Category - Economic Development

In last month’s New York Review of Books, Freeman Dyson leads off with an essay on “Our Biotech Future“. He predicts that biotechnology will, in this new century, become relatively cheap and widespread in a similar way to the cheapening and spreading of physics-based and computer technology over the past several decades.

It has become part of the accepted wisdom to say that the twentieth century was the century of physics and the twenty-first century will be the century of biology. Two facts about the coming century are agreed on by almost everyone. Biology is now bigger than physics, as measured by the size of budgets, by the size of the workforce, or by the output of major discoveries; and biology is likely to remain the biggest part of science through the twenty-first century. Biology is also more important than physics, as measured by its economic consequences, by its ethical implications, or by its effects on human welfare.

Over at the Boston Review, Michael Piore and Andrew Schrank’s recent article (“Trading Up: An embryonic model for easing the human costs of free markets”) on labor in Latin America offers a spot of good news. They’ve been studying labor inspections throughout the region, from the Dominican Republic to Mexico to Brazil and Chile, and say they’ve found “an emergent model for reconciling market and social forces.”

By Jonathan Teller-Elsberg, CPE Staff Economist

Most of the news we get about China has to do with the actions of the Chinese government or with broad economic trends. Only rarely, it seems, is there much reporting on the actions of Chinese people.

So the Washington Post and China correspondent Edward Cody deserve credit for a series of articles he’s written for the paper over the past year. Cody’s articles have described the struggles of Chinese factory workers and peasants as they face various abuses at the hands of factory owners and corrupt local officials (sometimes one and the same people). He reports that the Chinese government believes that the core cause for the increase in spontaneous mass protests across the country is growing economic inequality.

In the southern Fujian province, thousands of peasants have been protesting the seizure of their land, which is often converted to industrial use. Those Cody talked to have received hardly any compensation for the land, and they suspect that the local officials who should be distributing compensation payments have instead used the money to make investments in factories. Few of the peasants have been able to get jobs in the new factories, something that was promised when the land was seized.

In next-door Guangdong province, workers at shoe factories have staged spontaneous strikes, including one in which hundreds of workers ransacked company facilities. There have been numerous walkouts at the shoe manufacturers in the past couple years. The workers are angry about low wages, limited time off, and lack of communication with managers.

Farther north, in the town of Huaxi, villagers fed up with years of polluted air and water and stonewalling by government officials created a protest camp outside the gates to an industrial park. Despite a police raid to shut the camp down, the protesters increased in number. When a large force of police and civilian assistants returned on April 10th, some 20,000 villagers responded. A fierce street battle ensued and the police and city officials were forced to retreat from the town. The protest camp remained for another month and a half, until government officials agreed to shut down the industrial park. However, those suspected of being leaders of the protest movement remained on police wanted lists.

In the Anhui province, the beating of a young man by bodyguards of a businessman sparked a spontaneous riot in which approximately 10,000 city residents torched police cars, threw rocks at anti-riot troops and looted a grocery store after the owner was seen providing water to the police.

Though each of these was an isolated incident on its own, they are part of growing pattern of angry resistance by China’s poor—whether from peasant farms or sweatshop factories—to the Communist Party’s cozy alliance with capitalist business. A minister for public security in China estimated that 3.76 million people participated in what he termed “mass incidents” throughout the country during 2004, and that the frequency of these incidents has been increasing.

The government has become very concerned, both because this expression of people power threatens the stability of Communist Party control and because it could undermine the party’s goals for further economic development in the capitalist mold. The spread of cell phones and the internet are allowing unofficial news of resistance to reach a larger Chinese audience, despite the efforts of government censors in the official media. Even the state-run media has begun reporting that the root cause of the recent unrest is the widening gap between rich and poor in the country. Perhaps conveniently, these reports downplay the idea that protesting citizens could be angry about the political structure of one-party rule. After all, much of the economic development that has been part of China’s shift to capitalism and the growing rich-poor gap has relied on collusion between local government officials and private businessmen.

Sources:

Articles by Edward Cody in the Washington Post:

“China’s Land Grabs Raise Specter of Popular Unrest; Peasants Resist Developers, Local Officials,” 10/5/04;

“In China, Workers Turn Tough; Spate of Walkouts May Signal New Era,” 11/27/04;

“For Chinese, Peasant Revolt Is Rare Victory; Farmers Beat Back Police In Battle Over Pollution,” 6/13/05;

“A Chinese Riot Rooted in Confusion; Lacking a Channel for Grievances, Garment Workers Opt to Strike,” 7/18/05;

“A Chinese City’s Rage At the Rich And Powerful; Beating of Student Sparks Riot, Looting,” 8/1/05;

“China Grows More Wary Over Rash Of Protests; Cell Phones, Internet Spread The Word, Magnify Fallout,” 8/10/05;

“China’s Rising Tide of Protest Sweeping Up Party Officials; Village Chiefs Share Anger Over Pollution,” 9/12/05;

“China Warns Gap Between Rich, Poor Is Feeding Unrest,” 9/22/05;

“China Promises Equitable Growth,” 10/1/05;

“China’s Party Leaders Draw Bead on Inequity,” 10/9/05;

“Beijing Pledges to Focus on Income Disparities,” 10/12/05.

