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Global Poverty and Progressive Politics

By Thabo Mbeki

10 July, 2003

All thinking people throughout the world recognise the fact that global poverty constitutes the deepest and most dangerous structural fault in the contemporary world economy and global human society. Recognition of this fact is not an exclusive preserve of progressive politics. All thinking people throughout the world agree that the elimination of this structural fault requires sustained economic growth and development in the areas of the world defined by poverty.

These thinking people agree that various macro-conditions have to be met to create the possibility for such sustained and adequate economic growth and development to take place.

These refer to such matters as democracy, good governance, rule of law, property rights, contract law, etc. They also relate to macro-economic policy and practice, including such matters as fiscal and monetary policies, the labour market, international trade policies, policy predictability, and so on.

There would also be general agreement that the first driver of the growth and development process is capital investment. Without new capital formation, there can be no growth and development. Further, all these thinking people would agree that in contemporary society, the capital needed for this growth and development is privately owned, and that the publicly owned fraction of capital is but a tiny proportion of the stupendous volumes of capital in the global economy.

The general agreement about the necessary macro-conditions therefore relates to the agreed specific requirement that the appropriate climate should be created to encourage the private owners of capital to put this capital into the areas where such macro-conditions exist, especially the poor countries.

Immanent within this, is the recognition and acceptance of the fact that in its functioning and reproduction, capital, as distinct from capitalists, is not informed by any sense of social responsibility. It has no soul. Money and its multiplication constitute its motive power.

No thinking person would therefore contest the view advanced by political economy from its foundation, that profit maximisation is a necessary condition for the existence of capital. Without this, capital dies and humanity perishes.

The universally accepted proposition that the necessary macro-conditions should exist, to ensure that new capital formation takes place, is therefore an admission that the possibility has to be created everywhere, for capital to make such profits as it would consider acceptable to itself.

Again, none of the foregoing is a peculiar feature of progressive politics. What has happened is that ‘market economics ’has acquired the character of a universal and self-evident truth. The objective reason for this is the recognition by the human universe that capital, the first driver of the process of economic growth, development, and the generation of the means to ensure human survival, is privately owned. In this condition, capital, ‘the market’, has its own innate logic, its own objective process of development, which is independent of human consciousness.

In this sense, capital dictates the rules that human society sets itself, to ensure that capital is able to reproduce itself. This is the reason for the universal victory of the neo- liberal/conservative economic paradigm.

Human beings have consciously observed, studied and theorised about the regularities of the functioning of capital for more than two centuries. This gave birth to the academic discipline of the political economy or, more narrowly, economics. In essence, the practitioners within this discipline have sought to interpret and predict the behaviour of capital as an objective, material factor in the evolution of human society, as opposed to those factors that are subjective and spiritual. In the process, they have elaborated a body of ‘knowledge ’,two of whose features are assertions about the predictability of the behaviour of capital, and its tendency towards ‘equilibrium ’. According to the theoretical construct that asserts this tendency, it is possible to determine what capital would do given specified conditions. Further, this capacity to predict is based on the philosophically correct proposition that to arrive at the unknown, logic demands that one must start from the known. In this instance, ‘the known ’is that the life imperative of capital is profit maximisation.

The rest of the architecture of the equilibrium thesis consists essentially of an attempt to predict the behaviour of capital in any situation of a changing balance in the variables that dictate its decisions. Theoretically, such predictions would be right or wrong depending on whether political economy/economics has properly captured all the relevant variables, and correctly interpreted the outcome of their dynamic action and interaction. Because, in principle, ‘sufficiently complete knowledge ’of the variables is achievable, it becomes possible to elaborate sets of rules/predictions about the behaviour of capital, which are, in reality, rules about how human society should respond to the dictates of capital.

This brings us back to the first proposition we made – that global poverty constitutes the most challenging structural fault in the contemporary world economy and global human society. Logically, this means that the correction of this fault has to be at the centre of the politics, policies and programmes of progressive politics.

Progressive politics must therefore answer the question – what is to be done?

