The Impossibility of Convergence in a Capitalist World System

In “Technology, Finance and Dependency: Latin American Radical Political Economy in Retrospect,” Matias Vernengo takes another look at dependency theory especially as it pertains to the development of Latin America since the development of the theory. In particular, he looks at how to reconcile the fact that several periphery countries have in fact been able to industrialize despite dependency theory. For Vernengo, the dependency has transferred from the trading of goods to a more financial peonage, one where debt is the controller of the nation’s destinies at the periphery.

I think having a look at Dependency theory is important because for me so much of economics is both relational and a process. I think it is too easy to look at a developing country and say to yourself, “Oh that is so sad, we must do something!” This idea springs forth from the idea that nations exist in a vacuum and not as part of some world-system. Vernengo looks at both the Marxist and the Structural traditions of dependency theory and sees that their commonality lies in the agreement that “the core of the dependency relation between the center and the periphery lies in the inability of the periphery to develop an autonomous and dynamic process of technological innovation” (552). Vernengo argues that the focus on the technological is wrong as it is finalization that has trapped the developing nations in their peripheral role. In my view of the argument, I am more sympathetic to Vernengo’s argument. In the course of my lifetime I have seen dollar flows come in and crash Mexico and Russia and South East Asia and Argentina etc. This is not to discount Baran or Prebish or the schools they worked in. Capital has many tentacles.

What thinking about dependency theory has done for me is to make me think of the totality of the system so that we are not looking at individual nations in isolation. What this does is make me somewhat pessimistic about the possibility of growth. I was thinking specifically of some mathematical truisms. For example, if a country has an initial GDP per capita of 50 units, and they can grow their output in one year by four percent, at the end of the year, they will now have an output of 52 units. If this can be sustained year over year, we would laud this nation for growth over and above what rich nations would do, even if we would point out that a higher level of growth would be expected from developing nations because they are not at the technological frontier. The problem with looking at one nation in isolation is that if you look at a comparative nation that is twice the size of the first nation. The second nation has an initial GDP per capita at PPP of 100. This second nation only must grow at a two percent rate to equal the absolute gain of the first nation. If the growth rate of the country twice the size maintains the growth that is half of the smaller country, the gap between the countries will never close. At some point there will have been enough growth that the fifty-unit gap will be trivial, but we all know what the master said about the long run.

I was interested in taking this thought away from the thought experiment and into the real world. What I did was to go to the World Bank Website, and I pulled their data for GDPs per capita for purchasing power parity. Aware of the limitations of GDP per capita in not catching the distribution of output internally, it was still a good first pass for what I was interested in seeing, as its standardized output per person. I then took the GDPs and expressed them as a ratio of the least developed country in 2017, here the Central African Republic. The CAR GDP per capita in 2017 was just under 726 dollars at purchasing power parity. What is enough to make a person pessimistic is to see just how high the ratios go. My pessimism driven though experiment was too optimistic. There are 45 statistical divisions with a ratio higher than 50. The implication here is that mathematically is that if any of these nations with a higher GDDP per capita than the Czech Republic grows two percent, then the Central African Republic needs to literally double its economy over a year to keep up.

This is mathematical truism makes me wonder about the possibility of convergence, as even China, which has been lauded as a growth miracle over the past thirty years, only has a ratio of 23, meaning that in comparison to the richest countries, per person it is only a quarter of the size. So much of its growth in absolute terms has been the sheer number of people China has. So if we look at that as our best case, if we really want to talk about the possibilities for convergence, we would need to be thinking about much slower growth or even-degrowth in the core countries, and I have a feeling that politically that is a very heavy lift because the core countries do not want people looking at development in terms of a world system, but would prefer that people look at the poor countries and ignore that there is a structural cause and that there is an ahistorical reason that the people of Niger are in need.

