Customer Reviews

The Myth of Development: The Non-Viable Economies of the 21st Century (Global Issues Series)

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This is global classic by a Peruvian diplomat who has become convinced that the so-called 'underdeveloped' states are actually non-viable under the prevailing international order. He became convinced of this while participating in the longest trade talks in human history called the Uruguay Round under GATT. He discovered that the industrialised states who dominated the talks by reason of their share in international trade hardly paid any heed to the rest of the world exporting primary commodities and only marginally value-added manufactures. The emphasis was on export of high-tech goods, on trade of sophisticated services and on standards for the protection of intellectual property. There was a time when Peru, exporting raw materials and traditional Latin American items like guano, sugar, saltpetre, rubber, coffee, cotton, wool and minerals, had its clout. In the 1990s, it was sidelined, with its slightly value-added exports and a population that had doubled and an economy that was creaking under foreign loans.

The author is aware that the Latin American countries that got their independence in the 19th century were much better off than those in Africa and Asia that got free in the 20th. Yet, after 150 years as sovereign states the Latin American countries had neither become modern nor economically self-sufficient. Prosperity under capitalism had eluded them. Was it possible to 'develop' like the industrialised states of Europe and North America? Since the Industrial Revolution 185 new states had emerged on the world map but most of them were dysfunctional, unable to modernise to the level where they could participate in the international economy. While these states failed to keep pace, global economy itself shifted its paradigm: it no longer required raw material in the same quantity as in the past, and relied on technologies that cut cost by minimising labour. These states had nothing but raw materials and proliferating population to export.

They were in fact quasi nation-states. They had not evolved the way the nation-states of the industrialised world had evolved. The advanced nation-states had produced a middle class market of national dimensions before coming into their own. The new nation-states that came upon the scene suddenly after the Second World War were mostly without a middle class, a bourgeoisie and a unifying nationalist economy. The states had emerged before the nations could be sufficiently formed. They were the children of their enthusiasm rather than of prospering middle and scientific and technological progress, and they embarked upon the dubious task of replicating the developed, capitalist and democratic nation-states. They continue to survive as low-income, poverty-stricken, technologically backward societies ruled over by authoritarian regimes or 'low-powered' democracies. The survival was made possible because of the strategic value in the cold war and because of the residual value of their raw materials.

These non-viable quasi nation-states are told that they can achieve development under globalisation and its totally unfettered market. For this they have to open themselves to the multinationals and the floating international finance that comes in their wake. The leverage for this process is provided by the fact that state loans have dried up after the cold war and the developing states have no income and no savings to embark on investment on their own. The state is increasingly broke and has to privatise its assets developed during the cold war under inefficient comprador regimes. There is massive unemployment in consequence which the multinationals will not absorb because of an increased reliance on information technology and enhancement of profits through the cutting down of production cost. Because of the devaluation of exports coming mostly from the agrarian sector, poverty is first produced in the countryside from where population makes an exodus into the cities. There is unskilled labour which is sought to be absorbed into industries that increasingly require skilled manpower.

Oswaldo de Rivero Asks: 'How can the quasi-nation states be made economically viable when their populations are growing explosively and their export goods consist of primary goods or only slightly processed products, which fetch low prices and are in little demand? How are we to deal with ungovernable countries where corruption is rife and the daily practice of democracy is rudimentary at best? How are market economy and consumer society to be produced in Latin America. Asian and African countries that have more than 40 percent of their population living below the poverty line, on less than one dollar a day? How are nearly 5 billion persons with low incomes to be integrated into global consumption patterns, without seriously damaging the biosphere? How is the enormous gap between the rich and poor countries to be closed without gravely affecting the planet's ecological balance'. Add to that the developing countries' obsession with nationalism and war, and you have the slippery slope these states will never be able to negotiate.

What does the author offer as solution? Alas, there is no solution because the anti-globalisation drive is still a protest from the utopian well-wishers of humanity without a clear-cut anti-capitalist economic doctrine. After the collapse of socialism as a counter-system, no one risks recommending a return to the state sector economy, especially in the third world where it was simply another name for corruption and authoritarianism. The book ends with a pious hope that the more vigilant of the developing states would curb population growth and somehow save the ecology from being destroyed. The dream of a kind of 'union' of the poor is impossible because the poor are busy more often in fighting each other than in getting together against a hostile global environment.

This book is a very persuasive, level-headed account of why most "developing countries" will never really develop. De Rivero cites the scientific and technological poverty of such countries as a prime reason. The modern "casino economy" of the global financial system makes it unlikely that this kind of poverty can be cured, since financial markets offer far richer short-term gains than capital investments in all but a handful of developing nations. Western abandonment of human rights in post-Cold War diplomacy (to say nothing of international business)also contributes to the problem.

Some of the book's other insights are quite arresting -- such as its points about the globalization of rubbish, the futility of the IMF's and World Bank's exclusive focus on countries that "have no influence on the world economy," and the notion that even the Four Tiger economies (Taiwan, S. Korea, Hong Kong and Singapore) probably would not have succeeded but for the fact that they were all strategic for (and so subsidized by) the US and Japan during the Cold War. The writing style is very clear and powerful; I was amazed to see that it was a translation.

The book isn't free from occasional overstatements; for example, I have the feeling that the environmental doom and gloom it describes might not descend upon us quite as soon as the author predicts. You should also note that the book was written before such developments as 9/11 and the offshoring boom in India. Nonetheless, I don't think either of those factors should discourage you from reading this very thought-provoking book.

De Rivero's work has been widely reviewed by the two comments before mine. I won't make a summary as I think they've been efficient in this. However, I think it's worth mentioning that de Rivero's work is accesible style-based and quite illustrative for those unaware of the economical forces that shape the way the world works. The reasons why apparently "rich" countries are still poor (mine, for example), and other smaller "poorer" countries are rich (Switzerland, for example) are explained clearly and extensively. Though many criticize that the author has no clear proposal for improvement at the end of the book, I think he's work is so evidently realistic that the proposal lays automatically within: start looking for alternative solutions (i.e. local development), as transnational coorporations won't let go power and governments are doomed to submit to their laws.

This is a must for any development student / average citizen. Being conscious of the world we live in is the number one step to take action and modify reality.