The Politics of Poverty and the New Freedom

excerpt of an academic paper for a class at the University of Florida's Levin College of Law, Trade and Human Rights in the Americas (Spring 2006)

by barb howe

Introduction

The central question in the debate over neoliberal economic globalization revolves around issues of poverty.  People undertake the dangerous trek of immigrating to a country illegally, enduring life threatening conditions along the way and a range of abuse and exploitation in the destination country because of lack of economic opportunity in their homelands.  Women and daughters sell themselves or are sold into the sex trade because few other options exist for them or the income from other forms of work are insufficient to a living wage.  Less developed countries destroy their environments out of economic necessity, trying to convert tropical rainforests into capital.  They build sweatshops and maquiladoras to entice multinational corporations to “invest” in their countries, offering low wages and poor working conditions.  After centuries of colonialism –that form of regulated transfer of assets, resources and other wealth from the source country to the colonizing country– the misery of the people and the rape of the land in the Third (Majority) World is the only “comparative advantage” these countries have left. 

In one way or another, poverty either causes and/or is caused by all of these various impacts (trafficking, immigration, sweatshops, environmental degradation etc.) of trade liberalization on human well-being.  In fact, poverty is so interwoven into the neoliberalization debate that some critics have called it the “globalization of poverty” .

Because the Bretton Woods Institutions (BWIs) so often use the language of poverty alleviation in their mission statements and generally speak of reducing poverty as one of the goals of liberalizing economies the world over, questioning the effects of neoliberal trade practices on poverty is equivalent to questioning the effectiveness of the organizations themselves.  Are they doing their jobs?  Are they doing what they claim to do? 

The question assumes a certain amount of confidence in the stated purposes of the BWIs.  That is, that the alleviation of poverty is indeed a goal of these institutions, not just an attractive packaging put on to sell the idea of economic globalization to the public.  Suspicion of the intent behind the authors and institutional architects of economic globalization is valid, and arguments questioning globalization in this way have been made previously, most recently, perhaps, by political economist J.W. Smith in his book, Economic Democracy:

When the universal result [of globalization] is low resource export prices and increased poverty in the developing world, the IMF/World Bank/ GATT/NAFTA/WTO/MAI/ GATS/FTAA/military colossus can hardly claim its intent was to develop those countries (Smith 2005).

That said, however, motivations are difficult to prove or disprove.  This paper will assume (granted without evidence one way or another) that the mission statements of the Bretton Woods Institutions are forthright and honest in their stated goals and that the creators and backers of the system genuinely thought and continue to think that liberalization helps the poor.

Additionally, a note on terminology is in order.  Much as this paper argues that how one defines poverty has political consequences, so does how one talks about it.  That the world is made up of rich countries and poor countries is clear.  That some of these countries are more “developed” than others is a subjective term based on a normative argument.  Therefore this paper does not refer to “developing” versus “developed” countries as such terminology presupposes a linear, evolutionary and even finite concept of history .   The terms “Third World” and “First World” are equally problematic for the same reasons but they also can be misleading from an international law point of view, as they might be associated with the different types and generations of human rights (civil and political rights emphasized by the First/Western World; social, cultural and economic rights emphasized by the Second/Communist World and communal/environmental rights emphasized by the Third/Non-aligned World.  Such divisions have been outdated since the end of the Cold War.  For these reasons, this paper will refer to the (Rich) Minority World and the (Poor)  Majority World.  I fully embrace the political consequences of such terminology and make no pretenses to implying that these terms are neutral or objective.  It is important to clarify, however, that the terms “minority” and “majority” here refer to numerical values, i.e. numbers of people on the planet who are rich or poor, not, as most sociologists use the terms, referring to who has access to power.  While it’s true that the Poor Majority have less access to power via most of the current international institutions set up by the Rich Minority, I choose to use these terms to remind us that the system is incredibly unbalanced and works only for a minority of the world’s population.

This paper will argue that the liberalization of trade around the world has not only done little to alleviate world poverty, sometimes it actually perpetuates and deepens it.  The first part of this paper will begin by examining various commonly used definitions of poverty and different approaches to measuring it.  I will then map out the political consequences of those different definitions, explain a few of the myths behind them and how some alternatives are more useful in conceptualizing the phenomena.    

The second part of this paper will address the conclusion that trade reduces poverty by using both types of measurements: traditional money-metric measures and non-traditional social measures.  I also will challenge the notion of economic growth as being inherently beneficial to the poor and how other non-market centered approaches to raising the quality of life for impoverished people might not necessarily contribute to economic growth or raise the national GDP of a country, but nonetheless greatly improve the lives of the poor.   Finally I will use traditional measures of poverty to question the assertation that free trade is good for the poor.       

