Meanwhile the international placemen and experts sing their little songs of innocence and inexperience. “Adjustment” is the current refrain: a touch of freedom here, of market and exchange rate realism there, and things will be better, may even get well. One of the games economists play may be called “statistical misinference.” Compare more or less comparable numbers from different countries and draw conclusions, past and future. So with Africa: as we saw earlier, comparing Nigeria and Indonesia, Africa has done less well than East Asian countries that started at a lower level. (One can make a similar invidious comparison between Turkey and South Korea.) But why not turn that around? If Indonesia could do so well, why not Nigeria? The same World Bank report that deplores African performance in 1965-90 cites Asian figures for 1965 (“conditions similar to those in Africa in 1990”) to envisage African growth over the next quarter century. Equal levels at different times constitute for these experts similar conditions. Oh yes, the proportion of children in school was higher in Asia, but that is easily remedied. Otherwise, no problem. Of cultural and institutional differences, nothing.
News item: The United Nations, in collaboration with the World Bank and the International Monetary Fund, has announced a plan to raise $25 billion over the next decade, over and beyond what these international agencies can find (much to come from private sources), and invest it in African improvement.28 At present twenty-two of the twenty-five poorest countries in the world are in Africa, and 54 percent of Africans live below the UN poverty line; what’s more, Africa is the only region where poverty is expected to increase over the next ten years. How much can $25 billion do? Well, as of 1994, the debts of African nations totaled $313 billion (almost 2.5 times total export income), so the $25 billion could pay the interest for one year. In the meantime, of $231 billion in direct foreign investment in the Third World in 1995, some $2 billion, less than 1 percent, went to Africa. Businessmen know to go elsewhere.
No matter: accentuate the positive. The worse the situation, the greater the potential for improvement. Better policies (structural adjustment) can/will put Africa back on the growth track. But there would still be lots to do. The continent’s problems go much deeper than bad policies, and bad policies are not an accident. Good government is not to be had for the asking. It took Europe centuries to get it, so why should Africa do so in mere decades, especially after the distortions of colonialism? And how about no government? At the moment, for example, Somalia is a political vacuum: even if one wants to send help, what address to send it to? “We don’t even know how to send them a message.”29
In a fragile world, good policies are hostages to fortune. In Africa, as in much of the world only more so, the clocks go backward as well as forward.
Country Interrupted: Algeria
One of the most chastening exercises in economic history is to recall the expert prognoses of yesterday and appreciate their vacuity.
In the euphoria of the 1970s, when Algeria was raking in abruptly inflated oil revenues and, after South Africa, had the largest industrial base on the continent, a happy minister of industry predicted that Algeria would be “Africa’s first, and the world’s second, Japan.” From his mouth to God’s ear. Plant and equipment may not mean output, and output may not mean utility and salability. Like other developing nations before it, including those in nineteenth-century Europe, Algeria set about creating a modern industrial infrastructure. Like some of them, it aimed especially to promote heavy industry, the more so as good socialist doctrine saw that as the only way to go. Comparative advantage (a bourgeois-capitalist doctrine) be damned.
All of this costly, state-owned apparatus featured overemployment, inefficiency, nonmarket prices, and cooked books. Just about none of the industrial product was exportable, and even in the captive domestic market, much was unusable or liable to rapid deterioration. The factories went rapidly downhill. Many stood idle or lay underused for want of maintenance and spare parts. Cannibalization, always the accomplice of poor repair, consumed equipment before its time. Manufacturing output fell by 1.9 percent per year from 1980 to 1992; and sank from 15 to 10 percent of GDP in the quarter century from 1970 to 1992.30
Meanwhile population tripled in the thirty years after independence (10 million in 1960, 27 million in 1993), in spite of substantial emigration to Europe. The ambitious revolutionary government encouraged big families in order to enhance military power and international influence, and reproduction turned out to be the one efficient branch of production. Unfortunately, children have to grow up to produce, and this rapid increase (almost half the population is now under fifteen years of age) has imposed a heavy if temporary burden. Birth promotion, for example, implied a big investment in education, yet 43 percent of the population were illiterate in 1990, and 55 percent of the women.* It also presupposed an abundant food supply, but the country has not added to its arable land (the same 2.9 percent of the area as in 1910), has made a mess of collective farming, and can no longer feed itself. Algeria imports increasing quantities of basic and not-so-basic foods (cereals, milk, sugar, bananas, cooking oil) and subsidizes them for consumers.
While at it, the government has also imported consumer durables and sold them to favored insiders at concessionary prices. Highly coveted contracts to furnish such goods have become the object of keen competition among foreign suppliers. One might have expected the bids and counterbids to yield lower prices; on the contrary, they have yielded bigger bribes. And big as these are, they are but a small part of a much larger pool of privatized state funds. Algerians speak of $26 billion (109) in secret bank accounts abroad.31
Cover of imports by exports was running in the early 1990s between 3 and 10 percent, coming almost entirely from oil and gas shipments. That may seem like little, but remember, two thirds of these oil revenues, as well as other export income, go to pay interest on the debt. (The oil, in other words, is mortgaged, and reserves are dwindling fast.)32 Again, Algeria could, like any other sovereign country, tell its creditors to get lost. But it needs to borrow more, if only to feed itself. The IMF has offered the usual “structural adjustment” financing: We will pay you to change your ways. The Algerian government has accepted with alacrity: We will change our ways. Besides, we owe so much, a little more can’t hurt.
