166 Contemporary Theories or Development corollary of the first: thus Ernest Gellner remarks that 'science is the mode of cognition of industrial society'.37 Finally, we are reminded that growth depends upon increasing the amount of capital, which is a fairly obvious reflection of contemporary Keynesian economic ideas. From these three elements Lewis follows a procedure of unpacking: thus he shifts ever closer to history and to the real world by asking why the; c proximate causes operate in some societies more strongly than in others This is a search for those configurations of institutional and cultural factoi s which are compatible with the logic of economic development. All the non economic factors must be consistent with the demands of economic logr In general we can ask what an environment conducive to growth looks liki At this point the questions are reformulated to focus on the evolutionär \ aspects of the process. It can be asked how it is that environments chang c so as to become more or less conducive to economic growth. In this wav Lewis links themes within classical political-economy, material drawn from Keynesian-influenced economic growth theory and descriptive historical and social scientific material related to the condition of the underdeveloped coun -tries. In all this he both recalls the concerns of the classical tradition with i s Jocus on the analysis of complex change and anticipates the particular j" schedule of interests of the approach which came to dominate much of First eWorld development theorizing; that is, modernization theory. The Construction of Modernization Theory /The background to the construction of modernization theory is suffused 1 with the political concerns of the USA in the late 1950s and early 1960s, The general ethos of the period finds intellectual expression'iní he social scientific concern with the structural-functionalist analysis of industrial society. The social scientific material can be taken to comprise a package ideal which specifies the nature of industrial society, indicates how^non- I industrial societies might be expected to modernize, argues that capitalism | and socialism will converge as the logic of industrialism drives the global I system forward, and suggests that the system will produce widespread | prosperity with a consequent diminution of conflict-occasioned ideological Š debates. The background to the production of the theory of modernization can be said to have three elements: bipolarity; containment; and .aid-donor, competition (see figure 11). International bipolarity, containment and aid-donor competition Hobsbawm analyses the short twentieth century in terms of the_ eclipse of the optimistic project of the European Enlightenment.38 There are two 37 E. Gellner 1964 Thought and Change, p. 179. 38 E. Hobsbawm 1994 Age of Extremes: The Short Twentieth Century, 1914-1991, Lor don, Michael Joseph. : uecolomzation, Cold War and Modernization Theory 167 Figure 11 Modernization theory M01DEMMZAT1ION THEORY Social evolution Optimistic economic growth i Modernization UN AGENCIES US GOVERNMENT NEW STATES ASCUENTS ©BpcmrvE; EVOLUTIONARY MODERNIZATION TO E1F1HECT S1HMFT HROM TRADOIONAL TO MODE1RN SOCIETY elements to the analysis. The major theme deals with a series of disasters which overtook the Europeans and these included war, revolution, depression and, after a brief economic and social golden age, a return to drift and unclarity. The minor theme deals with the shift in power within the! global system of industrial capitalism away from Europe and towards the j USA. J •*> The changing nature of power relationships within the capitalist global system is a familiar issue for economic and political historians. The stand-ardjitory involves an opening phase centred on the rise to global prominl ence of the UK in the nineteenth century followed by the rise of competitors in the USA, Germany and Japan. The Great War sees the Europeans locked m conflict while the Americans (and the Japanese) advance. In the period, following the Great War the centre of the capitalist world economy is the! USA. in the post-Second World War period the European powers are finally lb 8 Cuntempuiaiy i neunes ui jľvciu^iju.u. , V eclipsed. The effective removal of the major colonial economic blocks with their centres in Paris, Amsterdam and London leaves the "USA as_thé unchallenged leader of what comes to,be..called~theJ?ree WorlcLor the WesF. However, as the post-Second "World War period sees, the decline "of 'Eurer, pean power and the rise to pre-eminence of the USA it also sees the parallel Irise of the USSR. The dominance of the USA and the USSR within the j I international system was understood in terms of the notion of bipolarity. I Í The USA prepared for its global role as the core power