Introduction
In the age of globalization, the gap between high and low income countries is not only persisting, but in many cases it is widening, as the OECD (Organization for Economic Cooperation and Development)[1] has shown in its study of Luxembourg. While the existence of such a divide is unquestionable, its origins, structure, and consequences are not. Could one, for example, securely say that income gaps lead to conflict? Is it possible to relate intractability to this divide? Rather than answer these thorny questions, this article explores the debate with the aim of identifying its key arguments. But first, it is necessary to clarify some concepts.
Poverty, Inequality and Welfare
Poverty: Poverty has been approached in both absolute and relative terms. "Absolute poverty" is a measurable quantity referring to a lack of the basic resources needed to maintain a minimum of physical health, normally calculated in calories or nutritional levels. "Relative poverty" has a qualitative dimension. It refers to general standards of living in different societies, taking into account culturally sensitive interpretations of poverty, and variations between and within societies over time.
Inequality: For those concerned with social policies and economic growth, inequality is normally interpreted as lack of equality of condition, that is lack of achievement of any given welfare indicator (e.g. income, consumption) or any valuable attribute of a population. For example, the larger the difference in income between a country's rich and poor, the larger the inequality. Note that reduction of poverty levels within any given society may not imply a reduction of inequality, because all classes in society may benefit simultaneously from economic growth, keeping the same proportion among them. While it seems clear that inequality is undesirable, there is a great deal of debate over the desirability of total equality. One debate over equality questions is the meaning and value of concepts such as class, status, power, and authority. These cannot, it is argued, be completely equalized without suppressing other values such as personal freedom and individualism.
Welfare: It has a much broader meaning, referring to the general state of well-being that an "entity" enjoys. Here, "entity" can be taken as a person or as a state, thus one can speak in terms of "personal well-being" or "welfare of the state."
Economic Logic and the Development Discourses
William Ury begins explaining his role in trying to prevent a civil war in Venezuela, where the country is extremely polarized between those who support the president and those who oppose him. Like many other countries, it is essentially a conflict between the 'haves' and 'have nots.'
|
Classical economists have been largely influenced by Kuznet's 1955 postulate that suggests that in the early stages of economic growth in developing countries, inequality will tend to worsen, while at later stages there will be a better distribution of income.[2] Therefore, inequality, as well as poverty, Kuznet argued, could be tackled by efficient economic policy -- in other words, by rational development.
Though Kuznets's hypothesis influenced the study of income distribution for nearly four decades, others had previously established a direct casual relationship between economic development and overall betterment in people's life. This connection gained international political meaning on January 20, 1949, the day President Truman took office. In his Inaugural Address, Truman[3] said:
We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. The old imperialism -- exploitation for foreign profit -- has no place in our plans. What we envisage is a program of development based on the concepts of democratic fair dealing.
As Sachs[4] notes, Truman's speech "created" underdevelopment, by attaching a positive meaning to America's political institutions, which were built on "scientific advances and industrial progress." Development, then, could be achieved through science and material progress. The president also pointed out how politics and economics should work together to achieve development through "fair dealing."
For two at least decades, this rationalist view of development informed aid assistance to Third World countries. Underlying these ideas was the Weberian concept of modern (rational, urban, disciplined) versus traditional (superstition, rural, undisciplined). Weber's "spirit of capitalism" defined a life-style that reconciled discipline, diligence, and moderation, a rational hard-working principle necessary to turn "peasants into laborers."[5] The physical distance from the natural environment, and the very nature of non-agricultural activities, would disperse superstition, an essential characteristic of traditional/rural societies. Thus, development thinking rewarded rational behavior, linked to urban entrepreneurship and capitalist development.
It was only at the beginning of the 1970s that this development model was challenged within the circles of classical economics. Robert S. McNamara, then president of the World Bank, questioned the usefulness of economic definitions of development, and opened an avenue for a more humanist way of thinking that emerged later in the decade when the International Labor Office sponsored the "Basic Needs Approach."
