The Third World. Is poverty really the problem?

erosion, due to deforestation, has jeopordized the future of the meat

industry and severely damaged the countries long-term economic

viability and left a rump of unemployed urban workers and

dispossessed peasants. These examples highlight the problems faced by

many Third World primary producers. The protectionism practised by

the industrialised nations, coupled with the downward spiral of

commodity prices, forms an international trading system which

contributes to a global poverty trap, creating the conditions for

export led environmental destruction.

The iniquities of the international trading system, however,

are just some of the problems contributing to mass poverty in the

Third World. Another factor is the concentration of land ownership,

either in the hands of domestic or foreign agribusinesses, or absentee

landlords leaving large areas of land fallow as a future investment.

The wealthy elite own the earth while the poor scratch a living on the

periphary; huge estates lie unused while people starve in the midst of

plenty. Between them, Brazil's poorest 56% of farmers own just 1/15 of

the amount of land owned by the richest 1% Outside the Amazon but

within Brazil, an area the size of India lies uncultivated while 20

million rural peasants are landless, forcing them to move into the

shanty towns of the cities, or into the virgin territory of the Amazon

Basin. All over the world this process is reproducing itself and

driving peasants into marginal lands or urban slums, becoming a drain

on the environment and scarce government resources. In the Philippines

the expansion of huge agribusinesses, producing sugar, cotton and

pineapples for the markets of the developed world, has pushed 12

million peasants into the lowland forests which are then obliterated.

No business can afford to operate by eating into its capital and in

this respect nations are no different. Yet the major development and

aid agencies suggest just these policies by means of the

euphemistically termed structural adjustment loans . "Throughout the

tropics, the World Bank and IMF are advocating that countries

liquidate their natural capital: by turning their forests into timber,

their fisheries into fishmeal and their subsistence farmland into cash

crops." (Monbiot: P.25) However, it could be argued that the

environmental destruction is balanced by the creation of jobs and

wealth within Third World countries, but this is not the case. The

majority of agricultural businesses are capital intensive and pay a

mere pittance in wages to their employees. The wealth generated is

either repatriated to the First world via multinationals or

governments meeting debt requirements, or, channelled to a wealthy

domestic elite who exacerbate the inevitable balance of payments

problem by importing luxury goods. This pattern of capital intensive

agribusinesses, unequal distribution of income amd mass land

clearances for prestigious industrial projects has become depressingly

familiar in Latin America, South Asia and Africa. Rather than creating

a thriving, wealth producing peasant class; based on good land with

the security of land tenure which allows them to invest in the future

and guaranteed self-sufficiency in food, a disillusioned, distrustful

group of peasants has emerged, scratching out a living on marginal

lands with only a future of poverty and ignorance to look forward to.

However, it is only when we place the problem of Third World

debt into the equation that things start to make sense. The facts

about the Petrodollars of the 1970's becoming the massive debt problem

of the 1980's is now quite familiar, but it is precisely this

predicament which locks the majority of Third World countries into the

poverty inducing export practices of the 1990's. To go further, many

economists now agree that the paths these countries are taking are now

inappropriate for sustainable development. Ironically, the loans taken

out in the 70's to help modernise and develop Third World economies

are now, twenty years later, actually hindering this process.

Crippling interest payments mean many countries are forced to produce

and export at the expense of their national health, wealth and

environment. OECD figures show that debtors are reimbursing their

loans at the rate of $3 billion a week. Latin America sends $4 billion

a month northwards. Sub-Saharan Africa, with the worst poverty levels

in the world, sends $1 billion a month. (Source:S.George P.22) In a

nutshell, most debtor countries rely on export earnings to service

their debts. They must comply with the Structural Adjustment Loans

designed by the IMF and World Bank. These institutions always insist

that a debtor improves the export performance: export led growth means

that non-tradeables (local foodstuffs, housing, education, healthcare)

are sacrificed to 'tradeables'. In other words, governments must

invest all their resources in export production and be dissuaded from

seeing to the needs of their people before meeting those of the

foreign banks. As Susan George put it, this is now the 'debt

boomerang' which has returned to threaten the financial stability of

the West and, as a by-product, suppresses domestic wealth generating

activity in the Third World.

