Background

In his book The End of Poverty: How We Can Make it Happen in Our Life Time, Jeffey Sachs, Director of The Earth Institute at Columbia University and director of the UN Millennium Project, tells us that

‘For the first time in history, our generation has the opportunity to end extreme poverty in the world’s most desperate nations. We can make a real difference for the one-fifth of humanity who still live in extreme poverty. We can end poverty by 2025 and change the world for ever. We can help the 15,000 people daily dying needlessly from preventable, treatable diseases – AIDS, TB, and malaria – for lack of drugs that we take for granted; we can help the 8 million people who die each year because they are too poor to stay alive; we can close the yawning gap between what the rich world claims to be doing to help the poor and what it is actually doing; and we can forge a common bond of humanity, security, and shared purpose across cultures and religions.’

An uncomfortable truth

Bono, the rock star who is helping Jeffrey Sachs get the message of compassion across to the rich, has opened the eyes of millions of fans and citizens to the shared struggle for global equality and justice. He states:

‘These statistics make a fool of the idea many of us hold on to very tightly: the idea of equality. What is happening in Africa mocks our pieties, doubts our concern, and questions our commitment to that whole concept. If we are honest, there’s no way we could conclude that such mass death day after day would ever be allowed to happen anywhere else. Deep down, if we really accept that their lives – African lives – are equal to ours, we would all be doing more to put the fire out. It’s an uncomfortable truth.’

In Chapter 10: The Voiceless Dying: Africa and Disease Jeffey Sachs continues:

‘Western governments enforced draconian budget policies in Africa during the1980s and 1990s. The IMF and World Bank virtually ran the economic policies of the debt-ridden continent, recommending regimens of budgetary belt tightening known technically as structural adjustment programs. These programs had little scientific merit and produced even fewer results. By the start of the 21^st century Africa was poorer than during the late 1960s, when the IMF and World Bank had first arrived on the African scene, with disease, population growth, and environmental degradation spiraling out of control.’

‘When it comes to charges of bad governance, the West should be a bit more circumspect. Little surpasses the western world in the cruelty and depredations that it has long imposed on Africa. Three centuries of slave trade, from around 1500 to the early 1800s, were followed by a century of brutal colonial rule. Far from lifting Africa economically, the colonial era left Africa bereft of educated citizens and leaders, basic infrastructure, and public health facilities. The borders of the newly independent states followed the arbitrary lines of the former empires, dividing ethnic groups, ecosystems, watersheds, and resource deposits in arbitrary ways.’

‘As soon as the colonial period ended, Africa became a pawn in the cold war. Western cold warriors, and the operatives in the CIA and counterpart agencies in Europe, opposed African leaders who preached nationalism, sought aid from the Soviet Union, or demanded better terms on Western investments in African minerals and energy deposits. In 1960, as a demonstration of Western approaches to African independence, CIA and Belgian operatives assassinated the charismatic first prime minister of the Congo, Patrice Lumumba, and installed the tyrant Mobutu Sese Seko in his stead. In the 1980s, the United States supported Jonas Savimbi in his violent insurrection against the government of Angola, on the grounds that Savimbi was an anticommunist, when in fact he was a violent and corrupt thug. The United States long backed the South African apartheid regime, and gave tacit support as that regime armed the violent Renamo insurrectionists in neighboring Mozambique. The CIA had its hand in the violent overthrow of President Kwame Nkrumah of Ghana in 1966. Indeed, almost every African political crisis – Sudan, Somalia, and a host of others – has a long history of Western meddling among its many causes.’

 In The Creation of World Poverty Teresa Hayter details how the wealthy countries of North America and Europe have enriched themselves at the expense of their colonies and dependencies.

 

THE CREATION OF WORLD POVERTY

TERESA HAYTER

Pluto Press in association with Third World First

Second edition 1990

PART I

 

Back cover

The Creation of World Poverty examines the origins of the present inequalities in the distribution of the world’s resources. Teresa Hayter describes how, for the last four centuries, the now wealthy countries of North America and Europe have enriched themselves at the expense of their colonies and dependencies, and reveals that the concerns of the international establishment about Third World Poverty are subordinate to its goal of ensuring the smooth functioning of the prevailing world order.

The author argues that the proposals made by the Brandt Report and the work of the aid agencies are not just irrelevant to the fundamental problems but actually serve to support the system that has created the poverty in the first place.

Teresa Hayter is a research Fellow at St Peter’s College, Oxford.

Introduction

The market economies of the West now reign supreme, glorying in their apparent ability to pile up production for ever. Their problems of unemployment, public squalor, pollution and inner city poverty are brushed aside as problems that can be overcome through minor reforms of an otherwise successful capitalist system, lesser evils compared to scarcities in Eastern Europe and hunger in the rest of the world. Not only in the West, but also in Eastern Europe and the Soviet Union, the Third World, and even parts of the left, many people see the market as the only system of economic organization capable of creating prosperity, and inequality and privilege as the necessary stimulus for further growth.