French-educated Algerian observers have compared the country to the grasshopper of La Fontaine’s fable:
Que faisiez-vous au temps chaud?
…Je chantais, ne vous déplaise.
What were you doing when it was warm?…
I sang, I hope you don’t mind.33
Fortunately for Algeria, the IMF is not so hard and exigent as La Fontaine’s ant: “You sang, eh? I like that. Well, now dance.”
It won’t be easy for Algeria to change. State socialism is not only a mode of production; it is a symbol and legacy of the revolution, an “irrevocable commitment” (to cite the original constitution), an egalitarian ideal, the banner under which Algeria has played a major role in Third World political movements.
In the last few years, the country has faltered and festered. Almost three quarters of the young men from seventeen to twenty-three years of age are unemployed. These are the “wall people,” so called because they have nothing to do but lean against a wall and watch the street go by. They are a pool of resentment, brooders of dark fantasy, bomb and gun fodder. Civil war has killed more than sixty thousand people. Untimely death is never pleasant, but rebels in Algeria have gone out of their way to be cruel, dispatching victims whenever possible by cutting their throat. This saves bullets and supposedly brings the killer nearer to God.34
Much of the death has been random, the victims innocent passersby, many of them women and children. But Islamist terrorists have particularly targeted “shameless women” and key personnel: trained jurists and bureaucrats, foreign technicians, intellectual leaders. In this way, they roll back any progress toward freedom of thought and gender equality. Outsiders are particularly vulnerable: a few exemplary murders c
an discourage the rest and persuade them to leave. (Compare the effect of attacks on foreign tourists in Egypt.) The state responds with its own violence: torture, rape, murder. Presumably an end will come—on which side of the line, no one can say. Meanwhile the secular, francophone elements flee to France. The French do not want them, in part because Algerians bring the struggle with them. France has already had its premonitory explosions of Algerian terror.
From Leftist Scholar to President of Brazil: The Advantages of Realism
For years Fernando Henrique Cardoso was a leading figure of the Latin American dependency school, ideological flagship of anticapitalist anticolonialism. The doctrine had first been defined by the Argentine Raoul Prebisch, who drew his inspiration from center-and-periphery theories of European and American exploitation of weaker economies overseas; and it found powerful resonance in countries aggrieved by the growing gap between rich and poor. In the 1960s and 1970s, the sociologist Cardoso wrote or edited some twenty books on the subject. Some of them became the standard texts that shaped a generation of students. Perhaps the best known was Dependency and Development in Latin America. In its English version, this ended with a turgid, less-than-stirring credo:
The effective battle…is between technocratic elitism and a vision of the formative process of a mass industrial society which can offer what is popular as specifically national and which succeeds in transforming the demand for a more developed economy and for a democratic society into a state that expresses the vitality of truly popular forces, capable of seeking socialist forms for the social organization of the future.35
Then, in 1993, Cardoso became Brazil’s minister of finance. He found a country wallowing in an annual inflation rate of 7,000 percent. The government had become so inured to this monetary narcotic and Brazilians so ingenious in their personal countermeasures (taxis used meters that could be adjusted to the price index, and perhaps to the client) that serious economists were ready to make light of this volatility on the pretext that the certainty of inflation was a form of stability.
This may have been true for those Brazilians able to take precautions; but inflation played havoc with Brazil’s international credit, and this country needed to borrow. It also needed to trade and work with other countries, especially those rich, capitalist nations that were marked as the enemy. So Cardoso began to see things differently, to the point where observers praised him as a pragmatist, “without a strong ideological core.”36 Gone now were the anticolonialist passions; gone the hostility to foreign links, with their implicit dependency. Brazil has no choice, says Cardoso. If it is not prepared to be part of the global economy, it has “no way of competing…. It is not an imposition from the outside. It’s a necessity for us.”37
To each time its virtues. Two years later Cardoso was elected president, in large part because he had given Brazil its first strong currency in many years: the real, rated at slightly more than a dollar. The real is still there, and what a boost to national pride: more than a dollar!
Epilogue: A stable currency does not cure all. As of mid-1996, public finances showed a larger deficit; export growth had slowed; real product fell in the first quarter; real interest rates, though lower, were still prohibitive; and productivity gains in manufacturing had fallen sharply, indeed, to negative rates in such key sectors as metallurgy, machinery, and textiles in 1995.38
29
How Did We Get Here? Where Are We Going?
