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Third World countries [adopted] development models that were

believed to address more  accurately nationalist aspirations, historical

inequities of class, and the apparent unwillingness of the developed

countries to undertake significant efforts to redistribute the world's wealth.



Southern Needs

By Michael Manley


From the perspective of a leader of a sovereign and developing country, the evolution of the political contour of the world over the last three decades is nothing less than breathtaking. Movements for democracy, intellectual freedom, and economic self- determination have forced fundamental changes in the relationship between the state and its citizens. New economic policies are clearly demanded. Simultaneously, the political and economic order has become truly globalized. All these factors have led to the rapid and seemingly irreversible warming of the Cold War.

While discussions of East-West economic competition are being recast in terms of cooperation, glaring disparities in the comparative levels of wealth and development remain between North and South. Yet all countries are becoming aware of the need for collective, coordinated, and rational approaches toward the problems of the Third World.

It is regrettable that the developed countries did not view Third World countries after World War II with the same concern they showed Europe and Japan. For many years following the series of decolonizations that began after World War II, the Third World did not receive infusions of development assistance sufficient to create a modern industrial base; however, many continued to provide the developed countries with raw materials for industry and agricultural commodities. 

No comprehensive program for expanded trade and business opportunities in the Third World was considered. Instead, the developed countries continued to treat the developing countries as immature and almost immutable backwaters of industry, trade, and finance. During the 1950s and 1960s, however, positive ideas surfaced such as raising official development assistance from the developed countries to .7 per cent of their gross national product (GNP).

The relationship between developed and developing countries is exceedingly complex, with historical antecedents that cast both North and South in less than positive lights. But unlike today, when quiet diplomacy and negotiation have become the norm, during the 1960s and 1970s North-South interaction was often characterized by confrontational approaches that tended to preclude rational and equitable solutions. Admittedly, some Third World countries themselves significantly contributed to the throttling of their economic development. In all too many instances endemic corruption, wasteful and extravagant public projects, rejection of principles of participatory governance, and inept government intervention in the domestic marketplace combined with turbulence in the world economy to stifle economic growth and maturation.

In the two or three decades prior to 1990--when Third World countries began to appreciate the usefulness of collective action--overt criticism by one developing country of another was viewed as something to be avoided, if at all possible. To a significant degree, the Third World community attached too much importance to the need to display a united front in light of the overwhelming military and economic power of the developed countries. In some cases this was a disservice to the legitimate aspirations and expectations of citizens of countries whose governments repressed or hindered the exercise of universally recognized human rights and economic freedom.

However, times have changed and Third World countries no longer turn a blind eye toward actions of any government that are inconsistent with generally accepted norms. Increasingly they understand and accept that, while cultures and religions may vary, certain standards generally apply to governments everywhere.

The creation of the nonaligned movement in 1961 reflected the belief of many countries that a forum was needed in which the Third World could articulate its views, propose solutions to common problems, and maintain a united front when criticizing the actions of East and West. Like any multilateral group, the nonaligned movement faced many problems--"benefactors" in the East and West who expected blind devotion; exigencies imposed by the spirit of realpolitik, which dominates the international system; disagreements within the movement over particular issues; and so on.

During the 1970s, many Third World countries sought to create institutions that could formulate development schemes to advance their economic development exponentially. Accordingly, these years witnessed prominent discussion of the New International Economic Order. The work of people such as Raul Prebisch at the United Nations Economic Commission on Latin America and the writings of such authors as West Indian economist Arthur Lewis came under closer scrutiny. Attempts were made to identify the sources of developing countries' economic woes and to provide solutions to remove the impediments to economic well-being.

This new wave of thinking led Third World countries to adopt development models that were believed to address more accurately nationalist aspirations, historical inequities of class, and the apparent unwillingness of the developed countries to undertake significant efforts to redistribute the world's wealth. In the 1960s, Jamaica was one of many countries to adopt wide-ranging import substitution policies, and it took some time to learn the inherent disadvantages of that strategy. Then, as developing countries began to address the flaws of pure import substitution, there came the enormous shocks of the 1970s.

Developing Jamaica

In 1972, the government of the People's National Party of Jamaica had a vision of a development plan that would correct the maldistribution of its country's resources, increase local ownership of the means of production, and improve Jamaica's position in the international marketplace. Like most Caribbean countries, Jamaica's economy is small and import-dependent. 