It is in the provision of answers to this question that progressive politics would break ranks with the neo- liberal/conservative paradigm, and thus determine what is unique about itself.

This paradigm represents the political (subjective)expression of the rules and regularities of ‘the market ’. Consistent with the logic of the market, it correctly emphasises the ‘private ’,as opposed to the ‘public ’,the individual, as opposed to the collective, the individual versus the state. Thus society becomes an agglomeration of atomised individuals, connected to one another only by the reality that to achieve their individual and competing objectives, they have to interact with one another as such competing individuals. Necessarily and perfectly understandably, it accepts the reality of private ownership of capital and the private acquisition of the gain from the reproduction of capital, by its owners, understanding that each owner succeeds only to the extent that he or she is not overwhelmed by his or her competitors. Even countries have the responsibility to aim for and achieve international competitiveness.

It then transposes this into a proposition about the imperative for society as a whole to organise itself such that each individual lives only for personal gain and fulfilment, on the basis of the principle inherent in the operation of capital and ‘the market ’, of each for himself or herself, and the devil take the hindmost. Thus ‘the market ’becomes the great leveller, the cold, dispassionate and undiscriminating instrument for the achievement of the goal of human equality, giving an equal possibility to all to succeed or fail. The neo -liberal/conservative political ideology therefore proposes, logically, that to achieve this democratic goal of egalité , ‘the market’ must be given free reign to operate as it will.
This endows capital, ‘free enterprise’, with the imminent capacity to produce the greatest good, both in politics and in the economy, creating the optimal, humanly possible result, with regard both to the political rights and the economic welfare of the individual. And so it becomes possible to proclaim the edict – woe unto all those who oppose and act in contradiction of this eternal truth!

To be itself, and have any real meaning, progressive politics has to make the determination that it disagrees with these propositions. It must disagree with the assertion both about a market tendency towards equilibrium, as a beneficial quantum, and the objective regularity within this market to deliver the greatest good.

Fortunately, there is sufficient empirical information to substantiate these conclusions. The neo-liberals and conservatives would contest, fiercely and vigorously, any statement of these conclusions by prominent representatives of progressive politics. They would respond in this manner because they consider any proposal to intervene in the market, against its ‘natural’ rules, as a punishable act of heresy.

Capital would join them in this war, through the involvement in this struggle of the individual owners of capital, who are the earthly personification of capital, as Christ was of the Creator.

In his novel Hard Times ,Charles Dickens warned about the dangers of interfering with ‘the market ’.He wrote: “Surely there never was such fragile china-ware as that of which the millers of Coketown were made. Handle them never so lightly, and they fell to pieces with such ease that you might suspect them of having been flawed before. They were ruined, when they were required to send labouring children to school; they were ruined when inspectors were appointed to look into their works; they were ruined,when such inspectors considered itdoubtful whether they were justified in chopping up their people with their machinery; they were utterly undone, when it was hinted that perhaps they need not always make quite so much smoke …Whenever a Coketowner felt he was ill-used – that is to say, whenever he was not entirely left alone, and it was proposed to hold him accountable for the consequences of any of his acts – he was sure to come out with the awful menace, that he would ‘sooner pitch his property into the Atlantic ’.This had terrified the Home Secretary within an inch of his life, on several occasions.”

A century-and-a-half after the publication of Hard Times ,the whole world, and especially the poor, is as petrified out of its native wits, for fear of losing the favors and residence of the property of the ‘millers ’,as were the British Home Secretaries.

To ensure that nobody does this, the injunction is issued that all and sundry must abide by the rules of liberalisation, deregulation, privatisation, absolute protection of private property rights, and all else that would not give cause to the owners of productive property to issue and carry out the threat to pitch their property into the Atlantic, or, in the globalization era, move it to another, less intrusive and threatening location.

If progressive politics decides to challenge this injunction, it has to be made of much sterner stuff than the British Home Secretaries of Charles Dickens’ days. Do the progressive politicians have the necessary courage?

