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HAOL, Núm.

6 (Invierno, 2005), 31-44 ISSN 1696-2060

DID RECENT TRENDS IN WORLD SOCIETY MAKE


MULTINATIONAL CORPORATIONS PENETRATION
IRRELEVANT?: LOOKING BACK ON VOLKER
BORNSCHIER’S DEVELOPMENT THEORY IN THE
LIGHT OF RECENT EVIDENCE*

Arno Tausch
Universität Innsbruck, Austria. E-mail: Arno.Tausch@bmsg.gv.at
*The opinios expressed in this article are strictly his own private academic opinions in the
framework of his venia docendi, and do not necessarily reflect the opinions of the Austrian
Government.
Recibido: 13 Noviembre 2004 / Revisado: 12 Diciembre 2004 /Aceptado: 15 Enero 2005 / Publicado: 15 Febrero 2005

Resumen: This article first investigates the INTRODUCTION


determination of 14 indicators of development
in 109 countries with complete data based on ecent debates about globalization among

R
MNC penetration on development in the 1990s decision makers and social scientists
and beyond, with such “new” indicators as have coined the term that social
“Islamic culture” or “adherence to the scientists should be "pathfinders of
Washington consensus”. A consequence of the globalization". A good segment of the
“dependency” analysis of this essay is the international social scientific community
realization that a reliance on foreign capital in would be in accordance with such a role-
the short term also in the 1990s might bring description, while an equally important and
about positive consequences for employment but growing segment of the social scientific
that the long-term negative consequences of community would vehemently oppose the basic
dependence in the social sphere, but also for axioms of globalization in its present form.
sustainable development strategies for years to Volker Bornschier, throughout the 1970s, 1980s,
come. EU membership in the world economy and beyond, has been a critical voice on the
fails to have sufficiently enough dynamic effects long-run detrimental effects of transnational
and its democratic deficits become ever more penetration on the host countries in world
clears. The empirical record speaks a clear capitalism, thus enormously enriching earlier
language in favor of Islamic democracy and work on dependency theories, pioneered by
against those in the West that attempt to treat Peter Heintz and the Latin American
Islamic cultural heritage as a general "dependency school". His theoretical and
development burden. It should be also clear that empirical developments made "dependency
a reliance on the “Washington Consensus” alone theory" truly global and linked it up to the
will not “fix” the performance of countries evolving world system school, and by his
beyond a better and more predictable networking and collaboration –especially with
“development stability”. Christopher Chase Dunn– firmly entrenched the
Palabras Clave: development theory, indicators "quantitative approach" in the world system
of development, multinational corporations, school. His later work, related to the long
Volker Bornschier, world society. cyclical fluctuations in the world economy, has
______________________ shown that instability is also an overwhelming
element in the historical evolution of capitalism,
and that the world would need a new social
contract similar in its encompassing nature to
the one that shaped the world after the Great

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Did Recent Trends in World Society Arno Tausch

Depression in the 1930s. Bornschier, as a true Today's counter-position, advanced by


European and citizen of this world, has always globalization critics, environmentalists,
asked himself what the alternatives are, and he liberation theologians of all denominations, and
put high hopes into the European Union as an –most recently– dissidents from the once
alternative, more "social" pole in the world homogeneous neo-liberal camp would hold that
economy. unfettered globalization increases the social gaps
between rich and poor both within countries as
The spirits of our time are different, however. well as on a global scale. Most of the adherents
On the one hand, the idea that only by strict of this camp would share the view proposed by
adherence to the canon of neo-liberal doctrine, a Cornia and Kiiski that income distribution in the
country will be able to achieve economic world system has worsened during the period of
growth. To put it bluntly: do not worry about globalization.
dependency and inequality, two cornerstones of
Bornschier's scientific work, but concentrate on The Latin American social scientist Osvaldo
economic growth. Conventional wisdom of the Sunkel first proposed in his essay Transnational
"Washington Consensus" has it that it is always capitalism and national disintegration (in Latin
the periphery or semi- periphery country that got America) the still provocative thought that
it all wrong during a crisis, like in East Asia, transnational investment and integration might
Russia or recently in Turkey and that a good go hand in hand under certain conditions with an
combination of economic freedom, increasing relative social polarization between
privatization, tight monetary policies and above rich and poor in the host countries of the
all private foreign direct investment will "fix" it, evolving transnational system and on the
once the forces of the market are properly at international level2.
work.
The other most visible preoccupation of
The "Washington Consensus" has been comparative social science in the 1990s and
summarized by Raffer1 as to represent the beyond is associated with the effects of cultural
following policy priorities: and cultural patterns on the chances of
development. Dramatic shifts in the centers of
1. Fiscal discipline: a primary budget gravitation in the world economy from the
surplus of several percent of GDP Atlantic basin to the Pacific region and the
2. Public expenditure priorities: defined as stagnation that many observers diagnosed in
re-directions of public expenditures large parts of the Middle East and North Africa
towards fields with high economic tended to underline the relevance of Samuel
returns such as primary health and Huntington's all too well known emphasis on
education culture.
3. Tax reform: cutting marginal tax rates
4. Financial liberalization: moderately While debates abound, hard-core social
positive real interest rates and the scientific evidence on the contradictory effects
abolition of preferential interest rates of globalization is needed more than ever
(such as for developmentally useful or before.
socially demanded projects)
5. Exchange rates: unified and competitive THEORIES EXPLAINING
6. Trade liberalization: abolishing quotas BACKWARDNESS AND
(replacing them by tariffs) and reducing DISARTICULATION
tariffs to a uniform low level within
After the "ultimate triumph" of the market
three to ten years.
economy on a global scale (Fukuyama) as the
7. Foreign direct investment: equal
result of the collapse of Communism in Eastern
treatment with domestic firms. The
Europe, an intensive debate about the
World Bank calls this the elimination of
development prospects of Europe's Southern and
barriers. This principle is also enshrined
Southeastern neighbors set in.
in the WTO treaties
8. Privatization On a global economy level, neo-liberal authors
9. Deregulation: abolishing regulations like Barro; Barro and associates; Crafts; Dadush
aiming at achieving developmental or and Brahmbatt; Dollar and Kraay and Weede
social aims generally tend to think that with the
10. Property rights: must be guaranteed establishment of "economic freedom" positive