During the 1970s, the economy was hurt by several developments. The oil crisis of 1973 led to a worldwide recession and a decline in imports of raw materials and commodities by industrialized countries. As Jamaica's energy bill soared, international demand for its most important exports, sugar and bauxite/alumina, dropped. Inevitably, its balance of payments deteriorated sharply. 

At the same time, the prosperity of the island's industrial base was almost completely dependent on attracting foreign capital. Like many Third World countries, Jamaica experienced problems when foreign owners of Jamaican-based businesses and industrial concerns transferred profits to their home countries rather than investing them in local development. Exacerbating the already formidable problems facing the government were such glaring social inequities as high unemployment, an inadequate educational system, and deficient health care, which deprived a substantial number of Jamaican citizens of the basic requirements for productive lives. 

Thus, rapid rises in the price of imported oil, domestic demands on government resources, increased costs of imported goods, and financial turbulence within the world monetary and trade sectors all coalesced to form the ceaseless debt problems and financial shortfalls that Jamaica is currently experiencing.

During my first period as prime minister, 1972-80, Jamaica's government reacted to these difficulties with very strong government interventionist policies. Jamaica was not alone in its early and unsuccessful experimentation with new types of development strategies--strategies that were viewed as the deus ex machinas of the Third World. Developing countries adopted import substitution, protectionist legislation, and regulations that compelled foreign exchange generating export sectors to subsidize more inefficient and less competitive sectors. 

The number of parastatals, corporations, and industries that were owned and operated by the state mushroomed. Hindsight provides perfect visual acuity but, at the time, these well- meaning schemes were viewed as the path to greater productivity, increased per capita income, and the creation of modern manufacturing sectors. Ironically, many of the countries that experimented with import substitution briefly witnessed measurable progress toward their development goals. By the 1980s, however, bitter experience had taught us that the slender capacity of the state to counteract the tidal forces of the world economy was totally inadequate.

Currently, Jamaica is strangled by debt; virtually half its export earnings go to service the debt. Its economy cannot move forward. At the end of 1989, Jamaica had a population of only 2.3 million but an external debt of US$4.5 billion, constituting approximately 140 per cent of gross domestic product (GDP).

As the pressures mounted, the Jamaican government, like most others in the Third World, was forced to borrow. Loans came from three sources: private commercial banks, other governments, and official international lending agencies, such as the International Monetary Fund (IMF), the World Bank, and regional development banks like the Inter- American Development Bank. The last group is known as "multilateral institutions." Whereas most African debt is bilateral--that is, it is owed to governments--most Latin American debt is owed to commercial banks. Jamaica's own debt is mostly bilateral and multilateral, and it was accumulated mainly from 1978 through 1987.

From 1980 to 1983, Jamaica's debt was expanding at an average rate of more than 20 per cent a year, and during this period, debt grew from US$1.8 billion to US$3.3 billion. In 1987, the debt jumped again by almost US$500 million, primarily in reaction to the revaluation of non-dollar denominated debt.

In the meantime, there has been a cruel irony in relations with multilateral institutions. For example, between April 1, 1989, and March 31, 1990, Jamaica paid in excess of US$80 million net to the IMF, an amount that represents an incredible burden to the island's limited economy.

Jamaica has not been alone. Much of the Third World has confronted rising payments on its debt. In 1981, the developing countries' debt was US$674 billion; by 1989, according to World Bank reports, it had risen to approximately US$1.14 trillion. Between 1984 and 1988, the total net transfer from developing countries to the developed world was US$168 billion, US$45 billion in 1988 alone.

The debt crisis threatens not only individual countries, but the functioning of the world economy as well. It constrains world trade, inhibits capital inflows, hampers growth and per capita income, and generates tremors of increasing severity in the international banking system. Certainly it cannot be in the interest of transnational banking institutions in industrialized countries to allow Third World countries to degenerate into virtually permanent states of debt. It is highly likely that some banks will be unable to absorb the financial shocks that would flow from a unilateral and permanent suspension of repayments by large numbers of developing countries, particularly if the governments of these banks did not formulate tax and banking regulations to protect their solvency or financial ratings. 

Moreover, any perturbations in the banking sector could have ripple effects in other capital-intensive sectors of industrialized countries. Finally, any regional or bilateral conflicts among developing countries resulting from the pressures of the debt crisis could set back the superpowers' current progress toward sustained detente.