of the liberal1 capitalist system and the machineries of the Bretton Woods system of international economics were predicated upon^thejiotion of open liberal^trade.39^ i The Bretton Woods system along with the dominant role pfthe USA was ) successful. Hobsbawm notes that the period from 1945 to 1970 was in ret-( rospect an economic golden age,40 notwithstanding that no one can quite explain why it all happened.41 However, for present purposes we can set these debates aside. It is enough to record the division of Europe into an eastern bloc and a western bloc. It was this Cold War situation which coloured the\ thinking of American policy-makers, political agents and scholars.42 J The notion of containment expressed the resolution of the USA to halt s* the spread of communism. The concern of the USA was initially focused on Europe in the wake of "wartime upheaval. In particular the occupation of eastern Europe by the USSR and the activities of the left in western Europe. Subsequently, the attention of the USA extended to the Third World. „ ^«Ir In the period of the 1950s when the first work that was to issue in modernization theory was undertaken, the model of the modern was not merely the image of the USA writ large, but an image suffused with the <; demands of the 'patriotic imperative'.43 It was widely supposed that it was—v / the business of the USA to reconstruct the world in its own image. The ideological position týpicärô'fÄme'fiťän thinking"equated: (ä)i thé~mtérests of the USA; (b) functioning liberal market economies; (c) resistance" tá communism; and (d) the future prosperity of the world, lhis doctrinal} \__ pac^ä^e^wäTlab^l^TKe^Free World'. The mere existence of the USSR was' _ a challenge and it seemed within the logic of this ideology that peace and stability required that the USA adopt the role of protector of the Iree *£\%) World. It was President Harry S. Truman's March 1947 address to_the Congress that officially launched the "doctrine of containment. The US .jV^* government was attempting to proscribe any change - political, social or economic - to which it had not given its assent. 39 G. Kolko 1968 The Politics of War: US Foreign Policy 1943-45, New York, Vintigt fJOř^í* • 40 Hobsbawm 1994 op. cit. t*íť*"»' - l 41 P. Krugman 1994 Peddling Prosperity: Economic Sense and Nonsense m an Agi. of •tí'L!?-,,,, Diminished Expectations, New York, Norton, speaks of the post-war 'magic economy 1 ^^í*.,* J-^j which arrived unexpectedly and then went away equally unexpectedly.' ,. i^'Č^áM*' i 42 In substantive vein, see T. Spybey 1992 Social Change, Development and Dependency, «IL Hjä Cambridge, Polity, ch. 7. AsSfÜ' 43 D. Caute 1978 The Great Fear: The Anti-Communist Purges Under Truman dllU t ■^pjt^ Eisenhower, London, Seeker and Warburg, p. 21. '■, ■" - ''|['J'-" decolonization, Cold War and Modernization Theory 169 -;■ The; third element'in^the background to modernization theory involves ajgl-donor competition,,-'In- the history of aid-giving it_js_possible to distin- x guIsH" between two broad phases.44 At first aid was internally ^oněntě3"liŤRl~' concerned with the reconstruction ofJEurope. In the second phase however the attentiorTöf First World theorists was outwardly priented and epneemeď' with developmentJntheJThird World. The key events which marked the] change of focus were the Bandung Conference of 1955 when a group off newly independent countries founded the influential non-aligned movement, ind a few years later the entry onto the aid-giving scene of the USSR. Over-ill, this is the period during which modernization theory was constructed. In the early post-war years the USSR regarded the world as split into hostile camps and any suggestion of non-alignment was viewed with suspicion. However with Staljn'sdeath in 1953 there was a relaxation in that stance which coincided with a tHaw"in the Cold War. The first sign of this was the pledge by the USSR of one million dollarsi to^alJ]^ aid programme. In 1956 Nikita KKnishchev announced that the USSR was now™ willing to offer the underdeveloped countries development aid. This offer saw practical expression when in the wake of the USA's withdrawal of financial support for President Nasser's Aswan High Dam (in Egypt) the USSR stepped irf with aid. """ÄŠ a consequence of these events there opened up an area of competition1 between the super-powers. The competitive aid-giving took the form of ofifer^ofsocialism jjnjhe one hand and membership of the Free World oik(' the, other. In the US A the latter scheme was presented within the ambit oil development studies as modernization theory. A recent discussion of the J impact of the competition of the USA and the USSR in the Third World \ indicates that extensive disruption has been caused^n respect of the activities of