The poison of development aid (1986)

From the Summer 1986 issue of the World Socialist

The following article has been translated from the Internationales Freies Wort, journal of the Bund Demokratischer Sozialisten, the section of the World Socialist Movement in Austria.

The poison gas catastrophe in Bhopal in India with its large number of dead plus many more blinded and injured shook world opinion. The American multinational chemical corporation Union Carbide, to whom the Indian poison laboratory belonged, was quick to point out in the media that its production of protection for plants (pesticides) aided India towards self-sufficiency in food and thereby saved many people from dying of hunger. So, after deducting the thousands who were poisoned Union Carbide still comes out as positive!

But the truth is that India doesn't need any poisonous material for pesticides. The poverty-stricken small farmers lack the most basic implements such as spades and hoes as well as pumps for irrigation, etc. But there's no business in this for big industry in the Western countries. So the underdeveloped countries get pushed the products which the industrialised countries want to sell, all in the name of development aid. In other words, "we are helping ourselves, not the underdeveloped countries" as no less than President Nixon openly declared when development aid was under attack in America.

So the Indians, happy with their unordered poison which of course the poverty-stricken small farmers could not buy, were forced to migrate to the towns as they couldn't make a living from agriculture, where they settled in front of the gates of the chemical factory and died "like flies" when the poison gas leak came.

World opinion, prevented from a correct insight into the problems of the underdeveloped countries by all the manoeuvres that go on over loans and exchange rates, was taken unawares by this catastrophe. But not anyone who had taken the trouble to inform themselves of the facts. Some years ago the American writer Susan George published her How The Other Half Dies in which she attacked established myths and exposed the businesses of the industrialised countries as responsible for the poverty of the underdeveloped countries.

Such statements are not approved of by the establishment of the industrialised countries — but the latter's failings make their investigation of the problem worthless. This is also the case with the "Independent Commission for Development Questions", a committee under the chairmanship of Willy Brandt (SPD), the majority of whose members are "representatives" of the underdeveloped countries themselves but they are all from the capital-benefiting elite-strata of these countries. The consequence is that the first report (1980) carefully avoids everything that could go against the capital interests of the industrialised countries and so ignores all the real problems and can show no way towards solving them.

The second report (1983) is just the same. In the foreword Brandt points out that events have regrettably confirmed the worst apprehensions of the first report. In which case the Brandt Commission was useless. Of the 94 proposals in the first report not one had been implemented. Of course something else will happen — more recommendations and more pious wishes.

Development to what?

In reality everything resolves around the preservation of the existing economic institutions of the industrialised countries. The assumption is that the underdeveloped countries should be lifted to the splendid heights of the developed countries. But people in the developing countries are less and less enchanted with this. It has been noticed that all the aid has not reduced the gap between living standards in the South and those in the North — on the contrary the backward countries have fallen even further behind. It has also been noticed that the industrialised countries are not a paradise for all their inhabitants. The introduction of industry into the underdeveloped countries has led to more disadvantages than advantages — the uprooting of traditional ways of living and working, the cut-back in home production in favour of the products of the multinational corporations, the growing impoverishment through the ever-increasing dispossession of those who are insolvent, ending in the disasters like Bhopal.

If the practice of industrial development is so unsatisfactory this is above all because its theory, the basic concept of raising the underdeveloped countries to the level of the developed countries, is nonsense from the beginning. When the whole world is "developed" and busies itself with profitable stock exchange transactions where would the raw materials and foodstuffs at present imported from the underdeveloped countries come from?

But this leads to the view that real aid for the underdeveloped countries demands fundamental changes in the developed countries — and that the establishment does not want to hear. It wants to push forward normal business to an ever greater extent, to exploit the population of the underdeveloped countries as underpaid producers of raw materials and, beyond this, also to make them low-wage industrial workers and customers for the products of the multinationals. In this effort large factories have been set up in the underdeveloped countries, to the detriment of existing industries in the developed countries. Their financing has mainly come from credit.

International debts

High finance, which likes to go on about being thrifty, once again didn't follow its own advice. The big banks queued up to lend credits to the underdeveloped countries. Now they are faced with the international debt problem, the consequences of which are borne by the underdeveloped countries. Over-burdened with debts these have growing interest payments and an increasing dollar exchange rate to worry about too. The much-ballyhooed recovery of the American economy which Reagan boasts about has taken place mainly to the detriment of other countries. Tax reductions for the rich and unlimited increasing arms spending has led to an enormous deficit in the American budget with no noticeable inflation — at home. The inflation was in fact exported through the increased interest rates which attracted international capital to the US and made it a debtor country, but pushed up the exchange rate of the dollar.

The underdeveloped countries are now faced with a mountain of debts expressed in expensive dollars, borrowed at ever-increasing rates of interest. On top of this the International Monetary Fund (IMF), which the second Brandt report still hoped would increase its support for these countries, forced devaluations on the debtors, further increasing the burden of their dollar debt. In 1985 the interest payments alone were 50 per cent of the borrowed amount for Argentina and Brazil and 40 per cent in the case of Mexico. These are the so-called "threshold countries" who stand on the threshold of industrialisation and so should be "somewhat better" than the ordinary underdeveloped countries!

