Neoextractivism and Capitalist Development

Dennis C. Canterbury

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815356776
• eBook ISBN: 9781351127325
• Topic: Politics & International Relations
• Subtopic: Global Politics
• Index: Politics & International Relations

The large-scale extraction of natural resources for sale in capitalist markets is not a new phenomenon, but in recent years global demand for resources has increased, leading to greater attention to the role of resource extraction in the development of the exporting countries. The term neoextractivism was coined to refer to the complex of state-private sector policies intended to utilize the income from natural resources sales for development objectives and for improving the lives of a country's citizens. However, this book argues that neoextractivism is merely another conduit for capitalist development, reinforcing the position of elites, with few benefits for working people.

With particular reference to the role of neoextractivism within Latin America and the Caribbean, using Guyana as a case study, the book aims to provide readers with the tools they need to critically analyze neoextractivism as a development model, identifying alternative paths for improving the human condition. This book will be of interest to academics and students in the fields of international development, political economy, sociology, and globalization, as well as to policymakers and political activists engaged in social movements in the natural resources sector.

Part I

The debate on neoextractivism

1 Neoextractivism and capitalist development

An outline

One of the most important but surprisingly overlooked facts in the debate on the new extractivism is that capitalist crisis and reform creates the conditions in the capitalist periphery that stimulate demands by the ruling elites in those countries for national ownership and or control of their natural resources – agricultural, mineral, metal, water, marine life, and forest products provided by nature – as a development strategy. The intensity of those demands ebbs and flows with crisis and reform in the global capitalist system. The proponents of the new extractivism nonetheless treats this cyclical phenomenon as a conjunctural event associated with the pushback against neoliberal economic adjustment policies in the current era of global capitalism. Whereas a historical analysis of capitalist development in the Caribbean periphery reveals the presence of the phenomenon at different historical periods; it is therefore not a one-time event caused by neoliberal capitalism.

The large-scale extraction of natural resources for sale in capitalist markets has been ongoing for 500 years. Since the turn of the twenty-first century, however, the growing demand for natural resources has been attributed to increasing global consumption of manufactured goods led by China, India and selected African countries. The World Bank, the International Monetary Fund, Western donor states, and international Non-Governmental Organizations have hailed the increase in consumption as an opportunity for development in resource-rich countries in the capitalist periphery.¹ UNCTAD (2014) justifies its advocacy of natural resources driven development on the grounds that the United Kingdom, Northern Ireland, the United States, Canada and the Netherlands, Australia, Malaysia, Brazil, Argentina and Mexico are all examples of commodity-based development. UNCTAD (2014) stated however that in several developing countries the empirical evidence has demonstrated that the link between natural resources and development is not positive. The negative association of development and resource extraction has led to the idea that the developing countries endowed with natural resources are cursed rather than blessed.²

The advocacy of commodity-based development in the developing countries, continues to move apace. In their overview of the geological potential of Africa, for example, Buchholz and Stürmer (2011) set out to show the opportunities for additional tax revenue from the extractive sector that could contribute to further financing the sustainable development of sub-Saharan Africa. Buchholz and Stürmer (2011) observed that the economic rise of emerging economies such as China and India among others had altered international commodity markets. The commodity boom between 2003 and 2008 saw prices increased significantly and the terms of trade turned in favor of commodity exporting sub-Saharan African countries. This phenomenon placed the extractive sector high on the development agenda in terms of its potential to generate revenue for economic development (Buchholz and Stürmer, 2011).

The use of revenue generated from the sale of natural resources is precisely what the new extractivism or neoextractivism in Latin America and the Caribbean is all about. It reflects a complex of state–private sector policies favored by the World Bank and International Monetary Fund (IMF) intended to seize the opportunity for development provided by the growing demand for natural resources to produce consumer products. Moreover, in Latin America and the Caribbean region these measures are described as supposedly the strongest pushback by progressive forces against the failed neoliberal economic policies. They are pointed to as ushering in a post-neoliberal era. The new extractivism seeks to utilize the income a country earns from the sale of its natural resources to improve the standard of living of its citizens.

It is regarded as another development model that is being tried out in the Latin American and Caribbean region. It joins the litany of theoretical expositions on development in the region, such as center-periphery, dependency, plantation dependence, the two-sector model, import substitution industrialization, structuralism, neo-structuralism, neoliberalism, and post-neoliberalism. Like its predecessors however neoextractivism is merely a catalyst for capitalist development, spawned by crisis and reform in different historical periods in the evolution of the capitalist system. Capitalist crisis and reform produce theoretical and policy responses about how development can occur in the periphery. These reactions merely serve to reform the capitalist system and to strengthen it, rather than bring about structural transformation.

