Development is the Story of How We Forgot History

22:27Ciaran McCormick

The story of how countries can best develop has been debated for centuries. Many different ways of encouraging economic, social and political progress have been tested. At the moment, many people seem to assume that the neoliberal story of development has become dominant to the point of being the common sense approach. However, it has clearly failed. The world produces enough food to give every person 2,720 calories a day. But the United Nations Food and Agriculture Organization estimated that 870 million people suffered from chronic undernourishment between 2010 and 2012.

Flickr: International Monetary Fund

By accepting a doctrine that countries should be liberalised and opened up to the global capitalist market in order to compete, we have prevented them from growing. Crucially, countries like the UK and the USA have forgotten that when they developed, they did not follow the policies that they now preach as sacrosanct. We need to take a look at all of the historical evidence and the alternatives available to us.

The Washington Consensus is the heart of the development problem. It is a way that countries and institutions conduct themselves and the policies they advocate. It is not just the US government but all of the people and organisations that locate themselves at the heart of political power in the United States. For example, it includes the World Bank and various technocrats and agencies that have an interest in developing countries. The very idea that there can be a consensus over these difficult issues and a legacy of failure is absurd. We have forgotten the alternative development solutions and our very own histories.

The neoliberal orthodoxy that is practiced across the world is articulated most clearly by John Williamson who listed some of its central features. For example, it argues that countries should maintain low budget deficits, eliminate barriers to foreign investment, privatise and deregulate. Whilst institutions such as the IMF and the World Bank that praise these policies are bastions of Western influence, they forget how Western countries developed.

The very first secretary of the US Treasury Alexander Hamilton thought about how the USA could protect infant industries, those that were not established. They could use devices like tariffs on imported goods that would compete with fledgling domestic industries. This would allow the domestic industries to gain a footing in the market before they were exposed to the harsh competition of the international system. The British raw wool industry was protected in similar ways for over a hundred years before the protections were lifted. This shows that when we declare neoliberal policies as the best (or only) way of developing, we have forgotten our history.

Indeed, now that the West dominates the international capitalist economy, it is more important than ever that infant industries in developing countries are not rushed into the world market and suffer because they are not as established. The neoliberal way of developing countries has failed to eliminate gross inequalities and poverty. Instead, it has given license to large corporations to enter foreign markets and exploit their resources for the holy grail of profit. For example, Nestle has been a persistent offender in developing countries, from exploiting child labour to damaging clean water supplies. The neoliberal theory that praises this type of development should not be allowed to have a form of ideological hegemony.

Instead, we need to look elsewhere in order to consider alternatives to the neoliberal theory or other examples that allow us to refine it. One of the best examples is the idea of the developmental state. This is the key to the Asian miracle that happened in the latter half of the 20th century. Japan developed so dramatically in a matter of decades that America felt threatened by its potential for economic rivalry. A developmental state is one where the government still believes in allowing their country to enter the global market, but it does so under certain conditions. It develops a bureaucracy that can guide growth and cultivate industries in order to make them competitive. This bureaucracy often has a pilot agency driving it forward, like the Ministry of International Trade and Industry did in Japan.

The experience of this form of development has often been through authoritarian systems of government. Because this is different to the liberal democratic political system in America, it may seem more alien to the mainstream of development thought. Nonetheless, it is still worth considering as an alternative way of encouraging development in other countries. One of the main reasons why developmental states has been rejected is that it failed East Asia in a major financial crisis in the 1990s. However, we have recently experienced. the 2008 crisis of global capitalism. That makes now the ideal opportunity for us to look beyond the neoliberal orthodoxy and explore the alternative ways of organising politics that we have discarded.

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