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The UN is Investigating extreme poverty in Britain. What does that tells us about the global political economy and the way forward?

November 14, 2018

The UN special rapporteur for extreme poverty and human rights made a visit to Great Britain this week to better understand the growth of inequality there.

Per the NY Times, “Special rapporteurs for extreme poverty are mandated to visit and investigate countries with high levels of deprivation and then report their findings to the United Nations. They have historically spent most of their time in the developing world, and Mr. Alston’s trip to Britain is only the second mission to a Western European country by a poverty rapporteur this century, the other being to Ireland in 2011. The rapporteur has also visited the United States twice since 2000” (my emphasis).

This indicates something obvious and well understood by many, but also under-analyzed and all-too-absent from mainstream political discussion. The political currents that we are currently witnessing, including a global trend toward polarization and authoritarianism, are directly related to the decades-long political economic shift toward neoliberalism and the dismantling of the Keynesian welfare state that began in the 1970s.

Following WWII and into recent decades, the hegemonic idea of development (as constructed and transmitted by Western elites) sought to bring post-colonial and Global South regions in line with the political economies of the US and OECD nations. This conception, known as modernization theory, met resistance from some intellectuals and activists, who produced alternative paradigms like participatory development or embraced socialist alternatives.

Beginning in the 1970s and through the 1980s, however, Western elites imposed new policies that doubled down on the hegemonic idea of capital-led development. These policies are most widely recognized in terms of Reagan and Thatcher’s austerity programs (1980s), the IMF-facilitated Washington Consensus of suggested policies for economically troubled countries in the South (1980s / 90s), and free-trade agreements in which labor has been outsourced to the South (1990s to present). Naomi Klein has referred to them as a Shock Doctrine, citing the 1973 Chilean coup and the aftermath of Hurricane Maria ion Puerto Rico prominent examples. Less discussed, but no less significant, were policies designed to facilitate global information flows via digital technologies, especially in the service of the financial sector.

Whether these policies actually led to quality of life improvements for the populations of the global South has been a matter of fierce debate, with points of contention centered on sweat-shop labor in South Asia and the rise of an urban Chinese middle class, for instance. The effect on populations in the North has been a lesser though occasionally significant matter of debate, with Ross Perot’s critique of NAFTA during the 1992 US Presidential campaign being a prime early example. These effects have risen further to the fore since the economic crisis of 2008, but they have remained obfuscated by the prominence of social issues like identity, terrorism, and immigration. The restructuring of the geographic wealth distribution of the global North is less addressed far less directly.

This has not been missed by those paying close attention, however. Ankie Hoogvelt recognized it in his 1997 book “Globalization and the Postcolonial World: The New Political Economy of Development” (2nd edition in 2001), which argues that neoliberal globalization is not a mere expansion of capitalist relations but an involution of them, such that wealth and power are being brought back into the core regions of the global economy, thus increasing their inequality with peripheral regions. This is the basic critique of dependency theory, which was developed as early as the 1950s, but understood the periphery only in terms of the South. Hoogvelt extends the notion of periphery to regions of the North that were once integral to the capitalist apparatus but, thanks to new policies, are experiencing increased inequality and thus a quality of life closer to that experienced in the South.

This is the hard kernel of truth in conservative critiques of free trade, laments of lost factory jobs, and fears of immigration. It is evident in deals between states and private companies that offer substantial tax incentives for dubious investments, as with Foxconn’s factory in Wisconsin and Amazon’s recent “HQ2” announcement regarding regional offices in New York and Virginia. The Foxconn deal, over-hyped from the get go, has not been a boon to Wisconsin’s “heartland” economy. Amazon’s deal uses taxpayer funds to place the company right where it wants to be, next door to the Wall Street and the Pentagon, at the core of the global political economy.

I hope, but doubt, that the UN will construct and enact valuable initiatives to reverse this pattern. To the extent that it tries, I expect it will make yet another attempt, along with many liberal and conservative elites, to put things back the way they were. Conservative attempts to do so, epitomized by Trump, are clearly disastrous. Liberal attempts, like those offered by Bernie Sanders, strike me as a step in the right direction, but often not properly focused and perhaps altogether too frail. (One point of frustration: We should be much more concerned about robust funding for pre-K and K-12 education than community college for all.)

I think Hoogvelt had the right idea. He’s worth quoting at length:

“… if it is the case, as I believe, that at the present historical juncture a fundamental cleavage has opened up between, on the one hand, networks of capital, labour, information and markets – which link up through technology, and on the other, populations and territories deprived of value and interest to the dynamics of global capitalism. If, furthermore, this process is one that can be predicted to deepen and widen in both relative and absolute terms, then it would make sense not to talk about strategies of inclusion but rather to celebrate a concept of exclusion that tries to develop sustainable life on the outside. Moreover, if in capturing the fundamental logic of the system of global informational capitalism, we come to the conclusion that the properties of the system not only switch off, and render as economically irrelevant, particular locales and groups, but also undermined their capacity to regroup and reorganize in alternative modes of production and survival, would it not then be better to develop strategies of intervention that protect them from the gales of globalization threatening to overwhelm them?” (130-1)

The question has remained the same for some 150 years now, but we once again find it rising to existential levels. How to conceptualize and construct those alternative modes of production and survival? What is the concept of (self-)exclusion that will allow for sustainable life on the outside?

I believe I can point to some fundamental aspects of the answer. We must not privilege the power of the free market nor the power of the centralized state. Privilege should flow to a decentralized civil society that makes use of markets regulated by deeply democratic states. That democracy should inhere within civil society to the greatest and most localized degree possible, according to the logic of subsidiarity. Civil society organizations and networks, meanwhile, must adopt deeply democratic decision-making structures, with one outcome being increased opportunities for citizens to truly practice democratic behavior and thus recognize when it is properly modeled at higher levels of governance in which they have less opportunities for direct participation, but over which they can play oversight roles.

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