Wednesday, January 05, 2005

Dependency Theory, Not Again!

Andre Gunder Frank is still around? I remember him from a college sociology class, and I really thought his writing had gone the way of the dinosaur. But I’m quickly realizing I’m wrong, for not only are there still many devoted fans of dependency theory, but Gunder Frank is still writing.

I found his latest at the Asia Times, which occasionally has interesting articles. He writes about US indebtedness, a little late to the game given that almost everyone everywhere has already given their opinion on this theme (you'll hear plenty of mine in later posts, also late to the game). His imagery is quite sensationalist, as he has us imagine what all the debt would look like in cash. “But no worries: Congress just raised the debt ceiling to $8.2 trillion. To help us visualize, $1 trillion tightly packed up in $1,000 bills would match a building 40 stories high”

According to Gunder Frank, the current arrangement between China and the US is one where “especially poor China gives away for nothing at all to rich Uncle Sam hundreds of billions of dollars' worth of real goods produced at home and consumed by Uncle Sam. Then China turns around and trades these same paper dollar bills in for more of Uncle Sam's paper called Treasury Certificate bonds, which are even more worthless, except that they pay a percent of interest.”

Gunder Frank goes on to assert that the US’s imperial traipses of the last decades (beginning with Iraq) have been the result of threats to denominate international trade in Euros. According to that theory, we should have gone to war with Russia last year, as they debated (and are still considering, I’m sure) pricing their oil in Euros.

The sad thing is that he takes a perfectly good story (that the US is over-indebted, that its over-indebtedness is due to its “exorbitant privilege” of printing the world’s reserve currency, and that the dollar will be watered down in order to pay for that debt) and turns it into such a whacky conspiracy theory that all the little nuggets of truth are lost in the huge swamp of exaggeration.


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