{"id":748,"date":"2019-03-05T13:25:29","date_gmt":"2019-03-05T13:25:29","guid":{"rendered":"https:\/\/wsm.prolerat.org\/?page_id=748"},"modified":"2019-10-20T11:56:11","modified_gmt":"2019-10-20T10:56:11","slug":"from-third-world-to-one-world","status":"publish","type":"page","link":"https:\/\/www.worldsocialism.org\/wsm\/from-third-world-to-one-world\/","title":{"rendered":"From Third World to One World?"},"content":{"rendered":"\n
July 1997, U.K. (Updated April 2001)<\/pre>\n\n\n\n
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While the growing disparity in G.N.P. between rich and poor states in recent years has been matched by the growth of inequality within each, there are undeniably huge differences in material circumstances of the average worker in Western Europe and their counterpart in, say, Bangladesh. How did this come about and what, if anything, can be done about it within global capitalism? <\/em><\/p>\n\n\n\n
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Modernisation<\/h3>\n\n\n\n
Since the Second World War there has been a concerted effort by national\ngovernments and international agencies to “develop” the so-called\nThird World. At the outset this was linked with de-colonisation; it would help\nmake political independence more “meaningful”. According to the\nprevailing “modernisation” theory, development meant “less\ndeveloped countries” passing through a series of stages mirroring the\neconomic history of “developed countries”. But while favourable\ncircumstances had allowed the latter to reach the final stage of “mass\nconsumption”, a number of internal factors prevented the former from\nprogressing towards “take-off into self-sustaining growth”.<\/p>\n\n\n\n
Most important was a supposed shortage of capital. This had to be tackled on\ntwo fronts. Firstly, savings as a proportion of GNP had to be increased. As the\n“propensity to save” was thought to be highest among the rich, gross\ninequalities were justified on the grounds that they facilitated savings.\nSecondly, as less developed countries were thought unlikely to generate\nsufficient capital internally, foreign capital needed to be mobilised for inward\ninvestment along the lines of the famous Marshall Plan which helped rebuild the\nwar-torn economies of Western Europe.<\/p>\n\n\n\n
For modernisation theorists, this shortage of capital necessitated a policy\nof “unbalanced growth”: concentrating investment where it realised the\ngreatest return and hence the most rapid accumulation of capital. Following the\nexample of the First World countries, Third World countries embarked on a\nprogramme of industrialisation. At a time when Keynesian orthodoxy still held\nsway with its implicit distrust of unfettered markets, a policy of\nimport-substitution was pursued to protect budding industries from foreign\ncompetition behind a wall of tariffs.<\/p>\n\n\n\n
As well as promoting rapid growth, industrialisation was supposed to assist\nthe structural transformation of these countries’ economies. Typically, these\nwere thought to exhibit an essentially dualistic structure: a small modern\nurban-industrial sector alongside a large traditional, mainly pre-capitalist,\nrural sector. The latter was supposedly characterised by low productivity and an\nabundance of surplus labour. Industrialisation would enable this surplus labour\nto find employment in the modern sector and indirectly help boost local\nagriculture: the exodus of labour from the rural areas would draw farmers into\nthe emerging cash economy, compelling them to buy agricultural inputs, like\nmachinery and fertilisers, to meet the growing demand for food in the towns. It\nwas expected that, in due course, the benefits of economic growth, hitherto\nconfined to the modern sector, would automatically “trickle-down” to\nthe impoverished backwater. The “dual economy” would, it was\nenvisaged, be replaced by a structurally-integrated modern capitalist economy.<\/p>\n\n\n\n
It was not long before cracks in this scenario began to appear. The\nprohibitive costs of agricultural inputs meant many small farmers were unable to\nincrease output, while growing labour shortages caused by urban migration\nseriously impaired the productivity of traditional labour-intensive farming. As\nfor the urban sector, modern methods of industrial production, being highly\ncapital-intensive, required only a relatively small workforce. Thus, increasing\nurban migration in fact led to rising unemployment while the importation of\nthese First World technologies imposed a growing debt burden.<\/p>\n\n\n\n
Dependency<\/h3>\n\n\n\n
By the 1960s, modernisation theory had reached an impasse. A new scenario of\ndevelopment emerged: dependency theory<\/em>. Contrary to the previous\nconventional wisdom that the economic backwardness of less developed countries\nwas attributable to their incomplete incorporation into global capitalism, it\nwas portrayed instead as an inevitable consequence of capitalist penetration of\nthe Third World which left it increasingly dependent on the First. This shifted\nattention from internal to external factors affecting the development of\nnational economies. For dependency theory, the “world trading system”\nwas a hierarchical order in which the dominant or “core” countries\nwith their technological, economic and political superiority, are able to impose\ntheir needs on the “peripheral” countries. These dictate that the\nlatter should become markets for the products of industrial countries, not rival\nproducers, supplying them with raw materials for processing into finished goods.\nIn short, industrial development and economic diversification in the less\ndeveloped countries was effectively blocked within an externally imposed global\ndivision of labour.<\/p>\n\n\n\n
