World order on developmental see-saw

September 18, 2013

     By Duncan Green     

This piece (not my title btw)¬†appeared on Tuesday in Wellington’s newspaper the Dominion Post, as I wrapped up three weeks’ intensive ranting inArab spring 2 Australia and New Zealand.

Bloodbaths in Syria and Egypt; banking crises and austerity; the rise of the “emerging powers” and the apparently unstoppable decline – perhaps even disintegration – of Europe: the past five years has been a period of extraordinary global turbulence.

The global financial meltdown was a watershed event. The new world order was recognised as the G20 took over from the G8.

The crisis drew attention to the risks of an excessively “financialised” global economy, but failed to lead to a reining in of the excessive size and volatility of “hot money”, condemning us to future financial crises.

International aid agency Oxfam has witnessed the destruction caused by austerity and recession in parts of Asia, Latin America and Africa, as well as here in New Zealand.

Simultaneous with the financial crisis, the world experienced a spike in food prices, ending 30 years of stable and falling prices. In many countries this traumatised the lives of poor people to a much greater extent than the mayhem on Wall Street, threatening long-term progress on hunger and nutrition. That has led to renewed attention to the basic issues of food and farming, but also some unfortunate side-effects such as “land grabs” by investors from rich countries.

The Arab Spring confirmed the importance of active citizens in driving social and political change, but it also showed us that when it comes to social change, good starts can easily go wrong..

Taken together, these events have had a profound impact on the way we see international development. We are much more aware of the impact of volatility, risk and vulnerability on the lives of poor people.

Inequality and redistribution have become mainstream debates, with even the International Monetary Fund weighing in on how high levels of inequality imperil both growth and stability. And the levels are breathtaking. I calculated that the amount the world’s richest 100 people added to their wealth in 2012 (NZ$295 billion) would be enough to end extreme poverty (NZ$81 billion according to the Brookings Institution) four times over.

There are more than 1.2 billion people living below the international poverty line of NZ$2.25 a day. So if we altered the lives of the world’s richest 100 people slightly, we could change the lives of 1.2 billion people monumentally.

inequality cartoonIn overcoming world turbulence, and continuing the upward curve of human development that has characterised the last 70 years, we need to move “from poverty to power” in both thinking and practice. Oxfam’s experience suggests that the key lies in a combination of active citizens and effective states.

Why active citizens? Because people living in poverty must have a voice in their own destiny, fighting for rights and justice in their own society, and holding the state and private sector to account.

Why effective states? Because history shows that no country has prospered without a state that can actively manage the development process in terms of infrastructure, rule of law, human capital and industrial upgrading.

Are we successfully completing an “age of development” or seeing the prize slip from humanity’s hands in an economic and climatic meltdown? It is hard to recall a period when developmental optimism and pessimism co-existed to such a high degree.

The stakes could not be higher. The coming decades will show whether poverty enters the history books, joining slavery and the fight for women’s suffrage, or whether an age of chaos and scarcity starts to reverse the progress of the last 70 years.

September 18, 2013
Duncan Green