Changing the Terms of the Debate: A Report from Antigua
Rosen, Fred
As global poverty deepens, doubts have begun to emerge "from within" regarding the marketdriven, neoliberal development model-also known as the Washington Consensus. After 20 years...
...Any new paradigm, argued Joanna Kerr of the Ottawa-based Association for Women's Rights in Development, would have to incorporate a kind of feminist economa 0 4 a O u gate in Villa Fiorito, a shantytown in Buenos Aires...
...Intractable problems, contradictory events, dissonant realizations: Sooner or later something's got to give...
...Sixth, growth is thus uneven, and competition is imperfect...
...On the theme of local development and mutual care, Cuban economist Pedro Monreal commented that among the "possible alternatives that could be explored are the so-called 'associative and self-managed projects,' consisting of measures to allow workers to share in the management of existing firms and the establishment of new worker-managed private firms and cooperatives...
...Nearly half of them were extremely poor or "indigent...
...A lot of the early discussions happened when I was at the Cambridge Program [on Rethinking Development Economics]," related Maldonado after the conference...
...ing is better for an economy than no manufacturing at ly about all...
...The severity of the crisis in the global stakes in the resolution of the sense that a window of opportunity for and implementation of dissident ideas development may be briefly open, led seriousness and mutual tolerance not gatherings of this type...
...Thus, the growing inequality we see throughout the world--acutely in Latin America-may not simply be a negative unintended consequence of the Washington Consensus, but rather an intended fulfillment of its objectives...
...It grows, production becomes increasingly cheaper...
...Or at least to come up with some ideas about what such a paradigm might look like...
...There was once a time when the necessity of state intervention in the marketplace, for any number of reasons, was commonly accepted as a given...
...Bendafia's "addressing the politics of the paradigm" could well be a first democratic step toward Mkandawire's "true development...
...Though the par sented a very broad center-left diversit' positions, differences were addressed r there was a remarkably low level of wide-ranging discussions...
...At the conference, Chang commented that the motto of the wealthy countries that advocate on behalf of the Washington Consensus should be: "Do as we say, but not as we've done...
...If these things were going to take off they would need champions, and if these champions were based in the South, so much the better...
...No 3 NOVEMBER/DECEMBER 2003 27 Vol XXXVII, No 3 NOVEMBER/DECEMBER 2003 27RETHINKING DEVELOPMENT nets, to one that seeks institutionally to strengthen countries' entire social fabric...
...Fred Rosen, Deepak Nayyar A growing proportion of the world's population is experiencing a process that has been referred to by economic historian Erik Reinert as "retrogression and primitivization...
...As such, it is a ga new alterna- model that produces "one-size fits all" policy recomSouth, the high mendations...
...The demand for a change in the dominant i ment model has emerged not only as a result i ing global poverty, but also from the fact majority of economies in the South, desp efforts to integrate themselves into the global e have not-in developmentalist lingo-"tak, During the 1990s, a period of almost unprei accumulation of individual wealth, tl Development Program (UNDP) reports that ( tries, all in the Global South, actually grew pc Latin America, even those countries that l. grown poorer have grown more powerless their Northern counterparts...
...In those days, only some 25 years ago, advocates of the free market were marginalized in international development policy debates...
...This "recovery," this great neoliberal success story, is the legacy of such willful political leaders as President Reagan, Lady Thatcher and General Pinochet...
...activist Second, no country has ever developed on the basis of )erts do...
...Chang has long argued--notably in his * the gathering, book Kicking Away the Ladder-that the "advanced" irector of the countries did not develop by simply employing the he third World tools of the free market, but rather achieved developn Porto Alegre, ment by carefully employing state interventions in Vol XXXVII, No 3 NOVEMBER/DECEMBER 200325 Vol XXXVII, No 3 NOVEMBER/DECEMBER 2003 25RETHINKING DEVELOPMENT order to strengthen their domestic industries and very deliberately build their own comparative advantages...
...It was in these discussions that the closest thing to a full-blown paradigm emerged, a paradigm drawing on the work of the Austrian economist Joseph Schumpeter...
...24RETHINKING DEVELOPMENT million in 1990...