They need it because they have to present the reality, boldly and frankly, that it is impossible to solve the problem of global poverty solely through reliance on ‘the market ’.

Simply put, the poor do not present themselves as an appropriate object of attention by capital, whose inner logic is the maximisation of profit.

Billions across the world, including Africa, are too poor and underdeveloped to achieve full and beneficial integration into the global market, even if they succeed in creating the macro-conditions supposedly attractive to capital.

These are billions of people who, in other circumstances, are described as ‘unbankable’ .Something else, in addition to self-beautification, and outside the possibilities of ‘the market ’,must happen, to make these poor multitudes ‘bankable ’.

Happily for progressive politics, the European Union (EU)has found the practical answer to this challenge. And the EU response makes the direct statement that, with regard to poor areas, it is irrational and unreasonable to expect ‘the market ’to prepare the material, market conditions it needs, that would enable it to come to such areas, as attractive investment target areas.

To ensure the very cohesion and survival of the Union, the EU had to ensure the advancement of the most underdeveloped and poorest areas within the Union. Accordingly it set up a comprehensive system of ‘structural funds ’.These are for the specific purpose of transforming regions among the EU member states that, because of their levels of poverty, cannot easily come into the ‘market system ’,ensuring access to private capital.

The necessary programmes are being implemented, based on the correct proposition that some regions within the EU are too poor to be expected to depend on private capital for their development. What has to be done is that public capital has first to be invested in these regions, to prepare them for the possibility of being attractive to private capital. This has led to the establishment and use of EU public sector ‘structural funds ’.

Reporting on an interview it conducted with the Portuguese Foreign Minister, Antonio Martins da Cruz, the Financial Times of 21st October 2002,wrote: “Portugal ’s most difficult political and diplomatic battle of the decade will begin in earnest in 2004,says António Martins da Cruz …That is when formal negotiations start on the next six-year package of European Union funds. ‘The principle of economic and social cohesion between member states must be upheld as the community expands from 15 to 25 countries, ‘he says.‘(Despite this),the EU has to do everything possible to maintain the flow of funds to Portugal. They are essential for our development.’’’ “EU structural funds, amounting to more than EUR3bn a year, have played a crucial role in the modernisation of Portugal. They have helped lift GDP per capita from 53 per cent of the EU average to 74 per cent since Portugal joined the community in 1986.”

Africa is much less developed than Portugal. She has greater need of the official, non-private sector capital that the Minister correctly assessed as being essential for the development of Portugal.

However, Africa ’s development partners tell her that for her own development, she must depend almost exclusively on private sector capital. Little else is being done to assist the process of her beautification, with significant inflows of public capital from the partner countries that have unimaginable volumes of capital, both public and private.

To add insult to injury, she is also expected to service the debt she owes to these countries, exporting capital she does not have, compete with their heavily subsidised agricultural products, absorb continuously adverse terms of trade, finance the achievement of ‘standards ’of behaviour set by capital, with money she does not have, negotiate with these countries complex agreements without any capacity to negotiate, and so on.

What Africa and the poor of the world say to their development partners is – do with and for us, what you do with and for yourselves. If Portugal and other regions within the EU need ‘structural funds ’,as they do, how shall the similar and far greater need of Africa and other countries of the South be met?

If this question is not answered honestly and practically, the structural fault in the world economy and human society will grow ever wider, with incalculable consequences for all humanity. Only, and only, a vigorous, sustained and successful intervention by the school of progressive politics will save humanity from the impending catastrophe. This is the central challenge confronting the global progressive movement today.

The progressive politicians of our time will have to demonstrate whether they have the courage practically to define themselves as progressive, recovering their historic character as true champions of the poor, and break the icy ideological grip of the skinny hand of rightwing politics, in the interests of the poor of the world.

The billions of African and world masses are watching and waiting, including those in the developed world, hoping and praying that a progressive agenda will emerge as the defining feature of the process of globalisation. Nobody knows how long they will watch and wait.

Thabo Mbeki is the President of the Republic of South Africa.