Commentary Magazine


Underdevelopment Revisited

The poverty in which large numbers of human beings live has been a stubborn and morally troubling reality for a long time. The terminology describing this reality has often changed, however. During the hopeful years of decolonization in the aftermath of World War II, “backwardness” (a term suggesting mental retardation) gave way to “underdevelopment” (implying a merely physical lag). This “underdevelopment” was to be cured by “development,” in turn identified with “growth” (as a child catches up with an adult). The manifesto of this period was Walt W. Rostow’s The Stages of Economic Growth, first published in 1960, and reminiscent of Jean Piaget’s child psychology in its self-confident prescription of how a country develops from “take-off” to “maturity.”

Then came the late 1960′s and early 1970′s, when this entire way of looking at the poorer portions of the globe was radically debunked, both in the “underdeveloped” countries themselves and in influential academic sectors of the West. Not only did the “children” throw the book at their “teachers,” but many teachers recanted their earlier pedagogic doctrine. The quasi-mythological phrase “Third World” came into vogue, while the bureaucratic agencies concerned with the poorer regions fell back either on the relatively optimistic term “developing countries” or on the seemingly neutral term, “less developed countries” (with its official acronym, LDC’s).

In the last few years, as the revolutionary redemptions of the “Third World” have proved ever more disappointing, the favored term has become “South,” as in “North/South dialogue.” “South” suggests sunshine, perhaps even natural abundance, but also languid siestas in the heat of the day. The ambiguity is telling.

Changes in terminology sometimes reflect advances in knowledge; sometimes they are covers for ignorance. Which is the case here? How much have we really learned about the world’s poverty and the remedies for it?

If one is in the habit of writing books, these books can sometimes serve as convenient landmarks to measure both advances in learning and perduring ignorance. It is now almost exactly ten years since the publication of my Pyramids of Sacrifice, which was a tentative summing-up of what I had learned about “development” since becoming involved in the topic a few years earlier. As it happens this book (somewhat to my surprise) is still being read; more importantly, it reflects a particular phase in the intellectual and political debate over the issue of poverty and development. For this reason a look at what I said in 1974 may be a useful exercise.

I wrote Pyramids of Sacrifice in response to two powerful experiences. One was my first contact with Third World poverty, which shocked me morally as well as emotionally. The other was the eruption in American academia of a neo-Marxist rhetoric, which purported to understand the causes of Third World poverty and which also claimed to know the remedies. I was never convinced by this rhetoric, but I wanted to be fair to it. More than anything else, I wanted to explore, with moral engagement and skeptical rationality, an area which at that time was suffused with violent emotions and blatantly irrational opinions.

The book argued that both capitalism and socialism had generated myths that had to be debunked—the capitalist myth of growth, which mistook an increase in GNP for improvement in the condition of the poor, and the socialist myth of revolution, which provided an alibi for tyranny. In the service of demythologizing these ideas, the book advocated an open, non-doctrinaire approach; neither capitalism nor socialism, it argued, offered a panacea. Each country would have to think through, in pragmatic terms, what its most promising development strategy should be. As far as moral criteria were concerned, such a pragmatic assessment should be guided, I thought, by two calculi—a “calculus of pain,” by which I meant the avoidance of human suffering, and a “calculus of meaning,” which I defined as respect for the values of the putative beneficiaries of development policies.

A centerpiece of the book was a comparison of Brazil and China, important respectively as the largest capitalist and the largest socialist case. I had traveled extensively in Brazil just before writing Pyramids; although I had not been to China, I had read voraciously about it. I concluded that both “models” should be rejected—curiously, for the same reason. Both were willing to sacrifice a generation for an allegedly certain goal of development, Brazil through the adoption of economic policies that condoned widespread and bitter misery as the short-run price for long-run prosperity, China through terror and totalitarianism. Neither the Brazilian technocrats nor the Chinese ideologists, I wrote, could be certain about the eventual outcome of their policies. This being so, they lost any moral warrant for the sacrifices they were imposing on their peoples.

