No. 056 CRITICAL DIMENSIONS IN DEVELOPMENT THEORY: by SHIRLEY CERESETO CALIFORNIA STATE UNIVERSITY AT LONG BEACH October 1979 RED FEATHER INSTITUTE
A version of this article under the title, Socialism,
Capitalism, and Inequality," is in the Insurgent Sociologist
11 (2) Spring 1982. |
ARCHIVES
of the TRANSFORMING SOCIOLOGY SERIES of the RED FEATHER INSTITUTE for ADVANCED STUDIES IN SOCIOLOGY
|
EDITOR'S COMMENT on the importance of this Article |
CRITICAL DIMENSIONS IN DEVELOPMENT THEORY: A TEST OF FOUR INEQUALITY MODELS
GLOBAL INEQUALITY: FOUR THEORETICAL MODELS* This paper is concerned with the desperate plight of the impoverished people of the world and with the academic theories which are formulated to explain the problem. The objective is to examine four prominent theoretical explanations of inequality, and to test empirically the fundamental propositions of each concerning the major determinants of inequality. Two components of inequality are investigated: inequality of income distribution and inequality in fulfillment of basic human needs. The latter is being defined in the new basic human needs approach to development in terms of rates of infant mortality, life expectancy, literacy, and other conditions related to the physical quality of life. The relative explanatory power of the four theoretical models will be evaluated by an analysis of relevant statistical data for 120 countries (97 percent of the global population).
Inclusion of data for socialist countries, as a distinctive mode of production, is a crucial feature of this study, which has been curiously absent from the research on cross country inequality.
The distinctive contribution of this research is the presentation of empirical data evaluating the efforts made by the socialist countries compared to developing capitalist countries in the same income range, in reducing inequality and the problems associated with abject massive poverty. The major significance of this evidence is to determine whether any program of development can be effective in reducing inequality and improving life for the billions of persons on earth. ______________ *In the 1960s, the notion of changing the attitudes and values of the people of other countries came under attack as being ethnocentric and imperialistic. This aspect was subsequently toned down. The emphasis was shifted to financial, technological, and scientific assistance in economic development. Modernization theory became development theory. _______________
THE FOUR THEORETICAL MODELS
Of the numerous explanations of inequality which have been advanced, there are four which continue to be formidable contenders. Of the conventional approaches, population and development models remain the most influential. Of the Marxist approaches, dependency theories have gained the greatest prominence and use in the West in recent years. Dependency theories seek to explain the inequality which exists in the capitalist world system. A mode of production in Marxist model, hardly tested in the West, specifies the differences to be expected between capitalist and socialist systems with regard to inequality. A substantial body of data exists in support of certain aspects of each of the four models, thus none can legitimately be ignored. take into account and explain can legitimately be ignored. take into account and explain will examine each of the four propositions which need to be
Proponents of any one of these models must the data supporting the other models, thus none Proponents of any one of these models must the data supporting the other models. We models in turn and extract the central tested in order to evaluate the power of each.
*Computations were done at the Computer Center of California State University at Valazquez. I wish to thank Josef Velazquez, Computer Programmer, for his invaluable work and assistance on this research project. I also wish to thank Sandra Hunt, Christopher Chase-Dunn, David Dowell, Jerry Lembcke, and Ann Gregory for their comments on an earlier version of this paper.
Neo-Malthusian Theories of Overpopulation
The oldest and perhaps most influential explanation of inequality and deprivation of basic human needs was first formulated by Malthus almost two centuries ago. There were fewer than a billion people on earth then (less than a quarter of the present population), but the earth, according to Malthus, was already overpopulated. The poverty, disease, and starvation which existed in the slums of wealthy England and in the British colonies, Malthus said, were direct results of the irrational propensity of the lower classes to proliferate.
There were, Malthus (1798) proclaimed, two "eternal laws of nature" governing the rates of growth of population and of subsistence. The former increases geometrically, while the latter increases only arithmetically. Thus, population, if unchecked, would outstrip the food supply. If there were no moral restraint (sexual abstinence) to curb population growth, then famine, misery, pestilence, or war would do the job.
The advocacy of sexual abstinence and the crude, harsh condemnation of the poor were quite congruent with 19th century laissez- faire capitalism, but became outmoded and an embarrassment to the liberal ideology underpinning the later stages of modern capitalism. Thus, contemporary neo-Malthusian theories have been modified considerably. Many are quite sophisticated and complex. The essence of the Malthusian argument, however, remains unchanged. The inequality between rich and poor is still seen in terms of overpopulation, and- more specifically, over-breeding by the poor. According to neo- Malthusian theorists, overpopulation represents an imbalance between population and resources. Land and resources are limited relative to population. In countries where rapid population growth outstrips resources and the growth of food, poverty and hunger are inevitable. There is not enough for all, and the segments of the population with high birth rates will be deprived. Moreover, the burden and heavy costs of maintaining an increasingly large portion of the population which is young, nonproductive, and dependent diverts funds which are needed for national investment, thus preventing the economic development of the poor countries. A vicious circle is produced. The increase in impoverishment associated with the current global crisis has been brought about by the mushrooming population growth, the population explosion. This model leads to an interest in birth control technology and coercion to accept it.
While population density has not received empirical corroboration as a determinant of underdevelopment or inequality (Hernandez, 1974), there is strong evidence supporting the relationship between high rates of population growth, underdevelopment, and inequality (World Bank Staff, 1974; Ahluwalia, 1976). Interpretations of the nature of those relationships, however, differ considerably (Syzmanski, 1974; Cereseto, 1977) as will be indicated later.
Modernization and Development Model.
In the aftermath of the second World War and the formation of the United Nations, the new international organization was faced with many grave problems. Among the most urgent was the underdeveloped state of most of the countries of the world and the conditions of poverty, chronic starvation, squalor, disease, and illiteracy which Affected hundreds of millions of people in those countries.
The enormity and urgency of the problems led officials to seek the aid and advice of social scientists, and created the initial impetus for the outpouring of studies on underdevelopment in subsequent years.
The task for Western social scientists was: first, to explain why such deplorable conditions existed in the underdeveloped world, and second, to propose methods whereby the poor countries could be helped along the capitalist road to development so that the dangerous inequality gap might be reduced. Western social scientists conscientiously and energetically devoted themselves to their task and, in due time, a promising theoretical explanation emerged.
In the new modernization model, underdeveloped countries were portrayed merely as arrested cases of development. They were simply traditional societies at earlier stages of development. As a result of isolation or resistance to change on the part of people who clung to traditional habits, customs, and institutions, the underdeveloped societies had not yet started, or were only beginning to initiate the processes of modernization pioneered earlier by the advanced capitalist countries. Processes associated with modernization-- secularization, industrialization, urbanization, differentiation, diversification, specialization--make possible sustained economic growth. Economic growth, in turn, leads to a decrease in inequality. Modern, industrial growth creates so much wealth that elites can distribute a greater relative share of the surplus while still increasing their own absolute share. More is available to trickle down to the masses (Lenski, 1966).
According to this model, a consistent pattern of structural changes occurs in developing countries as the level of per capita income rises. Among these processes are increased investment in both physical capital stocks and in human capital. Inputs to improve human capital include education, public health, technical assistance, and other public services which augment human productivity (Chenery and Syrquin, 1975:11,23). Thus the physical quality of life and standard of living of the general population are expected to be positively correlated with level of economic development.
In subsequent years, research findings indicated that there was a curvilinear, rather than a positive, linear relationship between economic development and inequality of income distribution. That is, with regard to income, inequality appeared to increase somewhat in the early stages of development, and then to decrease as industrialization occurred (Kuznets, 1963: Paukert, 1973). These findings, however, were not considered to be contradictory to development theory. The predominant emphasis was on the need to promote economic growth which would lead to a higher level of development.* Economic growth required heavy investment for the creation of a modern, industrial sector. In the early stages of development, then, it was deemed desirable that the share of the national income going to the elite upper-class groups be increased. It was assumed that these groups would save and invest more. An initial concentration on savings and investments would insure rapid economic growth, the benefits of which would in turn trickle down to the Entire population in the form of growing per capita income (Hansen,1977: 61). A growing middle class would then emerge and both poverty and concentration of wealth would decrease.
It was postulated that the underdeveloped countries would follow along the same path and through the same stages of development as the advanced capitalist countries (Rostow, 1960). With foreign investment of capital, the transfer of technology, and the diffusion of attitudes, values, and knowledge from the modern world, the transition would be speeded up (Moore and Feldman, 1960). Massive programs of aid and investment were, in fact, initiated and implemented during the three decades following the second World War. Measures emanating from propositions of population theorists were also incorporated into the development projects (U.S. Agency for International Development, 1974). Consequently, the failure of the programs to bring about the desired results led to a questioning of the theoretical assumptions upon which they were founded.
Dependency Theories and the World-Economy Model.
Both modernization and population models were criticized for the virtually exclusive emphasis upon internal, national processes in their analyses of the causes of the problems. Dependency theories, the powerful new challenging model which emerged in the 1960s, argued that the underdevelopment, poverty, and inequality characteristic of the Third World countries were a result, not of internal, national processes, but rather of the inequitable processes of the international capitalist system (Letelier and Moffitt, 1977; Abu-Lughod and Hay, 1977). Dependency theories were, in general, particular versions and modifications of the theory of capitalist imperialism. In stark contrast to the implications of modernization theory, foreign investment, technology, and personnel were viewed not as benign aspects of the diffusion process which would speed up modernization, but rather as foreign penetration which created and perpetuated underdevelopment (Baran, 1956; Frank, 1969; Amin, 1974).
