development framework, according to which Europe and capitalism could only carry out a developmental mission to the Third World (Kay, 1975: 1-3). The shortcoming in the dependence outlook, according to Kay, was to respond in ideological terms without attacking the scientific basis of conventional development theory. This inadequacy leaves dependence theorists still preoccupied with quantitative analyses, which must mean that they belong to the same framework that they appear to attack (Kay, 1975: 10). Leys (1977) has taken up Kay’s criticism of dependence theorists and said much the same thing about them. The ideological counter­ argument by dependence theorists is the reason, according to Kay, they were so eager to prove what conventional development theorists were themselves already beginning to accept - capitalism's responsibility for 'underdevelopment' - that they missed the more important point of capitalism being the source of development (Kay, 1975: 7-10).

Kay is unconvincing in his assertion that dependence theorists were in a sense all part of the conventional developm ent framework, especially when seen in the light of the individual contributions of the theorists we discussed in Chapter One. There is also no supportive evidence, either for arguing that dependence theorists merely presented ideological responses, or for implying as Kay does, that ideological additions to analyses diminish the latter's value. With these preliminary comments, we must now turn to the alternative statement that Kay makes.

development and exploitation. Many of these lie outside the scope of this thesis. We therefore do not treat that 'law' in detail here, our emphasis being on the elements that constitute the relationship between the 'law' and merchant capital, even though this may not do justice to Kay's presentation. Let us begin by saying that the law recognizes labour as the only value-creating factor in all societies which carry out commodity exchange, and that merchant capital opens up but does not fully facilitate the development of capitalist commodity production. This is because, being largely restricted to