International development is in serious crisis. Charities are worried about the fact that public support for development is waning – that people just don’t seem to ‘buy it’ any more. According to a recent report by the development umbrella group Bond, ‘Efforts to eradicate poverty appear to many members of the public to have failed, and scepticism about the effectiveness of aid and global development initiatives has risen.’
People are less and less likely to believe that foreign aid is some kind of silver bullet, that donating to charities will solve anything, or that Bono and Bill Gates can save the world.
What lies behind this growing scepticism? NGOs find the trend almost impossible to understand. As far as they’re concerned, development has been an outstanding success, scoring improvements in areas such as child and maternal mortality and inching us toward the UN’s Millennium Development Goals. NGOs want the public to accept that these piecemeal gains – however impressive they may be – are tantamount to overall success.
But the public isn’t going for it. On the contrary, people increasingly believe that, despite billions of dollars of investment in aid, global poverty is not getting better, and may even be getting worse. The development industry has repeatedly failed to deliver on its grand promises to End World Hunger or Make Poverty
History – so why give them any more money?
This crisis of confidence has become so acute that the development community is scrambling to respond. Bill Gates’ most recent annual letter scolds the sceptics and enjoins them to accept that ‘by almost any measure the world is better than it has ever been’, a claim illustrated with handy before-and-after pictures. In addition to delivering reprimands, the Gates Foundation, along with a number of major organisations – including Oxfam, Save the Children, and ONE – has commissioned research to devise more effective ways to ‘market’ development to the public.
These efforts miss the point: development doesn’t need better marketing; it needs a total overhaul. The present crisis presents a monumental opportunity to allow development as we know it to wither away and leave space for the evolution of a new approach: an approach framed not in terms of charity but in terms of justice, and focused not on symptoms but on systems.
International development has failed
As a general rule, most people don’t have a clear analysis of why global poverty persists, but they are correct in their assumption that it does. In fact, this intuitive assessment is more accurate than the official narrative.
The Millennium Campaign has done its best to convince us that poverty has reduced dramatically over the past decades, but independent watchdogs have shown that this claim rests on statistical sleight-of-hand: the metrics have been massaged by focusing on proportions rather than absolute numbers, by shifting the poverty line downward in real terms, and by claiming China’s gains against poverty in the 1990s.
But if we look instead at absolute numbers, and if take China out of the equation, we see that the global poverty headcount is exactly the same today as it was in 1981. And that’s using the Campaign’s own poverty line of $1.25 per day.
These are staggering numbers. But a growing number of scholars are beginning to insist that the picture is actually even worse than this. In many countries $1.25 per day is simply not adequate for human existence, to say nothing of human dignity. In India, for example, children living just above this line still have a 60 per cent chance of being malnourished.
One study has shown that if people are to achieve normal life expectancy, they need roughly triple the current poverty line, to a minimum of $3.70 per day. If we were to measure global poverty at this more realistic level, we would see a total poverty headcount of about 3.5 billion people, which is more than three times what the Millennium Campaign would have us believe, and nearly half the world’s population. We would also see that poverty is getting much worse, with around 500 million more people added to the ranks of the extremely poor since 1981. That’s eight times the population of Britain.
And all the while, the wealth ratio between the richest and poorest countries has grown tremendously. In 1973 the gap was around 44:1. Today it’s nearly 80:1. Inequality has reached such extremes that now the richest 67 people in the world – a number of people who could fit comfortably on a London bus – have more wealth than the poorest 3.5 billion.
This is the real crisis of development. The west has been engaged in the project for more than six decades now, but the number of poor people in the world is growing, not shrinking, and inequality between rich and poor continues to widen instead of narrow.
It’s not terribly difficult to figure out why. International development is failing because it fundamentally misses the point about poverty. It assumes that poverty is a natural phenomenon, a problem that exists out there, as if on an island disconnected from the rich world. Maybe it has to do with bad climatic conditions and tropical diseases in poor countries, or perhaps it’s because they don’t have the right technology. All they need is a bit of aid to help them up the ‘development ladder’.
This view lends itself to technocratic interventions led by ‘experts’ in development ‘science’: take MIT’s Poverty Action Lab, for example, or Jeffrey Sachs’ now‑discredited ‘millennium villages’. On a more popular level this approach manifests as quick-fix fads like merry-go-round water pumps, deworming campaigns, microfinance and laptops for children – projects that studiously avoid thinking about the political context of impoverishment. This is the stuff of TED talks, and donors love it. It allows people to feel they are fixing the problem of poverty without ever having to confront power, challenge the tenets of the prevailing economic order, or question their own position within the global class system.