Dependency theorists claim that the conditions confronting developing countries today are very different from the conditions which promoted the economic development of the presently industrialized countries; that therefore it is unrealistic to believe that they can develop by the same methods. The capital, raw materials, labor, and land required for the industrialization of the developed countries were obtained, in part, through the conquest, colonization, subjugation, and exploitation of the Third World countries (Jalee, 1968; Magdoff, 1969; Riddell, Stamos, and Shackelford, 1979). Even after formal political independence was obtained, the former colonies were not able to break the strangle-hold of economic dependence and political subjugation.
The mechanisms which perpetuate dependence and subjugation and which negatively affect economic development and internal income distribution in peripheral countries are thought to include: (1) penetration by multinational corporations and export-oriented production which distorts the economic structure; (2) exploitation by core powers which drains resources (by extraction of profits, interest on debt, royalties and license fees) needed for development; (3) links between elites in the core and the dependent periphery which act to suppress autonomous, self-centered development; (4) alliances and military support from strong foreign powers which enable ruling groups to continue to take a high share of the national income, thus maintaining high inequality (Chase-Dunn, 1975).
The most comprehensive formulation of dependency theory as an explanation of inter-country differences in inequality was presented by Robinson (1976). Utilizing Wallerstein's (1974) propositions on the world-economy, Robinson described the mechanisms by which the strategic position of a country in the world-economy in terms of control over production in other nations is linked to processes of class formation, class relations, and occupational structure which shape the internal stratification system. Typically in dependent countries, an unequal class structure develops which is dominated by a small economic elite whose predominant interests are tied to foreign economic actors through mutual interests in the control of production for export, primarily of raw materials required by dominant countries. A small, specialized export sector becomes well-developed, but not a diversified economy. The occupational structure is characterized by a small wage-labor aristocracy in the export sector, and a large work force with a low level of skills and low wages.
Robinson's study showed that the world-economy dependency model, while not negating the relevance of economic development, was superior to the development model in ability to account for the variation in inequality in income distribution for a sample of 47 capitalist countries. Other studies summarized by Bornschier, Chase-Dunn, and Robinson (1978) have also produced empirical confirmation for dependency model explanations of inequality. In general, such studies represent a search for universal principles underlying the relationship between patterns of stratification and of development. The possibility that other systems and alternative forms of relationships may exist is rarely explored.
The failure of world-economy dependency theorists to consider the mode of production in socialist countries as a potentially significant factor stems, in part, from the overwhelming force they attribute to external factors (the world-economy system), and their tendency to discount or downplay internal variables. Whereas dependency theorists criticize other models for undue focus on internal variables; they, in turn, have been criticized for undue focus on external variables (Delacroix, 1977; Gerstein, 1977; Riskin, 1978). In the final analysis, however, a determination of whether or not the laws governing the distribution of material rewards differ in the two systems must rest upon an examination and analysis of the empirical evidence.
The Marxist Model: Mode of Production.
Marx's theory is a theory of the historical stages of societal development and the central role of the mode of production in that development. At the same time, it is a theory of inequality and the specific forms it assumes at each stage of development. In contrast to other models, Marx postulated that inequality was rooted in the social organization of society, in the unequal relations of classes in the productive process.
Marx identified and described a succession of stages of development, each with its own specific mode of production, unequal class relations, and unique form of exploitation. In this evolutionary model, the human population assumes a central role. Human beings are distinguished from animals in that they engage in purposeful productive activity-- they produce their means of subsistence, consciously and not instinctively.
Thus the laws that govern the social activities of human populations are social laws, not "natural," supernatural, biological, technological, or physical laws. While Marx postulated the forces of production as the moving force of history, human beings were conceived as the essential element of the productive forces. Productive forces include machines, tools, natural resources, as well as the knowledge, skills, and abilities of the human labor force. The productive forces are continuously changed throughout history by virtue of human creativity and ingenuity. In the process of developing the forces of production, human beings simultaneously develop their own talents, abilities. and skills. Societal and technological developments are inseparable from the development of human potential. Opportunities for human development, however, vary for different segments of the population in accordance with its particular relation to the productive process. Furthermore, relations of production are organized differently in different historical eras.
With the advent of the capitalist mode of production, Marx asserted that a drastic change occurred in the organization of the relations of production. Ownership and control of the means of production were separated from the producers and concentrated in the hands of a small segment of the population, the new capitalist class. The fundamental characteristic of the new capitalist system was that the production of commodities was organized for sale in the market for the purpose of obtaining maximum profit for the owners.
In this stage, human labor power becomes an input, one of the factors of production, a commodity to be bought and sold in accordance with the laws of supply and demand. In pursuing the goal of maximum profitability, labor power is bought, like other commodities, at the lowest possible cost. Human beings become a means to an end, a means to increase output and surplus value. In the search for efficiency, increased output, and maximum profits, the forms of inequality proliferate. Hierarchy, competition, extreme specialization, maintenance of a surplus population of unemployed are methods of dividing and separating the labor force, of reducing labor costs, and increasing profits. Communities are split into mental workers and manual workers, into town people and rural people, into employed and unemployed. They are divided into dominant and subordinate classes, specialized and sorted, thrown into selfish competition with one another (Gurley, 1976).
Henceforth, the processes of population--its growth, movement, employment, and income--are governed, not by the needs of the population, but in accordance with the requirements of capitalist accumulation. Increasing deprivation and inequality are inherent and inevitable in such a mode of production. Marx describes the apparent paradox, the dialectical process whereby greater wealth and greater poverty are simultaneously produced by the law of capitalist accumulation.
"...Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital"(Marx, 1867, 1967:644-645).
Despite such grim accounts, Marx's vision of the future was optimistic. He predicted that capitalists, pushed by competitive forces and pulled by profit forces, would continuously revolutionize and advance the means of production, ushering in an era of abundance. Then, the irrationality and the absurdity of poverty in an era of abundance and great productive potential, the contradictions and crises inherent in the capitalist mode of-production would bring about its demise. A new socialist mode of production would be created in which the means of production would become collective property. Once the imperative to produce for private profit was eliminated, production could be planned to meet the needs of the new owning class- -the entire population. The fulfillment of basic human needs would not be left to the vagaries of the marketplace, but would be planned.
A socialist mode of production, Marx (1875) believed, could lay the foundation for the elimination of classes, of domination and exploitation, of social inequality. It could lay the foundation for the construction of a communist society which would serve the needs of the people, in which the people would be ends in themselves, not means to an end. It could lay the foundation for a higher stage of societal development in which "the full and free development of every individual forms the ruling principle" (Marx, 1848). That was Marx's theory and his vision.
According to the Marxist premise, the laws governing population growth, as well as those governing patterns of stratification, would change in accordance with the new form of organization. This view is in direct conflict with Malthus. The Marxist assumption is that rapid population growth in poor underdeveloped countries is governed by the law of capitalist accumulation (Gimenez, 1977; Valentey, 1978). The conditions of poverty, extreme economic insecurity, low life expectancy, and high infant mortality tend to produce high birth rates. Under such conditions, it is necessary to give birth to many children in order to replace infants who do not survive, to increase the number of income earners in the family, and to have offspring to support the parents in old age (Mamdani, 1972). The traditional household role, low education, and low employment opportunities for women also operate to maintain high birth rates (Valentey). The high birth rates, in turn, provide a large surplus labor force which permits the payment of mere subsistence wages.
Theoretically, then, if socialist societies were to improve the material conditions of life, provide economic security for the entire population, and equal employment opportunities for women as hypothesized, a reduction in birth rates and in population growth should follow. While such changes are predicted for socialist countries in contrast to poor, underdeveloped capitalist countries, the expectation with regard to the developed capitalist countries remains ambiguous and requires clarification.
Despite unemployment, economic insecurity, and poverty for portions of the population, the standard of living for the bulk of the population in the developed capitalist countries is high relative to the rest of the globe. Population growth did, in fact, decline in all of the industrial countries in response to a pattern of changes similar, but not identical, to those predicted above for the socialist countries.
If the general standard of living for the majority of the population in developed capitalist countries improved, does that, then, constitute a refutation of Marx's prediction that capital accumulation would be accompanied by a corresponding increase in impoverishment? This controversial issue is pertinent to the hypotheses tested in the present study and requires examination.
The rise in the general standard of living in the developed capitalist countries, most notably in the United States after World War II, led many scholars to claim that Marx's analysis was false. other scholars, however, insisted that an adequate test of Marx must take into consideration the operation of the entire world capitalist system. An understanding of the conditions in the few wealthy capitalist nations was necessary, but was only part of the task.
A number of factors were suggested to explain the general rise in living standards in developed-capitalist countries. First and foremost, the gains made by the working class in the industrial countries were primarily a result of their own struggles and the rise of effective industrial unions. But, in addition, there were also reasons why concessions to the working class might be advantageous to the capitalist class. Lenin (1917) argued long ago that capitalists of the imperialist countries could and do use a part of their "booty" to bribe and win over to their side an aristocracy of labor. Such tactics could be extended to include a majority of the workers in the industrialized countries (Sweezy, 1967). The allegiance of the population in the core countries was necessary to ensure maintenance of a home base. The high financial returns secured from investments in underdeveloped countries allowed a greater amount to be trickled down to masses in the core countries. Furthermore, there were other advantages and reasons for spreading greater benefits to a larger portion of the population at home. A more highly educated labor force was required in advanced technological societies. Better health and nourishment provided a more productive labor force. In other words, higher investment in human capital for certain portions of the world labor force was not disadvantageous or contrary to the law of capitalist accumulation. It was characteristic of a hierarchical system.