Since then, development theories have changed character: they have begun to consider human dimensions involved in economic development, and questioned the real meaning of "development" to the poor. Welfare economists, such as Amartya Sen, have forcefully introduced new concepts, such as human-centered development. The concept of "empowerment" has also become central in the analysis of developing countries, which many prefer to call Less Developed Countries (LDCs).
At the same time, classical economists[6] have proven, with observations from 108 countries, that there is no support for Kusnet's hypothesis that inequality falls as economic development advances.[7] Therefore, there is a growing perception that the main casual relationship between inequality and economic growth is in fact the opposite: inequality is likely to obstruct the rate and quality of economic growth. It is therefore possible that a country could continue its economic development regardless of the inequalities its economy produces. Growth with inequality is an explosive mixture, one in which the very rich and the very poor live side by side in large urban centers. This fuels many forms of social conflict.
Double-standard "free" trade
Since Truman's inaugural words, the capitalist system has logged an incredible number of achievements. The technological revolution has brought a new standard of wealth, health and comfort to the peoples of First World countries, as well as great accomplishments in LDCs. According to E.A. Brett, these achievements have been possible due to a new institutional framework that supports "competitive markets, political freedoms, universal education, encourages objective scientific research, allows social and political criticism, and provides safety nets to reduce risk and deprivation."[8]
But Brett also observes that these achievements come with conflict. "Reducing scarcity," says Brett, "has created a crisis of sustainability as our propensity to consume exceeds our capacity to conserve diversity and control wastes; removing national barriers has exposed poor and ill-equipped peoples to the threats as well as the benefits of free trade and competitive markets; globalizing communications has reduced cultural diversity and exposed everyone to the temptations of an often materialistic and trivial international media industry."[9] In addition, Brett analyses the demands of competition in the capitalist setting, transforming workers into workaholics, with implications for stress-related illnesses, family breakdown, and the loss of traditional values and community solidarity.
The internationalization of the economy has had a direct impact in one of LDCs most important sectors: the international trade in agricultural and livestock commodities. Lagging behind in terms of industrialization, it is in the commodity market that LDCs may be competitive due to innate comparative advantages such as weather, soil, specific products, and labor costs. It is by commercializing their natural products, either raw or (semi) processed, that LDCs may achieve a balance of trade surplus. However, it is also in the agricultural markets that rich countries' policies have been most contradictory.
For example, global cotton prices have fallen by 50 percent since the mid-1990s. According to an Oxfam report,[10] when adjusted for inflation, prices are now lower than at any time since the Great Depression of the 1930s. However, as the study points out, despite its rhetoric of economic liberalism, the United States' cotton subsidies give its cotton producers an unnatural place in world market. It is only because of these subsidies that U.S. cotton is globally competitive. "Every acre of cotton farmland," says Watkins, "attracts a subsidy of $230, or around five times the transfer for cereals. In 2001/02 farmers reaped a bumper harvest of subsidies amounting to $3.9 billion -- double the level in 1992."[11] This is larger than the entire USAID budget for Africa's 500 million people, and also larger than the entire GDP (Gross Domestic Product) of a country like Burkina Faso.
