Sie sind auf Seite 1von 5

COMMENTARY

The Crisis and the Global South: From Development to Capitalism


Hugo Radice

Current trends in the world economy and global politics provide evidence that the global south has now arrived, at last, at normal capitalism, bringing with it new patterns of uneven development, inequality and injustice. Its newly confident lites, now fully engaged in global circuits of trade, investment and finance, and in global governance too, appear to have left behind their previous colonial-comprador role.

This paper was presented at a workshop on Global Crisis: Responses and Impacts in the Global South, Global Development and Justice Research Group, School of Politics and International Studies, University of Leeds, UK, on 4 March 2011. Hugo Radice (h.k.radice@leeds.ac.uk) is Life Fellow, University of Leeds.
Economic & Political Weekly EPW

hirty years ago, ambitions for a New International Economic Order based on autonomous postcolonial development foundered on the debt crisis that shattered the unity of the Third World as we then conceived it. Today, rapid economic growth appears to have spread from east-south Asia to Latin America and now Africa, and, while much of the old capitalist heartland is mired in economic stagnation and fiscal crisis, the emerging economies face an investment glut. In this essay I argue that current trends in the world economy and global politics provide evidence that the global south has now arrived at normal capitalism, at last, bringing with it new patterns of uneven development, inequality and injustice. Its newly confident lites, now fully engaged in global circuits of trade, investment and finance, and in global governance too, appear to have left behind their previous colonial-comprador role. While the true import of the banking and financial crisis of 2008 remains contested, its impact on the world economy has followed a path that diverges sharply from the experience of past crises, and from the expectations of most western observers. Overall, it is clear that the global south, or in lite-speak the emerging economies, has suffered less and recovered more quickly than the advanced capitalist heartland. In addition, in 2011 it now seems that the patterns of political impact not in the sense of immediate crisis measures, but of longer-term tectonic shifts may be equally significant and unexpected. While political lites in the United States (US), western Europe and Japan struggle to find paths of recovery that are acceptable to their confused and divided electorates, remarkable changes of various kinds are observable across Asia, Africa and Latin America. Many commentators have tried to identify specific historical crises in the hope that a comparative analysis could shed
vol xlvi no 48

light on current events, the most common being the crisis that followed the 1929 Wall Street crash. After all, that was also a crisis that had its immediate origin in excessive financial speculation centred in the US, and soon assumed a global scale with dramatic effects both economic and political (notably the collapse of world trade and the rise of Hitler). But while there are clear parallels in relation to the points of origin of the two crises and their unfolding in the economies of the US and Europe, the effects on the wider world have been so different in so many ways that we are immediately drawn to an examination of the intervening decades in search of deeper understanding. I think that it is more fruitful, therefore, to situate the present crisis in the context of the post1945 period, which for this purpose can be divided into two: from 1945 until 1982 (the Mexican debt crisis), and from 1982 to 2007 when the current crisis began. In the next section, I sketch these two periods as the rise and fall of developmentalism as a unified global process. I will subsequently argue that the present crisis reveals that the unravelling of developmentalism since 1982 can be reinterpreted as the transition to what I call normal capitalism in the global south.

1 The Rise and Fall of Developmentalism


After 1945, the golden age of post-war economic growth and the worldwide movement for decolonisation provided not only a new historical subject on the global stage, the Third World, but a strategic task for that subject: development. Given the intensity of the political and military struggle for liberation from colonial rule, and the global context of confrontation between capitalism and communism, there was in retrospect a remarkable degree of agreement on the actual objective the condition of having achieved development. In essence, this centred on industrialisation, urbanisation and the building of an effective modern state apparatus. In pursuit of this common objective, the political economy of development could of course be elaborated from a wide variety of ideological positions, from free-market liberalism, through the mainstream of Keynesian theory and the critical school of underdevelopment and

november 26, 2011

27

COMMENTARY

dependency, to the orthodox communist model of central planning. As the post-war boom drew to a close in the late 1960s, both the theory and the practice of development were debated in academic and policy circles primarily between the mainstream and the dependency school. For the mainstream, a benevolent and hopefully democratic state could guide the development of a mixed economy, in which the public sector mobilised resources for physical and social infrastructure, while the private sector including foreign investors implemented the transformation from agricultural predominance to that of manufacturing. For the dependency critics, this rosy vision ignored the realities of extreme inequalities of wealth and power, and above all, the pervasive dependence of postcolonial economies on access to the finance, technology and markets that only the advanced industrial countries could provide. Aside from advocating complete national closure a strategy which became associated for all time with the brutalities of Cambodia under Pol Pot the critics typically argued for a larger role for the state in economic development. But they also recognised that Third World lites were substantially complicit in the reproduction of external dependency, maintaining a comprador character linked to the persistence of a colonial international division of labour (Baran 1957). The implication was that the interests of workers and peasants needed to be explicitly recognised in the policy practices of development, especially with regard to limiting reliance on foreign capital and nurturing an autonomous national industrial base.

