The Divide: A Brief Guide to Global Inequality and its Solutions by Jason Hickle. 2017. Heinemann, London.
This book is excellent in its forthright account of the way the global economy has been structured by and for Western elites and consumers. It deals with the history of brutal colonial grabbing, the creation of global inequality and the way Neoliberal doctrine enables continued polite plunder today. It disputes the conventional faith that Third World poverty is being eliminated. However I think Hickle’s discussion of alternatives is disappointing, and I want to suggest more effective options.
The history of inequality; the creation of inequality.
Hickle (2017) begins with a discussion of “development”, conceived by the Truman administration as the solution to Third World hunger and poverty. In recent years it has been taken for granted that enormous gains have been made, lifting hundreds of millions out of despair and cutting the numbers in poverty in half since 1990, but Hickle gives strong case that poverty has not been reduced. He points out that most of the achievement has been in China, and that the gain has been in proportions of populations, not in absolute numbers, which he says for extreme poverty remain at 1 billion.
And that is based on a poverty line that is set far too low. Hickle says that if we measured poverty by a more realistic $5 a day we would find that 4.3 billion are under the line, and we would find that the problem has actually become worse over time. Pritchett of Harvard says the line should be $12.50.
International inequality has also become worse. In 1960 rich world per capita income was 32 times that in poor countries, but by 2000 Hickle says the ratio was 134 to 1. Personal wealth inequality has deteriorated at a far more rapid rate; in 2014 Oxfam estimated that 85 people had half the world’s wealth but by 2017 they say half was held by 8 individuals.
What has the “development” industry done to deal with this threat to its core ideological claim (i.e., that the system is solving the problem so no need to change it)? Easy – set very low hunger and poverty definitions and alter them when required. Consider the official definition of hunger as a yearly average of 1600 – 1800 cal/day, enough for “… a sedentary lifestyle.” Firstly, that means many averaging that intake over a year would have spent much of the year under it, but would not be classified as hungry. Secondly, Hickle points out that a rickshaw operator needs 3000-4000 cal/day. He says a satisfactory definition would mean 1.5 to 2.5 billion are hungry.
He rightly ridicules the “trickle down” rationale for conventional i.e., capitalist development theory. “To eradicate poverty at $5 a day, global GDP would have to increased to 175 times its present size.” (p. 57.)
So the first part of the book constitutes a hefty challenge to the conventional wisdom, showing that “the divide” is enormous and by some indices hardly improving and by others actually getting worse.
In Part 2 Hickle turns to the origins of poverty, surveying the 500-year-long story of the rich dispossessing the poor, primarily via either conquest and theft or by enclosures of various sorts. For instance, enclosures left the Irish poor highly dependent on the potato because it was the only plant they could survive on given the little land they had left at the time of the famine … in which 1 million died … while “Ireland was exporting … shiploads of food to England and Scotland.”
He sketches the same processes in many regions. The British deliberately wiped out Indian manufacturing, especially of textiles which were superior to British produce. As a result “… the centuries-old traditional welfare buffers were destroyed on the basis that they “… interfered with market forces” (p. 86.) (As Hickel points out on p. 185, for four hundred years the British had made sure market forces were not allowed to interfere with their development!) Thus in two major droughts 30 million died…although during the worst years “… they shipped a record 6.4 million tonnes of Indian wheat to Europe.” He reminds us about the forcing open of China and the Opium wars, and the scramble for Africa. He thinks the French were the worst, although the records of the Belgians and the glorious British Empire are pretty hard to beat.
These were the kinds of processes that created the Third World. A few hundred years ago there was little difference in economic performance and per capita “living standards” between Europe and various other regions and the world. There is little mystery in why the Third World became full of poor people suffering primitive economies, tyrants and miserable living conditions.
However in the 1950-70 period there was a remarkable progressive surge, “… a miracle in the South”, a liberation from colonialism and the emergence of “Developmentalism”. This reoriented the use of national resources to national purposes, controlling foreign investment and capital flows, land reform, protecting infant industries via tariffs, and nationalizing resources and industries for development in the interests of the nation. Due to this “postcolonial miracle”, inequality between rich and poor nations began to decline for the first time.
