Collision Course: Endless Growth on a Finite Planet (22 page)

Another factor inflates the scale of this divide. Financial assets hidden away in tax havens by the ultra-rich are estimated to be well over $21
trillion
as of 2010; these assets are earning their owners invisible and largely tax-free income, and neither asset nor income shows up in the statistics of inequality.
⁵²

Most studies of inequality use income data or a combination of income and consumption data. The United Nations University’s World Institute for Development Economics Research (WIDER), however, has based recent work on household surveys of assets. According to WIDER:

The richest 2 percent of adult individuals own more than half of all global wealth, with the richest 1 percent alone accounting for 40 percent of global assets. The corresponding figures for the top 5 percent and the top 10 percent are 71 percent and 85 percent, respectively. In contrast, the bottom half of wealth holders together hold barely 1 percent of global wealth.
⁵³

In the case of China, even though average income has grown in the neoliberal era, inequality within the country has increased.
⁵⁴
While India is also regarded as a “globalization” success story, there are many places inside India where the reality is very different (discussed in chapter 9). The Indian novelist and essayist Arundhati Roy puts it this way:

It’s as though the people of India have been rounded up and loaded onto two convoys of trucks (a huge big one and a tiny little one) that have set off resolutely in opposite directions. The tiny convoy is on its way to a glittering destination somewhere near the top of the world. The other convoy just melts into the darkness and disappears.
⁵⁵

Analyzing Third World “Catch-up”

Perhaps the most telling analysis comes from Peter Edward of the Judge Business School at Cambridge, who used density curves in a 2006 study to examine just which people worldwide have benefited from economic growth under globalization and asked whether growth was shown to be an efficient means to address poverty. This technique allowed him to go beyond averages and identify which deciles of the global population enjoyed expanded consumption. Edward’s work for the period 1993–2001 confirms that the changes in China at that time did not apply to the rest of the third world. Generalizations about reduced global poverty masked the real situation—the reduction of extreme poverty in China was offsetting an increase in poverty in the rest of the global south.

Moreover, Edward’s analysis shows that the vast majority of the increased income and consumption over this period went to the richer half of the world population. Nearly half of it went to the top 10 percent, almost all of whom live in the first world, while less than 10 percent of it went to the poorer half of the world’s population. The emerging Chinese middle class (defined here as those whose incomes range from about $1,000 per year, or $2.75 a day, to $7,000 per year) drew one quarter of the increase, much of this flowing to people close to the $7,000 end of the range. There was a shift toward greater consumption throughout Chinese society, however, and Edward suggests that the extreme poor in China have benefited by moving toward or slightly above $2 a day; at the same time, levels of inequality have increased.
⁵⁶

Edward’s work demonstrates that it takes an enormous amount of global growth to yield tiny improvements for the very poor. The tactic of pie or cake expansion is still embraced firmly by the global financial entities. Senior IMF economist Anne Krueger is adamant: “The solution is more rapid growth—not a switch of emphasis towards more redistribution. Poverty reduction is best achieved through making the cake bigger, not by trying to cut it up in a different way.”
⁵⁷
For the period from 1990 to 2001, Woodward and Simms calculated that only 60 cents out of every $100 of per capita income growth actually flowed to the poor,
⁵⁸
making the cake-baking strategy a slow and inefficient means of addressing poverty—and one that is unlikely to be sustainable for long enough to alleviate poverty anyway.

The torrent of avid insistence on poverty-busting success noted above has been based primarily on the rise of the new Chinese middle class rather than on the fate of the poor and very poor in the rest of the third world. This partly explains the triumphalist rhetoric found in the World Bank research, the APEC report, and economics journalism such as that of Martin Wolf in the British
Financial Times
and Rupert Murdoch in his fifth Boyer Lecture, titled “The Global Middle Class Roars.”
⁵⁹
The collective pie is certainly much bigger, eight to ten times what it was in 1950, yet the share of most third world countries, risible at the outset, shows no significant increase, and has in some cases declined.

The development era brought modest economic growth and considerable industrial expansion to the “underdeveloped” countries, and for Korea, Taiwan, Singapore, and Hong Kong established the basis for their future success as the “Asian tigers.” The globalization era that followed brought more industrialization but little economic growth when averaged across the third world as a whole. Extraordinary growth in China and, to a lesser extent, India and Brazil has not necessarily reached the extremely poor of these nations. It is doubtful whether the numbers of people living in the misery noted by Truman in 1949 have been greatly reduced, though it is probable, for what it is worth, that the percentages of desperately poor, poor, and somewhat poor people have decreased.

Growth, touted as the necessary means of catching up, has made little impression on the actual numbers. From the perspective of 2013, the gross number of people in serious trouble (living on less than $2 a day) has fluctuated but not declined decisively in the past thirty years. Even if the burgeoning global middle class is able to extract another decade or two of economic growth from the planet, the World Bank’s figures
⁶⁰
indicate that billions will remain poor (without discretionary expenditure), and a billion or more of these will continue to face the extremes of malnutrition, disease, and early death. At the same time, while growth continues to be the primary tool of improvement, loss of forests, fish stocks, and species cuts away the safety nets of the rural poor.
⁶¹

As Ross Buckley notes, “There are about 195 countries in the world. Fifty years ago, 27 of those countries were developed. Today 32 are. In 50 years, five countries out of about 170 have achieved the goal of development.”
⁶²
Buckley’s realism throws the growth solution to poverty into stark relief. At this rate, world development, even if it turned out to be ecologically possible, would take a further 1,500 years. To the extent that there
was
any real plan to share wealth or ameliorate poverty, the evidence suggests a verdict of substantial failure for the “bigger pie” approach.