The Debtors

Brazil was the first country to break the hundred billion dollar debt level. In Sao Paulo 34 per cent of those available for work are unemployed. They don't known that they each owe 14,000 Schillings (about $750) to the international bankers, and, even if they did know, it wouldn't worry them. The debts were contracted under the military regime to use on numerous large projects which were in part profitable, but which in many cases became unprofitable through mismanagement and the downturn in the economy. Home-produced cars fill the streets, but have no petrol and run on alcohol which is produced from raw sugar. The cultivation of this together with that of soya beans for export means that the cultivation of foodstuffs has fallen by 12 per cent, and this in a country of chronic undernourishment! The really pressing problem of increasing the production of home-grown foodstuffs has been forgotten in the industrialisation-illusion.

The Pinochet regime in Chile, supported by international finance capital, came to power through the murder of the democratically-elected President Allende and has since practised a murderous reign of terror. But this has not meant that there have been no business swindles under it. The five big banks which Pinochet had privatised could only be saved from bankruptcy by being renationalised. And a number of bankers and two Ministers have been found guilty of fraud by the Courts.

In this respect there is no essential change if a military government is replaced by a civilian one, as has happened in Argentina and now also in Brazil, so long as the civilian government continues to obey international capital and its bailiff, the IMF. In the rest of South America and in Africa and Asia things are similar: foreign credit is mainly used for projects which ignore the needs of the population because these only very sporadically correspond to the valorisation requirements of capital.

The spectre

There is a saying that if you owe the bank $1000 you have problems but that if you owe the bank $1,000,000 the bank has problems. And the underdeveloped countries have debts of billions of dollars! Hence the spectre of a debtor's cartel: if all the developing countries were to stop their payments at the same time then all the big banks in the industrialised countries would go bankrupt and there would be an economic earthquake. At present it hasn't happened as the governments in these backward countries are in the hands of wealthy capital-benefiting minorities and have openly gone into the (well paid) service of the foreign exploiters. But in the last analysis they have to understand that an explosion threatens them if they exact further sacrifices from the population.

The creditors can no longer seriously hope to ever recover their capital. It is now only a case for the creditor-banks of not having to cancel the uncollected debts and thereby admit their faulty credit position. The debtors are given a delay for repayment and are lent yet more money so that they can pay the interest. In theory the debtors receive the new money but they never see it; it remains in New York, London, etc in the hands of the banks who are thus enabled to achieve considerable profits.

The truth is that these countries can only settle these new debts inadequately. Among the many proposed solutions there is the tried solution which always emerges when the capitalists are in difficulty: let the much-suffering state pay! This would save the banks, before or after, from their bankruptcy - naturally at the expense of the majority of the population of the industrialised countries who thereby see established a forced solidarity with the inhabitants of the underdeveloped countries.

We can't help thanking them. Financial pressures have produced more than enough harm — they have poisoned not only the thousands in Bhopal but the whole economy of the underdeveloped countries. And the economy of the industrialised countries is in no better state: they suffer from stagnation and unemployment and so have unused resources that could be used to produce the things the underdeveloped countries really need.

But this is opposed to the basic principles of the profit economy: only what yields or at least promises a profit is produced. Here is the real problem and any attempt to find a solution must start from here. The removal of the profit system is the watchword. That the Brandt Commission and the other aid schemes are chained to the profit system is the real reason for their failure.

"The Only War We Want" (1952)

From the August 1952 issue of the Socialist Standard

The editor of the Glasgow Forward (June 14th, 1952), in a front-page article with the above title stated that forty human beings are born every minute, condemned, if they reach adult life, to face, with two-thirds of their fellow men, “an existence oppressed by poverty, racked by disease and blinded by ignorance.”

" Yet,” continued Mr. Morgan Thomson. “ in a privileged corner of the earth’s surface like Britain, we find socialists worried over the question, ’Where do we go from here? ’ We have removed in our own small community the most glaring inequalities between man and man, and we feel sometimes that we have removed the very conditions which gave Socialism its drive. What next?  

’’Surely the answer is to make the British people aware that the next round in the battle against poverty has to be fought internationally, that there are privileged and under-privileged nations, and that the socialist principles which have made a more just society in Britain should now be applied to wipe out the inequalities between the white and the coloured races of the world.” 

Other members of the Labour Party don't agree with Mr. Thomson about conditions in Britain. Mr. S. Silverman, M.P. for Nelson and Colne, said, at the Labour Party Conference of 1950, “ There are hundreds of thousands of workers whose wages make a bitter mockery of our claim that we are providing fair shares.” (Daily Herald, 4/10/50.) And Mr. J. Griffiths, Colonial Secretary in the last Labour Government, also said at the same conference, M the ownership of wealth has by no means been adequately shared out. Far too much of the nation's wealth is owned by too few people.” (Daily Herald, 4/10/50.)

Dr. Campion, in his book "Public and Private Property,” showed that in 1946-7 one per cent of the population owned fifty per cent, of the wealth. (The Economist, 24/2/51.)

In another of the “privileged nations,” the United States, a Senate sub-committee set up to investigate the problems of lower income families found that about 10 million families had incomes insufficient to provide an adequate diet (Glasgow Forward, 6/10/51.)

Some members of the Labour Party even claim that the extreme poverty in individually backward countries may be the cause of war. In fact, the Labour Party entitled the chapter dealing with their plans for the development of these areas in “Facts and Figures for Socialists, 1951,” "Peace through Plenty.” It seems to be forgotten that the major wars of the past were fought between the industrially advanced countries7

The Labour Party, in their policy for the development of backward areas, the “World Plan for Mutual Aid,” express the interests of the British capitalist class. British capitalists depend on the Commonwealth and the colonies for markets for their goods and as sources for raw materials, therefore, must strive for friendly relations with these and other rising capitalist countries where the vital sea and air links which connect Britain with her markets are situated.