But the rich Western countries didn’t like it. Their access to cheap labour and resources and markets, and lucrative investment opportunities was being undermined. “The governments and corporations of the Western world were not willing to let this happen.” (p.115.) Eisenhower (correctly) saw all this as “…a threat to the commercial interests of American multinational corporations. “ (p. 115.) Thus began what Hickle describes as “The Age of the Coup”, the long list of CIA subversion and military invasions to get rid of non-compliant regimes and install those willing to rule in the interests of the rich. “Developmentalism” was of course identified as communism, thereby instantly justifying its ruthless elimination. “…pro-poor legislation was demonised in Western media as communist and this designation gave Western governments licence to employ even the most draconian tactics with impunity.” (p. 140.) In fact the unacceptable initiatives had little to do with communism, and few of the leaders behind them and thus assassinated were communists. “…the goal rather, was to defend Western economic interests”. (p. 140.)
Hickel sketches the US, French, British and Portuguese interventions in Guatemala, Brazil, Guyana, Cuba, The Dominican Republic, Nicaragua, Bolivia, Ecuador, Haiti, Paraguay, Honduras, Venezuela, Panama, Indonesia, Ghana, the Congo, Guinea-Bissau and Cape Verde, Angola, Gabon, Cote d’Ivore, and South Africa. African problems are usually attributed to being plagued by corrupt dictators, but “…Africans have been actively prevented from establishing democracies… Western powers have actively thwarted countless attempts at real independence.” (p. 124.)
Enter Neoliberalism.
Hickel then outlines the emergence of the Neoliberal masterstroke, the ideology enabling effortless plunder, without gunboats. Chile was the test bed. Instead of the old strategy of organizing a coup and installing a dictator to rule in our interests with an iron fist, the CIA funded the installation of lots of Chicago trained ”economists” eager to implement free-market doctrine. The outcome was very successful … for the corporate rich and their military friends, but it was a predictable disaster for most Chileans. Chile became and one of the world’s most unequal societies and entered a long period of brutal dictatorship.
But Neo-liberalism was away and running. The US promoted it in many other countries, preferably dictatorships as it proved somewhat difficult to get free people to accept policies that transferred national wealth from them to the rich. Hickel’s Part 3 is about “The New Colonialism.”
He goes on to summarise the triumph through the Thatcher and Reagan years, and especially through the brilliant strategies implemented by the IMF and World Bank. The oil price hikes of the 1970s saw large amounts of money flowing into banks that didn’t know what to do with it all … until someone got the bright idea of seducing Third World leaders into borrowing heavily. Before long huge debts had accumulated, via unwise projects undertaken and much siphoned off in corruption, and then Federal Reserve chairman Volker hiked interest rates to 21%, skyrocketing debts and leaving no chance of paying them off. Bank profits soared to $100 billion p.a.
Enter the Structural Adjustment Packages, whereby new loans would be granted to solve debt repayment problems, but on condition that recipients geared their economies to Neoliberal policies. Thus, deregulate, get rid of impediments to business and foreign investment and trade, eliminate tariffs and protection for your industries, sell national assets (to rich world corporations, at fire-sale prices), eliminate subsidies, devalue (making your exports cheaper for the rich world to buy, and making you pay more for your imports from it), free up access to resources for foreign corporations, cut wages and welfare and allocate national income to paying back debt. In other words, totally reverse the previous national “developmentalist” policies and redirect national income and assets to debt repayment. “From the 1950s through the 1970s Western powers had struggled to prevent the rise of developmentalism in the South. What they failed to accomplish through piecemeal coups and covert intervention, the debt crisis did for them in one fell swoop.” (p. 155.) “Debt became a powerful mechanism for pushing Neoliberalism around then world.” 156.) Power over national development was shifted to rich world banks and corporations. It was “…a new kind of coup.” The IMF then began to put these conditions on all new loans.
