Define and evaluate the contribution of the dependency school to our understanding on international economic relations.

Although capitalism is without question the overriding system of production in the international economy, capitalism is not the sole driving force which dictates economic relations.  The role of the state, and the concept of power and security within states still influence international politics and thus the international political economy is still strongly influenced by the interests of states, and the power relationships between them.  Therefore the interstate system cannot be reduced to a process of capital accumulation as the dependency theorists argue, but must also look to political aspects.  Although I disagree with the Realist tradition that a state uses the economy to increase its power, and is inherently engaged in a struggle among other states in IPE, states are nevertheless the dominant actors of global politics, and analysis of the international political system must focus on the level of the state in order to recognise the influence that nationalist aims of power and security can have on the economic relations between states.  Lake’s focus on the growing challenge of realist political economy against Marxist theories of political economy is convincing, as he examines the role of the interrelationship of power and interests in the work of Krasner and Hart.   Through using the example of the creation of the NIEO, they see this as a manifestation of power interests by the Third World in an attempt to secure domestic interests for the underdeveloped states.  That there is a relationship between power and wealth is certain, and thus the ‘single integrated logic’ of politics and economics within capitalism must be accepted, and capitalism cannot be seen as a tool that manipulates the purpose of states to facilitate the accumulation of wealth for the benefit of a ‘worldwide capitalist class’ as dependency theorists argue.

Dependency theory is again weak in its analysis of capitalist relations as being inherently negative and based purely on exploitation.  Although underdevelopment and poverty are vital problems of a global scale, they are not sole features of the international economy. Development has occurred in peripheral areas, and not all relations between the first and third world are about exploitation; indeed, not all international relations involve interrelation between underdeveloped and developed as Dependency focuses, but relationships between advanced states must too be studied.  Therefore the extent to which one believes the issue of underdevelopment is salient in the international political economy can dictate how much one believes dependency theory enables an understanding of these economic relations to a degree, however this approach is inherently limited because IPE must also be studied by looking at a system of wealth production and not just monopolistic exploitation of wealth.

The Economic Liberalist perspective demonstrates this in its argument that often economic relations can be harmonious and lead to increased economic integration from the world market (Adam Smith).  That interdependence, which arose from capitalism, has acted as means of cooperation and not only a source of conflict as dependency theorists see in tangible throughout the world economy.  The integration of the EU, for example, which began with the creation of the European Economic Community is a perfect example where increased benefits have been shared by varying states and led to more cooperation and harmony of interests international.  Even within the developed and developing, not all relations should be based with assumptions and undertones of exploitation, as the recent example of the Canadian implementation of the new WTO rule on international property rights has shown.  Furthermore, the unevenness of development in the third world makes the assumption that at least a certain level of development and mutual benefit from trade is achievable under capitalism.  Similarly, the  

even faster growth of development in less industrialised states over the industrialised in examples of Taiwan and Singapore indicate that Dependency theories do not encapsulate fully the potential nature of economic relations through ignoring any possibility of cooperation and mutual advantage through capitalism. (Brewer)  This neglect to see any possibility of capitalism, or economic relations of any kind, as a possible means to cooperation is a problem of the Dependency School, which is empirically supported by the economic growth achieved over the past century as we can see in the table below:

Even in the Dependency theory’s analysis of underdevelopment itself can flaws also be found.  The fact that the ‘development of the underdevelopment’ is still as crucial an issue today as it was when Frank wrote his piece in 1969 is proof that ‘dependency’ does not offer a real understanding of underdevelopment, despite highlighting it, because it cannot offer a solution to it.  Its analysis explaining the reasons why certain countries are underdeveloped is singular and base because it is using ‘dependence’ alone as justification, and so isn’t able to offer structural adjustment programmes to actually change the economic position of the underdeveloped in the international economy. (Lall)  The fact that underdevelopment is always equated with capitalism also adds to a tendency for Dependency to criticise capitalism rather than explain the reasons why underdevelopment is not solved and analyse the causes of poverty. (Lall)

Nevertheless, weaknesses do not appear only under Dependency scholarship: Realist and Liberal economic views too are limited in that not always are economic relations determined in terms of interests of power, nor are they characterised always through harmonious cooperation and mutual benefit. Katherine Barbieri’s analysis between the nature and context of economic links and the impact of these as a source of interstate peace or conflict demonstrate that more often extensive economic interdependence raises the probability of conflict.  Similarly Realist views of equating economic relations between power and wealth do not always hold true: aid programmes, the giving up of sovereignty to international economic organisations are indicators that states do not operate purely in terms of national selfish interests of power and security.  Theoretically it’s interesting to study international economic relations purely from an economic perspective as dependency theorists do.  However, in terms of understanding international economic relations as a real functioning system of relations, a concept of dependency is inadequate in that it is too ‘economically deterministic’ in placing the impetus of the International Political Economy as solely driven by capitalist forces.  It can be concluded that due to the nature of the International Political System as a society of states and the persistence of national interests of security and power, economic relations between states must be seen in a political context.  Thus despite the valid and important contribution dependency has made in highlighting the issue of underdevelopment, not all economic relations are determined by this feature.  

Bibliography:

• Frieden and Lake – International Political Economy
• Sanjaya Lall - Is Dependence a useful concept in analysing underdevelopment?
• Anthony Brewer - Marxist theories of Imperialism
• David Lake – Power and the Third World: Towards a Realist Political Economy of North-South relations
• Economic interdependence: A path to peace or a source of interstate conflict? – Katherine Barbieri (in Journal of Peace Research, Feb. 1966)
• Andre Gunder Frank - Latin America: underdevelopment or revolution : essays on the development of underdevelopment and the immediate enemy
• Christopher Chase-Dunn - ‘Interstate system and capitalist world economy: one logic or two?’