[Book Review] World poverty addressed in new book

from Middle East Online

Jeffrey Sachs discusses global situation in relation to poverty in his latest work ‘Common Wealth’.

Book review of: “Common Wealth – Economics for a Crowded Planet” by Jeffrey D. Sachs (Penguin Press, NY, 2008).

Reviewed by Jim Miles

Economists some so intent on their money, not able to truly release themselves from their fundamental neoliberal values, afraid to admit that many of the policies they are advocating fall squarely into the rubric of ‘socialism’. That of course is a very sweeping definition, a rather broad paint stroke colouring them all with the same brush, but for Jeffrey Sachs it is suitable. While working at an eminently prestigious foundation, the “Earth Institute” at Columbia University, obviously intelligent enough to gather major resources around himself and use them effectively, and an able writer whose style is generally clear and not filled with incomprehensible economic jargon, Sachs recent work “Common Wealth” has enough significant errors to render it – well incomplete. That is because they are - for the two major errors - those of omission that take away the basis of his logic.

Sach’s essential thrust is how to eliminate poverty, indeed a noble goal, and to do so with our most “important responsibility [being] a commitment to know the truth as best we can, truth that is both technical and ethical.” One needs to add complete, for in discussing the global situation in relation to poverty, the distribution of wealth, the unequal relationship between the haves and have-nots, he covers much valid territory but no work on global economics can be fully valid, can fully argue about poverty and its causes, effects, and cures without including to a fairly large degree significant information on two parameters: militarization and corporate power.

Major faults of omission

Certainly Sachs discusses the military and its huge budget, repeating the now well known information that the US spends more than all other countries combined on its military/defence budget, (twenty times per capita more than the world average), that the military itself contributes significantly to global warming, and that the invasion of Iraq is a big mistake. But when it comes to the militarization of society, its ideals, the use of the military to maintain the empire (Why then over 750 military bases in over 130 countries around the world?), an empire that serves the wealth extraction of the elites, Sachs remains silent. As an obvious intelligent man, he must have – and if he did not, should have – read works by other significant American authors that describe the enormous influence that the American military has on global economics, foreign policy, and foreign domestic policies, and the seeming necessity of that military to support the commercial wealth of the US (the oft repeated ‘hidden fist’ as postulated by Thomas Friedman). [1]

That runs squarely into the ideas – or ideals of – corporations, those legally invisible entities that seem to have more rights than a person and whose main function is to make profits. The corporate world, which is the majority of global economics by most measures, is supported in its enterprises by the military, from well before the ‘banana wars’ of Central America to the military conflagrations that seem to follow the chase after extractive natural resources, oil being the most significant currently.

Even larger than the corporations are the organizations supported by the corporations as an upper level of government, a level fully non-democratic and hardly understood or even known by most citizens, the governance of the World Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD) and other smaller and lesser known organizations - lots of ‘think tanks’ and ‘policy institutes’ that are nothing more than fronts for the corporations.

Sachs on occasion mentions these various organizations in passing but only the World Bank receives a spot in the index, with four mentions that are nothing more than passing references and have no influence on his arguments. The WTO, OECD, and IMF receive no index listing and only minimal passing mention in the text, an error of such huge proportion for the knowledgeable reader that it essentially destroys his arguments and perspectives however logical and rational they might seem at first.

To ignore the effects that the WTO and IMF have had in restructuring global economies by their imposed rules of engagement (while not necessarily ‘forced’ onto the countries involved, there is much in the way of coercive threats that can be intimated or stated to make ‘compliance’ much easier) with the result of large agricultural losses (consider Haiti and its loss of rice production, similarly in Mexico with its loss of corn production – with other factors involved to be sure) as the involved countries are forced to pay back huge debts at the expense of their own people. That includes the loss of community social services, education, health and welfare, job safety and other factors that Sachs argues for in his presentation.

Wealth Extraction

To not account for this entwinement of the military-corporate power and then its extension into the world of politics, all leading to the imperial concept where currently there is a huge extraction of wealth from the global hinterland to the imperial heartland is fully misleading. Sachs presents confusing arguments on extraction. At the end of the book he does say clearly that “The worst abuses have come – and continue to come – from the extractive industries, especially hydrocarbons (oil and gas)…where it is easy for companies to make a fortune by extracting high-value resources at a rapid rate without care for the local communities or the physical environment.” All true, but what about the ‘finance economy,’ the global market of pure speculation on money, banking, and corporations that when freed up by WTO and IMF intervention creates a huge vacuum of money heading towards the first world from the developing world, as experienced by the Asian ‘tigers’ that were halted in their tracks by global financial manipulations.

Sachs tries to deny that the rich are rich because the poor are poor, according to him a “failed Marxist notion”. He argues that if that happened “then the world income would be roughly constant”….except that he presents no arguments or statistics (economist love statistics when they support their point of view and change to ‘perfect market conjecture’ when it does not) to support that. Quite in contrast, it is evident from looking at the various statistics in other sources that the wealth of the first world is predicated upon extraction of that wealth from respective imperial hinterlands.

He even provides his own examples – taking on the white man’s burden of imperialism helping the down trodden poor: Korea’s performance economically was “built on foundations laid by Japanese investments during the colonial era”; Taiwan was assisted with “a good communication network...laid down, designed not with the narrow prupose of extracting some primary raw matieral but with the aim of increasing production of smallholder rice and sugar, both wanted in Japan;” and India was blessed with a railway system, entirely non-extractive of course. Well, okay maybe not primary resources in Taiwan, but we sure want to extract your agricultural resources; Korea (with Manchuria) was certainly utilized to extract raw materials for Japan’s rising industrial strength; and India suffered famines while food and other products were shipped overseas to Britain, using those same rail lines that were also convenient for moving militaries around.

