Dark Victory: The United States, Structural Adjustment, and Global Poverty. - book reviews

The late 1980s were supposed to mark the end of history." Communism's collapse, we were told, showed once and for all that free market capitalism represents the pinnacle of social evolution. "Market forces" now dominate the lives of most of the world's people, but rather than the predicted burst of growth and flowering of democracy, the result has been widespread economic crisis and social decay. The reason, according to the "new wisdom," is that we have entered the "age of anarchy." Only a few of us (most of whom live in the developed capitalist world) will have the chance to enjoy the end of history; the great majority of the world's people are doomed to be "stuck in history," or perhaps better said, condemned to move "backward in time." But it is not capitalism's fault. In a revival of Malthusian thinking, it turns out that the poor are responsible for their own situation - overpopulation and defective cultures lead to environmental decay and the erosion of nation-states and the rule of law. The resulting anarchy also threatens to destroy our own chances for survival. In short, there is really nothing we can do but prepare to defend ourselves from the (non-white) barbarians massing at the gate.

In point of fact, there is much we can do. As a start, read Dark Victory. Although not written specifically to counter this new wisdom, the book helps illuminate where this thinking is coming from and why and how it needs to be challenged.

The New Wisdom

Robert D. Kaplan, writing for the Atlantic Monthly, was one of the first to popularize this notion of "the coming anarchy."(1) In a rather lengthy piece, we learn about "what is occurring in West Africa and much of the underdeveloped world: the withering away of central governments, the rise of tribal and regional domains, the unchecked spread of disease, and the growing pervasiveness of war."

Driving this process is an environmental crisis caused by deforestation, soil erosion, water depletion, air pollution, and overpopulation. With resources scarce, people are driven to fight or flee for survival, thereby further weakening national order and national borders. Sadly, given the nature of many Third World societies, even new resource technologies and free market development cannot help. Under these conditions, anti-western totalitarian states such as Iraq and hostile ideologies such as Islamic extremism can be expected to flourish. Thus, as the Cold War gives way to the age of anarchy, the "environment" comes to replace the Soviet Union as "the national security issue of the early twenty-first century."

To help us understand the world we live in, Kaplan tells us to imagine that we are wealthy people in an air-conditioned stretch-limousine, driving around the potholed streets of New York City where homeless beggars live. There are threats all around. One of the most immediate comes from the massive wave of immigrants who want to escape their fate by coming to the United States. Limousines, of course, are only so big. But more is at stake than room. Accepting these immigrants might cause us to lose our own sense of national cohesion. And, warns Kaplan, if we lose our national identity and patriotism, we might eventually lose our own seat in the limousine.

Walden Bello and his associates Shea Cunningham and Bill Rau also recognize that the last two decades have been hard ones for the people of the South. But in sharp contrast to Kaplan, who explains the African experience as one of "nature unchecked" and approvingly quotes a scholar who believes that "for too long we've been prisoners of 'social-social theory,' which assumes there are only social causes for social and political changes," Dark Victory tries to confirm analytically and empirically the widely shared sense that the collapse of the South and the greater insecurity in the working and living conditions of most people in the North were consequences of the same thing - a sweeping strategy of global economic rollback unleashed by northern political and corporate elites to consolidate corporate hegemony in the home economy and shore up the North's domination of the international economy.

The Challenge from the South

The book's argument is straightforward. The U.S. offensive against the people of the South was designed to reverse three trends which, over the 1960s and 1970s, became increasingly threatening to corporate profitability.

First, active state intervention in economic affairs - which in many countries included strategic planning, development finance, public enterprise, and trade protection - generated significant (although admittedly uneven) growth. To sustain this growth, governments in major Third World countries like Brazil and Mexico were, by the late 1970s, closing off key sectors of their economies to U.S. corporate investment. The situation, from U.S. capital's point of view, was even worse in the newly industrializing countries (NICs), especially South Korea and Taiwan. U.S. firms were not only locked out of markets, they were also forced to compete against exports in the U.S. market.

Second, anti-capitalist, national liberation movements came to power in Mozambique, Angola, Guinea-Bissau, Vietnam, Laos, Kampuchea, Nicaragua, Iran, and Zimbabwe. And, in spite of active support for anticommunist dictatorships, the U.S. government seemed unable to stop the growth of such movements in other countries.

Finally, growing numbers of Third World leaders began to organize and call for the restructuring of the existing international capitalist system. New organizations such as the United Nations Conference on Trade and Development and the Group of 77 were formed to strengthen Third World unity and power. The Non-Aligned Nations Movement brought together governments of countries as diverse as Cuba, Brazil, Libya, and Saudi Arabia to demand a New International Economic Order. In fact, a related Action Program was adopted by a special session of the United Nations General Assembly in 1974. OPEC's price actions gave an indication of the potential political and economic power available to a unified South in control of its own resources.

Reaganism

U.S. post-Second World War policy had been guided by a strategy known as "containment liberalism." In broad terms this meant a foreign policy defined by anti-communism and a domestic policy shaped by New Deal, Keynesian thinking. With respect to the South, policymakers viewed Third World growth positively, believing that it would help ensure the political stability of existing non-communist regimes as well as generate new markets for U.S. corporations.

Given the trends noted above, the U.S. corporate elite was, by the end of the 1970s, ready to reject containment liberalism and embrace "Reaganism," which disagreed with containment liberalism's premise that a more prosperous South would work in the interest of the United States. Indeed, many people in the new administration believed that the interests of the North were fundamentally antagonistic to those of the South, and that the task of the moment was to repair the damage through firm policies aimed at rolling back the South and resubordinating the increasingly unmanageable Third World within a U.S.-dominated world economic system.

