Is ‘Development’ Good For The Third World?

Is ‘Development’ Good For The Third World? – Brief Article

Bill Emmott

IN THE FIRST OF A REGULAR NEW SERIES, IN WHICH KEY PLAYERS DEBATE THE CRUCIAL ISSUES OF OUR TIME, ECONOMIST EDITOR BILL EMMOTT AND INDIAN ENVIRONMENTALIST VANDANA SHIVA LOCK HORNS OVER THE FATE OF THE ‘DEVELOPING’ WORLD.

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Dear Bill Emmott,

Over the years, magazines like The Economist have promoted the idea that financial growth is ‘development’ and that this ‘development’ is good for the Third World. However, this sort of growth is not ‘development’ — it is more often than not destruction of the environment, the livelihoods and the cultures of Third World communities.

What is referred to today as ‘development’ is actually ‘maldevelopment’. It is designed and driven by external forces for the profits and control of external agents and actors. The World Bank generates $3 of business for western companies for every dollar it lends to the Third World for ‘development’. ‘Development’ allows $500billion to flow out from the Third World to the rich West in interest and debt payments and low prices for Third World products, while $50billion goes in the opposite direction as development aid.

‘Development’ is a trick played on the people of the Third World, especially rural communities, to rob them of their resources and wealth, and leave them dispossessed and in debt. While the people of the Third World are supposed to be ‘developed’ by this process, they are instead uprooted and displaced. Their resources are snatched from them, converting them into ‘development’ refugees. Two hundred million people have been forcibly removed from their homes, ecosystems and cultures in the name of development. The tribals in India’s Narmada Valley, the indigenous peoples of the Amazon and Papua New Guinea and the coastal communities along India’s 7,000km coastline do not view the giant dams, superhighways, mines, ports and industrial aquaculture that uproot them as ‘development’. For them, these activities spell disaster, which is why they are resisting.

One of the most ominous commercial developments of the past decade has been the merger of chemical, pharmaceutical, biotechnology and seed companies to create what are called ‘Life Sciences’ corporations. A more accurate name would be ‘Death Sciences’, because these are the bodies that produce genetically engineered, herbicide-tolerant seeds which lock farmers into dependence on chemical inputs, destroy biodiversity and render agriculture more vulnerable. For farmers, the shift from open-pollinated plant varieties to hybrids, genetically engineered crops and sterile ‘terminator’ seeds, is not a symbol of ‘development’ but of debt, dependency and destitution. For seed corporations, forcing farmers to buy seed every year implies bigger markets and faster growth. But this increase in corporate profits is based on the destruction of nature and her processes of renewal and abundance, as well as a destruction of local economies.

This destruction of nature’s economy and peoples’ economies is never taken into account by modern economics, and hence processes that lead to ecological destruction and poverty and deprivation for millions are presented as ‘growth’ in national accounts and the global economy. However, it is not growth when assessed in terms of the health of ecosystems and societies. This contrived pseudo-growth camouflages the destruction it unleashes on the lives of Third World communities.

A good example of such pseudo-growth is in Third World agriculture. The shift from a ‘food first’ to an ‘export first’ agricultural policy in India is justified on grounds of food security, because export earnings are supposed to pay for food imports. In fact, export-oriented agriculture has reduced food security by encouraging a shift from small-scale, sustainable local production to large-scale, non-sustainable industrial production. It also brings changes in ownership over natural resources and means of production, from small autonomous producer/owners to large corporate interests. Peasants are displaced from farming, while commercial interests take over land for production of export commodities. These enterprises often have negative environmental impacts, creating further hardship for local communities.

Meat, vegetable, shrimp and flower exports, for example, have costs that often far exceed the earnings generated. Large-scale meat exports have an external ‘shadow’ cost that is 10 times higher than export earnings. This is due to the former ecological contribution of livestock in small-scale agriculture, now on the wane.

Particularly in developing countries, livestock is not just meat on legs. Livestock in India helps produce $l7million-worth of milk and $1.5billion-worth of food grain; they also provide $l7million-worth of energy. If the animals are slaughtered, all these benefits are lost. In the case of one export-oriented slaughterhouse alone, meat exports earned $45million, whereas the estimated contribution of the slaughtered animals to the economy if they had been allowed to live was $230million.