the Americans it is p7)š1šiBIě"tcu3entify a series of overt and covert interventions within the Third World which have had a catastrophic impact.45 In ■> [ general, where we looked earlier at the crystallization of Keynesian-derived' I growth theory within the context of decolonization, here we look at the { ^construction of modernization theory within the context of bipolar competi- A ition t between super-powers. > ■ i Ě m T) C "i The Logic of Modernization Theory ' * 7 In the process of the construction of modernization theory there were two major areas of intellectual resources available to the theorists and these were the work of the economists who confront the problems attendant uPon the scale and complexity of the macro-economics of growth arid the JÍÍ2EÍL2Lt'le Droad spread of social scientists who concerned themselves in one_way or another with the problem of analysing industrial society. 11' J- White 1973 The Politics of Foreign Aid, London, Bodley Head. *> R Halhday 1989 Cold War, Third World, London, Radius. 170 Contemporary Theories of Development The economics of modernization The debate in respect of the possibilities of stable growth can be seen as an element in the wider debäte around the implications of the work of Keynes for economics in general. In this debate two tendencies can be identified. First, the 'new Cambridge school' in the UK which seems to have taken Keynes to have reinvented political-economy. Second, the continued neoclassical line promoted by scholars at Cambridge, Massachusetts, which takes Keynes to be assimilable to the neo-classical line where economics is taken to be a matter of the construction of formal economic-analytic cal culi. Overall, the hesitant rediscovery of political-economy made by the nev Cambridge school is echoed ahd_elaborated„by later theorists of develop ment whilst the work of Keynes is simultaneously absorbed into a revivified neoclassical orthodoxy.46 Indeed in the 1980s the anti-Keynesian economi« liberalism of the New Right attained a measure of fashionable acccptana in parts of the First World. The history of technical growth economics can be characterized as a sustained attempt to weaken the unpalatable implications of Roy Harrod's work,47 and in this restricted sphere 'gro^vthjtheory quickly became highl} elaborated and often esoteric'.48 In jl956 Solow presents a revised model of economic growth in which the uncomfortable elements of Harrod's worl are simply removed and no longer is the growth path difficult to find and hard to keep to but on the contrary it is easy to find and thereafter self sustaining/*' In the practical political context of aid-donor competition this» is a much more attractive position. A related series of revisions are made and models of the growth process are made more sophisticated by using material from 'theories dealing with the processes of social and institutional change'.50 Overall the models became more complex and less narrowly economic and the distinction between economic growth theories and theories of social change grew increasingly blurred. , The problem of social change and modernization Theories of social change constitute the second area of substantive interest that carries over from the earlier discussions of growth theory and here we can trace the emancipation of the broad range of the social sciences from their status as under-labourers to economics. With regard to the origins of modernization theory commentators are clear that 'the idea of modernisation 46 P. Ormerod 1994 The Death of Economics, London, Faber, ch. 3. 47 H. Jones 1975 An Introduction to Modem Theories of Economic Growth, London, Nelson, p. 53. 48 H. Brookfield 1975 Interdependent Development, London, Methuen, p. 30. 49 R. Solow 1956 'A Contribution to the Theory of Economic Growth', Quarterly Journal of Economics, 70. 50 R. F. Mikesell 1968 The Economics of Foreign Aid, London, Weidenfeld, p. 32. \ ',>• Decolonization, Cold War and Modernization Theory 171 is primarily an American_ide£, developed by American social scientists in thě~pěnoď"aFťěr the Second World War and reaching the height of its popularity in the middle years of the 1960s'.51 The period saw an. attitude "of complacency towards American society which had its counterpart in social theory when a mixture of structural-functionalism, social psychology and empirical survey analysis was deployed_to elucidate the nature of industrial society and it was claimed that all societies were 'converging \ towards a common destination dictated by the technical and organisational j imperatives of advanced industrialisation'.52 The fate of the Third World was one of disintegration and reformation in line with this trend. All this c in be read in the light of American intellectual traditions and 'in such