I've spotted several good articles or reviews recently on economic development. I'm just going to link to one here, but there's others which I'll summarise in further posts.
Together, they represent part of a growing body of opinion against the Wall Street Journal-style platitude that developing countries just need enough 'free market reforms' to become wealthy and stable. Even many US thinkers are now seeing this 1990s-esque triumphalism as at best simplistic and unbalanced, at worst deeply hypocritical given the histories of wealthy countries themselves.
What's interesting is the increasing range of more-or-less centrist economists, historians and journalists making many of the same points as Eduardo Galeano's The Open Veins of Latin America -- though without quite the colorful, stirring prose.
A particularly succint and insightful piece is a critical review by former New Yorker writer James Surowiecki of Indur M. Goklany's The Improving State of the World: Why We're Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet.
Goklany's thesis is one that Surowiecki doesn't fundamentally disagree with (and neither do I): the onset of industrialization in the eighteenth century and the application of technology through practices loosely describable as 'capitalism' have delivered unprecedented benefits to humanity. Not only has economic growth made us all wealthier, but it's allowed us breathing space to care about the environment enough to arrest and reverse its degradation.
Or as bluntly summed up by New Zealand National Party environment spokesperson Nick Smith at a debate I attended, 'if you want to be clean, first you've got to be rich'
It's the intellectually honest starting point from which I wish more of the environmentalist millenariasts and 'smash capitalism' activists would start: those of us born in the Western world in the last few decades are comfortably the luckiest people ever to have lived. Our ability to become passionate about issues beyond scraping together our next meal is substantially dependent on the system that we are critiquing.
What Surowiecki does reject is the faith in economic growth as some irresistible, almost Marxian historical force that inevitably delivers human and environmental improvments.
This greatly understimates the historical struggles to win a share of industrial wealth for ordinary working people, improve health, and address pollution and other environmental problems. In many cases, real gains have only been achieved though those deeply unsexy measures -- governmental regulation and intervention.
Such faith also takes insufficiently seriously the fact that large parts of the world -- the so-called 'developing' countries -- have not benefited anything like as much from the industrial age as the 'Western' nations.
True, as Surowieci acknowledges, they've experienced significant advances in areas such as health and longevity, thanks to the 'trickle-down' dispersement of improvents in medicine, engineering and agriculture, while remaining relatively poor. But there's also Galeano's case to be answered that the very success of the Western nations was partly on the back of the dominance and exploitation of the 'developing' world.
What's most irritating is the use by neoliberal theorists of the broad-brush historical view to evangelise for something they glibly call 'free markets'. Boiled down, it turns out all anyone needs to do is apply a set of formulas derived from Milton Friedman and distilled by the IMF (reduce government spending, deregulate, privatize, drop trade barriers, etc), and hey presto!, everything will get better.
In support of this case, free-market fundamentalists like to point out that, in the last 30 or 40 years while their ideas have held sway, even aggregate global inequality has reduced. But the obvious riposte (made by Surowiecki) is that almost all of this is due to the success of China and India. The approach of both these countries has been heterodox, in their own time, and on their own terms. Meanwhile, the parts of the world that have followed IMF prescriptions -- including much of Latin America and Africa -- have stagnated or only made painfully slow advances.
Even paragons of development through economic othodoxy such as Chile and Botswana show divergence from the formula. The engine of Chile's development -- copper -- remained under state control even during the time of Pinochet. And Botswana is one of the world's largest producers of diamonds. These two countries may just be examples of not stuffing up the mixed blessing of being resource-rich, rather than demonstrating the transformational magic of a narrow set of economic policies.
In short, there may be certain broad policies that are necessary (but not sufficient) for economic success. But achieving this is a complex business, more dependent on the specific historical, social and geographic circumstances of a country than any formula from a textbook. And the improvement of human and environmental well-being is something that must be fought for in its own right, not simply a slag-like byproduct of the economic growth engine.
The summation comes best from Surowiecki himself:
The fact that every country's experience is different does not mean that there are not deeper truths to be uncovered by looking at the experience of the world as a whole. But the truths thus far uncovered are relatively few in number and often limited in impact. So, yes, free trade is a good thing, subsidies to agriculture and official corruption are bad things, and so on. And policymakers should be aggressive in implementing those practices and policies that there is a good reason to think will work. But they also need to be cautious about taking theoretical pronouncements for reality, and they should be pragmatists rather than evangelists. After decades of misplaced certainty, it may be time to recognize the limits of our own knowledge -- at least if we want the state of the world to continue improving.
From my own unschooled point of view, I might posit the 'general truth' that one of the key things a country needs to get ahead is the autonomy and control to decide and implement what works for them -- rather than being forced into a straitjacket set of textbook-derived policies that may be unhelpful or even counter-productive. That would be close to my definition of 'freedom'.
Categories: free trade, economic development, Latin America, Africa, environment, labor