This apolitical stance explains why Goldman Sachs can celebrate the Poverty Action Lab in the pages of the Financial Times, and why former US government figures such as Lawrence Summers and Condoleezza Rice feel comfortable sitting on the board of ONE. Even the UN’s new Sustainable Development Goals project (aimed to replace the Millennium Development Goals, which expire this year) fits snugly with establishment institutions: last year the four-person advisory board included John Hewson, the chairman of both an investment advisory firm and a fracking company, Aitur Rahman of the Central Bank of Bangladesh, and two figures from the world of corporate social responsibility.
The architecture of extraction
This approach to poverty is not only apolitical, it is also deeply ahistorical. It ignores the history of European colonialism that plundered Latin America of the gold and silver that galvanised the industrial revolution; it ignores the Atlantic slave trade that transferred 15 million people from West Africa for forced labour in European colonies; and it ignores the new imperialism that saw a mad scramble for resources in India and Africa.
The crisis of poverty in the global South, and the trend of widening disparities between the west and the rest, was set in motion by these initial forces – and yet this context is elided in standard development analysis.
There was, of course, a brief period of reprieve after the end of colonialism, when global South countries – many of them led by leftist governments – used trade tariffs, subsidies, import substitution, and social spending to build their economies and reduce poverty with remarkable success. This was the heyday of ‘developmentalism’, and, beginning in the 1950s, the gap between rich and poor countries gradually began to narrow, particularly in the Southern Cone of Latin America and East Asia.
But in many cases these programmes were actively dismantled by western intervention, often with coups that deposed democratically elected leaders to install dictators friendlier to foreign corporations.
When coups fell out of favour, the World Bank and the IMF stepped in instead. Leveraging their power as creditors, they required poor countries to adopt crushing structural adjustment programmes that privatised public assets, cut social spending, and pried markets open to foreign companies. They promised that neoliberal reform would improve ‘development outcomes’, but instead it turned out to be one of the greatest single causes of poverty in the 20th century.
Per capita income growth in developing countries plunged to half the previous levels, and in sub‑Saharan Africa the GNP of the average country shrank by around 10 per cent during the 1980s and 1990s. All told, developing countries lost roughly $480 billion per year in potential GDP. Multinational corporations raked in astonishing profits under the new economic regime.
All of this gets obscured by the discourse of aid. Today, rich countries give $136 billion per year in aid to poor countries – a figure touted by western leaders as evidence of their benevolent concern for the wretched of the earth. But if we look more closely, it becomes clear that this is little more than propaganda. It hides the patterns of extraction that contributed to the impoverishment of the global South in the first place, and that continue to do so today.
Consider tax evasion, for instance – one of the biggest media stories of the past few years. Global Financial Integrity calculates that up to $900 billion flows out of the developing world into western accounts each year through trade misinvoicing (deliberately misreporting the value of trade to customs), and Raymond Baker estimates that probably another $900 billion flows out through abusive transfer pricing (allowing multinationals to misrepresent profits for tax purposes). On top of this, poor countries pay about $600 billion to rich countries in debt service each year, much of it on the compound interest of loans accumulated by illegitimate rulers long since deposed. These figures alone amount to nearly 18 times the size of the aid budget.
These reverse flows of aid are relatively well known. But much less discussed – and much more serious – is the fact that rich countries benefit from artificially cheap labour in poor countries. Wages are kept low by a variety of forces. As globalisation allows corporations to scour the planet in search of the cheapest labour, countries compete for their favour by driving wages down. On top of this, some trade agreements restrict union activity, or empower corporations to sue governments if they improve labour standards.
As a result, workers in the global South earn only a fraction of the wages that workers in rich countries receive for the same productivity. Samir Amin calculated that, in 1966, developing countries lost $161 billion (in today’s dollars) each year through undervalued labour. Gernot Kohler updated this figure for 1996, and found losses had risen to $2.66 trillion – a hidden transfer of value that amounts to 20 times the size of today’s aid budget.
There have been attempts by some NGOs to campaign on these more structural issues: the Make Trade Fair campaign run by Oxfam, for instance. Even Make Poverty History had trade and debt in the mix. But such efforts toward global justice are quickly drowned out by the dominant framing of charity and aid that the same NGOs promote. The charity paradigm obscures the real issues at stake. Poor countries don’t need our aid – they need us to stop the plunder.
The central contradiction
Yet turning our attention to the basic injustices of the global economic system is only half the battle. We also need to confront the obvious contradiction that lies at the heart of the mainstream development model.
The development industry tells us that, by exporting western, neoliberal capitalism around the globe, we will eventually bring the world’s population to the point where we can each enjoy a lifestyle similar to that of the average citizen of the average high-income country. But if we take a closer look at this vision it crumbles into incoherence. If everyone on earth lived like people in high-income countries, in terms of consumption and emissions, we would need at least 3.4 earths to sustain us, according to data provided by the Global Footprint Network. If we all lived like the average American, we would need 4.4 earths. Even at existing levels of average global consumption, we’re overshooting our planet’s capacity by about 50 per cent each year, and this is almost entirely due to overconsumption in rich countries.