Having provided an explanation for the conditions existing in the small number of wealthy capitalist countries, it was then argued that the accuracy of Marx's proposition of growing polarization should be evaluated by inequality data for the world capitalist system as a whole. Such data will be presented in this study.
RESEARCH METHODS
The Sample of Countries. A large part of the data analyzed in this study is new data (1976) provided by a recent World Bank report. Most World Bank publications, including their most comprehensive and widely-used source of international statistical data, WORLD TABLES 1976, contain little data on the socialist countries, particularly social, demographic, health, or educational data.* THE WORLD DEVELOPMENT REPORT 1978, which is not as well-known or widely- distributed, does include more than the usual amount of data for socialist countries. The latter report includes data for 125 countries, _________________ *WORLD TABLES 1976 contains selected economic data for the centrally planned economies, but does not include them in the section on social indicators: demographic, population, employment and income, health and nutrition, education, housing and consumption. THE WORLD DEVELOPMENT REPORT 1978 includes infant mortality rates and literacy rates for market economies but not for the centrally planned economies. ________________________
omitting countries with populations of less than one million. With the exception of five countries, the World Bank sample is the sample of countries included in the present study. Essential data were missing for the five countries which were deleted: Bhutan, Madagascar, Cambodia, Laos, and Vietnam. Additionally, the latter three nations were capitalist countries until 1975 and are now considered to be socialist countries. Therefore, they would not properly fit into either category at the present time. All the other countries which are classified by the United Nations as centrally planned economies* are included in the study. All have been socialist countries for at least 20 years. A list of the countries is included in the appendix. The conditions in which such data are collected require considerable caution in interpretation, however the rough outline of differences are revealed in such data.
Measurement
Independent Variables. The measures which were used in this study as indicators of the independent variables postulated by the four theoretical models as determinants of inequality are shown in List 1. While GNP/C is the measure most commonly used as the indicator of level of economic development, other measures of economic development which have been found to be significant in studies of cross-country inequality (Chenery and Syrquin, 1975; Ahluwalia, 1976) were also included. The additional measures are per capita energy consumption, percent of population in urban areas, and percent of labor force in agriculture. Economic growth is indicated by GNP/C average annual growth rate during 1960-76.
Measures of population growth used were birth rates, death rates, and population growth rates. In addition, size of total national population, agricultural density, and total land density were also included.
Measures used as indicators of dependency and position in the world economic system are primary commodities as percent of exports and external public debt as percent of GNP. Primary commodity percent of exports is considered to be an important indicator of a nation's role in the international division of labor. The measure has also been found to be of significance in studies on cross-country inequality (Chenery and Syrquin, 1975; Gorin, 1978). External- public debt is an obvious indicator of economic dependence. The WORLD DEVELOPMENT REPORT 1978 provides data on external public debt only for the developing market economies.
Designation of the mode of production for each country was based on the United Nations classification of countries as market economies or as centrally planned economies.*
______________ *The terms "centrally planned economies" and "socialist countries" are used interchangeably in this paper. ____________
Dependent Variables. List 2 itemizes the dependent variables, the year, and the data source for each of the variables. Two types of variables were included. The first are the physical quality of life variables (PQLV) which were used to measure inequality in the fulfillment of basic human needs. The Physical Quality of Life Index (PQLI) and its three components (life expectancy, infant mortality and literacy rates) are shown separately and also as a single score.1 In addition to the PQLI measures, other variables which are commonly used as indicators of the PQL were also included. Population per physician, calorie supply per capita as percent of requirements,
LIST 1. INDEPENDENT VARIABLES POSTULATED BY THE FOUR THEORETICAL MODELS
I. MODERNIZATION AND DEVELOPMENT MODEL
Level of Economic Development and Growth
GNP/c: 1976a 1974b 1970c GNP/c average annual growth rate 1960-76a Energy: per capita. consumption (kilogram of coal equiv.) 1975a Percent of population in urban areas 1960, 1975a Percent of labor force in agriculture 1960, 1970a
II. POPULATION MODEL
Measures of Population
Population (millions) mid-1976a Crude birth rate/1000 (1975)a Crude death rate/1000 (1975)a Average annual population growth rate (%) 1960-70, 1970-75a Percent change in crude birth rate 1960-75a Population density per sq. km. of total land 1970d,e Population density per sq. km. of agricultural aread
III. DEPENDENCY THEORY - WORLD-ECONOMY MODEL
Position in World-economy: Dependence
Primary commodities: percent share of merchandise exports 1960, 1975a External public debt as percent of GNP 1970, 1976a (for developing market economies only)
IV. MARXIST MODEL OF CAPITALIST AND SOCIALIST DEVELOPMENT
Mode of Productionf
Market economy (capitalist) Centrally planned economy (socialist)
Sources:
aWORLD DEVELOPMENT REPORT 1978 (Washington, D.C.: World Bank, Aug.1978) bJohn W. Sewell and the Staff of the Overseas Development Council, THE UNITED STATES AND WORLD DEVELOPMENT: AGENDA 1977 (N.Y.: Praeger, 1977) cYearbook of National Account Statistics 1974, Vol.III dWORLD TABLES 1976 (Washington, D.C.: World Bank, 1976) eUnited Nations Demographic Yearbook 1971 fUnited Nations' classification
LIST 2. DEPENDENT VARIABLES USED TO MEASURE INEQUALITY
I. Physical Quality of Life Variables Used to Measure Inequality in Fulfillment of Basic Human Needs
PQLI score for country (mid-1970s)a,c
Health and Nutrition
Life expectancy at birth (mid-1970s)a Infant mortality rate (mid-1970$)a Population per physician (1974) D-5c Nutrition: Calorie supply per capita as percent of requirementsc
Education
Percent literate (mid-1970s)a,c Numbers enrolled in secondary school as percent of age group (1975)b Numbers enrolled in higher education as percent of age group (1975)b
Position of Women, Employment, and Price Stability
Female labor force as a percent of the total labor forced Percent unemployed (1970) - (market economies only) (N=65)d Average annual rate of inflation (%) 1970-76 L),e
II. VARIABLES USED TO MEASURE INEQUALITY IN INCOME DISTRIBUTION
Percent of national income received by lowest 20% of population (N=72)d,f Percent of national income received by highest 5% of population (N=72)d,f Gini Index of Inequality (N=61)d ========================== Sources:
aJohn Sewell and the Staff of the Overseas Development Council, THE UNITED STATES AND WORLD DEVELOPMENT: AGENDA 1977 (N.Y.: Praeger, 1977) bWORLD DEVELOPMENT REPORT 1978 (Washington, D.C.: World Bank, Aug. 1978) cRuth Sivard, WORLD MILITARY AND SOCIAL EXPENDITURES 1977 (WMSE, 1977) dWORLD TABLES 1976 (Washington, D,C.: World Bank, 1976) eUnited Nations Statistical Yearbook 1973 fShail Jain, SIZE DISTRIBUTION OF INCOME: A COMPILATION OF DATA (Washington, D.C.: World Bank, 1974) =====================
enrollment in secondary school and in higher education were included as additional indicators of health care, nutrition, and education. Female labor force as a percent of total labor force, percent unemployed and average rate of inflation were included as indicators of position of women, employment situation, and price stability. It was assumed that unemployment and inflation add to the survival problems of the poorest segments of the population.
The second type of dependent variable included in the study were the variables used to measure inequality in income distribution: percent of national income received by the lowest 20 percent of the population, percent of national income received by the highest 5 percent of the population, and the Gini index of overall inequality (for the entire income distribution). The income distribution data were taken from the World Bank compilation (Jain, May 1975; WORLD TABLES 1976), which is the most extensive data bank of cross-country income distribution available.
As an indicator of distributional characteristics within countries, the PQLI is much more adequate than the GNP/C, for instance, which tells us nothing about distribution, but the PQLI is less adequate than measures of income distribution. Since the PQLI data used in this study are unitary scores and average rates for the entire population of countries, they obscure the great differences in PQL conditions which exist for different economic strata of the population. They may grossly understate the deprivation of the poorest segments. On the other hand, in a limited sense, the PQLI does give some indication of inequality within countries. We can assume that the lower the score for a country, the less the proportion of the population which is experiencing benefits in these vital aspects of life.
Internationally, the great differences that exist among nations today simply in terms of probability of survival beyond birth, mean that such gross measures of inequality at a basic level are still revealing and meaningful. The PQLI represents data on inequality at the most fundamental level-the life or death level--what Gimenez (1977:20) refers to as "death inequality."
Classification of Countries. One of the most crucial methodological problems was to devise an adequate classification system in order to test the research hypotheses. The classification system utilized by the Overseas Development Council (ODC) in analyzing cross-country differences in PQLI exemplifies the most typical mode of categorization. All countries are ranked from high to low on per capita income. The rank order list of countries is then divided into four categories of countries: high-income, upper-middle income, lower-
middle income, and low-income. Countries in the same income category are then compared with regard to performance in fulfilling basic human needs. Individual countries may be analyzed in terms of deviation from the average score of the countries in their category. Since the fulfillment of basic human needs entails financial expenditures for the provision of education, health care, and other services, it is assumed that poor countries should not be expected to perform as well as wealthy countries.
