Satyajit Das: The West's reward is still the riches that developing nations 'don't value'
Das Capital: For emerging nations to rise out of poverty always entailed a risky, uncertain and tragic future
Satyajit Das writes the Das Capital Column in the Independent. He has worked in financial markets for over 35 years, as a banker, a corporate treasurer and now as a consultant to banks, fund managers, governments, companies and regulators around the world. He is also the author of Traders Guns and Money and Extreme Money as well as a number of reference books on derivatives and risk-management, which double as 'door stops'. He became a banker because he wasn't good enough to be a professional cricketer, but would give up finance if anyone offered him a job as a cricket commentator or allowed him to pursue his other passion- wildlife (he is the co-author with Jade Novakovic of In Search of The Pangolin: The Accidental Eco-Tourist). He lives in Sydney, Australia.
Friday 04 July 2014
The relationship between advanced and developing economies is complex. Human rights and working conditions in emerging nations, where many products consumed in developed countries are made, have been debated for many years.
None of this is new. Its origins lie in the colonial past. Using superior military power and technology, European powers established and maintained colonies in Asia, Africa and the Americas. The basic driver was cheap resources, labour (often slavery) and new markets for the colonising nation's products.
Karl Marx approved: "The question is not whether the English had a right to conquer India, but whether we are to prefer India conquered by the Turk, by the Persian, by the Russian, to India conquered by the Briton". While recognising that Indian markets and labour were being exploited by the East India Company for commercial gain, Marx argued that capitalism would transform the subcontinent. India would benefit from the fruits of industrial revolution, such as improved communications and a free press.
It was a sentiment worthy of George MacDonald Fraser's Flashman, who regarded the Victorian empire as "the greatest thing that ever happened to an undeserving world".
Peter Whitfield, writing in Travel: A Literary History, identified the link between earthly power (wealth) and spiritual glory (Christianity) that provided the justification for colonial conquest: "It amounted to a theory of cultural destiny – that the European maritime nations were destined to bring Christianity and civilisation to a pagan and savage world, and their reward was to be the wealth and riches which the indigenous populations themselves were incapable of appreciating and valuing."
Underlying colonialism was what the author Edward Said described in 1978 as Orientalism. This was a reference to the patronising attitude of Westerners towards Asian, Middle Eastern and African societies. They were seen as static and underdeveloped, to be shaped by a superior West in accordance with its own image.
Driven in part by the 1941 Atlantic Charter, many colonies gained independence after the Second World War. In his landmark speech on 14 August 1947, prime minister Jawaharlal Nehru identified the transcendent hopes of an independent India as well as all former colonies: "Long years ago we made a tryst with destiny, and now the time comes when we shall redeem our pledge, not wholly or in full measure, but very substantially. At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance."
The reality proved different.
A combination of casual indifference and malicious design created nation states whose borders ignored important historical, ethnic, tribal, religious and economic differences. It set the stage for frequently violent sectarian conflict in a number of states in Asia, Africa and the Middle East that continues to this day. This impeded development, as political and economic resources were diverted to resolving differences. Often lacking were essential infrastructure, political and social institutions, and skilled people to administer the new states, often reflecting a lack of "nation building" by the colonisers.
New-found statehood changed but did not eliminate reliance on metropolitan countries, which did not, of course, offer recompense for sometimes centuries of looting or exploitation. Most new states remained dependent on the colonial power for capital, technology, skills and markets for their products. Developed nations carefully controlled innovation and intellectual property to capture a substantial share of any commerce.
The newly decolonised world went through several semantic mutations : less developed countries); newly industrialised countries; emerging markets; and frontier markets. As the world economy globalised, these nations were progressively forced to join the capitalist caravan train and travel a familiar road.
Initially, foreign investment drove growth as developed countries relocated production facilities, utilising low-cost local labour. To foster development, international aid agencies and NGOs advised deregulation and the sale of government-owned businesses, local assets and business opportunities. Foreigners and favoured locals, sometimes in partnership, purchased assets – frequently at bargain prices and on advantageous terms. Living standards improved – for the fortunate and connected. Inequality increased as, for the bulk of people, there were only minimal improvements through the trickle-down of wealth. Finally, local constraints, rising costs and demands from the disadvantaged altered the dynamics. Costs rose to levels that made the economies uncompetitive. The capitalist caravan became restless, seeking newer, cheaper locations. Smart locals shifted money to Switzerland, Luxembourg, Hong Kong or Singapore.
Emerging nations, so the argument goes, can rise out of their impoverishment through trade and foreign investment. But most of the trade involves supplying low-cost labour and relies on poor environmental and workplace safeguards. For emerging nations producing cheap, low-value products for international markets to escape poverty always entailed a risky, uncertain and tragic future.
Most people living under the yoke of this neo-colonialism are already familiar with what Oscar Wilde identified in The Soul of Man Under Socialism: that capitalism lays upon men "the sordid necessity of living for others".
Satyajit Das is a former banker and author of 'Extreme Money' and 'Traders, Guns & Money'
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