Wednesday, October 22, 2008

economic prosperity without development


Madeleine Bunting's review of Aravind Adiga's Booker Prize winning White Tiger contains this passage:
"The western model of neoliberal financialisation was driven by clear self-interest, argues the Cambridge economist Ha-Joon Chang. The west couldn't compete in manufacturing (its labour costs are too high), so it turned to financial markets and used the cheapest way to make money: it offered loans, not for productive investment (factories, businesses) but to consumers, using their homes as collateral. Credit cards and small loans are particularly lucrative. So the west leaned heavily on countries through the World Trade Organisation and the IMF to open up their financial sectors. The western banks and the advertising companies piled in, and the result is a credit consumer boom. This may make a few people rich, but it is not, by any definition, development."
This one's pretty damning too:
At its most stark, the analysis is that the west has had a vested interest in keeping wage levels down in developing countries while making money from offering cheap credit. All it had to do was enlist a collaborating elite in each country to implement the deal, which was clearly not in the interests of the bulk of the population. Neoliberal globalisation was a system that ensured the rich got richer and the poor got poorer.
In fact, the whole review is really, really good. Well done Mad and well done Aravind for penning this stuff.

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