While the business world’s free trade campaign was gathering steam, UN agencies attempted to promote the idea of “sustainable development,” which professed to reconcile development with ecological protection and somehow ensure both. The next chapter explores the fate of these endeavors in the neoliberal universe that has prevailed since the 1980s.

8

Growth and “Sustainable Development”

Many of the development paths of the industrialised nations are clearly unsustainable. And the development decisions of these countries, because of their great economic and political power, will have a profound effect upon the ability of all peoples to sustain human progress for generations to come.

—World Commission on Environment and Development, 1987

The Brundtland Commission

Sustainable development emerged as an international policy objective from the time of the World Commission on Environment and Development (WCED), also known as the Brundtland Commission, which met in the mid-1980s and filed its report,
Our Common Future
, in 1987. The definition it advanced has been much debated:

The concept of sustainable development provides a framework for the integration of environment policies and development strategies.… Sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future. Far from requiring the cessation of economic growth, it recognises that the problems of poverty and underdevelopment cannot be solved unless we have a new era of growth in which developing countries play a large role and reap large benefits.
¹

From the outset, the WCED accepted a twin focus on environment and development, rejecting an environmentalism that ignored third world problems. To achieve this dual objective, it thought environmental sustainability would have to be made compatible with economic growth. The needs of third world countries were thought to require a new era of growth, but the WCED stressed that “growth by itself is not enough” and that these countries must fully participate and fully benefit. As chapter 7 showed, this kind of benefit is not evident and the rate at which the proceeds of growth have been shared suggests a pace that is unlikely to redress the unmet needs of the world’s poorest people in the foreseeable future.

As outlined in chapter 3, the UN took the dawning perception of threats to the environment seriously throughout the 1970s, when the UN Environment Programme was set up and the Stockholm Conference, the first to link environment and the future of humanity, was held. It was as part of this process that the UN appointed former Norwegian prime minister Gro Harlem Brundtland to chair the WCED with the objective of reconciling the environmental problems identified by scientists since the mid-1960s with the intractable “development deficit”—poverty persisted almost everywhere—and to suggest how humanity might best pursue a future that would be more “prosperous, just and secure” for all.

The underlying prescriptions spelled out in
Our Common Future
were that the essential needs of the poor should be given “overriding priority” and that all futures were circumscribed by the capacity of the environment to meet these needs, especially in light of the demands already being made by the affluent. Many people in the first world were living beyond the “world’s ecological means,” according to the commission, especially regarding energy consumption. It stressed that the energy intensity of economic growth had to be curtailed and per capita consumption in the north had to be reduced.
²
Although some reduction in energy intensity has been achieved (discussed in chapter 14), there has been no sign whatsoever of reduced consumption in first world societies.

The WCED warned at length that the debt regime was forcing third world countries to liquidate their natural resources to pay interest on debts to the first world while forgoing any boost to the welfare of their own people.
³
In examining the role and power of transnational corporations, the commission noted that 80 to 90 percent of the trade in each of the world’s key commodities—tea, coffee, cocoa, cotton, timber, tobacco, jute, copper, iron ore, and bauxite—was controlled by fewer than six TNCs. It thought international measures to regulate them were lacking, and recommended the adoption of codes of conduct that would include environmental values; it wanted sustainability addressed by all corporations and relevant international institutions, including the World Bank, the IMF, and the General Agreement on Tariffs and Trade (GATT, which became the WTO). It stressed the need for third world countries to retain sovereignty over their resources in all cases.
⁴
Yet in the new world of the neoliberal economic orthodoxies, such measures were regarded as unacceptable barriers to trade or as unwelcome regulation; in this world, prosperity could only be guaranteed by liberating the “free market” to work its wonders.

The commission was sharply aware of environmental degradation of many kinds and of necessary limits to expansion in the use of fossil energy. It pointed to the immense scale of the growth already experienced (a fiftyfold increase in industrial production in one century, 80 percent of it since 1950) and the unimpressive level of improvement that had resulted in third world countries. It described the situation as one of “interlocking crises” and “a threatened future.” It acknowledged that the first world had “already used much of the planet’s ecological capital” and that population was growing faster than the capacity to provide for all. Questions of distribution, it concluded, would need to be tackled, since growth alone was insufficient. Part of the increases in the income of the rich should be diverted to the very poor, it declared.
⁵
Although the idea was to redirect only part of the
increment
, not current wealth and not the entire increase, nothing of the kind has occurred. As explained in chapter 7, the world’s rich monopolized most of the increased income and consumption during the 1990s.

Growth was accepted as essential, if not sufficient, to address deepening worldwide poverty.
⁶
The WCED’s new era of economic growth was to be “based on policies that sustain and expand the environmental resource base.” The commission believed that the concept of sustainable development would allow environmental policies to be integrated into development strategies.

Though the Brundtland Commission’s definition of sustainable development has been criticized by environmentalists for its emphasis on growth and its optimism about the sustainability of economic growth,
⁷
it should be conceded that the commission recognized the failure of the development era up till then, and was far more attentive to issues of equity and ecological limits than such institutions as the World Bank, the IMF, and GATT. It was these bodies, however, along with the TNCs themselves and the US Treasury, that would continue to shape the world’s fate over subsequent decades. Most of the considerations canvassed by the commission, apart from the broad call for economic growth, were ignored.

The Earth Summit