Andre Gunder Frank (1971) argues that the reason trade doesn’t work for poor countries is a legacy of colonialism – before independence, the colonising 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.
Four reasons why free trade doesn’t always promote development
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.
Value is added to primary commodities by rich countries.
The terms of trade are often biased against poor countries
Poor countries have been pressurized into exporting to clear their debts.
Poor countries export low value, primary products
According to Elwood (2004) three commodities accounted for 75% of total exports 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.
One example of a country which appears to be still dependent on the export of low value primary products is Malawi:
Malawi – dependent for most of its income on one primary agricultural product – Tobacco. (Source.)
However this may not apply to that many African countries today. According to data from Statista, while there is still a colonial legacy which affects African exports, more African countries have moved towards exporting oil and gas which are more profitable than the more traditional agricultural commodities.
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.
This infographic on the economics of coffee from Visualcapitalist shows shows how little poor farmers make from coffee compared to the end retailers. The breakdown is as follows:
growing – $0.07
exporting coffee – $0.16
Roasting – $0.35
distribution – $0.04
retail $2.17
total = $2.80
So the farmers growing the coffee get around 2% of the end price!
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.
This 2015 video from Al Jazeera focuses on this issue in Kenya – Kenyan cotton farmers are finding it very difficult to compete with subsidized American cotton farmers. You get to see the large scale U.S. operation which is subsidized by the American government, who exports their cotton: the US is the largest cotton exporter in the world. And you also get to see how American cotton production contrasts with the much smaller scale nature of Kenyan cotton production, cotton which they cannot export because they cannot compete with the subsidized US cotton.
More recently, OXFAM has been 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.
In 2020 War on Want argued that aggressive new post-Brexit trade deals between the UK and Ghana hit Banana exporters in Ghana with £20 000 worth of tariffs a week, putting the livelihoods at risk.
Exporting to clear 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) argued 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.
Signposting and Sources
This material is relevant to the Global Development module. This is an option in the second year of A-level sociology,
References
Chapman et al (2016) – A Level Sociology Student Book Two [Fourth Edition] Collins. ISBN-10: 0007597495
‘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 – It’s about keeping goods circulating, and services of course!
Governments can restrict free trade across international boarders by doing the following:
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)
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.
Imposing high taxes on profits – which reduces incentives for private companies to invest and produce goods.
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:
Eliminating tariffs and quotas
Eliminating government subsidies
lowering taxes on profits
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:
The governments of developing countries are expected to pull down all barriers to Western investment
Workers in the developing world are expected to work hard and cheaply for Transnational Corporations
Public services need to be privatized
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.
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.
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.
Ha-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.
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, which is covered in ‘The Corporation’ documentary:
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’…
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
Many of these criticisms are historical, and they may not apply to World Bank policy today.
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 isolate the specific effects of policies given the open-systems nature of global development.
Signposting
This material is of general interest to anyone interested in global social justice, but also to A-level sociology students taking the Global Development option in their second year.
The world bank provides aid and loans to help the development of the poorest countries, but it has many critics!
Last Updated on August 19, 2021 by
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 was established in 1944, towards the end of of World War Two with the intention of lending money to help countries rebuild after the war, and over the years ‘evolved’ into one of the main institutions which provides aid and loans to developing countries more generally.
Historically it is most closely associated with Modernisation Theory but in more recent decades it has adopted a more neoliberal agenda.
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.
Since the 1980s the World Bank’s primary role in development seems to have been 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.
This means that the remaining 130 countries, mostly outside of Europe, are eligible for development aid through the World Bank.
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)
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.
Lower taxation, especially on profits – to provide incentives businesses and attract international investment.
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.
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.
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….
Signposting and Related Posts
The World Bank is one of the main global institutions students need to know about for the Global Development module, one of the options in the second year of A-level sociology.
Generally speaking, the World Bank is supported by Modernisation Theorists but criticised by all other theories of development.
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 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
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
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 – 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.
