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

by Jason Hickel

between 1896 and 1902, El Niño struck again – and this time the death toll was even higher. Twenty million Indians died of starvation, bringing the total body count to 30 million. Thirty million is a difficult number to imagine. Laid head to foot, the dead would stretch the length of England eighty-five times over.

Just as in Ireland, mass starvation in India was completely avoidable.

It was the colonial period of forced market integration that inaugurated the ‘development gap’ between Britain and Asia.

While India and China watched their share of global GDP diminish, Europeans increased their own share from 20 to 60 per cent during the colonial period. Europe didn’t develop the colonies. The colonies developed Europe.

Ten million Congolese perished under Leopold’s brutal regime – roughly half the country’s population.

Today, more than 50 per cent of the black population lives in absolute poverty, while the mines and plantations remain monopolised by a handful of white-owned (mostly British) conglomerates.

The Roosevelt Corollary was invoked to justify more than a dozen US interventions during the early 20th century, including multiple invasions and occupations of Cuba, Mexico, Honduras, Colombia, Nicaragua, Haiti, the Dominican Republic and Puerto Rico.

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. But there were other issues at stake too. When the US invaded Colombia in 1903 it was in order to secure control over Panama, to clear the way for the US to dig the Panama Canal. Nicaragua was occupied from 1912 to 1933 largely in order to prevent the Nicaraguan government – or any other nation – from building its own alternative canal. Another key issue was debt. When the Dominican Republic threatened to default on its debts to American creditors, the US invaded and seized control of its ports, channelling the country’s customs revenues directly into American coffers. The occupation lasted from 1916 to 1924, at the end of which the US installed a military dictatorship to rule in its interests.

In 1820, at the dawn of the second wave of imperialism, the income gap between the richest country and the poorest country was only 3 to 1. By the end of colonialism in the middle of the 19th century, the gap was 35 to 1.

In most undergraduate economics courses, students are taught that the differences between the economies of poor and rich countries can be explained by the laws of comparative advantage and supply and demand. The standard theory holds that prices and wages are set automatically by the market depending on each country’s factors of production. Poor countries have a natural abundance of labour, so their wages are low and therefore their comparative advantage lies in labour-intensive production (first mining and agriculture and later also light manufacturing). Rich countries have a natural abundance of capital, so their wages will be higher and they will specialise in capital-intensive production of higher-order commodities. In orthodox economic theory, this is regarded as the natural order of things. But as soon as we bring history back into the picture, this theory starts to fall apart. Why do poor countries have a comparative abundance of labour in the first place? Because of hundreds of years of colonial rule, under which subsistence economies were destroyed and millions of people were displaced and forced into the labour market, driving unemployment up and wages down. The fact that slavery was used up through the 19th century further contributed to downward pressure on wages, as workers had to compete with free labour. And why do poor countries have a comparative deficit of capital in the first place? Partly because they were plundered of precious metals, and partly becaus...

In 1910, the richest 1 per cent in the United States claimed 45 per cent of the nation’s wealth, while in Europe they claimed nearly 65 per cent of total wealth.

Zoom out a bit and the numbers are even more staggering: in the US the richest 10 per cent claimed more than 80 per cent of the nation’s wealth; in Europe, it was as much as 90 per cent. Such levels of inequality would be almost impossible to imagine were we not once again approaching similar extremes today.

But of course eventually the bubble popped, as all bubbles must,

From the 1950s to the 1970s, a new movement emerged across much of the postcolonial world, driven by the ideals of economic independence and a fairer distribution of the world’s wealth. And it worked. Incomes rose, living standards improved, and the gap between rich and poor countries began to narrow for the first time since 1492. It was nothing short of a development miracle. But not everyone was pleased with this turn of fate. Indeed, those whose rhetoric most celebrated international development as an abstract idea turned out to be its most violent enemies in practice.

John Maynard Keynes

Keynesian policies created the conditions for high rates of economic growth through the 1950s and 1960s

Black people were denied fair labour contracts and access to decent schooling and housing – particularly in the United States,

Anti-colonial thinkers like Mahatma Gandhi and Marcus Garvey had been sowing the idea of independence for a number of decades,

the Good Neighbor policy, which committed them to respecting the sovereignty of Latin American nations. The policy suspended the long history of US intervention that had beleaguered the region under the Monroe Doctrine and opened up the possibility for democratic revolutions to gain traction and overthrow US-backed puppet regimes.

