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Clinical Development Economics: The End of Autonomy?
Prescriptions to rid the world of poverty, ignorance, and disease shot to prominence in 2005. Development practitioners, experts, respected commentators, celebrities, and critics sought to influence global economic policy, domestic institutions, and the consumption habits and charitable contributions of individuals in ways that they believed would lead to better lives for poor people. Popular debate on the specific policy changes required to achieve a more equitable world was fueled through the release of numerous major reports on these matters and the political activism of transnational coalitions, whose awareness-raising campaigns achieved their fullest expression to date with the Live 8 global concert. Many of these efforts aimed to influence the Group of 8 Summit at Gleneagles and the WTO Ministerial Meeting in Hong Kong. Their respective agendas contained language about resolving long-standing grievances such as the debt crisis, anemic levels of development assistance, and the lack of special and differential treatment for poor countries in the trading system.
In this trendy policy space each explanation of development problems and the potential ways forward necessarily takes a position on the relative merits of globalization or autonomy. Embedded within liberal establishment opinions on the desirability of freer trade, targeted aid flows, good governance, and the appropriate anti-poverty, social, environmental, and industrial policies are implicit or explicit stands on the need for ever-increasing global economic integration and the universal standards that will ensure an open world. Conversely, left-liberal and more radical thinkers are generally united in their stance that progress towards global justice can best be served through raising the capacity of those in the peripheral zones of the global economy to make their own choices about how to engage with rich countries and corporations, and organize local, national, and regional political economic systems. Policy entrepreneurs on either side of this divide have agreed to disagree, talked past each other, questioned the legitimacy of the opposing camp's research output, and even made attempts to obfuscate the existence of the alternative approach. Few have sought to bridge the two solitudes of the World Economic Forum and the World Social Forum, and fewer still have made such an attempt successfully.
My paper engages with this thorny terrain by reviewing a mainstream liberal point of view on the subject and evaluating its implications for the autonomy of people, cultures, and states at the margins of the global economy. Not to be confused with autarchy or delinking from all foreign economic connections, herein, autonomy is taken to be synonymous with the ability to exercise self-determination in economic affairs. The recent work under discussion, The End of Poverty: Economic Possibilities for our Time, authored by Jeffrey Sachs (2005), is an important example of Davos-style, pro-globalist thinking. It proclaims the irrelevance and uneconomic foundations of autonomous political economic policies in the present era of globalization. In offering up a methodology to identify the barriers to poverty eradication which he terms "clinical economics," and advocating "treatments" to the conditions that afflict the poor, Sachs sings the praises of globalization. Some of his supporters might excuse the ease with which he dismisses the autonomy option. He is, after all, a high status intellectual who has graced the cover of Time Magazine and is the undisputed guru of one of Time's 2005 Persons of the Year, U2 front man Bono. As a monetary expert and consultant to governments experiencing crises, Special Advisor to UN Secretary General Kofi Annan on the Millennium Development Goals (MDGs) and Director of the Earth Institute at Columbia University, he is potentially the most well-known development economist alive today. Sachs might also be forgiven for rejecting the viability of independent economic paths based upon the fact that he has benefited from supraterritoriality, a phenomenon unique to this era of globalization (Scholte 2000).The ascendance of a global space where territory seems to matter less has empowered his prescriptions and bolstered his reputation and career. Nonetheless, his failure to directly engage with the ideas of those that disagree with the means he promotes is significant. This exclusion reinforces the Chinese walls separating Latin America's populist or “Bolivarian" revolutionaries from the market fundamentalists that dominate the pages of the Financial Times. Global policy actors that have previously viewed his works to be the authoritative writings of a disinterested scientist should take note. Impartial observations and programs to engineer a brave new open world do not go hand in hand.
In my view, clinical development economics is a recipe to limit or even end autonomy. Sachs' utopian call for a redistribution of global wealth to eliminate extreme poverty has popular backing and certainly demonstrates his strong moral convictions. Yet his blueprint for identifying and overcoming the barriers to poverty eradication reads like a plan to universalize or modernize the behaviours of peoples, cultures, and states the world-over. Autonomy is seen as a problem to be overcome. Here, as Vandana Shiva notes, off-the-books subsistence or "sustenance producers" must be incorporated into the growth regime and adopt "rational" acquisitive impulses (The Ecologist 1 July 2005). To surmount the financial and social inefficiencies he associates with high levels of state involvement in economies, Sachs indicates that intervention needs to be restricted to measures that facilitate openness and reproduce markets. While he does well to explain the rationales for resource transfers to transcend poverty-generating factors such as adverse geography, poor climates, and under-investment, his concern with turning the Least Developed Countries (LDCs) into growth engines shines through. Like the modernization theorists of the Kennedy era, Sachs understands the diversity of national political economies to be a barrier to growth (Gilpin 2001). Though he does endorse participatory development decision making, this is the case only up to the point that the ideas and institutions adopted reinforce growth in the near term. Truly autonomous, forward-looking paths aimed at rectifying economic structures inherited from colonial times or bringing economies into ecological balance are therefore precluded. In sum, the Western biases of the clinician's action plan, including its definition of poverty, and his assumption that rich states will acquiesce to a loss of relative economic power, ensure that this work is highly idealist and fundamentally imperialist.