This uni-dimensional classification system does not, however, enable one to compare capitalist and socialist countries. The socialist countries are intermingled among the 160 countries included in ODC's study. Since the major interest is in testing Marx's propositions concerning expected differences between countries with a capitalist as opposed to a socialist mode of production, the first requirement was to divide the two into two separate categories of countries. Our data analysis will provide comparisons of the two categories of countries. However, a comparison of the two categories without regard to income level is open to justifiable criticism. The task, then, was to find the most appropriate comparison groups by controlling level of income. The method devised was to divide the capitalist countries into 3 groups; low-income, middle-income, and high-income. The lower and upper cut-off points for the middle-income capitalist category were selected so as to match the GNP/C of the lowest and the highest socialist countries.2 Thus, the middle-income capitalist category and the category of socialist countries are almost identical in per capita income range. Table 1 shows the classification system: the per capita income range for each of the four categories, and the number of countries in each category.
============= TABLE 1. CLASSIFICATION OF COUNTRIES BY INCOME LEVEL AND ECONOMIC SYSTEM GNP/c (1976) LOW INCOME = $100-390 CAPITALIST COUNTRIES = 42; SOCIALIST = 0 MIDDLE INCOME = $410-4,250 CAPITALIST COUNTRIES = 49; SOCIALIST = 13 HIGH-INCOME = $4,480-$15,480 CAPITALIST COUNTRIES = 17; SOCIALIST = 0 107 CAPITALIST COUNTRIES; 13 SOCIALIST; TOTAL = 107 ============= |
The socialist countries will be compared to the other categories also however, it will become evident that comparison of the two middle-income groups represents the fairest type of comparison. It also provides a test of the development theory proposition that level of development, as indicated by GNP/C, is the main determinant of inequality. Data supporting this proposition would show that the two groups of countries at the same economic level should manifest approximately the same degree of inequality.
Prior Conditions and Level of Development. A second problem involved in comparing the capitalist and socialist countries pertains to the level of development of the socialist countries prior to the time that they became centrally planned economies. Information showing that the level of development of the two comparison categories was approximately similar would serve to rule out initial level of development as the source of any difference which might be found to exist at the present time. Historical data on the variables studied here are poor in quality and are available for only a limited number of countries. Nevertheless, we present what data we were able to obtain.
Before World War II the world was almost entirely dominated by capitalism. There were only two socialist countries in the world, the Soviet Union and the tiny population of Mongolia. The Soviet Union had been a socialist country for only two decades, since 1917.3 Mongolia, a feudal society with a population of less than a million, became a socialist country in 1921. All of the other countries changed to socialist systems after World War II; ten countries between 1944 and 1949, and Cuba in 1959. Thus 1938, the last prewar year, is perhaps the most appropriate year for examining prior level of development of the centrally planned economies.
The nations of the world can be classified into high-income, middle income, and low-income categories based on their per capita incomes in 1938 (Woytinsky, 1953). Fourteen wealthy countries had per capita incomes above $250. Some forty or so countries ranged between $50 and $186, and the rest were poverty-stricken countries with per capita incomes estimated to be below $50. Nine of the 13 countries that would become socialist were distributed across the middle-income range, with Czechoslovakia at the top and Cuba close to the bottom. The three Asian countries, China, Korea, and Mongolia, were among the low-income, impoverished countries of the world in 1938. Woytinsky (1953:389-391) lists China as close to the bottom with a per capita income of $17. Only Germany, with a per capita income of $335, was among the high-income countries. However, that part of Germany which became socialist was the agricultural region of the country, not the industrialized region. Per capita income in the industrialized section of Germany was about 43 percent higher than in the agricultural section (Woytinsky:404).
None of the countries that would become socialist were among the 14 countries which Chenery and Syrquin (World Bank, 1975:10) list as the developed countries in 1950. Therefore, in terms of income level and economic development, three socialist countries were in the lowest category, ten were in the middle, and none were among the top category that contained the 14 wealthy, developed countries in 1938. With regard to other conditions, Table 2 presents the historical data which could be found in United Nations Yearbooks on two PQLI measures and on death rates. Although data are available for only a limited number of countries, United Nations estimates of average rates for geographic regions tend to support the statistics in Table 2.4 The statistics give some indication of comparative conditions forty years ago for our four categories of countries. Analysis of variance statistical tests indicate that the 3 income categories differed significantly on all 3 measures. On the other hand, life expectancy, infant mortality rates, and death rates were very similar, almost identical, for the countries which are now socialist and the capitalist countries presently in the same income range. Such data provide some basis for assuming that differences that may exist at the present time between the two equivalent income groups may be attributed to differences in economic system.
Analysis of Data and Findings. Analysis of variance statistical procedures were used to analyze the differences between the three groups of capitalist countries on each variable. 'F' ratios and probability levels are reported to show whether the mean scores of the 3 groups differ significantly from each other. Eta2 statistics are given to show the total amount of variance (both linear and non-linear) among capitalist countries that is explained by income group.
Three comparisons were made between socialist and capitalist countries on each variable. The socialist group is compared with the middle-income capitalist group, with the high-income capitalist group, and with all capitalist countries as a single group. T-tests were computed to determine whether the mean scores of socialist and capitalist groups differ significantly from each other. The level of statistical significance was determined for each comparison.* A matrix of zero-order correlation coefficients for the
================= TABLE 2. HISTORICAL PQLI DATA AND DEATH RATES FOR THE 4 CATEGORIES OF COUNTRIES *All tabular data are available in the larger version of the paper published in the INSURGENT SOCIOLOGIST. In Brief, Socialist Countries had lower INFANT MORTALITY RATES, lower DEATH RATES and longer LIFE EXPECTANCY than did comparable capitalist societies. ============== |
107 market economies, indicating the strength of the relationships between each variable and every other variable was constructed.
An analysis of the data is made separately for each of the four theoretical models. The hypotheses implied in each model are illustrated in Figure 1. Since the hypotheses of the first 3 models pertain only to capitalist economies, the data for the 3 capitalist economy, groups will be discussed separately before turning to the data for the centrally planned economies. With regard to the 3 capitalist groups, the most striking feature displayed by the data repeatedly is the steeply-graded, hierarchical character of the world capitalist system. Low- income, middle-income, and high-income market economy groups are significantly differentiated in the expected direction on almost every variable. Presented in this manner, the data reveal the inequality and enormous magnitude of the development gap within the world capitalist system.
Development Model Hypotheses. The first hypothesis predicts that economic development and growth will be positively associated with fulfillment of basic human needs; that is, the higher the economic development, the better the PQLV scores. This hypothesis is supported by the data. Low-income, middle-income, and high-income market economies are significantly differentiated on each of the PQL variables. The differences between the three income levels in life expectancy, infant mortality, supply of physicians,
============= FIGURE 1. THE STRUCTURE OF THE FOUR THEORETICAL MODELS AND IMPLIED HYPOTHESES *All tabular data are available in the larger version of the paper published in the INSURGENT SOCIOLOGIST. In Brief: MODERNIZATION/DEVELOPMENT THEORY predicts that Advanced Capitalist Societies would have HIGH PQLI and LOWEST INCOME INEQUALITY. NE0-MALTHUSIAN POPULATION THEORIES predicts that HIGH PQL and LOW INCOME INEQUALITY comes with LOW BIRTH RATES and LOW POPULATION GROWTH. DEPENDENCY THEORIES predict that countries independent of Core Countries would have HIGH PQL and LOW INCOME INEQUALITY. MARXIST THEORY says that socialist countries with INDEPENDENT Governance would exhibit HIGH PQL and LOW INCOME INEQUALITY. =================== |
nutrition, literacy, and school enrollment are very great. At each succeeding level, a much higher proportion of the population enjoy benefits in these crucial areas of life. Income category explains a relatively large amount of the variation between groups on the PQLI (.550) and on the other PQL measures.
The correlation coefficients support and strengthen the analysis given above. Each of the measures of level of economic development are strongly and significantly correlated with each of the 8 PQL variables. Economic growth is also significantly correlated with the PQL variables, but the relationship is not as strong.
The second development hypothesis predicts a curvilinear relationship between economic development and income inequality. Inequality is expected to increase in the early stages of development, and then to decrease with industrialization. Therefore, income inequality is expected to be highest for the middle-income category and lowest for the high-income category. This hypothesis receives some limited, weak support, but the evidence is mixed. There is a wide-spread of scores within each of the 3 income groups. Income distribution is highly unequal in all market economy groups. Group means indicate the share of the national income received by the top 5 percent of the population ranges from 14 to 24 times as much proportionately as the share received by those in the bottom 20 percent of the population. The 3 groups of countries do not differ in the share of national income given to the poorest 20 percent. On the average, the poorest fifth of the population gets only between 4.6 and 5.6 percent in the 3 groups of countries. They get a half to one percent more in the low-income group of countries. They should get less according to the theory.
The high-income group of countries is significantly less unequal than low or middle-income groups on the other 2 measures, income of the top 5 percent and the Gini Index. The latter reflects the greater strength of the middle classes in the industrial countries. The middle classes receive a higher share of the national income in the industrial countries than in the developing countries. While the top 5 percent in the high-income capitalist countries receive a significantly lower share of the national income than in the 2 lower-income groups of countries, we must remember that the former 5 percent own a large proportion of the wealth of the world.
