THIRD WORLD DEVELOPMENT

16.6.10

Contents

 

The situation -- Conventional development theory and practice --Faults in conventional development -- Growth is not development -- The trickle down assumption -- Conventional development is a form of plunder -- The NICs --Globalisation -- The Structural Adjustment Packages -- Conventional development is only capitalist development --The unjust global economy enables rich world living standards -- Your empire cannot be kept in place without repression -- The limits to growth perspective; Implications for development -- The alternative: Appropriate Development -- Conclusions

Summary:

Despite significant advances since World War II, the state of Third World development is very unsatisfactory. Around 1billion people live in extreme poverty. More than 800 million do not get adequate food. Third World debt is huge and can never be repaid. About 3 billion people have an annual income of less than $2 per day. Development has mostly benefited the small Third World upper classes and the rich countries and their corporations. The gap between rich and poor countries is widening. Very little has trickled down to the poorest.

The conventional approach to development theory and practice, which focuses on promoting economic growth, investment, trade, and free markets, is the basic cause of the Third World problem. This is especially because it allows the market to allocate scarce resources to the rich and to generate inappropriate development; i.e., development that only benefits the rich.

The conventional approach to development should be seen as a form of plunder. When development is defined as enabling as much production for sale as possible, i.e., as promoting economic growth, then the focus is helping people with capital to invest to increase production for sale. This means development resources mostly go into the most profitable purposes, and the inevitable result is that most wealth and resources flow to the rich while the poor majority lose the access to the resources they once had. Third World productive capacity becomes geared to producing for local elites and for export to the rich countries.

Rich world living standards could not be as high as they are if the global economy did not enable them to take most of the world's resources.

The limits to growth analysis is extremely important for the discussion of development, because it shows that conventional development for the Third World is impossible. There are not enough resources for all people to rise to rich world living standards and systems,

Satisfactory Third World development is not possible within the present global economic system, where production is for profit as distinct from need. Nor is it possible unless rich countries stop taking more than their fair share of the world's wealth.

Appropriate development for the Third World must be based on very different principles to conventional development, especially enabling people to cooperate in using their local resources to meet their needs, immediately, through self-sufficient strategies. Appropriate development has little to do with the global market system, foreign investment, trade, or corporations.

THE SITUATION

No issue sets more serious challenges to our affluent society and our economic system than does the plight of the Third World. Since the Second World war the Third World has achieved considerable economic growth and some countries have modernised spectacularly. On average infant mortality, literacy and length of life have improved considerably.

However the Third World development is in a very unsatisfactory state. The benefits have mostly gone to the small richer classes in the Third World. The important question to ask of a development strategy is how well does it work for those in most need, not what does it add to GNP or to the wealth of the rich. About half the world's people have an income of under $2 per day. The inequality evident within the world economy is extreme. The richest 20% of people are getting 86% of world income, while the poorest 20% of people are getting only 1.3%.

The inequality is getting worse. In 1960 rich world average income was 20 times poor world income. In 1980 rich world average income was 46 times poor world income. In 1990 rich world average income was 55 times poor world income. The ratio is now around 80 to 1.

At least 850 million people suffer chronic hunger. About 1.8 billion do not have safe drinking water. More than 30,000 children die every day from deprivation.

Far from progressing towards self-sustaining, economic growth and prosperity, the Third World has fallen into such levels of debt that few would now hold any hope of repayment. Meanwhile many Third World governments deprive their people and strip their forests more and more fiercely to raise the money to meet the debt repayments.


In 1989 rich world banks lent $87 billion to the Third World, but got back $130 billion in loan repayments and interest.

           
Annual aid to the Third World in 1998 was $30 billion. Debt repayments from the Third World to rich world banks was $270 billion!

The Editors, Review of the Month, Monthly Review, March, 1992, p. 16.

The magnitude of the debt problem sets a major challenge to anyone who believes the conventional development strategy can lead the Third World to prosperity.

But there has been significant Trickle down’. In the last two decades many countries have experienced significant improvements in development indices.  (Rosling, 2009)  However this does not mean that conventional development is satisfactory.  The case against Trickle Down will be discussed below.

CONVENTIONAL DEVELOPMENT THEORY AND PRACTICE

The huge and disturbing Third World problem is mainly due to the faults in conventional development theory and practice. The core mistake is the identification of development with economic growth (or the assumption that growth is the means to development, or the main condition necessary for it, etc.) Conventional development theorists proceed as if all that matters is increasing the amount of economic activity, i.e., of production for sale or Gross Domestic Product. They assume that the more goods and services produced and sold then the more wealth that is being generated, the more taxes governments can collect and spend on problems such as health, education and the environment and the more jobs and incomes people can have. So in time the increased economic growth is supposed to lift all to high living standards.

Thus conventional economists emphasise the need to:

Š            stimulate and assist the accumulation and investment of capital, for infrastructures such as ports for new firms to use.

Š            export as much as possible in order to earn the money to pay for imports, infrastructures etc.