To develop the above points, this paper proceeds by reviewing the methodology of clinical economics. It then addresses Sachs' restricted understanding of poverty, and the ethnocentricity of his framework. After identifying the imperialist underpinnings of the project, the argument shows that he has undervalued the role of power in the global political economy by outlining what the richest states continue to do on their own and in concert to reinforce their economic standing. Attention is then focused on Sachs' inability to identify transnational factors that work against the realization of a more equitable world. Finally, taking UN General Assembly Resolutions on autonomy as a guide, evidence is presented that his approach unduly limits the ability of people in the peripheries to self-determine their economic systems.
Sachs professes that his medical analogy, if adopted, would help development economists to avoid advocating the cookie cutter-type solutions that dominated the era of policy-based lending and conditionality. He outlines five key lessons from medicine that he believes would ensure that today's development planning in service of the MDGs is more successful. First, Sachs argues that like humans, economies are complex systems, and that symptoms of distress might reflect dozens of underlying causes. In his view, treatments will have unforeseen effects if such complexities are not taken into account. To ensure the recovery of patients embarking upon treatment regimens, Sachs posits that family support is essential. Convalescence requires the richest members of the global household to cooperate and make concessions. Completing the analogy, he emphasizes the need for effective monitoring and surveillance of the patient and for strong ethical and professional standards amongst those vested with the power to diagnose.
In the End of Poverty, Sachs identifies categories of problems that an ideal diagnosis would take into account. His vision requires a detailed analysis of the factors that reinforce poverty such as spatial concentrations of poor people, demographic trends, cultural characteristics, lack of infrastructure, and environmental risks. Domestic economic policy frameworks must be scrutinized to determine if trade and investment policies are enabling a strong business environment and human capital formation. Public debt, revenues, and expenditures must be tracked and related to poverty reduction targets. The limits of physical geography, including the proximity of populations to trade routes, agronomic conditions, and disease ecology must also be factored into the assessment. Impacts that government failures have had on economic growth such as corruption, violations of civil and political rights, and internal and cross-border conflict must be charted. Finally, cultural barriers such as gender inequalities, ethnic and religious divisions, and geopolitical factors arising from international relations must be accounted for. Taken together, Sachs argues that this diagnostic model will lead to the formulation of solid plans to expand investment and household incomes in the LDCs, two preconditions for eradicating extreme poverty in his view. Under his leadership, the Millennium Project has drawn upon this methodology to identify priority areas in African LDCs such as agriculture, health, education, infrastructure, and water and sanitation.
At first glance, Sachs' clinical economics seems to be quite a departure from his earlier association with a form of economic medicine known in the popular press as "shock therapy." As an advisor to executive branches of government in countries experiencing price instability such as Bolivia, Poland, and the former Soviet Union, Sachs prescribed immediate price stabilization and the re-establishment of currency convertibility to facilitate international trade. He called for the end of price subsidy schemes and the reduction of big government, favouring instead the adoption of market-based pricing, privatization, and the institutions of liberal democracy. In countries where Sachs' advice was acted upon many executive decisions on macroeconomic policy, as well as the economic technocracy in general, were insulated from popular pressures. Deindustrialization, rising inequality, and falling life expectancy followed the imposition of stabilization plans in several instances (The New Yorker 11 April 2005). Although Sachs claims that he pushed hard for debt forgiveness and a program of grants to facilitate transitions in Eastern Europe similar in kind to the Marshall Plan, start-up resources were not secured, and inequities plagued the paths these states pursued subsequent to Sachs' involvement. In light of this record, his support for measures aimed at bettering the lot of the world's poor appears to indicate that he has entered into what Canadian political economist Daniel Drache refers to as "repentance mode" — a proactive effort to make good on avowed convictions more effectively (Drache 2001).