(c) 2005 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

By Yahya Mete Madra

The 1990s saw a revived interest in the writings of Karl Polanyi (1886-1964). Given that capitalism is still in the process of being re-instituted everywhere across the globe; given that the expansions and contractions of capitalism cause endless social dislocation; given that the
recent wave of financial liberalization, labor market deregulation, and privatization has led to grave socio-economic costs; this revived interest should not be surprising. Those who wanted to understand and devise alternatives to capitalism have found it useful to revisit Polanyi’s account of the emergence of capitalism as laid out in his The Great Transformation.

Polanyi maintained that exchange, along with redistribution and reciprocity, has always existed, albeit embedded in different socio-institutional forms. Nevertheless, during the nineteenth century, first in England and then in Western Europe and North America, as land, labor, and money gradually became commodities, the price mechanism and the profit motive, rather than the deliberation and negotiation of diverse social interests and concerns, became the structuring principle of the society. The market society, for Polanyi, was not only undesirable but also was socially and ecologically unsustainable. He believed that the society will develop spontaneous responses to protect itself against the advent of the logic of the markets.

By Zhaochang Peng

Y.C. James Yen (1893-1990), a Chinese educator and social activist, developed a fourfold “rural reconstruction” approach to rural development in China during the 1920s. A resurgence of interest in his approach to development is currently underway in China, while his work has been continuously promoted by the institute he established in the Philippines in 1960.

James Yen’s Rural Reconstruction Movement promotes an integrated program of education, livelihood, public health and self-governance, which targets the interlocking problems of illiteracy, poverty, disease and civic inertia found among peasants in developing countries. While the four aspects of the program could be designed to address the problems in a one-for-one way, James Yen intended them to be an organic whole, to be carried out in close cooperation with one another.

Yen’s first experimental project, which began in 1926, was in rural Ding Xian (in China’s Hebei Province). With the help of external funds and volunteers, the reconstruction unfolded over a ten-year span. In the first three years, illiteracy was eliminated; for the next three years, more productive farming methods were disseminated and the local public health system was established; and finally, on the basis of the cultural, economic and social improvements already achieved, peasants were able to set up a local system of self-governance. The results of this experiment were positive and encouraging, and had begun to impact other parts of China.

From 1950 till his death in 1990, James Yen devoted his life to adaptation of this approach to peasant communities in developing countries in Asia, Africa and Latin America. His lifetime pursuit of the betterment of the life of peasants in developing countries won him world reputation and numerous awards, including the Copernican Citation as one of ten outstanding “modern revolutionaries” of the world together with Albert Einstein, Henry Ford, John Dewey and others in 1943, and the U.S. Presidential End Hunger Award for Lifetime Achievement in 1987.

However, there is one major limitation inherent in James Yen’s Rural Reconstruction method: its local approach relies on the prevailing political, economic and social relationships that already exist, rather than transforming them. For example, it provides aids to peasants, and to
some extent even organizes local peasants into cooperatives in order to make them more competitive in the market, but it does not attempt to abolish market forces, thus keeping rural economy in a structurally disadvantageous position to be subject to unfavorable market vicissitudes. Another example is that the “experiment sites” of James Yen’s approach are restricted to peasant communities dominated by self-employed households. Thus, in rural localities where feudal landlords and capitalists exploit poor peasants, problems of underdevelopment for those poor peasants persist.

In contrast to James Yen’s “rural reconstruction” approach, Mao Zedong’s “rural revolution” approach provides a better solution to rural development issues in developing countries. Under Mao’s leadership, feudal and capitalist forms of peasant exploitation were abolished through land reform, peasants were organized into cooperatives through guided and voluntary rural collectivization, and the rural economy got extensive aids from the state in a planned economy context where market forces were limited or completely eliminated.

In the past quarter century, the return of the market economy to China, the degeneration of the state into a predator on peasants, and the increasing integration of China with the capitalist world economy have subjected Chinese peasants to higher market risks and exploitation rates. In this context, an increasing number of Chinese social activists and expert volunteers are getting involved in reviving James Yen’s approach, with the hope that organized peasants will be less vulnerable to market risk and state coercion. Although it may still be some years before we can assess the influence of the revival of James Yen’s approach on Chinese peasants, we know from historical experience that there is a better solution to problems of rural development.

Sources and Resources:

The International Institute of Rural Reconstruction

James Yen’s biography by the Magsaysay Award

The Hunger Project’s brief comments on James Yen

“James Yen-inspired new Rural Reconstruction Movement in China” (in Chinese)

(c) 2004 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

By Noah Enelow

You would think the discovery of massive natural gas deposits in the heart of a developing country would present itself as an enormous windfall. All this country would have to do is find a source of financing, extract and refine the gas, sell part of it on the world market, and keep the rest, along with the profits, for domestic development.

Unfortunately, in Bolivia it hasn’t worked out quite so rosily. The battle over natural gas has exacerbated the country’s class and ethnic tensions to the point of warfare. Dozens of people have been killed in massive street protests; the president has resigned; the country is in chaos. What happened?

