Criticisms of Official Development Aid

Criticism 1 – The most vociferous recent critiques of Official Development Aid comes in the form of Dambisa Moyo’s recent book (2009) Dead Aid: Why Aid is not Working And How there is another way for Africa. At root, her most basic criticism  is that Official Development Aid hasn’t actually generated significant economic growth in recipient countries. According to Moyo

‘Over the past thirty years, the most aid-dependent countries have exhibited growth rates of minus 0.2% per annum.  Looked at as a whole, Africa has had over $1 trillion dollars of aid money pumped into it over the last 60 years and not much good to show for it.’

 

Criticism 2 (Neoliberalism) – Aid stifles the development of small businesses.

Moyo explains how this works as below…..

‘There’s a mosquito net maker in Africa. He manufactures around 500 nets a week. He employs 10 people, who each have to support upwards of 15 relatives. However hard they work, they cannot make enough nets to combat the malaria-carrying mosquito.

Enter vociferous Hollywood movie star who rallies the masses, and goads Western governments to collect and send 100, 000 mosquito nets to the affected region, at a cost of $1 million, The nets arrive, the nets are distributed and a good deed is done.

With the market flooded with foreign nets, however, our mosquito net maker is promptly out of business. His ten workers can no longer support their dependents.

Now think of what happens 5 years down the line when the mosquito nets are torn and beyond repair, we have now mosquito nets, and no local industry to build any more. The long term effect of the ‘aid injection’ has been to decimate the local economy and make the local population dependent on foreign aid from abroad.

Criticism 3 (Neoliberalism) – Aid Encourages Corruption

In 2004 the British envoy to Kenya, Sir Edward Clay, complained about rampant corruption in the country, commenting that Kenya’s corrupt ministers were ‘eating like gluttons’ and vomiting on the shoes of foreign donors. In February 2005 (prodded to make a public apology), he apologised, saying he was sorry for the ‘moderation’ of his language, for underestimating the scale of the looting and for failing to speak out earlier

According to Dambisa Moyo – If the world has one image of African statesmen, it is one of rank corruption on a stupendous scale. One of the best examples of this is Mobutu, who is estimated to have looted Zaire to the tune of $5 billion. He is also famous for leasing Concorde to fly his daughter to her wedding in the Ivory Coast shortly after negotiating a lucrative aid deal with Ronald Regan in the 1980s.

Moyo further argues that at least 25% of World Bank Aid is misused. One of the worst examples is in Uganda in the 1990s – where it is estimated that only 20% of government spending on education actually made it to local primary schools.

Moyo argues that growth cannot occur in an environment where corruption is rife. There are any number of ways in which corruption can retard growth.

  • Corruption leads to worse development projects – corrupt government officials award contracts to those who collude in corruption rather than the best people for the job. This results in lower-quality infrastructure projects.
  • Foreign companies will not invest in countries where corrupt officials might siphon off investment money for themselves rather than actually investing that money in the country’s future.
  • Aid is corrosive in that it encourages exceptionally talented people to become unprincipled – putting their efforts into attracting and siphoning off aid rather than focussing on being good politicians or entrepreneurs.

Criticism 4 – A final Neoliberal criticism of Aid is that too much aid money is spent on salaries, admin fees and conferences. Not only are these often secretive and not open to account, but this also means reduced money spent on actual development. The aid industry employs hundreds of thousands of people worldwide. For example, in the UK DEFA spent £248 million on administration in 2007/08. This has led to some referring to aid agencies as the lords of poverty – ironically, it is actually in the interests of these bureacractic agencies for poverty to exist, or thousands of people would be out of work.

Criticism 5 – Dependency theory argues there is a political agenda to aid

The allocation of US and UK aid has often depended on whether the political ideology of the developing country has met with Western Approval. Dependency theorists argue that the main point of aid is to make the recipients dependent on the donors. Many neo-marixsts argue that along with aid packages comes western values, advice, culture, and aid merely ensures that the interests of west are maintained.

  • During the cold war developing countries were rewarded with aid if they aligned themselves with the Capitalist west and against the Socialist regimes of Eastern Europe and China. Both the UK and U.S. governments refused aid to the Ethiopian government in the early 80s on the grounds that the government was Socialist.
  • A similar focus is also found in US military aid. Much military aid was sent to South America where it was used by right wing governments to repress socialist movements that were opposed to the interests of US multinationals.
  • Even with the fall of the cold war, countries are still rewarded for promoting western interests. Kenya was rewarded in 1991 for providing the US with port facilities during the gulf war while Turkey was denied US aid for not allowing them to lease its air bases.
  • In 2005 developing nations were rewarded for assisting the Bush regime’s war on terror.

NB Tied aid is now illegal in the UK by virtue of the International Development Act, which came into force on 17 June 2002. Other countries, however, still only provide aid on the basis that a proportion of the aid money is spent on products produced by the donor country.

Criticism 6 – (Dependency Theory) – World Bank aid has traditionally required countries to undertake ‘Structural Readjustment Policies’ (SAPs)

The World Bank and International Monetary Fund (IMF) are the largest and most influential of the International Financial Institutions (IFIs), and these have pursued a neoliberal development agenda since the 1980s. The damaging strings that the World Bank & IMF attach to aid, loans and debt relief often make it more difficult for poor countries to effectively tackle poverty. These strings often force poor countries to undertake Structural Adjustment Programmes – cut vital spending on health and education, or to privatise their public services, which provide opportunities for international companies to take these services over. Tanzania, Guyana and Bolivia have all been told that they must privatize their water supplies in order to get millions of pounds in aid from the world bank[1] [2]

Criticism 7 – (People Centred Development) – Top down aid is often irrelevant to the countries receiving it!

Much Official Development aid has focused on monstrous projects such as the building of dams and roads which have sapped local initiative harmed the environment and lead to social injustices[3].

Criticism 8 – (People Centred Development) –  Focusing on aid for developing countries suggests that Africans are helpless. Live Sid Yasmin Aibhai- Brown argues that concerts such as Live Aid perpetuate the idea of Africa as a helpless continent incapable of helping itself, whereas the opposite is actually true. [4]

[1] http://www.actionaid.org.uk/index.asp?page_id=1365 – extract about water privatization in Tanzania from Action Aid.

[2] See Chapter on Bolivia water privatisation, The Corporation DVD

[3]  See http://www.whirledbank.org/environment/dams.html for a critical look at the World Bank’s funding of dams in half a dozen developing countries.

[4] http://www.opendemocracy.net/globalization-G8/aid_2650.jsp – a critique of events such as Live Aid.

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Arguments for Official Development Aid

Early modernisation theorists believed that it was essential to inject aid into countries to establish infrastructure and change attitudes. From the 1950s to 70s aid programs seemed to have a positive effect on many developing countries as both economic and social development increased, however this progress seamed to stall from the late 1970s.

Contemporary supporters of aid believe that aid is not necessarily a bad thing, but aid needs to be targeted, its effects monitored and accountability measures need to be in place, so that aid money doesn’t go astray, like the $10 billion lent to Indonesia during General Suharto’s rule between 1965-1995.

Neo-modernisation thinker Jeffry Sachs (2005)

In the ‘End of Poverty’ (2005) Sachs notes that large scale aid can work when it is practical, targeted, science based and measurable. He believes in aid as ‘one big push’ to sort out specific problems. He points to the following evidence  to support his view that aid works:

  • Firstly, aid aimed at improving health has been particularly successful. Aid money has led to mass immunisation of children against diseases such as smallpox and measles, polio, diphtheria. Smallpox was practically wiped out with $100 million of very targeted aid aimed at vaccinating those most at risk. Today, Barder (2011) points out that every year foreign aid pays for 80% of immunisations and saves 3 million lives a year.
malaria-graphic-008

Malaria Statistics

The recent sharp decline in Malaria deaths is largely due to targeted immunisation, paid for by international aid, a cause championed by the Bill and Melinda Gates foundation 

  • Secondly – The Green Revolution – In the 1960s, Western Aid assisted in the green revolution in China, India and South East Asia which saw rice yields increase by 2-3 times, leading to surplus rice being produced for export. Such countries were then able to use the income generated by these cash crops to diversify and grow their economies, transforming into Newly Industrialised Countries (The Asian Tiger Economies). The video below outlines the case for the Green Revolution.

