The Divide: A Brief Guide to Global Inequality and its Solutions

by Jason Hickel

Europe’s development couldn’t have happened without colonial loot.

They found that in 2012, the last year of recorded data, developing countries received a little over $2 trillion, including all aid, investment and income from abroad. But more than twice that amount, some $5 trillion, flowed out of them in the same year.19 In other words, developing countries ‘sent’ $3 trillion more to the rest of the world than they received.

The charity paradigm obscures the real issues at stake: it makes it seem as though the West is ‘developing’ the global South, when in reality the opposite is true. Rich countries aren’t developing poor countries; poor countries are effectively developing rich countries – and they have been since the late 15th century. So it’s not only that the aid narrative misunderstands what really causes poverty, it’s that it actually gets it backwards. Just as in Truman’s time, aid serves as a kind of propaganda that makes the takers seem like givers, and conceals how the global economy actually works.

Poor countries don’t need our aid; they need us to stop impoverishing them.

But archaeological records show that people in the forager-farmer communities that lived outside these early states were a good deal better off, with life expectancies around 50 per cent longer.1 They were healthier, stronger, taller and better nourished than their more ‘civilised’ counterparts in South America – and, indeed, in Europe.2 They were less likely to die of famine for they had a much more diverse food system: they grew some of their food and foraged for the rest. They worked far fewer hours and the work was lighter. There were no powerful aristocrats or landlords around to force them to work, or to skim their yields for profit. And they were less exposed to the diseases that plagued densely populated societies.

A la against the grain

Landlords began to realise that they could skim much more value from peasants if they were able to get them to increase their agricultural output. To do this, they transformed peasants’ secure tenure rights into a market for leases, and gave leases only to those who were able to produce the most. Those who were less productive would be kicked off the land and left with no way to survive. This new system – known at the time as ‘improvement’ – put peasants under tremendous pressure. If they wanted to survive they had to devise ways of extracting ever more yield from their land – far beyond what they needed to live on. They had to increase their workload and intensify their farming techniques.26 This led to a dramatic increase in agricultural output, but the only real improvement was to the landlords’ profits. The application of this market logic to land and farming marked the formal birth of capitalism. It meant that, for the first time in history, people’s lives were effectively governed by the imperatives to intensify productivity and maximise profit.

The displaced peasants had no way to feed themselves, save for one last option: to sell their labour for wages. Such people were euphemistically referred to as ‘free labourers’, but this term is quite misleading. True, they were not technically slaves, but wage work was hardly a matter of free choice.

The emergence of the landless working class added a final piece to the great transformation of England’s economy: they became the world’s first mass consumer population, for they depended on markets for even the most basic goods necessary for survival: clothes, food, housing, and so on. It was these three forces – enclosure, mass displacement of peasants and the creation of a consumer market – that provided the internal conditions for the Industrial Revolution.

Before the British arrived, India commanded 27 per cent of the world economy, according to economist Angus Maddison. By the time they left, India’s share had shrunk to just 3 per cent.

Europe didn’t develop the colonies. The colonies developed Europe.

These are known now as the Banana Wars, as in many cases the invasions were designed to guarantee abundant land and cheap labour for American fruit companies. For instance, US marines invaded Honduras seven times between 1903 and 1925 in order to contain progressive political parties and install puppet leaders who would serve the interests of American banana producers. Cuba is another example: the US occupied Cuba on and off from 1906 to 1934, mostly to secure the interests of American sugar companies.

The rise of Keynesianism coincided precisely with the last decades of European colonialism. In fact, it was partly due to the influence of Keynesian ideology – with its focus on fairness and welfare – that the colonial project began to seem untenable and gradually unravelled. The progressive political parties that began to take control in Europe after the Second World War had little appetite for colonialism as it conflicted with the growing discourse on equality, national sovereignty and human rights.

in the United States, the top marginal tax rate hovered around 90 per cent during the 1940s and 1950s. (Today, politicians like to claim that higher taxes will slow down the economy, yet historical data shows that the US enjoyed some of its highest rates of growth during the period of 90 per cent tax.)

The point to take from this sordid story is that neoliberal economic policies were so obviously destructive to people’s lives that it was very difficult to get them implemented in a democratic government. In most cases, the only way to bring them in was through military dictatorship and a state terror programme that would quash resistance wherever it emerged. In order to aggressively deregulate the economy, you first have to aggressively regulate the political sphere. Total market freedom requires total political unfreedom, even to the extent of mass imprisonment and concentration camps.

The solution to mass poverty turns out to be remarkably simple. Poor people don’t need charity, they need fair wages for their work, labour unions to defend those wages and state regulation that prevents exploitation. They need decent public services – such as universal healthcare and education – and a progressive taxation system capable of funding them. They need fair access to land and a fair share of natural resource wealth. In

Western policymakers told developing countries that they had to liberalise their economies in order to grow, but that’s exactly what the West did not do during its own period of economic consolidation. Every one of today’s rich countries developed its economy through protectionist measures.

an unprecedented expansion of state power was necessary to force countries around the world to liberalise their markets against their will. As the global South has known ever since the Opium Wars in 1842, when British gunboats invaded China in order to knock down China’s trade barriers, free trade has never actually been about freedom. On the contrary, as we have seen, free trade has a tendency to gradually undermine national sovereignty and electoral democracy.

To the extent that charity is enabled by the accumulation of surplus wealth it can never be a meaningful solution – for the very processes by which wealth is accumulated are those that produce poverty in the first place.

If you cut down a forest and sell the timber, GDP goes up. If you strip a mountain range to mine for coal, GDP goes up. If you extend the working day and push back the retirement age, GDP goes up. But GDP includes no cost accounting. It does not measure the cost of losing the forest as a sinkhole for carbon dioxide, or the loss of the mountain range as a home for endangered species, or the toll that too much work takes on people’s bodies and minds and relationships.

greater equality reduces the pressure for economic growth. This might seem a bit counterintuitive at first, but keep in mind that one of the reasons growth is so appealing to politicians is that it allows them to sidestep the thorny problem of distribution. As long as the pie is growing there’s less pressure to redistribute existing resources.