The middle-income group of countries has the most unequal income distribution, but the mean scores are not much worse than those of the low-income group, and there is a wide range in both groups. Eta,- shows that income category explains only .161 and .181 of the total variance of the 2 income measures.
Turning to the correlation analysis, we find that income share of the poorest 20 percent of the population is not significantly associated with any of the economic development variables. This strengthens the previous findings that income share of the poor does not differ in the 3 income groups of countries. On the other hand, income for the top 5 percent and the Gini Index are significantly and negatively related to all measures of level of economic development. Therefore, despite the fact that the mean scores of the middle-income group of countries are slightly more unequal than the low-income group, over the entire range of capitalist countries, income distribution tends to be less unequal with higher level of economic development.
Rate of economic growth is not significantly correlated with the measures of income distribution. The finding that inequality of income distribution is significantly related to level of economic development but not to economic growth rate has important implications. Most studies of inequality are cross-sectional studies which do not include historical data or growth rates. The assumption is made that countries at different levels of development at the present time can be considered equivalent to countries which were at different stages historically. It is further assumed that all countries will pass through the same stages--stages which the industrial countries traversed. Given these assumptions, it is then expected that after a period of time and growth, the developing countries will duplicate the patterns of income distribution and other characteristics of the developed capitalist countries. Such assumptions are questionable on both methodological and theoretical grounds. The validity of drawing historical inferences from cross-sectional data has been criticized (Hanneman, 1978). And as discussed earlier in the paper, dependency theorists question the assumption that the developing countries can be expected, with very different circumstances, to follow in the footsteps of the developed countries. World-economy theorists claim that a stratified system of dominant/subordinate relationships precludes all nations from attaining the same characteristics and patterns of stratification. The empirical finding on lack of association between rate of economic growth and income equality casts further doubts on the assumptions discussed above.
In summary then, the data confirm the importance of economic development and growth as a determinant of the fulfillment of basic human needs. The basic human needs of larger proportions of the population are met at higher levels of economic development and growth. The evidence is more ambiguous with regard to income distribution. In general, income inequality tends to decrease at higher levels of economic development; however, on the average, the middle-income group of countries is slightly more unequal than the lower income group. Economic development does not seem to affect the income share of the poorest segment of the population. They get an equally low share in each of the 3 market economy groups. And finally, economic growth rate is not significantly related to equality of income distribution.
Population Model Hypotheses. Since historical data for the dependent variables are not available for most low-income countries, we cannot make any statements here concerning direction of causality between dependent and independent variables. The following analysis is made solely in terms of the association between variables. In such terms, analysis of the data shows that the variables identified by the population model are of major importance in the study of inequality.
Birth rates are significantly, strongly, and negatively correlated with economic development, PQL conditions, and income inequality. PQLI has a stronger association with birth rates (- .90) than with any other variables in the study. Low, middle, and high-income capitalist countries are significantly differentiated on birth rates in the expected direction.
Population growth is also significantly and negatively correlated with most economic and dependent variables, but to a lesser degree. Because the mean death rate is significantly higher for low-income countries than for middle-income countries, the rate of population growth is actually a fraction of a percent lower for the low-income countries, even though their birth rates are significantly higher. Therefore, birth rate, but not population growth rate, differentiates low-income and middle- income market economies. Population growth is significantly and negatively correlated with female proportion of the labor force; with a higher proportion of women in the labor force, population growth is lower. Income inequality (the Gini Index and share of the top 5 percent) is more highly correlated with birth rates and population growth than with any other variables in the study.
The decrease in birth rates from 1960 to 1975 is significantly and positively correlated with all economic variables and most dependent variables. Low, middle, and high- income groups are significantly differentiated, with higher decreases in birth rates in higher income groups of countries.
On the other hand, population size of country is not significantly related to other variables. The two measures of population density have mixed results. In those cases where density is significantly related to the other variables, the direction is opposite to implications of the population model. For example, density is positively related to economic growth, PQLI, and income equality, although the relationship is not as strong as in the case of other population variables.
Dependency Model hypotheses. Dependency theory postulates that position in the world-economy is the major determinant of inequality. It is expected that dependent, subordinate countries will have a lower level of economic development and growth, lower PQL conditions, and higher income inequality than less dependent countries o; independent countries. Two variables were utilized as indicators of dependence in this study: primary commodities as percent of merchandize exports and external public debt as percent of GNP. Primary commodity exports, in particular, and external public debt to a lesser degree, are related to other variables in the manner hypothesized by dependency theory. Middle-income and low-income countries are significantly differentiated by both variables in the expected direction. Countries whose role in the world capitalist division of labor is that of producers and exporters of primary commodities have a significantly lower level of economic development, a lower rate of economic growth, lower PQL conditions, and greater income inequality. They also have a higher rate of population growth.
The external public debt (which does not include debts to external private banks and lenders) increased from 1970 to 1976 to 29 and 20 percent of the GNP of low-income and middle-income countries respectively. External debt in 1976 shows a significant negative association with GNP/C, rate of economic growth, PQLI, and nutrition. It shows a significant positive association with birth rate, death rate, and unemployment. The relationships, however, as measured by the correlation coefficients, are weaker than those indicated for primary commodity exports.
Marxist Model Hypotheses Economic Development and Dependent Variables.
We turn now to the Marxist model and its propositions concerning the effects of different modes of production. The general hypotheses to be tested here are that there will be greater fulfillment of basic human needs and less income inequality in socialist than in capitalist countries. However, tile data will also be analyzed by income category in order to evaluate development model hypotheses. First, we analyzed the data on the dependent variables and the economic development variables for the socialist countries and the capitalist countries at the same income range. Examination of the category means and t-test statistics indicates that as the model predicts, the socialist countries have better scores on each of the 12 dependent variables. All of the differences are statistically significant except that for enrollment in higher education. The socialist countries are significantly higher in fulfilling basic human needs and in income equality despite the fact that, as a group, they match the middle-income market economies very closely on all measures of economic development with the exception of energy consumption. Socialist countries are significantly higher on energy consumption, reflecting perhaps more widely-spread economic development in contrast to economic development concentrated in the export sector in developing market economies.
If we compare the socialist countries with the high-income capitalist countries, we find the opposite kind of pattern. The two groups of countries differ on economic variables, but are similar on the dependent variables. Taken as a group, the socialist countries are far below the wealthy capitalist countries on mean GNP/C ($1888 vs. $7233) and are also significantly lower on the other indicators of economic development (energy consumption, urban population, and non-agricultural labor force) with the exception of rate of economic growth. The two groups are approximately the same on rate of economic growth (GNPIC) according to the data provided by the World Bank.6
The wealthy capitalist countries have better mean scores on six dependent variables than socialist countries but none of the differences are statistically significant. PQLI scores are almost identical (88 - 89). On the other hand, the socialist countries have higher mean scores on the other 6 dependent variables, and 5 of the differences are significantly better, the differences on the 3 income distribution measures, on women employed, and on price stability.
Socialist vs.Capitalist Levels of Development.
We can also compare the mean scores for all socialist countries as opposed to all capitalist countries. On mean per capita income, the two are almost identical. Socialist countries are higher on all other measures of economic development, but significantly higher only on energy consumption. Socialist countries are better on every PQL variable, and significantly higher on all except enrollment in higher education and rate of inflation. With regard to income distribution, the data on income distribution provided by the World Bank for 6 socialist countries places 5 of them above all other countries in the world bon income equality. The exception is Yugoslavia which retains more capitalist features than any other centrally planned economy. With regard to income share of the poorest 20 percent of the population, socialist mode of production appears to be the only factor that significantly improves the share they receive. Income share of the poorest 20 percent was not significantly related to any variable in the correlation matrix for the capitalist world system except the Gini Index.
The data confirms the Marxist hypotheses that income inequality will be lower in socialist than in capitalist countries, and that fulfillment of basic human needs will be higher in socialist than in capitalist countries. Both the Marxist model and the developmental model predict the importance of level of economic development; however, the development model cannot explain why the socialist countries have much greater income equality and much better PQL conditions than capitalist countries at the same level of economic development. Such findings appear to be in opposition to the major proposition of the development model. Furthermore, only the Marxist model predicts the striking findings enumerated above concerning the effect of mod& of production.
Population Variables in Socialist Countries and Capitalist Societies. When we examine the effect of mode of production on population variables,,we find that the socialist countries have the lowest rate of population growth and the lowest death rate of the four groups of countries. The socialist countries are significantly different from the middle-income capitalist economies, but very similar to the high-income market economies on population variables. The socialist group of countries is the only group which has joined the high-income market group in the third stage of the demographic transition, which is defined as having low birth rates and low death rates, as illustrated in Table 3. Both the low and middle-income market groups still have high mean birth rates. The low-income group still has a high mean death rate.
TABLE 3. POSITION OF THE
4 GROUPS OF COUNTRIES *All tabular data are available in the larger version of the paper published in the INSURGENT SOCIOLOGIST. In Brief, DEMOGRAPHY TRANSITION THEORY works for Market Economies: Low Income Market economies have HIGH BIRTH RATES AND HIGH DEATH RATES: High Income Market Economies have Low Birth Rates and Low Death Rates. Socialist Economies go directly to Stage 3: Low Birth Rates and Low Death Rates. There is no Transition Pattern in the Data. |
In the earlier analysis of the data for the capitalist countries, we showed the type of data and analysis that could be used to support population model hypotheses. On the surface, it might appear that the hypotheses of the population model are confirmed even for the socialist countries. Population theorists would claim that the low birth rates and low population growth rates of the socialist countries explain their better performance in meeting basic human needs and in income equality. However, the population model cannot explain why capitalist and socialist countries at the same level of economic development have such different rates of population growth. Of the four categories, the socialist countries have the lowest rate of population growth while the middle-income capitalist countries have the highest rate of population growth (albeit only a fraction of a percent higher than the low income countries). It is also relevant to note here that for female participation in the labor force and income equality, both significantly related to population growth, the socialist countries have the highest scores while the market economy countries at the same income level have the lowest scores of the four groups.