Part I: Defining our terms: Definitions of Poverty

Different Realities, Different Measures

A dollar a day: Money-metric approaches

Alternative ways to Operationalize Poverty: Non money-metric approaches

Possibilities for and Resistence to Change

Part II: Is Free Trade Good for the Poor?

Remedy for Poverty: Business as usual?

Using traditional measures

Using social measures

Conclusion:  The New Freedom

This paper began with a subheading, “Different Realities, Different Measures”.  The reverse is also true.  Different measures lead to different realities.  If we believe that poverty is what we can measure, we will design policies in accordance with that reality and those policies will in turn reinforce and perpetuate that vision of the world.  And as we have seen over the last fifty years despite unprecedented economic growth, we will continue to make very little progress towards alleviating global poverty. 

If, on the other hand, we believe that poverty is a complex, multi-dimensional phenomena that is difficult but not impossible to measure, one that simply requires new, more advanced and refined methodologies, I believe the human race is undoubtedly capable of devising more effective policies that will be much more successful in eradicating poverty.  Jeffery Sachs, Director of the Earth Institute at Columbia University agrees:

we've arrived at a situation today where we are truly so rich that if we ever really made a serious effort to address these problems, not only could we tremendously improve the state of the world, but actually it is not crazy for us to think about having within our power, uniquely for the first time in the history of the world, the chance to end extreme poverty within a generation.

We don’t need high theory to do this, according to Sachs.  There are very practical simple steps we can take to improve the quality of life for people around the world; anti-malarial mosquito nets in Africa and Latin America; Directly Observed Therapy for tuberculosis patients in Peru;  programs for universal access to HIV/AIDS drugs such as those implemented in Brazil.  There are very simple measures we could take to improve the quality of life of people in impoverished countries.  Not all of them will directly increase the GDP, or result in economic growth or raise the price of stocks on Wall Street.  What they will do simply is make life better for people.

What we need to eliminate poverty, according to Jeffery Sachs, is a transfer of wealth from the Rich Minority World to the Poor Majority World in roughly the amount of $25 billion dollars a year.  After centuries of colonialism, a system which was designed specifically to subsidize some countries at the expense of others, a transfer of wealth such as this would not be unprecedented or unfair. $25 billion may sound like a lot, but to put that number in perspective George W. Bush asked for $87 billion for the U.S. to fight the war on Iraq.  $25 billion a year is one-thousandth of the annual income of the rich world, or in other words one-tenth of one percent of rich world GNP. By another metric, it is about five months of stationing troops in Iraq (Sachs, 2005).  The difference being in that last example (the Iraq example) of course that it is not the U.S. alone but all wealthy countries who share in the cost of the wealth transfer (what some might even call a repatriation of stolen wealth). 

Neoliberal economic globalization does not transfer wealth from the rich to the poor countries of the world.  In fact, it does just the opposite.  This is why critics have called it neo-colonialism or colonization by other means.  I believe most of the early twentieth century architects and proponents of the Bretton Woods Institutions knew this to a greater or lesser extent, which is not to say that they were malevolent manipulators conspiring against the world’s poor.  They simply took it for granted –as many of us in wealthy countries do today–  that we in rich countries are entitled to a particular standard of living that is unsustainable and is subsidized by the enormous suffering of poor people in poor countries (and sometimes in rich ones too).  While colonialist sentiments such as these may no longer be acceptable to state directly, they are the remnants –i.e. they are the subtler 21st century versions of archaic early 20th century ways of thinking about the world, the ordering (sometimes considered “divine” ordering) of the world and one’s position within that ordering.  They are rooted in racist, sexist, and imperialistic  perspectives.

This is why I believe the 21st century will not be the age of neo-liberal economic globalization but the age of a different kind of globalization.  A globalization in which we, the descendants of Martin Luther King Jr., Gandhi, Franz Fanon, and other anti-colonialist leaders will finish the struggle that they began in the 20th century: a struggle for decolonialization which is, after all, a struggle for authentic freedom.  Not the freedom to exploit others, which is a psuedo, one-sided, capitalist-based notion of freedom but the freedom from the exploitation of others.  It is a freedom that is indistinguishable from equality and equity.  It is a more nuanced, democratic concept of freedom.  It is a freedom that is particularly 21st century.  It’s the new freedom and I believe it will become the basis of a new globalization