The problem is not liberalization of trade. As McKay et al. have discussed, trade liberalization "can have significant impacts on poverty which may be either positive or negative."[12] Liberalization may have positive impacts in the long run because, "it stimulates broadly based economic growth." Nevertheless, as the authors state, "it can still have significant adverse effects on particular groups...especially in the short term."[13] The problem is "double-standard" liberalism, one which may spread the gospel of democratic free trade, and at the same time put people's livelihoods at risk
This is also the case with the European Union's Common Agricultural Policy, which, among other roles, protects the income of its member nations' dairy farms "through a system of price support, production quotas, import restrictions, and export subsidies."[14] According to Fowler et al, "milk production is the most important agricultural activity in the majority of EU member states," and is particularly important in France, Germany, the Netherlands, Ireland, Italy, and the UK, representing around 14 percent of agricultural production, or $38 billion, and involving 600,000 farmers.[15]
Arguing the need to attend to its own internal market, the EU introduced a system of production quotas in 1984, which was set at 120 million tons of milk per year. This is 110 per cent of today's domestic consumption, which means that a large export surplus was built into the quota system. In addition, the dairy sector receives subsidies of around $16 billion -- 40 percent of dairy production. This is, says Fowler, "equivalent to more than $2 per day per cow. Half the world's people live on less than this amount."[16]
The damage is twofold. First, within the EU, subsidies are monopolized by the dairy processing and exporting industries, which have concentrated production, transportation, distribution and trade at the expense of the small farmer. So, "the number of EU dairy farmers has fallen by more than 50 percent over the past decade, while average herd size has increased by 55 percent."[17] The same concentration of production at the hands of large transnational companies effects LDCs. Low-priced dairy products from the EU are shipped to countries like Jamaica, Dominican Republic, Argentina, and India where they undermine local small-scale production.
The cases of U.S. cotton and EU dairy subsidies are just two examples of how economic globalization has benefited a few large companies and producers while damaging the small, mostly in developing countries. There are many other cases in the commodity sector as well as in the financial sector. However, the core discussion here is whether, and how, this state of affairs leads to social conflict.
Rich-poor relations and social conflicts
The development discourse and practice has been based on a rational approach that assumes that economic growth benefits all society, reducing both poverty and inequality. "Good" development, moreover, would be achieved by those LDCs that follow Western political institutional models, echoing Truman's view of "development based on the concepts of democratic fair dealing." However, it is clear that in at least two sectors important to rich countries, cotton and milk, the dealing has been far from fair.
This may have some implications for social conflicts in LDCs. Recent research carried out for the World Bank by Fajnzylber et al., for example, claims to have found substantial evidence indicating a sharp increase in violence during the last decade of ever-increasing globalization.[18] This violence was measured using recorded homicide rates in both the two poorest regions of the world (Latin America and sub-Saharan Africa), and where growth of inequality has been fastest (Eastern Europe, Russia, and Central Asia).
Additionally, econometric research on Brazil carried out for the World Bank has found increasing demand for public safety in both poor and richer neighborhoods.[19] These studies show that both poverty and inequality have risen in the last decade. By 1998, 1.2 billion people still lived on less than a dollar a day, and 2.8 billion on less than two. If so, the "quality" of development has been widely compromised. A development that takes place without "quality," that is, without fairness, is a development undermined by intense and diverse forms of social conflicts.
While figures on crime may illustrate the situation, there are dimensions to current relations between rich and poor countries that both reveal the depth of inequality between the two as well as possibilities of transforming or resolving this disparity and its resulting social conflicts.
First, the dual behavior of rich countries has undermined LDCs' faith in the possibilities of alternative dispute resolution (ADR) methods. This is partially because dispute settlement mechanisms existent at the global level (like those from the World Trade Organization -- WTO), have not been able to counter rich-countries' biased trade policies. Also, the Western framework of democratic institutions that has given support, and meaning, to economic liberalism and therefore to "fair dealing" has itself been called into question. There is therefore a vacuum of meaning in Western democratic institutions that support ADR.
Second, expanding inequality has reinforced the power of local elites in LDCs, who, in many cases, achieved prominence under a colonial power. The situation today could be called a "new colonialism" with two levels. The first level involves the power of the rich over the majority of the poor. The second has to do with the use of that power in relation to globalization: within the unstable political and economic setting of LDCs, inside information is vital for international businessmen. Those who hold economic, political and/or informational power in LDCs are in a position to channel investment and/or development where they want. The overall result is an even larger imbalance of power, which restrains fair negotiation and conflict transformation/resolution practices. To some extent, local-scale rich-poor conflicts mirror the conflicts between LDCs and the rich nations.