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….
The rich are getting richer and the poor are getting poorer
200 Corporations control 25% of world economic activity
The World Bank and the IMF dictate economic policy to poor countries
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.
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!
Marxists argue that the education system performs the following functions…
It is the ideological state apparatus
It creates a passive and subservient workforce
It reproduces class inequality
It legitimates (justifies) class inequality
You might like to review the Marxist Perspective on Education before reading this post. Once you’ve fully understood the key ideas of Marxism on education, you should be able to use the items below to evaluate each of the above claims…
Item A: Statistics on Educational Achievement by Social Class Background
The latest research study which suggests children from a lower social class background are disadvantated in education compared to their wealthy peers
Poorer youngsters’ life chances are further compromised as they are considerably less likely to study the sort of A-levels that will help them get into leading universities.
The report by Oxford University’s department of education found that just 35% of disadvantaged students (distinguished by their being on free school meals) who were identified as highly able at the age of 11 went on to get three A-levels compared with 60% of their wealthier counterparts.
Only 33% of the disadvantaged group took one or more A-levels in the so-called “facilitating subjects” favoured by universities, such as maths, English, the sciences, humanities and modern languages, compared with 58% of their better-advantaged peers.
Item B: A recent Longitudinal Study found: ‘three years after graduation, those from more advantaged socio-economic backgrounds and those who attended private schools are more likely to be in the ‘top jobs’….
‘This research shows that even if we compare students from the same institution type, taking the same subjects and with the same degree class, socioeconomic status and private schooling still affects an individual’s chance of securing a top job,’ the report concluded.
‘An individual who has a parent who is a manager and who attended a private school is around 7 percentage points more likely to enter the highest status occupations. Male graduates from a managerial background who attended a private school are around 10 percentage points more likely to enter the highest status occupations.
But academics do not know whether the advantage given to private school pupils is simply the ‘old boys’ network’ or whether they learn better social skills so appear more confident in job interviews.
‘Our results indicate a persistent advantage from having attended a private school. This raises questions about whether the advantage that private school graduates have is because they are better socially or academically prepared, have better networks or make different occupational choices.’
Item C:Why middle class kids get the best jobs interviews with graduates, employees and experts and explores the reasons why wealthy and connected graduates get the best jobs and why poorer graduates lose out, suggesting our system is not meritocratic.
Item D: The growth of the creative industries in the UK
New figures published in 2015 reveal that the UK’s Creative Industries, which includes the film, television and music industries, are now worth £76.9 billion per year to the UK economy.
Growth of almost ten per cent in 2013, three times that of wider UK economy
Accounted for 1.7 million jobs in 2013, 5.6 per cent of UK jobs
2015 set to be another bumper year for UK creative outputSajid Javid, Secretary of State for Culture, Media and Sport, said:The UK’s Creative Industries are recognised as world leaders around the globe and today’s figures show that they continue to grow from strength to strength. They are one of our most powerful tools in driving growth, outperforming all other sectors of industry and their contribution to the UK economy is evident to all.
The Prevent Agenda is a recent social policy which requires schools (among other public bodies) to assist the government in preventing people from being drawn into terrorism, which is worth looking at because it’s relevant to several areas of the A level syllabus – education, crime and deviance, ethnicity, and social policy.
The Prevent duty: what it means for schools and childcare providers
From 1 July 2015 all schools are subject to a duty under section 26 of the Counter-Terrorism and Security Act 2015, to have “due regard to the need to prevent people from being drawn into terrorism”. This duty is known as the Prevent duty.
It is essential that staff are able to identify children who may be vulnerable to radicalisation, and know what to do when they are identified.
Schools and childcare providers can also build pupils’ resilience to radicalisation by promoting fundamental British values and enabling them to challenge extremist views.
“Extremism” is vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs. We also include in our definition of extremism calls for the death of members of our armed forces, whether in this country or overseas.