(NB – as a counter criticism you should check out ‘The Mythology of the Green Revolution, featuring Vandana Shiva – basically a ‘post-development perspective on the green revolution.)

  • Thirdly, Numerous countries, known as the International Development Association (IDA) graduates have gone on to ‘drive to maturity’ following large injections of aid money. Riddel (2014) argues that there is a substantial body of evidence that South Korea, Botswana and Indonesia have all benefited economically from Official Development Assistance.
indonesia-underdevelopment

Indonesia – seems to have benefited economically from a large amount of Official Development Aid over the years

 

Aid can also Support the Interests of Developed Countries (*)

According to Marren (2015), there is plenty of evidence that aid is shaped by the self-interest of the donor countries:

  1. Aid may be used as a ‘sweetener’ to gain access to resources and markets and foster better trade links. The USA has used aid to guarantee access to scarce resources such as oil, while the increased donor activity of China in recent years may be linked to its need for raw materials. This goes some way to explaining why more aid money goes to lower-middle income countries rather than low-income countries – put simply, donor countries stand to gain more from giving aid the slightly better off rather than the very poorest.
  1. Aid may be a way stimulating the donor economy. Some countries attach conditions to aid stipulating that a proportion of the funds must be spent on goods manufactured in the donor country. This is known as ‘tied aid’. The UK banned this kind of aid in 2001, although research conducted by The Guardian newspaper found that only 9 out of a total of 117 major DFID contracts (worth nearly £750 million) had gone to non-British companies.
  1. Aid may be a way of strengthening political links and securing strategic interests. Countries which are viewed by the Americans as allies in the ‘War against Terror’ are generously rewarded with aid. A recent study of U.S. Aid since the 2000s showed that the main destinations were Afghanistan, Iraq and Egypt. Similarly, UK aid is increasingly being spent on military objectives.

Statistics on the Benefits of UK Aid (*)

Wealth creation provided 68.9 million people, including 35.9 million women, with access to financial services to help them work their way out of poverty.

Poverty, vulnerability, nutrition and hunger reached 28.5 million children under five and pregnant women through the government’s nutrition-relevant programmes.

Education supported 11.0 million children, of whom 5.3 million were girls, in primary and lower secondary education.

Health ensured that 5.1 million births took place safely with the help of nurses, midwives or doctors. The UK has funded the distribution of 47 million insecticide-treated bed nets and is investing in vaccines and drugs, helping contribute to malaria deaths falling by 60% in the last 15 years.

Water, sanitation and hygiene supported 62.9 million people, of whom 22.2 million were women, to access clean water, better sanitation or improved hygiene conditions.

Humanitarian assistance reached over 13 million people with emergency food assistance, including 5.5 million women or girls.

Governance and security supported freer and fairer elections in 13 countries in which 162.1 million people voted.

Climate change supported 15 million people to cope with the effects of climate change.

Tax and transparency supported agreement on a new global standard for automatic exchange of tax information, making it easier for governments to tackle offshore tax evasion.

Scientific research helped the global elimination of rinderpest, a cattle disease which led to famine and poverty, and helped breed a new disease-resistant crop which has increased food security for an estimated 3 million people.

Sources

Chapman et al (2016) – A Level Sociology Student Book Two [Fourth Edition] Collins.

*A good example of this can be found in DFID’s 2015 document ‘UK Aid: Tackling Global Challenges in the National Interest’

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/478834/ODA_strategy_final_web_0905.pdf

 

 

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Different Types of Aid in International Development

Aid refers to any flow of resources from developed countries to the developing world. Aid can come in the form of money, technology, gifts or training, and can either be provided in the form of a grant which does not have to pay back or a loan with interest which does have to be paid back.

There are different strengths and limitations of aid depending on where it comes from – and you need to be able to distinguish between Official Development Aid from large scale institutions such as the World Bank and Governments, aid organised through Non-Governmental Organisations – or Charities such as Oxfam and Private Aid – from organisations set up by wealthy individuals – such as the Bill and Melinda Gates Foundation.

Types of Aid

There are three main types of aid you need to know about:

Firstly – Official Development Aid (ODA) is aid from public or official sources such as national governments or international agencies of development. Official Development Aid accounts for 80% aid.

official-development-assistance

There are two main types of ODA (which are not distinguished in the table above)

  • Bilateral Aid involves countries in the developed world giving money directly to governments, local communities or businesses in the developing world. In the UK this is knowns as ‘Official Development Assistance’ and in is delivered through the Department for International Development (DFID). 70% of ODA is bilateral.
  • Multilateral Aid involves the UK (and other countries) donating money to international agencies such as the World Bank and the European Commission. There are over 200 international agencies which provide aid to developing countries. 30% of ODA flows through such international agencies.

Secondly – Non-Governmental Organisation (NGO) Aid – NGOs are independent charities such as OXFAM which raise donations from the general public. There are thousands of NGOs ranging from the very large and well-known such as OXFAM, which focus on a range of development projects, to the very localised and specific, which may consist of just a few individuals focussing on one development issue in one area of one country. NGO aid makes up the other 20% of aid.

Thirdly – Private Aid – This is aid from international foundations which are set up by wealthy individuals or Corporations such as the Bill and Melinda Gates Foundation. This accounts for a relatively small proportion of aid flows.

Sources

Chapman et al (2016) – A Level Sociology Student Book Two [Fourth Edition] Collins.

 

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What is Happiness?

 Happy – lucky, fortunate; contented with one’s lot, glad or pleased[i]

Synonyms [of happy]: Pleasure, joy, exhilaration, bliss, contentedness, delight, enjoyment, satisfaction.[ii]

Happiness is the meaning and purpose of life, the whole aim and end of human existence” (Aristotle) [iii]

The very purpose of life is to seek happiness.” (The Dalai Llama)[iv]

Happiness has always mattered

The pursuit of happiness has been a central concern for millennia across many different cultures. We find its earliest written expressions in ancient traditions as diverse as Buddhism with its devotion to compassion and the end of suffering, and we find it as a theme in ancient Greek Philosophy, especially in the work of Aristotle who believed that happiness was the very meaning and purpose of life.

Happiness first became recognised as a political goal in the United State’s Declaration of human rights, and its pursuit is today embedded in the United Nation’s Universal Declaration of Human Rights (UN General Assembly 1948)[v] and governments around the world are increasingly seeking to measure ‘Gross National Happiness’ as an indicator of national progress.  The best known example of this is Bhutan’s commitment to measuring Gross National, but in recent years the British government has stepped up efforts to monitor the well being of the nation.

world happiness report.jpg

In 2012 the United Nations commissioned the first ‘World Happiness Report

Looking at literature, happiness emerged as a common theme amongst late Enlightenment philosophers, the topic seeing a surge of interest between 1800-1840, most notably in the work of Jeremy Bentham and John Stuart Mill’s theories of utilitarianism.[vi] Following this, the topic of happiness as a focus of literary attention witnessed a gradual decline, until just after the turn of the millennium, since when the topic of happiness has seen a massive increase in popularity. Today, an Amazon search in books for the term ‘happiness’ yields 21,742 results[vii]

So the fact that humanity has this shared goal is clear, but what is this thing we call happiness?

What is happiness?

The problem with defining happiness is that although the experience of it may have objectively measurable, biological roots (Layard 2011) it is also a subjective feeling with many different dimensions and in order to understand this complex feeling we need to unpick its various qualities. I think it is useful to distinguish between four different dimensions of happiness.

– ‘Aroused’ compared to ‘unaroused’ happiness

– Immediate ‘in the moment happiness’ compared ‘reflective’ happiness

– Happiness as pleasure compared to ‘eudaemonic’ happiness

– Ego-centric notions of happiness compared to egoless ideals of happiness

There is a degree of overlap between these different dimensions, and other systems of categorising happiness may well have fewer categories, but to really ‘unpick’ this emotion, I feel it is most useful to work in four dimensions as will hopefully become clear below.

