The Dialectic of Economic Development: How the Logic of Self-Interest Impedes Progress

This study contributes to deeper understanding of how self-interest creates economic inefficiency and is bad for economic development. The author, writing in clear, compelling language, comprehensively analyzes environments in developing countries where the greater part of the population is poor and miserable. Thus, this book is a must-read for every scholar interested in the socio-economic development of developing economies.

Ellis B. Beteck, Ph.D. International Affairs and Development

This book introduces a refreshing perspective to the discussion on the barriers to economic development in third world countries. It is one of the rare moments when the pursuit of self-interest by developed nations is held accountable for slow development in third world countries.

David Tataw, PhD, MMIS,MPA,FACHE

To my mother, Agnes Batembo Manga.

And to the memory of my father, Bernard Arrey Manga Besong.

ACKNOWLEDGMENTS

I wish to express my deep gratitude to Dr. Betek, to Dr. Ayuk Augustine Ayuk, and to my fellow Toastmaster Mr. John Grinder for accepting to read parts of this book and for offering suggestions, which have somehow made the book a better read.

Thanks especially to Evelyne M. Langer, my companion, for designing the cover page and for all the patience and encouragement, without which it would have been difficult to complete the writing of this book.

INTRODUCTION

The need to undertake this work on the obstacles to economic development first occurred to me some years ago. I had then just started studying political economy at college when, at a chance meeting with some industrialists and clergymen, I became engaged in a debate on the problems of the transfer of technology.

It dawned on me, for the first time perhaps, that through the control of technical knowledge and other important resources, the countries of the North were in a position to dictate the rhythm of development in the South. This was the conclusion I reached after one of the participants at the debate questioned the wisdom of transferring technology to the South. He said, Isn’t the transfer of technology or the sale of highly sophisticated capital goods to the South going to lead to the economic suicide of the North?

To say the least, this is a very genuine preoccupation for anyone who owes his dominance over others to his control of knowledge and technology.

Prior to this meeting, I held the view shared by many in the Third World that all that the South needed to do was to imitate the North. Never had it occurred to me that efforts to imitate the developed countries could be hindered in any way. Seeing the machines and the methods of production that were in use in the First World and considering them easily transferable, I had even come to the hasty conclusion that the South should be able to make up for its economic backwardness in less than fifty years. Well, I took for granted the willingness of the North to cooperate in the development process. That was rather naïve of me.

This work is not about how certain countries became underdeveloped. It is rather about why they remain underdeveloped despite great achievements in science and technology in recent times. In other words, it is about one other factor—self-interest—that may be holding back development in the South.

A lot of literature already exists on this subject in which underdevelopment is blamed on several factors, including the lack of capital, the lack of entrepreneurship, the lack of appropriate technology, the lack of natural resources, or the existence of hostile climatic conditions. Underdevelopment is also blamed on the unfavorable political climate that exists in many Third World countries. Important as the contribution of those factors may be to development, do they sufficiently explain the continued state of underdevelopment in the South? Probably not; there might be more to it than just the lack of these resources.

In this work, I have tried to examine at least one other factor that may be contributing to the continued backwardness in the South: the attitude of the developed societies, which is dictated by self-interest concerns. Are they willing to have other Japans or other Chinas or other emerging economies mushrooming at their doorstep? If the answer to this question is no (which I truly believe it is), are they in a position to prevent such mushrooming? I dare to suggest that they might already be doing so without admitting it.

Some authors have refused to be realistic and have instead shown a naïve disregard for sociopolitical realities and for vested interests. Professor Hirschman’s theory of possibilism is based on this naïve disregard. My own view is that there exists a subtle but nonetheless tremendous resistance to development. It stems neither from some unexplained love for underdevelopment nor from sadism but rather from the desire, which all people have, to defend their interests. It stems also from their eagerness to protect their privileged positions. This is even more so when we reckon that their control of economic and political powers is their only real guaranty of a continued high standard of living.