Schools and childcare providers should be aware of the increased risk of online radicalisation, as terrorist organisations such as ISIL seek to radicalise young people through the use of social media and the internet.
There is no single way of identifying an individual who is likely to be susceptible to a terrorist ideology. Children at risk of radicalisation may display different signs or seek to hide their views. The Prevent duty does not require teachers or childcare providers to carry out unnecessary intrusion into family life, but schools are expected to liase with social services where it seems appropriate
School staff and childcare providers should understand when it is appropriate to make a referral to the Channel programme. Channel is a programme which focuses on providing support at an early stage to people who are identified as being vulnerable to being drawn into terrorism.
Stats so Far….
There were 7500 referalls in 2015-16, about 20 a day, with 1/10 being deemed at risk of radicalisation with a referral to the ‘Channel’ programme.
What are the arguments for the Prevent agenda?
Leicestershire Chief Constable Simon Cole (also the National Police Chiefs’ Council lead for Prevent), argues Prevent is essential to fighting terrorism and describes the scheme as “putting an arm around” people at risk of radicalisation.
“We try and divert, allow people the opportunity to help them make better decisions. It’s absolutely fundamental,” he said.
“It has enabled us to try and help stabilise communities and stop people getting us into a cycle of aggravation.”
He cited a case in which people referred a young man from the Midlands who had been considering travelling to fight in Syria. Prevent groups worked with the man and he decided not to go,
“The people he was travelling to meet, we believe, are dead. This is very real stuff,” he said.
Some of the arguements against Prevent
Click on link four below for lots of different types of criticism – to summarise just a few:
It alienates British Muslim communities – let’s face it, most of the focus is on Islamic radicalisation, especially when 9/10 people thought to be at risk aren’t
It doesn’t stop everyone from being radicalised, even though so many people who aren’t at risk are caught in its net, the very existence of the Prevent agenda could just make those people who are inclined to get radicalised to be more cautious.
It means an increased level of surveillance of some people (links to categorical suspicion nicely).
It’s something else teachers now have to do on top of teaching
Mobile phones seem to be having a profound impact on the way we interact with each other and on how we understand ourselves and our relation to place. Their increased usage has mean that many of us have moved away from ‘chance socialness’ to ‘chosen socialness’; they encourage us to not be nostalgic about physical spaces, but rather to construct our identities in virtual spaces while being mobile in physical space; and they also make communication more democratic and open, as more people are connected than ever before and communication has become more visible rather than invisible (via land-lines).
Below is a summary of Leopoldina Fortunati’s theorising about how mobile phones are changing the way some of us think about our identities in relation to our sense of place. It’s a very positive take on the impact of mobile phones on these aspects of social life.
Fortunati uses the term “nomadic intimacy” to describe how people in public situations use their mobile phones to interact with people they already know (“chosen socialness”) rather than interacting with strangers who are physically present (“chance socialness”) (Fortunati, 2002: 515-516)
They’re not zombies, they’re just rejecting ‘chance socialness’ in favour of ‘chosen socialness’
Our sense of being part of social groups is no longer based on belonging to fixed
places but increasingly about belonging to communicative networks. As a consequence,
people tend to suffer less from nostalgia, the sense of loss of one’s own relationship with
‘sacred’ places like home, and familiar territory. “So, the use of the mobile phone ends up by reinforcing profane space, constructing a space without addresses, without precise
localizations, playing down the specifically geographical and anagraphical aspect….to the point that the mobile phone in itself becomes a true mobile home” (Fortunati, 2002: 520).
The mobile phone’s phatic function, that is being in touch rather than the actual content of the conversation or message, enables us to rapidly regain stability. “It is the possibility of contacting its own communicative network at any moment that has the powerful effect of reducing the uncertainty that mobility brings with it.” (Fortunati, 2002: 523).
Finally, she argues that the mobile phone favors the development of a democratic society, because “the mobile has granted the same communicative rights to nomadic persons and those that are sedentary or immobile” and in addition “it has extended individual access to mobile communication also to members of the family up to yesterday ‘invisible’ with the fixed phone” (Fortunati, 2002: 525, my addition in brackets).