But the good will of some sections of the British capitalist class doesn't stretch to investing their money in these countries. They fear that elements in the native community, imbued with nationalist ideas, may gain power, and confiscate their investments, without giving them adequate compensation.

And the Labour Party, by comparing working-class conditions in the advanced capitalist countries With conditions in the more backward, draws attention away from the position of the workers in the "privileged nations,” what they receive in relation to what they produce, the way they live and the way they could live if their present productive capacity was used to the full.

These plans, consisting of loans and technical aid to backward areas, which the Labour Party want coordinated into a world plan for mutual aid, just mean developing Capitalism in those countries, reproducing the conditions which exist in the more advanced capitalist countries. No doubt the development of Capitalism in these under-developed areas will get rid of quite a lot of the disease, and much of the ignorance. Modern Capitalism requires a working class reasonably healthy and with some education.

Owing to the traditional standard of living in the backward countries working class requirements are very low. Again the British Labour movement gives support to working-class organisations in these countries that are struggling to improve conditions not because it is in the interest of the working class to do so, but claim that in these countries the capitalist class can compete successfully with the British capitalist class because of the low wages of these native workers.

Investing money in the form of loans to these less developed countries, means using it to employ workers at a wage sufficient to buy what it takes to keep them, and at most this would mean a wage and social services just enough to provide the necessary education and state of health called for by modern capitalist production. What the workers produce over and above what they receive enables the investors to live in the greatest comfort and also to carry on the productive process which keeps them in their privileged position based upon the exploitation of the working class.

There are no privileged nations and unprivileged nations as far as the working class are concerned just a privileged class, the capitalist class, who own the means of living, and an exploited class, the working class, which can only gain access to the means of living by selling their capacity to work. The Labour Party’s "World Plan for Mutual Aid" would not alter this basic condition but would perpetuate it.

The task facing the socialist is, nationally, to build up an organisation with the object of abolishing capitalism, and establishing socialism, and, internationally, to spread socialist knowledge to the workers in the more backward countries which would induce them not to waste their energies supporting rising nationalist movements, miscalled “Socialist" or “Communist,” but would compel them to expend these energies setting up a Socialist Party which could collaborate with its companion parties throughout the world in bringing to an end the system which gives rise to their problems.

Jim Thorburn

Material World: Africa: from bread-lines to bread-basket? (2022)

The Material World Column from the June 2022 issue of the Socialist Standard

North Africa was called the granary of the world during the time of the Roman Empire and it may surprise many that the richest person in recorded history was allegedly not a Rothschild, Rockefeller or even Elon Musk but an African ruler from the 14th Century, Mansa Musa, who possessed wealth of around $400 billion in today’s terms.

The media’s coverage of Africa tends to be a rather negative one of human suffering, accompanied by pessimistic predictions for the continent’s future. Africa’s great potential is ignored and its promising possibilities neglected, leading to a public impression in the developed world that Africa survives only through the humanitarian compassion of outsiders offering foreign aid and philanthropic charity. There needs to be a seismic shift in people’s perception of what Africa can achieve.

The March 2020 Material World described how the Guinea Savannah, a region of arable agricultural land, is not fully utilised but could enable Africa not only to feed its rapidly growing population but, in addition, produce a surplus to supply the rest of the world with food.

Contrary to commonly held belief, new research has determined that the Sub-Sahara is not as lacking in water sources as once was thought. There exists sufficient groundwater located in underground aquifers, much of it untapped, to irrigate and transform agriculture in the region, providing people with sufficient safe water, as long as it was sustainably managed and not unnecessarily polluted.

According to recent research by more than 200 experts sub-Saharan Africa could increase crop production by more than 500 percent in some countries in the region. Malawi’s agricultural production could grow by more than 700 percent while Tanzania has the potential for a 17-fold rise in crop production and is able to double its livestock. Zambia, too, can double its livestock numbers and increase crop production by 564 percent.

Tim Wainwright, the chief executive of WaterAid UK, said:

‘Our findings debunk the myth that Africa is running out of water. But the tragedy is that millions of people on the continent still do not have enough clean water to drink. There are vast reserves of water right under people’s feet, many of which are replenished every year by rainfall and other surface water…’

The study found that every sub-Saharan African country could supply 130 litres a day of drinking water per capita from groundwater without using more than a quarter of what can be renewed, and most using only about ten percent.

The recent UN annual World Water Development Report found that only 3 percent of farmland in sub-Saharan Africa was equipped for irrigation, and only 5 percent of that area used groundwater, even though groundwater is often abundant in the region. It explains that while some groundwater is quickly replenished by rainfall there are aquifers that have been untapped for millennia now within reach of modern pumping methods and risk being drained. This ‘fossil water’ is not replaceable across human time scales.

To add further caution, the Oakland Institute think-tank has published a study warning that transnational corporations see a profitable opportunity:

‘When irrigation infrastructure is established, it benefits private firms for large-scale agriculture, often for export crops, instead of local farmers and communities. People living in arid and semi-arid lands are severely impacted by large-scale irrigation projects that reduce available pastures, and prevent flood recession agriculture, while fences and canals cut through traditional routes of people and livestock.’