The millennial record seems simple enough. From a world of great and little empires and kingdoms, more or less equal in wealth and power, we have become a world of nation-states, some far richer and stronger than others. From hundreds of millions of people, we have become 6 billion and counting. From working with modest if ingenious tools and techniques, we have become masters of great machines and invisible forces. Putting aside magic and superstition, we have passed from tinkering and intelligent observation to a huge and growing corpus of scientific knowledge that generates a continuing flow of useful applications.*
Most of this is to the good, although intellectual and material power has often been abused to evil and destructive ends. Or just simply used, with unintended but nefarious consequences.1 We suffer from the asymmetry between our knowledge of nature and our knowledge of man, between outside awareness and self-ignorance. Still, few people would prefer a return to earlier times. Those who secede from the rich material world to find spiritual renewal in nature may leave their watches behind. But they take books, eyeglasses, and manufactured clothing; also sometimes CD players; and they usually know enough to get medical help when they need it.
Note that my assumption of the ultimate advantage and beneficence of scientific knowledge and technological capability is today under sharp attack, even in the Academy. The reasons for this reaction, often couched in preferences for feeling over knowing, range from disappointment at Paradise Unfound to fear and resentment by laymen of unknowable knowledge.2 Some of the anti’s are millenarians: they look to an apocalyptic revolution to right wrongs and generalize happiness. Marxian Socialists and Communists, for all their lip service to science, fall in this category. Others are nostalgics, harking back to the mythic blessings of stateless, communal, primitive societies. The first group well illustrates the human limits of good intentions. The second is pissing into the wind. That is not where the world is going.*
Until very recently, over the thousand and more years of this process that most people look upon as progress, the key factor—the driving force—has been Western civilization and its dissemination: the knowledge, the techniques, the political and social ideologies, for better or worse. This dissemination flows partly from Western dominion, for knowledge and know-how equal power; partly from Western teaching; and partly from emulation. Diffusion has been uneven, and much Western example has been rejected by people who see it as an aggression.
Today, the very account of this story is seen by some as an aggression. In a world of relativistic values and moral equality, the very idea of a West-centered (Eurocentric) global history is denounced as arrogant and oppressive. It is intended, we are told, “to justify Western domination over the East by pointing to European superiority.”3 What we should have instead is a multicultural, globalist, egalitarian history that tells something (preferably something good) about everybody. The European contribution—no more or less than the invention and definition of modernity—should be seen as accidental or, to use the modish word, contingent.
We have seen examples of this Europhobia in recent discussions of the age of voyages and discovery. The Chinese, we are told, might have (should have) found the Americas. Or the Japanese, or Africans. Maybe they did. Europe was just lucky. Or, in an angry variant, the Europeans were not lucky. They were nasty and vicious. They stole the silver of the New World, used it to pay for empire and trade in Asia, beat up more cultivated peoples, and then praised themselves for their wealth, technical achievements, civilizing mission, and spirituality.
Above all, say the globalists, we must not account for European priority by “essentializing” it, that is, by tying it to European institutions and civilization—explaining it by European “presences” as against non-European “absences.” Thus the manifest asymmetry between Europe’s systematic curiosity about foreign civilizations and cultures and the relative indifference of these “others” is denied a priori by apologists who unknowingly reaffirm the contrast.4 The point, say some globalists, is that there is nothing to explain. Or, if one prefers, one can “prob-lematize” both European and non-European history by including what did not happen: “failed struggles as well as successful ones are all part of history.”5 To be sure, attention to failure is open to the charge of biased negativism: who says non-Europeans had to pursue goals similar to those of the West?
This line of anti-Eurocentric thought is simply anti-intellectual; also contrary to fact. But how popular, especially among those allegedly chauvinist Westerners. The new globalists, not liking the message, want to kill the me
ssenger—as though history hadn’t happened. The fact of Western technological precedence is there.* We should want to know why, all of us, because the why may help us understand today and anticipate tomorrow.6
Historians like to look back, not ahead. They try to understand and explain the record. Economists also want to know the past, but believe what they know about it only insofar as it accords with theory and logic; and since they have the assurance of basic principles, they are less averse to telling a future shaped by rationality. To be sure, economists recognize the possibility of accident and unreason, but these can in the long run only delay the logically inevitable. Reason will triumph because reason pays. More is better, and in choosing goals, material achievement is the best argument.
So, whereas historians are agnostics about the future, hence virtual pessimists, economists and business people tend to be optimists.7 Optimism has to do, above all, with increase of wealth, what Adam Smith called “the natural progress of opulence.” Even for the poor: “In almost any way you care to measure, life is getting better for people in developing nations.”8 Also longer; and these data on life expectancy should settle the issue. In the same way, poor people are on average better off. Not fewer; but better off. Economists now opine that the world will continue to get richer, that the poor will catch up with the rich, that islands of growth will become continents, that knowledge can solve problems and overcome material and social difficulties along the way.* So it was, and so shall be.
Economists have not always felt this way.† Adam Smith’s successors anticipated stagnation: Malthus, with his inexorable press of people on food supply; Ricardo, with his “stationary state” as land and rent soaked up the surplus; Jevons, with his bogey of fuel exhaustion. In those times, economics wore the sobriquet of “the dismal science.” Subsequent progress has allayed these fears, although some see the Malthusian doom as only postponed.**
The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor Page 60
