'Development': Making Poverty History... or Making the History of Poverty?

It is absurd to believe that global poverty is a technical issue that reflects a lack of development among countries in the global south; but it is obscene to think that we can eradicate global poverty through an economic system which’s very own subsistence depends on creating it.

Extra, Extra! Read all about it: development is a success! Compassionate leaders in the global north, with a little help from international economic organisations, have reduced global poverty in half since the 1990’s! There is more, statistics show that the gap between rich and poor countries is finally closing ! At last, governments of the west, the United Nations, and the World Bank proclaim that the world is getting better. How come? Neoliberal development and western charity of course. It is a fantastic feel-good story; but it is simply not true.

The myth of poverty reduction

I am not a big fan of measuring poverty through income thresholds, nor development through GDP for that matter, but since the institutions in charge of reducing global poverty do so, lets follow suit. Anthropologist Jason Hickel has taken a close look at the MDG’s poverty reduction numbers and shown that they are largely theatrical- a matter of playing with absolute and proportional measurements, changing baseline years, and altering poverty thresholds without properly adjusting factors such as purchasing power. In fact, when using the initially stablished metric- poverty headcounts today stand at 1 billion, the same as they did in 1981; now, that is using a conservative dollar a day threshold, if one works with a more accurate income metric such as 5 dollars a day, the poverty headcount rises to 4.3 billion. In case you were wondering, that is a 60% of the world’s population! And this is not due to a lack of ‘development’, for global GDP has tripled since 1980, it is a problem of unequal distribution. In the 1960’s income per capita in the richest country was 34 times higher than in the poorest country, yet, at the beginning of the new century the ratio was already 134 to 1.

Far from what the United Nations and the World Bank want us to believe, global poverty has not reduced but increased, so has the gap between the rich and poor countries. Debunking these success stories is important because they claim that neoliberal development is working for most of the world’s population when it is quite the contrary.

The myth of development

The term development is commonly associated with progress, the improvement of human lives. However, a closer look takes a more draconian turn. The term originates during colonialism, a hierarchical social construct that divided the world between those who were supposedly developed and those who were not (fun fact, archaeological studies have shown that before European conquest, people in regions across the global south, lived longer and healthier lives while working less than their equivalents in Europe.) Yet, the idea of development provided a moral justification for the global extraction of resources and the exploitation of labour, namely colonialism, which in turn fueled the industrial revolution of the west, leading to more development, and what nowadays we call modernity.

So, it is not so much that European empires underdeveloped countries in the global south, but that actually, countries in the global south developed those in the north.

Okey, colonialism and slavery were bad, racist, and kind of genocidal, but that was a long time ago, how does one explain the persistence of poverty in the global south despite all the aid that rich countries provide?

Well, colonialism did not only represent a process of accumulation by dispossession, but it also meant that countries in the south were integrated within the global economic system on unequal terms, terms which are very much in place today. In fact, research shows that countries in the global south are still net providers of wealth to rich countries. Wait, What?

Yes… If one looks at the totality of resource transfers that fluctuate between rich and poor countries, one notes that while poor countries receive a yearly amount of 2 trillion, they send back about 5 trillion; in other words, they provide 3 times the amount that they receive. So much for charity.

The myth of neoliberal economics

Despite colonialism, there was a time where countries in the global south were growing fast- as a matter of fact faster than their western counterparts during their periods of economic bonanza. The end of colonialism coincided with a change on mainstream developmental thinking from laisse-faire free market economics to Keynesian state-led development. From the 1950’s to the 1970’s Keynesian development translated into social spending, diversifying and protecting the economy and limiting capital flows.

It worked, poverty and inequality were reducing within and among countries, it seemed that the world was truly getting better.

One would think that world leaders in rich countries were happy about this, after all, is almighty growth not the ultimate goal of capitalism, the supreme indicator of development? Well, not quite. Newly independent countries gained political control over their economic resources and one could say that that multinational corporations and governments in the west had grown accustomated to buy cheap and sell dear. There is more. Following political sovereignty, south to south cooperation movements such as NAM, the G77, and the NIEO emerged raising the voices of much of the world’s population asking for global justice: debt cancelation, equal terms of trade, technology and pharmaceutical transfers, and the democratization of international governance and financial institutions. This meant that global capital and the leaders of the west could no longer dictate the terms of the global economic system to their advantage.

Sadly, after years of promoting western friendly military coups nurtured with developmental aid to ensure access to resources, the west found a way to reverse global wealth (again). Since the 1980’s rich countries have used their power as creditors to gain de facto control of poor countries economic policies. Developmental aid, which is a fancy name for high interest loans, turned into everlasting debt. To obtain funds from developmental economic institutions (mostly to pay debts from loans which were meant to eradicate poverty), poor countries were required to reverse the very same policies that promoted their development via imposing the World Bank’s holy neoliberal trinity: austerity, privatisation and the liberalization of the economy.

Okey. This is just crazy! Not only did rich nations consolidate their economies through protectionist and redistributionist policies, but, the only places that have seen significant poverty reduction in the last decades have also deployed Keynesian, and state-led developmental policies.

All in all, it is only fair to say that neoliberalism has been the largest producer of poverty and inequality since European colonialism.

The narratives have changed, nowadays structural adjustment programs are called poverty reduction strategies, and they are not only about the right policies but about the right institutions- guess what? none of the rich countries had in place the so-called right institutions during their periods of economic bonanza.

Just to be clear. Underdevelopment is not a matter of catching up, and poverty is not a domestic technical problem, these are human-made and highly political issues; even worst, they serve as discursive tools to promote the policies that maintain an unequal global system. A system were multinational corporations can sue sovereign governments attempting to improve the wellbeing of their citizens in the name of ‘potential future economic loses’, a system were 60% of the world has no true voice within global governance institutions, a system were the World Bank, the main institution in charge of global poverty reduction, acts as an inverted robin hood who steals from the poor to feed the rich, a system that makes us believe that charity and not justice is the way forward.

Now, that is not the sort of world I want to live in, and if you do, be my guest. It is extremely clear to me that eradicating poverty entails dismantling the ways in which the current global system operates, and this starts at home. Maybe I am mad for thinking that debt cancelation, global wealth taxes, fair trade, and democratizing international organisations are more effective poverty-reduction strategies than sending bags of food, sponsoring children, or going on humanitarian holidays while imposing austerity and privatisation. But in the words of Thomas Sankara:

“You cannot carry out fundamental change without a certain amount of madness. In this case, it comes from nonconformity, the courage to turn your back on the old formulas, the courage to invent the future. It took the mad men [and women] of yesterday for us to be able to act with extreme clarity today. I want to be one of those mad men. … We must dare to invent the future.”