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The Financial Express

Metropolis-satellite chain in apparel, jute export from Bangladesh

| Updated: January 13, 2022 21:15:47


Metropolis-satellite chain in apparel, jute export from Bangladesh

Metropolis Satellite Chain is a theory presented by Andre Gundar Frank in his book "Capitalism and underdevelopment in Latin America" in 1967. Frank says capitalism is a monopolistic exchange and exploitation and transfer of surplus from the satellites to the Metropolitan Capitalist centres. The method is named the Centre Periphery theory eventually.
The truth behind this theory was the definition of Capitalism by Karl Marx. Marx designated capitalism as a mode of production, which produces development with elevated inequality. According to Marx, capitalism commenced in 1701. He termed the period of 700-1800, up to the 19th century as feudalism. Frank disagrees with his thought. He says capitalism started in 1501 from the 16th century. He described capitalism as mercantile capitalism. Europeans set up colonies by occupying different countries because of mercantile capitalism.
In 1701, the journey of competitive industrial capitalism started, and colonialism emerged. Its span was 1701-1945. The significance of capitalism is the acquisition of a country for trade and commerce. These beget additional possibilities from the business that means unequal occupation. Frank postulates this unequal transaction as a monopolistic exchange. The duration of monopoly capitalism was from 1870 to date. He expressed it in this way-
Monopoly Capitalism> Finance Capital (MNCs)>State Monopoly Capital (Imperialism) or New Imperialism or Ultra Imperialism.
Actually, during industrial capitalism, the capitalist system is implicated in the whole world by Metropolitan Capitalist Centres. Frank designated this practice as the World Capitalist system that Marx did not assert in his theory.
Underdeveloped countries are stimulated by capitalism, included in a capitalist system later, disseminated by a chain, Frank articulated. The chain presented by Frank is as follows:
Metropolitan Capitalist Centre> Regional Centre> National Centre> Local Industries> Middle Men> Land Owners> Producers (Peasants, workers).
A.G. Frank presented the dependence dominance alliance of developed and underdeveloped countries by the Metropolis Satellite chain. He portrayed Western Europe and Latin American countries as Metropolis, which means core, and other countries as Satellite that means periphery.
The chain is a symbol of dominance-dependence. This relationship thrived with exploitation from the colonial period. Frank emphasizes that rich countries dominate underdeveloped countries. The economic condition of the underdeveloped countries is an outgrowth of the world capitalist system. The increasing condition of a country is called the underdeveloped or distorted developing condition of other countries. Frank called it the development of underdevelopment. Frank blamed the metropolis satellite structure of the world capitalist system for befalling the development of underdevelopment. The metropolis exploits the satellite. The satellite is cut off from inherent investment funds, so its growth dwindles. A state of dependence lessens the satellite development, which creates a local ruling class, a "Lumpen bourgeoisie" that supports a strategy of underdevelopment.
Examples of Metropolis Satellite Chain: The classic examples of the Metropolis Satellite chain are the apparel export and jute export of Bangladesh. Now the enigma is how the chain operates in the apparel sector and jute sector.
In Apparel Export- Metropolitan Capitalists Centre >Regional Suppliers> Buying house/port or capital> BGMEA leaders> Garment owners> Garment workers
In Jute Export- Metropolitan Centre > Regional Centre> Port or Capital> Local Centre>Middlemen and local merchants> Land owner> Peasant or share croppers
The peripheral farmers of these two chains are employed in jute or ready-made garment factories because they have no ownership. For instance, in the yield of jute, the collected plethora is called expropriation of surplus and appropriation of surplus. Farmers produce jute in the field, but they are not the owner, just shareholders. The sellers sell one maund of jute but do not get more than Tk 500-600. Because, those who buy jute from the farmers are agents. They pocket Tk 600-1200 par maund in the wholesale storehouse. Then it is shipped to the metropolis centre of Dalton of the USA or Dundee of Scotland through the seaport from the river port in a district town. The receiving amount is Tk 3,000 from them, and earnings are Tk 1000. In the jute sector, Dundee is the Metropolitan centre. The determined price is Tk 2000, but the actual was Tk 500. The same condition is in the apparel sector. Here, the owner pays a low wage to a labourer. No country has such cheap labour as in Bangladesh.