These problems contribute significantly to the proliferation

of poverty in the Third World. Although simply solving these

difficulties would not eradicate poverty, it would certainly mitigate

some of the worst consequences of the dilemna. For instance: the

formation of common mineral cartels and buffer stocks could help

stabilize the commodity markets and ensure a fair price for Third

World products. Through the auspices of UNCTAD and the GATT agreement,

arrangements could be made for the general lowering of tariffs on

value-added products originating in the developing world, thereby

relieving the balance of payments crisis endured by many Third World

states and also easing environmental destruction. As far as the debt

crisis is concerned, Todaro offers a rather neat solution whereby

debtors would pay interest only in local currency, which creditors

would then be required to invest in the local economy. This would

boost employment and alleviate some of the difficulties encountered in

domestic capital accumulation. However, it is the next issue, that of

domestic land reform, which in many ways lies at the heart of both the

development and poverty problem, as it indicates the power of the

Third World domestic elites and their progressive integration into the

world economy which in many cases is inimical with the needs of the

majority.

"The bourgeoisie of the Third World are not the inventive,

productive, entrepreneurial class of the Communist Manifesto, but a

parasitical stratum profiting from a subordinate economy."

(Mittelman:P.164) This incisive comment by Frantz Fanon highlights the

process whereby imperialism has incorporated Third World countries into

global capitalism, and as a direct consequence underdeveloped the

internal socio-economic structures. The powerful domestic elites profit

from their existing links with the international economy and have no

desire to change this comfortable arrangement. Therefore the investment

process is skewed towards capital-intensive, high-profit projects, with

scant regard to local consumption needs. This process also has an

insidious side effect as, through heavy taxation in kind or cash, it

actively discourages investment in land and equipment at village level:

"The peasants share a notion that they do not wish to feed the

consumption habits of a voracious bureaucratic bourgeoisie. Such is the

blockage that restrains productive forces in underdeveloped countries."

(Mittelman:P.160) To put it bluntly, the rural and urban poor of the

Third World get it in the neck: not only from the inner functioning of

an exploitative social system, but from an international economy which

consistently reproduces underdevelopment.

It would seem then, that in order to start to eliminate

poverty swingeing political and social reforms are necessary. But,

again this is only part of the equation: the structural changes made by

countries aiming at socialism have lessened social inequalities but

have not fuelled the accumulation process. State capitalist countries

have achieved high levels of capital formation but have broadened

social inequalities. There is no reason to believe that the NIC model of

industrialization will, or can, be repeated. Galleano dismisses the Latin

American NIC's "as caricatures of development: dwarves pretending to be

children." (Galleano:P.37) Likewise, every country cannot hope to be

the beneficiary of the containment policies of the USA, such as Taiwan

and South Korea. However, in the 1970's a third way of development was

sought, a path that was neither socialist or capitalist: the Mozambique

Liberation Front (FRELIMO) explored the possibilities of managing the

ties of dependency. By managing the ties of dependency FRELIMO hoped to

create a robust, independent economy by subordinating external capital

to the needs of the domestic economy. The first step in this innovative

programme was to identify the deep sociological and cultural reasons

for underdevelopment. "Underdevelopment refers to the blockage which

forestalls a rational transformation of the social structure in Third

World countries. Taken to the extreme, rational means that the

interests and needs of the majority are increasingly dominant. What

blocks development is an internal and external constellation of power

and privelege" (Mittelman:P.24) In the case of Mozambique, the

internal and external constellations of power and privelege was the

hangover of 500 years of colonialism and the bureaucratic structures

this had left in place. FRELIMO sought to overcome the blockages, which

thwart the interests of the majority by moulding a new culture, what

Gramsci called 'a war of position': a means whereby a cohesive society

could be forged in which all sections, classes and interest groups

would be 'empowered' and work for the economic well-being of Mozambique.

Unfortunately, the programme was overly ambitious and paid heavily for

its early mistakes; such as centralizing the agricultural sector and

emphasizing State sponsored heavy industry. The situation was further

compounded by the drought of the 1980's and the destabilizing tactics

of its large powerful neighbour, South Africa, which had no intention

of allowing a democratic socialist regime to thrive on its border.