• Proponents of the capitalist system usually ignore one major reason for its success in one small part of the world. This is that, for the last four centuries, the now wealthy countries of North America and Europe have enriched themselves at the expense of their colonies and dependencies in what is now called the Third World.
• The wealth of Asia, Latin America and Africa has been the foundation on which the industries and cities of the West were built. Moreover, over this period, virtually all of the peoples of the world have been incorporated into the capitalist world market.
• While some of them became rich, the rest became poor. The system has to be judged by its effects in the world as a whole, not in one part of it.

The long history of the exploitation of some parts of the world by others is the main subject of this book. The international inequalities created by this exploitation are of course even more glaring than the inequalities within individual market economies. They have given rise to a whole industry of what is euphemistically called foreign ‘aid’. Institutions have been set up whose purpose is said to be to help the rest of the world ‘develop’. They never, or very seldom, or only partially, recognize that the Western governments they serve, and the economic system whose survival they were in reality set up to secure, are themselves responsible for what they see as the Third World’s failure to develop. Their published explanations for the poverty they are supposed to be concerned about are wrong, or non-existent. This book is based on a search for more convincing explanations for the phenomenon of underdevelopment. I hope that, in the process, it may also help to make some small dents in the racism that persists in the West, and which is rooted in this colonial history. 

• When I wrote this book in 1980, the international financial institutions of the West were at the tail end of a reformist phase. One of their leaders, the so-called World Bank, had commissioned a report which came to be known as the Brandt Report, and was published under the title North-South: A Programme for Survival. This report has since disappeared with little trace.
• But at the time it attracted much publicity and, usually uncritical, public support. The first section of the book is therefore devoted to a critique both of the dubious motivation and the lack of realism of Brandt Report reformism.
• Unfortunately subsequent events seem to have borne out its main argument: that the concerns of the international establishment about Third World poverty were subordinate to its goal of ensuring the smooth functioning of the prevailing world order.
• The intensification of the crisis in the world capitalist system in the early 1980’s was reflected in more acute form in the Third World, as the governments and institutions of the West succeeded in transferring much of the burden of adjustment to the Third World.
• The desperate situation of Third World governments and peoples provided opportunities for Western institutions to impose their ‘remedies’ and to demand ‘market-orientated reforms’.
• They pursued their objectives of liberalization and privatization of the Third World with renewed vigour; as the World Bank put it, governments became ‘more receptive to our advice’.
• In the early 1980s, as this book dimly foresaw, the authorities were about to have their attention fully absorbed by the debt crisis. Since Mexico declared itself unable to service its debt in 1982, debt has become the dominant issue in the economic relations between the governments and institutions of the Western industrialized countries and those of the Third World.
• At the 1983 annual meetings of the World Bank and its ‘sister’ organization the IMF, poverty in the Third World barely got a mention.
• The discussion dealt exclusively with the problem of how to extract debt-servicing, at exorbitant rates of interest, from the governments which, throughout the 1970s, had been urged to borrow from Western private banks.
• The conditions attached to official ‘aid’, especially to the lending of the World Bank and the IMF, are now designed above all to extract resources from the Third World’s poor in order to enable their governments to service their debt.
• The policies demanded have the effect of redistributing income from the poor to the rich, in ways similar to the policies of the Thatcher government in Britain.
• Because of this, the burden has been borne not by the governments and elites of the Third World, nor of course by the banks or the tax-payers of the West, but overwhelmingly by the Third World’s poor.
• The real villains, the Somozas, the Marcos family, the many others who enriched themselves, and the banks and governments that connived with them, enjoy their stolen wealth; and the US and British economies are cushioned by massive trade deficits financed partly by Third World interest payments.
• As a result of this latest form of extortion, together with big and continuing declines in the prices paid for most Third World commodity exports and contraction in their markets in industrialized countries, nearly all of the Third World countries’ already low income levels have declined severely since 1982.
• Although official publications continue to claim the West is ‘helping’ by providing ‘aid’, in fact, even in terms of strictly financial flows, resources are now flowing in the opposite direction. In 1988, the net outflow was US$50 billion.
• Campaigns on behalf of the Third World’s poor have been joined by environmental organizations, outraged at the directly and indirectly destructive effects of aid on forests and soils.
• The World Bank, attacked for its failure to mobilize grass-roots support and consult local people, has turned the tables, in its latest and most flagrant bit of hypocrisy, by attacking African governments for their failures in this respect.
• But when mobilization does occur, the World Bank is at the forefront of the West’s attempts to crush it.
• The Third World’s debt is unjust; it ought to be cancelled, across the board, without conditions; or repudiated.
• Blatantly unjust though the extortion through debt service is, it is only the latest episode in a long and discreditable history. This is the history which this book attempts to describe.

 

Chapter 1: Survival