Š            seek loans and aid, because they assume capital is needed,

Š            attract foreign investors to set up firms,

Š            permit as much freedom for market forces as possible. This is claimed to be essential to maximise the efficiency of the use of capital and the allocation of resources.

This general view of development can seem plausible and it is overwhelmingly dominant among people who work in the development field.

THE FAULTS IN CONVENTIONAL DEVELOPMENT THEORY AND PRACTICE

If you take maximising the growth of GDP as your top priority then you will encourage and assist those with capital to invest in whatever will make most profit. They will do this best if they put the available local land, labour and capital into producing relatively expensive things to sell to people on higher incomes. People with capital to invest never maximise their income by producing what is most needed, such as food for poor peasants. It is always far more profitable to invest in putting Third World land into producing luxury crops such as coffee to export to rich countries.

Although increased production for sale in a society can bring some benefits to some people, when economic growth is taken as the major development goal damage is done to the living standards and the experienced quality of life of the poor majority of the people, to social cohesion and to the environment.

Yes making growth the goal will maximise the volume of goods and services produced, i.e., the wealth generated, but this is typically of little or no benefit to most people in the Third Worldl, especially the poorest. More importantly, it deprives the poor of the resources they once had. It is very easy to see this if we look at how resources are distributed by an economy driven by market forces, profit and growth. The basic problem in Third World development is not any absolute shortage of resources such as land and capital, but their extremely uneven and unjust distribution. So we must ask why the distributions are so bad? The essential answer is very simple.

The global economy is a market system. Market forces have a powerful, indeed typically an overwhelming tendency to make the wrong development decisions. The three major effects of the market system on development are:

1. Market forces allow the relatively rich few to take most or all of the available resources.

The 20% of the world's people who live in the developed countries consume approximately 80% of the resources produced for sale. Their per capita resource consumption is approximately 17 times that of the poorest half of the world's people. For example, while possibly 850 million people lack sufficient food, which might require 40 millions tonnes of gain p.a. to remedy, over 600 million tonnes of grain are fed to animals in rich countries each year.


 Markets...enrich the rich and pauperise the poor.

                 Mahbub Ul Haq, The Poverty Curtain, 1976, p. xii.

...resources are shifted to suit those who can best pay for them, the rich,

and not those who need them most, the poor.

                  G. Lacey, Enabling All To Survive, 1976, p. 6.

A MARKET ECONOMY IS AN INGENIOUS DEVICE FOR ENSURING THAT WHEN THINGS BECOME SCARCE ONLY THE RICH CAN GET THEM!

These extremely unfair distributions of the world's resource wealth come about primarily because it is an economic system in which rich countries are allowed to outbid poor countries to buy scarce things. If you allow the market to allocate scarce things like oil, when a few are rich and many are poor, then inevitably the rich will get most of them. The market has no concern whatsoever for what humans need or what is best for the environment.  It will always distribute things according to effective demand , which means that richer people and nations can take what they want and the poor must do without.

2. Market forces have mostly produced the development of the wrong industries in the Third World.

A great deal of development has taken place in the Third World; the trouble is that it has not been development of the most needed industries. It has been mostly the development of industries to provide crops and consumer goods for the small rich local elites or for export to the rich countries i.e., it has been inappropriate development.

Just consider the fact that millions of Third World people work hard producing crops and goods for other people, from which they derive very little benefit, i.e., very low wages. All that labour and all that land could have been fully devoted to meeting their own needs. Look at any typical Third World capital city and you see a vast amount of development of offices, hotels, airports, boutiques, cars and roads...which is of little or no benefit to most people.

Inappropriate development is precisely what should be expected when development resources are invested in what will make the highest profits or contribute most to GNP i.e., when profit and market forces are allowed to determine what is developed.


 Over half the children in Ghana are malnourished while over half their

farming land is growing cocoa for Western chocolate bars.

                Rainbow Ark, 5th Jan, 1992, p. 9.

3. Much of the Third World's productive capacity has become geared to the demand of the rich.

This is most evident in the case of export crops. In some poor countries half of the best land grows crops to export to the rich countries, including fodder for animals. Again this is a direct consequence of allowing the highest bid to determine the uses to which the Third World's productive capacity is put.

When Third World productive capacity is put into producing exports the people of the Third World receive only minute proportions of the wealth generated. For instance in Central America a 3000 ha cattle ranch might provide (very low) incomes for only two workers, yet that much land might feed 15,000 people if gardened intensively.

Export Crops; Highly Inappropriate Development.

In El Salvador a subsidiary of the giant American transnationql corporation Bud Antle established huge irrigated 'garden from which peasants have been moved. These plantations produce vegetables in the winter and feed for livestock (for export) in the summer. None of this produce is eaten in Senegal.

This process is occurring across all of North Africa. In Ethiopia in an area where thousands of people were evicted to make way for agribusiness and then starved to death, international firms are producing alfalfa to feed livestock in Japan.

            W. Murdoch, The Poverty of Nations, 1980, pp 297-298.

In the Caribbean people starve beside fields growing tomatoes and flowers for export.