...Participants also explored issues associated with the question of social reproduction, the care and services economies, the roles that women are traditionally assigned in those sectors and strategies for transforming these activities in such a way that would promote social well-being and integral development...
...Ideas are shaped by politics, and not the other way around...
...Fourth, new ideas, knowledge and inspiracial jus- tion create investment opportunities...
...The current debate over First World farm subsidies that anomalously pits the "free traders" of the South (who have been frozen out of global agricultural markets) against the "protectionists" of the North (who insist on subsidizing the exports of their own agricultural sectors) is one such contradiction...
...The gathering was a sober and critical dialogue among 45 development economists, development practitioners and political activists--a quarter of whom were from Latin America or the Caribbean-over the failures and contradictions of the neoliberal develo well as the possibilities for constructing tive...
...Fifth, high growth and techni26 NALLA REPORT ON THE AMERICAS "^"'"'"~"" """'"'"""" ^'^""" 26 NACIA REPORT ON THE AMERICASRETHINKING DEVELOPMENT cal change lead to higher wages and industrial synergies like clusters of producers and linkages between firms in the production process...
...Trying to get policymakers to think different] development," wrote Alejandro Bendafia, Nic...
...This creates an opportunity to rethink what kind of development...
...Ultimately, that's where the policies have to be developed and advocated, by Southern governments...
...And a shift in paradigm -equires a shift in power...
...According to Soros, Brazilian economic policy is made in Washington and it's best not to confront the real policymakers too strongly...
...There were scholars and different networks that were emerging...
...So it happened kind of informally, after a lot of discussions with different scholars who were part of Excluded people can't be consider "leftovers" of modernization our network and different civil society partners who we would engage with...
...Contradictory events also bode poorly for dominant paradigms...
...Uneven development and imperfect competition are dynamic processes and should be encouraged...
...this ssionals, is a much more problematic process with agriculture...
...It was also agreed that global macroeconomic policymaking must be transformed, by moving away from a model based on "economic equilibrium" towards a new model that focuses on development...
...Some blamed them for creating internal debt crises...
...In terms of transforming the )n...
...the simple pres)olicies, ence of capital does not...
...We thought that one way to do this was to help create an international platform that would help bring together all these different strands that were already emerging...
...A small planning committee, drawn from the ACDC participants, has been created...
...He gave a talk with the very Schumpeterian title "From Destructive Creation to Creative Construction," in which, among other things, he raised the question of microfinance...
...What we wanted to do was help create a space that would bring a lot of those strands together on an annual basis--help those different movements build the political and intellectual capital we thought they needed in order to help legitimize the alternative proposals they were recommending...
...A portion of this article originally appeared in the Mexican newspaper La Jornada...
...Held in 1 Guatemala from July 25-28, 2003, the cor billed the First Annual Conference for Deve and Change (ACDC), was convened by the C University-based International Economic Working Group and funded by the Ford Fou Above all, it was meant to create the beginni visible, international platform for alternative "human-centered" ideas, theories and policy proposals for development...
...what kind of model we are trying to construct...
...The Other Canon," wrote Reinert in a concept note, "has been the basis of the economic strategies A child plays behind a chained that have catapulted laggard countries from relative poverty to relative wealth, from 15th Century England to Korea in 1960-1980 and Ireland from 19802000...
...They only have to be fostered and expanded...
...But the presentation of the Schumpeterian paradigm inspired some of the most substantive discussion of the conference...
...Seventh, the dynamic sources of uneven economic development are found in the realm of production, not trade...
...Indeed, the Washington Consensus is a model within which neither history nor concrete political, legal or market institutions exist, in which the historical consequences for an economy that produces sugar and an economy that produces refrigerators are the same...
...In this grim context, a small international co: was organized to discuss the growing misgivil the dominant international development mo, more importantly, to begin sketching out a ne, set of policies that would be more inclusive, and more fully developmental...
...Emphasis, it was felt, should be on the creation of new spaces in which developing countries can pursue their own trade and industrial policies and not on the concept of international harmonization...
...Many for the need to replace this elite process with one that emphasizes Policy chang a bottom-up approach to eco- iS a shift in nomic policymaking...