1970s Events
In the 1970s the economic dynamism of the capitalist west was hit by a series of more or less unexpected blows. The collapse of the post-war international monetary order, created at Bretton Woods in 1944, in large part the result of western Europe and Japan challenging US industrial hegemony, created uncertainty in international trade and investment, and transmitted inflationary pressures around the world economy. The action taken by the Organisation of Petroleum Exporting Countries (OPEC) in 1973 to reverse the declining purchasing power of its oil generated a global

recession, and spurred developing countries to come together and shape demands for a New International Economic Order to redress the north-south balance of wealth and power. This coincided with the period of east-west dtente after Nixons visit to China and the negotiations to end the Vietnam war. The availability of recycled petrodollars as an alternative way to finance development, together with economic and political stagnation in the US and the fall of the Shah of Iran, seemed at the decades end to presage a dramatic shift in the dynamics of world economy and the international order. A clear implication was that the development of the Third World might at last be freed from its postcolonial shackles. Yet within a few years, the US and its allies, particularly Britain, had achieved a dramatic turnaround in these trends. Carters 1979 appointment of Paul Volcker as chair of the US Federal Reserve signalled a return to free-market economics after the stagflation and policy muddles of the previous 10 years. The Feds ultrarestrictive credit policies drove up interest rates and shocked the US economy into the deepest recession since the war. By 1982, developing countries that had relied on cheap foreign loans to finance faster growth were hit by a triple whammy: primary export volumes declined, export prices fell, and the cost of servicing and rolling over dollar-denominated loans soared. The Mexican default of August 1982 ushered in the Third World debt crisis, a lost decade in Latin American and African development, and the rebirth of the International Monetary Fund (IMF) and the World Bank as global enforcers of market discipline. By the time the Soviet bloc collapsed in 1989-91, the Washington Consensus was firmly in place, imposing neo-liberalism in almost every corner of the world. The exception was, of course, east Asia, where South Korea and Taiwan adapted the post-war growth strategy and policies of Japan and launched the final flowering of post-war developmentalism: the developmental state (DS) model. While African economies shrank and Latin America stagnated, this model scored remarkable successes, notably in high levels of economic growth, rapid modernisation, and an end to reliance on foreign capital. A major factor, already evident by the late
november 26, 2011

1980s, was the even more remarkable transformation of China, as market reforms opened up its economy to foreign trade and investment, and unleashed an unprecedented growth dynamic that has continued, with only minor slowdowns, even since. Both South Korea and Taiwan also underwent considerable democratisation, something that was clearly absent (and remains so) in mainland China. The widespread emulation of the DS model across southeast Asia led to break-neck but uneven regional growth. Although the inflow of hot money from the new circuits of global finance led to the east Asian financial crisis of 1997-98, recovery was remarkably quick and rapid growth resumed; but by then, the DS pioneers had pretty much abandoned their distinctive pattern of state-led development, and the model lost its iconic status (Radice 2008).

Changes in Latin America


The 1990s also saw significant changes in Latin America, centred on the retreat of the generals, the easing of the debt crisis and the adoption of more liberal economic policies. Growth in output and trade recovered, although the distribution of its benefits was extremely uneven. Privatisation of state enterprises and the erosion of populist and clientelist welfare systems also signalled a substantial departure from the development model of earlier decades. Perhaps most dramatically in the 1990s Mexico, despite a major financial crisis in 1994, joined the North American Free Trade Area (NAFTA), liberalised trade and investment and abandoned the corporatist model that the Institutional Revolutionary Party (PRI) had presided over for seven decades. Between 1982 and the centurys end, then, both the geopolitical unity of the Third World and the ideology of developmentalism had largely disappeared. The Third World had fragmented into a growing number of criss-crossing regional and sectoral groupings, making it relatively easy, especially after the demise of the Soviet Union, for the advanced capitalist states to dictate the terms of engagement within the world economy. A good example is the question of state policies on inward foreign direct investment. In the mid-1990s, the Organisation for Economic Cooperation and Development (OECD) proposed a
vol xlvi no 48
EPW Economic & Political Weekly

