Economic Development and Rana Plaza

The official death toll from the April collapse of the Rana Plaza building in Dhaka, Bangladesh, which housed clothing factories, has now passed 1,100.  How exactly will the staggering costs of that overwhelming tragedy be figured?  Will they count as part of capitalism’s contribution to economic development across Asia, Africa, and Latin America?

In capitalism’s earlier history, steadily replacing feudalism across Europe from the 17th century onward, it became colonialist on a global scale.  Most of Asia, Latin America, and Africa were carved into colonial territories whose economies were radically reorganized to serve their European capitalist masters.  These reorganizations involved slavery and the slave trade, massive population relocations, destruction of existing industries and their replacement with others, massive loss of life, and so on.  Colonies became dependent on a few agricultural or mining exports to their European masters and also often became protected markets for them.  The results amounted to the “development of underdevelopment.”  Colonial economies were systematically subordinated to the needs of their colonizers’ capitalism.  The costs of that subordination, then and since, were mostly imposed on the subordinated.

Of course, the Europeans who operated colonial capitalism mostly understood it differently.  For some of them, colonialism had chiefly to do with missionary work, bringing Christianity to people not yet blessed with its benefits.  For others more secularly inclined, Europe was bringing all (or at least most of) the achievements of advanced cultures to backward civilizations.  Colonial subjects, they assured themselves, were better off than they had been before European conquerors had arrived.

For over a century now, a massive critical literature interacting with historic movements against colonialism have countered that self-serving image of colonialism’s effects.  Former colonies and semi-colonial territories (e.g. China) have mostly achieved political independence as the formal empires were overthrown.  However, economic underdevelopment of the former colonial territories continued, although changed by new conditions associated with political independence.  Bangladesh’s tragedy illustrates the process.

After World War Two, independence struggles ended formal colonialism.  In subsequent decades, capitalist development in Europe, the US, and Japan organized a new kind of (independent, post-colonial) underdevelopment in most of Asia, Africa, and Latin America.  Alongside continuing exports of raw materials and foods, first manufacturing and later service industries were started or massively expanded in the latter.  Mostly these took a capitalist form from the beginning.  Where they did not, they eventually shifted over to capitalist forms (mostly private, but sometimes state capitalist enterprises).

The mechanisms and pressures of capitalist competition in what had become a world economy governed the relocation of much capitalist industry to the former colonial countries.  One cause was the relatively high level of wages won by the struggles of the working classes in Europe, the US, and Japan.  Capitalists therefore saw increasing competitive advantages to be gained by relocating to the much lower wage levels that colonialism had established in the former colonies.  Simultaneously, smaller capitalists in those former colonies competed ferociously for contracts or partnership deals with the larger capitalists arriving from the former colonizing countries.

Globalized capitalist competition destroyed the clothing industries of the former colonizing countries, for example, and relocated them in the former colonies and semi-colonial territories.  Thereby, the kind of primitive capitalist industrialization exposed by Dickens in England exploded in Bangladesh among many other parallel locations.  Such awful conditions are often punctuated by catastrophic tragedies such as Rana Plaza.  Meanwhile, the former colonies remain dependent not only on exports to the former colonizing countries but now also on the latter’s capital markets, distribution networks, etc.

Once again, supporters of capitalism everywhere will portray all this otherwise.  They will extol the gains brought by capitalist industrialization in former colonies.  We will be assured that workers, however poorly paid, housed, and educated, are better off than they would have been without that industrialization.  In other words, so terrible was the earlier capitalist colonialism that primitive capitalist industrialization since independence represents progress.  US, European, and Japanese consumers will be directed to think about the benefit of lower prices they pay rather than the costs of lost jobs when capitalists relocate to low-wage former colonies and semi-colonial territories.

Twenty-first century global capitalism thus rests on nineteenth century conditions for more and more of its core proletariat.  The other sides of relocating production to former colonies are the declines of jobs, working conditions, and crises, as well as the austerity policies imposed on working classes in Europe, North America, and Japan.  Everywhere, this uneven capitalist development displays growing inequalities of wealth, income, political power, and cultural access.  Everyone moves closer to explosive social tensions and conflicts — in China and India as in the US and Europe.

The issue in global economic development today is not whether former colonies and semi-colonial territories have legitimate claims to “help” in their passage from poverty to wellbeing.  Of course they do.  The issue is how those claims are to be satisfied.  The current method stresses capitalism’s competitive investments in the former colonies.  A radically changed economic system in the former colonizing countries would enable a different way of satisfying those claims.  Suppose a genuine socialist commitment to full employment become policy in the US and Europe.  Suppose further that governments provided capital for workers’ cooperatives to be the prevailing organization of state and private enterprises securing that full employment.  A good portion of the resulting output could facilitate much better economic development in the former colonies, including support for workers cooperatives there as enterprise organizations.

In the US, the Federal Reserve reports that 20 percent of productive capacity lies idle.  The Bureau of Labor Statistics reports roughly the same percentage of the available labor force as idle.  Since the remaining 80 percent produced over $15 trillion in GDP last year, what full employment here could produce and share with the former colonies is huge.  Apropos of capitalist “economic development” after Rana Plaza, the appropriate response is TIAA: there is another alternative.

Richard D. Wolff is Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.  He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Visit Wolff’s Web site at, and order a copy of his new book Democracy at Work: A Cure for Capitalism.  His work is also featured on the new website:  His weekly radio program, “Economic Update,” broadcasts on several Pacifica Network stations including WBAI in New York City and KPFA in San Francisco.  It is archived on

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