Multidimensional, multifunctional economies based on mutuality are being systematically destroyed by a development model which is unable to take diversity, reciprocity, complexity and sustainability into account. It is time to ask the basic questions: growth of what? Development for whom? It is time to move beyond the fictions and illusions of economic growth which siphons wealth from the poor to the rich, and take into account the reality of ecological catastrophes and social disintegration that have been unleashed by ‘development’ processes and which leave the poor poorer.

Hoping that the new millennium will bring new economic thinking based on principles of inclusion rather than exclusion.

Vandana Shiva

Dear Vandana Shiva,

Thank you for starting such a stimulating and important debate. Let us first see what, on the evidence of your letter, we agree upon.

We are both against ‘tied aid’, namely aid or lending which, sometimes by accident but often intentionally, primarily gives business to rich-country firms. I am, incidentally, pretty sceptical of all aid except when it is given to relieve a specific humanitarian crisis (such as famine, natural disaster or war) because it is so often tied, and because it tends to make the recipients less self-sufficient. ‘Give a man a fish and you feed him for a day; teach him to fish and you feed him for life,’ runs the old Chinese cliche, and it is a very valuable point.

We are both against the forced removal of people from their homes. I oppose this on every ground, whether it is development, national security, national cultural or environmental policy, or whatever. Furthermore, you seem to equate ‘nature’s economy’ and ‘peoples’ economies’, while my observation suggests that these quite often are not identical, even at a local level.

We are both against the capital-intensive ‘gigantism’ of many dams, superhighways and so on. These generally (though not always) are based on the idea, pioneered by Stalin and Mao and often copied by Nehru and his successors, that poor countries must leap into a capital-intensive, industrial economy. From such centrally planned policies, people rarely benefit and nor does the economy.

Finally, we are also both against monopolies that can force customers (in your example, farmers) to buy goods they would not buy if given a free choice (in your example, seeds that require undue amounts of herbicide and that are designed not to reproduce). This does not, however, make me against all genetic engineering: seeds that allow farmers to use fewer pesticides, for example, or less fertiliser, strike me as likely to be useful. The choice, though, must remain with the farmer, and the role of national and local government should be to ensure that farmers retain that choice.

So where do we disagree? Judging by your letter, we seem to face three fundamental disagreements.

First, on the nature of the starting point. You say that ‘multidimensional, multifunctional economies based on mutuality’ are being destroyed. I find it hard to accept this as a good description of, for instance, the India either of today or of recent decades. To me, your phrase would be a good description of Britain, as long as you were to agree that the free exchanges, of jobs and spending and ideas and family development, enjoyed by 55 million Britons, can be called ‘mutuality’. That is certainly what we have thought of it as, ever since Adam Smith’s two great 18th-century works, The Theory of Moral Sentiments and The Wealth of Nations. But in India, my observation is that Nehruvian Socialism brought widespread damage to the multidimensional, multifunctional nature of a country already badly damaged by the British Empire (of which, by the way, I am ashamed), bringing in more monopolies, gigantism, rigid state enterprises, rigid state regulation and pollution from unaccountable big businesses, while simult aneously failing to improve literacy, health or other welfare measures at anything like the pace achieved since 1950 by other similarly endowed Asian countries.

Second, on the role of profit. Please accept my apologies if I am mistaken, but you seem to believe that the incomes of ‘corporations’ and of ‘commercial interests’ are of a different nature, and of a different moral or social value, from the incomes of farmers, small ‘producer/owners’ and ‘peasants’. To me, they are the same. Neither is better nor worse than the other. Profits are, like it or not, the prime incentives for human behaviour and allocation of resources. And both big business and small farmers are prone to fail to take account of real costs that are not being given, in our societies, a monetary value: namely, environmental and other social costs.

Which brings in the third point of probable disagreement, on how to think about and deal with environmental costs. It certainly is not easy, and many economists (though not, I would claim, The Economist) are too reluctant to accept that ways need to be found to take such costs into account. I feel that the only way to do this in a sustainable and equitable way is to use market mechanisms themselves, by imposing taxes or offering subsidies in such a way as to lead, for example, farmers to make their choices about products and processes in a way that takes in (democratically determined) ‘shadow’ costs. I always distrust government, since it so often, in all countries, leads to corruption and to arrogance. I would want these measures to be used at as local a level as possible, so that the imposers were close to local conditions and subject to local accountability.