Nonetheless, his new work continues to be imbued with problematic assumptions about modernization. Deploying the exact terminology used by W.W. Rostow in Stages of Economic Growth: A Non-Communist Manifesto (1960), Sachs identifies the barriers to "take-off" plaguing economic laggards. He understands political liberty, social mobility, and household savings to be the pre-conditions to successful modernization. According to Sachs, as these phenomena were increasingly realized, science was more successfully applied to industry in Britain and the wealth-generating modern era ensued. He makes the explicit conjecture that all people around the world were equally impoverished prior to Britain's industrialization and great transformation. Consequently, clinical economics is imbued with a missionary zeal to develop plans that will speed the emergence of the evident "fundamentals" of the British path to sustained growth elsewhere. Sachs does recognize the unique fortune of Britain as regards climate and geography, and his framework plays up the necessity of financial transfers to overcome less favourable conditions in the peripheries. Nevertheless, his strong beliefs about modernity have precluded him from engaging with the argument that in some cases, so-called "pre-modern" institutions might not be all that bad. An impulse to modernize the absolute poor in order to save them remains at the core of his approach.
Given that Sachs is out to liberate certain people from what he considers to be economic backwardness, the issue of just who qualifies for emancipation must be clarified. He asserts that poverty comes in three varieties — extreme, moderate, and relative — and unambiguously states that investments accompanying clinical economic planning are to be limited to ending extreme poverty. Beyond this contention, he notes, the "poor will have to get rich on their own effort." These restrictive understandings are debatable on numerous fronts. For starters, Sachs relies upon the World Bank's poverty head count to argue that there are fewer absolutely impoverished people in countries that have embraced openness. According to Robert Wade's extensive studies, however, there is no way of arriving at a definitive conclusion about the relationship between openness and poverty eradication based upon the Bank's numbers (Wade 2005). The head count is increasingly viewed to be an ineffective guide to poverty as the dollar-per-day measure fails to capture the relatively greater expense of essential food and shelter needs in the hinterlands of poor countries. Wade’s analyses have also shown that income distribution in the vicinity of poverty lines is generally very flat in the South, meaning that a small change in the line results in large shifts in the number of people considered poor. As reliable data are hard to come by, Sachs' dependence upon the Bank's definition of extreme poverty is questionable, and his point about openness is speculative at best. To his credit, he has moved beyond a simple income definition of poverty by identifying five types of capital that poor people lack, including human, business, infrastructure, public institutional, and knowledge capitals. Here, by focusing on how the extreme poor have been unable to increase or benefit from these varieties of capital, Sachs demonstrates a more nuanced understanding of poverty along the lines of Amartya Sen's notion of poverty as "capability deprivation" (Sen 1999). Nevertheless, he does not offer an explanation of why investments need to be delimited to upgrading the capabilities or capital of the worst-off. He considers wealth and income inequalities within and between countries to be a principle stimulus to the efforts to eradicate extreme poverty. Yet his action plan does not problematize the very real possibility, documented by analysts such as Branko Milanovic (2005) that incomes and wealth are polarizing around the world. What if people in the peripheries reject the notion that inequalities only indicate relative poverty? What if they view the elimination of these inequalities to be part of their project to end poverty as they define it? This point speaks to how Sachs' work can at times read like a monologue, and indicates that the pursuit of his prescriptions might seriously limit autonomy for marginalized people everywhere.
Sachs claims that he is sensitive to cultural diversity, but the fact remains that his framework for modernization seeks to universalize what economists used to call "rational" economic man. Debate has raged over the potential for development theories and prescriptions to be free of ethnocentric assumptions. Nearly twenty years ago, Howard Wiarda argued that the vast majority of the mainstream literature remained imbued with Eurocentric biases. Many experts still believed that "pre-modern" authority structures would give way across the South, and that the values and institutions they associated with modernity were applicable in any and all contexts (Wiarda 1988; Tucker 1999; IFG 2002). Firmly within this tradition, Sachs makes the paternalistic argument that the poor are not condemned by their cultures or personal behaviours to be impoverished. For him, the stimulus to change must come from the outside. Notwithstanding his moral stands against illiberal local traditions such as female genital mutilation, and the disproportionate workloads borne by women, he seems to be primarily concerned with removing the local obstacles to generating acquisitive impulses amongst the poor. Targeting what he views as the “economic irrationalities" of tribalism, such as ascriptive rather than merit-based social advancement, and communal land tenure relations such as usufruct, Sachs' overriding concern is not simply about getting prices right. This neo-modernizer is in the business of politically engineering attitudes and expanding the domain of Western-style property rights regimes.