‘Aroused’ and ‘unaroused’ states of happiness

clubbing-happiness

Clubbing – merely induces an ‘aroused’ state of happiness

Aroused states of happiness are those states characterised by pleasurable feelings of intense joy, excitement, heightened awareness or a general sense of being ‘mad for it’. Most of us would associate such feelings with the ‘happiest times of our lives’ – Peak experiences such opening your presents on Christmas Day, finding out you’ve passed you’re A levels, or the day you get married; while on a more day-to-day basis such peak experiences might include such things as orgasms, your football team scoring a goal, or simply going out at the weekend. Wonderful though such peak experiences are, basing our happiness on them is fundamentally flawed as these are relatively short-lived moments in the grand scheme of the years of our lives.

In contrast to these short-lived ‘peak experience’ moments of happiness, for most of us, most of the time, ‘happiness’ means a slower-burning feeling characterised by contentment, satisfaction, being at ease, and peace of mind. These are generally the kind of ‘happiness feelings’ that are elicited by happiness surveys (Layard 2011) in which people are asked to reflect on how happy they are with their lives. These surveys reveal a huge range of different types of activity that people associate with happiness. In order of reporting – people are happiest when engaged in sex, socialising, relaxing, praying/ worshipping/ meditating, eating, exercising, watching T.V. and shopping.

It we are honest with ourselves, most of the time, most of these activities don’t involve us experiencing extreme joy[viii], although any of these activities might morph into such moments and then back into mere contentment and so on. It is also worth briefly noting the activities we associate with happiness range from ‘watching television’, an extremely passive, often unconscious activity, to prayer, which is at its best can be a very ‘tuned in’ highly conscious activity.

Immediate happiness compared to reflective happiness

According to recent survey data[ix] the happiest time of the week is 7.26pm on a Saturday evening while ‘7.29am on a Monday is the lowest point. In general, we are happier at weekends than on Mondays, in the morning compared to the evening (Golder and Macy 2011), and in any given year, the happiest day is June 20th[x]. All of us will be able to relate to such cyclical fluctuations in happiness – all of us will have our happiest times of the day, week and year, and all of us will be able to say ‘right now’ I am relatively happy or sad’. In fact, revelling in the up times, being aware that ‘I am happy right now’, being aware of the fact that ‘I’m lovin’ it’ can actually be an important part of the experience of immediate happiness on top of the actual feeling of happiness itself. The problem with ‘happiness in the moment’ is that at best it only gives us a partial measure of someone’s overall level of happiness, which is why we also need to take into consideration reflective happiness.

Reflective happiness involves looking at your life in the longer term and, taking into account all of the moment to moment fluctuations, reflecting on how happy you are in general at this stage of your life, rather than on how happy you are right now in this moment compared to other moments. Reflective happiness can also involve people evaluating their happiness by comparing what they have achieved in their life so far compared to what they think they should have achieved, which in turn is influenced by one’s relative social status in society.

Looked at in this way, it is possible to have had a year consisting of miserable moments, while on reflection you are very happy with your life in general. One can easily imagine, for example, someone working in an intense career earning a six figure salary hating the 14 hour days and experiencing very little ‘immediate happiness’ in the course of a typical working week, but such a person might score very highly on reflective happiness by deriving a sense of status and self-worth from knowing that they’re in the top 1% of earners and that their plan to semi-retire at 45 is well in hand. As a converse example, someone might have a wonderful social life and plenty of drug-induced peak experiences, but might be stuck in a dead-end job, going nowhere, knowing that it’s only a matter of time until ‘the drugs don’t work’.

Happiness as pleasure compared to ‘Eudaemonic’ happiness

There is a big difference between happiness as straightforward ‘enjoyment’ or ‘pleasure’ seeking, characterised by immediate gratification of some sort – supping on my bucket-sized quad-shot cappuccino between eating forkfuls of my double chocolate fudge cake, or spending a week on holiday indulging in booze, sun and sex (probably in that quantity-order for most people), for example, and Eudaemonic happiness which is happiness achieved through the restraints of deferred gratification.

Eudaemonia is an ancient Greek concept most commonly associated with Aristotle[xi] [xii] who equated happiness, with “human flourishing”. For Aristotle, happiness was ‘a final end or goal that encompasses the totality of one’s life. It is not something that can be gained or lost in a few hours, like pleasurable sensations. It is more like the ultimate value of your life as lived up to this moment, measuring how well you have lived up to your full potential as a human being’.[xiii] Eudaemonia is a value laden concept which holds that a life worth living is one in which the individual engages in effort to pursue a more meaningful happiness in the long term which may well require one to forgo immediate gratification and engage in a routine and disciplined life, potentially even enduring considerable suffering along the way.

Aristotle believed that individuals could fulfil their potential, and thus maximise their happiness, by developing the intellect through exercising reason and leading a ‘virtuous life’, which for Aristotle roughly equated to leading a moral life in engagement with society – striking a balance between such things as being disciplined enough to restrain yourself when just doing as you please might result in negative consequences, and yet having the courage to engage with society where necessary, rather than standing back and doing nothing.

Aristotle, however, is far from having a monopoly on the notion of Eudaemonic happiness, and there is considerable disagreement over how individuals can best achieve ‘happiness through flourishing’. All of the world’s major religions contain within them the idea that meaningful happiness is to be achieved through leading a virtuous or ethical life and they all lay down codes of conduct which, if followed, supposedly lead to greater peace of mind in this life, or bliss in the next.

Neither is this type of happiness limited to religion. Thousands of humanists and political activists who engage in ‘lifestyle’ politics today practice the way of the Eudaemon, believing that a more meaningful happiness in the longer term can only be achieved through things such as voluntary poverty, ethical consumption, veganism, and protest where appropriate.

As well as developing ‘moral character’ and leading an ethical life, eudaemonic notions of happiness also incorporate the idea that in order to lead a meaningful and happy life one needs to fulfil one’s own potential and this notion is widespread in contemporary society. The most obvious example of this as I write in early August 2012 is the Olympic athlete who sacrifices and suffers to realise their full athletic potential. This type of great effort to achieve great things is hugely celebrated[xiv] in our society, and such efforts are by no means limited to big name athletes. Millions of people sacrifice to meet their athletic goals, as do millions of students who go through education every year, and there is a wealth of similar examples people forgoing immediate pleasure, even enduring suffering in the present, in order to maximise their potential in the future.

Layard (2005) reports on research by psychologist Carol Ryff which has found a correlation between believing you are leading a meaningful life and levels of happiness. So according to this research, eudaemons are likely to be happier than immediate-gratifiers, so many people subjectively believe that this type of happiness is more worthwhile than the happiness associated with mere immediate-gratification and many people believe that greater and more profound happiness in the future can only be achieved through deferring immediate gratification to achieve their eudaemonic objectives.

 Egocentric and egoless happiness

By egocentric ideas of happiness I mean any notion of happiness which revolves around the self – such as me being gratified by getting what I want. By egoless notions of happiness I mean any sense of happiness that arises as a result of a genuine intention to put the well-being of others before oneself or any happiness that arises when the self becomes temporarily absorbed in an activity.

Egocentric notions of happiness include most of the notions of happiness which have already been discussed. This means any form of happiness achieved through me getting what I want – in the short term this means any happiness induced when I move from a relatively unhappy to a more happy state by eating my chocolate cake, going on my holiday, or getting into a relationship with somebody I desire; in the longer term it means the more contented happiness that arises when I consider how wonderful my life is compared to others, or the smug satisfaction I get when I reflect back on my life’s achievements. Those eudaemonic notions of happiness which are rooted in me fulfilling my potential for the sake of myself are also egocentric. We might celebrate the achievements of Olympic gold medallists for example, but these achievements are, at the end of the day, all about them. Some might even argue that one individual putting in so much effort to be able to jump just 10 centimetres further or run just 1 second faster than the next person to achieve glory on one day in one four year period ranks amongst the most egocentric projects in the world.

Egoless notions of happiness

Probably the most accessible and appealing dimension of ‘egoless happiness’ comes in the form of the now widely known idea of ‘flow’ which refers to the loss self-consciousness that happens when you are completely absorbed in an activity. Classic examples of activities where ‘flow’ might occur include playing music, dancing, painting, or engaging in hobbies more generally. The idea of flow as an ideal form of happiness was originally proposed by Mihály Csíkszentmihályi (Csíkszentmihályi, 2013), one of the leading thinkers within the positive psychology movement, who argues that for flow to happen we have to be engaged voluntarily in an activity which we enjoy doing with the intention of self-improvement. This essentially means that while this is an egoless mode of happiness in the immediate term, in the longer term it is egocentric.