Contrary to what experts continue to assert, it is believed by many that, on balance, development in the South will threaten the North’s social and material welfare. Of course, such threats do not even need to be real for people to adopt a defensive attitude. It suffices that they believe in its existence for them to take preemptive measures. This attitude is a force to be reckoned with in the planning of economic development.

To the pessimistic reader, the doubts I raise about the North’s intentions of cooperating in the development of the South might sound rather fatalistic. My intention has been, on the contrary, to alert readers to the dangers of placing confidence in outsiders to do one’s tasks for one. Assistance of any kind—based on the doctrine of mutual dependence—is no more than a farce. If, as former US secretary of state Gen. Colin L. Powell stated in an article in Foreign Policy magazine, foreign aid that succeeds is foreign aid that makes itself obsolete, then all genuine assistance, with long-term positive effects to the recipient, is self-defeating (from the point of view of the donor) in that it tends to remove the power gap between the donor and the recipient. In other words, it sharpens the competition between them as the dependence of the one on the other is reduced.

Although most, if not all, of my examples are drawn from situations in the North-West/South relations, this work is not to be seen as an attack on the capitalist system. As the anecdote below shows, I have the strong conviction that socialist countries (if they still existed in reality) would adopt a similar attitude when confronted with a similar situation. The anecdote goes to suggest one thing—that a lot more might be running on self-interest than we are willing to admit.

At a book fair recently, I stopped at a stand to discuss with the lady in attendance. In the course of our brief conversation, I let her know that I was researching the reasons why countries of the South may never be developed. Then she inquired, Under capitalism?

No, I said, it doesn’t matter whether it is under capitalism or under communism. The relationship between the developed countries and the underdeveloped countries remains the same irrespective of the political system involved.

It is under capitalism that the South may never develop, she insisted.

Well, I said, when Communist Soviet Union was still around, they did not cater very much to the interests of the South. Instead, they were concerned only with their own interests.

The Soviet Union was not really practicing communism, she said. What they practiced was Stalinism, and they did not care very much about other countries.

That is the point I’m trying to make, I said. It is that desire to pursue one’s own interests to the detriment of those of others that affects the relationship between the North and the South, not whether it happens under capitalism, communism, or Stalinism.

Look at what Cuba is doing to help other developing countries, she protested.

Cuba is, by the way, not a developed country, I cut in. So there is no chance it can help another underdeveloped country become developed. You cannot give what you do not have. Secondly, Cuba, being itself a country of the South, has very little to lose by helping other poor countries, which would not be the case if the developed countries were to help bring development to the South.

The lesson of the brief encounter related above is that self-interest is no respecter of political ideology. It behaves just the same way, whether under communist or under capitalist influence. In the capitalist system, representatives of private and corporate interests may lead the charge, but those catering to public interests are usually very close by. Under communism, the subdued private interest cedes its role to the state. Despite that distinction in roles, the fact remains that the pursuit of one’s own self-interest / corporate or national interests is still paramount and trumps all other considerations. That explains why the defunct Communist Russia was concerned, primarily, with preserving its own interests. That was dictated not by ideology but by the imperatives of self-preservation.

The conclusions I draw and the suggestions that follow thereupon are based on the following premises:

That the international setting is constantly changing, so policies similar to those that worked well in the past may prove less successful today in providing a solution to comparable economic problems

That the effectiveness of the assistance given by developed countries in promoting or in resisting development in the South increases with the extent to which the developing countries are dependent on the assistance

That the existence of developed countries represents both an opportunity for and an obstacle to the development of other countries (which way the scale tips depends greatly on the attitude of the developed countries)

That the developed countries will naturally tend to be hostile to all development in the South, which fails to guarantee or which threatens their privileged positions

That development in the South, in the long run, threatens rather than guarantees these privileged positions, given the world’s limited stock of natural resources and market opportunities

If the premise I put forward here (that the North is in a position to promote or retard development in the South) is accepted, then the need for a new development strategy has been firmly established.