28

COMMENTARY

Multilateral Agreement on Investment (MAI) which would severely restrict the right of host governments to impose conditions on transnational investments. When the MAI came up against stiff resistance from both developing countries and the increasingly active development NGOs, it was quietly dropped. Instead, leading investor states negotiated a web of bilateral investment treaties (BITs) which achieved very much the same outcome. It has become commonplace to see the years after 1982 as the age of neo-liberalism. But before examining the events of 2007-08, let alone the question of whether that age might be drawing to a close as a result of the current crisis, it is vital to look more closely at the political sociology of neo-liberalism during this period. In particular, it seems clear that the new order was by no means just the result of economic (and at times military) coercion by the US and its allies. Instead, it can only be understood as a set of transformations in the nature of class divisions and political rgime norms that was not just reluctantly accepted, but enthusiastically embraced by lites throughout the global south. It is these changes that lie at the heart of normal capitalism.

2 Normal Capitalism in the Global South


Between 1994 and 2001 a sequence of dramatic financial crises struck the global south, most notably in Mexico 1994, via east and south-east Asia 1997-98, Russia 1998, Brazil 1999 and on to Turkey and Argentina in 2001. This succession of crises, characterised in particular by capital flight, financial sector insolvencies and huge fiscal deficits, were seen at the time by the mainstream as the consequence of incomplete liberalisation and inadequate economic governance; and by left critics as a clear indication of excessive or at least poorly-sequenced liberalisation and the abandonment of developmentalist policies. The critics also saw them as symptomatic of broader strains in a global financial sector characterised by rampant speculation and greed, part and parcel of a financialised global capitalism that also generated the collapse of the brilliantly misnamed investment fund Long Term Capital Management, the dot.com crash of 2000, the Enron and WorldCom scandals, and increasingly
Economic & Political Weekly EPW

frequent asset bubbles in securities, commodities and property markets. From this perspective, the 2007-08 crisis is seen as confirming such a diagnosis, leading critics to forecast the end of neoliberalism, the end of globalisation, and for many, a lengthy global slump. However, it is important not to see these dramatic financial episodes collectively as evidence of an aberrant form of capitalism. Rather, they are the consequence of much broader changes in global capitalism encompassing the international division of labour, the rise of new centres of capital accumulation, and the social and political order both within nation-states and at the regional and global levels. Perhaps because of a reluctance to abandon the developmentalist perspective, the focus of attention has largely been on a global capitalism understood as external to and imposed upon the global south, for example in relation to the agendas of the Bretton Woods Institutions, such as the World Trade Organisations Doha Round. We still far too often assume that a common and collective national interest still exists in the global south, despite the abundant evidence to the contrary, and despite a longstanding central tenet in dependency theory, that foreign (i e, northern) capital disintegrates the national political economies of the south, socially and politically as well as economically (Sunkel 1973). In the sphere of production, the vast literatures on supply or value chains in both industry and agriculture, chart the everdeeper nature of that national disintegration. Strategies of national food selfsufficiency have been abandoned in pursuit of foreign exchange from supposedly highvalue agri-exports, hoping that imports can substitute for domestic food staples. In manufacturing, host governments compete fiercely to move up the value chains, finding that securing lasting success in this regard requires not just cheap labour, but expensive infrastructure and high-quality local supply networks. In turn, these developments imply the nurturing of a more educated middle class of small entrepreneurs, professionals and technicians who need to be trained, and to be persuaded to stay by the promise of a middle-class lifestyle: hence the growing importance of higher education, a western-style consumption
vol xlvi no 48

infrastructure, and practical good governance in the sense of a public administration more effective in both collecting and spending tax revenues, dispensing justice and providing existential security. And a central requirement for all these things is a dynamic financial services sector that can provide credit to households, businesses and government, and services such as pension funds and insurance. If the developmentalist creed was one of catching up with the advanced capitalist countries, then the new capitalism in the south surely amounts to development. But this is not development towards the benign capitalism of the post-war Keynesian welfare states of Europe and North America, because those states have themselves been transformed under neo-liberalism. The east European experience has been especially poignant in this regard: urged to overthrow an oppressive and economically stagnant communism, the peoples of the region imagined that they would arrive in Sweden, but instead found themselves in Mexico. Meanwhile, the Mexicans, abandoning the comforts of authoritarian corporatism for NAFTA and electoral democracy, found themselves not in Johnsons full-employment Great Society of the 1960s, but instead in an extreme form of the grotesque inequalities of wealth and power that now characterise the US. In these circumstances, management of the vast discrepancy between expectation and reality becomes central to both domestic and international politics. It is commonplace to see the ruling classes of the global south as facing both ways externally towards the rapacious powers of foreign capital and internally towards their own fractious citizenry. But we need to take full account of how these social forces are structured in a given period, as well as across different regions and individual countries. Externally, the ruling classes have been increasingly integrated into the global networks of business and politics, with their supportive realms of higher education, finance, media and culture. Internally, they have mostly come to realise that their position is more effectively ensured by the nurturing of a significant middle class of the kind outlined earlier, and a democracy lite of competing parties to provide a semblance of voice