Two elements are related to the metropolis satellite chain. They are:
1. Surplus Expropriation
2. Surplus Appropriation
Those who survive in the bottom level of the chain are producers or small or peripheral labourers or farmers because they have no ownership. Their purchased surplus from production goes through the top level. That means to the landowners or merchants who are subsisting in the village centre. The plethora that goes through from the bottom level to the top level is called surplus expropriation. Every producer's maxim is to gather this surplus. From this surplus, they keep some portions for their personal use, which is called surplus appropriation. And the residual part is sent by trade to the town centre that exists at the top level. In this way, the surplus is gathered in the metropolis centres in the rich countries. The main question is the flight of resources from the periphery to the core. In each step, some capitalists exploit the lower level by using monopoly power. In each capitalist system there occurs development at the international, national and local levels but underdevelopment occurs more. In that case, imperialist metropolis forms the satellite, an immature state by exploitation, where the administrative body creates local comprador who possess the self-interest of a metropolis.
The principal mechanism of expropriation and appropriation of the surplus is:
1. International Trade
2. Foreign Direct Investment
3. Foreign Aid
RMG industry and jute industry are typical examples of metropolis satellite channels. These are the two main export products of Bangladesh. Bangladesh's export earnings in 1981-82 were $752 million, meaning 75.2 crore dollars, which is the lowest export earnings in Bangladesh. But in 2015-2016, the export earnings were $33.07 billion that means 3307 crore dollars, which is 45 times the figure in 1981-82. Among the export earnings, $27 billion came from garments and knitwear. Total exports of goods from Bangladesh rose to 39.34 billion U.S. dollars in 2019. The amount is the highest level in ten years, nearly double the 2010 figure. Much of these exports are garments and textiles. The government has proclaimed an export earnings target of US$ 51 billion, propelling a 12.37 per cent year-on-year growth for the fiscal year of 2021-22.
According to the Export Promotion Bureau (EPB) data, Bangladesh's export earnings from jute and jute goods posted an 8.10% growth to $882.35 million in FY20 against $816.27 million in FY19. The jute and jute goods sector has become the second-largest export earners after the RMG sector.
International trade is moderate in Bangladesh for jute, and FDI did not increase much because of degradation. In 2020, FDI for Vietnam was $20 billion, but FDI for Bangladesh was only $2.56 billion. Only RMG is the sector in Bangladesh where the country has an advantage of cheap labour.
In the world, the metropolis satellite channel works as multinational corporations. They give a request at a regional centre. We stay in the national centre. There, the BGMEA members are doing work on labor subcontracts. Landowners arrange appropriate surplus from the land-less peasants. Then middlemen do the appropriation. BGMEA then appropriates the surplus from them by supplying subcontracts to the landowners. Then national centres get it from BGMEA. But the regional centres complete appropriation surplus from the national centres. and the Metropolis centre performs appropriation from the regional centre. In this way, surplus expropriation and appropriation are occurring through metropolis centres. This practice is called a chain.
Frank accepted the chain as a token in this theory. In 1945, the colonial countries got independence from the colonialists. But Frank stated, "we are still made dependent by this chain, as if, we have got emancipation from colonialism." This chain means the third world is never free from burglary and capital flight. If this chain somehow crashes, then the capitalist system will also break down. It is difficult to break the chain. Some countries like China, Korea, India, Iran, Brazil, Argentina, South Africa and Russia can annihilate this chain. Bangladesh is deciding to break this chain. PRAN, PHP Group, Nasir Group, Square, Apex are attempting to be free from principal-agent relationship commerce. We have to be free from dominance-dependence that means to be free from dependence to break this chain.
Soma Dhar is a PhD student at the Department of Economics of the University of Chittagong, Bangladesh
Email: [email protected]

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