The question must be asked whether the world appreciates that it is in every nation's interest to create conditions favorable for general economic development, rather than economic development for only one sector of the world. The time for the international community to look into this question is long overdue, and the price in human suffering is too high. 

Further, the democratic governments and free-market economies in many developing countries are being threatened by the dangers caused by the debt crisis. As the unprecedented and startling legitimization of democracy and the free-market system in Eastern Europe unfolds, the developing countries are struggling to continue their commitment to such practices. 

Indeed, one need only examine the motives cited by participants in internal disturbances and attempted coups around the world to confirm that crushing external debt leads to domestic instability. The effects of the debt crisis can be seen in the increasing attractiveness of underground economies to citizens of developing countries, economies that sap governments of capital, complicate the task of stabilizing their structures, and deprive national industries of legal consumer transactions.

The debt crisis has also fueled the explosive growth of the drug trade; in Colombia wealthy and powerful drug cartels have undermined democratic government. When meeting subsistence needs legally seems impossible, the attractiveness of illegal alternatives, such as drug trafficking, increases. Inadequate health services and malnutrition retard the development of millions of children around the world, preventing them from becoming productive members of society. 

Driven by poverty, rural residents abandon their lands and migrate to cities, placing incredible pressure on urban governments trying to provide basic services and frustrating national efforts to achieve self-sufficiency in food supplies.

In addition, developing countries face a brain drain as their most talented and educated citizens emigrate to developed countries where economic and career opportunities are better. Emigration is not limited to the elite, however; those on the lower rungs of the economic and educational ladders also enter (legally or illegally) developed countries in an attempt to escape the cycle of poverty. 

Media reports in France, the United States, and other industrialized countries highlight the societal pressures that result from increased immigration. In developing countries with long-standing tensions and economic rivalries between ethnic groups, the added pressures imposed by debt servicing can transform competition for resources and commercial opportunities into violent confrontations. 

Meanwhile, competition among developing countries for resources and industrial input increases the likelihood of transnational conflicts. It is ironic that, as East-West rapprochement is diminishing the risk of superpower conflict, the danger of Third World instability appears to be increasing.

Altruism and Self-Interest

Assistance from the North to developing nations can thus be justified upon the same basis as was the Marshall Plan: enlightened self-interest. Following World War II, the United States concluded that it could best serve its national interests and the world's security by assisting in the reconstruction of the war-ravaged economies of the West European countries, regardless of the side on which they had fought during the war. 

While the altruistic considerations underlying the Marshall Plan cannot be denied, a fundamental motivation was the U.S. government's realization that European reconstruction would provide new markets and trading opportunities for the U.S. business sector and therefore significant benefits for the American economy.

The success of the Marshall Plan and U.S. assistance to Japan is manifest in the West European and Japanese economies today. The countries of Western Europe, particularly West Germany, are models of industrial know-how and technological innovation. U.S. reconstruction assistance to Japan allowed that country to emerge in the postwar years as an economic powerhouse respected around the world for its expertise in high-technology production and for the quality of its consumer goods. 

The United States, for its part, has enjoyed export markets in the reconstructed economies. While some trading tensions have arisen between the United States and countries that benefited from its postwar reconstruction program, an examination of those reconstruction efforts demonstrates that "common sense" based on enlightened self-interest is to everybody's advantage when it promotes economic growth that incorporates the widest sections of humanity.

Ultimately, the global debt crisis may be resolved in several ways, including the revival of world trade and the resumption of adequate capital inflows to developing countries. Whatever the solution, a way must be found to halt the debt-deflation spiral that saps the world economy of much of its vitality. Sufficient debt relief to developing countries would restore the import capacity of debtor countries and free resources to resuscitate world trade. 

Such an expansion in world trade would alleviate the trade deficits of debtor countries. Moreover, debt relief would prompt a resumption of capital flows to developing countries that would stimulate economic growth. Appreciation of the benefits that would accrue to the world economy from an expansion of world trade and from a resumption of the capital flows to developing countries appears to be growing.

In recent times, various innovative solutions to the debt crisis have been proposed, including debt-equity swaps, cancellation of debt for least developed countries, and the Brady Plan. In the case of debt-equity swaps, particularly those proposed for purposes of privatization, private concerns have hesitated to acquire state enterprises that are often highly inefficient, with outdated equipment and little market dominance. Variations on the debt-equity swaps, such as "debt for nature" exchanges are problematic because of countries' understandable desire to control their natural resources and, in the case of small island nations, the lack of available land. 

