Why more of the same will not work Jayati Ghosh

A visit to Western Europe in early March provided some slightly different – if unsettling – insights into global economic arrangements and their socio-cultural co-ordinates. As the crisis unfolds, people everywhere are questioning current economic institutions and processes, and naturally enough their fears, insecurities and concerns also affect their visions for the future. The fundamental issues relate to income and resource distribution (don’t they always?) but in this time of global crisis, the expression of these issues can become sharper and even more openly divisive in spirit.

Two features of some current public responses in these societies are especially relevant in this context. The first is the barely concealed animosity towards China and India (inevitably clubbed together, despite all the huge differences) as perceived beneficiaries of globalisation and voracious consumers of global resources. The second is the general inability to conceive of a way out of the current global economic crisis in any way other than simply replicating the past, even though those past trends clearly cannot be sustained.

European attitudes towards Asia have long been characterised by varying combinations of fear and fascination, respect and revulsion, competition and colonialism – as studies of Orientalism have made only too evident. But the current public perceptions are somewhat different: fed by sensationalising media that cannot waste time or space on complexities, they move in pendulum swings from seeing populous Asia as the breeding ground for poverty and terrorism to believing that aggressive exporting based on underpriced labour is causing more than two billion people to lead “middle class lives” that draw unsustainably on the world’s resources.

Of course, sheer ignorance explains a lot. Among the general public in Europe, and even in the more informed sections, there is almost no realisation of how globalisation has adversely affected livelihoods and employment of the majority of the population in the developing world including in fast-growing Asian countries. The agrarian crisis is largely seen to be history, supposedly vanquished by the rising prices of agricultural goods in world trade between 2002 and mid 2008, even though farmers’ incomes continue to stagnate and cultivation is still barely viable in large parts of the developing world. Because of the volumes of manufacturing exports from Asia, there is still widespread perception of shift of manufacturing jobs from North to South – even though manufacturing employment has declined in the developing world as a whole, has barely increased in most countries of Asia and has actually declined since 1997 in what is generally accepted to be the workshop of the world, China.

A member of the audience at a public debate in London asked whether China and India, newly enriched by exploiting the globalization process, would therefore use the current crisis as opportunity to ride through the global economic tsunami that threatens to engulf everyone else and emerge stronger than the US and Europe. A distinguished-looking and apparently eminent elderly gentleman at a large conference in Berlin was even sharper: “China and India”, he claimed, “benefited from the Asian economic crisis in 1997-98 at the cost of their neighbours, and now they will benefit from the global crisis”. Another participant from the floor expressed it slightly differently: “These countries are not poor, they are full of billionaires and have four out of ten of the world’s richest people, and yet they come blaming us for the crisis and demanding assistance from us.”

These are obviously not politically correct positions, nor are they necessarily even the majority view, since they were opposed by other participants in each of these events. Yet the sheer honesty of their expression is useful, since it provides some idea of what must be a widespread underlying perception. And the concerns do not relate only to potential shifts in geopolitical or economic power. Even among more progressive people in Europe, there is a palpable fear (sometimes unspoken and sometimes expressed only in subtle and qualified arguments) that growing consumption of such a large part of the world’s population will put an unbearable strain on global resources and therefore cannot really be supported.

There is certainly some degree of truth in this – there is no question that current “Northern” standards of life cannot be sustained if they were made accessible to everyone on this planet. This means that future economic growth in the developing world has to involve more equitable and sensible patterns of consumption and production. But that hardly deals with the basic problem. Even if the elite and middle class of the developing world, and particularly China and India, just stopped increasing their consumption, simply bringing the vast majority of the developing world’s population to anything resembling a minimally acceptable standard of living will involve extensive use of global resources. It will necessarily imply more natural resource use and more carbon emissions.

So the stark reality is that the developed world must, on the whole, consume less of the world’s resources and reduce its contribution to global warming absolutely. This in turn has effects on income as well. It is not immediately clear why rich countries with falling populations necessarily need to increase their GDP, and why they should not focus instead on internal redistribution and changing lifestyles, which could in fact improve the quality of life of every citizen.

The current crisis is an excellent – even unique – opportunity to bring about such shifts in socially created aspirations and material wants, and to reorganise economic life in the developed world to be less rapacious and more sustainable. But sadly, this message is not being heard at least among the major policy makers in the core capitalist countries. In the United States, even the relatively environment-friendly Obama administration simply talks about promoting “cleaner, greener technologies” rather than altering absurd and wasteful consumption patterns. For example, it is still basing its transport strategy on excessive reliance on private automobile use rather than more extensive and efficient public transport.

In Europe, too, the focus is on reviving and increasing the old (outdated?) patterns of consumption. Silvio Berlusconi in Italy has just pleaded with his people not to change their lifestyles because of this crisis, because this would reduce economic activity immediately! The implication is that wasteful and excessive consumption is socially desirable because that is the only way to preserve employment.

Globally, too, policy makers are displaying the same startling lack of imagination. The focus is on the US and all eyes are on the Obama recovery package, since direct or indirect dependence on exports to the US is so great for most countries that this is seen as the only way for all economies to recover. Yet the US simply cannot continue to be the engine of world growth, given its huge external debt and current deficit, nor is it desirable that it should do so. This creates an inevitable and urgent need for other economies to redirect their trade and investment, at least at the margin. And associated with that, it also creates an opportunity for other countries to think about generating different, more sustainable and possibly more desirable, consumption patterns.

Why is it that so few people, especially those in a position to influence economic policies today, are raising these rather obvious questions? What we do not seem to realise is that unless we sort out these basic issues, we will not only be marching with lemming-like intensity and desperation to the sea, but we will also be squabbling, fighting and even killing each other for the privilege of getting there first.