              Beyond Brandt, Third World First pamphlet. p.4.

Much of the protein wasted on the livestock eaten by the West comes from the poor countries; oilseeds and peanuts from West Africa, fishmeal from Peru, soybeans from Brazil...

             P. Harrison, Inside the Third World, 1979, p.276.

Third World fodder... provides every tenth litre of milk and every tenth pound of meat produced in the EEC.

             K. Jannaway, Abundant Living in the Coming Age of the Tree, Leatherhead, Surrey, 1991, p.11.

The core problem is not the lack of development; it is the inappropriateness of development. To allow market forces, the profit motive and the maximisation of economic growth to be the overwhelming determinants of development is to guarantee that mostly inappropriate development will result. This is a natural and inevitable outcome in our economic system. Available resources will always go to those who can bid most and investment will always go into the most profitable ventures, i.e., those which provide what richer people want.

Thus conventional development can be seen as a process which draws Third World productive capacity into producing mostly for the benefit of the local rich classes, the transnational corporations and the consumers in rich countries.

Millions of people are without sufficient food and materials for reasonable lifestyles and more importantly without the small amounts of productive capacity (e.g., land) that would enable them to produce for themselves most of what they need. The required land, water, capital etc. exist in adequate and often abundant quantity in most if not all poor countries. It is the normal functioning of the global market economy which delivers the available resources to a few and deprives the majority. The drive to maximise output, sales and returns on investment and economic growth inevitably leads to focusing development and resources on those who are already rich.

GROWTH IS NOT DEVELOPMENT

There are serious conceptual mistakes in identifying development with economic growth.

Firstly a society is much more than an economy. A society includes moral values, social relations, traditions, cohesion, community, arts, cultural and religious practicess. If the economy is allowed to become the dominant factor in a society this will cause serious problems. The quest for greater individual wealth via competitive market operations will easily damage and drive out considerations of morality, justice and what is good for society. This is one of the main mistakes being made in rich countries today.

Secondly even within the economy development is not equivalent to growth. When a tadpole develops it does become bigger but it also changes its form; it becomes a frog and it then stops getting bigger, because it has then finished developing. Economists have no concept of when an economy has become developed enough , or what the end goal of development might be. They can only think about it endlessly becoming bigger, i.e., increasing the volume of sales. But it makes no sense to discuss development without having some idea of the what the goal of development is. We should start with questions like, What do we want developed? , What will our society be like when it has been developed? , What are our development goals?

There is a head-on clash between what is appropriate and what will maximise the GDP. If maximising the GDP is your goal you will encourage local owners of capital and transnational corporations to put more land into export crops.  However it is obvious that most of the land should be growing more food for hungry people. However if the land was taken out of production of export crops and put into growing food for poor people it would reduce the GDP. In general doing what is best for people and the environment is the opposite of doing what will most increase the GDP.

Therefore we can state a most important economic law which conventional economists never consider... GROWTH DEPRIVES! If you make the maximisation of growth of GNP your supreme development goal then you will facilitate the flow of development resources into the most profitable ventures. But these will always involve production of things for richer people, especially for export to consumers in developed countries. Not only will the poor majority in the Third World derive little or no benefit from such development, it will deprive them of the productive capacity they once had, because it will draw that capacity, especially their land, into production for the rich.  Conventional development is therefore only development in the interests of the rich.

DO NOT CONTROL DEVELOPMENT; LET THE CORPORATIONS DO WHAT THEY LIKE.

 


Essential to the neo-liberal doctrine which now dominates economic theory and practice is the assumption that maximum scope should be given to free market forces. This means as much as possible should be decided by individuals and corporations trading with each other as free as possible from rules or regulation or involvement by the state. This is precisely what corporations want.  They do not want any restriction on their freedom to go where they like and produce what they like. Obviously the more rules a government sets and the more conditions they impose restrict the freedom of corporations to maximise their profits (e.g., invest where the unemployment is high, set aside some funds for worker pensions or environmental restoration, don’t log that forest, don’t enter that market because you would take livelihoods from many poor people…). The more productive activities governments engage in, e.g., providing water, the less business opportunities there are for the corporations.

Thus globalisation has brought huge pressure to deregulate, to free markets, to eliminate government regulation and to transfer government activities to private firms…all moves that are fabulous for corporations and banks.

But this is actually a process whereby government abandons development. They give up control over what is developed, where, how and for whose benefit. For government to leave what happens to free market forces is for government to not make the decisions but to leave development to be determined by what corporations want to do. As has been noted, corporations never want to do what is most needed. They only want to do what will maximise profits and that is never done by developing industries that will produce what then poor majority need. It is done by producing what the local upper classes and the rich countries want to consume.

THE TRICKLE DOWN ASSUMPTION

Conventional development allows those few with most of the capital to develop whatever will most enrich themselves, while a tiny fraction of the wealth or benefit produced goes to Third World people, e.g., via job created in a cosmetics export factory. Conventional economists think this is acceptable, and that this trickle down process will in time raise all to high living standards someday

Many indices of conventional development have indeed improved markedly in recent decades.  (See for instance Rosling, 2009.)  But this does not mean that a trickle down process is acceptable.

