Relevance of Marxian Theory and Economic Development in UDC

The countries like India, Egypt, Burma and Ghana have followed the Marxian Departmental scheme in their development plans.

The basic strategy has been to increase investments in capital goods industries and services, and to increase the supply of consumer goods by increasing investment and production in agriculture and small scale sector.

The Marxian theory is not applicable directly to UDCs. Marx did not think about the problem of such poor countries. He talked of colonial exploitation and foreign backwardness of colonies but he never analyzed the problem of their development. Recently most of the UDCs are trying to develop their economies under the conditions of controlled capitalism, or mixed economy with planning as pre-dominant characteristic. Thus, Marxian notion of planned development also seems to appeal to those backward countries which are in a great hurry to industrialize at the risk of excessive national belt tightening.

Marx’s Departmental scheme is applicable to UDCs. Such a country consists of two sector economy-capitalist sector and a subsistence agriculture and small scale sector which may represent Marx’s two departments. Expansion of economic surplus or capital accumulation is the basic requirement of these economies. It is the capitalist sector which yields more surplus while the subsistence sector yields small surplus. Rapid economic development requires reorganization and modernisation of the sector by bringing about both structural and technological changes.

The countries like India, Egypt, Burma and Ghana have followed the Marxian Departmental scheme in their development plans. The basic strategy has been to increase investments in capital goods industries and services, and to increase the supply of consumer goods by increasing investment and production in agriculture and small scale sector.

The primary aim is to create larger employment opportunities to increase purchasing power and fresh demand, to build strong capital base and increase productive and technical capacities within the economy. The greatest lesson which the planners of underdeveloped countries can learn from Marxian economics is that accelerated development means complete reorganization of the economy both technologically and structurally.

In short, following points may be relevant for underdeveloped countries:

(1) Unequal Exchange and Exploitation:

The society is divided between rich and the poor in UDCs. The poor is exploited by the rich. Because of the elastic supply of labour workers are paid just the subsistence wages. Concentration of wealth with the richer section of the society is clear indicator of the Marxian hypothesis. Existence of Bonded Labour in such countries itself speaks exploitation of labour by the rich classes.

(2) Reserve Army of Industrial Workers:

Marxian observation that growth of capitalism causes reserve army of the unemployed workers is also true in case of poor countries. Further, adoption, of capital-intensive technique of production in these countries has displaced lots of labour causing the mounting problem of unemployment. Widespread poverty, starvation and unemployment are very common.

(3) Falling Rate of Profit:

As the population in underdeveloped countries is poor, the size of the market remains limited. Generally, entrepreneurs face uncertainty of demand for their products. This adversely affects the rate of profit.

(4) Departmental Division:

According to this theory, the economy can be divided into two departments: Producer Goods Department and Consumer Goods Department. This type of dualism is very much evident in less developed countries. In these countries, only a small sector is confined to the production of producer goods, while a vast unorganized sector is engaged in the production of consumer goods.

In short, Marxian model is not of much relevance in understanding the problems of less developed countries. Yet, some of the elements of the theory ‘exploitation of labour’ concentration of capital, subsistence wages, ever-rising poverty and unemployment of the workers, and the like are found to be relevant in such economies.