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Arno Tausch Did Recent Trends in World Society

patterns of development will prevail in associates; Goldfrank; Goldstein; Hopkins;


practically all countries. Hopkins and Wallerstein; Kiljunen; Modelski;
Raffer; Ross and Trachte; So; Tausch and
Cultural theories of development tend to stress associates; Walker; and Wallerstein tended to
that at present development perspectives for the discard the "culturalist" explanations, offered by
large region between Morocco in the West and Huntington, and rather would support the
Iran in the East are not good. Their principal argument that world economic position, and not
spokesperson today is Huntington, but also such culture, determines conflict. Wallerstein comes
diverse sources as the UNDP's Arab Human clearly up in defense against demonizing the
Development Report (2002) or the World Bank's Arab/Islamic world and thinks that opposing
MENA Report (2002) tend to highlight the forces against the present world order will
pretended various socio-religious development increase3.
constraints in that region. While the UNDP
stresses the lack of democracy, human resource Dependency and world system theory generally
development and gender equality as the main hold that poverty and backwardness in poor
development blocks, the World Bank highlights countries –like the Islamic world– are caused by
the negative heritage of "Arab Socialism" or the peripheral position that these nations have in
past state sector influence. the international division of labor. Ever since the
capitalist world system evolved, there is a stark
Dependency authors by contrast explain distinction between the nations of the center and
backwardness and stagnation by the ever- the nations of the periphery. Former Brazilian
growing dependent insertion of these countries President Fernando Henrique Cardoso, when he
into the world economy. Starting with the was still a social scientist, summarized the
writings of Perroux, Prebisch and Rothschild in quantifiable essence of dependency theories as
the 1930s, their leading spokespersons, like follows:
Addo; Baran; Bello; Cardoso; Cordova;
Cordova and Silva-Michelena; Dubiel; Feder; • there is a financial and technological
Flechsig; Frank; Frank and associates; Froebel penetration by the developed capitalist
et al.; Gonzales Casanova; Griffin; Griffin and centers of the countries of the periphery
associates; Kent; Linnemann and Sarma; Müller and semi-periphery
et al.; Raffer; Senghaas; Singer; So; Sunkel; and • this produces an unbalanced economic
Woehlcke all would stress the unequal and structure both within the peripheral
socially imbalanced nature of development in societies and between them and the
regions that are highly dependent on investment centers
from the highly developed countries. Short-term • this leads to limitations on self-sustained
spurts of growth notwithstanding, long-term growth in the periphery
growth will be imbalanced and unequal, and will • this favors the appearance of specific
tend towards high negative current account patterns of class relations
balances. Many of these authors focused their • these require modifications in the role of
attention on Latin America; their leading the state to guarantee both the
spokesperson in the Islamic world is the functioning of the economy and the
Egyptian economist Samir Amin. political articulation of a society, which
contains, within itself, foci of
Later world system analyses –that started with inarticulateness and structural imbalance
the writings of the Austro-Hungarian socialist
Karl Polanyi after the First World War– tended A rising degree of monopolization in the leading
to confirm and expand this dependency center countries over time determines that, in
argument. Capitalism in the periphery, like in order to keep the share of wages at least
the center, is characterized by strong cyclical constant, a rising exploitation of the raw
fluctuations, and there are centers, semi- material producers sets in to offset the balance.
peripheries and peripheries. The rise of one There is a massive, internationally published
group of semi-peripheries tends to be at the cost evidence that speaks in favor of dependency
of another group, but the unequal structure of theory. However, it would be wrong to portray
the world economy based on unequal exchange dependency simply in terms of MNC4
tends to remain stable. Authors from the world penetration, and to neglect other aspects of that
system approach, like Arrighi; Arrighi and relationship. Such authors as Singer and Tausch
associates; Beaud; Bornschier; Chase-Dunn; have put emphasis on the resource balance as an
Chase- Dunn and associates; Frank and indicator of the weight of foreign saving. Other

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Did Recent Trends in World Society Arno Tausch

formulations of dependency insisted on 'unequal of the surprising findings by Weede in this


exchange' which, according to one such respect.
formulation, hampers development (i.e. double
factorial terms of trade of the respective country Other schools of thought (Holzmann et al.;
are > 1.0)5. Labor in the export sectors of the European Roundtable of Industrialists) have
periphery is being exploited, while monopolistic stressed recently the importance of pension
structures of international trade let the centers reforms in a globally aging society as a
profit from the high prices of their exports to the determinant of growth and development. Aging
world markets in comparison to their labor societies and inadequate pension systems, and
productivity. not culture, economic freedom or dependency
alone, are to blame for the negative development
Neo-dependency and world system schools6 perspectives in many leading capitalist
would fear in addition that the most recent countries. Without adequate pension reform,
tendencies of world capitalism will strongly aging will be an increasing burden on the
work against high female employment and comparative growth and development
create female unemployment, and they would perspectives of the aging richer nations.
especially expect two hypotheses to hold
Ever since the writings of Colemann (1965),
1. transnational capital marginalizes also education should be mentioned among the
female labor power; determining variables of the development
2. the dynamics of growth turn away from performance of a country. Education and human
those countries, where women still have capital formation figure prominently in the
a strong position on the labor market. "Human Development Reports" of the United
Nations Development Programme as variables,
The measurement scale, compatible with such which determine positively the development
hypotheses, would be the share of women in outcome. For the UNDP it has been self-evident
total employment and its trade-off with growth over the last decade that gender empowerment
rates. The gender empowerment indicator series, and the re-direction of public expenditures away
first developed by the UNDP for the UNO- from defense will positively contribute to a
Women-Conference in Beijing 1995, provides a positive development outcome.
further testing ground for the different feminist
social theories of world development. However, neo-liberal thought would caution
against such premature conclusions. Public
However, neo-liberal thought would caution education expenditures are still public
against such conclusions. Feminism per se might expenditures, and it is entirely conceivable that
positively affect development patterns, but it in the long run public education expenditures
might also work like a 'distribution coalition' might negatively affect the development chances
that tries to influence –like all distribution of a society, not because they are education
coalitions– the results of the market via political expenditures, but because they are still public
pressure. Instead of changing the sexist expenditures. For such a theoretical
distribution of human capital endowments, and understanding, University reform and University
thus changing the "starting capital" of women in privatization would be important political steps
society, feminism, the argument would say, tries to achieve a more viable development.
to directly influence distributive relations via
politics alone. The result could be –like with any DEVELOPING THE RESEARCH DESIGN
distribution coalition– long-run stagnation and
worsening income and other inequality. So it is time to look anew at the evidence,
empirically first presented by Volker Bornschier
Our theory has to be qualified in one important and his school for the 1960s, 1970s and early
further respective. Militarism will under certain 1980s, in a contemporary, comparative and
circumstances be a 'substitute' for a Keynesian multi-dimensional perspective. Development
strategy and might have positive consequences means more than ever: social development,
for employment, and hence, perhaps also economic development, ecological development,
distribution issues. Apart from that, it is not gender empowerment, and the development of
entirely clear whether –like it or not– a negative democracy and civil society. It should be clear
short term or middle term positive Keynesian that the logic of the 1980s, the 1990s and
relation between militarism and economic beyond obey to another logic (the logic of the A-
growth is to be ruled out entirely. Earlier phase in a Kondratieff cycle) than the logic
research by Tausch (1993-2002) replicated some analyzed by Volker Bornschier in his path-