This was the era of ‘developmentalism’.

The epicentre of the developmentalist movement was the United Nations Economic Commission for Latin America, based in Chile. Founded in 1948, the Commission was headed by the progressive Argentinian economist Raúl Prebisch, one of the thinkers who developed the theory of dependency and unequal exchange.

Prebisch argued that underdevelopment and global inequality were the result of the way that colonialism had organised the world system, limiting the countries of the global South to exporting primary commodities and preventing them from building competitive industries.13

In 1965, with the aid of weapons and intelligence from the United States, Suharto hunted down and killed between 500,000 and 1 million of Sukarno’s supporters in one of the worst mass murders of the 20th century.

His iconic 1965 book, Neo-Colonialism: The Last Stage of Imperialism, put this critique into powerful prose and gave voice to the frustrations of people across the South.

Patrice Lumumba, the young Pan-Africanist who was elected the Congo’s first post-independence leader in 1960, was in office for only two months before being assassinated in a violent a coup orchestrated by Belgium and the US, on the direct orders of President Eisenhower.

Keynesianism

neoliberalism.

ideological warfare.

In order to aggressively deregulate the economy, you first have to aggressively regulate the political sphere.

monetarist policy

‘supply-side economics’.

CEO salaries grew by an average of 400 per cent during the 1990s while workers’ wages grew by less than 5 per cent and the US minimum wage decreased by more than 9 per cent.56

According to US Census data, the top 5 per cent of American households have seen their incomes increase by 72.7 per cent since 1980,

effect. As it turns out, making rich people richer doesn’t make the rest of us richer.58 Nor does it stimulate economic growth, which is the sole justification for supply-side economics. In fact, quite the opposite is true: since the onset of neoliberalism, the rich countries of the OECD have seen per capita growth rates fall from an average of 3.5 per cent during the 1960s and 1970s down to an average of 2 per cent during the 1980s and 1990s.59 As these numbers show, neoliberalism has failed as a tool for economic development – but it has worked brilliantly as a tool for restoring power to the wealthy elite.

The developmentalist policies that were introduced across the global South after the end of colonialism succeeded in reducing inequality and poverty. The movement operated according to a vision that was diametrically opposed to Truman’s narrative: it saw inequality and poverty not as natural phenomena, or as a sign of moral failure, but rather as a matter of injustice – a political problem that demanded political solutions.

Poor countries didn’t want aid from the West, they wanted a fairer global economic system, with the latitude to determine their own economic policies.

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 ...

They need fair access to land and a fair share of natural resource wealth. In other words, real development requires the redistribution of power, which then in most cases naturally precipitates a redistribution of resources. Developmentalist policies were generally brought in by democratically elected governments that had broad popular support, although a few of them – as in Egypt – calcified into authoritarian regimes. But in all cases, developmentalist governments sought to change the rules of national economies to make them fairer for the majority,...

In short, the fight against poverty and underdevelopment during this period was underst...

this is exactly what the West would not tolerate.

Western governments intervened on the side of disgruntled national elites in order to roll back developmentalist legislation.

Under the banner of the Cold War, pro-poor legislation was demonised in Western media as ‘communist’, and this designation gave Western governments licence to employ even the most draconian tactics with impunity.

Yet few of the global South leaders who were assassinated or deposed during this period identified as communist; for the most part, they were explicitly non-aligned, and champi...

If we dig behind the rhetoric, it becomes clear that Western support for right-wing coups had little to do with Cold War ideology, and certainly nothing to do with promoting democracy (quite the opposite!); the goal, rather, was to defend Western economic interests.

It is interesting to imagine how states such as Guatemala, Brazil, Iran, Indonesia and the Congo would have developed had they been allowed to continue with their pro-poor policies in peace. It is possible that by now they would have come very close to eradicating poverty, and perhaps even shed their Third World status altogether – as many East Asian countries managed to do. Sadly, they were prevented from taking this path.

Developmentalism was not without its flaws.

the focus on rapid economic growth sped up the process of commodifying human life and nature that had begun under colonialism.

‘traditional’ values and lifeways were treated as a barrier to economic growth and social progress, and were often purposefully eradicated. Developmentalism was, after all, a Western model.