The Cycle of Dependency 50 Years Later

• Author: Claudio Katz
• Published date: 01 March 2022
• Date: 01 March 2022
• DOI: http://doi.org/10.1177/0094582X211018475
• Subject Matter: Articles

https://doi.org/10.1177/0094582X211018475

LATIN AMERICAN PERSPECTIVES, Issue 243, Vol. 49 No. 2, March 2022, 8–23

DOI: 10.1177/0094582X211018475

© 2021 Latin American Perspectives

8

The Cycle of Dependency 50 Years Later

by

Claudio Katz

Translated by

Mariana Ortega-Breña

Dependency theory faces a new scenario in Latin America, with cycles and crises

impacting a weakened industry and fragmented consumption. The primacy of agricul-

tural and mining exports contributes to imbalances in all models, while, in contrast to the

South Korean case, the exploitation of the workforce has been more decisive than the com-

mercial opening. The relationship with China recreates patterns of subordination, and

there is no state income management such as is seen in other countries. Geopolitical action

has contradictory effects on development, and ruling classes, bureaucracies, and govern-

ments act under severe conditioning. A general reconsideration of Marxist dependency

theory points to a way in which it can be revived and expanded.

La teoría de la dependencia afronta otro escenario en América Latina. Los ciclos y crisis

impactan sobre una industria debilitada y un consumo fragmentado. La primacía de la

exportación agro-minera potencia los desequilibrios en todos los modelos.La explotación

de la fuerza de trabajo ha sido más determinante que la apertura comercial en el contraste

con Corea del Sur. La relación con China recrea subordinaciones y no existe el manejo

estatal de la renta que se observa en otros países. La acción geopolítica tiene efectos con-

tradictorios sobre el desarrollo. Clases dominantes, burocracias y gobiernos actúan bajo

severos condicionamientos. Una reconsideración general indica cómo renovar y ampliar

el dependentismo marxista.

Keywords: Dependency theory, Latin America, Underdevelopment, Neoliberal

globalization

In the 1980s, Ruy Mauro Marini studied the cycle of dependency in Latin

American economies, assessing the crisis of industrialization alongside the

region’s trade, financial, and productive imbalances (Marini, 2012: 21–23).

Forty years later, we see the same contradictions reappearing in a new scenario

of shrinking factories, regressive exploitation of natural resources, and finan-

cial fragility. In this context, comparisons with the Asia-Pacific region replace

Claudio Katz is a researcher with the National Scientific and Technical Research Council and

teaches economics at the University of Buenos Aires. He has been a group coordinator at the Latin

American Social Science Council and is a member of the Institute for Latin American and

Caribbean Studies. He has received honorable mention in the competition for Venezuela’s

Liberator Prize for Critical Thought for Bajo el imperio del capital (2011), Las disyuntivas de la izqui-

erda en América Latina (2008), and El porvenir del socialismo (2004). This article is a translation from

La teoría de la dependencia, 50 años después (Buenos Aires: Batalla de Ideas Ediciones, 2018). Mariana

Ortega-Breña is a translator based in Mexico City.

1018475LAPXXX10.1177/0094582X211018475Latin American PerspectivesKatz / THE CYCLE OF DEPENDENCY 50 YEARS LATER

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Katz / THE CYCLE OF DEPENDENCY 50 YEARS LATER 9

the old comparisons with metropolitan capitalism; countries that manage the

income of their primary exports also gain relevance, while China’s role is more

pertinent than U.S. dominance and Brazil’s future attracts less interest.

Additionally, developmentalist expectations have dissipated among the Latin

American bourgeoisies, and the nature of civil servants has changed. All of this

significantly alters the traditional topic of Marxist dependency theory and

demands discussion of modifications or extensions of it.

Tensions and Crises

Marini associated the imbalances of Latin American industrialization with

unequal exchange and specialization in the provision of raw materials. He

argued that the development of manufacturing in Brazil, Mexico, and Argentina

did not eliminate the drainage of resources but reproduced this adverse factor

in the manufacturing sector (Marini, 1973: 16–66). He postulated the existence

of a cycle of dependency that prevented the kind of development that occurred

in central economies and described this obstruction during the various phases

of accumulation in terms of a model inspired by Marx’s Capital (Marx, 1973:

27–47). He portrayed the way financial resources (money capital) were trans-

formed into inputs for industry (merchandise capital), which facilitated the

superexploitation of workers (productive capital). He also analyzed in detail

the tensions brought about by this process (Marini, 2012: 23–35). He noted that

the preeminence of foreign capital encouraged the transfer of value abroad

(e.g., in the form of royalties, patents, and profits), thus limiting the scope of

accumulation. He noted that multinational firms complemented this absorp-

tion by making huge profits from subsidies, tax exemptions, and the provision

of outdated machinery, suggesting that foreign acquisition of inputs and equip-

ment increased the loss of foreign exchange.

Marini’s main focus was production and the extraordinary profits achieved

by large companies by paying workers less than the average cost of labor in

central economies. He stressed that this wage reduction was solidified through

the use of capital-intensive technologies, which created few jobs and perpetu-

ated the reserve army of the unemployed. He added that local capitalists rein-

forced the extraction of profits to compensate for their weakness in the face of

foreign competition (Barreto, 2013).

It was from these features of the cycle of dependency that Marini deduced

the existence of two kinds of crisis in the industrialized periphery. On the one

hand, he emphasized that a currency hemorrhage had caused a breakdown

of the balance between the components that supported accumulation (Marini,

1994). Revising the heterodox reading of balance-of-payments imbalances in

Marxist terms, he said that, since industry does not generate enough dollars

to import its inputs and equipment, periodic strangulation by outsiders

impairs its activity. On the other hand, he identified a crisis in the area of

consumption, noting that low wages reduced purchasing power and this

blocked the realization of the value of goods. He understood that this impeded

a degree of mass consumption similar to that in the metropolises. He pointed

to the differences in the segmentation of purchases of elites and the popular