Although Sachs stops short of advocating the intensive promotion of a one-world consumer culture, his prescription to standardize capitalist institutions and behaviours is presented without a discussion of the ways such moves could undermine the ability of people to determine their livelihoods autonomously. Questions about the cultural knowledge that could be lost through these changes are also not raised. Certainly many traditions are flawed and at the extremes can even be considered uncivilized, but a strong argument can be made that rich Westerners only became concerned with the standards of living in the peripheries when they realized that it was in their self-interest to do so (Rodney 1972). While Sachs might view his program to be entirely altruistic, it seems very hard indeed to separate his moral positions from the identifiable transnational interests that would benefit from his efforts to lock-in a market-expanding political economic model.
In recommending the supposed universal cure-all of deeper integration, Sachs also fails to engage with the literature on economic asymmetries and the limits of growth. In so doing, he delimits the "economic possibilities for our time" to the "possibilities" that would be enabled by a questionable means (investor-friendliness) and a contested concept (growth). On the first point, Sachs does not think critically about the involvement of transnational corporations in the peripheries. In his view, increased investments in non-traditional sectors from the 500 firms that account for 90 percent of the stock of the world's foreign direct investment (FDI) and 40 percent of world trade flows, or their affiliates, are the sine qua non of growth (Rugman 2005). Consequently, he does not adequately address the great debate over the implications of host country regulatory concessions to attract investment for vulnerable people (UNCTAD 2005; Hoogvelt 2001).
Reviews have highlighted how Sachs fails to account for negative phenomena that have accompanied greater reliance on FDI in several instances, such as a highly concentrated distribution of benefits, more corruption, the growth of informal sectors, and significant levels of profit repatriation (The New Yorker 11 April 2005). The old argument that multinationals invest abroad to exploit or preserve their monopolistic advantages seems lost on him (Hymer 1971). So too does the newer position that the ability of FDI to work for poverty eradication might be undermined by the emergence of corporate self-regulation and the attempts firms continue to make to secure a one-world investment standard (Cutler et al. 1999). Sachs is faithful to the belief that property rights, good governance, and the emerging ethic of corporate social responsibility will make investment pro-poor. In his preferred future, the increasing autonomy of investors to determine what exactly constitutes "good" governance would be entrenched. That this governance could result in suboptimal economic futures while undermining the autonomy of millions to do anything about it is not discussed. Here again, if autonomy does not serve market expansion, it is considered something to be overcome.
Sachs justifies his advocacy of investment by noting that countries with "higher levels of FDI per person are also the countries with higher GNP [gross national product] per capita" (2005, 356). This correlation has explanatory power insofar as it can be used to back the claim that states that close themselves off from the global economy will not attain a sustained growth path (Rodrik 2001). After formal political independence, many peripheral countries pursued import-substituting strategies and transferred incomes and wealth from rural areas to industrial sectors in the pursuit of GNP growth (Bates 2005). Since many of these policies were state-directed and did not favour investment, Sachs characterizes them as misguided. The fact remains that stronger growth occurred under a fair number of these relatively closed regimes than was evident in the recent period of liberalization (Rodrik 2001). The idea that a single road exists to the achievement of high growth has now been thoroughly discredited. Recognizing this insight, Sachs devotes a chapter to refuting "magic bullet" solutions. Even so, when it comes to investment, while he does not consider the bullet to be magical, he does firmly believe that countries must open themselves to being shot if they are to grow. Sachs' discussion of the preconditions of GNP growth is also interesting for his lack of engagement with the long-standing debate over the desirability and usefulness of the GNP measure itself. He ignores the pioneering work of Herman Daly and Marilyn Waring on the ecological myopia of the current system of national accounting. Sachs does not acknowledge that the calculation of GNP fails to count women's work in the home and sustenance production as contributions to economic growth, as Shiva reminds (The Ecologist 1 July 2005). Autonomous redefinitions of growth are apparently not possible in our time.