The failed neoliberal policies are the motive force behind neoextractivism as a means to stimulate development, and not the idea that increasing consumer demand presents an opportunity for development. The latter idea ascribes more power to buyers than they truly have. A similar mythical idea was debunked in the old debate on consumer sovereignty – the power of consumers to determine what commodities are produced. The idea is associated with Smith (1994) who argued that consumption is the sole end and purpose of all production and that the producer’s welfare must be satisfied only for promoting that of the consumer. The falsity of consumer sovereignty has long been established so why bring it back into focus in the debate on commodity-led development? Why argue that a country can develop economically because there is an increasing demand for the natural resources it produces? The consumer is not king and does not determine what is produced. It is the capitalist who decides what commodities are profitable to produce and produces them. After 500 years of resource extraction for sale in capitalist markets, where there is always a demand for extracted commodities, why only now is there an opportunity for economic development in the countries that are endowed with those resources?

The extraction of natural resources in the capitalist system is for profit; the consumers do not determine by their demand what natural resources are extracted as primary commodities to produce consumer goods. It is folly to base a development model on the notion of growing consumer demand for natural resources. To base the development of a country on such an idea merely serves to perpetuate the capitalist system. This is how capitalism works, the investment sharks cash-in on the production of commodities that are trending due to high profit and exit those markets as newer lucrative investment opportunities arise. In their drive for profits the capitalists determine demand for their produce through advertisement.

The notion that neoextractivism is a development model is problematic given the relationship between nature and humans who are also a part of nature. Humans depend on nature for their existence, and given this dependence the real problem concerns capitalist development, which treats nature as the private property of the few to be exploited for profit. This is the issue that has to be addressed and not extractivism or neoextractivism. Also, to question whether natural resource endowment is a curse or a blessing to a country, is undoubtedly a non-issue, misplaced and misleading, but for capitalist development. The problem is not with the quantity of natural resources with which the land is endowed, but with the socio-economic system created by humans to secure the utilization of those resources for their survival. The real issue therefore is that of creating a system of production to exploit nature, not to profit the few, but for the survival of the human species, regardless of their position in the production system.

This issue is not fully addressed in the debate on the neoextractivism in Latin America and the Caribbean. The debate on the new extractivism is less than two-decades old, but in the short period since the concept emerged as a subject for study, it has spawned a voluminous literature in fields such as political economy, sociology, economic development, international development studies, and critical development studies. Arguably, this literature has not produced any grand new ideas about an alternative production system save for the works by James Petras and Henry Veltmeyer,³ which advance the causes of working people in their struggle against the injustices and inequalities that for them are the hallmarks of the global capitalist system and its peripheral sub-systems.

The intellectual authors of neoextractivism and its critics both on the right and left continue to chew on the same old array of issues and themes of social development that occupied the interests of the social sciences of the bourgeoisie. These sciences, which are really derivatives of the positive philosophy are traced back to classical political economists such as Adam Smith (1994) and David Ricardo (2001), and the utilitarian philosophers and social reformers such as Jeremy Bentham (1907), and John Stuart Mill (1965). The singular focus in the social sciences of the bourgeoisie regardless of their economic, political, sociological, anthropological, psychological, environmental, etc. themes or issues, is on predetermined notions of social development or expansion in social welfare as established in the bourgeois classics. The goal in these sciences is to interpret, explain, explore, investigate, or critically analyze the perceived multiple social problems that thwart or positively enhance the human condition, either hampering or bringing about human progress or social development in the image of capitalism. These various pursuits are necessary conditions of capitalism that emerge in the light of the lopsidedness in the distribution of the wealth it creates by the exploitation of the many by the few.

At the level of ideas, the social sciences of the bourgeoisie have facilitated the transition from theological to scientific explanation of social reality in capitalist society, the positive philosophy. In terms of the organization of society these sciences provided the intellectual foundations for the transition from feudalism to capitalism, a realm in which they are still bogged down. This is to say that the bourgeois social sciences remain stuck in their service to capitalism, explaining how the capitalist system works in its multiple manifestation. They are trapped like water in a gourd unable to escape, but merely to work as handmaidens of capitalist development. The ideas they generate in theoretical expositions such as neoextractivism, continue to push the frontiers of crisis-ridden capitalism to new heights.