Almost instantaneously “…the US and Europe seized control over the economic destinies of developing countries, conquering them all over again without spilling a single drop of blood.” “This time the job was done by bankers and bureaucrats.” (p. 148.) They were the ones deciding what would be developed in the Third World and what purposes national resources would go into.
Hickle explains the devastating impact on the Third World. For instance the average African GDP quickly fell 10% and the numbers in extreme poverty more than doubled. “…structural adjustment turned out to be the greatest single cause of impoverishment in the 20th century.” (p. 160.) Chussudovsky (2001) describes the Neoliberal triumph as the greatest wealth transfer in history, attributing to it massive national collapses, such as in Russia and Yugoslavia, civil wars and the Rwandan genocide. No surprise that the 1% now have half the world’s wealth. By 1992 there had been 146 “IMF riots” … which made no difference.
Chapter 6 deals with trade, again exposing the processes which enable rich countries and their corporations to disadvantage the rest. For instance at the centre of Neoliberal doctrine is the demand that loan recipients and trading partners eliminate subsidies, which of course interfere with market forces, but the US and Europe subsidise their agriculture more than $1 billion every day. When the North American Free Trade Agreement came into force “… American corn flooded into Mexico undercutting the capacity of local producers to sell anything. Some 2 million farmers were driven out of business”, and “… much of that newly vacated land was then acquired by foreign firms…”, another form of enclosure movement. But the greater efficiency of production lowered food prices, right? The cost of tortillas shot up by 279%, increasing hunger and malnutrition. Farm worker incomes fell by 23%, poverty numbers rose 19 million. Per capita growth halved. And in the US NAFTA resulted in 682,900 job losses. (p. 206.)
He outlines the procedures enabling these draconian trade policies to be imposed, such as the laws which prevent the World Bank and IMF from being sued for any damage they cause, while corporations are allowed to sue if governments take action that corporations think might affect profits. Of course the trade agreement rules prevent corporations from being sued, and governments have been forced to pay them hundreds of millions of dollars for action threatening profits. This means corporations can force change in a nation’s laws. Note that the “dispute settlement “ arrangements give the task of determining what trade agreement law says to three anonymous “judges”, appointed from corporate sources, meeting in secret, with no representation of affected parties and no right of appeal. (p. 209.)
Why would anyone sign up to such agreements? Because if you don’t you will be shut out of trading. Why don’t they just default, refuse to pay up? Because after all the privatisation “…default is no longer an option…they are now totally dependent on foreign investment.” (p. 181.)
Thus “development” is determined by the rich and powerful transnational elites. Your country will only get development of the industries which those with capital think will maximize their global profits. Your own resources will not be put into developing the things most urgently needed by your people; they will go into whatever some foreign investor thinks will sell best when exported to rich countries. Even your capacity to improve local arrangements is blocked. “A new minimum wage was just passed in Haiti? Better move your sweatshop to Cambodia!” … Countries are forced to respond by cutting regulations and driving wages down, “…to make themselves more attractive to the barons of global capital.”(p. 215.)
Chapter 7 deals with several other mechanisms of plunder functioning well today, including tax havens ($1.1 trillion p.a. siphoned out of the Third World), and transfer pricing, all made easier by the Neoliberal deregulation of finance. Especially disturbing are the land grabs, the purchase of land by foreign investors. In Liberia 75% of the agricultural land is owned by foreigners, growing what … beans for hungry peasants? ..er, no … crops to export to rich world supermarkets of course. Thus deregulation in this sector both dispossesses the poor of their land, and of the food it produces.
Some of the land loss is due to schemes to deal with climate change, i.e., to plant carbon absorbing trees. This is another way the cost of the climate problem the West has created is being dumped on the Third World poor.
