In my last blog I discussed the fact that poverty and even rights-based agendas can be easily co-opted into a ‘Washington Consensus’ policy paradigm. How then can we avoid this propensity? In my background paper I suggested that this should be done by retrieving universalistic social policies as serious goals to be legitimised by leading international development organisations, especially given that they represent some of our most powerful tools to date of dealing simultaneously with both poverty and inequality. Universalism in this sense does not simply mean universal access, such as sending all children to school, which is a necessary but not sufficient condition. Universalistic social policy means the provisioning of education, health and various forms of social security through integrated systems financed indirectly (i.e. not at the time of need) by progressive forms of taxation (i.e. progressive income tax, corporate taxation, and taxes on capital gains), rather than through segmented systems financed directly and regressively (i.e. user fees, out-of-pocket payments, etc).
Many advocates of rights-based approaches probably imply such a return to universalism in their advocacy. However, we need to become explicit about this goal rather than veiling it in rights-terms. This is what I mean by re-politicising development; we need to become explicit about the choices that are being made and that we wish to be made rather than edifying our preferences into absolutist principles that can then be subverted into a variety of different policy and ideological agendas.
This leads me to my intervention at the end of the last session of the forum, which was prompted by the suggestion by Jan Vandemoortele that we need to proceed slowly and carefully. While I agree with him in many respects, we nonetheless urgently need to take the initiative of redefining the agenda now. The idea that the current crisis has shattered the Washington Consensus should not be taken for granted prematurely. A return to a more developmentalist agenda is not a fait accompli.
To a certain degree, the MDG agenda has led to an exaggerated over-inflated sense of self-importance among donors about the role that international aid plays in driving recent development. This exaggeration is all the more evident when we consider that probably the majority of aid flows return to their donors, if ever they even leave the shores of their donor, such as in the case of technical assistance, consultancies and research funding. In the US, by far the largest bilateral donor, it was estimated some years ago that close to 90% of its aid budget ends out being spent in one way or another in the US. ActionAid has done some excellent work on ‘phantom aid,’ with a particular focus on the uses and abuses of technical assistance. Academics should take these issues much more seriously, although perhaps their avoidance derives from fear of biting the hands that feed.
This being said, there are particular moments in time when the aid industry does play a very pivotal role. These are in times of economic crisis, when vulnerable developing countries start to face balance of payments crises. In these times of crisis, the aid industry is suddenly possessed with much power, particularly gatekeepers such as the World Bank and the IMF. If guided by the wrong ideological agenda, this power can be wielded in punitive destructive ways. This is precisely what happened in the 1982 Debt Crisis. While the crisis was fundamentally rooted in systemic disequilibria related to the breakdown of the Bretton Woods system, it was recast as a problem of petrodollar surpluses and subsequent irresponsible borrowing by developing countries ready to recycle these surpluses. This recasting created the ideological justification for policies that shifted almost the entire burden of adjustment from northern financial sectors to developing country governments. Policy failures in dealing with the debt crisis were thereby recast into ideological triumph, opportunistically consolidating the take-over of Keynesianism in the North and developmentalism in the South. This instant revisionism in the face of systemic crisis was so successful that the dominant narrative is rarely challenged or questioned in the mainstream development studies literature today, or else only at the risk of censure or ridicule by peers.
It is from this perspective that we urgently need to grab the opportunity of the current crisis now in order to reclaim the agenda before it is subverted in a similar manner. I agree entirely with Charles Gore and Sakiko Fukuda-Parr that the MDG agenda has been embedded within a Washington Consensus paradigm. It is not simply a problem of one-size-fits-all versus context specificity. Rather, there are some broad general lessons that we can draw from the past. These include strong state-led planning and promotion of industrial policy, a variety of ‘heterodox’ fiscal and monetary strategies to cushion domestic sectors during phases of integration into the international economy, and universalistic social policies. Indeed, Santosh Mehrotra (2000) points out that in 10 cases of ‘high human development achievers’ (relative to what we would expect from per capita GDP), all of them practiced various combinations of universalistic social policies. Even as far back as 1962, Alexander Gershenkron pointed out that all successful late industrialisers introduced universalistic forms of social policy before or simultaneous to the initiation of strong industrial catch-up strategies. Universal social policies were introduced much earlier than would have been predicted by the experience of more advanced industrial countries. In other words, well established lessons have long been there for us to heed. We do not need to ‘discover’ new ones. Rather, we need to redefine the agenda now so as to make adopting these lessons easier for the poorest of countries.