The Marxist explanation for the significant differences in birth rates and population growth rates for the two middle-income groups of countries is that the material conditions of life for most of the population are very different. The mere fact that the GNP of the 2 groups,when divided mathematically by the total number of people, happens to be equivalent tells us nothing about the actual division or allocation of the GNP. In capitalist countries, foreign and domestic owners of the means of production may appropriate a large portion of the GNP and leave very little, relatively, for other segments of the population, especially for the bottom segment. Such a hypothesis is supported by the data on income distribution. On each of the 3 measures, the scores for the capitalist middle-income group of countries are at least two times more unequal than the socialist group -- and population growth rate is twice as high. Perhaps even more important than income distribution is the fact that the PQLV (health, nutrition, education, position of women, price stability) scores for the socialist group are significantly better. Although we do not have adequate comparative historical data, the historical data that was presented in Table 2 suggests that 40 years ago, conditions were roughly similar for the 2 middle-income categories.
The population model cannot explain why the decrease in birth rates (19601975) was greater for the socialist countries than for low-income or middle income capitalist countries. The fact that the highest decreases in birth rates occurred in countries with the lowest income inequality and with fulfillment of basic human needs for higher proportions of the population conforms to expectations derived from the Marxist theoretical model.
Dependency Variables. The world-economy dependency model hypothesis, already examined, is that position in the world- economy determines degree of internal inequality; that dominant, independent countries which have the greatest control over world production and trade will have the least inequality, and that dependent, subordinate countries will have the most inequality. The Marxist model accepts this hypothesis for the capitalist world system, but considers the socialist countries to represent a different mode of production subject to different laws and relationships.
We have data on only one of the two dependency measures for the socialist countries since the World Bank data on debt do not include the centrally planned economies. The one measure, primary commodity exports, however, appears to play a very different role for socialist countries than for capitalist countries as indicated by the correlation coefficients for the two groups.
Whereas for capitalist countries, a high level of primary exports (higher dependency) is significantly associated with lower urban population, higher agricultural labor force, lower PQLI, fewer physicians, higher death rates, lower school enrollment, greater income inequality, and a smaller decrease in birth rates, only one of the above correlations is significant for the socialist countries, and that one is in the opposite direction.7 Higher primary commodity exports are significantly related to lower death rates for socialist countries. It is also related, although not significantly, to.a higher decrease in birth rates, a higher supply of physicians, and to greater income equality.
In summary, for developing capitalist countries, a higher proportion of primary commodities in exports (higher dependency) is significantly associated with lower economic development, lower PQL conditions, and higher income inequality. In contrast, for socialist countries the same measure is not associated with any of the negative characteristics assumed to be results of dependency and subordinate position. We interpret this finding as partial evidence that socialist countries are not subject to the same system of dominance-subordination relationships and consequences as the capitalist countries.
The most important evidence with regard to the socialist countries, however, is indirect. The evidence that the socialist countries have the lowest income inequality in the world is in opposition to the world-economy hypothesis that the countries which have the greatest control over world production and trade will have the lowest inequality. The evidence that the scores of the socialist countries on PQL variables and population variables are very different from those of capitalist countries at the same income level, and are very similar to the small group of wealthy, independent, capitalist countries suggests that the socialist countries are also independent. It suggests that they are independent of the laws of the world capitalist system, and that that independence has enabled them to carry out a program of autocentric development, development for the benefit of their own people.
The Inequality Gap. The gap between the rich and the poor nations in the world capitalist system is enormous and growing larger. In contrast, the Marxist model assumes that the gap between the socialist countries has narrowed, and that it will continue to do so. What do the data show on this question? Pre-World War II data on national income are not available for most low-income countries, therefore we cannot calculate precise before-after ratios for the two economic systems. However, we can look at several pieces of evidence. First, prior to the time that they became centrally planned economies, the socialist countries were distributed in income range from the top to the bottom of the underdeveloped world (the world with the exception of the 14 developed countries). Three countries were in the lowest income group. Today none of the socialist countries are in the bottom category. All are in the middle-income range. Forty-one countries (34 percent of the population of the world) have lower per capita incomes than the poorest socialist country. The ratio between the per capita income of Germany and China in 1938 was 20:1; between the German Democratic Republic and China today, it is 10:1. The ratio between Czechoslovakia (the second wealthiest socialist country) and China was 11:1; today it is 9.3:1. In contrast, the ratio between the richest and poorest market economy in 1938 was 33:1; today (by-passing Kuwait, the wealthiest country) the ratio between Switzerland, the second wealthiest country, and the poorest market economy is 89:].
The ratio of mean GNP/C of the high-income to low-income market economies is 34.3:1. The middle-income to low-income market economy ratio is 6.5:1. In contrast, the ratio of the mean GNP/C of the 6 high to the 7 low centrally planned economies is 3.4:1.
In terms of GNP/C annual rate of economic growth (1960-76), the all rate for the low-income market group was 1.41 percent compared to 3.98 percent for the high-income market group. In contrast, the mean growth rate for the 7 lower-income centrally- planned economies was 3.97 percent as compared with 3.55 percent for the 6 higher-income centrally planned economies. The correlation coefficient of GNP/C with GNP/C growth rate for the centrally planned economies is -.036 (significance level = .906) in contrast to .192 (significance level= .051) for market economy countries. The coefficients indicate that there is a significant positive relationship for the capitalist countries, that wealth is correlated with faster economic growth rate. Whereas, the relationship is insignificant and slightly negative for socialist countries. For socialist countries which belong to the Council for Mutual Economic Assistance (CMEA), this represents a deliberate policy of planning to narrow the gap (Shishkov, 1974; Szymanski, 1977-78; Marquit, 1978). For socialist countries in general, however, whether or not they are members of CMEA, the data support the claim that there are no systematic, exploitative, economic mechanisms operating among socialist countries designed to maintain positions of economic dominance and subordination.*
In terms of meeting basic human needs and income inequality which are primary concerns of the paper, the data are even more striking. While we do not have adequate historical data to compare the changes that have occurred over a period of time, we can compare the gap within the world capitalist system with the gap among the socialist countries at the present time. Table 4 presents the range on the Gini Index, the PQLI, and its 3 components. The dispersion on the Gini Index of income inequality between capitalist countries is almost 21-2 times as great as the difference in range between socialist countries. PQLI scores within the world capitalist system range from 14 to 100, whereas for the socialist countries the range is quite small, from 76 to 96. The disparity within the world capitalist system on each of the PQLI components is enormous. The range of scores for the socialist countries, by comparison, is quite small. We can assume that, 30 years ago, the PQLI measures of countries such as China, Korea, Mongolia, and to a lesser degree, Cuba, were as low as those of the countries at the bottom of the capitalist range. The data entered earlier in Table 2 showed very high infant mortality rates in 1938 for nine of the countries which are now socialist.** However, at the present time, life expectancy, literacy, and infant mortality rates of all socialist countries are substantially better than the mean scores of the capitalist countries. The remarkably small gap that still exists between the socialist countries in PQLI can be almost entirely explained by initial level of development, that four of the six countries with PQLIs below 90 were impoverished, semi-colonial, Third World countries not long ago.***
*Three of the 6 East European CMEA countries have higher GNP/C and higher economic growth rates than the Soviet Union.
**Data for China, Mongolia, USSR, and Yugoslavia are not available. Data for these countries would have made the group infant mortality rate even higher than the rate shown.
***The six socialist countries with PQLIs below 90 are: China, Korea, Mongolia, Cuba, Albania, and Yugoslavia.
Table 4. Comparison of
the Gap Among Capitalist Countries and *All tabular data are available in the larger version of the paper published in the INSURGENT SOCIOLOGIST. In Brief: Socialist Countries do better than MARKET ECONOMIES on PQLI, on LIFE EXPECTANCY; on LITERACY and on INFANT MORTALITY RATES. |
It should be noted that the mean scores for the socialist countries have already surpassed the goals which the Tinbergen (1976) Group set for each country for the year 2000. Of the capitalist groups, only the high-income group has surpassed the Tinbergen goals.
SUMMARY
In this paper we examined the 3 most prominent sociological explanations of inequality and deprivation of basic human needs, as well as a fourth theory, a Marxist model of socialist development which has hardly been tested in the West. We also examined the types of data which are presented to verify the theories. Statistical data for 120 countries (97 percent of the global population) were analyzed to test the propositions of each of the 4 theoretical models. The data analysis corroborated past research findings that the 3 prominent Western models each identify variables which are significant in the study of inequality. They each predict important relationships which are confirmed by the empirical evidence' Taken together, the 3 models predict the hierarchical picture of the capitalist world system that emerges from the data: at one pole, poor countries characterized by low economic development and growth, high dependency, high birth and death rates, shockingly low physical quality of life conditions, and high income inequality; at the other pole, a small group of wealthy countries exhibiting the opposite characteristics. While the development and population models predict various aspects of the empirical relationships, the world-economy dependency model is More adequate. It gives a more satisfactory explanation for the existence of such a steeply- graded system and for the present position of various countries in the hierarchical order. It explains the logic and operations of the capitalist world system. Such high-powered intellectual models supported by massive empirical evidence and statistical data explain and make acceptable the anomaly of poverty amidst plenty. It no longer appears as a contradiction that impoverishment increases at the same time that the global product and wealth of the world doubles, triples, and sextuples.