Upon first glance at the problem, there appear to be two root causes. The first issue was that the gas would have had to be exported through Chile, a longtime rival of Bolivia, which usurped Bolivia’s only seaport over a hundred years ago. The deal would thus enrich Chilean export companies at the expense of the Bolivians. The second issue was that the extraction and refining of the gas were to be undertaken entirely by a multinational company, Repsol-YPF. Their contract, signed long before the latest and largest gas deposits were discovered, was to provide the Bolivian public sector with 18% of the profits from sales. The rest would leave the country - a typical pattern for extractive industries in underdeveloped countries.

But those two issues are the just the tip of the iceberg. The peasants who make up the bulk of the protesters have good reason to believe they’d never see a dime of even those meager profits. Over the last two centuries, numerous raw materials have been extracted from Bolivia: silver, rubber, guano, and tin. The result? Underdevelopment, poverty, and disease. The leading cash crop of Bolivia, coca leaf, has been targeted for eradication by both the domestic government and the United States, as part of the “War on Drugs”.

Furthermore, as Bolivia has become increasingly beholden to the IMF’s structural adjustment program, life has steadily grown worse for the poor. In the last 3 years, the poorest 10% of the people have seen their incomes decline 15%, as the wealthiest 10% have seen their incomes increase 16%. Social services have been slashed while taxes have increased, to pay off the country’s high debt. How far can one expect a country to tighten its belt when its poverty rate is 70%?

Finally, the entire conflict is rife with ethnic and class tensions. The Bolivian elites are overwhelmingly of Spanish descent, while the poor are overwhelmingly indigenous. As a group, the former have proven untrustworthy, unaccountable, and corrupt; the latter grow more irate by the day.

The resignation of the U.S.-endorsed president, Gonzalo Sanchez de Lozada, who supported the gas plan, thus represents a victory for the poor. But the struggle is not over. The primary representative of the indigenous people, the self-described socialist and coca grower Evo Morales, in a recent speech declared the West a “culture of death”; meanwhile, in Sanchez’s resignation speech, he referred to Morales as a “narco-syndicalist” and warned of the power of the coca growers.

Is an agreement possible? A broad, highly organized coalition of labor and indigenous groups, the National Coalition in Defense of our Gas, has drawn up a list of demands. These include the formation of a constituent assembly to ensure greater popular participation in government, and the re-nationalization of Bolivia’s gas resources. The coalition has given the new president, Carlos Mesa, a 90-day truce to allow him to implement their demands. Will the two sides of Bolivia forge a new social contract, or will the country’s exports continue to enrich the few while leaving the many impoverished? Stay tuned.

References:

The Americas.org website contains a fantastic wealth of information about Bolivia. Numerous alternative sources and viewpoints are present alongside updates from the BBC and mainstream media.

Laura Carlsen. “Resources War: Lessons From Bolivia.”

Newton Garver, “Bolivia in Turmoil“, Counterpunch 10/17/03.

Keith Slack, “Poor Vs. Profit in Bolivian Revolt.”

(c) 2003 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

By Léonce Ndikumana, Assistant Professor, University of Massachusetts, Amherst

American interest in Africa has been traditionally peripheral, opportunistic at best. In the past, aid to African countries supported client regimes that the United States and its allies needed to prevent the expansion of communism on the continent, as in the case of former Zaire under the late Mobutu Sese Seko. In these circumstances, the objective of economic aid was not economic development of African countries, but instead aid often contributed to propping up dictatorships that catered to the interests of the West.

By Kiaran Honderich, CPE Staff Economist

(Reprinted from CPE’s newsletter, “The Popular Economist,” Spring, 2002.)

Over the last year activists have made important progress in the battle against global AIDS. Developing countries won a partial victory at the WTO ministerial meeting in Doha in November, affirming their right to produce affordable generic drugs in a health crisis. And the appalling mainstream consensus that treatment with antiretroviral drugs was too expensive and complex to be made available in poor countries–writing off literally tens of millions of lives at a stroke–is finally giving way to acknowledgement that treatment is possible in resource-poor settings, although it seems likely to be rolled out in a way that neglects rural populations. These battles are by no means finished–the WTO is still hashing out whether poor countries too small to produce their own generic drugs should be permitted to import them from another country; if Bush gains fast track authority then he will be able to take back the gains of Doha; and South Africa’s ANC government is being dragged kicking and screaming by activists towards the treatment programs that its country needs–but real progress is being made.

By Liz Stanton, CPE Staff Economist

1. You’ve Been Psychologically Conditioned To Want a Diamond. The diamond engagement ring is a 63-year-old invention of N.W.Ayer advertising agency. The De Beers diamond cartel contracted N.W.Ayer to create a demand for what are, essentially, useless hunks of rock.
2. Diamonds are Priced Well Above Their Value. The De Beers cartel has systematically held diamond prices at levels far greater than their abundance would generate under anything even remotely resembling perfect competition. All diamonds not already under its control are bought by the cartel, and then the De Beers cartel carefully managed world diamond supply in order to keep prices steadily high.