FOREIGN AID, GLOBAL POVERTY and the UN

Posted on | maart 25, 2011 | No Comments

On 20-22 September 2010, the UN celebrated the 10th anniversary of the Millennium Development Goals (MDG) program. This was with the intention of taking stock of the progress made thus far and to urge governments and the private sector to help meet the ambitious goals by the target date of 2015. The eight goals that 140 leaders from around the world came together to discuss in New York, include:

a) end poverty and hunger;
b) universal primary education;
c) gender equality and empowering women;
d) reduce child mortality;
e) maternal health;
f) combating HIV/AIDS, malaria, and other diseases;
g) environmental sustainability;
h) global partnership for development.


In all eight goals some progress has been made in the past decade. Guide and guardian of finance capital, the IMF proclaimed that the key to meeting MDG program targets is economic growth – always under the neo-liberal economic model whenever possible with minimal state intervention. Former President Bill Clinton has been soliciting financial assistance from high-profile individuals in Hollywood, businesses and governments. All efforts are better than watching more than 2 billion people go hungry and without medicine when there is more than enough food, water, and medicine to take care of their basic needs.

But is it profitable to provide basic needs for two-thirds of the world’s population, or do we confine ourselves to thanking billionaires and multi-millionaires who give a part of their wealth to charity, as nice as that is on their part to return wealth they have appropriated, wealth they accumulated by investing in corporations doing business in less developed countries where labor values are low and in part at least account for endemic poverty?

Is the market economy based on capital concentration and accumulation of capital, as well as social and geographic inequality undergoing transformation from its neo-liberal phase under globalization to an “enlightened capitalist phase,” or is this merely a very elaborate exercise in convincing world public opinion that capitalism can solve human rights problems?

The ultimate irony in this UN project is that the countries that MDG is designed to help possess most of the world’s natural resources, but the same are exploited directly or indirectly by the 20 richest nations mostly for the benefit of multinational corporations. For UN secretary-general Koffi Annan, who led the initial MDG effort, accused the rich nations of failing to meet their obligations. Even if rich nations heed his advice, the North-South divide will not be solved by MDG because its ambitious goal to eradicate poverty runs counter to the political economy of capital concentration on a world scale.

Considering that the recession of 2007-2011 has created greater poverty not only in the G-7 but throughout the world, with the exception of very few countries; considering that most countries even within the G-7 are diluting the social welfare state and strengthening corporate welfare, what is the best hope for MDG targets to be realized and for the poor countries not to have the problems that the UN has identified as chronic?

Let us consider the empirical reality that market economy in rich nations, including the US, is weakening the middle class and creating greater gap between rich and poor social classes, as evidenced by the fact that the US has 1 in 7 living below the poverty line; adjusted for inflation, the average weekly pay has dropped 13% since 1973–the base line for the end of upward middle class mobility in the US. Within the US the creation of a ‘Third World’ segment has been growing in the last three decades and it will grow even faster in the current decade. Why would a country like the US whose policies are creating poverty help other countries eradicate it by introducing the same policies to the others?

The fact that roughly 80% of the world’s wealth is concentrated in the G-20 and within those countries the majority of wealth is in the hands of a small minority, entails there is no hope for UN’s MDG program to be realized not by 2015 but not even in the next 100 years! What are some other obstacles to progress that go to the heart of contradictions of the market economy itself? The economies of the rich nations are inward-oriented, catering first to the domestic market and selling the surplus to foreign markets, especially to semi- and less developed countries where labor values are low and profits high. By contrast, the economies of the semi- and less developed countries where poverty is widespread are outward-oriented, based on few exports from which most of the revenue emanates. The rhetoric notwithstanding, there is no sustainable development; a concept that has been co-opted by multinationals as a backdoor channel to continue the dependency pattern of underdeveloped countries.

