Uneven Decommodification Geographies and Global Structural Inequalities

By Geoff Goodwin

When Covid-19 ground the world economy to a halt in early 2020, governments from across the political spectrum took measures to shield sectors of society from the full impact of the socioeconomic crisis. Yet the scale and form of these responses varied enormously between countries and regions. What explains this unevenness? What does it tell us about capitalism today? I take up these questions in a new article in EPA: Economy and Space.

Using Britain and Ecuador as illustrative examples of wider trends across Western Europe and Latin America, I argue that the variation in responses to the socioeconomic crisis triggered by the Covid-19 pandemic is rooted in the unequal structures and relations that have emerged through centuries of capitalist-colonial development. The article combines a critical Polanyian reading of the concept of decommodification with Latin American insights into centre-periphery structures and relations to explain this and consider what it tells us about twenty first-century capitalism. In this blog, I will explain how my analysis contributes to ongoing debates about global structural inequalities and capitalist development.  

The origins and evolution of the centre-periphery concept

In the decades after the Second World War, a group of brilliant Latin American economists changed the way we think about capitalism.  Challenging conventional economic wisdom about the tendency of incomes between countries to converge over time, this eclectic group of pensadores rebeldes revealed structural factors that explained persistent inequalities between countries and regions. The centre-periphery concept, first proposed by the Argentine economist Raul Prebisch in the late 1940s, was elaborated to demonstrate this point.

In short, Prebisch claimed that in the wake of the industrial revolution in the eighteenth century the capitalist world economy split into a centre and periphery, with North America and Western Europe dominating the former and Latin America relegated to the latter. Whereas capitalist countries in the centre, like Britain, experienced broad-based industrial development, peripheral nations, like Ecuador, developed dualist economic structures, with small high-productivity primary export zones existing alongside sprawling low-productivity traditional agrarian economies. Exports of raw materials and agricultural produce from the periphery underpinned industrial development and capital accumulation in the centre. Incomes therefore grew more rapidly in the centre than the periphery and countries in the centre reaped most of the economic benefits of capitalist development.

Prebisch believed centre-periphery structures and relations could be overcome by state intervention and planning, and he used his position as the head of the Comisión Económica para América Latina (Economic Commission for Latin America – CEPAL) to promote these ideas. However, while these policies bore fruit and industrialisation accelerated across the region, the process of state-directed capitalist development ran into economic and political obstacles in the 1950s and 1960s and military dictatorships spread across Latin America, usually with the support of the US government, which used its influence to control the development process and prevent socialist governments from coming to power. Meanwhile, multinational corporations began to penetrate deeper into Latin American societies, dashing hopes of autonomous broad-based capitalist development.

Against this backdrop, a new, more critical wave of Latin American economic thinkers emerged to refashion and extend the centre-periphery concept and explain why Latin American countries remained underdeveloped.  Drawing on and contributing to Marxist theory, dependency theorists – or dependentistas – showed how countries in the capitalist core dominated and exploited peripheral nations through trade, investment, technology, and finance. Some members of this school, like Celso Furtado, who had worked at CEPAL with Prebisch, pushed for progressive reforms within capitalism, while others, like Theotonio dos Santos, called for a socialist revolution. Either way, without more radical economic change, Latin American countries would remain trapped in a perpetual state of crisis and underdevelopment.

Centre-periphery structures and relations today

There is much debate about whether centre-periphery structures and relations remain a prominent feature of the capitalist world economy. A handful of nations – for example, Taiwan, South Korea, Singapore – have escaped the periphery, showing a country’s destiny is not totally determined by centre-periphery structures and relations. China has also become a global economic powerhouse. Yet Latin American countries continue to exhibit the macro characteristics of peripheral capitalism. Most, for example, remain heavily dependent on the export of oil, minerals and agriculture, which generates significant political-economic instability. Meanwhile, new forms of dependency have emerged in the context of climate change, including the extraction of lithium to support low-carbon technologies and industries in the capitalist core. Most Latin American countries also remain highly dependent on international financial markets and international financial institutions for external funding, and the fiscal capacity of Latin American states remains well below that of their counterparts in the core.  

Uneven decommodification geographies

State responses to the socioeconomic crisis triggered by the Covid-19 pandemic provide further evidence of the persistence of centre-periphery structures and relations. The measures introduced or extended during the opening phases of the pandemic in 2020, when the economic crisis was most intense, tended to have some decommodifying capacity, that is, they shielded sectors of society from the full force of capitalist markets. However, the scale and form of decommodification varied significantly across the centre and periphery. Narrowing to Western Europe (core) and Latin America (periphery) and taking Britain and Ecuador as illustrative examples reveals this. In Britain, for example, the headline programme introduced by the Johnson government paid 60-80% of the wages of millions of workers up to £2500 for several months and cost the government approximately £70 billion. In Ecuador, the main new scheme introduced by the Moreno government distributed cash transfers of between $60 and $120 on a couple of occasions to 1.5 million low-income families and cost the government around $140 million. Other forms of decommodification delivered through the state followed a similar pattern, that is, far more extensive and generous in Britain than Ecuador, indicating persistence structural inequalities between the two countries.   

Evolving capitalist geographies in the twenty-first century

The uneven decommodification geographies revealed during the Covid-19 pandemic call into question tales of global economic convergence in the early twenty-first century, at least between Western Europe and Latin America. Yet, while centre-periphery structures and relations remain firmly intact, there are increasing signs that prominent features of peripheral capitalism – e.g., precarity, instability, authoritarianism – are becoming more pronounced in the core. There is also evidence to suggest that some core capitalist countries are in a process of undeveloping. In Britain, this process has been led by the Conversative Party whose neoliberal necropolitics have exacerbated poverty and inequality and caused mass human suffering. The escalation of decommodification during the pandemic was quickly reversed and the Conservative government reverted to the longer-term trend of eroding decommodification and intensifying commodification while using authoritarianism and repression to contain resistance. Escalating authoritarianism in Britain and elsewhere in the capitalist core is part of a desperate attempt to maintain the neoliberal capitalist order, which looks set to eventually give way to political-economic transformation on a global scale. The ideas of Latin American economists of the past will be valuable in trying to map progressive pathways through this turbulence.

Geoff Goodwin is a Lecturer in Global Political Economy and the Co-Director of the Centre for Global Development at the University of Leeds, UK. His research focuses on land, water, infrastructure, socioecological transformation, and (post) capitalism. He conducts research in Ecuador, Colombia, and England.

Image: Alex Proimos on Flickr

Note: This article gives the views of the author, not the position of the EADI Debating Development Blog or the European Association of Development Research and Training Institutes.