That, I would suggest, is the way forward for any country, whether Third World or First World. The ‘development model’ I favour stresses freedom, competition and the profit motive, within the accountability framework of the rule of law and local democracy. South Korea, I would acknowledge, has followed only some of these points. But if I were, for example, a 70-year-old Bengali, I might well feel that I would rather my region had, during my lifetime, done more of the things that South Korea did, from a similar starting point in 1950 or 1960. I suspect you disagree. What, then, is your model?

Bill Emmott

Dear Bill,

It is interesting how rapidly our debate on development, the global economy and the environment has moved on to assumptions about ‘human nature’.

Your basic assumption is that greed is the predominant human trait, and that ‘profits are the prime incentives for human behaviour and allocation of resources’. You have universalised your values and imposed them on all of humanity, even though most of us do not live our lives guided by profits. We could not care for our children and future generations, we could not live in communities, we could not protect our forests and rivers if profits were the only calculus and competition our only logic.

Ignoring ecological limits, globalisation and free trade have elevated greed and the profit motive to the organising principle of society, eclipsing our human values and marginalising diverse cultures which organise themselves on other lines.

The profit motive and logic of ‘competition’ on which your ‘development model’ is based is creating gigantism and monopolistic control which dwarfs the projects of Mao, Stalin and Nehru. The superhighways, ports, thermal power plants and chemical factories being built by global corporations in post-Nehruvian India are displacing more people and destroying more fragile ecosystems than all the destructive development of the past fifty years.

The mergers of America Online and Time Warner, Glaxo Wellcome and SmithKline Beecham, Cargill and Continental, Monsanto and Upjohn, for example, are creating giant monopolies. The limitless profits made by these monopolies cannot be equated morally and socially with the small and limited incomes of peasants, tribal peoples, craftspeople and other autonomous producers. Peasants I work with return organic fertility to the soil and replenish bio-diversity through mutual exchange. Corporations, on the other hand, relate to nature and the ‘Third World’ as a one-way flow of resource extraction for unlimited profits.

Peasants and small producers are real people with multiple identities, multiple roles, multiple rights and duties. Corporations are legal fictions with only one function: profit maximisation. Your argument seems to suggest that people everywhere measure worth primarily or exclusively in terms of monetary value. But the problem with monetary value is that it reflects all the gender, race, class and ecological biases of the world’s dominant (Western) culture — it is not a neutral, universal measure.

We cannot have global laws (such as those being drawn up in the WTO) to protect freedom of commerce, but only local systems to protect nature and people, as you suggest. It is this asymmetry between the rights of corporations and the rights of citizens under globalisation which mobilised thousands of protesters in Seattle last December.

Like me, the thousands of women, young people, farmers, workers and environmentalists who gathered in Seattle believe in co-operation rather than competition, compassion rather than greed, diversity rather than monoculture, economic democracy rather than corporate monopoly, and decentralisation rather than gigantism.

I would like to hear your reflections on corporate gigantism and corporate rule today, and the threat this poses to democracy and sustainability.

Vandana Shiva

Dear Vandana,

I find it interesting, and a pity, that you think that the word ‘profit’ and the word ‘greed’ are the same thing. I certainly do not believe so, and I do not assume that greed is the predominant human trait. If it was, then life would be miserable indeed. I would not want to live in such a world.

Let me substitute the word ‘benefit’ for ‘profit’. Farmers, big or small, plant the crops and keep the livestock that they think will bring them the most benefit, either directly by meeting their families’ needs for food, or indirectly by providing them with produce to exchange with others for other produce and services they need. By their own sense of benefit, honed through generations of experience, they plant what they think are the best crops for their own interests, and to give their families and associates the best chance of survival and happiness.

This self-interest is not the only value by which people operate, nor is it blind to the virtues of cooperation and compassion. But it would be wrong, I believe, to pretend that people the world over, and since the beginning of time, have not directed their activities according to their views of their own benefit, sometimes narrowly defined, more often (and better) broadly defined.

And what of companies? They are not ‘legal fictions’. They are groups of people, real people like you and me, or the staff of The Ecologist, who work together in voluntary cooperation. Modern companies are owned by the pension funds held by millions of ordinary people. They are groups of co-operating individuals in which there is no longer a sensible distinction between ‘bosses’ and ‘workers’. I see no reason why 50,000 people working in a group called `a company’ should be given a moral and social value lower than (or, indeed, higher than) 50,000 people working as small farmers or craftspeople.