For Fortunati, the digital nomad is no longer dependent on fixed places but feels at home anywhere and is always in control.
The Millennium Development Goals (MDGs) were adopted by 189 nations during the UN Millennium Summit in September 2000. Eight MDGs were developed which responded to the world’s main development challenges.
The goals ranged from halving extreme poverty rates to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 – form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions.
They have so far galvanized unprecedented efforts to meet the needs of the world’s poorest. The UN is also working with governments, civil society and other partners to build on the momentum generated by the MDGs and carry on with an ambitious post-2015 development agenda.
The MDGs aimed to measure development in eight categories, using 60 separate indicators. The final two goals were aimed more at developed countries, aiming to monitor things such as carbon dioxide emissions, development aid donations and fair trade rules.
Following the success of the eight MDGs, they have since ‘developed’ into seventeen global goals for sustainable development
The Global Goals for Sustainable Development
The Millennium Development Goals – Progress to 2015 (selected)
The infographics below provide the headlines….
And some further MDG achievements….
The proportion of undernourished people in developed regions halved between 1990 and 2015.
In 1990, nearly half of the population in the developing regions lived on less than $1.25 a day. This rate dropped to 14 per cent in 2015.
The average proportion of women in parliament has doubled
The net loss of forests has reduced from an average of 8.3 million hectares annually in the 1990s to an average of 5.2 million hectares annually between 2000 and 2010.
Remaining Development Goals (selected)
At the global level more than 800 million people are still living in extreme poverty
Globally, an estimated 795 people are malnourished
Globally, 300 million workers lived below the $1.25 a day poverty line in 2015.
The proportion of the working-age population that is employed – has fallen from 62 per cent in 1991 to 60 per cent in 2015.
In countries affected by conflict, the proportion of out-of-school children increased from 30 per cent in 1999 to 36 per cent in 2012.
Globally, about three quarters of working-age men participate in the labour force, compared to half of working-age women.
Women continue to experience significant gaps in terms of poverty, labour market and wages, as well as participation in private and public decision-making
Between 1990 and 2012, global emissions of carbon dioxide increased by over 50 per cent.
The map below shows the regions where most and least progress was made over the 15 years of the Millennium Development Goals.
Sub-Saharan Africa remains the region where the most progress is to be made.
Some strengths of the MDGs as indicators of development
Much broader range of indicators (60) – more validity! – Good for professional development workers!
Includes the developed nations (these also have targets – 7 and 8 especially)
NB – These have now become the ‘sustainable development goals’.
Some limitations of the MDGs as indicators of development
Not very ambitious – halving poverty by 2015, given up on the idea of ‘economic growth’.
Problems with some indicators – e.g. ‘finishing primary school’ doesn’t tell us about quality of education or how many days actually spent in school.
Do the MDGs lack ambition?
Sources Used
The main source used to write this post was the United Nations ‘Millennium Development Goals Progress Page’.
The Post-Development Perspective became popular in the 1990s. Theorists from within this perspective are critical of Western models of development, arguing that development was always unjust, that it never worked, and that developing countries should find their own pathways to development.
Post-Development as a Rejection of the West
Escobar (2008) criticised modernisation theory for being ethnocentric. He argued that it was only ever interested in making poor countries like rich countries and was dismissive of many ancient philosophies and traditions which had worked in poorer countries for thousands of years. According to Escobar this is both arrogant and disrespectful, and created the potential for opposition and conflict.
Escobar argued that the Western model of development justified itself by claiming to be rational and scientific, and therefor neutral and objective. However, in reality, modernisation theory was a top-down approach which treated people and cultures as abstract concepts and statistical figures to be moved up and down in the name of progress. Modernisation theory effectively denied people within developing countries the opportunity to make their own choices and decisions.