Yet neither case, the book suggested, exhausted the possibilities of the capitalist or socialist development models. Capitalism need not be practiced as brutally as in Brazil, and there could be a more humane socialism than that of Maoist China. In this connection, I said some nice things about Peru (then under Velasco’s Left-leaning regime) and Tanzania; I had been briefly in both places and had been favorably impressed.

A number of readers of Pyramids of Sacrifice were misled by my wish to be fair to the Left (which, practically, meant that I desired to go on talking with most of my colleagues). They read the book as advocating democratic socialism. That had not been my intention at all. What did come through, however, was some vague notion of a “third way,” perhaps some sort of a so-called mixed model. I had no clear conception of what this might look like; I was unsure of much, and I admitted it. I did feel sure of two things, however: that people should not be allowed to starve if the means to feed them were at hand, and that people should not be subjected to totalitarian terror under any circumstances.

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Obviously, Pyramids of Sacrifice is today obsolete, because of the changes that have taken place in the world (more of this below). But looking back on it now, I am struck as well by the changes that have occurred in my own perspective. Not to put too fine a point on it, I am much less evenhanded today in my assessment of capitalist and socialist development models: I have become much more emphatically pro-capitalist. Some part of the shift I have undergone is undoubtedly due to personal experience. In 1974, except for one foray into Africa, my acquaintance with the Third World was limited to Latin America; inevitably, this made for a very specific bias. In 1977, however, I had my first experience of East Asia and since then my attention has turned very strongly to that region. East Asia is inconvenient territory for those who want to be even-handed as between capitalist and socialist development models. Specifically, the capitalist “success stories” of East Asia and the lessons they hold must be confronted by any reflective person with a concern for world poverty.

To speak of success stories implies a definition of success. And here I would today insist that, minimally, there are three criteria to be applied.

First, successful development presupposes sustained and self-generating economic growth. To that extent, at least, Rostow and the other enthusiasts of the 1950′s were perfectly right, while the late fantasists of zero growth were perfectly wrong. We have a pretty clear idea of what a zero-growth world would look like. It would either freeze the existing inequities between rich and poor, or it would see a violent struggle to divide up a pie that is no longer growing. Neither scenario holds out the slightest promise for such values as human rights or democracy. The existing inequities would have to be brutally defended or brutally altered. I daresay that this root insight of political economy is by now widely recognized, even on the Left (except, perhaps, among the remaining holdouts of romantic environmentalism).

Secondly, successful development means the large-scale and sustained movement of people from a condition of degrading poverty to a minimally decent standard of living. In insisting on this point, I continue to give credence to the critique (mostly from the Left) of the earlier development theories, which tended to see economic growth as a synonym for development rather than as its precondition. On that point, the critics were right: the most impressive growth rates can cover up massively inequitable distribution of the benefits of growth; there can be growth without development, and there can even be what Andre Gunder Frank has called “the development of underdevelopment.” Brazil in the early 1970′s was a striking example of this—staggering economic growth, so maldistributed that abject misery (measured by hunger, infant mortality, low life expectancy, and the like) not only continued unabated but, in parts of Brazil, worsened.

I would even go a step farther in conceding a point to the Left. The advocates of liberation theology have contributed a phrase, “the preferential option for the poor,” which sounds like a bad English translation of a bad Spanish translation of neo-Marxist German, but means simply that one is morally obligated to look at things from the viewpoint of the poor. Fair enough. After all, it was Dr. Johnson, not exactly a premature Marxist, who said that “a decent provision for the poor is the true test of civilization.”

In focusing on this particular criterion for defining successful development I am invoking, of course, the ideal of equity; but I am not invoking “equality,” a utopian category that can only obfuscate the moral issues. It is inequitable and immoral that, next door to each other, some human beings are starving while others gorge themselves. To make this situation more equitable and thus morally tolerable, the starvation must stop and the poor must become richer. This goal can be attained without the rich becoming poorer. In other words, I do not assume the need for a leveling of income distribution. Western societies (including the United States) have demonstrated that dramatic improvements are possible in the condition of the poor without great changes in income distribution; the poor can get richer even while the rich get richer too. And there are good economic grounds for thinking that income-leveling policies in the Third World inhibit growth, with the poor paying the biggest price for this inhibition. “Equality” is an abstract and empirically murky ideal; it should be avoided in assessing the success or failure of development strategies.

