The Divide: Global Inequality from Conquest to Free Markets

by Jason Hickel

I learned that people were suffering and dying of diseases that could easily be cured, prevented or managed in richer countries – a fact that to me seemed unspeakably horrible.

In the year 1500, there was no appreciable difference in incomes and living standards between Europe and the rest of the world.

centuries. It is about the belief, shaken with doubt from time to time but otherwise firm, that another world is possible.

At one of the most frightening times in our history, with inequality at record extremes, demagogues rising and our planet’s climate beginning to wreak revenge on industrial civilisation, we are more in need of hope than ever. It is only by understanding why the world is the way it is – by examining root causes – that we will be able to arrive at real, effective solutions and imagine our way into the future. What is certain is that if we are going to solve the great problems of global poverty and inequality, of famine and environmental collapse, the world of tomorrow will have to look very different from the world of today. The arc of history bends towards justice, Martin Luther King Jr once said. But it won’t bend on its own.

This story was deeply affirming for Americans; it made them feel good about themselves, proud of their achievements and their place in the world. But perhaps more importantly, it gave them a way to feel noble too – it gave them access to a higher, almost cosmological purpose. The developed countries would stand as beacons of hope, as saviours to the poor. They would reach out and give generously of their riches to help the ‘primitive’ countries of the South follow their path to success. They would become heroes, leading the way to a world of unprecedented peace and prosperity.

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.

And why was the government unable to provide basic social services? Because it was buried under a pile of foreign debt and had been forced by Western banks to cut social spending in order to prioritise repayment.

The deeper I dug, the more I realised that the reason poverty persisted in Swaziland had quite a lot to do with matters that lay beyond Swaziland’s borders. It gradually became clear that 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.

This approach encourages us to think with a kind of ‘methodological nationalism’ – to analyse the fate of each nation without ever looking beyond its borders.

The plunder of Latin America left 70 million indigenous people dead in its wake.

Whitman Rostow. Rostow – an academic who moonlighted as a foreign policy adviser to President Dwight Eisenhower – argued that underdevelopment was not a political problem, but a technical one. It had nothing at all to do with colonialism or Western intervention, but rather to do with internal problems. If poor countries wanted to develop, all they needed to do was accept Western aid and advice, implement free-market policies and follow the West’s path to ‘modernisation’. By telling a story of poverty that focused on domestic policies, Rostow’s theory not only sought to pull people’s attention away from the unfairness of the global economic system, it erased that system from view.

interventions. Leveraging debt, they imposed ‘structural adjustment programmes’ that reversed all the economic reforms that global South countries had painstakingly enacted. In the process, they went so far as to ban the very policies that they had used for their own development, effectively kicking away the ladder to success. 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.

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. In other words, developing countries ‘sent’ $3 trillion more to the rest of the world than they received. If we look at all years since 1980, these net outflows add up to an eye-popping total of $26.5 trillion – that’s how much money has been drained out of the global South over the past few decades. To get a sense of the scale of this, $26.5 trillion is roughly the GDP of the United States and Western Europe combined.

Three trillion dollars in total net outflows per year is twenty-four times more than the annual aid budget. In other words, for every dollar of aid that developing countries receive, they lose $24 in net outflows.

holidays. This figure alone outstrips the global aid budget. Remittances sent home by immigrant workers are slashed by exorbitant transaction fees, costing families $33 billion each year.

And then, of course, there are the damages that developing countries suffer due to climate change – caused almost entirely by rich countries – which are currently estimated to cost $571 billion per year.

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

problem. The aid paradigm allows rich countries and individuals to pretend to fix with one hand what they destroy with the other, dispensing small bandages at the same time as they inflict deep injuries, and claiming the moral high ground for doing

A casual observer might be impressed: American taxpayer money offered generously, in the spirit of humanitarianism, to assist impoverished Palestinians struggling to survive in the desert. But Palestine doesn’t have a shortage of water. When Israel invaded and occupied the West Bank in 1967, with the backing of the US military, it asserted total control over the aquifers beneath the territory. Israel draws the majority of this water – close to 90 per cent – for its own use in settlements and for irrigation on large industrial farms. And as the water table drops, Palestinian wells are running dry. Palestinians are not allowed to deepen their wells or sink new ones without Israeli permission – and permission is almost never granted. If they build without permission, as many do, Israeli bulldozers arrive the next day. So Palestinians are forced to buy their own water back from Israel at arbitrarily high prices.

tell this anecdote not just as an example of how aid often misses the point, but to illustrate a much larger truth. Poor countries don’t need our aid; they need us to stop impoverishing them.

