The problem is not that poor countries cannot manage to drag themselves up the development ladder, the problem is that they are actively prevented from doing so. Beginning in the early 1980s, Western governments and financial institutions like the World Bank and IMF changed their development policy from one that was basically Keynesian to one that remains devotedly neoliberal, requiring radical market deregulation, fiscal austerity, and privatization in developing countries as a condition of receiving aid.
We were told that this neoliberal shock therapy – known as structural adjustment – would help stimulate the economies of poor countries. But exactly the opposite happened. Instead of helping poor countries develop, structural adjustment basically destroyed them. Cambridge economist Ha-Joon Chang has demonstrated that while developing countries enjoyed per capita income growth of more than 3% prior to the 1980s, structural adjustment cut it in half, down to 1.7%. When it was foisted on Sub-Saharan Africa, per capita income began to decline at a rate of 0.7% per year, and average GNP shrank by around 10%. As a result, the number of Africans living in basic poverty nearly doubled. It would be hard to overstate the degree of human suffering that these figures represent.
Robert Pollin, an economist at the University of Massachusetts, estimates that developing countries have lost roughly $480 billion in potential GDP as a result of structural adjustment. Yet Western corporations have benefitted tremendously. It has forced open vast new consumer markets; it has made it easier to access cheap labor and raw materials; it has opened up avenues for capital flight and tax avoidance; it has created a lucrative market in foreign debt; and it has facilitated a massive transfer of public resources into private hands (the World Bank alone has privatized more than $2 trillion worth of assets in developing countries).
Poverty in the Global South is not just a static given; it is being actively created. And the striking thing is that these atrocities are being perpetrated under the cover of aid. In other words, not only does aid serve as a powerful rhetorical device that cloaks takers in the guise of givers, it also operates as a powerful tool in the global wealth extraction system.
How can that be the case when the private sector, by all indications, appears to be dominant in the economy, when the state is opening up state enterprises to increasing private investment, etc.? I also don’t think it’s characteristic of a socialist society to ban strikes and mobilize the labour of hundreds of millions of rural-to-urban migrants for working in factories and sweatshops designed to build useless consumer items for the American market.
Every indicator I’ve been able to find in China shows that there has been increasing polarization of wealth, exploitation and overwork for workers, and the use of vast infrastructure projects to absorb surplus global capital. I don’t understand how this argument can be made, and I would like to see a plausible account.
(On the other hand, I reject utterly the idea that Chinese economic growth has depended predominantly on the initiative of private entrepreneurs, since the state continues to oversee the economy in a far more powerful way than the Americans can. I mean, Chinese bankers have to listen to the state, unlike American ones.)
- person: get your license
- me: The Road Is A Terrifying Place And I Am Very Afraid To Drive
Yesterday one of my professors referenced “double rainbow,” the second time he’s referenced a bad and outdated meme.