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Arno Tausch Did Recent Trends in World Society

breaking works in the 1970s and 1980s. The Firebaugh and Beck.; Firebaugh; Hertz et al.;
almost unlimited number of empirical studies on Kick et al.; Korzeniewicz and Moran; London
peripheral capitalism and development on a and Williams; Meyer; Shen and Williamson;
world level in the B-phase of the Kondratieff Shin, Smith; Tausch; Ward; Wimberley; and
cycle from 1965 onwards go back, in a way, to Wimberley and Bello in general terms indicate
the classic essay published by Johan Galtung in that there is reason to believe that the march of
the Journal of Peace Research in 1971. For global capitalism not only negatively affects the
Galtung, income inequality, and hence, relative distribution of economic values in the world
poverty in the nations of the world system is system, but also of democracy, human
linked to trade partner concentration of the development, gender equality and the quality of
peripheral country and a trade structure that the environment.
relies on the exports of raw materials and the
imports of finished products. Bornschier, Chase- Our concept of dependence at least includes
Dunn, and their school later on reformulated the three dimensions:
argument7: not only income inequality, but also • unequal exchange
long term economic growth are being negatively • MNC penetration
determined by dependency from transnational • the resource balance.
capital, to be measured by a weighted share of
transnational investment penetration per the The analysis of development patterns in the
economic and demographic size of a nation. 1990s and beyond is complicated by the fact that
Later essays extended the argument to other capitalism develops not smoothly, but with very
indicators of human well-being, the environment strong and self-repeating ups and downs, called
as well as democratic stability8. cycles. Our choice of the time perspective starts
Macroquantitative analyses modeled around the from well-known empirical research results of
dependency/world system school generally have Joshua Goldstein, Volker Bornschier, and Luigi
confirmed dependency arguments. According to Scandella on this issue9. Cyclical fluctuations
these quantitative data analyses, there are have also a profound effect on cross-national
powerful influences at work, which cause comparisons of economic growth and societal
inequality and external imbalances in the development in the medium and long run. What
periphery. Flagship essays and book could have been spectacular long-run growth, in
publications of this school were written among the end might turn out to be just a short run
others by Beer and Boswell; Birdsall; cyclical spurt after a long recession. For that
Bornschier; Bornschier and associates; Boswell; reason, we include "development stability"
Boswell and associates; Bradshaw; Bradshaw among the dependent variables of our analysis.
and Huang; Bullock and Firebaugh; Chase- Cycle time plays, as we already stated, an
Dunn; Chase-Dunn and associates; Crenshaw; important role in our approach. Arrighi's thought
Delacroix and Ragin; Dixon; Dixon and is especially worthwhile mentioning here: that
Boswell; Evans and Timberlake; Fiala; the logic of accumulation on a world scale shifts
Firebaugh; Juchler; Kentor; London; London along time, and that we again witness during the
and Robinson; London and Ross; London and 1980s and beyond a deregulated phase of world
Smith; London and Williams; Moaddel; Muller; capitalism with a logic, characterized –in
Muller and Seligson; Nollert; Nollert and contrast to earlier regulatory cycles– by the
Fielder; Ragin and Bradshaw; Robinson and dominance of financial capital. Arrighi further
London; Rubinson; Russell; Tausch; Tausch and teaches us that even a century can be a 'short
associates; Timberlake and Kantor; Timberlake run' in the evolution of world capitalism. For
and Williams; Trezzini and Bornschier; and Van Arrighi, there are signal crises of world
Rossem. capitalism (the usual Kondratieff depressions),
There has been a tendency in more recent cross- and there are terminal crises of the world
national research to focus not only on such system, like the great crash of the early 1340s,
variables as economic growth, income which marked the beginning of the Genoese age,
inequality and a few other indicators of social the 1560s, which marked the beginning of the
well-being, but to interpret "well-being" more Dutch era, the 1750s and 1760s, which marked
widely to include also democracy, the the beginning of the British era, and the 1930s,
environment, gender inequality and human which were the terminal crisis of British world
development. Research results by Alderson and capitalist dominance. Regulation can be
Nielsen; Beer; Bullock and Firebaugh; Burns et successful, like after 1560, and 1930, and
al.; DeSoysa and Oneal; Dixon, Fain et al.;
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Did Recent Trends in World Society Arno Tausch