The basic mechanism that condemned the Third World to a state of perpetual “underdevelopment” was the continual outflow of economic surpluses–notably in the form of debt repayments and expatriated profits.  So, far from foreign aid and investment compensating for the lack of local capital, they caused this to happen. This had been compounded in recent years by the declining terms of trade with the value of Third World exports falling sharply against manufactured imports. Political independence made little difference; it simply enabled the First World to divest itself of the cost of administering these territories while co-opting their emergent class of “comprador bourgeoisie” into this process of neo-colonial exploitation.<\/p>\n\n\n\n
To break this stranglehold, several less developed countries saw the need to\n“de-link” as far as possible from the international economy and pursue\n“self-reliance”, while nationalising the economy to staunch the likely\noutflow of capital this would incur. In short, a marriage of convenience between\nThird World nationalism and Leninist state capitalism. However such an approach\nwas problematic for several reasons. Firstly, the structure of production which\nmany of these countries inherited was heavily oriented towards exportation of\ncash crops or minerals and could not easily be re-oriented towards local needs.\nSecondly, an autarkic policy favouring economic diversification would have to\ncontend with local markets being insufficiently large, particularly in small\ncountries, to justify investment in certain lines of production where economies\nof scale may be critical. Thirdly, increasing state intervention was likely to\nlead to the growth of an unproductive bureaucracy, further impairing an already\nimpoverished economy while increasing the scope for corruption.<\/p>\n\n\n\n
Getting worse<\/h3>\n\n\n\n
The 1970s oil crisis made matters worse for the less developed countries by\nmassively increasing import costs but in the short term it produced a flood of\n“petro-dollars” loaned to them via western banks. Between 1973 and\n1981 these loans increased nine-fold. The spending spree this unleashed helped\nmaintain relatively high growth rates though much of this investment tended to\nbe channelled into grandiose projects which did little to alleviate poverty.\nThen, as the long post-war boom came to an end, the bubble burst. The 1980s\nwitnessed a steep decline in Third World incomes. Growing poverty led to\neruptions of popular unrest to which governments responded with increased\nmilitary repression. Ironically, increased military spending only exacerbated\nthe problem, diverting scarce resources away from development projects. In the\n32 poorest countries in the world (apart from India and China) such expenditures\namounted on average to twice what was spent on education and seven times on\nhealth.<\/p>\n\n\n\n
Magic of the market?<\/h3>\n\n\n\n
Global recession also signalled a profound change in the political climate.\nGrowing disenchantment with Keynesian policies in the late 1970s and the sudden\ncollapse of the Soviet bloc in the late 1980s ushered in an age of “market\ntriumphalism”. Blind faith in market forces replaced blind faith in the\nefficacy of state intervention.<\/p>\n\n\n\n
Such free market theory was shaped by an influential theory first put forward\nby the British economist and MP David Ricardo in the last century. According to\nhis theory of ‘diminishing returns,’ companies would reach a point after which\ntheir additional investment would yield increasingly lower returns. This theory,\nof course, had implications for national economies, for as they grew they could\nalso be expected to reach a point of diminishing returns with their growth\nexpected to eventually come to a halt. This meant that the poorer nations were\npredicted to catch up – the ‘Third World’ to convergence with the ‘first.’<\/p>\n\n\n\n
This view did not take account of a number of important factors. Huge initial\namounts of capital are, as mentioned above, required before a company or nation\ncan even begin to compete in many world markets. Furthermore, wealthy states can\nexert influence on trade patterns to maintain their interests, as indeed they\nwere doing during the 1980s when free market theory was so much in vogue.<\/p>\n\n\n\n
Free market rhetoric was the forte of the I.M.F. and World Bank who took on a more aggressive role as watchdogs of international capitalism during the 1980s. With the growing threat of debt defaults in the early 1980s, Structural Adjustment Programmes were imposed in exchange for rescheduling debts and further aid. This involved privatisation of state enterprises, public spending cuts and price liberalisation. (The World Bank, IMF and Structural Adjustment<\/a>.)<\/p>\n\n\n\n