It is obvious that very very little ever trickles down. People making shirts in Bangladesh are paid 15c per hour. ( See Chossudovsky, 1997.)

1.  In the world as a whole the amount of benefit that trickles down is evident in the fact that one-fifth of the world's people now get 86% of world income, while the poorest one-fifth get only 1.3%, and the ratio is getting worse.

In fact for hundreds of millions precisely the opposite of Trickle Down is typically what happens. That is, when conventional development gathers speed people often lose what they had. For example the building of big dams and the expansion of export cropping has resulted in millions of small landowners losing the land and forests they used to have. The poorest millions have gone backwards.  There are about 50 countries where GDP per capita has fallen over a decade, and those most integrated into the global economy have fared worst. ( Wodin and Lucas,  p. 55.)  Most African countries are in this category.  (Meredith, 2005.)

Thus the benefits are going mostly to the already rich and little or no benefit is trickling down to the poorest one billion people.  A development process should be evaluated primarily by how well it addresses the most urgent needs. 

2.  Then there is the fact that the rate of trickle down development is extremely slow.  At present rates it would probably take several hundred years for the living standard” of the poor majority in the Third World to rise to the present rich world level…and by that time rich world GDP per capita would have become astronomical…which is ecologically impossible (below.)

So consider the criterion conventional economists focus on most of all, viz., efficiency.  Compare what trickles down to people in Bangladesh paid 15c an hour making shirts to export (Chussodowsky, 1997) with the benefit they would get if they were devoting their time and energy to producing necessities in their own local cooperative firms and farms.  It is in other words a morally unacceptable process because for every crumb of benefit going to those in most desperate need vast benefits are heaped on the rich and super rich.  

3.  But outweighing all these considerations is the fact that the global resource situation will not permit Trickle Down to work.  As has been explained above, there are not enough resources for it to lift 7 billion poor people to anything like rich world consumption.

Even if there was significant trickle down this would be far less satisfactory than if the available development resources were fully and directly applied by poor people to producing to meet their own needs. Any trickle down process means most of the productive capacity and most of the wealth generated are flowing to the rich. Appropriate development (below) makes sure that does not happen.

WHAT ABOUT CHINA?

 

China’s booming economy is taken as showing how conventional development can work miracles.  China has made extremely fast economic growth and incomes for many have risen markedly.

However conventional development is always extremely uneven.  A few countries where investments are most profitable attract capital and their economies boom.  But that does not mean all the others could do the same.  It means the booming country has managed to take most of the available and limited investment, sales, markets etc.  When China takes most of the world’s broom sales this means that many little broom manufacturers in Indonesia and Vietnam go out of business.  The net effect can be a reduction in jobs and an increase in poverty in the world.

China’s development is mostly benefiting a small proportion of its people, leaving perhaps 800 million in rural poverty.  Inequality is …appalling and getting worse.”  (McRae, 2008.)

China’s development is based on a huge export of goods to the rich countries, produced from huge imports of resources from countries like Australia.  They are getting control of resource sources all around the world, often by no-questions-asked aid to repressive states.  They are opening one new coal-fired power station every week, accelerating the greenhouse problem.  They are taking the water of the Tibetan Plateau on which South East Asia depends.  Their enormous environmental problems are accelerating.  The government has no choice but to deliver increasing consumption, or there will be social turmoil.  All this derives from the fact that they are driven by the conventional conception of development, which sees development only in terms of increasing consumption.  If they understand and adopted the idea of Appropriate development all these problems would be defused.

The global limits to growth make it clear that China cannot possibly develop to rich world living standards, and its frantic attempt to do so is adding significantly to the damage to the planet’s ecosystems. 

There are therefore several reasons why China’s development should not be regarded as demonstrating the acceptability of conventional development.

CONVENTIONAL DEVELOPMENT IS THEREFORE A FORM OF PLUNDER

Conventional development can be seen as a process whereby the Third World's resources are taken over by the rich countries and their corporations and Third World productive capacity is geared to rich world demand. Long ago Third World countries had control over their own forests and lands and used them to produce what they needed. But the result of conventional development is that these resources have come to be owned by, sold to, or producing for, the benefit of the small local rich classes, the transnational corporations and the people who shop in rich world supermarkets. Conventional development involves bringing people into the global market, where they must sell something in order to buy what they need, and where market forces then ensure that the majority of very poor people get very few of the resources available, have to sell their resources and labour cheaply, and see their land and forests bought by rich people and put into the production of items for others to use.

Thus Goldsmith discusses development as colonialism . (Goldsmith, 1997.) Rist says, ...development has resulted in material and cultural expropriation. (Rist, 1997, p.. 243.) Schwarz and Schwarz say Development now seems little more than a window dressing for economic colonialism. (1998, p. 3.) Chossudowsky's The Globalisation of Poverty (1997) details the mechanisms, especially in relation to finance. (See also Trainer, 1989, 1995a.)