Third, the contradiction between rich nations' development aid intentions and their actual trade practices has a negative result among LDC populations. A country's commercial practice, like its culture, can be, rightly or wrongly, identified with its people's beliefs. American trade practices, for example, are the practices that Americans supposedly defend. It could be argued, therefore, that the attacks on the World Trade Center and the Pentagon were attacks on what the perpetrators' identified as symbols of the main source of LDCs' growing poverty and inequality: American trade policy and its military.
Development economics also have to do with human values. Globalization brings about a change in people's lifestyles and behaviors. Forms of alternative income earning have grown faster than formal and secure employment. Global companies have maintained control over planning, and sent to LDCs all stages of production that involve financial and human risk. Life in LDCs has become more unstable, generating and/or expanding many different types of conflict, from crime to intra-household violence, from environmental destruction to unfair competitive practices in human relations and commerce.
Finally, the logic of globalization tends to homogenize once diverse institutions and the cultural frameworks derived from them. This brings conflict in different forms, as local culture institutions and structures have to adapt or risk dying out. This includes ADR practices themselves: their introduction in LDCs may become a source of conflict if indigenous forms of negotiation, based on local values and cultures, are not taken into account.
This list is not complete. Inequality has more faces and more links to social conflict than this paper has the room to discuss. The issues raised here -- the connections between peoples' welfare and social conflict at both local and global levels -- deserve further analysis.
[1] OECD, Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study (Paris: OECD, 1995).
[2] S. Kuznets, "Economic Growth and Income Inequality," American Economic Review 45, no. 1(1955): 1-28.
[3] Harry S. Truman, "Inaugural Address, January 20, 1949," in Documents on American Foreign Relations (Connecticut: Princeton University Press, 1967).
[4] Wolfgang Sachs, ed., The Development Dictionary -- A Guide to Knowledge as Power (London: Zed Books, 1995).
[5] Weber M., The Protestant Ethic and the Spirit of Capitalism, (London: Unwin University Press, 1971).
[6] K. Deininger and L. Squire, "A New Data Set Measuring Income Inequality," World Bank Economic Review 10 (1996): 565-591.
[7] See international inequality database at http://www.worldbank.org/research/growth/absineq.htm.
[8] E. A. Brett, (2000) "Development Theory, Universal Values and Competing Paradigms: Capitalist Trajectories and Social Conflict," LSE Development Studies Institute -- Working Paper Series No. 00-02, (London: London School of Economics, 2000), 20.
[9] Ibid.
[10] K. Watkins, "Cultivating Poverty -- The Impact of U.S. Cotton Subsidies on Africa," Oxfam Briefing Paper 30 (Oxford: Oxfam, 2002).
[11] ibid, 2.
[12] A. McKay and others, "A Review of Empirical Evidence on Trade, Trade Policy and Poverty - A Report to the Department for International Development (DFID), prepared as background document for the Second Development White Paper," mimeo (London, DFID, 2000), 45.
[13] ibid, 45.
[14] P. Fowler and others, "Milking the CAP -- How Europe's dairy regime is devastating livelihoods in the developing world," Oxfam Briefing Paper 34 (Oxford: Oxfam, 2002), 4.
[15] ibid, 4.
[16] ibid, 7.
[17] ibid, 2.
[18] P. Fajnzylber, D. Lederman and N. Loayza, "Determinants of Crime Rates in Latin America and the World," World Bank Latin America and the Caribbean Viewpoints Series Paper (Washington, D.C.: World Bank, 1998).
[19] M. Pradhan and M. Ravallion, "Demand for Public Safety," Free University and the World Bank, mimeo (Washington, D.C., World Bank, 1998).
Use the following to cite this article:
Barbanti, Jr., Olympio . "Rich / Poor Conflicts." Beyond Intractability. Eds. Guy Burgess and Heidi Burgess. Conflict Research Consortium, University of Colorado, Boulder. Posted: October 2003 <http://www.beyondintractability.org/essay/rich_poor/>.
Sources of Additional, In-depth Information on this Topic
Additional Explanations of the Underlying Concepts:
Online (Web) Sources
Breaking the Cycle of Hunger and Conflict. 2003.