It is not surprising that transnational banks resist outright cancellation of privately held debt; they would prefer arrangements that would guarantee payments on arrears and the resumption of regular repayments. The Brady Plan represents a conceptual breakthrough because for the first time debt reduction has been contemplated by the United States as part of an overall strategy to cope with Third World debt; however, it does not do enough. The extent of its relief for foreign exchange payments is relatively small, and it involves considerable new lending, which tends to perpetuate the cycle of debt.

With regard to multilateral lending institutions such as the World Bank and the IMF, the misconception persists that developing countries oppose conditionality. Generally this is not true. The overwhelming majority of developing countries have long since accepted the important contribution of institutions like the IMF to good economic management, fiscal prudence, and other matters. 

While these countries may sometimes question the manner in which conditionality is approached, they do not reject the concept. Many Third World countries are, however, concerned by the trend toward a heavy emphasis on structural adjustment and corrective measures in the absence of adequate resources for development.

Recently, there has been substantial debate in the United States over assistance to developing countries, with growing numbers of citizens viewing foreign aid as a waste of funds that can be used for domestic needs. During discussions held in May 1990, Jamaican government officials were impressed with President George Bush's and Secretary of State James Baker's appreciation of the problem and the apparent benefits of increased economic exchanges with Jamaica and of U.S.-Jamaican cooperation in fighting drugs and promoting regional stability. 

Such fruitful bilateral talks contribute not only to efforts to solve the debt crisis but also to the understanding that foreign aid and policies that stimulate trade and investment lend encouragement and support to countries that are attempting to become full-fledged participants in the world economy. They underscore the need for both the developing countries and the developed countries to cooperate on the issue of debt; for it is not the governments who suffer, but the average citizens they represent.

As noted earlier, by the 1980s Jamaicans had learned that excessively interventionist policies were not a panacea for their problems. The Jamaican People's National Party of the 1970s was returned to office in 1989 and developed a national consensus on different strategies for alleviating our economic difficulties. It has stressed continuity and, more important, has established a strong working relationship with the private sector emphasizing cooperative approaches to problem solving. 

This policy of outreach has also been extended to the other sectors of Jamaican society. To the credit of all Jamaicans, these interactions have been frank and constructive and generally free of demagoguery or political posturing.

Jamaica's commitment to sector-wide cooperation was demonstrated during the visit to Washington in May, when representatives of the private sector and labor groups accompanied government officers as part of an official delegation. In numerous substantive meetings, opportunities of expanding economic activity between Jamaica and the United States were explored. 

There is now a heightened awareness in Jamaica that trade and investment are indispensable elements in the development of any country. There is a parallel appreciation of the benefits that can be derived through programs such as the U.S. Caribbean Basin Initiative. It is hoped that the revised program will increase the attractiveness of exports from Jamaica and its fellow Caribbean countries to the U.S. private sector.

While these domestic initiatives are impressive and essential, they alone cannot solve the formidable economic problems confronting countries like Jamaica. While Third World governments continue to pursue their own domestic reforms, it must be expected that the creditor and debtor nations will coordinate their efforts more closely to ease the debt crisis.

Just as significantly, Jamaica has spearheaded an effort to develop regional approaches to stimulating private sector business activity. An example of this type of regional approach is the current discussion of creating a Caribbean Stock Exchange. Jamaica is also actively involved in the Caribbean Community's task of implementing the provisions of the Treaty of Chaguaramas leading to closer economic integration. Additionally, ties have been strengthened with the Organization of Eastern Caribbean States. 

Consideration of problems within a regional context is certainly not revolutionary. The states of Western Europe are but the most vivid example of countries seeking to abandon disunity and factionalization in favor of unity and economic integration. There is also the example of a free-trade agreement between the United States and Canada. 

The Jamaican government and people realize that it is in our interest to pursue and maintain trust, faith, and common purpose between Jamaica and the other Caribbean countries. Collective discussion of regional issues and concerted regional action make an invaluable contribution to the development of the Caribbean's modern manufacturing, industrial, and high-technology sectors.

The debt crisis is not going to solve itself, nor do piecemeal measures such as case- by-case rescheduling constitute a feasible solution. A solution must proceed from the recognition that governments in developed countries, transnational commercial banks, multilateral lending institutions, and governments of developing countries share some of the responsibility and all of the consequences of the debt crisis. 

