The Divide: Global Inequality from Conquest to Free Markets

by Jason Hickel

the eight richest men in the world have as much wealth between them as the poorest half of the world’s population combined.

Western powers roped the rest of the world into a single international economic system.

Why were AIDS patients dying? Over time, I learned that it had to do with the fact that pharmaceutical companies refused to allow Swaziland to import generic versions of patented life-saving medicines, keeping prices way out of reach.

the global economic system was organised in such a way as to make meaningful development nearly impossible.

Anthropologists tell us that when the structure of a core myth begins to change, everything else about society changes around it, and fresh new possibilities open up that weren’t even thinkable before. When myths fall apart, revolutions happen.

‘efforts to eradicate poverty appear to many members of the public to have failed, and scepticism about the effectiveness of aid and global development initiatives has risen’.

the richest eight people had as much wealth as the poorest 3.6 billion.

The stakes are high, for if the story of development collapses, so too will our certainties about the present order of the global economy. If people begin to accept that, despite many decades of development, poverty has been getting worse rather than better, and the divide between rich and poor countries is growing rather than closing, then it will become clear to all that there is something fundamentally wrong with our economic system – that it is failing the majority of humanity and urgently needs to be changed.

The plunder of Latin America left 70 million indigenous people dead in its wake. In India, 30 million died of famine under British rule. Average living standards in India and China, which had been on a par with Britain before the colonial period, collapsed. So too did their share of world GDP, falling from 65 per cent to 10 per cent, while Europe’s share tripled.

The United States and Western Europe discovered they could use their power as creditors to dictate economic policy to indebted countries in the South, effectively governing them by remote control, without the need for bloody interventions.

Structural adjustment – a form of free-market shock therapy – was sold as a necessary precondition for successful development in the global South. But it ended up doing exactly the opposite. Economies shrank, incomes collapsed, millions of people were dispossessed and poverty rates shot through the roof. Global South countries lost an average of $480 billion per year in potential GDP during the structural adjustment period. It is now widely acknowledged by scholars that structural adjustment was one of the greatest single causes of poverty in the global South, after colonialism. But it proved to be enormously beneficial to the economies of the North.

The problem is not that poor countries are having difficulty hoisting themselves up the development ladder; the problem is that they are being actively prevented from doing so.

After all, as we will see, poverty doesn’t just exist. It is created.

indeed, many increased their foreign aid disbursements accordingly. The aid narrative was useful because it overrode any suggestion that Western powers were in any way

In 2012, just two months before my visit, the United Nations General Assembly adopted resolution 66/225, calling for the restoration of Palestinians’ rights to their own water. One hundred and sixty-seven nations voted in favour of the resolution. The United States and Israel voted against it.

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

scholars agree that in 1492 the Latin American region had a combined population of between 50 and 100 million. By the middle of the 1600s, however, the continent’s population had been slashed to 3.5 million. In other words, around 95 per cent had been killed.

By the end of the slave trade in 1853, somewhere between 12 million and 15 million Africans had been shipped across the Atlantic. Between 1.2 million and 2.4 million died en route, in the darkness below the decks of the slave ships, their bodies cast into the sea.

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.

Ireland was exporting thirty to fifty shiploads of food to England and Scotland each day during the famine, while the local population starved to death.

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.

The Berlin Conference added considerable impetus to the scramble for Africa. In 1870, only 10 per cent of Africa was under the control of Europeans; by 1914 they had extended their reach across 90 per cent of the continent.

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.

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. The veil of the Cold War has obscured this blunt fact from view.

Every one of today’s rich countries developed its economy through protectionist measures. In fact, until recently, the United States and Britain were the two most aggressively protectionist countries in the world: they built their economic power using government subsidies, trade tariffs, restricted patents

Major decisions require 85 per cent of the vote. Not incidentally, the United States holds about 16 per cent of the shares in both institutions, and therefore wields de facto veto power.

if every single country in the global South united in disagreement against an IMF and World Bank policy, they wouldn’t be able to block it.

the large-scale development projects funded by World Bank loans required recipients to hire American contractors to carry out the work and to purchase equipment and materials from American businesses rather than local ones, even though this can be up to 30 per cent more expensive.

that 84 per cent of research on pharmaceuticals is funded by governments and other public sources, while only 12 per cent comes from the pharmaceutical industry.

consolidated large plantations – a scenario not unlike the process of enclosure described in Chapter 3. And just as with enclosure elsewhere in the world, many of the displaced farmers

‘Investor protection’ effectively grants corporations the power to circumvent the normal justice system and strike down the laws of sovereign nations. In other words, corporations are empowered to regulate democratic states, rather than the other way around.

The creation of a global ‘free market’ required not only violent coups and dictatorships backed by Western governments, but also the invention of a totalising global bureaucracy – the World Bank, the IMF, the WTO and bilateral free-trade agreements – with reams of new laws, backed up by the military power of the United States.

the technical term for a tax haven is secrecy jurisdiction.

Probably the most important central node in this global tax haven system is the City of London. While it may seem confusing, the City of London is not the same thing as London itself. It is a small council within London that houses London’s powerful financial sector. The City of London is able to function as a tax haven because it is immune from many of the nation’s laws, is free of all parliamentary oversight and – most importantly – is exempt from Freedom of Information rules.

As Oscar Wilde once pointed out, people’s emotions are stirred more quickly than their intelligence.

with admirable intentions, they very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease.

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.

You cannot carry out fundamental change without a certain amount of madness. In this case, it comes from nonconformity, the courage to turn your back on the old formulas, the courage to invent the future. Thomas Sankara

GDP was intended to be a war-time measure, which is why it is so single-minded – almost even violent. It tallies up all money-based activity, but it doesn’t care whether that activity is useful or destructive.

1919, with the landmark US Supreme Court case Dodge v. Ford Motor Company. At the time, the Ford Motor Company had a sizeable capital surplus, and Henry Ford had decided to devote some of it to raising his workers’ wages, which were already considered to be quite high. The Dodge brothers, two of the company’s biggest shareholders, sued Ford for this move, claiming that Ford’s capital actually belonged to his shareholders, and that unnecessarily raising wages was effectively stealing from them. The court ruled in their favour, and a precedent was set. Business decisions would have to be made in the interests of shareholder returns first.