Available at: http://www.aworldofpossibilities.com/details.cfm?id=46.
Hunger leads to conflict which leads to civil disorder which leads to more food shortages. Breaking this cycle is the topic of discussion for Mark Sommer and guests Andrew Natsios of the United States Agency for International Development and Peter McPherson of Michigan State University.
Offline (Print) Sources
Barbieri, Katherine and Gerald Schneider. "Globalization and Peace: Assessing New Directions in the Study of Trade and Conflict." Journal of Peace Research 36:4, July 1, 1999.
"Much empirical work supports the claim that the relationship between trade and conflict is direct and not mitigated by contextual factors. We review the different controversies on the link between economic interdependence and militarized disputes and outline some major challenges that have not yet been adequately dealt with in the scientific study of war and peace."
--Sage Publications
Friedman, Thomas L. The Lexus and the Olive Tree: Understanding Globalization. Anchor Books, May 2, 2000.
"Friedman, the well-traveled New York Times foreign-affairs columnist, peppers The Lexus and the Olive Tree with stories that illustrate his central theme: that globalization--the Lexus--is the central organizing principle of the post-cold war world, even though many individuals and nations resist by holding onto what has traditionally mattered to them--the olive tree. Problem is, few of us understand what exactly globalization means. As Friedman sees it, the concept, at first glance, is all about American hegemony, about Disneyfication of all corners of the earth. But the reality, thank goodness, is far more complex than that, involving international relations, global markets, and the rise of the power of individuals (Bill Gates, Osama Bin Laden) relative to the power of nations." (Amazon.com review)
Return to Top
Examples Illustrating this Topic:
Online (Web) Sources
A Nation Divided?. PBS (Public Broadcasting System). March 2, 1998.
Available at: Click here for more info.
The 1968 Kerner Commission Report found that races in the U.S. were becoming more separate and unequal. A newly released report says the situation has worsened. This page provides a transcript of a discussion on the debate over the state of racial equality and what should be done to improve the situation.
Bootstrap Leadership: Overcoming the Psychology of Poverty. 2004.
Available at: http://www.aworldofpossibilities.com/search_results.cfm.
An interview with Gail Aska, Diana Bustamante, Paul Getsos, Sarah Ludwig, Joan Minieri, Kalia Mullin, and Diana Spatz. Condemned by circumstances to lives of poverty and apparent helplessness, some people refuse to accept such a fate and decide instead to make their own destiny. Join us for an exploration of a different kind of leadership demonstrated by those who've shed their victimhood and taken a stand for themselves and one another in self-reliance and material support.
Global Poverty Report 2001: A Globalized Market - Opportunities and Risks for the Poor. World Bank.
Available at: http://povlibrary.worldbank.org/library/view/4757/.
This is the World Bank/IMF 2001 poverty report, in which they analyze the effects of globalization policies on poverty in four world regions: Sub-Saharan Africa, Asia and the Pacific, Eastern Europe and Central Asia, and Latin America and the Caribbean.
Goulet, Denis. "Inequalities in the Light of Globalization." , October 2002
Available at: http://www.nd.edu/~krocinst/ocpapers/op_22_2.PDF.
This paper addresses a set of questions related to globalization and the associated increase in global economic inequality. "Great inequalities have risen alongside increasing globalization in recent years, giving rise to the question: what is the relation between the two? Inequalities have always existed, and are not caused directly by globalization, which serves as the vehicle of flawed development." -abstract
"Since the Reagan Revolution."
http://www.cambridgeforecast.org/oldessays/Reports.htm.
This chapter describes how global rich/poor relations have been at the forefront of historical change from the "Reagan revolution" to the present.
Pfannl, Emilia R. The Other War Zone: Poverty and Violence in the Slums of Brazil.
Available at: Click here for more info.
This article examines the links between inequality and violence in Brazil.
The World Bank Group.
Available at: http://www.worldbank.org/.