deregulation can be successful, like after 1340, female life expectancy in the sum of
1760, and –most probably– the 1980s. male and female life expectancy)
• GDP output per kg energy use ("eco-
QUESTIONS OF MEASUREMENT OF social market economy")
THE MULTIVARIATE ANALYSIS • GDP per capita annual growth rate,
The choice of the 109 countries was determined 1990-98
by the availability of a complete data series for • human development index
the independent variables (if not mentioned • life expectancy, 1995-2000
otherwise, UNDP data): • Political rights violations
• share of income/consumption richest
• % population, aged >65y, 1998 20% to poorest 20%
• % women in government, ministerial • unemployment (UN social indicators
level website)
• (I-S)/GDP (calculated from UNDP;
investments minus savings per GDP) Our presentation of the variables used in the
• the absence of economic freedom analysis will be kept to a minimum11. Among
(Heritage Foundation and Wall Street the dependent variables, we just mention MNC
Journal website for economic freedom, penetration, unequal exchange and the resource
2000. The indicator is ranked from 1.30 balance as the three "master variables" of
–Hong Kong, best country, to rank 161– dependency. Unequal exchange is strongest in
worst country, North Korea, indicator the periphery, and weakest in the centers, with
value 5.0) the semi-periphery showing medium levels of
• EU-membership exposure to unequal exchange. Foreign saving,
• Islamic conference membership (OIC for its turn, is strongest in many parts of Latin
website) America, Southern Africa, in the "new Europe"
• ln (GDP PPP pc)^2 (natural log GDP and in China and in several countries of
per capita in real purchasing power Southeast Asia. In general terms, we observe
parities) today high levels of MNC penetration in the
• ln(GDP PPP pc) (natural log GDP per "dominion economies" like Australia and
capita in real purchasing power parities) Canada, in Western Europe, in some parts of
• military expenditure as % of GDP Eastern Europe, in Central Asia, other parts of
• MNC PEN 1995 (UNCTAD) the former USSR, in many parts of Latin
• public education expenditure per GDP America, Southern and Western Africa, in
• unequal exchange (calculated from Egypt, in Tunisia, and in China and Southeast
UNDP, concept: 1/ERDI; exchange rate Asia.
deviation index) During the 1990s, penetration by transnational
The following dependent variables were used; capital dramatically increased in many parts of
with pair wise deletion of missing values each Europe (especially in what was described by
time determining the number of countries Donald Rumsfeld, US Secretary of Defense,
entering into the 14 final regression equations: recently as "the new Europe"); in eastern Latin
America, in Southern Africa, in Central Asia
• % people not expected to survive age 60 and in South and Southeast Asia. However,
• CO2 emissions per capita there was a dramatic decrease of MNC
• development stability (year with highest penetration in most countries of the Arab world
real income minus year with lowest real during the second half of the 1990s. Among the
income) since 1975 (calculated from dependent variables perhaps only the
UNDP) environmental stability index might be not so
• ESI-Index (Yale/Columbia environment well known in the macro-quantitative research
sustainability index project website) community. The ESI Index is a measure of the
• Factor Social Development10 (calculated overall progress towards environmental
from 35 UNDP social indicators, SPSS sustainability and was developed for 142
factor analysis) countries. ESI scores are based upon 20 core
• female economic activity rate as % of indicators, each of which combines two to eight
male economic activity rate variables for a total of 68 underlying variables.
• female share in total life years It is the first time in the research literature that a
(calculated from UNDP - share of single yardstick of sustainable development has
been developed. The picture for the region of the

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MENA countries is rather mixed, with Turkey In the following, we will present our results
being classified ahead of the United Kingdom about the effects of globalization in a multi-
and on an equal level with Italy. variate perspective.

We have to start here from the assumption that THE FINAL RESULTS FOR 109
the basic tools of multivariate macro- COUNTRIES
quantitative analysis in political science and Looking at the predictive power of Volker
sociology are known to the audience of this Bornschier's empirical analysis of world
article (for further literature on the subject, see development in the 1970s and 1980s, one is led
Achen; Clauss and Ebner; Huang; Jackman; to the conclusion that several of his main points
Kriz; Krzysztofiak. and Luszniewicz; Lewis- are as valid as today as they were twenty or
Beck; Microsoft Excel; Opp and Schmidt). thirty years ago. The cumulative economic and
A sophisticated re-analysis of the tendencies of political power of transnational corporations in
world development in the 1990s should start their host countries is –quite in line with
from the assumption that the development level monopoly capitalism theories developed by
has a decisive, non-linear trade-off with Baran, Kalecki and Rothschild– a long-term
subsequent development performance: poor burden on the development paths of the
countries increase rapidly their average life periphery and the semi-periphery, short-run
expectancy or economic growth and they spurts of growth notwithstanding.
quickly reduce their income inequality etc. In general terms, several but not all aspects of
the presented theories are confirmed, while other
Social scientists interpreted this effect mainly in central assumptions of both the "Washington
view of an acceleration of economic growth in Consensus" and of its dependency theory
middle-income countries vis-à-vis the poor counterpart are rejected. Also, theories so much
countries and in view of the still widening gap en vogue in the 1990s and beyond about aging;
between the poorest periphery nations ('have- feminist theories; human resource theories;
nots') and the 'haves' among the former Second military Keynesian theories/peace theories (i.e.
and Third World12: theories maintaining that militarism has a very
• (Equation 1) development performance bad effect on long-run development); the
= a1 + b1* ln (PCItn) - b2* (ln contemporary globalization critique and
(PCItn))2 international economic integration theories have
to tally with both positive and negative effects
The same function is also applied to income of their key indicators on different
inequality and the rest of our 14 indicators, measurements of social, environmental and
following a famous essay published by S. economic welfare, indicating that the time of the
Kuznets in 1955. Growth and development "quick fixes" has definitely gone and that
accelerate with redistribution, and then stagnate. contemporary development realities are very
In general terms, we explain development complex indeed. It should be noted that in this
performance by the following standard multiple and in the following presentations, we already
cross-national development research equation: considered duly that "good effects" are "good
effects" and that "bad effects" are "bad effects"
• (Equation 2) development performance
when presenting our results; i.e. a development
1990 - end 1990s = a1 +- b1*first part
strategy that increases, say, under 60 mortality
curvilinear function of development
rates, is a bad strategy and thus has negative
level +- b2*second part curvilinear
effects.
function of development level +-
b3...*transnational investment per GDP Aging is part and parcel of the structure of
(UNCTAD) mid 1990s +- b4...*unequal industrialized societies, East and West. For
exchange (1/ERDI) +- b5...* foreign Volker Bornschier13, the core countries –
saving +- b6...* military expenditures grouped around the triad formed by the United
per GDP +- b7...* aging +- b8...* public States, Japan, and the European Union– have
education expenditures per GDP +-b9 * experienced successive waves of change marked
membership in the Islamic Conference by phases of ascent, unfolding, and decay of
+- b10 * European Union membership societal models, of which social security along
+- b11 * the absence of economic the lines of the PAYGO-model formed and
freedom integral part. What according to Bornschier
seemed stable and predictable in past decades