If the stated intention of such reforms was “economic stabilisation”,\ntheir real purpose was to ensure that these countries were better able to fulfil\ntheir debt obligations. To that end, greater emphasis was placed on boosting\nexports with the less developed countries reverting to their traditional role as\nsuppliers of raw materials as prescribed by the theory of comparative advantage\nwithin a global trading system progressively shorn of protectionist features.<\/p>\n\n\n\n
Predictably, the results have been disappointing. But then that is the nature\nof reformism; “solving” one problem within capitalism only seems to\ngenerate another. For example, while the new G.A.T.T. treaty prohibited developed\ncountries from dumping subsidised food onto Third World markets, this meant the\nless developed countries having to pay more for food imports. More expensive\nimports means getting ever deeper into debt which in turn intensifies the drive\ntowards export production at the expense of domestic food production.\nFurthermore, with many other producer countries in the same boat yet prevented\nby free trade agreements from forming cartels to bargain for higher price, the\nmarkets for such exports are soon saturated. So prices decline, as does the\ncapacity of less developed countries to service their debts. It’s a case of\nprotectionist swings or free market roundabouts.<\/p>\n\n\n\n
The Outcome<\/h3>\n\n\n\n
History has forced economists to rethink their supposition of a smooth path\ntowards development. Average growth for 16 rich countries surveyed by The\nEconomist<\/em> has slowed since the early 1970s in particular, but it is still\nabove the average. As for the supposed faster growth among the developing world,<\/p>\n\n\n\n
if there is any discernible pattern…. it is the opposite: poorer\n    countries have tended to grow more slowly.(1)<\/p><\/blockquote>\n\n\n\n
Interestingly, the United Nations Development Programme administrator, James\nSpeth, believes “the world has become more economically polarised” and\nthat “if present trends continue, economic disparities between industrial\nand developing nations will move from inequitable to inhuman”(6).<\/p>\n\n\n\n
As a result, many of the world’s poorest countries have seen average incomes\ndecline and increased polarisation. The wealth of many nations has actually\ndeclined in recent years. 89 countries are reporting lower per-capita incomes\nthan they were 10 years ago.(6)<\/p><\/blockquote>\n\n\n\n
The wealthiest fifth of nations dispose of 84.7 per cent of the\nword’s combined GNP; its citizens account for 84.2 per cent of world trade and\npossess 85.5 per cent of savings in domestic accounts. Since 1960 the gap\nbetween the richest and the poorest fifth of nations has more than doubled which\nconfirms in figures the bankruptcy of any promise of fairness in development aid\n(GT 29)<\/p>\n\n\n\n
During the 1980s average incomes were reported to have fallen by 10% in most\nof Latin America and 20% in sub-Saharan Africa. In many urban areas wages have\nfallen by as much as 50%.(1)<\/p><\/blockquote>\n\n\n\n
The 1980s decline in average incomes in many developing countries has\ncontinued in the 90s: in 1990, average per capita income fell by over 2.5% in\nLatin America and by over 2% in Africa.(2)<\/p><\/blockquote>\n\n\n\n
The 1992 United Nations Human Development Report<\/em> states that the poorest\n20% of the world’s population have seen their share of world income fall from\n2.3% to 1.4% over the past 30 years.(3) In sub-Saharan Africa, the number of\nfamilies who are unable to meet their most basic needs has doubled in a\ndecade.(4) According to OXFAM projections, the future looks little brighter for\nthe rest of Africa, the Middle East, South and Central America.<\/p>\n\n\n\n
Yet, as the Bank works through its sixth\ndecade of trying to promote something called ‘development’, the poor in most of\nits borrowing countries are in worse shape than they were a decade and a half\nbefore. According to the United Nations Development Programme (U.N.D.P.), since\n1980, economic decline or stagnation has affected 100 countries, reducing the\nincomes of 1.6 billion people”. For 70 of these countries, average incomes\nare less in the mid 1990s than in 1980, and for 43, less than in 1970. In the\nearly 1990s incomes fell by 20 per cent or more in 21 countries, mainly in the\nformer Soviet Empire. The poorest fifth of the world’s population has seen its\nshare of global income fall from 2.3 per cent to 1.4 percent over the past 30\nyears. Even according to the Bank’s Operations Evaluation Department’s latest\nAnnual Review of Development Effectiveness 1999, “poverty trends have\nworsened… The number of poor people living on less than US $1 a day rose from\n1,197 million in 1987 to 1,214 million in 1997. Excluding China, there are 100\nmillion more poor people in developing countries than a decade ago”.\nFurthermore, since 1990 life -expectancy has declined in 33 countries.(7; p15)<\/p><\/blockquote>\n\n\n\n
On other indicators of progress, the U.N.D.P report does provide some more\npositive facts:<\/p>\n\n\n\n