Therefore, although the FRELIMO experiment tried to address both the

internal and external factors which contributed to the

underdevelopment of Mozambique, its promise was never realized and the

strategy of managing the ties of dependency cannot, at this point, be

assessed.

It would seem, therefore, that poverty and starvation are the

result of internal and external factors of exploitation, corruption and

mismanagement. The iniquities of the international economy amd domestic

elites contribute significantly to the preponderance of poverty in the

Third World. Forty years ago, the economists and politicians laboured

under the assumption that every country in the world must develop into

a copy of the industrialised nations: all of these countries and

people wedded to the dream that in the next century 10 billion people

can live like the Americans they see on television; that utopia is a

supermarket with thirty brands of soap. After forty years only a

handful of nations, enjoying favourable circumstances, have made the

leap into sustained economic growth. Given the present technological

climate and finite resources of the earth, is it reasonable to assume

that there is room for anymore ? Is it reasonable to assume that the

eurocentric model of development is a natural evolutionary path which

every nation must follow in order to eradicate poverty? That the

historical class alliances that forged a measure of prosperity in the

West will be reproduced in the late twentieth century in the Third

World? The answer must be an emphatic no! If the current right-wing

ideology is to believed the only way to overcome the internal factors

blocking development in the Third World is to let the markets reign

supreme, which will in turn mitigate the excesses of the external

factors. But in the present economic system the market is so rigged as

to permanently favour only a handful of powerful nations with an

historical and cultural advantage. This is not the way forward. For a

steady reduction of poverty levels throughout the world there must not

only be different paths to development, but different development

itself. If the world leaders could take their collective heads out of

the sand long enough to contemplate the long-term future of the global

economy, instead of the next election battle, the path to a more equal

distribution of wealth might be a lot simpler, as it is we must come

back to the earlier point of managing the ties of dependency, but this

time with a variation developed by the Guyanan economist Clive Thomas.

In his pioneering analysis 'Dependence and Transformation'

Thomas outlines an alternative to orthodox doctrines of development.

The overall objective is to harmonize the sectors of the economy so

that indigenous peoples produce what they consume and consume what

they produce. This principle would govern investment choices,

encourage the growth of local technologies, suggest new possibilities

for resource-based industries and point the way towards an integrated,

self-sustaining economy. This idea is called 'dynamic convergence' and

calls for the realignment of resources with demand and the realignment

of needs with demand. However, if this programme is to work

successfully the needs of the many must supercede the needs of the

elite; a strategy of dynamic convergence must be built on the FRELIMO

model of empowering the masses and changing the aspirations and

expectations of the elites, in other words a 'war of position' must be

won before dynamic convergence could function successfully.

In this essay we asked is poverty really the problem? And a

cursory glance at the everyday problems of the Third World would

supply us with an emphatic yes: poverty is the problem. But the

question we should really be asking is why is poverty the problem? If

every person in Somalia could be fed tomorrow and the drought ended,

they would still be left poor, with a shattered economy and a country

awash with warring factions and a plethora of weapons from the arms

dealers in the north. While countries like Somalia, Costa Rica or

Malaysia follow the eurocentric model of modernisation their people

will always find themselves dependent on the vagaries of powerful

markets beyond their control, at the mercy of international

institutions and banks which need their pound of flesh in order to

prop up the financial system. Or subjected to domestic elites

committed to propagating global capitalism. For the worst effects of

poverty to be mitigated Third World states must reorientate their goals

and achieve a certain level of independence from the international

economy. In the long term this means following a programme of dynamic

convergence wedded to FRELIMO's concept of the 'war of position'.

 

 

 

BIBLIOGRAPHY

SAMIR AMIN EUROCENTRISM 1988

P. CAMMACK ET AL THIRD WORLD POLITICS 1991

N. HARRIS THE END OF THE THIRD WORLD 1986

J. MITTELMAN OUT FROM UNDERDEVELOPMENT 1988

M. TODARO ECONOMIC DEVELOPMENT IN THE THIRD WORLD

JOHN TOYE DILEMMAS OF DEVELOPMENT 1987

 

 

GUARDIAN SUPPLEMENT TO THE RIO EARTH SUMMIT