Works Cited

Vernengo, Matias. “Technology, Finance, and Dependency: Latin American Radical Political Economy in Retrospect”. Review of Radical Political Economics, Volume 38, №4, Fall 2006, 551–568

Work Bank. GDP per capita, PPP (current international $). (n.d.). Retrieved from https://data.worldbank.org/indicator/ny.gdp.pcap.pp.cd

 

GDP Per Capita Ratio 2017
Country Name	Ratio
Central African Republic	1.00
Burundi	1.01
Congo, Dem. Rep.	1.22
Niger	1.40
Malawi	1.66
Mozambique	1.72
Liberia	1.77
Sierra Leone	2.10
Madagascar	2.14
Togo	2.29
Gambia, The	2.34
Guinea-Bissau	2.34
Haiti	2.50
Burkina Faso	2.57
Uganda	2.57
Ethiopia	2.62
Chad	2.67
Afghanistan	2.72
Rwanda	2.81
Low income	2.97
Kiribati	3.00
Mali	3.05
Guinea	3.09
Benin	3.13
Heavily indebted poor countries (HIPC)	3.30
Solomon Islands	3.34
Zimbabwe	3.35
Yemen, Rep.	3.58
Nepal	3.71
Comoros	3.78
Least developed countries: UN classification	3.84
Lesotho	4.03
Tanzania	4.06
IDA only	4.15
Tajikistan	4.40
Vanuatu	4.42
Kenya	4.53
Sao Tome and Principe	4.62
Senegal	4.75
Micronesia, Fed. Sts.	5.09
Cameroon	5.12
Kyrgyz Republic	5.13
IDA total	5.24
Sub-Saharan Africa (excluding high income)	5.27
Sub-Saharan Africa	5.28
Sub-Saharan Africa (IDA & IBRD countries)	5.28
Pre-demographic dividend	5.29
Bangladesh	5.33
Tuvalu	5.41
Cote d'Ivoire	5.42
Mauritania	5.44
Cambodia	5.52
Zambia	5.54
Papua New Guinea	5.78
Marshall Islands	5.84
Fragile and conflict affected situations	6.13
Ghana	6.19
West Bank and Gaza	6.73
Sudan	6.75
Honduras	6.87
IDA blend	7.41
Congo, Rep.	7.50
Pakistan	7.61
Moldova	7.85
Nicaragua	8.05
Nigeria	8.09
Pacific island small states	8.19
Tonga	8.21
Myanmar	8.49
South Asia	8.95
South Asia (IDA & IBRD)	8.95
Samoa	9.13
Angola	9.15
Vietnam	9.33
Uzbekistan	9.46
Cabo Verde	9.50
Lao PDR	9.67
India	9.72
Lower middle income	9.91
Timor-Leste	9.94
Bolivia	10.41
El Salvador	11.03
Guatemala	11.23
Guyana	11.24
Morocco	11.32
Philippines	11.49
Belize	11.72
Eswatini	11.90
Ukraine	11.94
Jamaica	12.46
Jordan	12.61
Bhutan	12.91
Fiji	13.16
Armenia	13.29
Early-demographic dividend	13.34
Dominica	13.80
Namibia	14.39
Georgia	14.72
Kosovo	14.79
Low & middle income	15.08
IDA & IBRD total	15.45
Egypt, Arab Rep.	15.96
Ecuador	15.96
St. Vincent and the Grenadines	16.18
Tunisia	16.41
Middle income	16.69
Indonesia	16.92
Sri Lanka	17.68
Mongolia	17.80
Albania	17.83
Paraguay	18.02
Bosnia and Herzegovina	18.06
Peru	18.51
South Africa	18.59