More questions

There are more questions than answers arising from this book.

While speaking of wealth and its extraction, Sachs also ignores the huge debt pattern of US finances that is used to support its economy of mass consumption. An economy based on mass consumption can hardly be useful in any effort to curb global warming or ending poverty in other countries. The US is no longer a major producer of consumable items, but needs to import ‘stuff’ to keep the economy percolating along, and they have run out of the ‘savings’ that Sachs says are required to get out of poverty by using it for investments. Why nothing on the huge domestic and foreign global debt that has developed over the past decade?

The definition of “state failure” is tied to poverty and the poverty trap. Sach’s poverty trap is simplistic at best. There is no accounting for factors other than poor people have more kids because they are poor, and they are poor because they have more kids. Surely there is more to it than that. Let’s see: military intervention, CIA intervention, WTO, IMF, World Bank regulations, resource extraction, elitism and cronyism, racial barriers, lack of social services and education as caused by the preceding.

So this poverty and all the poor youth it creates leads to “state failure”. But now look at the main failed states that are presented: Afghanistan, Iraq, Somalia, Pakistan - oh my gosh; all the countries that have been invaded, attacked, occupied, and otherwise abused by the United States and earlier imperial powers! For ending the poverty trap he then has the audacity to use Afghanistan as the example, as it “exemplifies the end of the line for desperately poor countries when poverty, overpopulation, and environmental degradation are allowed unchecked for decades.”

For a supposedly intelligent man, this is an incredibly stupid statement!

What does he not see? I guess the British and Russian excursions into Afghanistan count for nothing, the American manipulation of the Pakistanis by the Americans to create the Taliban to get rid of the Russians in Afghanistan counts for nothing, the ongoing American led NATO occupation counts for nothing…no, it is there own fault for having too many kids! Incredibly, incredibly ignorant! How many exclamation points am I allowed to use? Should I write it all in capital letters? No, I guess the correct academic word would be exasperation that someone who should know better can make such clearly misleading statements.

Other problems arise within the book as well. There is no recognition of tariff barriers as fully described by other authors as significant factors in a developing countries successful progress by keeping out undesirable foreign competition – predation might be a more accurate word. [2] Japan maintained tariff barriers against foreign products after WW II to protect its renewing economy. Korea did the same as to protect its re-established and new industries. The same applies to all other wealthy countries at the beginning of their rise to power/wealth (the US and Britain included) – the protection of local industry by using tariffs, export taxes, and subsidies for protection.

Accompanying this is the lack of democracy in many of these state enterprises. Sachs does provide a one liner in support of the neoliberal ideal that wealthy countries are democratic and then do not go to war with each other. Except that Korea was a dictatorship up into the 1980s. Britain and the US were democracies but in the very limited sense of early forms that disenfranchised nearly everyone but the wealthy landowners. Further, all empires have never hesitated to support non-democratic autocratic, dictatorial, monarchical states as long as those states remained within their economic-ideological range otherwise.

The biggest avoidance of democracy arises from the very omission of the WTO, IMF, and World Bank, all directed by corporate personnel of some kind. Corporations themselves are not democratic, and the global governance bodies created by them are definitely not democratic, especially considering they have described themselves previously as “colluding” to form a new world governance.

Anything good?

To counter that with a positive note, Sachs almost redeems himself in a chapter discussing social welfare, or the welfare state. Previous to this point there are many ideas presented to assist the poor achieve some form of wealth, many of which, while coming under the social welfare rubric, are not described as such: education, health, worker safety, working conditions, agricultural training, empowerment of women through education and financial support. All these are part and parcel of a true ‘social democracy’ a true socialism. Somehow Sachs cannot quite admit to himself or his compatriots that his arguments are very much socialistic.

In Chapter 11, “Economic Security in a Changing World,” Sachs examines several levels of social democracy, starting with the Scandinavian countries (that are conveniently forgotten in most economic treatises trying to debunk socialism), passing through the slightly less socialist levels of Europe (called ‘mixed economies’), to those of us on the right that are mainly ‘free market’, at least at the government-corporate level if not at the level of the people. His conclusion is clear: “…uniquely among the world’s high-income countries [the US] has carried on a decades-long assault on social insurance in a manner contrary to the evidence, and with increasingly adverse results.” In other words, democratic socialist policies do provide benefits to the poor and the over-all economy of the countries they live in.

Almost redeems himself, but not quite, as he then turns to “Rethinking Foreign Policy” and on into “Achieving Global Goals” where – although some of his ideas are sound – there again is no recognition of militarism and corporate power. Without addressing those problems, the other ideas and proposed solutions are purely academic.

This is a very frustrating work as it could have so much more potential. Jeffery Sachs sits on the edge of the truth, never quite wanting – or able - to identify it for what it is, except for the one quick chapter on social welfare, not quite willing for some reason to look at the complete picture that includes the military-corporate ties, keeping blinders on that prevent a truly global view of “Common Wealth”. Because his writing and arguments are clearly presented as far as they go, I would hope that he re-addresses these issues in light of the above arguments. While everyone has biases of interpretation, there cannot be a bias on something that is simply omitted – it is just not there - and because of that, the work fails.

Jim Miles is a Canadian educator and a regular contributor/columnist of opinion pieces and book reviews for The Palestine Chronicle. Miles’ work is also presented globally through other alternative websites and news publications.

Notes:

[1] There are many works on this topic, far too many to list here, but among the main authors to review are Andrew Bacevich, Chalmers Johnson, James Carroll, Joseph Stiglitz, Howard Zinn, Alex Cockburn, William Blum, Greg Grandin, Amy Chua, William Greider, Noam Chomsky.

[2] some of the note [1] authors cover this especially Stiglitz, but see also Walden Bello, Bruce Cumings, and Ha-Joon Chang.