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Did Recent Trends in World Society Arno Tausch

came close to collapse or broke down entirely. A • female share in total life years - negative
new order, with a fresh, basic consensus around effect
an overarching set of norms that allows • % people not expected to survive age 60
problems to be solved efficiently, has not yet (survival) - negative effect
crystallized. The role of social security would • life expectancy, 1995-2000 - negative
play an integral part in such a consensus. effect
• Factor Social Development - negative
Bornschier's seminal work14 Western Society in effect
Transition should be especially mentioned in • human development index - negative
this context as an examination of the succession effect
of societal models of the Western world and
indications of its probable shape in the future. Political feminism, a variable analyzed in
Bornschier's central question is how a social Bornschier16 and systematically developed in the
order does arise and why does it dissolve? What Zurich school by Than Huyen Ballmer-Cao, has
provides social cohesion? What makes society an aggregate positive effect on many
pro-gress? We can start from the safe phenomena of human and ecological
assumption that the PAYGO systems –i.e. the development, but it fails to transform political
pension systems institutionalized by, inter alia, power into improved employment and
Chancellor Bismarck in Germany– will be distribution structures. This is due mainly to the
substituted in a majority of countries by funded process of distribution coalition formation,
and (partially) privatized schemes in future. But featuring so prominently in neo- liberal theories
what consequence will this have for the rise and of economic growth (see especially, the writings
decline of nations, and for social cohesion? of Weede).
However much world systems research paid
attention to the rise of the social welfare state in political feminism % women in government,
earlier periods, and to such phenomena as ministerial level
corporatism and Fordism, that characterized the • CO2 emissions per capita (Kyoto) -
long cycle of development from the 1930s to the positive effect
1980s, there is as yet no coherent and systematic • female share in total life years - positive
approach to study the effects of what might effect
become the substitution of one of the main • % people not expected to survive age 60
features of the capitalist state in the center, the (survival) - positive effect
system of public social security, by a new and • life expectancy, 1995-2000 - positive
completely different system. Aging contributes effect
to a generalized scarcity of labor, which in turn • Factor Social Development - positive
leads to improved distributive relationships effect
between the rich and the poor. However, several • human development index - positive
negative effects must also be considered effect
properly –especially the negative effects of an • GDP output per kg energy use (eco-
aging population structure on the process of social market economy) - negative
human development, which is basically the dire effect
consequence of unreformed pension systems15. • female economic activity rate as % of
aging % population, aged >65y, 1998 male economic activity rate - negative
effect
• GDP output per kg energy use (eco- • share of income/consumption richest
social market economy) - positive effect 20% to poorest 20% (income
• female economic activity rate as % of redistribution) - negative effect
male economic activity rate - positive • unemployment (UN) (employment) -
effect negative effect
• share of income/consumption richest As one of the three main indicators of
20% to poorest 20% (income dependency, the reliance on foreign savings
redistribution) - positive effect eases the distribution burden against the poorer
• unemployment (UN) (employment) - segments of society during the accumulation
positive effect process, but it has several negative effects on a
• CO2 emissions per capita (Kyoto) - variety of other development processes,
negative effect including the environment and political
democracy.

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foreign saving (I-S)/GDP dictatorship practicing a neo-liberal growth


strategy combined with high military outlays.
• share of income/consumption richest South Korea and Taiwan surged ahead under the
20% to poorest 20% (income nuclear umbrella provided by the 7th US Fleet,
redistribution) - positive effect and all had very large military establishments.
• CO2 emissions per capita (Kyoto) - Left-wing movements in Nicaragua and El
negative effect Salvador, questioning dependencia were
• human development index - negative actively confronted by the Reagan
effect administration in the US, that boosted military
• ESI-Index (sustainability) - negative outlays as never before a government did in US
effect history. Many governments in Europe,
• Political rights - negative effect especially in European NATO countries,
The absence of economic freedom, a variable followed suit and dramatically increased
crystallizing the antipodes of dependency theory military expenditures, while cutting back on
and being the master-variable of neo-liberal social welfare. In the Eastern Bloc countries, the
strategies, paradoxically enough, increases the spiral of militarism more and more constrained
rationality of the societal resource allocation and consumption. The provocation by Weede was
leads towards an improved development put on the table, and the controversy ensued.
stability but it fails to resolve two basic issues: Looking back at the issues in the light of today's
overall environmental stress and societal sexism evidence, let us state this: Military expenditures
in the employment sphere. Economic freedom do have a certain Keynesian effect but they
creates opportunities for women as the more contribute towards a worse environmental
vulnerable group in society. balance. Military expenditures lead towards a
drying up of what Marxists term "the reserve
absence of economic freedom army of labor", which, in turn, leads to a certain
• CO2 emissions per capita (Kyoto) - better social cohesion and employment gender
positive effect balance. But militarized structures consume
• GDP output per kg energy use (eco- large amounts of fossil fuel, with advanced air
social market economy) - positive effect forces especially contributing to that process.
• development stability (year with highest • female economic activity rate as % of
real income minus year with lowest real male economic activity rate - positive
income) since 1975 - positive effect effect
• ESI-Index (sustainability) - negative • share of income/consumption richest
effect 20% to poorest 20% (income
• female share in total life years - negative redistribution) - positive effect
effect • CO2 emissions per capita (Kyoto) -
• female economic activity rate as % of negative effect
male economic activity rate - negative • GDP output per kg energy use (eco-
effect social market economy) - negative
Now we have to turn to a series of controversies, effect
in which Bornschier was involved in the 1980s. And now, to Bornschier's master variable, MNC
Erich Weede, as is well known, challenged penetration. The author of the present study is
Bornschier's dependency approach by stating well aware of the intricate questions regarding
that militarization –measured by him by the the measurement of this variable. Should we use
variable "military personnel ratio"– is good for today the available UNCTAD data series about
redistribution and economic growth. The MNC cumulated investments per GDP of host
political consequences of what at first glance countries, or should we re-analyze the data
looked like a quarrel between two schools of series that many people regard as somewhat
advanced, quantitative development theory only, deficient? Should we introduce, as Bornschier
were obvious, especially at the time when these tended to do then, weights for population size
controversies were published. Allende's and size of the economy to control for the fact
government in Chile, that systematically that small countries will always have a higher
questioned the relationships of dependency and MNC penetration ratio, regardless of their
provided even a refuge for many dependency development strategy, simply because of their
theorists at the time from political persecution size? Should we control for the skewness of the
elsewhere, was deposed in 1973 by a military indicator by square-rooting or whatever the