Middle East & North Africa (excluding high income)	18.71
Middle East & North Africa (IDA & IBRD countries)	18.86
IBRD only	18.94
St. Lucia	19.23
Nauru	19.50
Colombia	19.94
Lebanon	19.95
Latin America & Caribbean (excluding high income)	20.39
Palau	20.42
East Asia & Pacific (excluding high income)	20.53
East Asia & Pacific (IDA & IBRD countries)	20.75
Grenada	20.83
Suriname	20.88
Algeria	21.02
Macedonia, FYR	21.06
Serbia	21.25
Brazil	21.33
Latin America & the Caribbean (IDA & IBRD countries)	21.65
Caribbean small states	21.73
Latin America & Caribbean	21.77
Dominican Republic	22.08
Maldives	22.94
China	23.15
Iraq	23.28
World	23.35
Arab World	23.36
Botswana	23.40
Costa Rica	23.52
Azerbaijan	23.97
Upper middle income	24.50
Late-demographic dividend	24.51
Thailand	24.62
Turkmenistan	24.79
Gabon	24.90
East Asia & Pacific	24.99
Mexico	25.17
Barbados	25.51
Belarus	25.95
Montenegro	26.66
Libya	27.04
Middle East & North Africa	27.42
Europe & Central Asia (excluding high income)	28.33
Argentina	28.63
Iran, Islamic Rep.	28.71
Bulgaria	28.86
Europe & Central Asia (IDA & IBRD countries)	29.38
Mauritius	30.73
Uruguay	31.08
Small states	31.42
Antigua and Barbuda	32.33
Equatorial Guinea	33.59
Panama	33.71
Chile	33.94
Russian Federation	35.17
Other small states	35.56
Croatia	36.21
Kazakhstan	36.41
Turkey	36.53
Romania	36.72
Greece	38.02
Hungary	38.72
Latvia	38.84
St. Kitts and Nevis	39.36
Central Europe and the Baltics	39.94
Poland	40.12
Seychelles	40.31
Malaysia	40.57
Bahamas, The	41.92
Trinidad and Tobago	43.50
Slovak Republic	43.55
Portugal	43.63
Estonia	43.73
Europe & Central Asia	44.99
Lithuania	45.45
Cyprus	47.53
Slovenia	48.03
Czech Republic	50.04
Spain	52.34
Israel	52.71
Korea, Rep.	52.81
Puerto Rico	53.54
Aruba	54.29
Italy	54.31
Malta	56.53
New Zealand	56.63
European Union	56.74
Oman	57.41
France	59.03
United Kingdom	59.60
Japan	59.62
OECD members	59.73
Euro area	60.13
Finland	61.80
Post-demographic dividend	63.91
Canada	64.34
High income	65.17
Bahrain	65.47
Belgium	65.90
Australia	66.75
Sweden	69.16
Germany	69.76
Denmark	70.75
Austria	72.18
Netherlands	72.32
Iceland	73.22
Saudi Arabia	74.08
Cayman Islands	80.14
North America	80.22
United States	82.01
Norway	84.60
Hong Kong SAR, China	84.77
San Marino	87.35
Switzerland	89.14
Kuwait	99.10
United Arab Emirates	101.77
Ireland	104.21
Brunei Darussalam	108.60
Singapore	129.36
Luxembourg	142.91
Macao SAR, China	158.58
Qatar	176.84

