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.

Brandt, cant and the banks (1981)

From the December 1981 issue of the Socialist Standard

In October Margaret Thatcher went to Cancun, there to enjoy the Mexican sunshine, attend some splendid banquets, and make pious noises about the millions who starve to death in the Third World. Reagan represented the American capitalist class; Zhuo Ziyang, the Chinese dictatorship; and assorted Arab sheiks showed up to threaten their fellow exploiters with further oil price increases. As one dignitary after another arrived at the conference centre to talk about holding future talks, the victims of the poverty trap continued to perish, oblivious that the masters of the world had convened to talk about them.

The problems of the so-called developing countries are of a magnitude not easy to comprehend. Approximately two-thirds of their populations are malnourished, receiving less than the essential 2,500 calories a day. Thirty million people die of starvation each year, which on average means that one person starves to death every second. In Africa, one fifth of all children die before their first birthday and only a quarter of the population has access to clean water. Diseases in these countries are the direct result of squalid living living conditions and lack of adequate health services. In India for one, cholera and typhoid are widespread killers. Statistics can neither describe the suffering nor express the waste which are hallmarks of nascent capitalism in Africa, Asia and Latin America.

In February 1980, the Independent Commission on International Development presented to the United Nations a report entitled, North-South: A Programme For Survival. The report is a striking indictment of the poverty of capitalist thinking about the problems engendered by their system. The Commission, chaired by Willy Brandt, and including such sterile minds as Edward Heath and Olaf Palme, was accurate only in its depiction of the plight of the poor in the developing countries. They recognised that irrigation is desperately needed; that pure water supplies and pumps are required; that more energy resources are wanted; that new educational facilities are necessary. Having highlighted these needs, the report then proposes solutions within the inhibiting structure of the world-wide profit system.

Under capitalism, investment in production is dependent upon the expectation of profit. Food is produced if it is likely to be sold: if there are no buyers, then there is no “market demands". So, even though people are starving, they do not “demand” food unless they constitute a profitable market. To the simple mind it might seem obvious that if there is enough food to satisfy the starving and according to United Nations statistics, there is a capacity to feed the world’s population several times over — then they should be given access to the food. But such a solution would be too simple for the Brandt Commissioners, who realise that the present system is geared towards the profits of the few rather than the needs of the many.

Brandt and Co. are not in the charity business; the purpose of their mission is to open up new areas of the world to be exploited for profit. It is not the poor who will be better off at the end of the day, but the bankers and the industrialists (despite all the cant about the moral righteousness of overseas aid, which anyway constitutes only a small fraction of government expenditure in comparison with such “priorities” as the armed forces). More than two-thirds of financial loans to the developing countries since 1977 have been private bank loans with onerous terms and debt-servicing burdens. Between 1979 and 1981, debt-service payments for non-oil producing developing countries stood at 120 billion dollars, on top of rising trade deficits.

From a capitalist point of view, the Brandt report is progressive; it recognises the massive, largely uncultivated wastelands of Africa, Asia and Latin America as potential areas for rapid exploitation. With world capitalism in the midst of one of its periodic crises (and not looking like coming out of it soon), such a plan offers some hope. It should not be forgotten that the minority groups who own and control the developing countries are not starving themselves. They are generally affluent dictators who have had no electoral support from the people they rule. This however will not deter the “liberal” capitalists who support the Brandt proposals from sitting round conference tables with them and engaging in trade deals. By bringing the rulers of the developing countries into the international capitalist market, the “aid” agencies are helping to strengthen their own economic system:

  They (the aid agencies) are based on the upholding of the existing international and national framework of the developing world . . . The international agencies cannot accept changes in developing countries which might endanger existing patterns of international trade, foreign private investment, the regular servicing and repayment of debts, and other more or less general concerns of the capitalist developed or creditor countries. (Teresa Hayter, Aid As Imperialism, Penguin, 1971.)

Of course, the rival imperialist superpower, Russia, has long been engaged in precisely the same “aid” business as the West. Russian state capitalism has succeeded in “liberating*’ the rulers of developing countries from one gang of creditors to another. The Brandt report is seen by some Western bankers as a way for the west to compete with the Russian Empire in the bogus liberation game.

The real losers in all of this are the world’s poor. Poverty is by no means only a problem for “under-developed” countries — it is a worldwide working class phenomenon. Every single wage slave, whether he lives in the midst of advanced “free enterprise” or the relative backwardness of Bangladesh, is never free from the threat of being one of tomorrow’s hungry. The vast majority of the world's population, who do not own or control the means of producing and distributing. wealth, are only ever entitled to have access to what they can buy. It is a dangerously insecure existence and it is madness for the workers to look to the bankers to change it for them.

Steve Coleman

The Review Column: Out of Control (1967)

The Review Column from the January 1967 issue of the Socialist Standard

Out of Control

Politicians are fond of depicting themselves as men who have capitalism firmly under control.

