The Awesome History of Development
The following post is the script from a presentation I gave to Engineers Without Borders (EWB) in January 2012 entitled “The Awesome History of Development: Abridged Version.” It was based on my class notes for “Geography 364: Globalization, Cities, and Regions” taught by Dr. Jamie Peck in 2011.
Today we’re going to explore the history of Western development and its implications for contemporary development in the Global South. We’ll begin by discussing the period post-WWII known as the industrial age to explain some of the dominant attitudes that emerged regarding the relationship between urbanization, technology, and economic development. We’ll then talk about how global systems changed in the 1970s in the post-industrial period. Lastly we’ll spend most of our time focusing on the implications for the present day.
Although we’ve broken up these sections according to time, it’s important to remember that all these processes are overlapping. For instance many scholars argue we are still in the industrial period and that the Fordist system of manufacturing still dominates.
1940s – 1970s: The Industrial Age
The “Fordist Regime of Accumulation” describes the dominant economic structure followed by most countries in the Global North. It began in the 1920s and reached its peak between the Post-WWII period and the mid-1970s.
Fordism is based on the strategies of Henry Ford. He believed in mass production and improving efficiency. These techniques significantly lowered the cost of producing cars in his factories. He also believed in paying his workers a living wage so they, too, could afford his cars. He wanted to create a consumer base for his product.
Ford’s strategies were one of the main causes of increased consumerism that began after WWII. During this time, Western countries – particularly the United States – saw unprecedented economic growth. In many ways this was the “golden age of capitalism.”
During the same time as economic growth, many countries developed their own version of the Keynesian welfare state. John Maynard Keynes was a British economist who believed the government should do anything possible to avoid a recession. He advocated demand-side government spending to stimulate growth even if it meant going into debt.
The purpose of the Keynesian welfare state is to redistribute wealth so everyone has a minimum standard of living. This means increased taxes and lots of government provisions such as infrastructure investment, welfare services, homeless shelter programs, pension plans, etc.
Unfortunately the golden age of capitalism and Keynesian economics reached a crisis during the mid-1970s. Many cities and countries had high levels of debt and could not sustain high taxes. This occurred for a variety of reasons, but one of the main drivers was outsourcing.
Companies in the Global North began to outsource their manufacturing to the Global South. Although this resulted in higher profit margins, it also caused deindustrialization and high unemployment in previously prosperous cities.
1970s – 1990s: Post Industrial Age
With this economic slump came the rise of neoliberal government policies brought on by Margaret Thatcher in the UK and Ronald Reagan in the United States. What is neoliberalism? It’s the increase of a market-oriented and capital-centric political doctrine.
Liberal economics are very different from liberal politics. The “liberal” in “neoliberalism” refers to freedom in markets, not freedom for individuals. It’s based on various financial liberalization policy positions such as flexible labour markets, privatization and deregulation, small government and tax restrains, and decreased government spending.
During the 1980s, many LDCs also had high levels of debt. The International Monetary Fund (IMF) and World Bank issued loans to poor countries, but these loans came with conditions attached called “Structural Adjustment Policies.”
SAPs forced neoliberal policies developed in the Global North onto the Global South: public services were privatized, long-term infrastructure investment was halted, borders were opened for foreign investment and trade, etc. These policies had disastrous consequences for developing nations.
Although it’s tempting to completely blame Third World poverty on SAPs, it’s also important to remember that these countries were already in debt for other reasons. That’s why they needed loans in the first place.
1990s – Present: Globalization
We’ll briefly discuss “globalization” because it’s a term to that’s thrown around a lot in literature. Globalization in an unfolding process intertwined with neoliberalism. When people argue against globalization, they’re usually arguing against the neoliberal form that is currently taking place.
Politicians often use it as a justification to advance a neoliberal policy or agenda. To many people, “Globalization” seems like an inevitable global transformation they can’t stop.
How did this current wave of globalization begin? By advances in technology, particularly transportation and communication. These advances gave markets and supply chains new international reach. Major transnational corporations now have unprecedented power over numerous countries’ local economic conditions.
Furthermore, globalization combined with neoliberal deregulation has arguably fuelled a “race to the bottom” in both the Global North and Global South. In developing countries, this often means relaxed environmental regulations, an extremely low minimum wage, and little (if any) employee protection provided by the government.
1990s – Present: Developing Countries
The 1990s and new millennium were supposed to make up for all past troubles of the SAPs. The belief was that since many developing countries were now operating in almost a utopian free market, progress had to be imminent!
Did this happen?
The 2003 UN Development Report stated “The main single cause of poverty and the inequality during the 1980s and 1990s was the retreat of the state.”
Unfortunately development and growth without redistributive policies does not create a ladder for people to climb out of poverty. After SAPs were implemented, slum growth exploded. Big business agriculture made it impossible for many rural communities to support themselves. Migration increased to cities.
Furthermore, this is also the first time in history than urbanization is occurring without economic growth: there are no jobs available in the city. For the past 30 years we’ve witnessed a huge jump in inequality both between the Third World and First World as well as within Third World countries themselves.
World Development Report 2009
So how are international agencies responding to this crisis? Here are some quotes from the World Development Report published by the World Bank in 2009:
“Economic growth is seldom balanced. Efforts to spread it prematurely will jeopardize progress.”
“With development, people and production become concentrated in some parts of countries, called ‘leading’ areas. Economic density grows in these parts while incomes in places economically distant can lag far behind.”
“No country has grown to middle income without industrializing and urbanizing.”
As you can see, the World Bank justifies increased inequality by calling it inevitable and necessary for economic growth. This report unquestionably favours the urban. The authors argue that people have to move out of the countryside to cities for economic development to happen. They also argue that trying to mitigate inequality will stunt economic growth.
What is EWB doing to address these problems?
I hope you can see from this presentation that most of the problems in developing countries are not technological. The technology has been invented to address poverty: energy, sanitation, transportation.
The problems, however, are in the system. That’s why EWB focuses on working with local organizations to develop solutions. We believe that Third World countries have had enough strategies imposed on them from the outside. Ultimately we are accountable to the people of LDCs in which we operate, not our donors or stakeholders.