a way contemporary history was assimilated to the foreshortened historical understanding in American social thought so that the diverse peculiarities of other societies and the worrying features of America itself could always be explained away'.53 The general ethos of the period finds intellectual expression in the social scientific concern with the structural-functionalist analysis of industrial society. The material gathered under this general approach was very influential within the West and it may be said to have i attained for a brief period.in the 1950s and early 1960s the status of an unquestioned „consensus, position. In producing this approach the work of Talcott Parsons was a key resource. Parsons offered_ a very complex general theory of social action which comprised four aspects: the analysis of the fundamental logic of social action; the scheme of the pattern variables which govern the orientation-of action; the identification of the functional requisites of systems of action which allow the system to be maintained; then finally the idea of equilibrium is introduced as the endpoint to which all systems tend when disturbed. The business of disturbance jnd restoration of equilibrium generates system learning. The system as a whole can be said to experi:'l chce differentiation, reintegration and evolution. Parsons then used this I general "theory of action to analyse existing society. It was argued that J the general social system comprised a set of sub-systems which could be j dealt with by the various social sciences (economics, sociology, politics and \ psychology). It is on the basis of the work on general action theory that the familiar structural-functionalist analysis of industrial society is constructed. What WfTrTäve is a model of the social world as a self-regulating harmonious whole held together by common values. The approach developed through tne pošPSécond World War period into the modernization, industrialism, ^1 D. C. Tipp; 1976 'Modernisation Theory and the Comparative Study of Societies: A Í- ritical Perspective' in C. E. Black ed. 1976 Comparative Modernization, London, Collier, P- 71. *• G. Hawthorn 1976 Enlightenment and Despair, Cambridge University Press, p. 242. 53 Ibid. 172 Contemporary Theories of Development convergence and end-of-ideology^ package. In this essentially ideological čéleBŕätion of the model of the Free West: (a) modernizationwas the pro-cess whereby the less developed countnesj^ould shift from traditional patterns of life to become developed; (b) industrial society wasche goal, where society was driven by the demanding logic of industrialism; (c) the logic of industrialism would lead to the convergence of political economic systems (in particular those of East and West); and (d) the achievement of prosperity as in the USA of the 1960s would mean that ideological debate occasioned by conflict in respect of scarce resources would wither away.54 Criticisms of Modernization Theory The whole episode of modernization is characterized by its adherence to dichotomous characterizations of the issue of development.55 Having con ceptualized the whole business in terms of the dichotomy between tradi tional and modern, the theorists of this school then proceed to attempt to elucidate matters by deploying a further set of dichotomous constructs such as agricultural and industrial, rural and urban, religious and secular, liter, ate and pre-literate, and so on.56 Yet the terms traditional and modern änj merely 'the latest manifestation of a Great Dichotomy between more primitj ive and more advanced societies which has been a common feature of Westerrt social thought for the past one hundred years'.57 The following influential typifications have all been offered: Maine's status/contract; Durkheim's mechanical/organic; Tonnies' Gemeinschaft/Gesellschaft; and Weber's tra ditional/rational.58 The strategy of argument entails that 'the bridge across the Great Dichotomy between modern and traditional societies is the Grand, Process of Modernisation'.59 Overall, it seems clear that what we have, in these schemes of modernization is an attempt to construct a descriptive general policy~šaénce which characterizes the process and goal of modern ization and identifies specific points of intervention. However, the theory of modernization has been extensively criticized. \^ 54 A fine example of the package is offered by C. Kerr et al. 1973 Industrialism and Industrial Man, Harmondsworth, Penguin. For a general rebuttal see A. Maclntyre 197Í Against the Self-images of the Age, London, Duckworth. ■ < 55 Brookfield 1975 op. cit. p. 53. 