Hickle sees the wider significance of all this. It is not just a matter of insatiable greed and single-minded bullying. The context is the long term trajectory of capitalism, driven by its ceaseless need to find ever increasing outlets for ever increasing capital accumulation. He says, the “…deeper purpose … was to save Western capitalism…” Neoliberalism opened up vast new fields for investment, resource extraction, markets and good business, fields that were previously inaccessible to capital. For instance the IMF forced through privatization of more than $2 trillion of assets in developing countries between 1984 and 2012. (p. 171.) Chusudovsky describes the sell off of Russian assets, including whole aircraft factories, for a song. Hickle refers to the classic Bolivian water example whereby the World Bank pressured the government to sell the public supply system to foreign corporations, which set about improving “efficiency”, i.e., profits, by a) hiking the price 35%, b) cutting off supply to poor areas. Similarly Hickle notes that 18 million people die every year because they can’t afford the high drug prices charged by extremely profitable private companies…while 84% of drug research is funded by governments. Questionable behaviour? Not really, after all item 1 of the World Bank’s Articles of Agreement says its role is “…to promote private investment … and the growth of international trade.” (p. 172.)
All in all Hickle’s indictment is spot on, but it is somewhat unusual in so clearly laying the blame and the cause of poverty mostly at the feet of Western elites, (and consumers), who knowingly and shamelessly drive through policies that grab for more resources, markets and territory. It’s all been heavily documented many times before, but it needs to be said again and again given the reluctance to take any notice.
Solutions.
In his Chapter 5 Hickle spells out major areas where he believes change is needed. These are debt relief, including cancelling the conditions put on SAPs [Structural Adjustment Programs], democratizing global institutions such as the IMF and World Bank, fair trade arrangements, just wages, and reclaiming the enclosed public resources and commons, ending land grabs and dealing properly with climate change. Of course all these are desirable, but the chapter is a huge and surprising disappointment.
Firstly, he offers no ideas on how such changes are to be made, especially when. he has spent 252 pages convincingly explaining that the rich and super rich will not tolerate anything like them. His entire theory of “how” seems to be, “…these interventions will require the political courage to stand up to the interests of the very powerful actors who extract so much benefit from the present system.” (p. 273.)
Secondly, in my opinion his statement of goals is unsatisfactory, because it does not focus on those which constitute the essence of the required system change. He does fleetingly refer to several of what seem to me to be the key themes, but in an indecisive and tentative way; nothing like as stroppy as he should be.
Here are a few of the points I think his first 252 pages show must be central and non-negotiable goal indicators.
- The global predicament cannot be fixed unless there are astronomically big and radical changes in economic, political and cultural systems.
- These changes cannot possibly be made by or within present society; it is run by and for the rich and they will not, cannot do other than continually intensify their drive for greater production, consumption, resource access, trade, investment , profits and wealth. A capitalist economy cannot abandon the commitment to growth, it cannot tolerate heavy regulation of the market, it cannot permit significant interference with the freedom of capital to invest where most profit can be made. Its greatest problem is finding outlets for the ever-accumulating volume of capital so it must get rid of impediments to this.
Such a system will not change itself. The kind of goals listed by Hickle cannot be got through the legislatures that exist today, which cannot move significantly against the interests of the capitalist class, nor of the rich world consuming masses who want more jobs and income and wealth. But Hickle proceeds as if changes of this magnitude can be made within and by the existing system. After referring to some of his big change recommendations he provides the following amusingly unconvincing claim: “This might sound scary but it’s really not,”… because “…it’s possible to reduce production and consumption at the same time as increasing human development indicators like happiness…” (p. 288.) True, but … A little later he says, “…one easy solution to overconsumption would be to ban advertising…” (p. 295.)
- The possibility of desirable change will only come when deterioration in the present system has become much more serious. The system will increasingly fail to provide for most people. Within ten years it is likely that oil will become extremely scarce (see Ahmed, 2017), and that this will suddenly trigger GFC 2 (debt levels are already far higher than before GFC 1.)
- There will inevitably be a great deal of trouble, probably catastrophic and irretrievable breakdown. Our fate will then depend entirely on whether or not enough people respond by moving to some kind of Simpler Way, i.e., to small-scale local economies that are as self sufficient as possible, basically collectivist, driven by mutuality and cooperation and centred on commons, committees, working bees and town meegtings, thoroughly self-governing, and above all content with lifestyles that are frugal, self-sufficient and not concerned with acquiring wealth or possessions. The chances of such a Simpler Way revolution in culture and systems are obviously very poor, but the point is that there can be no other solution; we have gone through the limits to growth and it is not possible to get per capita resource consumption down to sustainable levels unless we do manage to build this kind of alternative settlement and culture. Hickle does not seem to see this; he certainly does not discuss this way out.