Third criterion: development cannot be called successful if the achievements of economic growth and equitable distribution come at the price of massive violations of human rights. This criterion applies to both of the calculi formulated in Pyramids of Sacrifice. In 1974 it seemed to me and to many others that China offered an illustration of the “calculus of pain.” We now know that the economic and egalitarian achievements of Maoism were themselves largely fictitious. Still, I believe that I was correct to insist that, even if it were true that Maoism had vanquished hunger among China’s poor, this achievement could not morally justify the horrors inflicted by the regime—horrors that entailed the killing of millions of human beings and the imposition of a merciless totalitarian rule on the survivors.

As for the “calculus of meaning,” Iran now offers a good instance. The Shah’s regime undoubtedly achieved economic growth, it ameliorated the condition of many of the poor (even if a corrupt elite greatly enriched itself in the process), and its violations of human rights, ugly though they were, did not come even close to the horrors of Maoism (not to mention the nightmare of terror of the Khomeini regime). However, as Grace Goodell has persuasively argued, the reform program of the Shah systematically trampled on the mores and values by which the largest number of Iranians gave meaning to their lives. It was a program of rapid and coercive modernization, contemptuous of tradition and of indigenous institutions. Logically enough, this alliance of technocrats, profiteers, and secret police evoked a neotraditionalist reaction. The tragic consequences following the triumph of these reactionaries, and the fact that the new regime has worsened the condition of the Iranian people, cannot provide an ex-post-facto justification of the Shah’s policies. (By analogy, the Bolshevik Revolution was a catastrophe for the Russian people; but it does not follow from this that czarism, though in many ways morally superior to its successor regime, was a wise and humane system.)

It should be clear what I mean by “massive violations of human rights”: mass killings, concentration camps, forced deportations, torture, separation of families, pervasive intimidation—in other words, the standard practices of 20th-century totalitarianism. But I should stress at the same time that I do not include democracy as a necessary element in this criterion for successful development. Democracy is the best available form of government in the modern world; moreover, I consider it the only reliable protection of human rights under modern conditions.1 In the long run, I also believe that democracy and development are necessarily linked realities. All the same, the case regrettably cannot be made that democracy is indispensable to successful development.

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Armed with these criteria for development we may now turn to the evidence that has accumulated over the last ten years. Perhaps the most important piece of evidence is negative: the absence of even a single successful case of socialist development in the Third World.

Even in the early 1970′s it should not have been news that socialism is not good for economic growth, and also that it shows a disturbing propensity toward totalitarianism (with its customary accompaniment of terror). What has become clearer is that socialism even fails to deliver on its own egalitarian promises (the second criterion of success). In country after country, socialist equality has meant a leveling down of most of the population, which is then lorded over by a highly privileged and by no means leveled elite.

Put simply, socialist equality is shared poverty by serfs, coupled with the monopolization of both privilege and power by a small (increasingly hereditary) aristocracy. That this was so of the Soviet Union had already been accepted by most Western and Third World leftists by the late 1960′s and early 1970′s. What is evident now is that a Soviet-style nomenklatura seems to spring up predictably wherever socialism extends. It has done so in China, in Vietnam, in Cuba, and in such lesser socialist experiments as Angola and Mozambique. None of these countries, not even Cuba, is directly or entirely under Soviet rule. It seems to be the intrinsic genius of socialism to produce these modern facsimiles of feudalism.

