Poor nations and the new world order

One of the things I’ve come to realize in recent years is that institutions exist that constitute a kind of world government.

I always thought that for a world government to exist, it would have to have its own army.  But the International Monetary Fund, the World Bank and the investor-state dispute settlement judges in international trade agreements don’t need armies to enforce their—unless you consider the U.S. Central Intelligence Agency to be their army.

PrashadPoorerNations97818I just finished reading  THE POORER NATIONS: A Possible History of the Global South (2012) by Vijay Prashad, which is about how international institutions came into being to fight nationalistic governments in Africa, Asia and Latin America—the Third World.

These international institutions are greatly from the world government envisioned by the idealists who created the United Nations.

I’m worried about how the Trans Pacific Partnership agreement and other proposed trade agreements would create rules to protect international corporations and investors against national laws to protect labor, public health and the environment.  But for Third World nations, as Prashad showed, this is nothing new.

The first section of Prashad’s book is about what he called the demise of North Atlantic liberalism.

Robert McNamara, as president of the World Bank, genuinely wished to improve the lives of peoples of Africa, Asia and Latin America.  He sponsored the Brandt Report, a comprehensive plan to help them rise out of underdevelopment.

At the same time the Non-Alligned Movement, representing Third World countries, submitted a plan to the United Nations General Assembly called the New International Economic Order “with the basic objective of securing better conditions of social justice.”

Western leaders such as Henry Kissinger saw this as a threat, and led a counter-attack, which proved successful.  In 1975, he called the first meeting of the leaders of the G-7 (USA, UK, France, Germany, Italy and Japan) to plan a common economic strategy.

Vijay Prashad

Vijay Prashad

Kissinger feared the emergence of OPEC-like cartels for other commodities, and averted this by driving a wedge between the oil producers and the Third World nations without oil resources.

The G-7 gained control of international financial institutions and specialized United Nations agencies, creating a kind of OPEC of money and credit

They called for poor nations to prioritize economic growth and debt repayment over investment in education, public health and human development, with economic growth being defined in terms of exports of commodities.

The second section is about the step-by-step retreat of the Third World in the face of this new force.  The poorer nations depended on banks and international financial agencies for credit and their leaders felt they had no choice but to submit.  The result was lower wages, higher prices and a general decline in living standards through the 1980s and 1990s.

Much of the material for this section comes from the newly-tapped archives of the South Commission, an international organization tasked with producing alternatives to the so-called Washington Consensus.  As Prashad showed, the South Commission’s powerlessness caused it to generate a series of plans, each of which conceded more to the G-7 than the one before.

Economists at the International Monetary Fund, World Bank and other institutions claimed low wages, low taxes, minimum government and high concentrations of wealth were necessary for the accumulation of capital necessary for economic development.

But in fact, the only nation to develop economically in this way was Great Britain, which, as the first industrial nation, had no competitors.

All the others, including the USA, Germany and Japan (except maybe Hong Kong, if it a nation). found it necessary to aid and protect their infant industries until they were ready to compete on world markets.

One important part of G-7 agenda was intellectual property laws that effectively blocked technology transfer.  The older patent law, for example, covered industrial processes, but not products, which allowed for a certain amount of reverse engineering.

Under the stricter new intellectual property regime, the products themselves were patented, and minor improvements were patented, too.

Japan and China achieved strong economic growth partly because they resisted this.  Instead they insisted on sharing of technological and manufacturing know-how as a condition for allowing foreign companies into their markets.

The third section described the economic rise of the “locomotives of the South”—Third world economies strong enough to complete with the North Atlantic bloc.

First came Japan and the so-called Asian tigers (South Korea, Taiwan, Hong Kong and Singapore, then a “South-South” economic alliance among Brazil, South Africa and India and more recently the formation of the BRICS bloc of Brazil, Russia, India, China and South Africa.

Leaders of these nations felt they were not represented in international organizations in proportion to their economic weight, and so sought to develop alternative organizations of their own.

As Prashad noted, the economic systems of these nations were not greatly different from the USA, UK, France or Germany, so they were not a force for social change.  In fact the middle and upper classes of many poor nations took Lee Kuan Yew’s Singapore as an inspiration and role model.

But the “locomotives of the South” did break up the monopoly of power by the great North Atlantic nations, and they have started to create parallel economic institutions to serve their own business needs..

The last section of the book is about populist reform movements and their challenge to the global economic order.

Prashad described the Bolivarist movement in Venezuela and other Latin American countries, and the self-organization of slum dwellers in many cities to defend their communities.

There is a World Economic Forum, an organization of the world’s economic elite and their followers, which meets every year in Davos, Switzerland.  Left-wingers have organized a World Social Forum, which meets in various cities.

The problem with the World Social Forum, as Prashad saw it, is that its members have little unity in comparison with the World Economic Forum.  The billionaires and their supporters who meet in Davos, Switzerland, are united by a common language (English), a common economic philosophy and a common economic class interest.  None of these things are true of the Third World’s varied poor people, ranging from indigenous people in the Amazon rain forest to squatters in Mumbai.

All this was not, strictly speaking, a conflict among nations.  Rather it was a conflict between some nations and an international economic elite without loyalty to any particular nation.  The elite that presided over debt bondage of Third World Nations also presided over the hollowing out of American manufacturing industry.

I liked this book a lot and learned a lot from from it.  Its main defect is a left-wing bias.  Prasad explains away the failures of China under Mao as bad luck and understandable mistakes, but treats the shortcomings of China as intrinsic to a bad system.  I don’t regard this bias as fatal, because I don’t see state socialism as a live possibility.

Prashad concluded the book on a hopeful rather than optimistic note—an affirmation that the world cannot go on this way indefinitely and therefore it must change.


The South also rises: the Poorer Nations by Pepe Escobar for Asia Times (via Global Research).

Lessons From the Global South by Luis Nieves for Counterpunch.

Review of The Poorer Nations by Stefan Andreasson for the Times of London.

Return of the South: A Review of The Poorer Nations by Sameer Dossani for actionaid.

Review of Vijay Prashad’s “The Poorer Nations” by Alf Gunvald Nilsen for Shadows of Tender Fury.

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