"The World Bank is one of the world's largest sources of development assistance. Its primary focus is on helping the poorest people and the poorest countries. This site provides an overview of how the Bank uses its financial resources, its highly trained staff, and its extensive knowledge base to help developing countries onto paths of stable, sustainable, and equitable growth."
-website
van de Veen, Hans. "Uganda: Explosive Mix of Problems Could Re-ignite Civil War." , 2000
Available at: Click here for more info.
This article discusses the state of Uganda in the aftermath of years of off-and-on civil war. The author details events and dynamics in Uganda that could potentially lead to another security breakdown after several years of relative stability.
Offline (Print) Sources
Rigby, Andrew. ""Gram Swaraj" versus "Globalization"." Peace and Change 22:4, October 1, 1997.
"Since 1991, India has been pursuing macroeconomic policies of liberalization and globalization, the main costs of which have fallen on the poorest sections of society. Popular movements of resistance and the positive vision of "gram swaraj." This paper focuses on one such movement, the opposition to the spread of aquacultural enterprises along the southeastern coast of India. The continuities between the values embodied in the concept of "gram swaraj" and the themes of contemporary advocates of alternative patterns of sustainable development are highlighted. The paper concludes by exploring the significance of the linkages established between the grass-roots movements of resistance in the South India and transnational campaigns and movements." Blackwell Publishers
Moran, Theodore H. Beyond Sweatshops: Foreign Direct Investment and Globalization in Developing Nations. Washington, DC: The Brookings Institution, June 1, 2002.
"In Beyond Sweatshops, Theodore Moran examines the impact of FDI in manufacturing on growth and welfare in developing countries, and explores how host governments can take advantage of the contributions of foreign investment while avoiding the hazards to lower-skilled workers." -Amazon.com review
Stiglitz, Joseph E. Globalization and Its Discontents. W.W. Norton & Company, June 2002.
With this work Stiglitz, a Nobel Prize winner, Columbia University economics professor and former economist in the Clinton Administration, offers his analysis of the economic reprecussions of goloblization. He employs case examples from East Asia and Russia to demonstrate his critical view of globalization. He attempts to answer why so many revile the programs of the International Monetary Fund, the World Bank and the World Trade Organization programs, to the point of rioting in the streets.
Whose World Order?: Uneven Globalization and the End of the Cold War. Westview Press, February 1, 1995.
"In this volume, an international cast of contributors comes together to share regional perspectives on questions about peace and security, economic growth and welfare, and democracy and civil society in the post-Cold War world."
Return to Top
Audiovisual Materials on this Topic:
Offline (Print) Sources
A Narmada Diary . Directed and/or Produced by: Patwardhan, Anand and Simantini Dhuru. First Run Icarus Films. 1995.
This film documents a grassroots movement against the development of a dam in India that highlights the issue of development versus environment. Click here for more info.
El Otro Lado / The Other Side . Directed and/or Produced by: Webb, Alex. First Run Icarus Films. 1993.
This film looks at the Mexico-US border from the perspective of those living on both sides it. Click here for more info.
Four Voices . Directed and/or Produced by: Yates, Pamela. First Run Icarus Films. 1988.
This film looks at the grass roots activities that are being done in an effort to improve four of America's poorest communities: the Assiniboine/Sioux Indian Reservation in Montana; the Black Belt area of Alabama; the Appalachian Mountain region of Tennessee; and the South Bronx section of New York. Click here for more info.
Isle of Flowers. Directed and/or Produced by: Furtado, Jorge. First Run Icarus Films. 1990.
This film begins with a glib look at life on a Brazilian island, but soon turns sober as it examines the morals, values, and attitudes the wealthy have about poverty, when we see people feed their pigs and then give what is left to the poor. Click here for more info.
Jagriti / The Awakening. Directed and/or Produced by: Ramaswamy, Jugnu. First Run Icarus Films. 1991.
This film gives an insight into what aid organizations encounter in their quest to deal with situations involving humanitarian crisis. Click here for more info.
Return to Top
|