None of the 3 models includes propositions concerning socialist countries. Research on cross-country inequality, in general, does not include socialist countries. If individual socialist countries are included, they are incorporated into a single world system instead of being treated as a separate system to be compared with the capitalist system. Thus, one of the two major existing modes of development with one-third of the population of the world is, strangely, missing from the research on inequality. The leading theories do not have to confront or be tested against the explanation of the foremost oppositional theory. If no alternatives exist, then the contradictions of the capitalist system can be more easily accepted as the unfortunate but inevitable workings of the natural order. Nothing is put forth to challenge such assumptions.
On the other hand, if the socialist countries are included as a separate mode of production to be compared with the capitalist mode, as was done in this study, the assumptions and propositions of the major models are challenged. The findings for the socialist countries do not conform to the propositions put forth by the 3 models. The development model does not predict or explain why the socialist countries are higher in fulfillment of basic human needs and income equality than capitalist countries at the same level of economic development and theory. Such data contradicts the major proposition of development theory. The population model cannot explain why birth rates and population growth vary so greatly. It cannot explain why the Capitalist and socialist countries at the same level of economic development have the highest and lowest rates of population growth, respectively, of the 4 categories of countries. It cannot explain why the socialist countries have a higher decrease in birth rates than the low-income and middle-income capitalist countries. The world- economy dependency model does not predict or explain why the socialist countries have the least income inequality in the world. Such data is in opposition to its fundamental proposition that countries which have the greatest control over world production and trade will have the least income inequality. None of the 3 models predicts or explain 9 why inequality is decreasing within and between the socialist countries, while it is increasing in the capitalist world system. None of the 3 models explains why the socialist countries, which were part of the underdeveloped capitalist world not long ago, are the only group of the formerly underdeveloped countries which has joined the high-income capitalist countries in the third stage of the demographic transition and in surpassing all of the Tinbergen goals for basic human needs. In sum, none of the 3 models predicts any of the striking differences between socialist and capitalist countries displayed in the data because none use the concept "mode of production" as a comparative, explanatory concept.
In contrast, the findings appear to be more adequately explained by the Marxist proposition that each mode of production has its own set of laws. The law of capitalist accumulation, with its priority on private profit maximization, leads to uneven development, to growing concentration of wealth at one end of the pole and poverty at the other end. The different material conditions of life then, in turn, produce different rates of population growth. In a socialist mode of production, with the means of production collectively owned, with the imperative of private profit maximization eliminated, theoretically production could be planned to meet the basic human needs of the entire population, the new owning class. With an improvement in economic conditions, in security, in public health and educational services, in opportunities for employment of women, population growth would decrease. These assumptions and propositions appear to be supported by the data examined in this study.
The deficiencies and limitations of a statistical study of 120 countries are great indeed. Generalizations about large categories of countries give little insight or understanding of any particular country. Adequate understanding of any nation requires an in-depth historical study of the concrete conditions in that society. There are many other problems associated with large-scale statistical studies, with the data, measurement, and assumptions. Nevertheless, the data are adequate to discern patterns and trends.
The main value of this study and the major implications stem from the findings which support Marx's proposition that social relationships are shaped by laws which are distinctive and specific to each mode of production. Research which studies only capitalist societies or which combine socialist countries intermingled with capitalist nations contributes to the belief that the relationships found in these many studies are universal and inevitable processes. It contributes to the belief that gross inequality is natural and inevitable, or that countries must necessarily pass through periods of increasing relative inequality in order to promote economic development. The data in this study contradict such assumptions. The evidence demonstrates that countries with a socialist mode of production, with planning geared toward meeting the basic human needs of the entire population and toward decreasing inequality can make great strides toward such goals in a relatively short period of time even though they start at a very low, backward stage of economic development.
In this study we did not have the occasion to discuss the many deficiencies, shortcomings, and problems that exist in each of the socialist countries in this early stage of socialism. There is, however, an overwhelming abundance of information (and misinformation) available regarding the negative aspects of socialist countries. In contrast, the findings about socialist countries presented in this study are known to few people, even in Marxist circles, in the United States. It seems that the information presented is sorely needed at this time to balance the empirical studies that totally ignore the socialist third of humanity and those non-empirical studies which present one-sided, grossly distorted images of the socialist countries.
NOTES:
1. PQLI data consists of four measures for each of the 120 countries in the sample (=480). All of the PQLI data was obtained from THE UNITED STATES AND WORLD DEVELOPMENT: AGENDA 1977 (Sewall et al.) with the exception of five scores. Infant mortality rates for Mongolia and the Korean People's Democratic Republic were listed as not available (n.a.), but were obtained from a subsequent ODC study. Literacy rates for Korea, Cuba, and China were taken from WORLD MILITARY AND SOCIAL EXPENDITURES 1977, which is listed by ODC as one of its sources of data. The literacy rate for Korea was listed as not available (n.a.) in Agenda 1977. The literacy rates for China (25%) and for Cuba were obviously in error. The rate given for Cuba was its 1953 pre-revolution literacy rate (see UNESCO STATISTICAL YEARBOOK 1965). Sivard's literacy rates for Korea and Cuba, which are used in this study, are conservative. Other official sources suggest higher rates. PQLI scores for the four countries (Mongolia, Korea, Cuba, and China) were recomputed using a formula obtained from ODC.
The AREA HANDBOOK FOR NORTH KOREA (1976), prepared by Foreign Aid Studies of the American University for the U.S. military, states the following in the Country Summary for North Korea: "Literacy rate nearly 100 percent by 1975." (p. ix). Nevertheless, in this study we used the literacy rate of 85 given by Sivard.
Virtually all official Western sources are in agreement concerning PQLI data for the nine other centrally planned socialist economies. Despite the agreement, however, it is obvious that the rates for Albania, which were used in this study, are very old, outdated statistics. The literacy rate given is the same rate listed for Albania in 1955 (UNESCO STATISTICAL YEARBOOK 1965), and the infant mortality rate is higher than the rate listed for it in 1938 (1951 UNITED NATIONS DEMOGRAPHIC YEARBOOK). The high infant mortality rate (IMR=87) seems highly improbable since Albania's death rate has decreased from 17.7/1000 in 1938 (1951 U.N. DEMOGRAPHIC YEARBOOK) to 7/1000 (WORLD DEVELOPMENT REPORT 1978). But apparently, up-to- date statistics for Albania are not available from official Western sources.
It is important to note that the PQLI data were taken from AGENDA, 1977. The new AGENDA 1979 uses a different formula for the PQLI, making scores for all countries lower in order to allow room for higher scores in future years.
2. Neither ODC nor the World Bank give the rationale for their cut-off points. If ODC's lower and upper middle-income groups are combined, the following are the cut-off,points for the 3 studies for the middle-income group:
ODC: $300 - 2000 WDR: $260 - 3920 Cereseto: $410 - 4250
3. In 1921, following six years of war (World War I, revolution, civil war, and invasion by the leading foreign powers), industrial production in Soviet Russia had fallen to about 20 percent of its 1913 level. Soviet Russia was economically devastated. The economic recovery that followed was soon to be shattered again by the Nazi invasion and four years of warfare on Soviet soil.
4. United Nations estimates of life expectancy for different geographical regions for the 1935-39 period: Asia-30, Africa- 30, Latin America-40, temperate South America-51; South and East Europe-53; North America, North and West Europe-62, Australia and New Zealand-66 (World Bank Staff Report, 1974:170).
As noted by Grant (1978:23) adequate data on literacy generally are available only for developed nations.
5. The statistical means for categories of countries presented in the tables are unweighted means. The decision to use unweighted means was based on a desire to retain, to a greater extent, the effect of characteristics of each of the 120 countries in the sample rather than obtaining information based on the actual proportion of the global population represented by each country. Otherwise, a country such as China with more than 800 million people, would completely overwhelm and erase the effect of all other countries within its category. Data on the low income countries would overwhelmingly reflect the conditions in India. The effects of conditions in Brazil for the middle-income category, and of the United States for the high-income category, would greatly color all of the statistics computed. The five largest countries in the world make up more than half the population (51.6%) of the sample. Thus it seems that the weighting procedure would destroy much of the value of studying 120 countries.
6. However, WORLD DEVELOPMENT REPORT 1978 Table 23 (p. 27) for average annual gross domestic product (at 1975 prices) shows much higher growth rates for centrally planned economies than for the market industrialized countries: for 1960-70 CPEs=6.8% and market countries=4.9%; for 1970-75 CPEs=6.4% and market=2.8%.
7. The relationships discussed have very different correlation coefficients for the capitalist countries than for the socialist countries. Those with similar coefficients, but different levels of significance due . simply to the great difference in number of countries in the two groups, were not included in the discussion.
8. While we did not give evidence regarding the decrease within socialist countries in inequality, it is presumably conceded that the socialist countries are less unequal than they were in the past when they had czars, monarchs, emperors, nobility, and peasants. Inequality was a major cause of the revolutions in all socialist countries.
REFERENCES
Abu-Lughod, Janet and Richard Hay, Jr. 1977 Third World Urbanization. Chicago: Maaroufa Press.