To my mind a more authentic form of egoless happiness is witnessed in those people who strive to achieve happiness through helping others. Most of us will be able to think of examples of occasions when we have become happier through doing good for others, putting someone else’s needs before our own, or contributing to the collective good. This type of happiness emerges when we work as part of a team, when we give gifts, and when we care for dependent relations or spend time patiently educating our children. Most of us recognise that to lead a truly satisfying life we need not only to work with others, but we need to do things for others as well. I refer to these as ‘egoless notions of happiness’ in the sense that ‘I’ am less important in such examples than ‘I’ am in the immediate-gratification notions of happiness referred to earlier.

 Shallow happiness strategies compared to deep happiness strategies

To summarise I have distinguished between 4 ‘dimensions’ of happiness – I refer to any combination of those on the left as ‘shallow’ and those on the right as ‘deep’.

  1. ‘Aroused’ compared to ‘unaroused’ happiness – or ‘intense, excited peak experience’ happiness compared to calm, contented happiness.
  2. Immediate ‘in the moment happiness’ compared ‘reflective’ happiness – or felt happiness right now compared to our analysis of how happy we are in general.
  3. Happiness as pleasure compared to ‘eudaemonic’ happiness – Or happiness derived from immediate gratification compared to the happiness we derive from striving and possibly suffering to achieve our potential.
  4. Egocentric notions of happiness compared to egoless ideals of happiness – or the happiness derived from ‘gratifying myself’ compared to happiness derived from losing myself.

NB – I’m aware this is a bit of a departure from the main themes of this blog, but this is just something that interests me, so I thought I’d shove it our there.

References

[i]            1976. Concise Oxford Dictionary of Current English. 6th Edition. Oxford University Press

[ii]           The Online Dictionary – http://dictionary.reference.com/browse/happy?s=t

[iii]           Cited from the Writing Creative Non Fiction Blog –  http://writingcreativenonfiction.wordpress.com/2011/09/30/positive-psychology-what-makes-people-happy/

[iv]          Howard C. Cutler  and His Holiness The Dalai Lama, 1999. The Art of Happiness: A Handbook for Living. Mobius.

[v]           Article 25 refers to well-being which is one important dimension of happiness. http://www.un.org/en/documents/udhr/

[vi]          Google Books Ngram Viewer http://books.google.com/ngrams/graph?content=happiness&year_start=1750&year_end=2008&corpus=0&smoothing=0

[vii]          Searched on 30th October 2012

[viii]          If anyone has any data on how much of people’s active sex lives is characterised by feelings of ‘love and contentment’ compared to ‘going at it’ please do get in touch. My feeling is that for most people even sex is overwhelmingly about the former and the ‘going at it’ element is much less significant, hence I’d say that even ‘sex’ is really about ‘contentment’ rather than ‘ecstasy’.

[ix]           Daily Mail, 2011. When Do YOU Unwind: The happiest time of the week is 7.26pm on a Saturday http://www.dailymail.co.uk/news/article-1353672/Saturday-evening-7-26pm-happiest-time-week-British-people.html

[x]           The Telegraph.19th June 2008. Today is the Happiest Day of the Year –  http://www.telegraph.co.uk/news/newstopics/howaboutthat/2158104/Today-is-the-happiest-day-of-the-year-according-to-Cliff-Arnalls-maths-formula.html

[xi]           See this entry in Stanford Encyclopaedia of Philosophy for a fairly thorough and reasonably accessible discussion of the concepts of virtue, practical wisdom, Eudemonia and how they relate to each other. – http://plato.stanford.edu/entries/ethics-virtue/

[xii]          For a contemporary slant on Eudemonia see Karen Salmansohn’s blog post ‘A Happiness Tip from Aristotle’, from The Positively Positive Blog, April 8th 2012 http://www.positivelypositive.com/2012/04/08/a-happiness-tip-from-aristotle/

[xiii]          See this blog post on Aristotle – The Pursuit of Happiness: Bringing the Science of Happiness to Life –  http://www.pursuit-of-happiness.org/history-of-happiness/aristotle/

[xiv]          On logging onto Twitter one day in early August 2012 I was greeted with the following strap-line on the homepage – ‘Dedication. Sacrifice. Guts, Glory. Get closer to the #Olympics on Twitter’, August 4th 2012

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The Role of the World Trade Organisation in International Development

The World Trade Organisation (WTO) is the body through which governments and businesses (mainly TNCs) negotiate the rules of trade, and settle trade disputes once these rules have been established.

The concept of the WTO first began with the 1947 the General Agreement on Tariffs and Trade (GATT) was signed by the Western powers to govern global trade and to reduce trade barriers between nations. In 1994, the WTO was set up to replace GATT, originally consisting of 126 members; it has since expanded to 164 member states currently.

wto

The WTO now has trade rules in place covering not only goods but also services such as telecommunications, banking and investment, transport, education, health and the environment.

The WTO is committed to the concept of free trade, believing that unlimited competition in the free market results in efficient production, innovation, cheap prices and the fastest possible rates of economic growth. They see government interference in markets as stifling businesses and being harmful to economic growth. WTO trade agreements and trade rules have thus tended to focus on reducing government intervention, such as the reduction of tariffs, subsidies and restrictions on imports.

However, critics argue that the WTO has hidden goals, and that it is really interested in helping rich countries and TNCs maintain their economic dominance. Chang (2010) for example has criticized the World Trade Organisation, arguing that its trade rules are unfair, and biased against developing countries. The WTO pressurizes poor countries to open up their economies immediately to western corporations and banks by abandoning tariffs (taxes) on western imports. However, the developed countries are still allowed to impose quotas on the imports of manufactured goods from poor countries, in order to protect their manufacturing industries.

Along the same lines as Chang above, McKay argues that WTO trade rules have rigged the terms of global trade in favour of the West and consequently the WTO is a rich man’s club dominated by the neo-liberal philosophy of the developed, industrialised nations.

A second major criticism of the WTO is that it is notoriously undemocratic – decision making at the WTO is dominated by a small group of Western members, with representatives of developing countries being outnumbered by the representativeness of wealthier countries and TNCS, even though the majority of the world’s population lives in those poorer countries.  A consequence of this is that the WTO tends to see free-trade as more important than protecting workers rights or the environment.

Philippe Legrain (2002), former special advisor to the Director-General of the WTO has acknowledged four main criticisms of the WTO:

  • It does the bidding of TNCs
  • It undermines workers’ rights and environmental protection by encouraging a ‘race to the bottom’ between governments of developing countries competing for jobs and foreign investment.
  • It harms the poor
  • It destroys democracy by imposing its approach on the world secretly and without accountability. He argues that the WTO’s free trade rules have prioritised the interests of TNCs over democratic and human rights.

Sources 

Chapman et al (2016) – A Level Sociology Student Book Two [Fourth Edition] Collins.

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Arguments Against Trade as a Strategy for Development

Andre Gunder Frank (1971) argues that the reason trade doesn’t work for poor countries is a legacy of colonialism – before independence, the colonizing power simply took these commodities. After independence, developing societies are often still over-dependent on exporting these primary commodities, which typically have a very low market-value, and rich countries are happy to keep things this way because this enables them to stay rich.

Dependency Theorists point to at least the following reasons why trade doesn’t help poor countries develop:

Poor countries are often dependent on low value, primary products for their export-earnings

Examples of countries over-dependent on low-value commodities include the Ivory Coast in West Africa, which to this day remains around 33% dependent on the export of raw cocoa beans or related products; Kenya (in East Africa) which is about 30% dependent on two primary products – tea and cut flowers, and Ethiopia (also in East Africa, although never a European colony) which is about 30% dependent on income from Coffee exports.

 

malawi-tobacco

Malawi – dependent for most of its income on one primary agricultural product – Tobacco

 

According to Elwood (2004) three commodities account for 75% of total export in the poorest 50 countries, but because of the declining value of such commodities, the developing nations need to export more and more every year just to stay in the same place. One developing nation leader described it as ‘running up the downward escalator’. For example, in 1960, the earnings from 25 tons of natural rubber would buy four tractors, today it would only buy one.

