In search of a new development model between Western and Far Eastern one

Development itself is such a western term that emerged after post world-wars to recover what the European countries had enjoyed before the breakouts. During the next 60 years nations have seek their development under the westernised paradigm which considers capitalistic growth and progress as a synonym of development. Reading a book called ‘Westernizing the Third World’, from its beginning I put my political and economic agreements with its perspective where says that in spite of such development we call as progress, between 1965 and 1990 rise more poverty (as negative growth per capita), refugees and inequality, especially in Africa, South Asia and Central/Latin America. It continues saying “We lack clear and convincing theories and explanations for persistent underdevelopment and mass poverty in the third world“, blaming its failure on the faculty prescriptions derived from Western mainstream economic theorizing. “It is this failure that is primarily responsible for growth without development, or equity, or social justice.”

Mainstream economics as a theorising westernisation over the third world has demonstrated that such perspective is clearly neither value-free nor tolerant of non-Western cultures. Development economics has not been culture friendly and has effectively denied the cultural diversity that exists in non-Western branches of humanity, where group and community rights are often held in higher esteem than individualism, and cooperation rather than competition is prized. So, for further development of the third world, this book promotes to deconstruct the Western economic theorising especially about development economics, which is necessary since euro-centricity accumulates as racist stereotyping influencing the education of future policymakers, slanting and distorting in the process popular attitudes and images of non-European ways and culture. The label “Third World”, like “Orientalism”, is not only stereotyping peoples and economics in images not much different from those of slavery or Victorian days, it is homogenizing and denying the incredible range, diversity and cultural richness existing in the real world.

This concept of westernising the third world also meshes with the dependency theory of the third world, as a result of institutional colonialism that embedded during the European imperialism period. The mainstream economics cites that capital intensive economies would gain more capital and labour intensive economics would gain more labour, which is justified by fairly free trade that will eventually end to the labour exploitation of those third world countries. The book goes saying “the colonial policy-makers who built empires on capitalist foundations were schooled on, and believed they were practicing free trade doctrines. In fact, the result were the plantation (and mining) economies in British West Indies, Malaya, in Dutch Indonesia and in Africa, built and managed on mercantilist criteria, financed largely with capital from the London money market, thereby returning huge annual dividends and surpluses from colonies to the treasury of the mother country. The welfare or socio-economic development of local populations in colonies did not matter.” Ha-Joon Chang also mentioned in his book Kicking away the ladder that if a developing country fails to reach its development, it is not because its massive population didn’t work hard enough to produce excellence but because the few elites failed to cut the external dependence and vulnerability, redirecting its excellence to the western countries where they schooled themselves with an Eurocentric mindset.

Just as Frederich List dismissed Ricardo and Adam Smith in Europe in term of free trade, Far Eastern development model differentiates itself from the Western development model, in the way Frederich was in favour of infant industries protectionist strategies and recognising the existing inequalities between the already industrialised countries and those not. For both List and Ricardo, investment (or saving) was the engine of growth to achieve national wealth. The two differed in their interpretation of the role of investment; public investment for List and private investment for Ricardo. As such, List found favourable response in post-Meiji Japan. Why are some (formally third world) states better at economic and social development than others? In case of Far Eastern model, newly industrialised countries like Japan, Korea and China, succeeded their economic development primarily because they charted their own independence course, though with much learning and adapting from the West- more from List than Ricardo.

Then what should we expect from the third world, and how those countries can achieve their development? What path are those countries to take between market-driven development model and state-driven development model? The Third World, emerging out of colonialism, was suddenly discovered as lacking autonomous capacity for development. Mainstream economic development theorists, without inquiring into the history of this underdevelopment, rushed forward with new sets of US-Eurocentric prescriptions and paradigms to reconstruct the Third World. There were all dependent upon aid and technology flows from the First World caught in an ideological competition with the Second.

This westernising paradigm in development needs to be revised in developing countries. Nehru, the successor of Ghandi, said that planning and development have become a sort of mathematical problema which may be worked out scientifically. And this pseudo-scientific approach ultimately ended in a dramatic failure. The Indian planning failure was subsequently repeated in Africa and elsewhere causing food deficits and rural underdevelopment. Also two-sector development, dividing urban and rural development where the urban development is mainly considered as an engine of growth in third world countries, conceptualised by a Nobel prize winner Arthur Lewis, caused, as a result of unplanned urbanisation and rural-urban exodus, so much dislocation and deconstruction of the third world. Capitalist accumulation through pro-urban industrialisation was aimed to be dependent on capital imports from the West, directly holding down the productivity of the subsistence urban works in a manner matching the imperialists’ exploitation of colonial workers by keeping wages low for greater profits. Far Eastern model as it perceives in South Korea and Taiwan demonstrates the otherwise, as they first started with agricultural modernisation including land reform and investment in rural human resources to enhance the labour productivity.