The fact that there is not a single case of economically successful and non-totalitarian socialism has begun to sink in. (The social democracies of the West, of course, should not be subsumed under the category of socialism.) The monumental failures of Maoism, failures proclaimed to the world not by its old enemies but directly from Peking, have made a deep impression in Asia; so have the horrors of the triumphant socialist revolution in Indochina. In Asia more than elsewhere in the Third World, there now seems a new openness to the possibility of capitalist models, even if the word itself is avoided in favor of circumlocutions like “market mechanisms” or euphemisms like “pluralism.” The radical shift from a socialist to a capitalist model in Sri Lanka illustrates this tendency, especially because it came about as the result of open debate and democratic politics.

Two cases touched upon in Pyramids of Sacrifice, Peru and Tanzania, are interesting in this connection. The socialist experiments of the Velasco regime ended in economic disaster, after which, prudently, the military handed the mess back to a civilian government that stopped the experiments. It is not clear, however, to what extent the brief and limited socialist policies of the Velasco regime can be blamed for economic problems that antedated it.

The case of Tanzania—an economic fiasco—is much more instructive. Here was a country that in the early 1970′s had much going for it—reasonably good resources (especially in agriculture); a dubiously democratic but relatively humane government led by Julius Nyerere, an intelligent and attractive leader by most standards; and freedom from foreign domination. What is more, Tanzania had long been the darling of development-aid institutions, which poured vast amounts of money into the country. Whatever else one may say about the economic and political failures of Tanzania, these cannot be blamed on corrupt leadership, on bad Soviet influence, or on the hostility or destabilizing policies of Western capitalism. The fiasco was self-made.

Tanzania’s much-vaunted Ujamaa program of socialist agriculture has come close to destroying the agricultural productivity of the country. As the program has failed economically, it has become more coercive. The government had at first tried to persuade peasants to move to Ujamaa villages by means of incentives; by the late 1970′s, pressure had to be applied. As for the non-agricultural sector of the economy, small enough to begin with, the “para-statal organizations” that operate it have succeeded in running that little into the ground. This particular failure has been augmented by systematic pressures on the Indian minority, who (in Tanzania as in other East African countries) comprise much of the small entrepreneurial class. Not surprisingly, the economic failures have gone hand in hand with increasing political repressiveness; Tanzania today is even less democratic and certainly less humane than it was in 1974.

Events in China and Brazil, the two countries discussed at greatest length in Pyramids of Sacrifice, have been momentous. In the book I rejected the Maoist model because of its human costs; now the model must also be rejected because of the costs brought about by economic and social mismanagement. To put it differently, where I rejected Maoism on non-Maoist grounds, now the Maoist experiment can be shown to have failed even by its own criteria of success.

Brazil is a more complicated case. Before the oil shock and the ensuing indebtedness crisis, there were some modest signs of a more equitable distribution of the benefits of growth. There has also been an impressive move from harsh military dictatorship toward democracy. It is noteworthy that Fernando Henrique Cardoso, the father of Latin American “dependency theory,” is today a federal senator of the largest opposition party and speaks more in the moderate tones of Swedish social democracy than in the fiery neo-Marxist rhetoric of the early 1970′s. All the same, by the criteria set forth above, Brazil cannot be cited as a case of successful development, and cannot (yet) be used as an argument for capitalism.

One other case in the Americas, that of Jamaica, is interesting because it (like Sri Lanka) abruptly veered from a socialist to a capitalist course, and did so as a result of democratic politics. Jamaica, however, is beset with manifold troubles; the capitalist experiment of the Seaga regime is still very new; and the place of the experiment remains uncertain.

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A number of other cases (such as the Ivory Coast) are sometimes cited in favor of capitalism. But these aside, the most dramatic and convincing success stories today, and the ones offering the strongest brief for capitalism, are in East Asia.

There is, first of all, the astounding instance of Japan. To be sure, Japan is no longer regarded as anything but a highly advanced industrial society—in some ways a more successful one than the societies of North America and Western Europe. This very achievement, however, is what makes Japan crucial for any responsible theory of development. Here is the only non-Western society that has moved from underdevelopment to fullblown modernity within the span of a century. Moreover, whatever variables may have been in play (political, cultural, geographical, and so on), Japan is a successful capitalist society. How did the Japanese pull this off? And can others learn from their success? Not surprisingly, Third World politicians and intellectuals, even in countries that have reason to fear Japanese power, such as those of Southeast Asia, talk of the “Japanese model” as something to be admired and emulated.