Right-wing think tanks took leadership in promoting the view that Third World troubles were of their own making. Having messed up their economies because of state intervention, Third World leaders were now seeking to use the international arena (including organizations like the UN and World Bank) to demand handouts from the United States. Even more serious were Third World demands for international ownership and control over the world's natural resources through various treaties designed to regulate access to the seabeds, space, and Antarctica. Such notions dovetailed nicely with right-wing critiques of past U.S. state activity which, through its support of welfare programs, environmental regulations, and high levels of employment, was also seen as undermining the efficiency and profitability of U.S. corporations.

Thus, in the name of promoting "competition" and "free enterprise," the U.S. state set out to refashion a world open to U.S. transnational capital. In terms of the South this meant one thing: reopen Third World economies by rolling back the Third World state. Before long, the Reagan administration found IMF/World Bank structural adjustment programs SAPS) to be one of its most effective policy instruments.

Rollback

Third World governments, trapped in debt crisis, were forced to negotiate SAPS with the World Bank and IMF as a condition for obtaining new international credits. By the beginning of 1986, twelve of the top fifteen Third World debtors had agreed to SAPS. By the end of 1992, approximately 267 Saps had been approved. Sub-Saharan Africa was the most structurally adjusted region, with thirty-six of the forty-seven countries undergoing some form of structural adjustment.

The heart of Dark Victory is a careful examination of the logic and consequences of these structural adjustment programs on Third World people and economies. In broad brush, SAPS require Third World states to reduce spending on social programs in the name of fighting inflation and reducing imports; slash wages to boost exports as well as reduce inflation and imports; and drop controls on imports, remove restrictions on foreign investment, and privatize state enterprises to increase efficiency and boost exports. Kaplan does not mention it, but SAPS played a prominent role in undermining state power in Africa.

Considering that SAPS are designed primarily to weaken Third World states and open up Third World economics, it should come as no surprise that Bello and his associates are easily able to demonstrate that such programs leave most countries and their populations significantly worse off. Among the common results: deindustrialization, an increase in malnutrition and diseases such as tuberculosis and cholera, and greater exploitation and destruction of the environment. Kaplan may sec in all this "nature un-checked," but Dark Victory documents the role of SAPS in creating the conditions for "anarchy."

The book also makes it clear that SAPS have been remarkably successful if judged from transnational capital's point of view. Structural adjustment loans and structural adjustment policies created numerous profit-making opportunities for transnational corporations. In other words, World Bank/IMF policies reflect corporate interests, not misguided economics. This point is not always appreciated, even by those who oppose SAPS; many still think that the World Bank/IMF can be reformed.

Not facing a debt crisis, the NICs have been able to avoid SAPS. They have not, however, been able to avoid the pressure of rollback. Dark Victory shows how the U.S. government has repeatedly used the threat of trade war to force NIC states to reduce their economic activity and open up their economies to U.S. imports and investment. The new GATT agreement is an important part of the U.S. offensive. Although promoted as a generalized free trade agreement, it is primarily designed to restrict state direction of economic activity.

Finally, Dark Victory also shows how rollback has been applied in the United States. Reaganism represented an aggressive attempt to dismantle all laws, programs, and agencies that supported working people or reduced corporate profitability and freedom of action. The outcome, not surprisingly, was similar to what rollback produced in the South: greater poverty and hunger, growing inequality and social polarization, and decaying neighborhoods and industries.

One of Dark Victory's greatest strengths is the clarity with which it shows how U.S. economic and political elites have been pursuing a comprehensive strategy to create a world free for profit-making regardless of the social and environmental costs. The book's policy focus also makes clear the need for movement building and political resistance. In making their argument, however, Bello and his associates come dangerously close to advancing a kind of state-voluntarist view of change, one in which state policies are seen as shaping events rather than being shaped themselves by capitalism's internal logic, specifically its crisis tendencies and restructuring imperatives. Although unintended, such a view could easily lead to a political activism more oriented toward reform than structural transformation.

My only other criticism of Dark Victory concerns the way Bello and his associates compare U.S. and japanese policy choices to highlight the counterproductive and short-sided nature of Reaganism. The result is to overstate the virtues of japanese capitalism. Japan's high growth rate is not unrelated to its exploitation of the people and resources of Asia. Its high rate of capital accumulation is financed to a considerable extent by the low wages paid, and low level of social security programs provided, to most Japanese workers. And the job security Japanese corporations offer their core (male) workers also comes with a high price: a production regime that ruthlessly exploits the great majority of Japanese workers as well as those core workers who must seek new employment after being forced to "retire" at the age of fifty-five. In short, Japan does not offer a model for an economically superior and more humane form of capitalism.(2)

In building an alternative to Reaganism, Bello and his associates believe that there is "no room for nostalgia." The NIC model of military dictatorship and high-speed, environmentally damaging growth can no longer work. State socialism has also exhausted its potential. Similarly, we in the developed capitalist countries must move beyond the New Deal Keynesianism of the past.

While refusing to give a name to their alternative vision, they are clear that it must be based on the subordination of the market, of the institutions of production and distribution, to community. The reintegration of the economy into the community cannot be left to the invisible hand of the market, for that hand constantly erodes communal bonds and makes individual insecurity the human condition. They also believe that such an alternative social order requires new forms of economic cooperation operating at all levels, including between nations, and that these new forms can only be built on a base of meaningful international labor solidarity. These certainly seem like sound starting principles for movement building.

Capitalists may be enjoying their "dark victory" but given the economic, political, social, and environmental contradictions inherent in their rollback strategy, there is reason to be hopeful about the future.

NOTES

(1.) Robert D. Kaplan, "The Coming Anarchy," Atlantic Monthly, February 1994. (2.) For more discussion of these points, see the forthcoming work,japan in Historical Context Lessons for the U.S. Left, by Paul Burkett and Martin Hart-Landsberg.

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