Andrew M. Fischer: Aid as power in an unequal world

Development Policy15 Feb 2010Andrew M. Fischer

One theme needs much more emphasis, both in the Dutch WRR report and the current UN MDG review process more generally: if aid and the MDGs are to maintain legitimacy and credibility in their potential to forge what Andy Sumner calls a ‘new development consensus’, they must address inequality and the asymmetrical power structures underlying inequality. If not, they risk reinforcing these structures by confusing symptoms as causes, reminiscent of rudimentary versions of modernization theory in years gone by.

A glaring recent example serves to demonstrate this urgent need to refocus contemporary development debates. In response to what the UN has called the world’s worst humanitarian disaster in decades, the New York Times columnist David Brooks wrote that ‘it is time to put the thorny issue of culture at the center of efforts to tackle global poverty. Why is Haiti so poor? … Haiti, like most of the world’s poorest nations, suffers from a complex web of progress-resistant cultural influences.’ Obviously, it is widely acknowledged that poverty played a big role in accentuating this disaster. However, Mr Brook’s superficial culturalist explanation for such poverty is fairly described as bordering on racist caricatures. He could have considered 20 years of US occupation ending in 1934, followed by decades worth of US-supported dictatorships and two recent US-sponsored coup d’états against a twice-elected mildly left-of-centre president, but he did not. Instead, he turned to voodoo.

While such opportunistic jingoism is clearly callous, particularly in its timing, it is nonetheless important to acknowledge that a similar logic implicitly pervades much of current commentaries on poverty in the field of international development. This is the idea that the causes of poverty lie principally at the feet of the poor. Through basic confusions of correlation with causality, much contemplation on poverty can be reduced to a core of circular reasoning; the poor are poor because they are poor. Similarly, poverty reduction strategies tend to focus on reforming the symptoms of such poverty, whether through micro-conditionalities, credit, institutions, governance, participation, rights, or even, as suggested by Mr Brooks and reminiscent of colonialism and Maoism alike, ‘cultural education’. These approaches are often advocated at the expense of any significant acknowledgement of the broader structural processes of power and subordination that shape the realities of the poor.

It is important to question this logic. For instance, are poor people poor because they lack access to finance? Or do they lack access to finance because they are poor? Or, as with the recent subprime mortgage fiasco in the US, might the access to finance by previously excluded poor people yet lead to new forms of subordination and impoverishment, particularly if the power relations underlying financial inclusion are ignored?

The MDGs and the aid industry must acknowledge such power relations if we are to make any progress beyond 2015. Similar to other key international negotiations regarding international aid, trade or climate change, the challenge should be to imagine how we might forge an international economic order that genuinely enables net transfers of wealth to poorer countries. This would reverse the current pattern whereby such countries subsidize the economic obesity of the rich in exchange for cheap labour and related benefits of servitude.

How do we move towards such an agenda? The WRR report suggests self-sufficiency, although it is not clear what is really meant by this beyond the need for increased productive capacity. Self-sufficiency would seem particularly tenuous in light of the increasing consolidation of the global economy by transnationalized, mostly Northern corporate networks, fuelled by enormous flows of financial liquidity that far exceed whatever savings even the East Asians can muster, again, deriving mostly from Northern financial systems. The WRR report does not pay much attention to this reality, besides suggesting better regulation and taxation.

The idea of ownership is much more potent in this regard. However, a word of caution: ownership here does not imply the popular usage of the term by the World Bank or other donors, whereby ownership is formulated as a participatory principle in project management, or as a technique to create more sense of responsibility among domestic actors in the dissemination of policies initiated from abroad. Sometimes ‘ownership’ has even been used as a rhetorical means to justify cost recovery, to legitimize privatization policies, or as a guise to soften the fact that, after three decades of structural adjustment in much of the Global South, effective policy space has been increasingly constrained by the dictates of international financial institutions. Rather, here ownership is meant in the way it would be naturally understood by any rich person: as the direct ownership of assets and/or control over decision making.

As a corollary, genuine national ownership should involve some degree of domestic control over foreign involvement in both assets and decision making, according to the needs and priorities determined by domestic constituencies rather than by powerful foreign non-elected technocrats, whether private, public, or non-governmental. This implies that governments should be able to decide policies rather than simply deciding how to deliver them. Professionalization and harmonization in the aid industry, as promoted by the WRR report, are in fact foreboding in this sense, insofar as they might bolster the cartel-like power of foreign donors vis-à-vis domestic political deliberations. Perhaps a messy aid industry is much better for local autonomy, such as in the much more developmental years of the pre-1980s Cold War when most sub-Saharan African countries were actually making good progress towards the MDGs.

Control over finance is one crucial dimension of national ownership. It has been one of the keys of success in the case of China, particularly in the recent crisis. Despite privatizations in other parts of its economy, China has maintained effective state ownership over most of its financial system (together with the ownership of rural land, where egalitarian principles are maintained to this day). Although such control is much decried by Wall Street and High Street and their troubadour of economists, it is actually a tried and tested practice of successful late industrializers, from Germany to Japan and Korea. China has applied the rule most radically, although this is understandable given the sheer scale of the challenges the country – still relatively poor – has been facing.

The countries of French West Africa offer perhaps the starkest contrast. Their currency is tied to the Euro and the ownership of their banks is mostly based in Europe. As a result, they have almost no monetary or even fiscal autonomy to be able to respond to economic shocks and cycles, let alone to finance developmental strategies through their banks. The system is not just neo-colonial; it is a fully-operational direct vestige of colonialism. And yet, when the World Bank, the UNDP, or various aid reports emphasize the importance of ownership for development, this most essential financial dimension is rarely considered despite its centrality to any legitimate conception of developmental self-sufficiency, let alone national self-determination for that matter. The implication – of repatriating the financial sector – is indeed quite sensible, for it would complete a process of decolonization that is long overdue.

Obviously, it is extremely difficult to address inequality and power in the multilateral context of the UN, given the requirements of negotiated consensus. Dealing with these issues is very difficult even within nations, as we have seen with health care debates or responses to the recent financial crisis in the US. However, as with recent climate change talks, if inequality is not addressed now, we could soon risk reaching a tipping point. Or perhaps we already have. While it might not be clear whether poverty has been improving or worsening, it is quite clear that societies around the world have been getting more unequal. And this has nothing to do with voodoo, but everything to do with how we have come to organize ourselves as a global collective.