56 See B. Hettne 1990 Development Theory and the Three Worlds, London, Longman, ch. 2. See also H. Bernstein 1971 'Modernization Theory and the Sociological Study of Deve opmenť, Journal of Development Studies, 7; H. Bernstein 1979 'Sociology of Underdevel opment Versus Sociology of Development' in D. Lehman ed. Development Theory, London» Frank Cass. , - •"-. 57 S. P. Huntington 1976 'The Change to Change: Modernisation, Development and. Politics' in C. E. Black ed. op. cit. p. 30. ' /, 58 See R. A. Nisbet 1966 The Sociological Tradition, New York, Basic Books, ch. 3 which deals with community. , ^j 59 Huntington 1976 op. cit. v>? 'SÄ 3S& I r í ■it 4! >- t, -i - *\i f» " > ŤtfsrÍP i«« a'ŕí$ít' j J-x , functions, based on pre-Newtonian science and technology, and on pre- | 'j^^ Newtonian attitudes towards the physical world'.66 It does not mean that / y >; the traditional society was wholly static and indeed improvements in agri- \ {'ilíf culture could enhance levels of living. However, the absence of modern ( science and technology imposed inevitable limits upon such a society. Rostow I ^oes on to characterize this traditional society in terms of its agricultural / base, clan-based polity, and fatalistic mentality. J The second stage of the process has to establish the pre-conditions for take-off into self-sustained growth. The second stage is exemplified by western Europe in the late seventeenth and early eighteenth centuries as medieval society disintegrates, modern science grows and trade develops. In this period the possibilities for production opened up by modern science,^ find acceptance within society and as a consequence the whole slow busi-\ ness of remaking traditional society begins. In contrast to the traditional) societies of the Third World, which are dislodged by incursions of external powers, in seventeenth-century Britain reactive nationalism was generated by the wars against the Spanish, Dutch and French. Once the economic and social dynamic bad been initiated it was quickly extended to other European states. . -Ift the third stage of take-off economic growth becomes normal. Rostow o4 W. W. Rostow 1960 The Stages of Economic Growth: A Non-Communist Manifesto, Umbridge University Press, p. 1. M ' Ibid. p. 3. 66 Ibid. p. 4. 176 Contemporary Theories ot Development argues that the take-off 'is the interval when the old blocks and resistances to steady growth are finally overcome'.67 Rostow continues by arguing that v the 'forces making for economic progress, which yielded limited bursts and <"", enclaves of modern activity, expand and come to dominate the society'.68 A - particular group has to seize the opportunities provided by their resources K-within the expanding economy. The typical rate of capital investment rises from five to ten per cent of national income and a series of sectors c I , industry are quickly established. Rostow comments that in 'a decade 01 "| two both the basic structure of the economy and the social and political ] structure of the society are transformed in such a way that a steady rate of I growth can be ... regularly sustained'.69 In the fourth stage of the drive to maturity there is a long period o t progress with ten to twenty per cent of national income invested in new production capacity. As a consequence industries now forge ahead, mature and level-off. At the same time new industries arrive on the scene. There is a period of fine adjustment to social and institutional arrangements such that eventually a mature economy and society is established which rests on the absorption of home-generated new technologies. ; / In stage five, which is the period of high mass consumption, the leading , sectors shift away from heavy industries towards the provision of consumer durables and services in the consumer marketplace, and at the same time social welfare provisions are made. At this point the society in question has accomplished fully the shift from traditional to modern society. v« X- Rostow links this stage theory to a mechanism, which he has to in order to block the criticism that all he has produced is an arbitrary period-ization of history. Rostow insists that his stages 'are not merely descriptive .. . They have an analytic bone-structure, rooted in a dynamic theory of production'.70 Rostow's dynamic theory of production is a derivation it * seems of Keynesian work and he looks at savings, investment and sectoral performance, and postulates for an economy a set of optimum paths -r of sectoral development. The course of history will inevitably, see diver gences from this optimum path but essentially development is 'the effort ?, of societies to approximate to the optimum sector paths'.71 In terms of a ^ mechanism then, what we have in addition to the above noted element of ^ reactive nationalism is a mixture of growth economics after the style of ,-*5?' Harrod-Domar and sectoral analysis after the style of the economist Cohn ,, Js Clark.72 . - *- '