The tyranny of development

This is the first of two articles on developing economies by Sidhesh Kaul, an observer of regional economic and political affairs based in Jakarta.

JAKARTA (JP): On Jan. 20, 1949, president Harry Truman, in his inaugural speech before the congress, christened impoverished nation states as "underdeveloped areas" of the world.

In one master stroke president Truman crystallized the "us versus them poor folks" or the "rich North versus poor South" paradigm and thus provide a reliable benchmark by which economists have been able to compare countries.

Truman envisioned the United States as the leader of the pack, the torchbearer of development, with the rest of the globe -- especially the South -- as laggards. Truman saw the world as an economic playground where countries compete for a competitive grandstand position on the gross national product scale -- this philosophy being premised on the assumption that a civilization's real progress is measured by the level of its productive output.

Truman's development policy and world view spelt out the bound duty of the rich North to coax the straggling South to enter this race.

But coaxing poorer nations into metamorphosing themselves into credible competitors in a global economic arena was a gargantuan task that required the North to inject capital, transfer technology and bring about a shift from the "old ways" in the South.

Attitudes to work and governance, loyalty networks, values and habits of most of the conglomerated South were tangibly different from the developed North. Consequently these differences were viewed as obstacles to growth (although there was a brief period of lavish praise for "Asian Values" in between Japan's postholocaust resurgence as an economic power and the current economic crisis), a premise that has recently regained currency in the ongoing economic crisis.

To convert the South into credible models involved overpowering the barriers to growth and recasting countries in molds that the North could deal with. Consequently countries were treated as bland and lifeless economic models with scant regard for the fragile societal implications, a wretched habit that persists to this day.

Transforming the South, comprising of countries that were not built around the premise of accumulation, meant the systematic dismantling of established societal frameworks and institutions; revamping of laws and regulations; changing the decision making process in society; tinkering and fine tuning the local outlook on what comprises good civil governance; and the eroding established and traditional patterns of agriculture, production and commerce.

All this so that the "laggard" South could share in the fruits of development with the richer North. The questionable benevolence unleashed by the richer countries via their global developmental policies, to which history is witness to the travails of debt-burdened impoverished nations, has made it impossible for Third World countries to exit the race.

Almost 50 years have passed by since the implementation of these policies but the gap between the richer and the poorer countries has widened even more, although what these efforts have successfully done is to give birth to and nourish and enlarge a growing middle class elite.

The richer countries, not surprisingly, have cornered a major portion of the global increase in productivity.

A mere glance at the newly independent countries would reveal that theirs today is merely a continuation of their colonial past, albeit in a more politically correct and sophisticated way; one could propound that development and neocolonialism are terms that could be interchangeably used.

The patterns of subjugation and dependence are similar although the instruments deployed are considerably refined and sophisticated. However the powers that be have at times not hesitated to coax and persuade recalcitrant developing economies in less subtle ways, either overtly or covertly.

The new world view on development has enabled the governments of richer countries to squeeze concessions from the recipients in a manner that is less problematic and troublesome than directly assuming the worries of colonization.

While Truman was outlining his views that winter morning in 1939, foreign policy professionals and heads of large corporations had gathered in Washington to discuss how the postwar, postcolonization economies could be best shaped to satisfy American economic interests.

It was this discussion that spilt over to the Bretton Woods Conference of 1944. At the talks there were two erroneous assumptions that were made: a) That economic growth and enhanced world trade would benefit everyone and b) that planet earth would not impose any restrictions to growth.

This historical meeting saw the birth of the World Bank and the International Monetary Fund (IMF) and the seeds for the General Agreement on Tariff and Trade (GATT) were sown.

Since their inception, and through their structural adjustment program, the World Bank and the IMF have been pressuring the "southerners" to open borders and to metamorphose their economies from self-sufficient units to one that focuses on export production. Trade agreements negotiated under the GATT umbrella have in turn supported this metamorphosis.

To some extent the goals that were set at the Bretton Woods Conference have been met -- international trade has increased by a factor of almost 15 and economic growth has increased six fold. But the World Bank, IMF and GATT have failed to alleviate poverty and close the widening gap between the rich and the poor.

In the world view of the rich nations, domination over the world's resources and markets is ultimately going to decide the balance of power in the years to come and the Bretton Woods Conference (and the institutions that it gave birth to) are steps in that direction.

New alliances are being forged and cartelized blocs formed, driven by economic, political and commercial reasons. Interference in local affairs is unavoidable.

Brute force as an instrument of domination is passe. For poor countries this scenario poses the devil's alternative -- reject the benevolence and face deadly isolation or open up the borders to capital, technology, imports and cultural change and bow to the precedent condition of structural adjustment programs.

The postcolonization era has seen a systematic methodology of subjugation being deployed by the wealthier nations. The practice of nurturing indigenous elite continues since colonial times.

These western-trained elite swear by the tenets of the Truman gospel and in fact are too far removed from ground reality or the aspirations of their poor brethren. These elite are the effective instruments of the North and harbingers of change. The North in turn supports their efforts by generous injections of technology and capital.