- What is to be done here and now is to work very hard at increasing the understanding people in general have of our situation, so that more see the sense of moving to initiatives of this kind. The Transition Towns and Eco-village movements are showing the viability and the benefits, and creating the space for people to come across to as conditions in the mainstream deteriorate (…although I have major criticisms of these movements).
- States will not be central in the initial stages of this revolution; it can only be led by a grassroots shift to frugal, self-sufficient, communal localist culture. It is a mistake to try to get the big changes through legislatures here and now. Much later when states are failing and grass-roots initiatives have gathered momentum the task will be to bring (the relatively few) remaining state-level functions under the control of the local assemblies.
Hickle briefly refers to some of these themes, but again not very energetically. He points to the limits to growth and the need for Degrowth and reduced rich world consumption, but briefly and with no detail on how alternatives might be structured. He does not insist on the fundamental need to scrap capitalism or to prevent the market from determining our fate. He does not seem to realize that a sustainable society in a context of limited resources cannot be globalized, or have a lot of international trade, or be driven by high tech, or have more than a minimal amount of industrialisation or urbanization or scope for market forces. And although he deals with the fact that the GDP can rise while real indices of welfare fall, he does not go into the way that simpler lifestyles can liberate us to far higher quality of life than is possible in rat race society.
Surprisingly, it also seems to me he has no concept of alternative or non-conventional development for the Third World. The global reforms he recommends would only clear the way for improved conventional, basically capitalist development. Development would still be conceived in terms of investing capital to compete in the global economy, building profitable industries, operating within a market system, exporting to earn income to spend on imports, more jobs and wages, earning monetary income enabling purchase of consumer goods. Even if all this was under national control, and fair and free of corruption it would only be a resurrection of the old post WW2 “Developmentalism”, … and it would be grossly unsustainable.
Hickle does not seem to grasp the nature and magnitude of the limits to growth predicament we are in. We have so far exceeded sustainable global levels of resource use and ecological destruction that rich world per capita ”living standards” must be reduced by perhaps 90% before it will be possible to maintain them or extend them to all people. (See “The Limits to Growth analysis of our global situation.” This means the conventionally taken for granted ultimate goal of development must be totally abandoned; it cannot be aspiring to the living standards and ways of the rich countries.
Development must be radically reconceived in terms of moving to frugal, local, self-sufficient collectivism, in which growth, globalization and affluence have been scrapped and there is little role for trade, exporting, heavy industry or capital investment. National resources must be put into providing villages and regions with the (small amount of ) basic equipment and inputs they need. (See “Third World Development”). If you are interested in sustainable/appropriate Third World development, turn to the Zapatistas or the Eco-villages of Senegal.
Hickle’s general critique is valuable although well known and massively documented in critical circles. But I think the book’s merit is not in adding to our understanding of the empire or the creation of poverty but in its hard hitting indictment of the West and in its demolition of the exonerating myths and delusions. The history has been of deliberate, conscious grabbing and thuggery, sometimes engineered by trade and investment agreements but often by invasion and plunder, and now mostly by the quiet enforcement of debt provisions. As Hickle says, “If you have ever found yourself wondering what is responsible for global poverty, this is your answer.” (p. 182.) We in the West caused the underdevelopment, poverty and hunger. We got rich doing it. We continue to do it. We couldn’t care less.
Ahmed,N., (2017), Failing States, Collapsing Systems: Bio-Physical Triggers of Political Violence, Springer Briefs in Energy, Dortrecht, Springer.
Chussudovsky, M., (2001), The Globalisation of Poverty, Common Courage Press.
Hickle, J., (2017), The Divide; A Brief Guide to Global Inequality and its Solutions, Heinemann, London.
28.9.2017
