Over the past fifty years, the governments of poor countries have been in hot pursuit of their chimeric dreams of bringing development to their nations. Armed with an arsenal of economic weapons borrowed from their friends in the North, they have lanced this way and that, hoping to destroy the scourges of poverty: hunger, ignorance and early death. What they, with a few exceptions, have got instead is more poverty, more pollution, and more people.
First, they borrowed the models -- some from the western half of the North, others from the eastern. With the 20/20 vision of hindsight, we can now say that neither worked. The pure socialist path was too inefficient and the unfettered market was too insensitive and thus too unfair. Even allowing that the choices were well intentioned and perhaps even justified given the state of knowledge at that time, one could surely hope that fifty years of experience might have led to some learning. It is not obvious that it has.
Whichever strategy was chosen, technology became the heavy artillery and money was the ammunition. Never mind that both had to be borrowed from the outside at huge cost. The poor could always be relied on to produce more for less. And there was always nature, whose resources could be mined and sold to stay slightly ahead of the creditors. Development was synonymous with big projects, large industries and toys for the rich.
When it became apparent that these do not produce the desired results, the debate among development experts switched to the relative merits of export promotion and import substitution, then to the desirability of structural adjustment and tighter monetary policies, and more recently to the need for better governance and more effective management. The underlying techno-economic model, however, remained the same. And so did the results.
Now, we have arrived at global trade as the proper medicine for the development malaise that besets us. Open the doors and the technology and the money will come flooding in. Raise cash crops, make cheap goods and earn more foreign exchange.
The prime question is for whom? And at whose expense? Are growing poverty, pervasive pollution, rising prices and an exploding population the prerequisites to catch up with the twenty first century? Or will we end up back at square zero?
How will the money earned from all this trade reach those in whose name these development strategies are pursued? It will trickle down, say today’s followers of Adam Smith. Make the rich richer, and the poor will automatically get fat on the crumbs they leave behind. More industries, rising exports, active trade are all supposed to lead to a better life for all.
But does the rising tide actually raise all boats? It probably can raise some. Yet, what about the innumerable ones anchored to the bottom: the poor, the dispossessed, the marginalized. The landless, the women and the illiterate? And what does the rising tide do to the trees, the animals, the soils and waters on which these people depend?
Most people would presumably prefer to live in a rich country than to exist in a poor one. At least the opportunities for an individual to get out of poverty are usually better. On the other hand, poverty is not simply a matter of absolutes. In the consumer society, which, after all, is the ultimate aim of any globalization effort, poverty is also a matter of perception -- and therefore of relatives as well.
The invisible hand that was supposed benignly to guide the market is becoming a very visible clenched fist, ready to punch a clear hole into the new millennium to make way for those who can pay the passage. If it does, those who cannot afford the trip will just have to stay behind.
The market is clearly an effective mechanism to generate the goods and services that people need. To the extent that liberalization policies enable these mechanisms to work, they must be welcomed. But left to themselves, they tend to seek what economists call a “corner solution”, the extreme case where some get all and the others have nothing. Any policy that does not, by pre-emptive design, minimize its negative distributional, environmental or social impacts is bound to put us on a one-way road in the other direction -- to oblivion.
And it is one of the extreme “failures of the market”, as the eminent economist Lord Nicholas Stern calls it, that has brought us all to our knees on the things that sustain life – a stable climate, a resilient biodiversity and a strong, healthy society.
Ashok Khosla is chairman of Development Alternatives, co-chair of International Resource Panel, and former president of IUCN and Club of Rome.