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Did Recent Trends in World Society Arno Tausch

original data series? Are we not running, on the Human resources and human development
other hand, the risk of introducing GDP as a investments ever since the publication of the
term in the equation on the explanatory side, first United Nations Human Development
when we want to explain precisely GDP Reports in the early 1990s are regarded as the
growth? For the purposes of this essay we leave key towards a socially equitable and sustainable
it at that, and are aware of the intricate development. However, as often happens in
methodological questions involved, and simply development theory, the early optimism
work with the original UNCTAD data series regarding the effects of one variable has soon to
cumulated foreign direct investments per GDP be qualified.
of the host country. The results for the world of
today are somewhat striking: MNC penetration There are very surprising clear-cut negative
contributes to an improved ESI Index and interactions between public education
towards better female employment, but it has expenditure and an eco-social market economy
negative consequences for human survival and and political democracy. Positive effects exist as
life expectancy. well, but they are not statistically significant. A
plausible intervening variable, which we did not
The positive environmental effect might be a as yet consider in our investigation, could be the
consequence of higher environmental standards years of experience of a country as a centrally
of leading transnationals and the implementation planned economy.
of the European Union body of law (acquis
communautaire) in the host countries of the public education expenditure per GDP
heavy transnational investments in East Central • GDP output per kg energy use (eco-
Europe. In the wake of the perspective of EU- social market economy) - negative
membership, massive investments by the effect
transnationals poured into the region. But it • Political rights - negative effect
should also be emphasized that the ESI indicator
is not free from controversy17, and must be Unequal exchange has the most clear-cut
cross- checked with other, more direct measures negative results of all dependency indicators on
such as CO2 consumption per capita etc. the process of development, as understood in
this investigation; especially on democracy, the
In addition, an interesting phenomenon worthy environment, gender justice and employment.
of further research is the interconnection The positive effect on income redistribution has
between decaying public services, decaying to be seen in the context of the siphoning-off of
public transport and decaying public health the surplus value from periphery countries by
services in the host countries of transnational the mechanisms of dependency that reduces the
investment on the one hand and the strategic share of the richest 20 % in total income
policies of transnational corporations on the distribution.
other hand, concentrated on the private sector,
private transport, private medical services and unequal exchange
the private automobile. The strengthening triple • share of income/consumption richest
alliance between the MNCs, local capital and 20% to poorest 20% (income
the state is a net result of the globalization redistribution) - positive effect
process, and it still has dire social consequences • GDP output per kg energy use (eco-
as well. social market economy) - negative
dependency on foreign capital MNC PEN effect
1995 • Political rights - negative effect
• female economic activity rate as % of
• female economic activity rate as % of male economic activity rate - negative
male economic activity rate - positive effect
effect • ESI-Index (sustainability) - negative
• ESI-Index (sustainability) - positive effect
effect • CO2 emissions per capita (Kyoto) -
• % people not expected to survive age 60 negative effect
(survival) - negative effect • female share in total life years - negative
• life expectancy, 1995-2000 - negative effect
effect • unemployment (UN) (employment) -
negative effect

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Arno Tausch Did Recent Trends in World Society

There are very diverse views nowadays on the • female economic activity rate as % of
European Union. Bornschier reiterated male economic activity rate - negative
throughout the 1990s and beyond his optimism effect
regarding the Union. But as a recent paper,
published in the journal Parameters of the US The well-known acceleration and maturity
Army maintains: effects of development have to be qualified in an
important way. Ever since the days of Simon
«Still, there are those on both sides of the Kuznets, development researchers have applied
Atlantic who believe that the European Union, curve-linear formulations in order to capture
as an old-fashioned socialist bureaucracy, is these effects. However, the results for equation 1
'fundamentally unreformable' and also culturally above are not as clear-cut as one might have
hostile to the United States». expected; and –in addition– the direction of the
influence does hardly correspond with the
There is a wide range of literature now available equation. The curve-linear function of growth,
that highlights the negative effects of European being regressed on the natural logarithm of
integration in a globalized world economy18. In development level and its square, is sometimes
the present research design, the most called the "Matthew's effect" following
considerable effect is the negative trade-off Matthew's:
between EU membership and political
democracy, once you control for the other «For whosoever hath, to him shall be given, and
intervening variables that together explain he shall have more abundance: but whosoever
jointly 66.1% of political rights violations. hath not, for him shall be taken away even that
he hath».
EU-membership
Social scientists interpreted this effect mainly in
• Political rights - negative effect view of an acceleration of economic growth in
Our results about the European Union might be middle-income countries vis-à-vis the poor
considered more provocative still, when we also countries and in view of the still widening gap
consider that –contrary to popular assumptions– between the poorest periphery nations ('have-
membership in the Islamic Conference is not an nots') and the 'haves' among the semi- periphery
impediment against political democracy. Our countries. Their hypothesis is only partially
results clearly contradict many of the confirmed here – there is no significant
expectations inherent in the writings of acceleration at low levels of development, but a
Professor Samuel Huntington. 4 development significant econonmic growth
indicators –2 for the environment, 1 on human stagnation/saturation effect. The first expression
development, and 1 on democracy– are –+ b1* ln (PCItn)– yields the following results:
positively and significantly determined by
acceleration effects development ln(GDP PPP
membership in the Islamic Conference, once
pc)
you properly control for the effects of the other
influencing variables. However, gender justice • female economic activity rate as % of
and redistribution remain the "Achilles heel" of male economic activity rate - positive
today's members in the Islamic Conference, effect
strengthening the cause of those who advocate –
like in the United Nations Arab Human The second part of the "Kuznets-curve" –b2* (ln
Development Report– more social inclusion and (PCItn))2– has today the following results:
more gender justice in the region. maturity effects development ln (GDP PPP
Islamic conference membership pc)^2
• female economic activity rate as % of
• Political rights - positive effect
• GDP output per kg energy use (eco- male economic activity rate - positive
social market economy) - positive effect effect
• life expectancy, 1995-2000 - positive
• CO2 emissions per capita (Kyoto) -
positive effect effect
• share of income/consumption richest
• life expectancy, 1995-2000 - positive
effect 20% to poorest 20% (income
• share of income/consumption richest redistribution) - positive effect
• ESI-Index (sustainability) - positive
20% to poorest 20% (income
redistribution) - negative effect effect