It also serves as a potent political tool. The good-news narrative enjoins us to believe that the global economic system is on the right track. It implies that if we want to eradicate suffering, we should stick with the status quo and refrain from making drastic changes. For anyone who has an interest in maintaining the present order of distribution – the global 1 per cent, for instance – the good-news narrative is a useful story indeed. Sometimes this argument is quite explicit. In early 2015, the Spectator published a blog post with the title:

The author argued that all the attention we’ve been focusing on social inequality and wealth accumulation among the richest 1 per cent is misplaced. The 1 per cent may now have more wealth than the combined population of the entire rest of the world, but that’s OK because the very system that has made them so rich has also reduced poverty in developing countries. ‘We are, right now, living through the golden age of poverty reduction,’ the author wrote. ‘Anyone serious about tackling global poverty has to accept that whatever we’re doing now, it’s working – so we should keep doing it. We are on the road to an incredible goal: the abolition of poverty as we know it, within our lifetime. Those who care more about helping the poor than hurting the rich will celebrate the fact – and urge leaders to make sure that free trade and global capitalism keep spreading. It’s the only true way to make poverty history.

line made it appear as though fewer people were poor than before. When the new line was introduced, the poverty headcount fell literally overnight, even though nothing had actually changed in the real world.

people. In other words, while the good-news story leads us to believe that poverty has been decreasing around the world, in reality the only places this holds true are in China and East Asia. This is a crucial point, because these are some of the only places in the world where free-market capitalism was not forcibly imposed by the World Bank and the IMF. Everywhere else, poverty has been stagnant or getting worse, in aggregate. And this remains evident despite the World Bank’s attempts to doctor the figures.

Thomas Pogge likes to point out that the real metric of poverty reduction actually has nothing to do with proportions, and nothing to do with absolute numbers either. ‘The morally relevant comparison of existing poverty,’ he says, ‘is not with historical benchmarks but with present possibilities: How much of this poverty is really unavoidable today? By this standard, our generation is doing worse than any in human history.

Even establishment institutions are beginning to recognise this. In 2014 the Asian Development Bank conceded that the $1.25 line was simply too low to be meaningful. It is now considering nudging it up to $1.50 – a level that will at the very least allow for basic nutrition. Even this minor shift would see the number of people in extreme poverty rise by more than 1 billion, and invert the MDGs’ poverty reduction

What if we were to take these concerns seriously, and measure global poverty at a minimum of $5 per day? We would find the global poverty headcount to be about 4.3 billion people.

Because the yields of growth are very unevenly distributed. The poorest 60 per cent of humanity receive only 5 per cent of all new income generated by global growth. The other 95 per cent of the new income goes to the richest 40 per cent of people.

big assumption indeed. As if the epochal timelines here aren’t disappointing enough, it gets worse. To eradicate poverty at $5 a day, global GDP would have to increase to 175 times its present size. In other words, we need to extract, produce and consume 175 times more commodities than we presently do. It is worth pausing for a second to think about what this means. Even if such outlandish growth were possible, the consequences would be disastrous. We would quickly chew through our planet’s ecosystems, destroying the forests, the soils and, most importantly, the climate. As Woodward puts it: ‘There is simply no way this can be achieved without triggering truly catastrophic climate change – which, apart from anything else, would obliterate any potential gains from poverty reduction.’ It’s a farcical proposition – a cruel joke played at the expense of the poor. And, as if to add insult to injury, achieving this level of growth would mean driving global per capita income up to $1.3 million. In other words, the average income would have to be $1.3 million per year simply so that the poorest two-thirds of humanity could earn $5 per day. This gives us a sense of just how deeply inequality is baked into our economic system.

