Wednesday, June 27, 2007

Developmentalism as neo-colonialism?

New York University professor William Easterly has an interesting piece in Foreign Policy entitled The Ideology of Development. I've sparred with him in the past in FP's pages and take issue with some points he raises here but this essay is worth a read. Easterly offers a pungent critique of top-down of what he calls 'Developmentalism,' an ideology he claims is just as dangerous as fascism and communism.

He contends that a noble idea (the free market system) has been hijacked by bureaucrats of the International Monetary Fund and World Bank. These institutions were created primarily to advance the interests of corporations in donor (western) countries. As such, they have typically advocated policies to achieve precisely this end. During the 1980s, the cure-all-prescription was for poorer countries to completely deregulate their economies and to open themselves up to unrestrained foreign pillaging.

I'm generally in favor of more openness in trade. But I believe in this to the extent that it helps raise the standard of living of people in countries that do so. Raising the standard of living broadly, not just for the narrow elite. Where more openness hurts the broader population, I see nothing wrong with regulations, social programs, etc. I do not believe in government intervention merely for its own sake. I do not believe in deregulation and free trade simply for their own sake either.

Easterly echoes a criticism I've often made myself. These international institutions try to shove down the throats of poorer countries one-size-fits-all policies, regardless of any other considerations. These policies are conceived in air-conditioned offices in London or New York and completely disregard local realities on the ground, realities that are key to the success or failure of any reform. This is why most structural adjustment programs (the formal name for when a country hands over management of its economy to foreign bureaucrats) have failed.

He points outs out that this top down imposition of policies is the antithesis of free markets. Furthermore, he argues that these ill-suited foreign prescriptions have had a counterproductive effect by giving open markets a bad name. This disillusionment is what opened the door to a populist demagogue like Hugo Chavez who has become a mythical figure precisely by attacking laissez-faire capitalism. Most of the countries in South America, the continent most harmed by structural adjustment policies, are run by at least moderately left-of-center governments.

Easterly fails to mention another situation that further alienates people in the non-western world: hypocrisy. Western countries preach the gospel of the free market. But it's only a one way street. Africa is regularly encouraged to follow the laissez-faire prescription by opening its economies to foreign exploitation, something which has obviously garnered the continent's people such wonderful results during the last 200 years. But western countries reject the same prescription by refusing to eliminate huge agricultural subsidies to their farmers, subsidies which make African agriculture uncompetitive in relation. Free trade implies a certain reciprocity that western countries presently aren't willing to concede.

Laissez-faire capitalism is a fantastic ideology in theory but ideology doesn't fill your stomach.

And it's worth noting that developmentalism is not the sole provenance of the right-wing. Many moderate left-of-center folks, such as Professor Jeffrey Sachs, embrace these theories. They view it as a sort of benevolent update of old theories. Laissez-faire with a human face, you might say. But there's nothing particularly humane about any ideology that ignores the wishes and desires of the humans that it affects!

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