The Myth of Development : The Non-Viable Economies of the 21st Century (Global Issues Series (New York, N.Y. : 1999).)

Rating:
Summary: Is there a future for the 'underdeveloped' states?
Review: This is global classic by a Peruvian diplomat who has become convinced that the so-called 'underdeveloped' states are actually non-viable under the prevailing international order. He became convinced of this while participating in the longest trade talks in human history called the Uruguay Round under GATT. He discovered that the industrialised states who dominated the talks by reason of their share in international trade hardly paid any heed to the rest of the world exporting primary commodities and only marginally value-added manufactures. The emphasis was on export of high-tech goods, on trade of sophisticated services and on standards for the protection of intellectual property. There was a time when Peru, exporting raw materials and traditional Latin American items like guano, sugar, saltpetre, rubber, coffee, cotton, wool and minerals, had its clout. In the 1990s, it was sidelined, with its slightly value-added exports and a population that had doubled and an economy that was creaking under foreign loans.

The author is aware that the Latin American countries that got their independence in the 19th century were much better off than those in Africa and Asia that got free in the 20th. Yet, after 150 years as sovereign states the Latin American countries had neither become modern nor economically self-sufficient. Prosperity under capitalism had eluded them. Was it possible to 'develop' like the industrialised states of Europe and North America? Since the Industrial Revolution 185 new states had emerged on the world map but most of them were dysfunctional, unable to modernise to the level where they could participate in the international economy. While these states failed to keep pace, global economy itself shifted its paradigm: it no longer required raw material in the same quantity as in the past, and relied on technologies that cut cost by minimising labour. These states had nothing but raw materials and proliferating population to export.

They were in fact quasi nation-states. They had not evolved the way the nation-states of the industrialised world had evolved. The advanced nation-states had produced a middle class market of national dimensions before coming into their own. The new nation-states that came upon the scene suddenly after the Second World War were mostly without a middle class, a bourgeoisie and a unifying nationalist economy. The states had emerged before the nations could be sufficiently formed. They were the children of their enthusiasm rather than of prospering middle and scientific and technological progress, and they embarked upon the dubious task of replicating the developed, capitalist and democratic nation-states. They continue to survive as low-income, poverty-stricken, technologically backward societies ruled over by authoritarian regimes or 'low-powered' democracies. The survival was made possible because of the strategic value in the cold war and because of the residual value of their raw materials.

These non-viable quasi nation-states are told that they can achieve development under globalisation and its totally unfettered market. For this they have to open themselves to the multinationals and the floating international finance that comes in their wake. The leverage for this process is provided by the fact that state loans have dried up after the cold war and the developing states have no income and no savings to embark on investment on their own. The state is increasingly broke and has to privatise its assets developed during the cold war under inefficient comprador regimes. There is massive unemployment in consequence which the multinationals will not absorb because of an increased reliance on information technology and enhancement of profits through the cutting down of production cost. Because of the devaluation of exports coming mostly from the agrarian sector, poverty is first produced in the countryside from where population makes an exodus into the cities. There is unskilled labour which is sought to be absorbed into industries that increasingly require skilled manpower.

Oswaldo de Rivero Asks: 'How can the quasi-nation states be made economically viable when their populations are growing explosively and their export goods consist of primary goods or only slightly processed products, which fetch low prices and are in little demand? How are we to deal with ungovernable countries where corruption is rife and the daily practice of democracy is rudimentary at best? How are market economy and consumer society to be produced in Latin America. Asian and African countries that have more than 40 percent of their population living below the poverty line, on less than one dollar a day? How are nearly 5 billion persons with low incomes to be integrated into global consumption patterns, without seriously damaging the biosphere? How is the enormous gap between the rich and poor countries to be closed without gravely affecting the planet's ecological balance'. Add to that the developing countries' obsession with nationalism and war, and you have the slippery slope these states will never be able to negotiate.

What does the author offer as solution? Alas, there is no solution because the anti-globalisation drive is still a protest from the utopian well-wishers of humanity without a clear-cut anti-capitalist economic doctrine. After the collapse of socialism as a counter-system, no one risks recommending a return to the state sector economy, especially in the third world where it was simply another name for corruption and authoritarianism. The book ends with a pious hope that the more vigilant of the developing states would curb population growth and somehow save the ecology from being destroyed. The dream of a kind of 'union' of the poor is impossible because the poor are busy more often in fighting each other than in getting together against a hostile global environment.