Latin America went through Import Substitution Industrialisation (ISI) whereas Far East Asian countries generally went on export-led model. These two arguments are linked to the question of how to deal with infant industries while necessitating state protection for immediate or foreseeable duration in return for long-term economic and social benefits. Prebisch launched this powerful and empirical attack demonstrating the biased trade term of Ricardian theory. This is the central argument of the dependency. Though, arguments were made whether primary producing could lead direct economic growth, by Bhagwati for example, differentiating the empirical proof from that of Prebisch. Historically ISI generally empowered Western multinational corporations and their branch plants, for them to enjoy cheap labour resources and tariff for goods that were originally developed in the West. In case of South Korea the otherwise can be noted, as the book quotes “Korea has not relied upon direct foreign investment as a source of foreign technologies. Korea has hired technology but has not hired production; Korea has welcomed foreign techniques but has not encouraged foreign ownership. Together with the modern capital goods that Korea has imported in such large quantities has come the know-how to operate them; but in the main Korea has purchased both the capital goods and the know-how rather than let foreign firms possess them.” This is the opposite case where in much of the third world foreign ownership minimised the benefits of industrialisation.

This book keeps arguing that the planning mystique, abstract designs, analytical techniques and economic model-building emerged as the standard tools for the economic development for underdeveloped countries, which led Western experts to concentrate on technocratic modelling based on a ‘how-to-do’ cookbook mentality, thus ignoring institutional efficiency, indigenous history and cultures. Technocratic development theorizing was mostly pseudo-planning that was an exercise aimed at serving the programming interests of Western donors, rather than impacting at the actual living standards of populations in developing countries.

The Far Eastern countries’ success was remarkable in promoting growth with equitable income distribution. It verified empirically the wisdom of investment in education, human resource development and land reform, of which strategies sadly ignored in the rest of the developing world. Until the Asian currency collapse, Far East Asia was the envy of the world as the most dynamic area in the global economy. The economic centre of gravity shifted from the West back to the Orient. Even after this Asian financial crisis, China still outstands, creating new Beijing Concensus against Washington Concensus. Yet even with the history of Asian financial meltdown, Far Eastern model isn’t dead for the currency collapse was a crisis of global capitalism, not limited to only Asian countries that suffered. Even so, an endogenous economic development model is observed in the Four Asian Dragons (South Korea, Taiwan, Singapore and Hong Kong). The question about their economic model arises: Was it Western economic development theorising in the Asian territories? Or was it a different economic development model for other fellow developing regions? Far Eastern model was an example of organic growth. In it, the importance of redistribution, as a complement of growth, stemmed from endogenous cultural values which assigned high social weight to the family and other group values in sharp contrast to Western individualism. The experience of Four dragons was contrast to the poor economic performance of other Third Wold countries which, following Western advice, ignored distribution in favour of growth by relying on protectionist ISI theories. Then another question arises: Can this Far Eastern development model be transferred to other Third World countries?

Far Eastern model played well with human capital accumulation, unlike other third world countries where the education had stayed under the dominant Oxbridge model, which produced few loyal graduates for the civil service, emulating colonial models and lien curricula irrelevant to post-independence requirements. In those four Asian countries, entrepreneurship was recognised as a key development resource, as in Taiwan and South Korea where education was utilised as an instrument of entrepreneurial development both in industrial and agrarian sectors, stressing to raise farmers’ productivity through modern farm technology for example.

This book Westernizing the Third World concluded that the economists’ failure is not only technical but moral, just as it masks a dramatic change in the lives of masses of people for the promotion of economic growth, like the way missionaries bent on saving souls of natives in the 19th century. Kicking away the ladder agreed with the former book that economics is far from being value-free, rather it is political; Economics is politics. At the year 2008 many nations could witness the peak of financial capitalism, which had resulted in the ennoblement of financial markets and banks atop these markets at the expense of the welfare of ordinary people, globalised as a result of free capital mobility. Rather, labour bounds within national boundaries when capital frees across those boundaries, labelling ‘social exclusion’ phenomenon, and such phenomenon has resulted in an underground and ilegal trafficking in human beings created in a new form of slavery away from legal protection.

China’s economy is catching up or almost surpass the US’s. This century is witnessing the emergence of new powers reflecting newly acquired comparative advantage in trade, given its richness in natural resources and a large market. For the third world, none of those two models mentioned above, either the Western one or Far Eastern one, would be apt for political, social, economical and cultural reasons. But there would be lessons learned; debate between pro-capital growth and pro-labour growth, democracy and dictatorship, diverse indigenous cultures and endogenous theorising. In the sense of public polices, there would be coordinated macroeconomic policies and international fiscal policies under a proper development ethics and justice (based on fairness and egalitarian values rather than on economic inequality as Sen outsaid).

 

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