Value is added to primary commodities by rich countries

Primary products such as cocoa, tea and coffee, sell for relatively low prices, so the farmers growing and selling such products make relatively little. However, once these products have been processed, branded and turned into the goods you see on the supermarket shelves, they can sell several times the original price. The problem (for developing countries) is that most of this processing and branding is done in the West. Thus, poor countries stay poor, and rich countries get rich.

With some commodities, there are several links in the chain of trade – take coffee for example – it goes from grower (in Ethiopia for example), to the local buyer, to the exporter, to the roaster (in Germany for example), to the supermarket and then to the consumer – 6 links in the chain. A bag of coffee might cost the consumer £2.50 in the supermarket, but the grower is lucky (very lucky) if they receive even 10% of this.

Two good video sources which illustrate how low-value exports don’t generate enough income for development are the movie „Black Gold which illustrates exploitation of coffee farmers in Ethiopia, and there is also Stacey Dooleys „Kids with Machetes which illustrates the low wages paid to cocoa farmers in The Ivory Coast.

The terms of trade are often biased against poor countries

Western nations impose tariffs (import taxes) or quotas (simply limits on how much a country can import) on goods from the developing world, which seriously impairs the ability of poor countries to make money from exports.

At the same time as restricting imports from poorer countries, Western governments subsidize some of their own industries. This results in over-production in some sectors, which can result in cheap, subsidized Western goods being dumped on poor countries, which undermines local industries in poorer countries. This happened in Haiti in the early 1990s, when cheap, subsidized American rice was dumped on the Haitian market, forcing local rice farmers out of business (because the American rice was cheaper.

More recently, Dependency Theorists have become concerned with the recent increase in bilateral ‘free trade’ agreements (FTAs). For example, in 2007, the EU singed FTAs with India which opened up Indian markets to the import of poultry and dairy products, despite the fact that 85% of demand is met locally by Indian farmers, and the introduction of big supermarket chains into the Indian marketplace.

Poor countries have been pressurized into exporting to clear their debts

The World Bank sees loans and debt as a ‘normal’ part of development, and poor countries are required to maintain repayments on (often low-interest) development loans to be eligible for more loans, thus keeping up repayments on loans is a crucial part of development for many countries.

Ellwood (2004) argues that this has resulted in the ‘social violence of the market’ – the constantly escalating pressure on farmers and workers in the developing world to produce more for less, which results in a problem called ‘immiserating trade’ – the more a developing country trades, the poorer it gets.

Conclusions

 Marxists conclude that the terms of world trade are far from equal. Developing countries are very much junior partners in global trading relationships and are consequently exploited by more powerful countries, TNCs and their agents.

References 

Chapman et al (2016) – A Level Sociology Student Book Two [Fourth Edition] Collins. ISBN-10: 0007597495

 

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Arguments for Trade as a Strategy for Development

‘Free’ trade* refers to the relative absence of government interference in the affairs of private businesses and the consumers who buy their products. Free trade depends on free trade agreements.

Free Trade agreements are policies established between countries and private businesses which make it relatively easy for companies to produce and sell goods in more than one country, so the ‘free’ in free trade means the freedom of businesses from the restrictive power of government.

Free trade.jpg

Free Trade – It’s about keeping goods circulating, and services of course!

Governments can restrict free trade across international boarders by doing the following:

  1. Imposing tariffs – which are taxes that nations impose on imports. Tariffs increase the cost of goods, and make it harder for companies to sell their goods abroad. (Quotas are similar but blunter instrument than tariffs, they are simply a limit which governments put on the number or value of imports they will accept from certain countries in any given time period)
  2. Subsidizing domestic industries – which are government hand-outs or tax breaks on domestic companies – if a government does this, then it makes domestic goods cheaper and foreign goods relatively more expensive – it’s effectively the opposite of tariffs.
  3. Imposing high taxes on profits – which reduces incentives for private companies to invest and produce goods.
  4. Having too many regulations – which require that companies pay workers minimum wages, do health and safety assessments, and take care of the environment.

It follows that Free trade agreements tend to focus on:

  1. Eliminating tariffs and quotas
  2. Eliminating government subsidies
  3. lowering taxes on profits
  4. Reducing regulation and protection.

Free trade opens up foreign markets and lowers barriers for foreign companies that otherwise might not be able to compete against local businesses. Without free trade agreements, there would probably be less trading between countries.

The idea of free trade goes back a long way

One of the most well- known historic proponents of free trade was Adam Smith. In his 1776 book The Wealth of Nations Smith argued that the ‘invisible hand’ of the free-market would ensure that producers produced what consumers wanted as efficiently as possible.

David Ricardo expanded on Smith’s ideas arguing that countries tended to have a comparative advantage in providing different goods and services and should do what they do better and cheaper than other countries, and in this way everyone benefits. For example, the U.K. climate is well-suited to growing apples, but not sugar-cane, and vie-versa for Jamaica, so it makes sense that two countries specialize in each crop and trade, rather than trying to grow everything themselves.

Modernisation Theory and Neoliberalism both argue that developing countries need to increase their share of world trade (export and import more) in order to develop, and both recognize that most developing countries have enormous potential to increase exports, given that they have a two important ‘competitive advantages’ over the West –an abundance of natural resources, which the West no longer has, and abundance of cheap labour.

However, the two theories have very different ideas about how poor countries should increase trade – modernization theory prefers aid to encourage trade, whereas neoliberalism is suspicious of aid, believing that poor countries should move straight to opening up the markets to attract TNC investment.

Modernisation Theory

Modernisation theory argues that increasing trade with other countries is a crucial part of ‘climbing the ladder of development’.

Initially, in phase two, or ‘the pre-conditions for take-off’, developing countries themselves have very low levels of capital and expertise, and so they require aid from the West, in the form of capital investment and western advice, which could help countries establish an industrial base, for example.

In the ‘take off’ phase (phase three) of Rostow’s model, countries will start to manufacture goods for export to other countries, and the ‘drive to maturity’ phase (phase four) sees earnings from exports reinvested in public infrastructure such as education, which results in a higher skilled workforce and further integration into the global economy.

After 60 years, the ‘age of high mass consumption’ should have been attained which means that countries are equal trading partners in the global market place.

Neoliberalism

Reid-Henry (2012) argues that neoliberalists see global free-trade markets as both the means and desired end for development.

Neoliberal development policy argues that developing countries need to create a ‘business-friendly’ environment in order to encourage inward investment from wealthy individuals and Transnational Corporations.

Reid-Henry suggests there are four key organizing principles of neoliberal policy:

  1. The governments of developing countries are expected to pull down all barriers to Western investment
  2. Workers in the developing world are expected to work hard and cheaply for Transnational Corporations
  3. Public services need to be privatized
  4. Social life should be organized around the profit motive.

Many developing countries have actually set up huge Export Processing Zones, or Free Trade Zones In order to attract TNCs developing countries have set up. These are special areas in that country, typically close to ports, which offer incentives for Transnational Corporations to invest, including tax breaks, low wages, and lax health and safety legislation.

In Neoliberal theory, corporations will help a country develop by providing jobs and training. The money earned will be spent on goods and services at home and abroad creating more money to invest and (limited) tax revenue for further development.

Evaluations 

It is true that there is an obvious relationship between trade and economic growth. The world’s top five countries, ranked by GDP, export (and thus profit from) 40% of the world’s goods. Meanwhile, the bottom 50 GDP countries export less than 1% of the world’s goods.

However, dependency theorists argue that ‘free-trade’ has historically brought more benefits to wealthy countries and corporations compared to developing countries.

Further Reading:

What is Free Trade? – quite a useful intro blurb from study.com

The case for free trade is as strong as ever – Bloomberg View, March 2016

IMF study warns free trade seen as benefiting only a fortunate few – Guardian article, 2016.

The impact of free trade agreements on the economies of developing countries – DFID 2015 – based on a ‘rapid assessment’ of 144 studies of FTAs between developed and developing countries, this recent report concludes that (a) in most cases the evidence isn’t strong enough to say what the effects of free trade are and (b) where the evidence is strong enough, it’s mixed.

*The reason I typically parenthesize the ‘free’ in ‘free trade’ is that for free trade to happen effectively it actually requires a substantial legal framework, which requires government and a legal system to which all parties agree – the most obvious aspect of which is the protection of private property – which basically says that if you make a profit, you can keep it, rather than having someone come and simply take it off you.  