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• female share in total life years - positive on the other hand do not have so many
effect significant effects (insignificant effects > 50 %)
• human development index - positive as the "new" variables (insignificant effects < 50
effect %), which were analyzed in this article and
• Factor Social Development - positive which will determine future development
effect outcomes in a decisive way.
• GNP per capita annual growth rate,
1990-98 - negative effect Let us turn to the issue of Islamic development
efficiency. The empirical record, presented in
IMPLICATIONS FOR POLICY this essay, speaks a clear language in favor of
Islamic democracy and against those in the West
Volker Bornschier's empirical, cross-national that attempt to treat Islamic cultural heritage as a
research can be summarized today in the general development burden. A careful reading
sentence that uncritical reliance on the processes of what theologians –most notably, also leading
of globalization will not be the "quick fix" for Christian experts on Islam among them–
the problems of development that contemporary positively have to say on Islamic humanism and
theories pretend it to be. By far the most its interesting institutions of zakat and sadaqat
negative influence on development is wielded is in stark contrast to the contemporary rhetoric
today by unequal exchange, followed by the of cultural warfare; basic Islamic institutions
aging process (especially without pension have enormously many positive aspects to offer
reform) and certain negative aspects of feminist to world development. A glance at the literature
distribution coalitions in society. By far the most could easily convince anyone about the richness
positive effects on social, ecological and of Islamic social doctrine and Islamic social
economic development come about by the philosophy. Zakat is the first institution of social
maturity effects of development, followed by the security in the world system. Payment of 2 1/2
positive aspects of feminism, the aging process percent of savings of the zakat fund is one of the
and membership in the Islamic Conference. fundamental duties of a Muslim. The State is
With all the talk about dependency, responsible to collect zakat and makes
globalization or the "Washington Consensus" arrangements for its distribution; while sadaqat
notwithstanding, it is shown that feminism, is paid at no fixed rate19.
pension reform, and the maturity effects of Our evidence shows that the majority of Islamic
capitalism open up new horizons of future countries transformed their "growth" much
development debates. The variables better to the benefit of "life quality" (average
• political feminism % women in life expectancy) than most other societies
government, ministerial level around the globe.
• aging % population, aged >65y, 1998 At the same time, the UNDP data set shows that
• maturity effects development ln (GDP life expectancy as the most direct indicator of
PPP pc)^2 life quality in the world system has dramatically
• unequal exchange increased in the regions of the Middle East and
are far more relevant in explaining our 14 in the Andean countries of Latin America, while
development dimensions than the traditional in Southern Africa and in Eastern Europe there
"stars" of the debate, the political and left and was a stagnation over the long period 1970-
right, pro- and anti-globalization movements, 2000.
culturalist development theories etc. Seen in such a way, the contrary of common
notwithstanding. The variables beliefs is true: "Kemalism", "Arab socialism"
• Islamic conference membership and other "isms" were quite successful, while
• economic freedom the "Washington Consensus" strategies put in
• foreign saving (I-S)/GDP place after 1989 in Eastern Europe and the
• military expenditure as % of GDP former USSR proved to be one of the utmost
• dependency on foreign capital MNC development failures in human history.
PEN 1995 At a time, when leading protagonists of the
• public education expenditure per GDP "Consensus" proclaim that growth is simply
• acceleration effects development good for the poor, it is time to reckon by
ln(GDP PPP pc) quantitative means the complicated relationships
• EU-membership

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Arno Tausch Did Recent Trends in World Society