...Some folks from Third World Network and other civil society networks were involved...
...The entire thing has been a kind of consultative process, an informal process and, for logistical purposes, a small planning process...
...It is also a model that does not take into crisis and the consideration the importance of those institutions necthe expression essary for the construction of a well-functioning econand models of omy, much less the social norms, legal mechanisms or to a degree of diverse structures of Southern economies...
...well, that is where the challenge lies...
...For many practitioners in the development community, it has been particularly disheartening to see entire communities in worse conditions now than when the neoliberal reforms began to be implemented two decades ago...
...And then there is the dissonance caused by an unexpected realization: Last year's open letter, for example, sent by financier George Soros to the Brazilian electorate advising Brazilians to vote against the leftist then-presidential candidate, Lula da Silva...
...ne of the themes around which discussions revolved was the nature of the Washington Consensus, a free-market model that exists, it was generally agreed, at the heights of abstraction, delinked from reality...
...And why rewrite history...
...Thandika Mkandawire, Director of the United Nations Research Institute for Social Development (UNRISD), emphasized the importance of promoting not only economic growth, but also political democracy and social inclusion...
...After all, economic "discipline" and the maintenance of a large supply of labor able and willing to work for low wages was one of the major motors of the North's economic recovery, since stagnated, of the 1980s and 1990s...
...There is an obligation, in economist Monreal's words, "not to treat excluded people as 'leftovers of modernization' or as welfare recipients...
...dominant paradigm...
...The Working Group is now spinning off four processes: three regional training programs and the institutionalization of the ACDC platform...
...Above all, it was agreed that the dominant global trade regime needs to be transformed...
...Outside of the IFIs, there is a growing demand for a transformation of the entire development paradigm, although a clear alternative vision capable of elucidating a new political agenda has yet to emerge...
...he genesis of the conference was informal and somewhat serendipitous...
...We saw there was a need for a similar space, a recognized platform, for scholars and policymakers to get together to try to construct an alternative human-centered paradigm...
...All the orthodoxies are being questioned...
...It is a model that has denied the necessary existence of the field of development economics, because, according to its logic, the rules of economics The conference was held because there is a strategic opening where all orthodoxies are being questioned...
...This alternate set of ideas, referred to by Erik Reinert as "The Other Canon," holds (more or less) as follows: es are not enough, what is required paradigm...
...Michael Chu, a venture capitalist and former CEO of the global microfinance group Acci6n, expanded on this theme...
...Although the idea of local development drew a sympathetic hearing, participants were by no means unanimous in their assessment of the institutions of microfinance...
...Those who have critiqued unregulated markets have been treated as individuals who simply do not understand the !red the dynamics of the "real" world...
...tariff walls are necessary to permit infant industries to develop and inefficient manufacturiy task...
...In the realm of economic policymaking, the changes of the last several decades have been enormous...
...These synergies lead to higher wages for the economy at large...
...One perspective articulated at the conference was that in order to understand the logic of neoliberalism, it was necessary to go beyond its discourse...
...And as global poverty increases, as inequalities between individuals and between countries rise, as community bonds continue to disintegrate, the ACDC platform has set itself the task of elaborating alternative models, capturing the imagination of university scholars and researchers, engaging in a real dialogue with the media and changing the nature of the debate...
...pment model as can be applied equally everywhere...
...The conditions for the creation of what some authors have called a 'popular economy' are already there...
...Moreover, there was a great degree of intro- r spection at the meeting regarding the processes that alienate development professionals from their communities and create a chasm between thos considered "technical" (the work of profession the world of politics (the activities of commun is a standard attitude among mainstream profe, commented Southeast Asian development Shalmali Guttal that "technique is what we exI politics is why it doesn't work...
...He argued that it was now abundantly clear that these three goals (economic growth, democratization and social inclusion) were mutually supportive and, taken together, represent the true meaning of development...
...One of the goals of the y of origins and ongoing platform, insists Maldonado, is to "recapture" respectfully and that history...
...Its continuation, on the other hand, will require a good deal of deliberate effort...
...former UN ambassador, in a concept note prep the conference, "presupposes one of two opt that attaining development with and through so tice is simply a question of adjusting present I or b) that policy changes are not enough, what is required is a shift in paradigm...