Perhaps the main significance of this short study is to draw the reader’s attention to the existence of what may be the greatest of the forces working against development in the South and to warn them of the dangers of ignoring it. I will have achieved the purpose of this book if I succeed in showing that, under present circumstances, there is no reason to believe that economic development, as it is now conceived, will be realized in the South anytime soon. All rhetoric that persuades people in the South to pursue their development objectives along present lines is intended, therefore, to divert their attention from seeking alternative solutions to their problems.

An attempt has been made at reexamining the concept of the international division of labor. In my view, this concept should not be equated with that of international specialization, which demands that countries specialize in the production of those few items for which they enjoy comparative advantages over others. The result of applying such a doctrine is that the poor countries have concentrated on the output of primary products with a very low added-value potential. The concept of the international division of labor should be based on the observation that only those who contribute directly or indirectly in the process of production may lay claims to a part of the output. If you are unemployed, you do not receive any wages. The capitalists or the entrepreneurs who fail to employ their stock will not be rewarded with interests and profits, nor will the property owner who does not succeed in leasing it out receive any rents. The integration of the South in the world economy has resulted in the reduction in the use of the South’s resources, with the attendant consequent reduction of their share in the world output of goods and services. It will be reasonable for the South to find a means of increasing their share in the world supply of goods and services by way of an increase in their contribution to the production process. Such an increase can be achieved only if they have a chance to employ profitably their own resources. This calls for some form of protection for the developing economies.

I have had to work with French versions of texts, some of which were originally published in English. All translated quoted texts that appear here are followed by the abbreviation MT, meaning my translation. Some effort has been made to ensure accuracy in these translations, and any discrepancies observed therein are, therefore, in no way intentional.

John T. Manga

My own measurement of economic development will be based on such indicators as the availability of the essentials of life, such as drinking water, electricity, food and other such basic commodities in our local markets, at prices within the reach of the lowest income-earner in the country.

—General Buhari, former head of state of Nigeria

Tous les êtres humains aspirent à la santé, à l’éducation, au savoir, à une existence sûre, à un emploi stable, à l’abri des humiliations, à exercer pleinement leur responsabilités politiques et civiles, loin de tout système arbitraire, protégés des malheurs qui offensent leur dignité.

All human beings aspire to good health, to education, to knowledge, to assured existence, to a stable job, to be free from humiliations, to the full exercise of their political and civic responsibilities, away from all arbitrary systems, and protected from any misfortunes that offend their dignity. (MT)

—Jean Ziegler, a Swiss writer

Development means economic, social and political progress. It means a reasonable standard of living, and reasonable in this context requires continual redefinition, what is reasonable in an earlier stage of development will become unreasonable in a later stage,

—Robert S. McNamara, former US defense secretary

Chapter I

The Nature Of Development

Defining Development

Those acquainted with the subject matter will probably admit that providing a generally accepted definition of the term development is rather difficult. One practice, more or less acceptable, is to spell out the characteristics of a typical developed or underdeveloped country.

In defining underdevelopment, P. Samuelson states,¹

An underdeveloped nation is simply one with real per capita income that is low relative to the present-day per-capita incomes of such nations as Canada, the United States, Great Britain and Western Europe generally. Optimistically, an underdeveloped nation is regarded as being capable of substantial increase in its income level.

Some may wish to add to these purely quantitative indicators of an underdeveloped nation other characteristics, such as the following:

The existence of a very high proportion of the population engaged in agriculture

A low level of technology used in industry

A low level of literacy

A high rate of child mortality

A low rate of capital formation

A low rate of energy consumption, etc.

Ignacy Sachs considers that

Development must be seen as a societal learning process, the growing ability of a community or a nation; first, to project goals which conform to a set of accepted values— some variant on the theme of equal opportunity for each person to fulfil his or her own potentialities, extended beyond the present to future generation—and then to work towards these goals while keeping within the external constrains inspired by nature and inherited from history.²

The Tanzania National Union Party (TANU) believed that

"Development