They talk of capitalism as if it were a car, which needs only a touch on the brake or the accelerator to keep it humming smoothly along to prosperity. Or, like Richard Crossman last November, as if it were someone with a minor illness:

  For if it is vital not to let up until the medicine has really worked, it is equally important not to endanger the patient's recovery by the kind of overdose which could transform a carefully calculated cutback into an unplanned crisis of confidence and a collapse of private capital investment.

This sounds as if the politicians really know what they are about, as if the economy can be cured without a lot of difficulty.

It might be more reassuring if it were not for the fact that from the start the Labour government have said they had the situation under control, only to be hit by repeated crises which, they confessed, took them unawares.

It might be more reassuring were it not for the long history of unpredictable economic ailments which have come upon capitalism—the Slumps, the Recessions, the Great Crashes.

And again if it were not for the long list of politicians who have gone down in confusion after telling us, like Crossman, that as long as they were at the bedside there was nothing to worry about.

Capitalism cannot be controlled, no matter how refined and delicately calculated its politicians' policies may be. The system runs the politicians, not vice versa.

Perhaps Crossman knows this. One thing he certainly knows. Whatever the situation, a capitalist politician must always keep up appearances; he must never admit that the system has beaten him and even though the patient dies there must never be any verdict other than accidental death.


How to Build Houses

Labour's election manifesto last March said “Our first priority is houses." It asserted that in 1965 a total of 383,000 houses had been built and promised. "In the next five years we shall go further . . . we intend to achieve a . . .  target of 500,000 houses by 1969/70."

What progress is being made?

The latest available figures—for October last year—show a fall in houses built of 3.252 compared with the same month in 1965. In the first ten months of 1966, there were 245 fewer houses built than during the same period in 1965. The Daily Telegraph reported “Much bigger falls are forecast for the first half of next year . . ."

Does this mean that the need for homes is declining?

A new organisation, a National Campaign for the Homeless—Shelter it calls itself—says that there are three million families in Britain living in slums, near slums or in grossly overcrowded conditions. London has 7,613 homeless people in hostels; Glasgow has 78,524 families on its waiting list; Liverpool has 73,733 unfit houses.

Is there then a shortage of building materials?

As the building figures go down the stockpile of bricks goes up; over 700 million are in stock now, enough to build nearly 50,000 homes. The President of the National Federation of Clay Industries, Mr. Kenneth Timperley, describes the recession in brick demand as “. . . quite the worst I have experienced in 30 years. . ."

Does it make sense?

More people in desperate need of a decent place to live, less houses being built, more building material being stockpiled.

An inhuman muddle, but it does make sense in terms of the economics and the priorities of capitalism, whether it is capitalism under a Tory government or Labour.

Bonn-Crisis Over?

The political crisis in Bonn was averted by the formation of a coalition government made up of the Christian Democrats and the Social Democrats.

As a result Willy Brandt, Mayor of West Berlin, became Foreign Minister and Kiesinger’s deputy. Seven other Social Democrats joined the Cabinet.

Some people may wonder that parties which were once so hostile to each other can suddenly form an alliance. They may wonder that a party which calls itself Socialist can sit in the same Cabinet as one which openly stands for capitalism.

In fact the German Social Democrats, far from standing for Socialism or indeed any political theory, are one of the most adaptable parties in existence. Before they joined up with the CDU, it was strongly rumoured that they were about to throw in their lot with the other main German party, the Free Democrats.

This would also have been a painless business: the Guardian's Bonn correspondent reported on the marked similarity between the two parties and said the Free Democrats had ". . . published a policy statement . . ."

All capitalist political parties are basically the same and, when the occasion demands they have no difficulty in closing ranks with each other. They have little respect for what they profess as principles and for the meaning of the very words they use. All of them are after political power, and will do any sort of deal to get it.

The flavour of capitalist politics is international. It is also extremely unpleasant.

Rhodesia

In the Commons debate on Rhodesia on December 8 last. Harold Wilson said:

  The present situation in Rhodesia faces Britain with the greatest moral issue she has had to face in the post war world.

On the same day in the House of Lords, Tory Lord Ferrier was assuring the government:

  I and millions like me could never be persuaded to open fire on our kith and kin in Rhodesia.

In Salisbury, lan Smith has said all along that he stands for a settled, civilised way of life against barbarism.

In other words, however much both sides may disagree on other matters, they are at one in presenting their struggle with each other as a moral issue.

There is of course nothing new in this, although it is something of a mystery, why politicians think it is always necessary. There is no evidence that working class support for capitalism would decline, if they were told the truth about its power struggles.

Capitalism has many conflicts, all of them basically economic in origin. There is no morality involved in them, no human interests, no distinct division between right and wrong.

Wilson’s professed moral indignation against Rhodesia, for example, does not at present extend to South Africa, which has never made any secret of its support for the Smith regime.

The reason for this is plain. South Africa is too valuable a trading partner for Britain’s Labour government to want to upset.

The African states in the Commonwealth may protest at this, and they also use moral arguments to support their case.

Behind all this fog of confusion and official lies, the processes of capitalism grind inexorably on. They recognise no morality and the only issue they are interested in is a healthy balance sheet.