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Criticisms of the World Bank

The World Bank claims that its major goal is to promote global development through poverty reduction, but there are many critics who argue this is a smoke-screen, and the real aim of the World Bank is to use conditional loans in exchange for countries establishing neoliberal economic policies which ultimately benefit western companies and financial institutions.

bad-samaritansHa-Joon Chang (2007) for example argues that the World Bank (and the IMF) present themselves as a ‘good Samaritans’ whose only motives are to assist the developing world, but they are actually ‘bad Samaritans’ because their motives are essentially selfish.

Chang argues that the real point of the World Bank (along with IMF and the WTO) is to create a policy environment in the developing world that is friendly to Transnational Corporations, an environment which benefits TNCs and small groups of elites in developing countries, but results in deteriorating social development for the majority of the people.

John Pilger in ‘The New Rulers of the World‘ puts it more bluntly:

Pliger argues that the World Bank (along with the International Monetary Fund) is the agent of the richest countries on earth, especially America, and its function is to offer loans to poor countries, but only if they privatise their economies and allow western companies free access to their raw materials and markets.

The World Bank says its aim is to help poor people, calling this global development, but in reality, the effects of its policies are that the rich get richer on running up debt, cheap labour and paying as little tax as possible, while the poor get poorer as their jobs and public services are cut to pay just the interest on the debt owed to the World Bank.

The documentary also claims that the bank operated during the entire cold war as an institution which distributed money to mainly authoritarian regimes in the third world that supported the West in the Cold War.

The World Bank in Indonesia (1960s – 1990s)

Probably the best historical case study which criticizes the role of the World Bank in development is the case of Indonesia. 

In the 1960s General Suharto seized power in Indonesia secretly backed the United States and Britain. He removed from power the founder of modern Indonesia, Sukarno – a nationalist who believed in economic independence for the country. He had kept the Transnational Corporations and their agents, the World Bank, and the IMF, out of the country, but with Suharto coming to power they were called back in to ‘save’ Indonesia.

This regime change was one of the bloodiest mass murders in post WW2 history, with more than a million people estimated to have died in the process. Suharto took brutal steps to consolidate his power by rounding up thousands and thousands of civil servants, school teachers and basically anyone with communist leanings and murdering them.

Within a year of Suharto’s coming to power the economy of Indonesia was effectively redesigned, giving the west access to vast natural resources, markets and cheap labour, what Nixon called ‘the greatest prize in Asia.

Over the next 30 years the World Bank handed out $30 billion in loans for development to the Suharto regime, turning a blind eye to the estimated million people who Suharto massacred during his rule. The Indonesian elite instigated many development projects with World Bank loans during this time, and many of them were seen as opportunities to skim money for themselves.

The Asian financial crisis of 1998 collapsed the Indonesian economy which resulted in Suharto stepping down from power, ending a 30 year rule during which time he stole an estimated $15 to $30 billion from the Indonesian people, giving him the dubious honour of being the most corrupt dictator in modern world history.

According to the World Bank’s own documents, by the end of regime, $10 billion out of $30 billion in loans remained unaccounted for (so around half of the estimate above is straight from the World Bank). Of course the debt remained, and still had to be paid back to the World Bank by the Indonesian citizens who had never seen a cent of that money.

According to the auditor general of the World Bank, if the citizens of Indonesia made a legal challenge against the World Bank over the remaining debt (given that they never received the money), the World Bank would be bankrupt, because this has gone on the world over.

The World Bank in Bolivia (1994)

Another specific case study which demonstrates the harmful effects World Bank policies can have on poor countries is the case of the World Bank’s Structural Adjustment Programme in Bolivia in the mid 1990s (clip below from ‘The Corporation’):


In 1994 the World Bank refused a $25 million dollar loan to a local water co-operative in Cochabamba, Bolivia. Instead, they insisted that the Bolivian government hand over the running of the local water supply to a French mulitnational named Bechtel. The agreement that the World Bank forced onto the Bolivian government gave the French company total control over the local water supply in Cochabamba, even over the rain water, and locals were forbidden from collecting rain water to drink – they either had to pay the company for water or die of thirst.

The problem was that the fees Bechtel was charging for water cost the average local resident more than they spent on food, or about half of their income (the other half they didn’t spend on food).

In response,  a resistance movement sprang up (no pun intended), to which the government responded with military force – and over a hundred people were wounded in the following skirmishes.

In this case, the government eventually backed down, and the water supply was returned to the control of the local community, meaning that water was again effectively available for free, but this goes to show the lengths the world bank will go to in support of Transnational Corporations.

A good documentary which puts the Bolivian water privatisation in historical and global context is ‘Blue Gold: World Water Wars’ – clip below…

Some negative consequences of Structural Adjustment Programmes in Africa 

Structural Adjustment programmes are the primary vehicle through which the World Bank provides conditional loans for development – through them, a country only receives loans if it adopts neoliberal (pro-business) policies – there are four main strands to this – prviatising public services, cutting taxes, deregulation, and developing an ‘export driven’ economy.

This useful blog post summarises some of the harms that World Bank structural adjustment programmes have done in Africa. To summarise just a few of them…  

  • Privatisation has meant that Transnational Corporations have been able to buy state enterprises at very low costs.
  • Tax reforms under structural adjustment programmes typically have meant tax cuts for the wealthy (lowering taxes on profits for example) and shifted the tax burden onto middle and low-income groups.
  • Deregulation has made it easier for TNCs to shift their profits abroad – to offshore banking accounts for example.
  • Cuts to public services such as health have increased the number of people without access to health care.
  • Cuts in public sector employment, have led to large increases in unemployment. (for example 300 000 civil servants were retrenched in Zaire – now DRC – in 1995).
  • Liberalisation of labour markets have led to the phasing out of minimum wage legislation.
  • Export orientation in agriculture has led to the elimination of subsistence agriculture and pushed people towards cities, leading to rapid urbanisation and an increase in slum-living conditions.
  • Various NGOs funded by international aid agencies have gradually taken over government functions in the social sector.

Evaluations of these Criticisms 

  1. Many of these criticisms are historical, and they may not apply to World Bank policy today.
  2. It’s actually quite difficult to evaluate how successful World Bank policies have been in promoting development, because you can never be sure what would have happened if World Bank policies and conditional loans had not been put in place, and it’s difficult to isoloate the specific effects of policies given the open-systems nature of global development.

Further Reading

Structural adjustment programmes – more harm than good for African development?  A useful blog post analysing the reasons why SAPs generally didn’t work in Africa, from 2015

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The Role of the World Bank in International Development

The World Bank’s main function is to provide long-term loans to developing countries for development. These loans support a wide array of investments in such areas as education, health, infrastructure, agriculture, and environmental and natural resource management.

 

the-world-bank

The World Bank headquarters in Washington D.C.

According to the World Bank’s web site:

The World Bank Group has set two goals for the world to achieve by 2030:

  • End extreme poverty by decreasing the percentage of people living on less than $1.90 a day to no more than 3%
  • Promote shared prosperity by fostering the income growth of the bottom 40% for every country

The World Bank is not a bank in the ordinary sense but a unique partnership to reduce poverty and support development. The World Bank Group comprises five institutions managed by their member countries.

Historically, the World Bank’s primary role in development seems to be in promoting free-market pathways to development, focusing primarily on GDP growth as the most important indicator of development. However, more recently there has been more of an emphasis on poverty alleviation and and improving social development, as well as making countries resilient to global challenges such as climate change and pandemics. .

Donor Countries and Countries viable for World Bank Assistance 

The World Bank is funded primarily by the governments of the world’s richest 60 developed nations, and the amount each country provides is broadly related to its GDP – the USA is the largest donor, for example, having contributed $1.5 billion, while the UK is third, with a contribution of just under $900 million (2010 figures). NB It’s worth noting that the amount of money channeled through the World Bank is increasing.

world-bank-commitments

This means that the remaining 130 countries, mostly outside of Europe, are eligible for development aid through the World Bank.

World Bank recpient countries.png

Countries eligible for World Bank Assistance 2016

The Scale Development Assistance Given by the World Bank

In 2016 the World Bank made over $64 billion dollars of commitments to developing countries, broken down by region below (World Bank Annual Report, 2016)

world-bank-commitments

So what does the World Bank actually do to promote development?

