countries; in fact there wasrapid economic growth between the 1880s and
- Lenin argued that technological change would stagnate during the
monopolization phase; in fact there was a new dynamic phase of scientific-
technological change after 1890 based on electricity, chemicals and the inter-
nal combustion engine.
Around 1920 Marxist thought embraced a new vision of capitalism in
‘backward nations’. The power of traditional dominant classes (the indirect
rule discussed earlier in this chapter) in the backward countries was now seen
to be preventing the transformation of internal structures which capitalist
development/industrialization both needed and brought about. In contrast to
many contemporary concerns, colonialism was supporting rather than under-
mining traditional indigenous social structures. But it was also propping up the
power of rural landowners for political reasons and was influenced by industri-
alists in the home country who wanted no competition from producers of
manufactured goods in the colonies. In 1957 Paul Baran wrote The Political
Economy of Growth,the first major Marxist work to study underdeveloped
countries. He argued that capitalism was no longer an engine of growth in
developing countries. The centralization of capital that produced murderous
imperial competition in Lenin’s work was associated by Baran with corporate
lethargy. Monopolization, argued Baran, led to large firms squatting on
markets protected from competition from new entrants by their enormous size
and domination of markets; these firms also used this market power to restrict
output globally, raise prices and protect profits. Consequently, Baran argued
that much of the drive to pursue technological innovation would disappear. At
the centre of Baran’s worldview was an alliance between the developed coun-
try and a feudal ruling class in developing countries. The latter, he believed,
had been created and/or sustained in power by developed countries and ulti-
mately served to prevent growth. The strength of feudal groups allowed them
to maintain traditional modes of surplus extraction and fritter the results away
on conspicuous consumption such as large homes,fine dining and servants,
rather than investing in modern industry.
Later, Bill Warren returned to classical Marxism and revived the argument
that colonialism was a ‘powerful engine of progressive social change’ (1980:9)
and was/is a pioneer of capitalism. He returned to the views that colonialism
was progressive because it was linked to the penetration and spread of capital-
ism into non-capitalist parts of the world. Third-world nationalism, he
suggests, can explain the ‘ideological dominance of the underdevelopment
fiction’ (1980:8) whereby colonialism and its alleged harm provide a fictional
unifying element for disparate nationalist groups by giving them someone to
blame for any economic or social problems.
In the 1950s only the US, UK and France were major investors in developing
countries but by the 1960s there was sharp competition between US, Japanese,
and European enterprises for access to developing countries (Warren, 1973). In
the 1960s developing countries were still dependent on developed-country
technology but the conditions of their access in a post-colonial world were
196 Patterns and Determinants of Economic Growth