Instead of talking about ‘developing’ the ‘underdeveloped’ countries, perhaps we need to start talking about de-developing the overdeveloped countries. At present biocapacity, our planet only has enough resources for each of us to consume 1.8 ‘global hectares’ annually – a standardised unit that measures human resource use and the ability of the environment to absorb our waste. The average person in Ghana or Guatemala consumes roughly 1.8 hectares. By contrast, people in the United States and Canada consume about 8 hectares per person, while Europeans consume 4.7 hectares – many times more than their fair share.
This should be an outrage to the rest of the world, especially given the spectre of climate change. If we are to avoid the catastrophe of a world warmed by four degrees, which is our present course, we will need to radically redefine our notion of progress. Instead of pushing poorer countries to ‘catch up’ with rich countries, we should be thinking of ways to get rich countries to ‘catch down’ to more appropriate levels of development. We should look to societies where people live full and happy lives at relatively low levels of income and consumption not as basket cases that need to be developed toward western models, but as exemplars of efficient living.
Costa Rica, for example, manages to sustain remarkably high indicators of overall happiness as well as one of the highest life expectancies the world – beating the US on both counts – with a per capita income of only $14,000: about one fourth that of the US. Cuba, too, has a life expectancy that beats the US, plus one of the highest literacy rates in the world, with a per capita income of only $10,000 and consumption of only 1.9 hectares, right at the threshold of ecological sustainability. It may seem strange to ponder this, but these countries represent an approximation of the future we will have to accept, if we are to have any future at all. That is, unless we manage to come up with a radically different model.
What are our options?
The call to de-develop rich countries might prove to be a strong rallying cry in the global South, but it will be tricky to sell westerners on the idea. Tricky, but not impossible, so long as we frame it not as ‘de-development’ but rather – and more accurately – as a reorientation toward a truer form of progress. According to recent consumer research, 70 per cent of people in middle- and high-income countries believe overconsumption is putting our planet and society at risk. A similar majority also believes we should strive to buy and own less, and that doing so would not compromise our happiness. In other words, people sense there is something wrong with the dominant model of economic progress – that it violates the real needs and values of humans and the ecology upon which we all depend – and they are ready for an alternative narrative.
The problem could be solved to some extent by addressing the imbalances in the global economy: putting an end to structural adjustment, closing down the tax havens, cancelling debts, democratising global institutions, placing a moratorium on land grabs and suspending free trade deals until they can be renegotiated under more democratic – and transparent – conditions. Not only would this release global South countries from the siphons of the west and grant them more control over their own economies; it would also transmute the outsized consumer power of the rich into better incomes for the poor – incomes that would be used for life instead of luxury.
Any development organisation worth its salt needs to bump these campaigns to the top of the list.
Perhaps more importantly, though, we need to reimagine the basic logic of orthodox economics. We are told that in order for us to have a normal, healthy global economy, we need GDP growth rates of at least 3 per cent per year. Anything less, and economists tell us we’re in crisis. Yet to grow at this rate means we have to increase the size of the global economy by $2 trillion next year. That means adding the equivalent of the entire size of the global economy in 1970 – and then more again the year after. To imagine that we can continue on this trajectory indefinitely is to disavow the most obvious truths about our planet’s material limits. It’s a madness written into the very fabric of our operating system, and it will lead us rapidly to the brink of crisis.
On this point, not even Costa Rica and Cuba provide adequate solutions. We need to break with the logic of growth altogether, and abandon the mistaken assumption that wealth equates to happiness and freedom. Some heterodox economists are calling for an urgent transition to steady-state or zero-growth models. To get there, we would need a number of thoughtful measures: serious curbs on advertising, for example, and a much shorter working week – both of which are predicted to yield greater levels of happiness and well-being in addition to reducing production and consumption. We would also need to roll out new, saner measures of economic progress, such as the Genuine Progress Indicator (GPI), or the Happy Planet Index (HPI) presently being developed by the New Economics Foundation.
Of course, those who benefit most from the present economic system will not permit these changes until they are forced to do so – forced, that is, by a combination of economic crisis, environmental catastrophe and rising social discontent. And if the headlines are anything to go by, this is precisely what they have coming. Dramatic change is inevitable; the question is, what form will it take?
Instead of wringing our hands about the death of development, we would do well to grasp the opportunity it provides to evolve new narratives and new visions, speaking to the public about the imperative of justice, and uniting people in opposition to an economic system that impoverishes and degrades. We dare not allow the development industry to stand in for the political struggle that this moment demands. Instead of placing our hope in development technocrats, we should take a cue from the new social movements – Occupy, the Indignados, the Arab Spring, the Chilean Winter, Idle No More – that are actively confronting power and imagining the new world to come.