FOREIGN INVESTMENT

According to the conventional view foreign investment is crucial to facilitate development, because development is thought of in terms of investing capital to increase production for sale. However the critical view is that although foreign investment certainly promotes development, the development is almost entirely inappropriate.

Foreign investors never invest in the production of the most needed things, such as cheap food, clean water or simple housing. Foreign investment goes mostly into producing things for the urban rich or for export to rich countries and draws local land and productive capacity into these ventures.

In the period 1966-1978 US multinational corporations exported $11 billion to invest in underdeveloped countries but the return flow to the US on this investment was a fabulous $56 billion dollars.

       The Editors, US foreign policy in the 1980's , Monthly Review, April, 1980.

It is a mistake to think that foreign investment is essential because poor countries lack capital. Foreign investors often raise most of the capital they invest from Third World banks, meaning that there is plenty of capital in the Third World especially in relation to the things that need developing.

In addition there is evidence that the more foreign investment a country has the slower its development is! (For extensive documentation see Bornschier et a., 1978.)

Most importantly, it is a mistake to think that necessary and appropriate development can't take place without the investment of capital. In fact little or no capital is needed to develop those things that would most enable modest but satisfactory living standards for all in a typical Third World country. (This is important in the idea of Appropriate Development; below.)

GLOBALISATION

Since 1980 the situation of most of the poorest people in the Third World has deteriorated significantly due to the globalisation of the world economy and the rise of the International Monetary Fund, World Bank and the World Trade Order to be extremely powerful agencies determining development.

Globalisation refers to the emergence of a unified and integrated world economy in which the big transnational corporations and banks have increasing freedom and access to trade as they wish, because the barriers such as protection for Third World industries are being removed and governments are deregulating their economies. The conventional economist sees globalisation as highly desirable, especially as it involves increased freedom of trade which stimulates business activity and GDP growth, but it is having devastating effects on the Third World. Increased freedom of trade means greater scope for transnational corporations and banks to enter countries to get access to their resources and labour and to take over their firms and markets.

Globalisation is now widely recognised as being responsible for the destruction of the economies, jobs and living standards of millions of people in rich as well as poor countries. It enables the corporations to focus investment and activity in the few most profitable regions of the world, and to ignore the rest. Governments cannot direct development into needed areas, because that would be to interfere with the freedom of trade and enterprise . That is the supreme and sacred principle that must be followed now.

One consequence of this agenda is that poor people in general and some entire countries, especially in Africa and the Pacific, are increasingly irrelevant to the interests of the corporations and will therefore sink further into stagnation and squalor. They cannot possibly compete in export markets and they have no cheap resources to attract foreign investors. Inequality, great wealth accompanied by great poverty, is rapidly increasing around the world now.

Appropriate development is not possible unless governments have the capacity to control and regulate the economy, trade, foreign investment etc., for example, to be able to get foreign investors to locate in a region that needs jobs. Yet globalisation is about leaving development to market forces, which in effect means development will only be development of whatever it suits the corporations to develop. Rich countries and their agencies such as the World Bank, actively prevent the governments of poor countries from taking control of their own development.  For example Structural Adjustment Packages insist that free market principles should be adopted.  If a government tried to develop what is appropriate it would have to restrict the freedom of corporation and tax properly to fund development, and foreign investors would then go somewhere else, leaving the country without firms and jobs.

THE STRUCTURAL ADJUSTMENT PACKAGES

The most powerful forces inflicting these developments on the Third World over the last 20 years have come via the Structural Adjustment Packages of the World Bank and International Monetary Fund.

When a Third World country's debt repayments become impossible for it to manage it must go to the International Monetary Fund and the World Bank for assistance. These agencies arrange for more loans to enable debt repayments to be made, but they do so on condition that a Structural Adjustment Package is accepted. This package obliges the country to do a number of things that are supposed to improve the economy, such as cut government spending including assistance to poor people, open the economy to more foreign investment, increase exports (more plantations and logging), devalue (making exports cheaper for us in rich countries to buy, and making the country pay more for the imports from us), reduce government regulation, reduce government ownership and control and generally increase adoption of free trade policies.

These conditions are supposed to be designed to get the economy going again , i.e., to increase business activity, investment, export earnings, and to cut spending, so that the country becomes more able to pay back its debt. (In fact there is  evidence that these measures do not achieve these objectives; see Dasgupta, 1988, pp 109, 116, 136.)

More importantly, the package is a delightful bonanza for the rich countries and their corporations and banks. Their access to Third World resources is increased, they can buy up the firms that go bankrupt, they can hire cheaper labour, they can import commodities more cheaply from the country (because of the devaluation). Above all, the main point of the SAP is to enable debts to be paid to rich world banks. However the effects on the country's economy and on its poor majority of people are catastrophic. Many small firms fail, unemployment jumps, government assistance to the poor is reduced and food prices can double within days.  Above all the a rules out any move to devote more of the country’s resources to producing to meet its own needs – the overriding principle is that development must  be determined by market forces, which ensure that resources and productive capacity will only benefit rich people.