...e things First, industrial activities experience increasing .als) and returns to scale, meaning that as an industrial economy ities...
...We therefore must address the politics of the paradigm if we are to understand policy...
...In 2001, there were 220 million poor people in Latin America, who by ECLAC's estimation, could not afford to adequately feed and shelter themselves...
...agriculture alone...
...And a shift in paradigm requires a shift in power...
...Central to that goal is the work of one of conflict in the the conference initiators, Cambridge economist HaJoon Chang...
...As the participants debated the broad parameters of a new development model, a rough consensus evolved around several key points...
...hopefully the process will then take off to have an independent life of its own...
...And I had a discussion with Ha-Joon [Chang] about the need for the creation of a new type of forum...
...There was a strong consensus that long-term development and investment perspectives take precedence over short-term strategies, as should the real economy over the financial...
...ics, an analysis-to begin with-of the articulation of the "care economy" with the market...
...Advocates of neoliberalism prefer to obscure their political objectives behind the mantles of "efficient market theory" and "technical assistance," thereby privileging economists and technocrats in development policymaking processes...
...raaudigiiS oS01 lOUghlt are: gelner- ally driven to crisis points when key problems arise that they cannot solve...
...Earlier this year, the UN's Economic Commission on Latin America and the Caribbean (ECLAC) released its latest figures on hemispheric poverty...
...the trend, on the Wa, Consensus' watch, has been disquieting...
...But policymaking from below is no ea...
...An even stronger consensus emerged on the question of poverty reduction--that the design of anti-poverty policy needs to change from a model that focuses solely on safety Vol XX)(VII...
...The continuing stagnation-slow growth at best-of the Southern economies is one such problem...
...Institutions of microfinance, he argued, can create opportunities for knowledgeable and inspired-but impoverished-entrepreneurs and stimulate synergies, higher incomes and economic growth at the local level...
...That's why it's happening now...
...But if the historical record is distinct from the current rhetoric, what is the point of neoliberalism...
...Soros' letter raised doubts, especially in Brazil, about the necessary identification of "free trade" with "free elections...
...The timing was right, said Maldonado, because "there is a strategic opening...
...It is also a standard legacy of several centuries of colonialism: the deliberate deindustrialization of the colonized to the benefit of the colonizers...
...We thought: 'If only we could target these discussions to the advocacy needs of activist groups.' It is crucial that this kind of critical, historical thinking be accessible to civil society...
...The most immediate inspiration for explained Jerry Maldonado, the d Working Group, was the success of t Social Forum (WSF), held last year ii Brazil...
...This is up from 209 million Latin Americans living in poverty in 1994 and 197 NACLA REPORT ON THE AMERICAS Fred Rosen is an independent reporter and NACLA's Contributing Editor He is currently based in Mexico City...
...It is at the core of the dominant paradigm...
...The WSF, said Maldonado, showed that among a broad spectrum of civil society organizations, there was a clear-cut discontent with the current development paradigm...
...The key, according to this perspective, could be found in relations of power...
...Third, countries should therefore specialize in aragua's "high growth" activities rather than simply filling a ared for global niche in low-growth agricultural or maquila .ions: a) activities...
...It will also put together a special advisory council with prominent figures...
...Over the three days of the conference in Antigua, there were also fertile discussions regarding local development, entrepreneurship, microfinance and the need for generating high quality employment opportunities...
...For the past two decades, the opposite has been true...
...others were wary of the personage, implied by both Reinert and Chu, of the "heroic entrepreneur...
...The 'Free Market' is a political statement, not an economic one...
...For much of the Global South, the situation is desperate...
...always seen in It is a model that has egregiously participated in the ticipants repre- rewriting of economic history...
...Civil society was already proposing a series of alternative recommendations...
...That group will attempt to identify an institutional host-a government drawn most likely from among Brazil, India, South Africa or Malaysia-for the next conference...
...After 20 years of neoliberal hegemony, many within the international financial institutions (IFIs) have begun talking about the modifications of a "Post-Washington Consensus" or of the need for "second-generation reforms...
Vol. 37 • November 2003 • No. 3