TBH it’s difficult to say – exactly what the World Bank does in each country depends, to an extent, on that country’s level of development. To check out what the World Bank does in each country, and for progress, see the World Bank’s country pages.

Historically, the World Bank has had a Neoliberal Development Agenda

Despite there being different development programmes in different countries, since the 1980s, the World Bank has generally favoured a neoliberal approach to development by offering loans only if developing countries adopt neoliberal policies such as the privatization of public services, deregulation, lowering taxation, and developing an export-driven (rather than a subsistence) economy (Chapman et al, 2016).

The World Bank and Structural Adjustment Programmes (SAPs)

Structural Adjustment Programmes (SAPs) are one of the main policy vehicles through which the World Bank and the IMF* have sort to encourage economic development in poorer countries. They basically involve encouraging poorer countries to adopt a neoliberal pathway to development, favoouring free-trade. 

Structural Adjustment Programmess were first introduced by the World Bank and the IMF in the 1980s in response to a debt crisis in Africa in the 1970s. Under SAPs, countries are able to get loans from the IMF or the World Bank if they accept conditions, which usually consist of adopting neoliberal policy reforms.

How did SAPs intend to fuel development?

SAPs required numerous developing countries to introduce the following neoliberal policies, which favoured free-market capitalism.

  1. Lower taxation, especially on profits – to provide incentives businesses and attract international investment.
  2. Privatisation of public services – neoliberals believe that state run services (such as health and education) are inefficient, privatising them means handing them over to private companies to run, which should deliver better services for cheaper because they’re more concerned with cost-cutting to maintain and increase profit.
  3. Deregulation – which included reducing the rules surrounding minimum wages, environmental legislation and health and safety, all of which make it more difficult to do business.
  4. Refocusing the economy to favour production for export rather than ‘import substitution’ –  many SAPs encouraged developing countries to invest money in ‘export processing zones’ which were special areas (typically near ports) which TNCs could move into to manufacture goods cheaply for export, taking advantage of the cheap labour in poorer countries, rather than spending money supporting smaller,  local industries producing goods for domestic consumption. A good example of this is provided through the current case study of Malawi. The World Bank’s web site says: ‘With support from the World Bank and other donors, the Malawi government has been developing a new national agricultural policy to refocus smallholder subsistence farming to commercial approaches’.

So What is the role of the World Bank in International Development?

Historically we can certainly say that the World Bank has made considerable efforts to support free-market capitalism, and some of its policies do seem have benefited some developing countries, such as the IDA graduates.

However, unfortunately for the World Bank, there is a lot evidence that many of its policies have not helped developing countries at all and numerous critics argue that its interventions in poor countries have actually made things worse for a lot of people, which is covered in a later post….

Related Posts

Criticisms of the World Bank (forthcoming)

Further Reading

Structural adjustment programmes – more harm than good for African development?  A useful blog post analysing the reasons why SAPs generally didn’t work in Africa, from 2015

The World Bank’s Malawi page

*The International Monetary Fund – I’ll post on this later.

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The New Rulers of the World – A Summary

The New Rulers of the World (2001) by John Pilger provides a good example of a Dependency Theory analysis of the consequences of neoliberal globalisation, focusing on Indonesia as a case study.

The fact that this is a dependency view of development is quite clear from John Pilger’s own summary of the documentary:

“There’s no difference between the quite ruthless intervention of international capital into foreign markets these days than there was in the old days, when they were backed up by gunboats…. The world is divided between the rich, who get richer, and the poor, who get poorer, and the rich get richer on the backs of the poor. That division hasn’t changed for about 500 years” (the link above will take you to this quote)

Below I provide a brief summary of the documentary. The documentary is 15 years old now, but it provides a very useful introduction to the following concepts within global development.

  • It provides an unambiguous example of a Dependency Theory analysis of underdevelopment in one country – Indonesia
  • It’s an especially useful analysis of neo-colonialism – how economic institutions now work to extract wealth from a poor country.
  • It introduces you to the role of the World Bank and the International Monetary Fund in an accessible way.

NB this documentary is now over 15 years old, so you might like to think about the extent to which it still applies to Indonesia 15 years on, and the extent to which you can generalise this analysis to other countries today. 

(NB – the headings below are my own, not from the documentary)

John Pilger – The New Rulers of the World – intro section 

In recent months, millions of people around the world have been protesting against a new economic order called globalisation.

Never before has the human race enjoyed such enormous capacity to create wealth and reduce poverty, but never before has inequality been so great.

A small group of individuals controls more wealth than the billion people in Africa, and just a handful of corporations dominate a quarter of the world’s economic activity – for example General Motors is now bigger than Denmark.

The famous brands of almost everything are now made in poor countries, with wages so low it borders on slave labour.

Tiger Woods is paid more money to promote Nike than the entire workforce in Indonesia are paid to make Nike products.

Is this the new global village we’re told is our future, or is this an old project, that used to be run by the divine right kings, but is now run by the divine right of corporations and the government s which back them?

This film is about the New Rulers of the World – and especially their impact on one country – Indonesia.

Indonesia –history/ background

indonesia-underdevelopment

Indonesia is where the old imperialism meets the new. This is a country which should not be poor as it is rich in natural resources such as oil and gold, copper,  timber and the skills of its people.

It was first colonised by the Dutch in the 16th century, and plundered by the west for hundreds of years, a debt which is yet to paid back.

Pramoedayo Ananta Toer (ex political prisoner)

“For hundreds of years Indonesia and many other countries were sucked dry by the European countries, who became strong, and the masters of finance and commerce, and now they are dictated to by the World Bank and the IMF – Indonesia has been turned into a country of beggars because its elite is spineless.

George Monbiot (well-known environmentalist)

“We’re told that globalisation is going to bring us all together and help combat poverty but what we’ve actually seen is the opposite – the poor are becoming poorer, and the wealthy are becoming staggeringly wealthy”.

Rich and poor in Indonesia

world-bank-indonesia

The World Bank famously called Indonesia a ‘model pupil’, a success story of economic growth.

To illustrate this success the video now cuts to a lavish wedding between two merchant families – these are the elite who have reaped the benefits of globalisation –the freedom to earn money and let that money make more money.

However, Indonesia is also a very unequal country and only a relatively few people have benefited from this economic growth: 70 million people live in extreme poverty – and they’ve calculated that it would take one of the waiters working at the wedding 400 years to pay for such a wedding.

The lavish wedding is contrasted to an Indonesian labour camp less than 5 miles way where young people make the cheap consumer goods we consume in the west.

This is the backyard of global capitalism, the side we don’t see, the human price we pay for the cheap goods we buy. The average worker here gets £0.72 a day, the minimum wage in Indonesia, just over half a living wage (according to the government).

Dormitories are made from breeze blocks, they flood when it rains, and open sewers spread diseases which kill children.

The labour camp is set in an economic processing zone, which is basically a vast area of sweat shops.

Investigating Poor Working Conditions in Indonesia

GAP sweatshop.jpg

The documentary crew posed as fashion buyers to gain access and secretly filmed in one factory, and also conducted dozens of interviews with workers in these factories.

Working conditions are claustrophobic, frenzied, the workers fatigued, and working under strip-lighting in temperatures of up to 40 degrees (the management however have air conditioned offices.

They also have horrendous working hours – which can be upped when deadlines for orders are due. The workers are typically young women and one worker is on camera saying that she once worked a 24 hour shift with no breaks.  She says she is too scared to refuse or even question the working hours.

These factories are owned by Taiwanese and Korean contractors who take orders from companies such as GAP (whose products were made in the above factory where the workers are paid extremely low wages).

GAP has codes of conduct which are supposed to apply to working conditions globally, and GAP representatives do visit the factories, but the workers interviewed say they are warned by management to not tell them about forced overtime.

Dita Sari – Trade union leader

Points out that codes of conduct are meaningless in a country like Indonesia because there is high unemployment and terrible poverty, so the people are desperate enough to put up with dismal working conditions, and the government is unwilling to enforce the codes because they want Indonesia to be as attractive as possible to international companies (which means keeping labour cheap).