Like other groups, these corporate groups are capable of either good or evil, of operating well or badly. I neither laud the individual as especially morally worthy nor the group. Communities of all kinds in all countries have been shown to be capable of religious-led slaughter, genocide, environmental degradation, exploitation of others, and many other evils. Sometimes these groups have been corporations, sometimes tribes, sometimes armies, sometimes smaller, local groups.

In all cases what is essential is the rule of law, and the balance provided by competition from, and scrutiny by, other groups, all of which is only possible in an open society. Such a balance is the means by which large companies — which is what all the merged firms you name are, since none is a monopoly — can be and should be, kept in check. My belief is that the World Trade Organisation is part of that process of establishing the rule of law and keeping a check on such groups. It is not sufficient to achieve this on its own, but it is necessary. It is necessary if people wish to trade across borders, and do so equitably.

Our mutual concern is with people. In my first letter, I suggested that a 70-year-old Bengali might well, looking back, believe that he would rather his country or province had, during his lifetime, acted like fairly open trading South Korea rather than the closed, state-led, Nehruvian system that India has followed until recently, for Korea has ‘developed’ more successfully, and to greater benefit for its people, than has India. Do you think I am wrong?

Bill Emmott

Dear Bill,

Since you seem so fixed on the opinion of a 70-year-old Bengali, I asked an audience in Calcutta when I was in the city recently if they would have preferred to go the Korean way rather than the Indian. I am afraid not one person in the 2,000-strong audience voted in support of your assumption.

By the way, the chosen ideology of Bengal is not Nehruvian Socialism but Marxism. For the past 30 years, Bengalis have voted Marxists into power, and have prospered through equity, especially in land reform. For the Bengali peasant, secure in land ownership, the government has created an open society. In Karnataka, where land reform has been undone by removing limits on land ownership, and peasants are losing their land to large corporations for growing export crops, trade liberalisation is closing off their future. What is an open society and what is a closed society depends on where one is located in it. Societies free for corporations are becoming unfree for people.

You are misplaced to equate traditional producers with modern corporations. The moral, cultural, ecological and economic worlds they inhabit are utterly different. The world of the traditional farmer is governed by human relations; relations with ancestors and future generations, with the common, the sacred, the right and the wrong, the good and the bad. The world of the latter is governed by the dollar.

We need to move beyond both the State and the global market, to create economic democracies in which people and nature are at the centre of economic organisation. Democracy cannot be reduced to competition law, nor equated with freedom for capital. Democracy is freedom for people.

Vandana Shiva

Dear Vandana,

My contention is that in those parts of the Third World where, during the past half century, development has been permitted to take place, people have benefited hugely: in their welfare, health, lifespan, range of choices and, though I know this is a dirty word for you, income. These places are predominantly in East Asia, such as South Korea, Thailand, Malaysia, Singapore and Taiwan. They were as poor, or sometimes poorer, than India (and indeed Bengal) in the 1950s. The process has been far from perfect, and it has been riddled with abuses. Plenty needs to be done to make it better. But it has been far, far better than the alternative (little or no development).

What I am ‘fixed on’, as you put it, is people: the 1.2 billion who live in extreme poverty; the billions more who have stunted lives, with poor diets, a lack of access to health and education, a lack of opportunity to make a difference for themselves and for their children. The point of development is, or should be, those people: to give them opportunities and freedoms to change and improve their lives, if that is what they want.

This is never going to be possible without capitalism, though capitalism alone is insufficient. That is what Jyoti Basu and his ‘Marxist’ colleagues in Bengal have now realised, as they told me when I visited Calcutta last April.

The small farmer is also a capitalist, and needs to be given the opportunities to arrange his business for his own benefit. If that includes selling his land to a corporation, or growing crops for export, those choices should be available to him. The biggest obstacle to that is rich-country protectionists who seek to keep out Third World farm products. Another is people who seek to stop farmers having that freedom of choice. Democracy is freedom for people, as you say; but it is people who own capital; and your model seeks to deny them, big or small, from using their capital as they see fit. That is no democracy. Nor will it help improve the lives of the billions of the poor.

Bill Emmott

Vandana Shiva is Director of the Research Foundation for Science, Technology and Ecology in New Delhi, India, and a prominent environmental activist.

Bill Emmott has been editor of The Economist, based in London, since 1993. The author of three books on Japan, last year he wrote a 25,000 word article for his magazine on the 20th century, called Freedom’s Journey, which he is now developing into a book.

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