Africa holds a rich abundance of minerals and metals, vital for the planet’s future. It holds 30 percent of the world’s mineral reserves, 40 percent of the world’s gold and up to 90 percent of its chromium and platinum. Cobalt is a key metal used to produce batteries. In 2019, 63 percent of the world’s cobalt production came from the ‘Democratic’ Republic of the Congo. Tantalum capacitors are found in mobile phones, laptops and electric vehicles. The DRC and Rwanda together mine half of the world’s tantalum.

Africa’s tragedy is capitalism. Robbed of their lands, deprived of all means of independent economic existence, and compelled to work for poverty wages, the conditions of our African brothers and sisters have been tragic.

Certainly, there is corruption by kleptocratic dictators but they cannot function without the complicity of the corporations and the acquiescence of finance institutions. In the capitalist international division of labour, it currently suits most of Wall St, the City of London and Shanghai stock exchanges to keep the continent undeveloped rather than encourage manufacturing. The world’s capitalists prefer to loot and pillage resources from Africa instead of creating a viable economy which would compete with their own.

Our fellow workers in Africa should embrace the socialist concept of the cooperative commonwealth. Africa needs to erase frontiers to create a wider integrated society, based upon the free collaboration of all peoples. Africa cannot resolve its crises by nationalism nor with fraudulent reforms. There needs to be a return to the earlier history of shared communal land that is presently passing out of their hands.

A truly liberated Africa will be built upon associations of mutual aid with all the peoples of the world.

ALJO

Africa and the reality of capitalism (1998)

From the January 1998 issue of the Socialist Standard

Africa, a continent with virtually all the resources it takes for development, is the worst hit by hunger, starvation, armed conflicts, instability, displacement and abject poverty. Politicians, jockeying for the little resources left by the capitalist class, display the politics of hide-and-seek, repression and oppression.

This is mainly because of the system that encourages capital accumulation and profit-seeking. The cumulative effect is flagrant corruption, deprivation, wastage and impoverishment which intensifies underdevelopment.

Worst of all, as Africa is helplessly dragged into the global free trade championed by the IMF and World Bank, Africa’s natural resources are further exposed for deep exploitation by international capitalism, which deteriorates the woes of the already impoverished African working class. This shows that the objective conditions of African socio-economic formations do not favour capitalism.

Capitalism and imperialism are perceived as the major cause of the current underdevelopment in Africa. Capitalist development has tended to reinforce the exploitative dependence that enables underdevelopment to persist. The fact remains that Africa will never witness any meaningful development under capital accumulation and market profit-seeking which breed dissension, division, greed, selfishness, tribalism, ethnic chauvinism and the like.

Recently, after the just concluded 22nd ECOWAS Summit in Abuja, Nigeria, one African president identified division and the exposure of the region’s economy (market) to the Western capitalist class as the major source militating against the development of the region. But this is the base of capitalism—market profit-seeking and exploitation. It is not enough to identify these problems but more so to resolve them by helping to abolish the system that creates them.

The African working class have the cards in their hands for socialism if only they want it. Indeed, African conditions have revealed capitalism in its harshness and brutality: inequalities are too glaring. In the face of extremities of want and a meagre surplus, it is difficult to sell the idea that those who are in positions to accumulate should take what they can and leave the rest to suffer what they must. Africa’s ruling class has run out of ideas for fashioning and inspiring a functional development strategy, limited as it is by the constraints of working with ideas compatible with the maintenance of the existing property relations.

The evils of capitalism are conspicuous in Africa and Africans have lost confidence in capitalism, exemplified by the renewed springing-up of working-class consciousness in South Africa, The Gambia, Namibia, Kenya, Nigeria, Ghana and others but are choked by the external forces of capitalism. Again, another problem of the state of the development of productive forces in Africa is that it turns even the best of intentions into caricature. The lack of the development of the productive forces appears to encourage political authoritarianism and reduces “Socialism” to the management and redistribution of poverty.

But underdevelopment will surely persist if the existing capitalist relations of production are maintained, and if the dependence of Africa on international capital continues. Therefore, the overturning of the existing relations of production is necessary for overcoming underdevelopment. Socialism is inevitable if development is desirable.

It is obvious that in the event of protracted futile developmental efforts, the politics of anxiety has become institutionalised and increasingly the ruling class is displaying signs of paranoia while the subordinate classes have become frustrated, demoralised and available for induction into extremist movements as in Algeria, Senegal, Burundi, Rwanda and the like. The ruling class is fast psychologising failures which lie in the economic sphere.

The fact is that Africa has less hope of development if the property relations of production and distribution and the market system continue. The reverse is the solution—socialism abolishing capital accumulation and market profit-seeking and embracing production for need. The time is now to co-operate with fellow workers all over the world to establish global socialism.

JohnBull Nwarie

Development to what? (2021)

From the January 2021 issue of the Socialist Standard

We resume our refutation of the view that workers in the advanced capitalist countries share in the exploitation of the people in the so-called ‘Third World’ by examining contemporary theories of this.

In the early post-war years large swathes of the world’s poor countries were decolonised. Seeking to complement their new-found political independence with a semblance of autonomous economic development, they soon found this was not so easily achieved.

The concept of ‘development’ has roots in nineteenth century thinking on the supposed civilising mission of the imperialist powers succinctly captured by Kipling’s patronising phrase: ‘white man’s burden’. Cynically, imperialism was justified as a means of uplifting native peoples everywhere — economically, spiritually and culturally — though, in reality, its impact was often the opposite.

The modern understanding of ‘development’ as a coordinated macro-economic strategy was first clearly associated with a ‘structuralist’ school of thought that emerged in Latin America in the 1930s centred on the Economic Commission for Latin America (ECLA). The structuralists argued against the Ricardian concept of ‘comparative advantage’ promoted by liberals who extolled the virtues of free trade and urged countries like Argentina to specialise in the export of agricultural products, capitalising on that country’s natural advantages.

The structuralists countered that there was a long term tendency for the price of agricultural products, to fall against imported manufactures because of the latter’s greater ‘elasticity of demand’. Meaning Argentina would be shortchanged in the long run due to a declining terms of trade if it focused only on producing beef and wheat for the European market. Therefore it made sense to adopt protective policies of ‘import substitution’ to stimulate the growth of local manufacturing.

Development economics

After the Second World War, however, such economic nationalist thinking found itself increasingly swimming against the tide. While import substitution continued to be implemented in many developing countries, by the late 1970s it was largely abandoned. Ironically, it was instrumental in encouraging transnational corporations (TNCs) to set up — in Trojan-horse fashion – production facilities within the countries concerned precisely as a way of getting round import controls — leaving such countries still essentially at the mercy of external economic players in the guise of these corporations.

Moreover, commencing with the General Agreement on Tariffs and Trade (1948) there was an increasingly concerted, international push to bring about a ‘substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis’. The belief was that free trade would not only mitigate the prospect of war but also promote economic growth. This tendency culminated in the emergence of neo-liberalism (rubber-stamped by the so called ‘Washington Consensus’ which replaced the post-war Bretton Woods framework) in the wake of the collapse of Keynesianism in the recession-hit 1970s.

Dependency Theory

In the early post-war years, ‘development economics’ had fallen under the spell of the ‘modernisation paradigm’. A leading protagonist, Walt Rostow, argued that development was a process driven by capital investment and that the developing countries, being short of capital, needed to open themselves up to investment from abroad. The Modernists were Keynesian interventionists and, unlike the liberals, accepted the need for developing countries to industrialise and diversify their economies. For them, ‘development’ basically meant passing through a linear sequence of economic stages, mirroring the economic history of the already developed countries (The Stages of Economic Growth: A Non-Communist Manifesto, 1960)

In the 1960s and 70s, however, the modernisation paradigm was increasingly challenged. What had appeared so seductively simple at the outset no longer seemed to fit the facts. In those early post-war years, growth among the developing countries had been comparatively vigorous — though, for the vast majority of citizens, the benefits failed to ‘trickle down’. Then, in the seventies, the oil crisis came along — and the mushrooming problem of Third World debt as many countries desperately resorted to IMF (and other) loans to plug the gap between export earnings and the rising costs of imports. With the onset of global recession, growth began to falter. In Africa alone at least 15 countries saw their economies shrink in real terms. The situation deteriorated further in the 1980s, dubbed the ‘Lost Decade’.

In this period a new development paradigm emerged — Dependency Theory. This built upon earlier structuralist thinking but also marked a new departure. As Dudley Seers notes: ‘The realization that import substitution created new, and possibly more dangerous forms of dependence converted the ECLA structuralists into dependency theorists’ Dependency Theory: A Critical Reassessment,  1981).

According to the ‘Dependistas’, drawing on Lenin’s ‘law of uneven development’, the problems faced by poor countries was not the result of their incomplete integration into the global capitalist economy as modernisation theory suggested. They were already fully integrated into this economy and those problems sprang, instead, from the form of integration to which they were subjected. They were not ‘undeveloped’ but systematically ‘underdeveloped’. This manifested itself in a net outflow of capital from them via such mechanisms as ‘unequal exchange’ — proof that it was not for any lack of capital that their development was impeded.

The ‘world trading system’ was conceptualised as a hierarchical order in which the dominant core countries were able to impose their own needs on the dominated countries. Such needs dictated that the latter should remain suppliers of low-value raw materials for processing into high value finished goods within the industrialised core countries themselves, rather than rival producers of such goods, given the latter’s complete dominance over global value chains. In short, industrial development and economic diversification was effectively blocked in the capitalist periphery.

Thus, the linear ‘stages of growth’ model of modernisation was misconceived. It overlooked that the predicament developing countries found themselves was quite unlike the pristine state of affairs already developed countries encountered when they first began to develop since, back then, there were no already-developed economies around to obstruct and distort the development process.

For developing countries, trade liberalisation (which tended to be heavily biased in favour of developed countries) was not the only problem. There was also the growing dominance of the TNCs that not only controlled the great bulk of global trade but, as stated, were becoming increasingly active as producers inside these countries. Their immense economic clout and footloose nature in a world where capital could freely relocate to wherever costs where lowest, gave them considerable leverage in their dealings with poor countries. Finally, there was the ability of lending agencies like the IMF to impose ‘structural adjustment’ programmes on these countries — like privatisation and phasing out food subsidies — as a condition for receiving the loans they increasingly depended upon.

For some ‘Dependistas’ the solution lay in ‘delinking’ from the global economy and pursing a policy of national self-reliance. But in a world in which the global division of labour was becoming ever more diversified and complex, this was not really feasible.

Moreover, though it became fashionable for a while, Dependency theory seemed increasingly out of touch with changing realities. In particular, its core claim that industrial development of the poor countries would be ‘blocked’ was decisively refuted by the emergence of the ‘newly industrialising countries’ — particularly, the Asian Tiger economies (like South Korea and Taiwan) and, above all, China which has since become a major imperialist power to rival the US, with business interests right across the globe.

Additionally, there has been a massive shift in manufacturing away from the advanced countries to the Global South which now accounts for 83 percent of the world’s manufacturing workforce. Indeed, amongst many large western-based corporations there has been a significant movement towards ‘offshoring’ production and outsourcing it to local contractors based in the Global South — meaning such corporations are no longer involved in producing commodities as such, solely in marketing and ‘branding’ them.

Guilt-ridden liberals

Around the time the Dependency paradigm was gaining adherents — the 1970s — an alternative worldview centred on the concept of a ‘New International Economic Order’ (NIEO) began to be promoted. The impetus came from the non-aligned movement of developing countries. The basic idea was to bring about a more equitable global economy.

Hardly any of the proposals embodied in this concept were taken up as neo-liberalism strengthened its hold on practical policy-making everywhere. However, in ideological terms, the concept gained traction by implanting far greater awareness of the substantial inequalities in economic circumstances and living standards between rich and poor countries.

Along with this has arisen the idea that ordinary people in the ‘rich countries’ enjoy a standard of living so much higher than ordinary people in ‘poor’ countries precisely because they live in one part of the world that profits handsomely from the exploitation of the other. They are said, in effect, to share in the fruits of such exploitation and it is this that affords them a lifestyle incomparably more affluent and comfortable than their counterparts in the exploited poor countries.

Sadly, this frankly pernicious and tendentious idea is one that seems to seep into popular discourse with all the ease of a toxin into a watercourse. It is the meat and drink of hand-wringing liberals everywhere who fret guiltily about how appalling it is that ‘we in the West’ should enjoy the comforts of life produced by the sweatshop labour of the Global South.

Consider this comment by Jonathan Glennie and Nora Hassanaien in the Guardian newspaper, that most formidable bastion of liberal thinking, on the subject of ‘Dependency Theory’:

‘As with most Marxist-inspired tirades, it is not a complete analysis of Latin America’s history — it probably exaggerates the villainy of capital and heroism of peasants. But it presents a perspective on the truth that any serious development worker or academic should have intellectual access to. This is as relevant today as ever. It is critical that voters in the rich world learn that their wealth is related to a historic exploitation of other parts of the world, especially when they are eventually asked to readjust their living habits and conditions in order to better accommodate the just requirements of poorer countries’

(1 March, 2012).

At a time when many ‘voters in the rich world’ are finding it harder and harder to make ends meet, when governments are slashing social welfare programmes with the grim determination of a state-sponsored executioner with a quota of severed heads to fulfil, when more and more people seem to have been reduced to ignominious penury of food banks, charitable handouts and even a life on the streets, it must be comforting to learn that they can always depend upon that ‘historic exploitation of other parts of the world’ to sustain and materially uplift them.

Unfortunately, being ‘asked to readjust their living habits and conditions’, by which one assumes is meant having to accept a downward adjustment in their real income is no guarantee whatsoever that the ‘just requirements of poorer countries’ will be suitably accommodated.

On the contrary, the only beneficiaries of this sacrifice will likely be those who substantially own the means of production and profit from the employment of others who constitute the overwhelming majority of those ‘voters in the rich world’ to whom Glennie and Hassanaien appeal. There is no getting round this most fundamental antagonism in our existing capitalist society which mediates and conditions everything else that we find so obnoxious and objectionable about it.

In fact, grotesque inequalities are to be found in both the rich world and the poor world alike. Spatial-cum-national inequalities in this respect pale by comparison with class inequalities, something our liberal handwringers seem constantly prone to overlooking. In this, they are joined by Maoist-style ‘Third Worldists’ who cynically exploit the idiom of Marxist rhetoric to justify their abandonment of a class-based analysis of capitalism in favour of a nationalistic-based ‘anti-imperialism’.

In the final two parts of this series we will consider the claims of these Third Worldists and subject them to empirical and theoretical scrutiny.

Robin Cox

Finance and Industry: Nationalisation and the Commercial Jungle (1968)

The Finance and Industry column from the March 1968 issue of the Socialist Standard

Nationalisation and the Commercial Jungle

The shortcomings of capitalism are widely felt but little understood. The Labour Party see some of these as being due to the unbridled competition resulting from private enterprise and supposed Tory policies. To them capitalism is competition, private enterprise and the Tories. Their answer is to restrain competition through government intervention in industry and through nationalisation. Add planning to this and you get their idea of Socialism. But if this is Socialism, then the Tories too could call themselves socialists.

The government’s proposed aluminium smelter scheme is an example of how little can nationalised industries be isolated from commercial wrangles. In the past it was cheaper to import aluminium, but now it is expected to be a paying proposition to do the refining and smelting in Britain. The proposed scheme set off a competitive scramble between the nationalised atomic energy, electricity and coal industries. Aluminium smelting ' requires large, uninterrupted supplies of electricity. New nuclear power stations were expected to provide the cheapest source of power. But Alcan proposes to use electricity generated in their own coal-fired power station. It was this that caused the storm amongst the nationalised industries. The Central Electricity Generating Board (CEGB) complained that Alcan would be getting coal cheaper than they themselves were. The recently nationalised steel industry made the same complaint and added the objection that manufacturers of a rival metal were being given an unfair advantage. Again the NCB has been complaining that the government’s fuel policy unfairly discriminated against coal and in favour of atomic power. On top of trying to sort out the rival claims of the aluminium companies and to settle the squabbles of the nationalised industries, the government has come under fire from abroad. Overseas producers, especially Britain’s EFTA partner Norway, do not like the idea of losing part of their market. The Norwegian government suspects that the EFTA treaty may be violated, claiming that aluminium cannot be produced profitably in Britain without subsidy.

This is the predicament of those, like Labour, who would tame capitalism whilst leaving its basis intact. Socialists do not care who gets the contract or what kind of fuel is used or whether EFTA agreements are violated. We know that capitalism is based on the monopoly of the means of wealth production by a minority. Buying and selling and the commercial jungle result from this. Our answer is to replace minority ownership by the common ownership of the means of production by society as a whole. Then there would be no basis for commerce or competition as there would really be a common social interest.


Rich and Poor

The second United Nations Conference on Trade and Development (UNCTAD) meeting in Delhi was faced with problems that would have defeated the mythical wisdom of Solomon. They will also defeat this international gathering of talented experts. Unctad’s aim is to find ways of bridging the gap that exists between the so-called developed and underdeveloped nations. Statistics are used showing the differences between America and India in per capita income, steel production, electricity output and so on. Giving the impression that India equals poverty and America affluence and so the conclusion that poverty in India will be eradicated when average income and production figures reach those of America. So, Unctad claims, what is needed is more trade and technical development. But it is on the question of trade that their plans founder.

The underdeveloped countries are urging easier access for themselves to the markets of the developed countries. The developed countries are trying to balance their own trade and payments. This involves cutting imports and stimulating exports. So they are faced with the same problem as those they say they are trying to help: more exports. The main exports from the poorer countries are raw materials. But their plight in recent years has net been due to any lack of enterprise or too slow increase in productivity, as is generally thought, but to too much of these. The problem has been that the prices of their export commodities have been falling because the market cannot absorb the extra production. This is what the Unctad experts have to sort out. The best capitalism has come up with so far is giant bonfires of coffee, cocoa and other products, or, what amounts to the same thing, schemes for curtailing production. Proposals that more manufactured goods should be imported by the developed countries from the less developed are worth as much as the suggestion that Brazil should import large quantities of coffee.

Just as all nations are faced with trade problems so they all also have poverty problems. America is not entirely populated by Rockerfellers and Henry Fords. Nor is everybody in India destitute. Living in affluence there are not only the remnants of the pre-capitalist rulers but also home-grown captains of industry who are just as wealthy as their American counterparts. The problem is not one of rich and poor nations, but of rich and poor social classes. The solution to the world-wide poverty problem is the establishment of a world community in which production is geared solely to meeting human needs. The problem is not one of trade, aid or technology but of how society is organised.

Joe Carter

Food, Hunger and Politics (1990)

From the August 1990 issue of the Socialist Standard

It is becoming increasingly obvious that the present way of organising society cannot ensure that everyone has enough to eat. Millions go hungry in what the Times (10 June 1985) admitted is “a world which is awash with food surpluses”.

High-powered conferences of experts have failed to solve the problem. Reports and resolutions provide empty words for empty bellies. The objective proclaimed in 1974 by Nobel Peace Prize winner Henry Kissinger that “within a decade no child will go to bed hungry, that no family will fear for its next days bread" (London Evening Standard, 5 November 1974) has been a mockery. There are now. both in absolute and relative terms, a greater number of hungry people in the world than there were then.

The efforts of voluntary relief agencies have fared no better. They face what they have called "donation fatigue' and openly admit that they have to rely on the actions of governments—of those in charge of the system that produces the problem in the first place.

Hiroshima every three days
People are dying in their millions from entirely preventable causes. The side-effects of hunger and malnutrition kill 15 million children a year. Fifteen million completely unnecessary deaths. Poverty killing more than war ever did. And yet the means of ending hunger are to hand. Susan George, Associate Director of the Transnational Institute and writer and broadcaster on world poverty, claims that providing for the needs of 15 million could be done by 3.6 millions tons of grain. World harvests of grain in 1980 were 1.556 million tons. To feed the 450 million estimated by the UN Food and Agriculture Organisation to be malnourished would only take 128 million tons of cereals—8 percent of world harvests, less than the United States feeds to its livestock (world-wide, half the grain crop is fed to animals). In 1984 the FAO estimated global cereal carry-over stocks as 294 million tons (State of Food and Agriculture, 1984. p. 47).

That people are hungry because they are poor is a theme which runs through a series of essays written in the 1980s by Susan George and now published in a revised form as Ill Fares the Land (Penguin Books. £5.99). The book is written with a deep concern for the victims of a world where "the toll of hunger on human life is equal to a Hiroshima explosion every three days" (p. 223).

She catalogues in detail some of the seemingly endless contradictions of a world where profit is the driving force behind the production of the means of life. “Higher productivity—and higher profits— actually mean more hungry people . . . " Even a so-called success such as the "green revolution" brings in its wake a loss of land and employment for millions because it was "a means of increasing food production without upsetting entrenched interests (as well as a means of providing increased revenues to the Western firms supplying industrial inputs)" (p.184).

This has resulted in a situation where poor peasants now die of exposure in the Indian province of Bihar. Straw was formerly free for bedding, but the new breeds of cereals have shorter straws which now command a price as a raw material used in paper-making (to replace wood which is in short supply due to deforestation). At the same time, "substantial grain reserves exist partly because half the population is too poor to buy them" (p. 184).

However, while the descriptions of the scale and effect of the profit system are written with a humanitarian concern for the poor and the destitute. George's prescriptions for actions are deeply flawed. Having recognised that the economic power of the more industrially and economically advanced nations is used for the furtherance of profit, and that to this end the privileged elites of the "Third World" are willingly enlisted as allies, she fails to draw the obvious conclusion: if ensuring that all have enough to eat is not a technical problem but a political one, then the techniques and means of life must cease to be the property of a tiny privileged minority. They must be made the common property of the whole of humanity. Production must be directly for use and not for sale on a market where “the poor cannot express their needs in terms of money, the only language the market economy understands" (P. 6).

Third world elites
What George is doing is to decry the effects without removing the causes of those effects. Having, consciously or unconsciously, rejected a complete change in society she is forced back into attempts at reforming the present system. This results in her appealing to the self-interest of nationalists in less developed countries, to the economic self-interest of European capitalists (she has given up on the USA and Russia), and, most futile of all, for "justice".

She appeals to those elites in the Third World (short-hand for those areas of the world where capitalism is still in the process of being developed at the expense of the increasingly landless peasants) who are perceived to be "working for the betterment of their countries". These she calls "true nationalists". But, if as she argues, the system that dominates the world is increasingly global then the solutions to the problems it creates must also be global.

Capital must of its nature expand at the expense of other capitals. To advocate the implementation of schemes that are deliberately labour intensive (so as to provide work for the jobless peasant/worker in the making) is to invite disappointment when the system follows its own immutable laws. She is not unaware of these laws, describing the “trans national corporations" (TNCs) as operating as follows:

In a world of rising costs and diminishing profits, it becomes more important than ever for the industrialised countries and the TNCs to maintain and to reinforce their hegemony over the global economy. They must, from their point of view, increase their control over world production, and world markets . . . Those who believe that these companies have any object besides the enhancement of their own profits are making a serious mistake. (pp. 93-4).

If banks and international lenders see these firms as more reliable and more profitable than local Third World ones, and so give them better credit terms and loan facilities, it is unrealistic to expect them to act otherwise—they exist, after all, in the same profit-seeking economic environment. If in acting this way they "thereby indirectly prevent the creation and expansion of national firms which are short of working capital" (p. 102), nothing can be done about it; this is the way the capitalist system works.

What should be noted here is that we are being asked to take sides with the emergent capitalists in the less developed world—with the very group who control the state and have no compunction in using the military and police to "control" the desperate and hungry when they revolt (as Kaunda recently did in Zambia). Nationalists everywhere have always acted this way when they come to power and are strong enough to implement the rule of the class they represent, using the state "to extract as much wealth as possible from the countryside" (p. 215) (actually, from the labour-power of the people living there).

Giving this parasitic class in the making a sympathetic leg-up to join the first division of robbers will not solve the problems of the poor. George's dream of an improvement in the lot of the Third World poor through economic developmemt "independent" of the more developed capitalist countries is a non-starter. Not that the full development of a successful and prosperous capitalist system is a guarantee against hunger, as the existence of 20 million hungry Americans testifies (Scientific American, February 1987)

Who’s aiding who?

If her appeals for "independent" development in the Third world are unrealistic, her appeals to the power structures of the European Community are unnecessary. She tempts them with the following;

By espousing the cause of three-quarters of humanity. Europe would also, in the fullness of time, reap the more traditional commercial and financial benefits. (p. 68. emphasis added).

She need not worry. This kind of self-interested approach to aid has already been eagerly adopted by both the major British political parties. In a debate a few years ago on famine and debt in developing countries, Timothy Raison, Tory Minister for Overseas Development, told the House of Commons:

I believe that our approach to debt is sound. We have to work constructively in the world that exists. . . .  At the same time of course, we are concerned with British interests. We want to develop good relations and see stability increase and see potential markets grow . . . The aid trade provision enables us to respond flexibly to commercial opportunities . . . Over the last few years some £350 million of aid trade provision has resulted in British firms winning contracts overseas valued at more than £1,400 million. (Hansard. 11 June 1985. Vol 80. colls 779-780).

While in power the Labour Party also embrace "the world that exists" and the "commercial approach". Aid to the Third World is regarded as being in line with "British interests". Judith Hart. Labour Minister for Overseas Development, claimed an even better return than Raison's. This indirect subsidy to British capitalists cost £400m but resulted in £2,400 million's worth of exports—"growth for them means imports from us" (Times. 14 July. 1976).

The other main remedy Susan George relies on is a case for "justice"—an appeal to give the rapidly disappearing peasants a “fair" chance to help themselves. This amounts to trying to make the market system, which is driving them out of existence, work other than the way it must. To complain that TNCs "underpay" for Third World commodities is to ignore the fact that in any market buyers press for the lowest price while sellers press for the highest. Crying foul when the powerful exploit their advantage is no cure. The establishment of an "independent" enclave which would somehow circumvent the weak position of Third World producers is a chimera. The food producers of the EC and the USA, for example, can always as part of a potential trade war dump food on the world markets at prices which Third World peasants cannot compete with.

The only real hope for the hungry and exploited of the Third World lies in their realisation of the potential power they collectively have and organising consciously and politically with their fellow workers in the developed capitalist countries to democratically abolish capitalism and establish socialism. This entails the pursuit not of "justice" but of interest. Free men and women have no need of justice.

Gwynn Thomas