Ahluwalia, Montak S. 1976 "Inequality, poverty, and development." Journal of Development Economics 3:307-342.
Amin, Samir 1974 Accumulation on a World Scale. Volume I. New York: Monthly Review Press.
Baran, Paul 1956 The Political Economy of Growth. New York: Monthly review Press.
Barnet, Richard J. and Ronald E. Muller 1974 Global Reach: The Power of the Multinational Corporations. New York: Simon and Schuster.
Bornschier, Volker, Christopher Chase-Dunn, and Richard Robinson 1978 "Cross-national evidence on the effects of foreign investment and aid on economic growth and inequality: a survey of findings and a reanalysis." The American Journal of Sociology 84:651-683.
Cereseto, Shirley 1977 "On the causes and solution to the problem of world hunger and starvation: evidence from China,.India, and other places." The Insurgent Sociologist 7:33-52 (Summer).
Chase-Dunn, Christopher 1975 "The effects of international economic dependence on development and inequality: a cross-national study." American Sociological Review 40:720-738.
1978 "The Limitations of State Economic Planning: socialist movements in the context of the capitalist world-economy." Paper presented at American Sociological Association Annual Meetings. San Francisco.
Chenery, Hollis and Moises Syrquin 1975 Patterns of Development 1950-1970. Oxford: Oxford University Press.
Chomsky, Noam and Edward Herman 1979 The Pentagon-CIA Archipelago: The "Washington Connection" and Third World Fascism. Boston: South End Press.
Delacroix, Jacques 1977 "The Export of Raw Materials and Economic Growth: a cross-national study." American Sociological Review 42:795- 808.
Dupuy, Alex and John Yrchik 1978 "Socialist planning and social transformation in Cuba: a contribution to the debate." The Review of Radical Political Economics 10/4:48-60.
Frank, Andre Gunder 1969 Capitalism and Underdevelopment. New York: Monthly Review Press.
Gerschenkron, Alexander 1952 "Economic backwardness in historical perspective." In Bert F. Hoselitz (ed.). The Progress of Underdeveloped Areas. Chicago: University of Chicago Press. 3-29.
Gerstein, Ira 1977 "Theories of the World Economy and Imperialism." The Insurgent Sociologist 7:9-22.
Gimenez, Martha E. 1977 "Population and capitalism." Latin American Perspectives, 4:340.
Gorin, Zeev 1978 "Income inequality in the Marxist theory of development: a crossnational test." Paper presented at American Sociological Association Annual Meetings. San Francisco.
Grant, James P. 1978 Disparity Reduction Rates in Social Indicators. Washington, D.C.: Overseas Development Council.
Gurley, John G. 1976 Challengers to Capitalism: Marx, Lenin, and Mao. San Francisco: San Francisco Book Company.
Hanneman, Robert A. 1978 "Income equality and economic development in Great Britain, Germany, and France: 1850 to 1970." Paper presented at American Sociological Association Annual Meetings. San Francisco.
Hansen, Roger D. 1977 "Major U.S. options on North-South relations: a letter to President Carter." In John W. Sewell and the Staff of the Overseas Development Council (ed.). The United States and World Development: Agenda 1977. New York: Praeger. 21-141.
Hensman, C.R. 1971 Rich Against Poor: The Reality of Aid. Baltimore: Penguin Books.
Hernandez, Jose 1974 People, Power, and Policy: A New View on Population. Palo Alto: Mayfield.
Hoselitz, Bert F. (ed.) 1952 The Progress of Underdeveloped Areas. Chicago: University of Chicago Press.
ILO International Labour Office 1977 Employment, Growth and Basic Needs: A One-World Problem. New York: Praeger. Published for the Overseas Development Council.
Jain, Shail 1975 Size Distribution of Income: A Compilation of Data. Washington, D.C.: World Bank.
Jalee, Pierre 1968 The Pillage of the Third World. New York: Monthly Press.
Kuznets, Simon 1963 "Quantitative aspects of the economic growth of nations, VIII: distribution of income by size." Economic Development and Cultural Change, 11:1-80.
Laibman, David 1978 "The 'state capitalist' and 'bureaucratic exploitive' interpretations of the soviet social formation: a critique." The Review of Radical Political Economics 10/4:24-34.
Lane, David 1976 The Socialist Industrial State: Towards a Political Sociology of State Socialism. Boston: Allen and Unwin.
Lenin, Vladimir 1917 Imperialism: The Highest Stage of Capitalism. New York: International Publishers, 1939.
Lenski, Gerhard 1966 Power and Privilege: A Theory of Social Stratification. New York: McGraw-Hill.
Latelier, Orlando and Michael Moffitt 1977 The International Economic Order. Washington, D.C.: Transnational Institute.
Magdoff, Harry 1969 The Age of Imperialism: The Economics of U.S. Foreign Policy. New York: Monthly Review Press.
Malthus, Thomas 1798 An Essay on the Principle of Population. London: Macmillan.
Mamdani, Mahmood 1972 The Myth of Population Control: Family, Caste, and Class in an Indian Village. New York: Monthly Review Press.
Marquit, Erwin 1978 The Socialist Countries. Minneapolis: Marxist Educational Press. University of Minnesota.
Marx, Karl and Friedrich Engels 1848 The Communist Manifesto. New York: Monthly Review Press, 1964.
Marx, Karl 1867 Capital. Volume I. New York: International Publishers, 1967.
1875 Critique of the Gotha Program. Moscow: Progress Publishers, 1971.
McNamara, Robert S. 1977 Accelerating Population Stabilization Through Social and Economic Progress. Washington, D.C.: Overseas Development Council, August 1977. Development Paper 24.
McNamara, Robert S. 1977 "A pittance for international aid." The Bulletin of the Atomic Scientists. November: 36-37.
Moore, Wilbert and David Feldman 1960 Labor Commitment and Social Change in Developing Areas. New York: Social Science Research Council.
Morawetz, David 1977 Twenty-five Years.of Economic Development: 1950 to 1975. Baltimore: John Hopkins University Press.
Morris, Morris D. and Florizelle B. Liser 1977 The PQLI: Measuring Progress in Meeting Human Needs. Communique No. 32. Washington, D.C.: Overseas Development Council.
Paukert, Felix 1973 "Income distribution at different levels of development: a survey of evidence." International Labor Review 108:97- 125. Riddell, Tom, Steve Stamos, and Jean Shackelford 1979 Economics: A Tool for Understanding Society. Menlo Park, Ca: Addison-Wesley.
Riskin, Carl 1978 "East Asia and the World Economy." Bulletin of Concerned Asian Scholars. 10:57-61.
Rostow, Walt W. 1960 The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge: Cambridge University Press.
Robinson, Richard 1976 "The world-economy and the distribution of income within states: a cross-national study." American Sociological Review 41: 638-659.
Sewell, John W. and the Staff of the Overseas Development Council 1977 The United States and World Development: Agenda 1977. New York: Praeger.
Shishkov, Yuri 1974 Two Systems of Economic Integration. Moscow: Novesti Press.
Sivard, Ruth 1977 World Military and Social Expenditures. Leesburg, Virginia: WMSE Publications.
Sweezy, Paul 1967 "Marx.and the Proletariat." Monthly Review 19.
Sweezy, Paul M. and Charles Bettelheim 1971 On the Transition to Socialism. New York: Monthly Review Press.
Syme, S. Leonard and Lisa F. Berkman 1976 "Social class, susceptibility and sickness." American Journal of Epidemiology 104/1. July.
Syzmanski, Albert 1974 "Economic development and population." Studies in Comparative International Development 9:53-69.
1977-78 "Soviet social imperialism, myth or reality: an empirical examination of the Chinese thesis." Berkeley Journal of Sociology 22:131-166.
1978-79 "The class basis of political processes in the Soviet Union." Science and Society 42:426-457. Tinbergen, Jan
1976 Reshaping the International Order: A Report to the Club of Rome. New York: Dutton. United Nations
1951 United Nations Demographic Yearbook 1951. New York: United Nations.
1965 UNESCO Statistical Yearbook 1965. New York: United Nations.
1971 United Nations Demographic Yearbook 1971. New York: United Nations.
1973 United Nations Statistical Yearbook 1973. New York: United Nations.
1974 Yearbook of National Account Statistics 1974. Vol. III. New York: UN.
1975 1974 Report on the World Social Situation. New York: United Nations. United States Agency for International Development 1973 Population Program Assistance: Annual Report, FY 1973. Washington, D.C.: U.S. Government Printing Office.
1979 "A view from the South: the second phase of the North- South Dialogue." In Martin M. McLaughlin and the Staff of the Overseas Development Council (eds.). The United States and World Development: Agenda 1979. 115-124. New York: Praeger.
Valentey, D.I. (ed.) 1978 The Theory of Population: Essays in Marxist Research. Moscow: Progress.
Wallerstein, Immanuel 1974 The Modern World System. New York: Academic Press.
1974 "The rise and future demise of the world capitalist system: concepts for comparative analysis." Comparative Studies in Society and History, about p.415.
World Bank Staff Report 1974 Population Policies and Economic Development. Baltimore: John Hopkins.
World Bank 1976 World Tables 1976. Washington, D.C.: World Bank.
1978 World Development Report 1978. Washington, D.C.: World Bank.
Woytinsky, W. S. and E. S. Woytinsky 1953 World Population and Production. New York: The Twentieth Century Fund.