We tend to forget it, but the development cooperation agenda started, more than fifty years ago, with the aim of reducing the income gap between what is now called rich and poor countries. In the 1970s, when too many people started to believe in the necessity of effectively reducing the growing inequalities by way of globally redistributing incomes, World Bank’s president McNamara launched a poverty reduction programme, stating that within-country inequalities were much more important than the between-countries ones. He did not succeed, because of the emerging economic crisis in the western world. But in 1990, poverty was again put on the international political agenda, without inequality. All the World Bank had to say about is, was that inequality was different from poverty.
- Macro-economic policies should focus on the ‘real’ economy instead of the financial sector
- Tax policies need to be reformed in favour of national and global redistribution
- Social protection must become universal and aim at more solidarity and the preservation of collective life
- Democracy will have to reinvent itself in order to include the needs of all people
‘Noting, however, that in spite of the efforts made in recent years the gap in per capita incomes between the economically developed and the less developed countries has increased…’
We tend to forget it, but the development cooperation agenda started, more than fifty years ago, with the aim of reducing the income gap between what is now called rich and poor countries. In the 1970s, when too many people started to believe in the necessity of effectively reducing the growing inequalities by way of globally redistributing incomes, World Bank’s president McNamara launched a poverty reduction programme, stating that within-country inequalities were much more important than the between-countries ones. He did not succeed, because of the emerging economic crisis in the western world. But in 1990, poverty was again put on the international political agenda, without inequality. All the World Bank had to say about is, was that inequality was different from poverty.
A global consensus on the priority to be given to poverty reduction was reached at the UN Social Summit in Copenhagen in 1995. However, this agenda was not meant to enlarge and improve social protection systems, but in fact to replace them. As the UNDP (United Nations Development Programme) stated repeatedly: poor countries cannot afford social security and poverty is not a matter of increasing social spending. This is considered a ‘diagnostical error’, based on ‘good sentiments, but not efficient’. In fact, the poverty agenda perfectly fitted into the Washington Consensus, which shifted the focus of development from countries to individuals and from social development – an agenda of change – to poverty reduction. Inequality was said to be an incentive for growth and growth would reduce inequalities spontaneously.
This again started to change at the end of the 1990s. In 2006 the World Bank published its World Development Report on ‘Equity’, though it only touched on problems of ‘inequality of opportunity’ and not income inequality. It referred to ‘examples of ill-designed policies pursued in the name of equity that seriously harmed […] the growth process’. But one of its researchers published a paper in which it was said that inequality not only hampered the growth process but could also put a brake on poverty reduction. Moreover, Branco Milanovic, one the world’s most renowned inequality researchers, started to work at the World Bank and published a whole series of books and papers on global inequality. In the same period a debate on the role of globalisation and its impact on inequality started, as well as publications from the ILO (International Labour Organisation), UNRISD (UN Research Institute on Social Development) and the UN itself in which growing inequalities, within and between countries, were seen as problematic.
Recently, IMF researchers have confirmed the importance of inequality for the emergence of the current economic crisis and for making sustained growth very difficult. Add to this the seminal work of Wilkinson & Pickett in which these epidemiologists show how damaging inequalities can be for the whole of society, in terms of public health, violence, illiteracy, etc., of Joseph Stiglitz on the price of inequality and of Stewart Lansley on the cost of it. Clearly, inequality is back on the agenda, and will not disappear again immediately. The question is, obviously, what to do about it?
For the World Bank and its neoliberal allies, growth remains the first answer and the focus still has to be put on inequality of opportunity. Inequality should be fought against because of economic reasons. Other organisations have been proposing social protection programmes, though it is not clear whether these will be able to go beyond the poverty reduction programmes and whether they really aim to reduce inequalities. In fact, if inequality is back on the agenda, it may have more to do with a possible solution for the current economic crisis than with the growing gap between poor and rich countries.
Nevertheless, I think social protection is the way forward, though what I mean is much more than a re-invigorated ‘welfare state’. What I mean is a transformative and universal social development, which will entail systemic changes at different levels. Let me briefly summarize a couple of them.
First, a change at macro-economic levels is needed in order to re-shift the focus from the financial sector to the ‘real’ economy and the development of domestic demand. Promoting social and solidarity economy can be a useful way for achieving it.
Secondly, a change in terms of domestic and international taxes is mandatory, so as to make redistribution at national and global level possible. Tax havens will have to disappear.
Thirdly, this re-conceptualized social protection will have to be really universal, so that those who pay can also benefit and contribute to the coming about of integrated societies.
Fourthly, democracy itself will have to change in order to really take into account the needs of all people and to efficiently and pragmatically have all to participate in the new programmes.
Fifthly and finally, the scope of this re-conceptualized social protection, will be social security, social assistance, labour rights, public services and environmental rights.
It will thus be truly transformational and be based on individual and collective human rights. Its aim will not be more growth, but more solidarity and the preservation of collective life itself.
And yes, obviously, this will entail a change in development cooperation, which should be focused on more equality, solidarity and global redistribution. It is about giving a real meaning to globalisation.