Industrialized countries must understand that Third World countries are not seeking tolerance of inefficiency or corruption. Nor are they asking one part of the world to pay the costs of irresponsibility by other parts of the world. What developing countries do ask is that the world community capitalize upon hard-earned lessons in economic management to assist developing countries that have the will, intelligence, and determination to end their economies' stagnation or deflation.

As noted earlier, a more coherent, collective effort to solve the debt crisis is emerging. Discussions and planning at meetings of multilateral organizations, such as the June 1990 G-15 meeting, and summits of the industrialized countries contribute significantly to our understanding of the debt crisis and its possible solutions. What is needed, however, are joint meetings between the Paris Club and debtor countries in order to agree on concrete measures of debt relief for hard-pressed Third World countries. 

Such discussions will require all participants to avoid tangential matters, such as apportionment of blame for the current debt crisis, that distract from the task of extracting the developing countries from their morass of debt. One must believe that the international community will rise to this challenge to ensure peace and prosperity for future generations in both North and South.

The late Michael Manley was twice Prime Minister of Jamaica.

Source:  Foreign Policy, Fall 90, Issue 80

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Michael Manley (1924-1997) was Jamaica's fifth Prime Minister. He served two terms1972-1980; 1989-1992. He became leader of the People's National Party (PNP) in 1969 at the death of  his father. Considered a man of the people, he often mingled among the people in causal dress. Though white, he maintained an amiable relationship with Jamaica's black majority.

A socialist, he was a friend of Fidel Castro. His economic programs had mixed success.  Manley is also credited with initiating a culture of political violence by his party funding street gangs during  elections to ensure support and political success. The 1980s election was considered extremely corrupt.

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Vijay Prashad—The Darker Nations, Part 2

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The Price of Civilization

Reawakening American Virtue and Prosperity

By Jeffrey D. Sachs

The Price of Civilization is a book that is essential reading for every American. In a forceful, impassioned, and personal voice, he offers not only a searing and incisive diagnosis of our country’s economic ills but also an urgent call for Americans to restore the virtues of fairness, honesty, and foresight as the foundations of national prosperity. Sachs finds that both political parties—and many leading economists—have missed the big picture, offering shortsighted solutions such as stimulus spending or tax cuts to address complex economic problems that require deeper solutions. Sachs argues that we have profoundly underestimated globalization’s long-term effects on our country, which create deep and largely unmet challenges with regard to jobs, incomes, poverty, and the environment. America’s single biggest economic failure, Sachs argues, is its inability to come to grips with the new global economic realities. Sachs describes a political system that has lost its ethical moorings, in which ever-rising campaign contributions and lobbying outlays overpower the voice of the citizenry. . . . Sachs offers a plan to turn the crisis around. He argues persuasively that the problem is not America’s abiding values, which remain generous and pragmatic, but the ease with which political spin and consumerism run circles around those values. He bids the reader to reclaim the virtues of good citizenship and mindfulness toward the economy and one another.

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Sister Citizen: Shame, Stereotypes, and Black Women in America

By Melissa V. Harris-Perry

According to the author, this society has historically exerted considerable pressure on black females to fit into one of a handful of stereotypes, primarily, the Mammy, the Matriarch or the Jezebel.  The selfless Mammy’s behavior is marked by a slavish devotion to white folks’ domestic concerns, often at the expense of those of her own family’s needs. By contrast, the relatively-hedonistic Jezebel is a sexually-insatiable temptress. And the Matriarch is generally thought of as an emasculating figure who denigrates black men, ala the characters Sapphire and Aunt Esther on the television shows Amos and Andy and Sanford and Son, respectively.     

Professor Perry points out how the propagation of these harmful myths have served the mainstream culture well. For instance, the Mammy suggests that it is almost second nature for black females to feel a maternal instinct towards Caucasian babies.

As for the source of the Jezebel, black women had no control over their own bodies during slavery given that they were being auctioned off and bred to maximize profits. Nonetheless, it was in the interest of plantation owners to propagate the lie that sisters were sluts inclined to mate indiscriminately.

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The White Masters of the World

From The World and Africa, 1965

By W. E. B. Du Bois

W. E. B. Du Bois’ Arraignment and Indictment of White Civilization (Fletcher)

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Ancient African Nations

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