Sahlins (1997) argues that Western Aid agencies often incorrectly assume that people who lack material possessions are in poverty and are unhappy. However, he argued that people in developing world may have few possessions, but this does not necessarily mean they are poor. They may actually be happy because they belong to a supportive community and they have the love of their family. This idea has been practically applied in Bhutan where development is measured in terms of Gross National Happiness, rather than Gross National Product.
Other post-development thinkers argue that modernist explanations of underdevelopment have rarely sought contributions from sociologists and economists who actually live in the developing world. McKay argued that development strategies are too often in in the hands of western experts who fail to take account of local knowledge or skills and that development often has little to do with the desires of the target population.
Post-Development sociologists further argue that Western models of development have created a diverse set of problems for the populations of developing societies. Indigenous peoples have been forcibly removed from their homelands, grave environmental damage is being done to the rainforests, children’s labour is being exploited and aggressive marketing of unhealthy products is taking place all over the developing world, all in the name of achieving economic growth and the name of progress.
Some post development sociologists conclude that development is a hoax in that it was never really designed to deal with humanitarian problems, rather it was about helping the industrial world, especially the United States to maintain its economic and cultural dominance of the world.
Consequently, post-development thinkers argue we need alternative models of development rather than the industrial-capitalist model promoted by western countries.
Post-Development Perspectives – How should developing countries develop?
Korten (1995) argued that development needs to be more ‘people centred’ – which means given people more of a say in how their communities (and countries) develop and getting them to play more of a role in the process of development.
Similarly Amartya Sen (1987) argues, development needs to be about giving people independence so they have real power and choice over their day to day situations, it shouldn’t be ‘top down’ coming from the west, via governments and then trickling down to the people.
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People Centred Development theorists also have a much broader conception of what ‘development’ could actually mean. They don’t believe that development has to mean them becoming more like the West and development shouldn’t be seen in narrow terms such as industrialising and bringing about economic growth, development projects should be much smaller scale, much more diverse, and much more coming from the people living in developing countries.
Because of its support for diversity, there are many different paths to development within the Post Development/ People Centred Development perspective. Examples include:
Socialist models of development – where governments control most aspects of economic life – such as in Cuba
The Islamic model of development – adopted by Iran – where ‘development’ means applying Islamic principles to as many aspects of social life as possible, rather than focussing on economic growth as the primary goal.
Indigenous peoples maintain traditional lifestyles, effectively rejecting most of what the west has to offer is also something post-development perspectives support, as in the example of Bhutan
Appropriate Development
Post-development perspectives aren’t against charities or western governments giving aid, but they want aid to be ‘appropriate’ to local communities where development is taking place. Thus this perspective generally supports the thousands of small scale fair trade and micro finance projects around the world are good examples of PCD style projects embedded in a global network.
Criticisms of Post-Development Perspectives
All the other theories argue that, eventually, if a poor country really wants to improve the lives of its people en masse in the long term, it needs money, this can only come from industrialisation and trade, is it really possible to improve standards of living through small scale projects?
Focussing solely on small scale development projects still leaves local communities in developing countries relatively poor compared to us in the West, is this really social justice?
In a globalising world it simply isn’t realistic to expect developing countries (such as Bhutan or groups living in the Rain Forest) to be able to tackle future problems if they remain underdeveloped – eventually population growth or climate change or refugees or drugs or loggers are going to infiltrate their boarders, and it is much easier to respond to these problems if a country has a lot of money a well functioning state and a high level of technology.
Post-Development perspectives are too relativistic – is it really the case that all cultures have equal value and diverse definitions and paths to development should be accepted? Do we really just accept that patriarchy and FGM are OK in places like Saudi Arabia and Somalia because that’s what their populations have ‘chosen’?
Related Posts
‘People Centred Development’ is closely related term to Post-Development – for the purposes of A level sociology, you can effectively treat them as the same thing!
Modernisation Theory was one of the main theories of development which Post-Development perspectives criticise:
