Developmentalism

6. Suffering in the Wasteland: Independence — or In Dependency?

The Wasteland is a disturbing transition zone between Egypt and the Promised Land, between bondage and liberation. So Latin American today, in its second century after independence, finds itself in a wilderness between colonial subjugation and genuine self-determination.

Liberation theologians point to institutional evil, rather than individual evil, as the major factor keeping the poor trapped in the Wasteland. They shift the critical focus from problems caused by evil leaders to the oppression caused by large impersonal forces. And they further point out that these forces are not to be found solely in developing nations. (For example, in most societies, even developed ones, male-dominated social structures dehumanize women.) They remind us how a military-industrial complex, multinational corporations, government bureaucracies, giant banking centers, or other powerful institutions or organizations may depersonalize citizens, depriving them of effective control over their own lives.

The 1950s was an optimistic decade of developmentalism. But by 1967, Pope Paul VI questioned this optimism in his encyclical, Populorum Progressio. He saw rich nations developing quickly while poor nations developed slowly. He saw discord between people and nations arising from glaring worldwide inequalities of power and possessions. These conflicts arose in part, the Pope said, from too narrowly conceiving development as limited to economic growth. He called for broadening the goal to promote the good of every person, with emphasis on the whole person.

While in parts vague and offering no radical solutions, the Pope's encyclical nevertheless dramatized how poor nations may be held captive by economic dependence on rich ones, and served to correct a popular belief that economic growth alone is sufficient for progress.

Four years later, Gustavo Gutierrez raised a more substantive critique of developmentalism in his epochal work, A Theology of Liberation. As he saw it, underdevelopment, instead of being a step on the way to progress, is really the historical end-product of the economic expansion of the great capitalist countries. The amount of fat of wealthy nations is directly related to the amount of hunger of poor nations. Thus the first step toward liberation must be to sever the bondage of dependence. Gutierrez did not purport to be stating anything original, but simply advanced, in a theological context, ideas drawn from Andre Gunder Frank, Fernando Henrique Cardoso, and other secular Latin American social scientists who had produced various systems of dependency theory, based, in some cases, on Lenin's doctrine of imperialism.

It would be fatuous to deny that some of Latin America's poverty is traceable historically to the operations of First World companies and to the intervention of First World governments, as dependency theory holds. Due to the influence of Gutierrez and later Boff and others, dependency theory became a cardinal tenet of liberation theology. However, the theory is now recognized by Boff and Gutierrez as being of questionable value as a key to the solution or even diagnosis. Gutierrez now writes that the theory "does not take sufficient account of the internal dynamics of each country or of the vast dimensions of the world of the poor."

The existence of dependence does not automatically justify the charge that it stems from exploitation. This charge assumes a zero-sum situation where one region can increase its wealth only at the expense of other regions, which is to overlook the evidence that the world's wealth is not static but constantly being magnified by human enterprise. Economically, Canada is heavily dependent upon U.S. trade and investment, yet its standard of living is among the highest on earth — due, in no small measure, to precisely that trade and investment. Albania, by contrast, was until recently the least dependent of all nations; under Enver Hoxha it followed a policy of almost total isolation, and neither traded nor maintained diplomatic relations even with other Marxist states. Yet its standard of living was the lowest in Europe — due, in no small measure, to precisely that policy.

Insofar as dependency theory is (in a limited sense) analytically correct, the social ills to which it calls attention could be substantially dispelled by the proper allocation to the public of land and land value, or rent. Instead, most of the land rent is misappropriated by foreign corporations or domestic land-owning oligarchies. We will return to this very important point in Chapter 8. ...

8. Power in the Wasteland: Understanding Essential Relationships

Many liberation theologists ignore the role of land ownership and do not even include land in the indexes of their books. Yet none would deny that land hoarding and land access are fundamental issues of justice and economic development.

The following two passages by Henry George, the economist who made the most definitive statements on land's role in political economy, illustrate the fundamental characteristics of land that are missed or ignored by modern economic analysts of the left and the right:

Does the passenger who enters a railroad car obtain the right to scatter his baggage over all the seats and compel the passengers who come in after him to stand up? ... We arrive and we depart... passengers from station to station, on an orb that whirls through space — our rights to take and possess cannot be exclusive; they must be bounded everywhere by the equal rights of others. Just as the passenger in a railroad car may spread himself and his baggage over as many seats as he pleases, until other passengers come in, so may a settler take as much land as he chooses, until it is needed by others — a fact which is shown by the land acquiring a value....

On the land we are born, from it we live, to it we return again — children of the soil as truly as is the blade of grass or the flower of the field. Take away from man all that belongs to the land, and he is but a disembodied spirit. Material progress cannot rid us of our dependence upon land.

Beneath all ideologies, there are basic factors and relationships that underlie economic behavior. To understand the (otherwise inexplicable) omission of attention to land's economic importance, it is useful to go back to these basics.

• The term "Land" refers to the whole material universe, exclusive of people and their products. Not the creation of human labor, yet essential to labor, it is the raw material from which all wealth is fashioned. It includes not only soil and minerals, but water, air, natural vegetation and wildlife, and all natural opportunities — even those yet to be discovered. It is a passive factor of production, yielding wealth only when labor is applied to it.
• Labor includes all human powers, mental and physical, used directly or indirectly to produce goods or to render service in exchange. Labor is often thought of as work that is done for hire, at fixed wages, mainly excluded from the risk-taking and decision-making that is normally classed under the heading of "entrepreneurship". Yet labor, properly understood, includes all human exertion in production — including mental exertion. The payment to labor is called Wages. And it is important to remember that the payment, or return, to labor does not include any returns that are the result of monopoly.
• Capital is the economic term that is most profoundly misunderstood and confused. For the term to make sense in any systematic analysis of wealth distribution, we must define capital in its classical sense as "wealth which is used to aid in further production, instead of being directly consumed." Since production is not completed until the product is in the hands of the consumer, products on their way to market, or "wealth in the course of exchange," are also considered capital.

Now, the objective of all economic behavior is the satisfaction of human desires. Human beings always seek to satisfy their desires with the least exertion: this self-evident proposition lies at the heart of our concepts of economic value and exchange. The primary thing needed for satisfaction is, of course, the tangible things, made from natural resources, that satisfy human desires and have exchange value. Things that meet these four fundamental criteria are termed "wealth". But money, bonds, and mortgages are but claims upon and measures of this value; they are not the wealth they symbolize.

A clear understanding of these basic definitions points immediately to the primacy of land as an economic factor. Human beings have inescapable material needs of food, clothing and shelter. Regardless of how long a chain of exchanges they may pass through in a modern economy, these things ultimately have their source in the land; they can come from nowhere else. Human beings need land in order to live. But if we must pay rent to a private land "owner" for access to the gifts of nature, it amounts to being charged a fee for our very right to live.

Land's value goes up when population increases and technological and economic development make labor more productive. Those who "own" land often withhold it from use, expecting to capture its increased value in the future — thus, the possession of land enables people to take an income that they did nothing to produce.

Speculative withholding of land has disastrous consequences. Peasants who seek land on which to survive are pushed out to poorer and poorer lands. These "sub-marginal" lands become their alternative place for self-employment. With such a poor alternative, they have no choice but to accept very low wages. Rent — the payment to landowners — absorbs more of the wealth produced on all sites.

Land speculation also prevents development near the center of cities, pushing it to the outskirts while the center decays from neglect and slums increase. The "sprawl" engulfs farms and forests, even as it raises the price of land, making use and development more costly.

Rapid destruction of the Amazon rain forest in Brazil dramatizes how the unnatural phenomenon of sprawl has an ominous worldwide impact on the environment. In Brazil, ten per cent of the landowners own 80 percent of the land, while one million peasants are forced off the land each year. And a mere one per cent controls 48 percent of the cultivable land. The only place in Brazil where there is land for the taking is in the Amazon rain forest. The destruction of the rain forest is caused by a system that perpetuates artificial land shortages. Nearly four-fifths of Brazil's arable land is covered by sprawling latifundios, most of which are held by speculators who produce nothing.

Here is the root cause of poverty. When laborers are faced with the choice of either bare subsistence wages or land that can barely maintain life, labor itself is marginalized and cannot effectively bargain on its own behalf. Wages, generally, on all land, are driven down toward the point of bare subsistence. Returns to capital are also depressed for the same reason, deterring investment. When this is carried to an extreme — when people can no longer afford the goods being produced and when there is little profit in applying capital — the economy collapses. The inflated land market, on which the speculative frenzy has fed, collapses too.

Since the Great Depression, such total ruin has been minimized in more developed nations through Keynesian measures: monetary expansion, massive public works and welfare programs. In Third World countries, such Keynesian expedients, which support high speculative rent levels, work only if demand for exports is strong. When that demand weakens, the weight of external debt becomes so crushing as to defy redemption.

The Third World debt crisis is taken by many as the clearest sign of the correctness of dependency theory. It is asserted that Western moneylenders have extended loans to corrupt regimes, knowing that the nations' peoples would have to sacrifice to bear ever-increasing burdens. But when we recognize the land problem as the basic cause of the kind of economic collapse that has led to the "foreign debt crisis", it becomes clear that Western financial interests did not create those maladies but rather exploited the hapless economic policies of developing nations for their own gain.

Some defenders of the status quo admit that all land titles may be traced either to acts of force or fraud (or to the more respectable-sounding "priority of occupation"). But, they add, we cannot start over; society has for centuries given legal sanction to private landed property. Innumerable contracts have been executed on the basis of this sanction, and these include the good faith purchase of land. For society to withdraw this sanction, they claim, would be a breach of trust.

The passage of time, however, cannot turn a wrong into a right. Kings and popes and governments never had the moral right to vest in perpetual ownership what God intended for the benefit of all. If the acquisition of a benefit under the law were to establish such a vested right, no law could ever be amended, since it would invariably work to someone's disadvantage.

Obviously, change that further rends the fabric of society is usually self-defeating. And the vast majority of beneficiaries of unjust structures — the beleaguered middle classes — are not intentional wrongdoers but passive recipients of unearned wealth from a flawed system they did not create. The dismantling of these structures, therefore, should, whenever possible, be done in ways that avoid excessive hardship for them. But it must be done.

... Read the whole synopsis