between growth and the social and ecological periphery and semi- periphery. The EU under
dimensions of growth. present conditions fails to have sufficiently
enough dynamic effects and its democratic
It also emerges that the Islamic countries are deficits become ever more clear.
among the best performers on our scale
measuring exceptional human development In terms of the size of the quantitative effects on
increases in the world system (already taking the 14 dimensions of development under
into account past levels of human development). investigation here, it is shown that the new
political structures associated with political
Development is a contradictory and dialectical feminism that substituted patriarchic structures
process. There is no single strategy, that has inherent in practically all world regions for
only positive results, and there is no strategy, much of the 19th and the early 20th Century
that has only negative results. No single have a very considerable effect on the
development theory today captures all these development outcomes of today. As we have
negative and positive effects that interact outlined above, feminism in power –i.e. the
together. At this stage, perhaps, the question will share of women in positions of political decision
arise –what are the real policy implications, making– achieves to transform many aspects of
then, of this kind of analysis? It should be clear development, but, as other "distribution
that a reliance on the "Washington Consensus" coalitions" before it, creates certain aspects of
alone will not "fix" the performance of countries stagnation as well and thus is not free from the
beyond a better and more predictable effects of the logic of "collective action" that is
"development stability". The most consistent at the heart of the neo-liberal doctrine (see
consequence of the "dependency" analysis for especially the works Olson and Weede). In the
which Volker Bornschier stood for many years 21st Century, the process of aging and the
is the realization that a reliance on foreign necessity of pension reform, closely linked to
capital in the short term might bring about that process, also cannot be overlooked
positive consequences for employment – anymore. In our analysis, unequal exchange,
especially female employment– but that the aging, and political feminism achieve the
long-term negative consequences of dependence majority of the significant effects on the 14
in the social sphere, but also for sustainable development dimensions under investigation,
development, outweigh the immediate, positive i.e. far more than the "master" variables of
effects. Our three-fold empirical understanding earlier debates, like "economic freedom" versus
of the process of globalization – reliance on "MNC penetration". As has been argued
foreign savings, MNC penetration and unequal elsewhere, globalization critics especially must
exchange–, goes beyond the average analysis of start to look at pensions and pension funds
the workings of dependency structures and seriously – because the way, in which you
shows how different aspects of dependency manage the savings of society for old age, you
negatively affect development performance. The also manage technological innovation and world
integration of the countries of the periphery into systems position in general20. It is also evident
larger currency blocs –quite contrary to what the from the analysis presented in this article that
"Washington Consensus" has to say about Islamic culture is not a development blockade;
"competitive currencies"– will be one of the on the contrary. Membership in the Islamic
most important tasks for international Conference has --ceteris paribus-- a very
development strategies for years to come. Left positive effect on political democracy, on life
for themselves in the capitalist world economy, expectancy, and on our indicators of the Kyoto-
the countries of the periphery and semi- process and the eco-social market economy. Far
periphery will always be victims of international from being a "religion of the Middle Ages"
currency instabilities. In the light of earlier Islam has an important message for the 21st
published analyses, it is no surprise that Century. It is to be hoped that socially
"unequal exchange" (1/ERDI; ERDI being the progressive forces in the MENA countries will
exchange rate deviation index) is again achieve a better monetary distribution of
established to be the most important dependency incomes and a better gender distribution of work
variable today, far more important in its in the societies concerned in thefuture.
negative effects on social and sustainable
development than the UNCTAD data series on It is shown in this article, that transnational
MNC penetration. European Union integration, integration is and remains to be a contradictory
this analysis again shows, on the other hand is process that does not lead 1:1 to a greater
not a quick fix for many of the social ills of the amount of social cohesion and sustainable

© Historia Actual Online 2005 43


Did Recent Trends in World Society Arno Tausch

development in the host countries of along and is part and parcel of transnational
transnational penetration. The role of the social integration. Volker Bornschier is such a
scientist then will not be "pathfinders to pathfinder, and let us state how grateful the
globalization" but to become pathfinders for critical development research community across
those millions, who will become marginalized the globe is for all his path-finding
by the process of social disintegration, that goes contributions.

14
Ibid.
15
Tausch, A., Three pillars..., op. cit.
NOTAS 16
Bornschier, V., Western society..., op. cit.
17
1
"Keeping score - ESI - '2001 Environmental
Cit. in Tausch, A. (ed.), Three Pillars of Wisdom: A Sustainability Index' - Statistical Data Included". The
Reader on Globalization, World Bank Pension Ecologist, April 2001. Avalaible from Internet at:
Models and Welfare Society. New York, Nova <http://www.findarticles.com/ cf_dls/ m2465/ 3_31/
Science, 2003, 305-323. 73040733/ print.jhtml>.
2
Sunkel, Osvaldo, "Transnationale kapitalistische 18
For a survey of the literature and politometric
Integration und nationale Desintegration: der Fall evidence, see Tausch, A.; Hermann, P.,
Lateinamerika", in Imperialismus und strukturelle Globalization..., op. cit.
Gewalt. Analysen ueber abhaengige Reproduktion. 19
See The Light of Islam website at
Frankfurt, Suhrkamp, 1972/1973, 258-315. Id., <http://home.swipnet.se/islam/articles/Non-
Capitalismo transnacional y desintegracion nacional Muslim.htm>.
en America Latina. Buenos Aires, Ediciones Nueva 20
Tausch, A., Three pillars..., op. cit.', 20, 'The
Vision, 1984. opinions expressed in this article are strictly his own
3
Wallerstein, I., "Islam, the West and the world", private academic opinions in the framework of his
Papers of the Fernand Braudel Center, 1998, venia docendi, and do not necessarily reflect the
[document on-line] Avalaible from Internet at: opinions of the Austrian Government.
<http://fbc.binghamton.edu/iwislam.htm>.
4
MNC: Multinational Corporations.
5
Vid. Amin, S., Unequal Development: An Essay on
the Social Formations of Peripheral Capitalism. New
York, Monthly Review Press, 1976; Tausch, A.;
Köhler, G., Global Keynesianism: Unequal exchange
and global exploitation. New York, Nova Science,
2002.
6
Vid. Tausch, A.; Praeger, Towards a Socio-Liberal
Theory of World vDevelopment. Basingstoke and
New York, Macmillan/St. Martin's Press, 1993.
7
Vid. Bornschier, V.; Chase-Dunn, Ch. K.,
Transnational Corporations and Underdevelopment.
New York, Praeger, 1985.
8
Id., "Technological Change, Globalization and
Hegemonic Rivalry" in The Future of Global
Conflict. London, Thousand Oaks and New Delhi,
Sage Publications, 1999, 285-302.
9
Tausch, A.; 1998. Globalization and European
Integration [book on-line] Avalaible from Internet at:
<http://csf.colorado.edu/wsystems/archive/books/
tausch/tauschtoc.htm>.
10
Id., 2001. The European Union: global challenge
or global governance? 14 world system hypotheses
and two scenarios on the future of the
Union[document on-line] Avalaible from Internet:
<http://www.uni-trier.de/zes/bd49.html>.
11
The full data set, based on UNCTAD and UNDP
data, is freely available as an EXCEL file from:
<http://www.gallileus.info/gallileus/members/m_TA
USCH/ publications/ >.
12
Tausch, A.; Hermann, P., Globalization and
European Integration. New York, Nova Science,
2002.
13
Bornschier, V., Western society in transition. New
Jersey, Transaction Publishers, 1996.

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