One key assumption that underlies Sachs' research and advice is that economic growth, as he defines it, is a "game everyone can win." He implores rich countries to abandon mercantilist impulses to maximize their growth rates relative to each other, highlighting the imperative of states to move beyond these considerations in order to meet the commitments they made at the UN Millennium Summit. Sachs prescribes that states should act upon the view that they have a mutual interest in facilitating the expansion of the global economy. Given the long history of proactive attempts by the rich to augment their comparative advantages and retain high value-added industries at home, this order is quite a tall one (Gilpin 2001). Nonetheless, the record of international cooperation is rife with many prominent instances where rich countries chose to look beyond their immediate self-interests. As regards development cooperation, however, there have been few such successes. The inability of the Brandt Commission to advance the mutual interest thesis, and the fact that its prescriptions remain largely unrealized over twenty-five years later is a testament to the persistence of relative gains calculations. In this context, Sachs' liberal idealist challenge to the former and present imperialist powers to change their ways clearly faces intransigence. He does implore elite individuals to join with him and embrace the ascendant doctrine of individual responsibility to help end extreme poverty, but his principal target remains what he considers to be a skewed outlook on wealth-maximization.
Many globalization experts would consider Sachs' calls to be too state-centric and blind to the ways that the new world order limits autonomy in the periphery. Several prominent thinkers have interpreted evidence that rich states and transnational firms are increasingly working together to secure a global framework of rules to mean that they are putting in place systems that will advance their economic interests relative to the rest of the world (Cutler et al.1999; Soederberg 2002; Hardt and Negri 2000). In this view, "empire" itself has gone global. New norms for world trade, corporate governance, and foreign investment emanating from this transnational policy space are shown to be potential impediments to the realization of a just global order. From this perspective, increased participation in development planning and greater policy space in the LDCs in the post-Washington Consensus era will be restricted by market-expanding norms that have been enshrined in global governance institutions. The ability of publics across the South to carve out unique spaces from markets is considered to have been compromised. Sachs presumes that the poorest will be able to climb the ladder out of extreme poverty when his investment targets are realized and "personalized" treatment regimens have been completed. The notion that a second ladder — a way up to a more equitable future for the relative poor — might be in the process of being kicked out does not appear on his radar. It seems to me that his failure to engage with these nuanced perspectives on globalization indicates his market fundamentalist or system-maintenance bias, even though he claims to reject radical free market ideology (Sachs 2005, 318).
This slant is also evident in his dismissive treatment of the "real third way" pursued by many Southern states during the Cold War era, and enshrined in several General Assembly resolutions. Sachs makes the claim that state-directed development efforts in this period were typically uneconomic and therefore wrongheaded. He considers the collective actions undertaken by the Group of 77 and the Non-Aligned Movement to effect an international redistribution of wealth, enshrine autonomy as a central principle in international development law, and bolster state-led development to be equally objectionable. As demonstrated above, and in a similar manner to the world's self-proclaimed number-one free trader, Jagdish Bhagwati, it is difficult for Sachs to view openness-reducing policy options in a positive light (see, for example, Bhagwati 2004). Consequently, he is sure to consider the language of autonomy deployed by the South in resolutions such as the Declaration and Programme of Action for a New International Economic Order (NIEO), and in the Charter of Economic Rights and Duties of States, to be essentially irrational.
An attempt to enshrine the fundamental principles of international economic relations, the Charter propounded the right of every state to freely exercise full and permanent sovereignty over all of their natural resources and economic activities. For Sachs, this step is the antithesis of a rational development model. With the exception of efforts aimed to save the absolute poor, sovereignty must be ceded to market forces. Since Sachs rules out a discussion of these matters a priori, he has little to contribute to the much needed debate about the feasibility or desirability of levels of autonomy on par with the NIEO-era in the present context. As governments seeking autonomy from "neo-liberalism" continue to come to power across Latin America and assert the need for dialogue about the alternatives to relative impoverishment, social service breakdowns, and other phenomena they associate with gringo economics, Sachs' plan, as they say, has got nothing.
In sum, this paper has argued that clinical development economics is as much a comprehensive plan to do the right thing about ending extreme poverty as it is a program to expand "market civilization" and discipline people around the globe to its exigencies (Gill 2002). After the end of absolute poverty, in Sachs’ view, no one in the South should be autonomous from the justice that "freer" global markets provide. This vision precludes the ability of individuals, groups, and states the world-over to determine their economic futures autonomously. The massive increases in annual aid flows that Sachs desires, if they materialize, likely will end up sucking the impoverished into a global economy that has been actively structured against their interests. Although he claims that diagnoses will be participatory, and that such surveillance will thereby be "country-owned," Sachs' failure to theorize and account for the impact of power relations on these processes undermines his case. Moreover, if policy-makers embrace this model today, the autonomy of future generations to enjoy a healthy planet will be imperiled. The mainstream global justice movement would do well to note the evident poverty of The End of Poverty.
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