Please rip this essay apart! NO MERCY! Thanks :). I need some help with referencing. Do I put the author and page number in brackets and then fully MLA it in Works Citation? What if there are more than two articles written by the same author? Thanks!Modernization vs. Dependency Theory
For years, researchers and scholars have been wondering why third-world countries are underdeveloped. Today, two popular theories have emerged explaining how the third-world came to be. In Eduardo Galeano's Open Veins in America, he explores the dependency theory, explaining that the result of underdevelopment came from centuries of colonial expansion. The other is the modernization theory, explained by Lawrence Harrison in Development and Underdevelopment. The Political Economy of Global Inequality and Seymour Lipset in Promise of Development. Theories of Change in Latin America. The authors suggest underdevelopment is a result of a traditional society. Both theory authors argue ideas such as the cause of poverty in the third world exists due to structural restraints placed by European powers. They also examine the conquest led by Europeans in the 16th century to other countries to extort valuable resources from them, and the idea that third-world countries have been intimately involved with the capitalism system for centuries; involvement has been the cause of its ruin. The authors attempt to deconstruct the arguments, however, the most logical argument is that the origins of third world nations current underdevelopment dates back to the exploitation as a European colony.
Causes of poverty are due to structural restraints placed on the third world by European powers. Galeano describes the structural restraints as unequal exchange. He continues to state the declining "terms of trade" as the price of exports from the third world are decreasing, while prices from industrialized (developed) countries are increasing. This effect creates a circular trap as wages in third world countries are low, which declines the export prices, while wages in richer countries are increasing, which cause increases in the price of industrial goods. This means underdeveloped countries need to constantly increase their yields and exports for their profits to stay the same. However, Harrison/Lipset argue that the cause of poverty in the third world are blamed on their cultures and values; tradition. They say the view of traditional life is a life all integrated in the spirit, the family, the larger group, and the work tasks all working together, forming a whole. It is a poor, subsistence life from an economic point of view. It is a life of no hope of creating income, or accumulation of wealth. They believe this problem can be solved if the poor countries of the world can succeed in the transformation of traditional to modern (developed). They also suggest that the traditional society can follow the footsteps of those who became modern. Poor countries can avoid the mistakes pioneers made on the path to modernization. To follow the footsteps, the underdeveloped countries would have to fast track through 500 years of development, which would involve conquest, plundering and invading other countries for natural resources to be exported back to their native land.
In the 16th century, Europe led a conquest to other countries to extort valuables. Galeano explains that British capitalism led to the domination of plantation systems overseas that was purely used for exporting it to developed nations. Plantations met no local need. This led to another decline of terms of trade. Europeans looking to make profits came to control the rest of the world-sometimes with colonial empires, to take advantage of cheap labor for raw materials. With economic power and no legal administrative control, they were able to strike an unequal bargain with third-world farmers. A historical example draws on the poor Northeast of Brazil. Before it was invaded, it was once the richest area, but the soil is now ravished and eroded by aggressive planting of sugarcane to multiply profits. Sugar had destroyed the Northeast, now the most underdeveloped area in the Western Hemisphere. Today, less than 1/5 of the area is used for growing sugar under cheap labor. The rest is not used at all because the soil is severely damaged. Since sugarcane is the only crop grown, farmers must pay premium prices for imports, which they can barely afford. Harrison/Lipset say science and entrepreneurial spirit combined in England to produce little pockets of productivity. The engine of England's economic growth was capitalism. They defined capitalism as a market in which sellers and buyers come together on a voluntary basis to exchange goods and services in return for money, at a price. Because of this, workers in developing countries were and still are getting pennies a day for their work. They were exploited.
Third-world countries have been intimately involved with the capitalism system for centuries, and involvement has been the cause of ruin. Galeano supports this argument by saying that the poverty of the third world is not traditional, nor accidental. He believes the state of underdeveloped countries is absolutely necessary in order to support the richness of the developed countries. The industrial world requires cheap raw materials from the third world in order to keep profits from sold products high. Expansion of the industrial world consequently shaped the countries now known as the third world, making it incapable of balanced development. They are not traditional, they are just stuck in the capitalist system of developing countries. The regions now most underdeveloped and poverty-stricken, in the past have had the greatest exports and enjoyed periods of booms. Calling on the example of Potosi, now one of the most underdeveloped regions in the world, it was once the most valuable country full of natural resources. Once an exporting giant to Spain, its five thousand tunnels dug for the Spaniards are now empty. Eight million Indians died during the silver extraction of tunnels, and the amount removed from the country is about 5 billion in today's dollars. Spanish colonial expansion of Potosi (present day Bolivia) made their wealth by exporting the valuable minerals to Europe, and left the country when there were no more left. The Potosi economy crashed with nothing to support it, as minerals were out of the currency system. Harrison/Lipset and the Modernization school sees capitalism as a creative force responsible for the developed countries' growth and is capable of bringing the third world up to higher standards of living. The only problem, they say, is that their methods have not really been tried in the third world. Modernization school sees the rich countries as being the salvation of the poor. Galeano argues against this, saying slave trade and monoculture led to low export prices. The success of the capitalist system largely depended on labor earnings in the third-world to be low, so that imports into the core countries could be cheap and profits kept high. Galeano and the Dependency school see rich countries as being the main obstacle to the well being of the poor.
In conclusion, the modernization theory is only optimistic and full of contradictions. It is important to understand the history of a situation so a more realist approach can be taken to solve it. Dependency theory explores the history of countries and colonization. Attacking the issue of structural restraints on third world, the 16th century European conquest, and the intimacy of capitalism in third-world countries, Galeano has been able to provide a clear explanation of how third world countries came to be underdeveloped. Now that the history is understood, it is possible to work with it and correct its faults so that the third-world will not be stuck anymore.