There has been much criticism of the Structural Adjustment Packages, which have now been imposed on more than 100 countries (...never on any of the rich countries of course; the USA is the world's most heavily indebted country but would never have a SAP imposed on it!) They have caused or contributed to havoc in many countries, including riots, civil wars (Yugoslavia, Rwanda; see Chossudowsky, 1997) and increased death rates from deprivation, and the fall of governments (e.g., Indonesia.) SAPs and the rules of the World Trade Organisation are now widely recognised as among the main mechanisms ensuring that the global economy functions in the interests of the big corporations and banks. (For extensive documentation see Third World Development; Collected Documents.)

WHAT ABOUT AID?

 

In view of the foregoing discussion, it can be seen that aid is not very important. The solution to the development problem is ...not that we should give more, but that we should take less. In other words giving aid does not change the ujnjust rfunctioning of the global economy.

The rich countries give very little aid, around 3 cents for every ten dollars they spend on themselves. Most of what they give is tied; i.e., given on condition that the money is spent buying from our corporations. Aid in some recent years has been around 10% of the amount the Third World has had to pay to our banks as interest on their debt. Much aid goes to assist nasty regimes that will keep their economnies to the policies the rich countries want. And now aid is often given on condition that countries accept certain conditions...especially, you guessed it, moving their economies further to market principles. This is also now built into the definition of good governance .

Relatively little aid goes into appropriate development. Aid can be very valuable, and much of the work of the Non Government Agencies is going into appropriate development. But in general aid has to be understood as another powerful tool that helps to keep Third World countries to the kind of development that suits the rich.

CONVENTIONAL DEVELOPMENT IS ONLY CAPITALIST DEVELOPMENT

Economists proceed as if they are discussing development in general, but they are only discussing one very restricted form of development among many others, i.e., one that involves:-

Š      A few people being allowed to own all the capital and allowed to invest it in developing what ever will make most profit for themselves (...as distinct from society as a whole deciding what capital will be used to develop.)

Š      The assumption that it is most important to increase business turnover and sales as much as possible all the time.

Š      Maximum freedom for corporations to invest in whatever will be most profitable to themselves.

Š      A definition of efficiency in terms of maximising returns on investment, as distinct from meeting needs most effectively.

Š      Labour and the environment are regarded as mere commodities that can be bought or ignored in order to make maximum profit.

Š      The environmental and the social and human consequences of economic activity defined as externalities and therefore not very important to take into account.

Š      The assumption that economics is only about monetary values and therefore considerations of morality, justice, rights, social benefit and the environment are secondary or irrelevant.

Š      The assumption that in order to get anything you must buy it from the global economy, using income earned in the global economy.

Š      All people and countries competing for sales, exports and investments in a global economy where many cannot succeed at this.

But these are only the defining characteristics of a capitalist economy, not of economics in general. There are many economies that do not function according to these principles and assumptions (e.g., aboriginal economies, or ancient Egyptian or contemporary Amish economies or a household economy) and conventional economists cannot deal with these. Conventional economists give the impression that development can not be thought about in any other way, or that any other kind of economy is primitive or not a proper economy.

The principles of Appropriate Development flatly contradict these princiles of capitalist development.  Appropriate Development enables people to put local resources into producing what they need, and this can be done with little opr no capital. (See below.)

THE UNJUST GLOBAL ECONOMY ENABLES RICH WORLD LIVING STANDARDS

The living standards we enjoy in rich countries such as Australia benefit greatly from the way the global economy works. The global market system and the freedom of trade the corporations enjoy deliver most of the world's resources to us and draw the Third World's productive capacity into producing for our benefit. What would our tea and coffee cost if those who produced them were paid a decent wage, or if much of the land growing coffee was put into growing food for them?

The basic mechanism is simply the fact that the economy operates on market principles.  In this kind of economy resources and goods go to those who can pay most for them – that’s why the rich get most of them.  They are not distributed according to needs or rights.

To be more precise, there are three main groups who benefit from the way the global economy works. The transnational corporations and banks are by far the biggest beneficiaries. The second group includes the small richer classes in the Third World who own some of the factories and plantations or have highly paid jobs. It is in their interests to support the unjust economy and to cooperate with the transnational corporations and the rich countries to keep conventional economic and development policies in place. The Third group of beneficiaries includes the ordinary people who live in rich countries because they get far more than a fair share of world resources and they can go to the supermarket and buy many things produced cheaply from Third World resources.

In other words we have an empire and we could not have such high living standards” without it. If you doubt this, think how well you would live if you got only your fair share of the world's oil production, or copper or fish, and what would your coffee cost if most of the land producing it now was devoted to food instead?

...the high standard of living in the West is owing partly to the extraction of a surplus in the form of cheap labour in the less developed countries.

            W. Murdoch, The Poverty of Nations, 1980, p. 25.

YOUR EMPIRE CANNOT BE KEPT IN PLACE WITHOUT REPRESSION.