During this half century\nthe trend was towards greater income inequality among countries. At the same\ntime, on some important measures of social well-being, the gap between the\n`North’ and the `South’ has narrowed in recent years. During the 1960 to 1990\nperiod, North-South disparities declined in, for example, life expectancy,\nliteracy rates, infant mortality and average caloric supply. In the same period\nhowever, disparities rose on important indicators of economic capacity for\nfurther progress: mean years of schooling, tertiary education enrolment rates,\nand scientists and technicians per capita, for example (9; p71)<\/p><\/blockquote>\n\n\n\n
So-called ‘new growth theorists’ have sought explanations for this\ndiscrepancy between fact and the Ricardian theory. They have identified factors\nsuch as unequal levels of education and training as decisive in explaining the\nincreased polarisation. In a comprehensive study R. Barro concludes that:<\/p>\n\n\n\n
if one holds constant such factors as a country’s fertility rate, its\n    human capital (proxied by various measures of educational attainment) and\n    its government policies (proxied by the share of government spending in\n    Gross Domestic Product), poorer countries tend to grow faster than richer\n    ones.(5)<\/p><\/blockquote>\n\n\n\n
In stark contrast to the hopes of charity organisations such as the United\nNations Children’s Fund (U.N.I.C.E.F.), Overseas Development Aid (O.D.A.) can be relied\nupon even less as a substantial source of help for poorer nations. In 1993, O.D.A.\nfell 8 per cent from 1992 levels to US$56 billion.(3)<\/p>\n\n\n\n
As Michel Chossudovsky explains, the World Bank\nproduced an influential study in 1990 in which they\nproposed a low and quite arbitrary threshold to define poverty:<\/p>\n\n\n\n
The World Bank ‘estimates’ that 18 per cent of the\nThird World is ‘extremely poor’ and 33 per cent is ‘poor’.\nIn a major World Bank study which has served as a reference on issues of global\npoverty, the ‘upper poverty line’ is arbitrarily set at a per capita\nincome of $US1 a day, corresponding to an annual per capita income of US$370 per\nannum. Population groups in individual countries with per capita incomes in\nexcess of $US1 a day are arbitrarily identified as – ‘non poor.’ In other\nwords, through the manipulation of income statistics, the World Bank figures\nserve the useful purpose of representing the poor in developing countries as a\nminority group. Double standards abound in the ‘scientific measurement of\npoverty’. The World Bank, for instance, ‘estimates’ that in Latin\nAmerica and the Caribbean only 19 per cent of the population is –poor’.: a\ngross distortion when we know for a fact that in the United States ( with an\nannual per capita income of approximately US$20,000) one American in five is\ndefined (by the Bureau of the Census) to be below the poverty line.(10; p43)<\/p><\/blockquote>\n\n\n\n
More than 80 countries now have per capita incomes lower than they were a    \ndecade or more ago, and as the United Nations Development Programme (U.N.D.P.)\npoints out, it is often the countries that are becoming even more marginal which\nare highly `integrated’ into the global economy. While exports from Sub-Saharan\nAfrica, for example, have reached nearly 30 per cent of G.D.P. (compared to just 19\nper cent for the leading industrialised countries of the O.E.C.D.), the number of\npeople living in poverty there has continued to grow. (7)<\/p><\/blockquote>\n\n\n\n
Contradictions<\/h3>\n\n\n\n
Meanwhile, the problems of poverty and environmental destruction escalate in tandem. The same pressures that force governments to inflict austerity programmes on populations in the name of “structural adjustment” compel them to drastically cut their meagre environmental protection budgets–at a time when the drive to increase exports poses a growing threat to the environment. (See Environment section) Similarly, the increasing mobility of international capital in an era of free markets had enhanced its bargaining position vis-a-vis labour in both developed and less developed countries alike while enabling it to circumvent even limited attempts by states to impose environmental cost constraints by relocating (or threatening to relocate) to countries where environmental standards may be lower. Not that things could have turned out much different given the nature of capitalism. ( Globalisation<\/a>)<\/p>\n\n\n\n
There can be no turning back to the discredited models of development of the\npast. State interventionism could never provide a solution to poverty and\nenvironmental destruction. Even if this were theoretically conceivable,\ncapitalism’s globalising tendencies have put paid to that option. Arguably, the\nneo-liberal order we now have is the irresistible outcome of such tendencies but\nin any event it too can offer no hope of real progress. In short, the system has\nexhausted every possibility of development. To move forward the dispossessed\nmajority across the world must now look beyond the artificial barriers of\nnation-states and regional blocs, to perceive a common identity and purpose.\nThere is in reality only one world. It is high time we reclaimed it.<\/p>\n\n\n\n
Sources<\/p>\n\n\n\n