There have been a number of good books on inequality recently, most of them focusing on in-country inequality and its corrosive effects on society and human happiness. The Divide: A brief guide to global inequality, looks at the bigger issue of the gulf between the richest and the poorest in the world.
Jason Hickel is a writer and anthropologist. Like me, he grew up in Africa – in this case in Swaziland – and his motivations for writing are similar to my own: “I needed to understand why so much of the world continues to live in grinding poverty, despite decades of ‘development’, while a few countries enjoy almost unimaginable wealth.”
The answer, Hickel says, is that development is a convenient fiction that casts wealthier countries as benevolent aid providers doing their best to assist the poor. We get to feel good about ourselves, while in reality wealth flows the other way. $2 trillion in finance, aid and investment flows into Africa every year. At the same time, $5 trillion flows out of it in debt repayments, repatriated profits and capital flight. It’s a net loss to Africa, suggesting that “rich countries aren’t developing poor countries; poor countries are effectively developing rich countries – and they have been since the late 15th century.”
At the end of the middle ages, there was no divide. Europe was no richer or poorer than anywhere else. China and India had 65% of the world’s economy between them. The usual story about how Europe came to dominate the world usually involves the Enlightenment and the Industrial Revolution, but of course there was more than that going on. It starts with Spain’s exploitation of the Americas, and the vast extraction of silver and gold. Then comes slavery, and the enormous productivity of overseas plantations. It was that expansion of productive capacity that provided the raw materials and the capital for early industry.
“What if the sum of the value produced by African slaves in the New World – worth the equivalent of hundreds of trillions of dollars today – was subtracted from Western wealth and added to the wealth of Africa?” Hickel asks.
Back in Britain, the injustices of the colonies had a domestic counterpoint in the land clearances, driving millions of people off common land and into waged work in the factories. Then came Imperial expansion towards India and into Africa, creating “a world economic system that was designed over hundreds of years to enrich a small portion of humanity at the expense of the vast majority.”
If we’re tempted to dismiss that as history, the book shows how the same logic has unfolded in new ways. After independence, Western powers used coups and interventions to keep countries open to trade and stop radical democratic movements. Debt became an instrument of control, with the Washington institutions of the World Bank and the IMF dictating economic policy to poorer countries in ways that we now know to be entirely for the benefit of the rich. The World Trade Organisation was created to make a ‘level playing field’, but that in itself is an inequality when the ‘players’ are unevenly matched. The extraction of wealth and suppression of true development continues today, through global governance structures, unfair trade arrangements, tax evasion, and of course, the injustice of climate change. “Poor countries don’t need our aid” writes Hickel, “they need us to stop impoverishing them.”
These subjects have been covered in the past by others. Ha-Joon Chang has written about development economics and trade, Joseph Stiglitz about the failings of the Washington institutions, Nicholas Shaxson about tax havens, Andrew Simms on ‘ecological debt‘. But the cumulative power of all of these subjects in one book, showing how they form different chapters of an ongoing narrative of suppression and exploitation, that’s something new – and something very powerful. It highlights the ongoing self-interest in the West’s approach to Africa and Asia, and makes a strong case for justice.
On solutions, the book calls for debt cancellation and reform of global institutions. There are a couple of suggestions I haven’t encountered before, such as how a global minimum wage might work – something that’s worth a separate post. He also shows how a Universal Basic Income might work at a global scale, something I’ve not read elsewhere.
The book also points out that at current rates of consumption, the world cannot handle the end of poverty, and the richest nations will need to reduce their impact back towards a fair share. “If rich countries organise a planned shrinkage of their material economies, with the goals of maintaining and even improving their quality of life, this will free up the ecological space that poor countries need to achieve basic standards of human well-being.” In a world of environmental limits, the end of poverty will only be possible when we make extreme wealth history.
The Divide is well researched, very readable and highly recommended, though it should make uncomfortable reading for many of us.