The injustice and exploitation is mainly due to the normal working of the global economy. Market forces automatically enrich the rich and deprive the poor. However people do not like being deprived, hungry and exploited. From time to time they tend to protest! In many countries people can only be kept working in the mines, plantations and sweatshops for starvation wages through violent repression.

Often a great deal of repression and violence are required to keep the majority of the Third World’s people to the systems that benefit others.  The brutality is inflicted willingly by the local ruling classes who benefit most from the situation, but often rich countries give arms, training and other assistance that is used to put down dissent, and often they invade to install or get rid of rulers.

The history of international relations has always been mostly about struggles between nations to dominate – to get their hands on the wealth of others, by stealth or force, to make others accept conditions that suit the strongest. Over the last 500 years the Spanish, Dutch, British and Americans have run the world to benefit themselves, at immense cost to peasants and native people. Many wars arose from the efforts of the French and the Germans to dominate.
The British empire included about 70% of the planet and took over 70 wars to establish. In the last 50 years the Americans have invaded 60 countries and killed about 17 million people.
The point of all this is of course to make sure the resources of other countries are used by us, not them.

American corporations are the main beneficiaries of the present empire, but you would get far less oil and cheap goods if the US was not maintaining your empire.
(For detailed notes on the vast literature documenting these themes see Note…)

The present treatment of the Third World by the rich countries should be seen in the light of history. For 500 years since Columbus Western countries have slaughtered and plundered and conquered empires, killing and enslaving millions.  Whole nations, not just their ruling classes, contribute to the economic or military conquest of weaker nations, and take pride in their empires. The average Briton would surely have agreed that you should not harm others or steal from them, while at the very same time seeing no contradiction in fierce pride in the glorious British Empire –the result of brutal slaughter and conquest and exploitation of hundreds of millions of people, leaving many serious problems which are still causing immense cost in lives and resources (such as the Palestine – Israel conflict.)

The mentality is still there; the mindless ease with which corporations and governments automatically seek to beat others to resources, wealth and markets, and the unquestioning acquiescence of rich world people who are happy to purchase the tea and coffee and rubber without any thought about where they are coming from.

Repression and our empire.

Since June 1980 38,000 civilians in El Salvador have died, mostly at the hands of right-wing death squads... The regime which presides over these ...measures would long since have collapsed were it not for the support of the United States.

             New Internationalist, Feb., 1983, p.30.

Trosan and Yates list 23 countries with poor human rights records. All have been recipients of US military aid. Without US help they would be hard pressed to contain the fury of their oppressed citizens, and US businesses would find it difficult to flourish.

             E. Trosan and M. Yates, Brainwashing under freedom , Monthly Review,

Jan, 1980, p.44.

To maintain its levels of production and consumption... the US must be assured of getting increasing amounts of the resources of poor countries... This, in turn, requires strong American support of unpopular and dictatorial regimes which maintain political and police oppression while serving American interests to the detriment of their own poor majorities. If on the other hand, Third World people controlled their political economies, the export prices of their primary products would be significantly increased.

            W. Moyer, De-developing the United States , Alternatives, Freedom From Hunger Campaign, 1973.

THE LIMITS TO GROWTH PERSPECTIVE;
OVERLOOKED IMPLICATIONS FOR DEVELOPMENT

It is remarkable that the development literature has given so little attention to the limits to growth analysis of our global predicament. If this analysis is at all valid it will be totally impossible for all people to rise to the material living standards” presently enjoyed by the 1/5 who live in rich countries, let alone those we aspire to. These are therefore the over-developed countries while the rest are the never-to-be-developed countries. (For detailed analysis see The Limits To Growth Analysis on this Web page.)

This limits to growth” perspective requires the total rejection of any view of development which assumes growth and trickle down, or which takes Western affluent living standards as the goal of development. There is no chance that the world's resources and ecosystems will allow this approach to bake a sufficiently big cake for trickle down effects to solve the problems of the poor majority, let alone allow all to develop to rich world living standards.

... the Third World cannot conceivably attain the sort of affluence that we know  today in the affluent world.

                 E. Goldsmith and N. Hildyard, Battle for the Earth , 1988, p.133.

Sensible development theory and practice must therefore be based on acceptance of the view Gandhi expressed long ago, THE RICH MUST LIVE MORE SIMPLY SO THAT THE POOR MAY SIMPLY LIVE.

THE ALTERNATIVE: APPROPRIATE DEVELOPMENT

Following are the basic principles of Appropriate Development. These flatly contradict conventional development theory.

1. Enable people to immediately begin applying the existing resources and productive capacity to producing the things that are most needed to give all people the highest possible quality of life at the least cost in labour, resources and environmental impact. Most if not all Third World regions have all the resources they need to build the basic and simple structures and systems which would provide a high quality of life to all in a few years at most, via relatively simple technologies, lifestyles and systems.

The concern should be to ensure that all people have basic but adequate shelter, food, basic health services, extensive and supportive community, security, leisure-rich environments, peace of mind, a relaxed pace, worthwhile work, a sustainable environment, and access to a rich cultural life. Achieving these goals is possible with little or no foreign investment, trade, heavy industrialisation, aid, external expert advice or sophisticated technology and with little or no capital. Little more is required than the cooperative organization of the land, labour and traditional building and gardening skills the people usually have. Appropriate development does not depend on material affluence or economic growth or on access to large amounts of capital.