november 26, 2011

29

COMMENTARY

SAMEEKSHA TRUST BOOKS

China after 1978: Craters on the Moon


The breathtakingly rapid economic growth in China since 1978 has attracted world-wide attention. But the condition of more than 350 million workers is abysmal, especially that of the migrants among them. Why do the migrants put up with so much hardship in the urban factories? Has post-reform China forsaken the earlier goal of socialist equality? What has been the contribution of rural industries to regional development, alleviation of poverty and spatial inequality, and in relieving the grim employment situation? How has the meltdown in the global economy in the second half of 2008 affected the domestic economy? What of the current leaderships call for a harmonious society? Does it signal an important course correction? A collection of essays from the Economic & Political Weekly seeks to find tentative answers to these questions, and more.

Pp viii + 318

ISBN 978-81-250-3953-2

2010

Rs 350

Windows of Opportunity
By K S KRISHNASWAMY

A ruminative memoir by one who saw much happen, and not happen, at a time when everything seemed possible and promising in India. K S Krishnaswamy was a leading light in the Reserve Bank of India and the Planning Commission between the 1950s and 1970s. He offers a ringside view of the pulls and pressures within the administration and outside it, the hopes that sustained a majority in the bureaucracy and the lasting ties he formed with the many he came in contact with. Even more relevant is what he has to say about political agendas eroding the Reserve Banks autonomy and degrading the numerous democratic institutions since the late 1960s.

Pp xii + 190

ISBN 978-81-250-3964-8

2010

Rs 440

Global Economic & Financial Crisis


In this volume economists and policymakers from across the world address a number of aspects of the global economic crisis. One set of articles discusses the structural causes of the financial crisis. A second focuses on banking and offers solutions for the future. A third examines the role of the US dollar in the unfolding of the crisis. A fourth area of study is the impact on global income distribution. A fifth set of essays takes a longterm view of policy choices confronting the governments of the world. A separate section assesses the downturn in India, the state of the domestic financial sector, the impact on the informal economy and the reforms necessary to prevent another crisis. This is a collection of essays on a number of aspects of the global economic and financial crisis that were first published in the Economic & Political Weekly in 2009.

Pp viii + 368

ISBN 978-81-250-3699-9

2009

Rs 350

1857
A compilation of essays that were first published in the EPW in a special issue in May 2007. Held together with an introduction by Sekhar Bandyopadhyay, the essays that range in theme and subject from historiography and military engagements, to the dalit viranganas idealised in traditional songs and the unconventional protagonists in mutiny novels converge on one common goal: to enrich the existing national debates on the 1857 Uprising. The volume has 18 essays by well-known historians who include Biswamoy Pati, Dipesh Chakrabarty, Peter Robb and Michael Fisher. The articles are grouped under five sections: Then and Now, Sepoys and Soldiers, The Margins, Fictional Representations and The Arts and 1857.

Pp viii + 364

ISBN 978-0-00106-485-0 Available from

2008

Rs 295

Orient Blackswan Pvt Ltd


www.orientblackswan.com Mumbai Chennai New Delhi Kolkata Bangalore Bhubaneshwar Ernakulam Guwahati Jaipur Lucknow Patna Chandigarh Hyderabad Contact: info@orientblackswan.com
30
november 26, 2011 vol xlvi no 48
EPW Economic & Political Weekly

COMMENTARY

and choice. The democratic revolution that ended fascism in Europe in the 1970s, Latin American dictatorships in the 1980s and communism in the 1990s even appears to be reaching west Asia and North Africa through the Arab Spring.

