By Marina Cameron
For more than a decade, neo-liberal rhetoric has promised that a globalised "free market" will lead to progress and increasing prosperity for greater numbers. But the reality is the opposite: "in the past 15 years the world has become more economically polarized — both between countries and within countries". So says the foreword to the Human Development Report (1996).
This comprehensive study of economic growth and its relationship to levels of human development, commissioned by the United Nations Development Program (UNDP), outlines major global trends which are stunning in their portrayal of a world system in deep crisis.
The gap between rich and poor internationally is growing. In 1960, the richest 20% of the worlds people were 30 times better off than the poorest 20%. They are now 61 times better off. Concretely, this means that only $5 trillion of the $23 trillion global gross domestic product (GDP) in 1993 was located in the so-called "developing" world, although these countries have 80% of the worlds population.
The rich are getting richer. The assets of the worlds 358 billionaires now exceed the combined annual incomes of countries which contain 45% of the worlds people. This is not due simply to an increased share of growth. Wealth is transferred directly from poor to rich. The proportion of people enjoying per capita income growth of more than 5% a year has more than doubled over the last 30 years, while those experiencing negative growth have more than tripled.
The most developed countries, in the Organisation for Economic Cooperation and Development (OECD), have generally maintained slow but steady growth in per capita income over the last 30 years. But other regions tell a story of spectacular growth or dismal failure — of growth rates exceeding anything achieved since the industrial revolution, or outright decline, exceeding in duration, and often in depth, the Great Depression of the 1930s in the industrial countries.
East, south and south-east Asia and the Pacific, along with parts of Latin America and the Caribbean, have experienced rates of growth exceeding OECD countries' in the last 15 years. Meanwhile, sub-Saharan Africa, many Arab states and parts of Latin America and the Caribbean have experienced long-term negative growth. Eastern Europe has also had a massive decline in per capita income since 1990, exposing the myth of a glorious capitalist restoration and successful integration into the world economy.
While the benefits have been more equally spread in fast-growth economies, inequality within Third World countries is still growing. There is also growing inequality between and within First World countries. Australia, along with the UK, has one of the largest disparities in income equality — the richest 20% earn 10 times more than the poorest 20%.
Most First World countries have experienced a large shift in wealth from the poorest to the richest. The report's figures on access to education and womens empowerment seem to show overall improvements in human development in the First World. However, these are often misleading. For example, although total enrolments in higher education have increased massively since the 1960s, access to quality education and free education ended with the postwar boom in the early '70s.
Comparisons between Third World countries in particular reveal some as clear winners and some as losers. Three-quarters of increases in private investment flow to the Third World between 1970 and 1994 went to just 10 countries, mostly in east and south-east Asia, and Latin America.
Capitalist ideologues would like us to believe that this is simply because some countries are "better" at seizing the opportunities presented by an increasingly globalised world market, while others are bypassed and out-competed.
The world economy is certainly more globalised. More than a trillion dollars flit around the world every 24 hours. Even the strongest countries are vulnerable to fluctuations in interest rates and exchange rates on the international financial markets. World merchandise trade tripled from 1960 to 1990, while global trade in services increased more than 14-fold.
The report notes the negative consequences — the disastrous marginalisation of countries in regions such as Africa and worsening income equality in many countries as a result of the opening up of their economies. However, despite noting that fast-growth nations in the Third World have achieved their "success" because they "combine low wages with high-technology skills", the report makes a largely uncritical assessment of the benefit of globalisation for these countries.
Limits to globalisation
There are limits to globalisation and the ability of fast-growth Third World nations to maintain long-term benefits. These remain unexamined by the report.
While capital is more mobile today, the vast majority of owners of transnational corporations reside and locate most of their capital in one First World country. They continue to look to "their" nation state for support against rivals.
The relocation of some production by multinational companies to the Third World, where profits are maximised because wages and environmental controls are kept low, has allowed the ruling elites in a few countries to jump ahead and grab more of the share of limited Third World wealth. Despite the growth of indigenous multinationals in some less developed countries (such as Hyundai in South Korea), the so-called newly industrialising counties (NICs) remain dependent on foreign investment. But full relocation of transnationals to the Third World is prohibited by their need for skilled labour, supplies, lower transport costs and the backing of their own powerful state.