In other words Appropriate development totally rejects any notion of trickle down development. If the available labour and resources are applied fully and immediately to producing what people need the benefit to them will be huge in comparison with what they could ever hope to receive via any trickle down mechanism.

2. Priority must be put on cooperation, participation and collective effort. Organise and contribute to town meetings, working bees, cooperatives and town banks. Enable villagers to largely govern themselves and take control of their own development mostly through cooperative and participatory procedures.

Thus, reject the absurd conventional economic assumption that the best for all results if individuals compete against each other pursuing their self-interest in free markets. In a satisfactory economy there could be much freedom for individuals, many small private firms, and a place for market forces (under careful social control), but you cannot expect to have a satisfactory society unless the top priority is what is best for all, unless the main institutions and procedures are basically cooperative and collective, and unless there is considerable regulation of the economy for the public good. Thus it is very important to develop shared facilities, village commons, working bees, community workshops, committees, cooperatives, and to encourage giving and sharing, helping, civic responsibility and social cohesion.

3. Very simple material living standards must be accepted. Affluence and rich world living standards must be rejected as impossible for all to have. All the world's people cannot live affluently. This does not mean there must be deprivation or lack of necessities or inconvenience. The goal of development cannot be to rise to rich world affluent living standards. The goal must be material sufficiency on the lowest viable levels of per capita resource consumption for convenience and a good quality o life.

4. Local economic self-sufficiency is the key to appropriate development. Most of the goods and services used by people must be produced in and very close to the towns and suburbs they live in, by local people using local resources in local firms. Therefore mostly develop small, simple industries serving villages close by, exporting only small quantities of surpluses.

5. Capital and sophisticated technology are not very important for appropriate development. It is a serious mistake to assume that development cannot take place without large volumes of capital or without modern technology. A well developed village or region can be achieved with little more than traditional hand tool technology which can build highly satisfactory houses and dams and can plant thriving gardens. People can get together in voluntary working bees to build the dwellings, firms, clinics, stores, premises, gardens, small dams, workshops and leisure facilities their community needs, using local materials such as earth and timber. Of course a relatively few important modern items such as radios and medicines must be obtained through trade. Very little heavy industry is needed. States should aim to distribute mostly light industry across the rural landscape. The production or importation of many items should be banned or severely limited, e.g., cars, aircraft, fashionable clothing, soft drinks, expensive luxury goods.

6. Social and ecological goals must take priority over economic goals. Do not allow development to be determined by what is most profitable, what capitalists want to do, what market forces decree or what would maximise the GNP. Base development decisions on morality, justice, rights, tradition and what is best for community, the environment, social cohesion and people in general.

7. The most important elements in appropriate development are organisational and social. These include working bees, rosters, committees, participatory government, town banks, community development cooperatives and especially the climate of solidarity, good will, energy and cooperation that will ensure that people come together eagerly to build and to run their local systems.

8. Preserve and restore cultural traditions. Do not assume that you must modernise and therefore adopt Western consumer culture.

9. No attention whatsoever should be paid to the GDP. Whether it increases or falls is irrelevant. What matters is whether the quality of life, economic security, social cohesion and ecological sustainability are improving. In fact to adopt appropriate development strategies will in general be to reduce the GNP. In a well-developed Thailand there would be far less work, production, consumption and GDP than there is now! Develop a wide range of measures of important factors such as the quality of life, social cohesion, social problems, and especially ecological sustainability.

10. Minimise economic connections with the rich countries and the global economy. Borrow very little if anything. (There will be relatively little need for capital and conventional heavy infrastructure development; e.g., ports and freeways.) Export only a few surpluses in order to be able to import only a few important items. Allow foreign investors into your nation only if they will produce necessities on your terms.

11. Be quite clear that appropriate development is not a path to rich world living standards or prosperity , a consumer society, glamorous cities, high incomes or great national wealth, power and prestige. The outcome will not be expensive possessions, palatial houses full of gadgets, or jet-away holidays. Most things will be produced much less efficiently than the transnational corporations can produce them. Living standards and GDP per capita will be far lower than they are in the rich countries. But these things are not important for a high quality of life or an admirable society. The aim will be to guarantee simple but satisfactory living standards to all, and to preserve culture, traditions and ecosystems. In other words the conventional conception of the goal of development must be abandoned.

CONCLUSION

The principles of Appropriate Development for the Third World contradict conventional development theory and practice. Appropriate development could be easily and quickly achieved. However the Third World problem cannot be solved while we have an economy driven by market forces, growth and the profit motive or until the rich countries stop consuming far more than their fair share of world resources. In other words satisfactory Third World development will not be possible until there is transition to The Simpler Way in which in the richest countries begin to live simpler lifestyles in highly self-sufficient and cooperative local economies. ( See on this website, The Alternative, Sustainable Society.)