The Perpetual Communist Manifesto

I like to imagine 1848. The revolutionary wave sweeping the continent. It is lost in the popular imagination now, just a note in a history book, but at the time it must have been rife with optimism, the possibility of a better future ahead, capitalism and the bourgeoise states finally seeing their death throes and a new world which would be built upon the ashes of the new was soon to come. All the while, Marx is stuck in England, writing this text, which in my memory of the events, hit the streets too late. It was a manifesto for a time which had come but come too late to be the driving force. But the time for the Manifesto is always here.

A hundred and fifty years later, I was working at Burger King. It was one of those jobs that is constantly denigrated as being low skilled. But it wasn’t low skilled. It took a lot of coordination and hard work to make everything go smoothly. I worked in the back, making chicken sandwiches and fries. You had to keep track to make sure you always had the raw materials ready. You needed the frozen patties ready to go, and the right number of cooked patties in your heat lamp area, and fries, always cooking or ready to be cooked. The minute an order appeared on your screen, you jumped to attention. You grabbed the bun and dropped replacements for whatever you were going to take in the fryer. You toasted the bun and grabbed a pre-cooked patty and assembled the sandwich. You wrapped this up and sent it up front so they could put the sandwich in the bag or on the tray. You did this again and again, until you caught a break and were asked to go check the dining room trash or to clean up vomit in the kids play area. That was the break. Otherwise you were faced with the relentless repetition of making sandwiches, with little variation. You dropped the frozen patties into the grease that you kept at 400 degrees. That grease splashed and your forearms were covered with burns. Grease was in the air, and it covered you everywhere. In your pores, impossible to wash off. And you did this for minimum wage, an amount so small that it was the lowest statutory rate that you could be paid, and the rate had been set four years prior, so that the purchasing power has dropped. A wage that would take another eight years or so for the national politicians to increase again, and its slow erosions began again.

If you walked to the front, around the counter, you could see the menu board. The menu board had listed the sandwiches I made, and it was easy to compare your price to that of a sandwich. There is no better way to see yourself to the commodities you make than to make that comparison. One chicken sandwich, three dollars. One hour of my time, five dollars and fifteen cents. Two of those sandwiches and I could be paid for the whole hour. I could make a sandwich in thirty seconds, so that meant the first minute they were paying me, the other fifty-nine minutes they were paying themselves.

The company tried to avert such facile comparisons. In the back, they had a pie chart of where every dollar went. It showed that labor was a significant component of revenue. But even now, knowing how narrow the margins are in food service, it still doesn’t take away the fact that my menu price was so low. And not just that, as workers we were below commodities. We had to precook most of the food, so that it would be ready to serve as soon as someone came around in their car or up front. But we could only have it ready for so long on hold before it was no longer any good to serve to customers. It was waste. If we created too much waste, then we could get in trouble. But if we had orders that needed certain ingredients and they were not ready for the customers, we also could get in trouble. There was a strict inventory control over these trash items. They were trash, but they were forbidden to eat. I saw a co-worker fired for eating this waste. He was fired for eating trash. This is the system we introduce the working world to so many people in the western world.

It was working this job when my then girlfriend came home from college and talked about, he political science class. She had to read the Manifesto, and she was not happy. She was majoring in accounting and was going to take the business world by storm. (She is now a small business owner in Charlotte, so her dreams came true). I read it in the context a young worker. The book I have in front of me is that very same book she was so dismissive of, but it spoke to me. Well, mostly the first chapter, then the ten-point plan in chapter two and then the short chapter four – chapter three is somewhat dated. It has four different colors of highlighting, since it was not just read once, but revisited as a central text in who I see myself as. It makes it hard to pull back and be objective of the Manifesto as a text. Class struggle against the bourgeoise class seemed as relevant in 1848 as it did in 1998 and as it still does today. But that might be a problem. Socialism came in one state and then in some others, but the tide has gone out once. The criticism of capitalism is still valid. The bourgeoise therefore still produces “its own gravediggers” (Marx 24), but what Marx and all his followers didn’t consider was both how solid the ground was and how well it shifts, making that grave so hard to dig.

Personally, what I think we need to focus on is that last chapter. It is a clarion call for revolution, but it is “Proletarier aller Länder, vereinigt euch” (Marx 62). That is as workers we have a world to win, but we must be united as workers in a world-wide movement. That is respect needed and given to our comrades in Cameron instead of just privileging white voices from the western world. This, it seems, is the hardest hurdled because it is so difficult to pull back from your own personal relationship with capital and see that we all struggle with the same forces, if you are making sandwiches or editing journals.

  

Works Cited

Marx, Karl, and Friedrich Engels. Manifesto of the Communist Party. Marx/Engels Selected Works, Vol. One, Progress Publishers, Moscow, 1969