The NICs in Asia and Latin America achieved development predominantly because imperialism needed to build support bases in the fight against the "socialist camp". So, in South Korea, the US actively supported economic development to stave off the North Korean communist threat. The US supplied aid worth around 15% of South Korean GDP in the 1950s — more than the entire US aid to Africa.
In the post-Cold War era, imperialism no longer needs to bolster these countries' economies. They will be seen more as economic competitors than political allies, leading to the full-scale implementation of neo-liberal policies aimed at further opening up Third World economies to transnationals. Thus NICs are not a model which can spread to the rest of the Third World and in the long term these "success stories" will be brought back into a framework of dependence on the First World.
Already there is significant slowing of growth in the export-driven booms of the Asian "tigers" — Singapore, Taiwan, Hong Kong, South Korea, China, Malaysia, Thailand and Indonesia.
Growth and human welfare
Growth in per capita income does not tell the full story of development and progress. The report illustrates that it is not simply the quantity of economic growth that matters, but its structure and quality.
Types of growth which do not further human development are described as: jobless growth; ruthless growth for the rich at the expense of the poor; voiceless growth unaccompanied by increases in democracy or empowerment; rootless growth at the expense or suppression of other cultures, ethnic groups or nations; and futureless growth, where resources such as the environment are squandered.
Although the report asserts a general increase in human development worldwide — i.e. in life expectancy, education and real income — the amount and rate of increase in human development varies massively within and between all countries. Even in areas of relatively high human development such as the First World, unemployment and mass sackings resulting from corporate restructuring, and cutbacks to health and welfare have increased social insecurity and dissatisfaction.
In countries put forward as models for growth, such as Japan and Sweden, relative social and economic equality are qualified by the problems of environmental destruction and the fact that these economies too are beginning to succumb to worldwide trends of increasing unemployment and growing social insecurity. Japan lags behind the rest of the OECD on gender equality.
Having outlined types of growth which do not further human development, the report argues that these types of growth need to be curbed and concern for human development built into notions of growth. However, economic growth with limited concern for human development is the rule, not the exception. Jobless growth affected 40% of the 69 countries which experienced growth.
The rule is profit. Each capitalist government decides policy on the basis of what benefits big business most and what will increase the competitiveness of its businesses in the international economy. Human development will always be overridden by this driving force.
Solutions
In response to the failure of economic growth to contribute to human development adequately and consistently, the UNDP report calls for policy makers to strengthen this link.
Distributing gross national product more equally, translating growth into job opportunities, channelling more revenue into social expenditure, providing more opportunities for women, providing information about and access to family planning, allowing participation in decision making and promoting an active civil society are all put forward as essentials for maximising economic growth, human capabilities and productive potential simultaneously.
Reacting against the return to the "free" market promoted by neo-liberalism in the age of globalisation, the report argues for beneficent state intervention to attain these goals. It attempts to cajole governments into considering human development by arguing that it promotes economic growth. A better educated, healthier work force, it states, is more productive.
This argument is true, but it is one known and ignored by capitalism because profit is not made through generalising prosperity. The few aim to benefit from the many. Productive potential is not the driving force behind an economic system which produced a five-fold increase in the rate of armed conflict and the consequent destruction of massive amounts of productive potential since the second world war.
This report provides an interesting and useful critique of economic rationalism and trickle-down economics, and is a rich data resource. But it stops short of calling for fundamental change.
A strategy of demanding that growth be adjusted to take on board human development and attempting to create new national and international institutions to force governments and transnationals into line would, at the best of times, only produce a version of capitalist policies with a slightly better face.
In the era of neo-liberalism, this strategy is up against a worldwide, conscious drive by capitalism to increase the rate of exploitation of the worlds peoples and restructure national economies to keep profits up. The abstract calls for political commitment to policies such as full employment contained in the report ring hollow in the face of a global economy racing in the opposite direction. Keynesians tried this approach for years. It ignores the motor force of the whole system.
Tackling the problems outlined in the report requires tackling the system of capitalism as a whole. In the end it means mobilising the vast majority of the world's people, who are losing out under current arrangements, against the system and towards the goal of creating an economic, social and political system in which the masses of people own and democratically direct how the fruits of economic growth will be used.