Because the export sector in underdeveloped countries is invariably owned directly of through local contractors by multinationals, national capitalism and the state as a support mechanism are very weak in comparison with the rich nations. This makes it easier for the multinationals to manipulate through bribery and legal methods using the World Bank, IMF, and the services of their government in the underdeveloped countries that need capital. The result is less stringent legislation (environmental, labor relations, health codes, etc.) affecting foreign companies, lower taxes than they pay in their own countries, and of course easy terms for repatriating profits. This situation entails perpetual movement of capital from the semi and less developed countries to the core or rich nations.

Trade dependence is directly linked to deteriorating terms of trade at the expense of the less developed countries with low labor values and low consumption. Former Indian government official Shashi Tharoor, who took part in the initial MDG conference in 2000, commented:

“Many countries are prevented from trading their way out of poverty by the high tariff barriers, domestic subsidies, and other protections enjoyed by their rich-country competitors. The European Union’s agricultural subsidies, for example, are high enough to permit every cow in Europe to fly business class around the world. What African farmer, despite his lower initial costs, can compete?”

Another very significant area of structural weakness is what Chancellor Angela Merkel identified when she blamed governance in the debtor nations as part of the problem. Indeed it is true that the state structure in a semi- and less developed nation is weak, especially the fiscal system that is needed to support national capitalism, in comparison with the rich nations. But why is the state structure weak and do rich nations and international organizations like IMF and World Bank have any role in contributing to its weakness today and in the past? Debtor countries are in eternal need of loans–monetary (currency stabilization) or development (project).

To secure such loans they must meet criteria that the rich nations and/or IMF, European Central Bank and FED establish, all instruments for strengthening private capital. Such criteria is designed to maintain a very strong market economy, namely, domestic and foreign capital enjoy the support and protection of the state because ‘national interest’ and economic development is equated with private capital, while the enemy is the public sector and labor. Poorer countries are invariably perpetual debtors and financially dependent on the rich nations. Financial dependence is invariably linked to trade, manufacturing, transportation, and service sectors dependence, which does not permit for the less developed nations to emerge from perpetual poverty that a substantial segment of their population is suffering.

This does not mean that Merkel’s comment is not to be taken seriously, especially after the revelation that India falsified maternal death reports to meet MDG targets, or the fact that local politicians and military officials use foreign aid to enrich themselves. Indeed corruption in semi and less developed countries is a large part of the problem. However, even if corruption were to disappear by magic in a single day, the chronic problems that the UN has identified will remain for as long as the political economy is based on the principle of capital concentration and accumulation flowing outward from the less developed nations to the rich nations, and from labor to business.

The larger question to ponder in the UN’s MDG program is why the political and business establishment is behind this effort, why the same elites largely responsible for the calamities of chronic poverty are insisting they wish to eradicate it? One answer is that MDG is morally correct and that businesspeople and government and non-government organizations like the IMF and World Bank that support MDG are motivated by humanitarianism, compassion for the poor, for tens of thousands of children dying each day of hunger.

My answer to MDG and its supporters is that there are interesting parallels between the British ending slavery and UN’s MDG. Did the British end slavery out of consideration for non-white people, did they do it owing to pressure from minister of the church, or was there another motive that was rooted in the changing economy? British policy to retain the population in their colonies as the economy was changing from commercial to industrial capitalism thus the slave trade (ACT OF 1807) followed by the Abolition Act of 1833 was based on the realistic need for labor in the colonies to supply the mother country with raw materials for global trade. Industrial capitalism was based on free labor as it was on free trade, therefore the institution of slavery was anachronistic, for it was the product of commercial capitalism that was overtaken by industrial and finance capitalism.

Today, we have the evolution of globalization that needs a solid work force in the semi- and less developed countries where labor values are low, otherwise the growth and expansion of capitalism cannot continue. The UN is offering the forum and the means for governments of the rich nations serving the market economy to create a more viable work force in the semi- and less developed nations, and to continue the thorough geographic and economic integration of every inch on the planet in order to realize the goal of capital concentration.

AUTHOR: Jon Kofas
URL: http://jonkofas.blogspot.com
E-MAIL: jonkofas [at] yahoo.com

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