Kari Levitt-Polanyi believes however that capitalism is at a cross-roads, but that the direction it takes is yet to be determined.⁴ What are the possible directions capitalism may take? Is it going to select a path that deepen its stranglehold on society, would it change into something else on its own volition or, will it require revolutionary action by the downtrodden to bring about its transformation? It seems that the major question faced by working people is for them to determine for themselves whether the fundamental transformation of capitalism is possible through effective government planning, market mechanisms, or revolutionary action?

History has demonstrated repeatedly that fundamental change only comes about by revolutionary action. If this is indeed the case, the central task of working people and their leaders is to decisively confront capitalism at its cross-roads, and in their self-interest to push the human development project in an entirely new equitable and just direction. In this chapter we introduce the big ideas explored concerning neoextractivism and capitalist development.

Neoextractivism is a capitalist dynamic

Six theses on neoextractivism and capitalist development are first the phenomenon referred to as neoextractivism in Latin America and the Caribbean is a capitalist dynamic associated with crisis and reform in global capitalism. Undoubtedly, it is the result of capitalist crisis in the 1970s, which involved the failure of capitalist companies to turn sufficient profit. The neoliberal reforms implemented to restore profitability to global capitalism have reeked economic and political mayhem in the capitalist periphery. The reforms stripped working people of their industrial social welfare benefits, increased unemployment due to job layoffs, retrenchment, or downsizing in the public and private sectors, joblessness, higher levels of poverty, declining economic growth, informalization, and the transference of income from wage earners to profit seekers. The crisis and reform turned the tide on working people by increasing the hardships on them forcing their leaders to resort to neoextractivism as a pushback approach against structural adjustment to alleviate the suffering.

Capitalist crisis heightens nationalist struggles over natural resources

Second, the conditions described as neoextractivism involve the stimulation of political demands in the capitalist periphery for state ownership and or control of natural resources. The state then uses the income earned by those industries to promote social and economic development. The burning question concerning the resource-rich countries in the capitalist periphery is: why do these countries that are well endowed with natural resources have to experience such wretched economic conditions, when their resources are sufficient to bring their people a better life? Their riches in natural resources should be able to bail them out from the negative impacts of capitalist crisis and reform. Capitalism as an economic system does not possess the wherewithal to promote equal development across the global system in which it operates, some countries must be up while others are down. There is no equality in the capitalist system. The train of thought that countries have enough resources to deliver a better livelihood for their people and the corresponding intensification of nationalist struggles to own and or control natural resources, exist in different historical periods of capitalist development.

It encourages the domestic political elites, civil society organizations, and academics in the developing countries, to step up the demands for national ownership and or control of natural resources. The deliberate aim of such demands is to ease the economic hardships caused by capitalist crisis and reform. Neoextractivism, which is in effect reflective of just a particular dynamic of capitalist development, is a product of that line of thinking. The advocates of neoextractivism attack the neoliberal reforms of global capitalism for their failure to improve the conditions of the poor and the powerless in both the advanced and peripheral capitalist states.

A central idea explored herein therefore, is the intensification of the struggle for national ownership and or control over natural resources in resources-rich peripheral capitalist countries in periods of crisis and reform in global capitalism. This is done by investigating the conditions that put an end to the colonial slave mode of production⁵ or slavery-cum-capitalism,⁶ the form of primitive capital accumulation implemented in Guyana and the English-speaking Caribbean which came to an end between 1834 and 1921. The historical conjuncture characterized by the crisis in global capitalism that led to the collapse of the colonial slave mode of production, stimulated the development of center-peripheral capitalist relations amidst social unrest and demands for political and economic independence. The colonial slave mode of production engaged in natural resources extraction in agriculture, mining, and forestry products. It collapsed simultaneously as nationalist movements staked their claims in their self-interest, to own and or control the natural resources with which their country was endowed, to stimulate the economic development of the country.

Crisis in global capitalism produces reforms that pretend to resolve the crisis but instead create further crisis and heaps more hardships on working people in the peripheral states. This situation generates a dialectical response in the capitalist periphery as the countries there engage in different forms of pushback, whether anti-colonial or anti-neoliberal, against the reform policies. The anti-colonial struggle was in part a response to the crisis conditions associated with the form of capitalism that stimulated wars in Europe, and a fight for political independence and national ownership and or control of natural resources in the Europ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright page
• Table of Contents
• Acknowledgments
• Introduction
• PART I The debate on neoextractivism
• PART II Neoextractivism and development of center-periphery relations
• Index