3 The Crisis of 2007-08 and After


As already noted, the crisis of 2007-08 was not a rerun of the 1929 Wall Street crash. For the global south, two major differences are critical. First, in remarkably short order the existing structures of global governance were mobilised to support, and at least minimally coordinate, the deployment of the fiscal and monetary powers of the central banks and Treasuries of the largest economies. The responses of the IMF, the Bank for International Settlements (BIS) and the G7-G20 stand in stark contrast to the utter failure of the international system after 1929, when international trade and finance collapsed, and the great powers each sought their own salvation. Through the summer of 2011, it has become clear that maintaining the momentum of such international collaboration, in the face of the eurozone debt crisis and the threat of a return to global recession, is proving to be very difficult. Critics have castigated our global governors for not having yet agreed on measures to re-regulate the banks, to tame financial speculation, or to coordinate macroeconomic management. However, we should remember that after 1929 it took four years before the GlassSteagall Act was passed in the US, while only Hitler and Stalin achieved full employment in their respective national economies before war broke out in 1939. Second, again in stark contrast to the 1930s, both the credit crunch and the recession have had more impact on the advanced capitalisms of the north than on the global south. Of course, the immediate response of mobile global capital, as in earlier crisis episodes, was flight to the safe havens of the US and Europe, to gold and to triple-A securities; and of course the immediate impact upon working people in the global south was far more severe. But as economic growth resumed in 2009, it was the so-called emerging economies that recovered far more quickly, and it has become a clich that the BRIC economies, and China in particular, were driving a
Economic & Political Weekly EPW

recovery that, at the level of aggregate global production and trade, was remarkably robust. Even if some of the bubble markets around the world remained deflated (US and most European housing most notably), once short-term speculative forces are taken into account the rising prices of food and industrial commodities reflected that recovery. What is more, this was a resumption of a decade-long higher growth trend in Africa as well as Asia and Latin America. The apparent return to slower global growth and renewed financial uncertainties in 2011 has not reversed the shift in the relative dynamism of north and south. Despite the grossly unequal distribution of the benefits of this growth, it seems hard to deny that capitalism normal capitalism is working across the global south. For normal capitalism is not the capitalism of the post-war golden age, or of the developmental ambitions of the 1960s and 1970s. It is an economic system prone to destructive booms and slumps, to financial crises that wipe out household savings and government fiscal strategies alike, to polar extremes of wealth and poverty, and to a continuing reckless consumption of the global commons. It is also a political order constituted first and foremost on the defence of private property, in which the reach of democratic and electoral accountability stops at the entrance to the gated communities and tax havens of the super-rich, whether they hail from Omaha or Beijing. In the Davos World Economic Forum, the

Bilderberg meetings and the Group of Thirty (set up in 1978 as a think tank of top bankers and finance experts), the eager and willing servants of the super-rich figure out how to manage the affairs of the rest of us, so as to keep the global middle classes onside and the rest too fascinated by the possibility of prosperity and too terrified of exclusion from it, to contemplate a real and sustainable alternative. Two years before the Wall Street crash, the French writer and journalist Julien Benda published La Trahison Des Clercs (Benda 1927), in which he indicted the intellectuals of the day for abandoning the Enlightenment ideal of a disinterested pursuit of knowledge and truth, in favour of serving one or another earthly power. Today as always, society should expect that those citizens who possess the necessary knowledge will analyse and expose the workings of capitalism, and do all they can to develop an alternative order based on equality and social justice. The present crisis may not signal an end to neo-liberalism, but it should certainly signal the urgency of this task.
References
Baran, Paul (1957): The Political Economy of Growth (New York: Monthly Review Press). Benda, Julien (1927): La Trahison Des Clercs (Paris: B Grasset). English translation: The Betrayal of the Intellectuals (Boston: Beacon Press, 1955). Radice, Hugo (2008): The Developmental State under Global Neoliberalism, Third World Quarterly, 29(6): 1153-74. Sunkel, Osvaldo (1973): Transnational Capitalism and National Disintegration in Latin America, Social and Economic Studies, 22(1): 132-76.

W NE

NE

EPW 5-Year CD-ROM 2004-08 on a Single Disk

The digital versions of Economic and Political Weekly for 2004, 2005, 2006, 2007 and 2008 are now available on a single disk. The CD-ROM contains the complete text of 261 issues published from 2004 to 2008 and comes equipped with a powerful search, tools to help organise research and utilities to make your browsing experience productive. The contents of the CD-ROM are organised as in the print edition, with articles laid out in individual sections in each issue. With its easy-to-use features, the CD-ROM will be a convenient resource for social scientists, researchers and executives in government and non-government organisations, social and political activists, students, corporate and public sector executives and journalists. Price for 5 year CD-ROM (in INDIA) Individuals - Rs 1500 Institutions - Rs 2500 To order the CD-ROM send a bank draft payable at Mumbai in favour of Economic and Political Weekly. The CD can also be purchased on-line using a credit card through a secure payment gateway at epw.in Any queries please email: circulation@epw.in Circulation Manager, Economic and Political Weekly 320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013, India
vol xlvi no 48

november 26, 2011

31

Das könnte Ihnen auch gefallen