But Japan no longer stands alone as a success story. There are the four countries of what may be called the Asian prosperity crescent—South Korea, Taiwan, Hong Kong, and Singapore. Despite important differences among them, each has employed an exuberantly capitalist strategy to move out of underdevelopment to the newly designated status of “New Industrialized Country” (or NIC). And this has happened with breathtaking speed and thoroughness, within the span of two decades. In no meaningful sense can these countries any longer be regarded as parts of the Third World (though Hong Kong, depending on China’s policy toward it, may fall back into underdevelopment in the near future). There are even grounds for thinking that their prosperity is pushing into other countries, especially in Southeast Asia (Malaysia, Thailand, and possibly Indonesia).

South Korea, Taiwan, Hong Kong, and Singapore are successful by all three of the criteria listed above. Their rates of economic growth continue to be remarkable. They have completely wiped out Third-World-type misery within their borders. What is more, they (especially Taiwan and South Korea) have forcefully challenged the so-called “Kuznets curve” by combining high growth with a highly egalitarian income distribution. Their regimes, while not democratic, are authoritarian in a generally benign way (especially when compared with others in the region).

These four countries, only one of which, the Republic of Singapore, operates within the United Nations system, are increasingly attracting the attention of analysts of development and are more and more frequently cited as examples to be emulated. They constitute the most important evidence in favor of a capitalist path of development.

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What, then, do we know today about development? We know, or should know, that socialism is a mirage that leads nowhere, except to economic stagnation, collective poverty, and various degrees of tyranny. We also know that capitalism has been dramatically successful, if in a limited number of underdeveloped countries. Needless to say, we also know that capitalism has failed in a much larger number of cases. What we do not know is why this is so.

It seems to me that the issue of socialism should be put aside for good in any serious discussion of development; it belongs, if anywhere, to the field of political pathology or Ideologiekritik. The question that should be of burning urgency (theoretical as well as practical) is why capitalism has succeeded in some places and failed in others. What are the variables of success and failure? That is the crucial question.

The success stories of East Asia have, very understandably, led some analysts to think that an important causal factor may be the culture of the region. A “post-Confucianist hypothesis” proposes that all the successful societies and ethnic groups (notably the overseas Chinese) share a common economic ethic derived from Confucianism, deemed to be a functional equivalent of Max Weber’s famous “Protestant ethic.” But Confucianism is by no means the only cultural element that may be relevant. Others may include the political traditions of East Asia, patterns of family and household, and different components of the area’s religious heritage (such as Mahayana Buddhism).

One does not have to be a disciple of Weber to want these hypotheses addressed. Indeed, if one is concerned with Third World development in general, one would dearly love to see them falsified—not out of antagonism toward East Asia, but because the East Asian success stories can only become models for other parts of the world if they do not hinge on a non-exportable cultural factor. One might advise an African country to adopt the economic policies of South Korea; one can hardly advise the Africans to adopt Korean culture.

In Pyramids of Sacrifice I put forward a “postulate of ignorance”: we are compelled to act politically even when we do not know many of the factors determining the situation in which we find ourselves. I formulated this postulate in the context of recommending a non-doctrinaire approach to development policy. I would reiterate it today. We are less ignorant than we were ten years ago, but there is still much that we do not know. Those charged with political responsibility in the matter of development, however, do not have the luxury of the social scientist who can always say that more research is needed. Science is, in principle, infinitely patient; politicians must act out of the urgencies of the moment. In such a situation the morally sensitive politician should be fully conscious of the fact that, whatever he chooses to do—and often the range of choices is narrow—he will be gambling. The evidence today strongly suggests that it is much safer to bet on capitalism.

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Footnotes

1 I have explained why at some length in “Democracy for Everyone?,” COMMENTARY, September 1983.

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