If you pay £8.00 for a pair of boxer shorts, then an Indonesian worker will receive approximately £0.04 pence of that.

In the previous year, the profits of gap were just short of £2 billion, and the CEO ‘earned’ £5 million, figures typical of many multinational companies.

For the sake of the documentary, they had to keep the factories anonymous, because the workers would have Victimisation from contractors and violence from anti-unionists.

Barry Coats – World Development Movement

We should aim to be better informed as consumers – when we buy something, we need to ask the company where it was produced and to give assurances that the workers are treated fairly.

The secret history of globalisation in Indonesia

president_suharto_1993

President Suharto – The most corrupt leader in modern history, according to Transparency International, having embezzled an estimated $15-35 billion during his rule

In the 1960s General Suharto seized power in Indonesia secretly backed the United States and Britain.

Suharto removed from power the founder of modern Indonesia, Sukarno – a nationalist who believed in economic independence for the country. He had kept the Transnational Corporations and their agents, the World Bank, and the IMF, out of the country, but with Suharto coming to power they were called back in to ‘save’ Indonesia.

This regime change was one of the bloodiest mass murders in post WW2 history, with more than a million people estimated to have died in the process. Suharto took brutal steps to consolidate his power by rounding up thousands and thousands of civil servants, school teachers and basically anyone with communist leanings and murdering them.

He did this with the support of the CIA, who provided a list of 5000 people they wanted dead, and the British ambassador at the time suggested a little shooting was necessary to ease the transition, while British war ships played a supporting role in protecting Indonesian troops.

Within a year of Suharto’s coming to power the economy of Indonesia was effectively redesigned, giving the west access to vast natural resources, markets and cheap labour, what Nixon called ‘the greatest prize in Asia.

The American press reported these events not as a crime against humanity, but in terms of ‘The West’s best news for years’.

In 1967 – a conference in Switzerland planned the corporate take-over of Indonesia, with most of the world’s large international companies represented, such as ICI, General Motors and American Express. For western business this was the start of the gold rush which later became known as globalisation, and barely anyone mentioned the million dead Indonesians.

Professor Jeffrey Winters

Has never heard of a situation like this where global capital holds a meeting with the state and hammered out their interests. The conference lasted for three days – and the companies present hammered out policies which would be acceptable to them on a sector by sector basis. They basically designed the legal infrastructure for investment in the country.

It basically becomes clear from a series of interviews, despite their evasiveness, that the international business community new they were dealing with a nepotistic mass murderer.

Globalisation – the British arms connection

Globalisation began in the 1980s when Margaret Thatcher dismantled manufacturing and poured billions of pounds into building up the arms industry. Suharto was an important customer for the UK arms industry at that time, and sales to Indonesia were supported by ‘export credits’, in other words, a large part of Suharto’s arms bill was paid for by the British tax payer.

queen

The Queen – entertaining the mass murderer and dictator general Suharto

So important was Suharto to British arms exporters, that he was welcomed to London by the Queen.

The World Bank and the IMF – The New Rulers of the World

Who are the new rulers of the world? Their empire today is greater than the British Empire ever was. Basically they are the World Bank, and the International Monetary Fund, two bodies which are the agents of the richest countries on earth, especially America.

Initially set up to help rebuild European economies after WW2, they later they began offering loans to poor countries, but only if they privatised their economies and allowed western companies free access to their raw materials and markets.

Barry Coates

Debt has been used by an instrument by the World Bank and IMF to get their policies implemented. The poorest countries are in a cycle of poverty, and current debt-reduction (not forgiveness) is not sufficient to allow them.

Susan George

The difference between Tanzania and Goldman Sachs

Tanzania – is a country with a GDP of $2.2 billion shared among 25 million, Goldman Sachs is an investment bank with profits $2.2 billion dollars shared among 162 partners.

The World Bank says its aim is to help poor people, calling this gobal development. It’s an ingenious system, a sort of socialism for the rich and capitalism for the poor – the rich get richer on running up debt, cheap labour and paying as little tax as possible, while the poor get poorer as their jobs and public services are cut to pay just the interest on the debt owed to the World Bank.

Here in Indonesia, the hand-outs to the rich have been extra-ordinary, internal documents from the World Bank confirm that up to a third of the banks loans went into – around $8 billion.

The 1998 Financial Crash, the End of Suharto and Indonesian Debt Repayment

Globalisation means that capital (big money) can be moved anywhere at any time, without warning.

In 1998 short-term capital was suddenly pulled out of Asia, collapsing the miracle economy overnight. This actually benefitted Nike in Indonesia, because they ended up labour costs were cut to 25% of what they had been previously.

With the economy collapsed, and Indonesia on the verge of revolution, Suharto was forced to step down, having already stolen an estimated $15 billion.

During his reign of more than 30 years, Suharto had handed out public utilities to his family and cronies, driving from Jakarta airport, you actually paid a toll to Suharto’s daughter.

Interview

The bank presents itself as an economic development agency, focusing on poverty reduction, but in fact, the bank operated during the entire cold war as an institution which distributed money to mainly authoritarian regimes in the third world that supported the West in the Cold War.

The Indonesian elite instigated many development projects with World Bank loans during Suharto’s 30 year reign, and many of them were seen as opportunities to skim money for themselves. In total, $10 billion remained unaccounted for out of $30 in loans. Of course the debt remained, and still had to be paid back to the World Bank.

According to the auditor general of the World Bank, if the citizens of Indonesia made a legal challenge against the World Bank over the remaining debt (given that they never received the money), the World Bank would be bankrupt, because this has gone on the world over.

Interview with Chief Economist of the World Bank – Nicholas Stone

In response to the question of how the World Bank didn’t realise that $10 billion of aid money to Indonesia had gone missing, his response was firstly to deny any knowledge of the $10 billion figure, then (on having been shown the World Bank’s own report) to say that figure was made up. He finally argued that progress had been made during Suharto’s regime if we look at literacy and infant mortality figures, even if the numbers in poverty had doubled from 30 million to 60 million.

When asked why there was such a silence over the atrocities of Suharto, he simply said the World Bank got it wrong, and they will get it wrong in the future too.

Dita Sari

Globalisation creates debts, creates misery, creates crisis, and creates privatisation, which pushes up the prices people have to pay for basic goods. In effect the money stolen by the Suharto regime is being paid back by the people who never benefited from that money.

Debt and the International Monetary Fund (IMF)

Every day nearly $100 million is transferred in debt repayments from the poorest countries to the richest, it is a debt that can never be paid back, given that half the world’s population live on less than $2 a day.

Interview with Stanley Fischer, from the International Monetary Fund

John Pliger asks whether debt cancellation should be a priority if we are to alleviate poverty, given that some countries spend half their GDP on debt repayments.

Fischer argues that we should not necessarily cancel their debt – we should rather look at the policies on education and health, and look at what sort of economies they run – do they integrate into the world economy, or do they run corrupt economies.

Fischer basically argues that countries need to repay their debts because they need to keep more resources flowing into their countries, and if they don’t repay them, they’ll never be leant to again. He sees debt as a ‘normal’ part of expanding enterprise and increasing economic growth.

NB – The subtext to the interview is that Western financial institutions depend on the debt repayments being kept up too.

Dita Sari

(In order to keep up debt-repayments) the government, as recommended by the IMF. has cut subsidies on electricity, water and education, which means that the workers have to pay more their children through school.

Now people now eat two meals rather than three meals a day.

Protests at the World Trade Organisation

Two years ago, protestors from all over the world converged on Seattle at a meeting of the World Trade Organisation….

Evaluation – How Valid are the Findings of this Documentary Today?

The documentary makes the following claims, all of which are worth investigating to see if they are still true today….

  1. The rich are getting richer and the poor are getting poorer
  2. 200 Corporations control 25% of world economic activity
  3. The World Bank and the IMF dictate economic policy to poor countries
  4. These economic policies are shaped by the 200 (or so) largest global corporations and work in their interests, not in the interests of the majority of people in poor countries.
  5. There is a small elite in poor countries which benefit from these economic policies and enforce them, against the interests of the majority.

I’ll provide a summary of the rest at a later date… In the meantime, you might like to actually watch the rest of it! 

Related Sources

The New Rulers of the World – video on John Pliger’s website

The New Rulers of the World – the book!

 

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