In all likelihood, the Bank will continue to revise the poverty line downwards in real terms over the next fifteen years until it shows that poverty has been more or less eradicated. And when 2030 arrives, they will declare that they have succeeded. There will be much media fanfare, and politicians and development leaders will congratulate each other, pleased with a good-news story that will keep the public satisfied and silence any questions about the legitimacy of the global economic order. But meanwhile, back on Earth, some 4.3 billion people will know for a fact that it is a lie.

No one colonises innocently. Aimé C

whatever we want.’ During his second expedition, this time with seventeen ships and 1,200 men, Columbus travelled around the Caribbean capturing thousands of indigenous Americans to be sent back and sold in Spain as slaves. But this time his real objective was gold. He had noticed the indigenous people wearing gold ornaments and assumed that the metal must be abundant in the region. Yet he was having a difficult time finding the source, so he resorted to coercive measures. From his base on Hispaniola, the island shared today by Haiti and the Dominican Republic, he forced the local inhabitants – the Arawaks – to bring him a certain quantity of gold every three months. Those who failed to do so would have their hands chopped off or were hunted down and killed. Men were forced to spend their lives in mines, stripping the mountains in search of gold. Up to a third of workers died every six months. Within two years of the Spanish invasion, some 125,000 people had been killed – half the island’s population. Most of the remaining inhabitants of Hispaniola were forced into slave labour on plantations. A few decades later, only a few hundred Arawaks remained alive.

One European witness, Bartolomé de Las Casas, reported startling statistics of the slow-motion genocide unfolding in the Caribbean region: ‘From 1494 to 1508,’ he wrote, ‘over three million people had perished from war, slavery, and the mines. Who in future generations will believe this? I myself writing

A few decades later, Europeans discovered the immense network of silver mines centred on Potosi, in what is now Bolivia. Before long the metal came to account for 99 per cent of the mineral exports from the Spanish colonies. Between 1503 and 1660, 16 million kilograms of silver was shipped to Europe, amounting to three times the total European reserves of the metal. And that was on top of the 185,000 kilograms of gold that arrived in Spanish ports during the same period. By the early 1800s, a total of 100 million kilograms of silver had been drained from Latin America and pumped into the European economy – first into Spain, and then out to the rest of Europe as payment on Spain’s debts.

But while Europe benefited from this arrangement, Latin America suffered tremendously. It is estimated that Mexico had a population of up to 30 million indigenous inhabitants before the arrival of the Europeans. The Andean region had a similar number. Central America is thought to have supported around 13 million. The numbers vary by source to some extent, but 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.

How much did Western states gain from this enormous quantity of free labour? It is estimated that the United States alone benefited from a total of 222,505,049 hours of forced labour between 1619 and the abolition of slavery in 1865. Valued at the US minimum wage, with a modest rate of interest, that is worth $97 trillion today. And that’s just the United States. Right now, fourteen Caribbean nations – represented by the law firm Leigh Day – are in the process of suing Britain for slavery reparations. They have not disclosed how much they seek in damages, but they have pointed out that when Britain abolished slavery in 1834 it paid its slave owners compensation of £20 million for loss of property (paying no compensation to the slaves themselves), which would be the equivalent of $300 billion today. It is worth noting that this figure reflects only the price of the slaves, and tells us nothing of the total value they produced during their lifetimes, nor of the trauma they endured, nor of the hundreds of thousands of

While the wool industry was a major driver of enclosure, the Reformation added impetus to the process. When Henry VIII dissolved the old Catholic monasteries, Church lands were quickly appropriated by the elite. Many of the peasants who lived on them were kicked off. But by far the most powerful driver of enclosure had to do with agriculture. 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. This led to a dramatic increase in agricultural output, but the only real improvement was to the landlords’ profits.

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.

This dependency on potatoes proved deadly when the potato blight hit in 1845. Over the next seven years 1 million people died – more than 10 per cent of the Irish population – in what became known as the Great Famine. What made this famine so appalling was that it was completely avoidable; it would never have happened if peasants had retained full rights to their ancestral land, where they would have had plenty of space to produce a diversity of crops. In other words, the scarcity that led to the famine was artificially created. But even with the new agrarian system in place, Ireland was still producing plenty of food, in aggregate; the problem was that it was all being siphoned away by the British. 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.

The human toll was staggering: 10 million Indians died of starvation.

Twenty years later, between 1896 and 1902, El Niño struck again – and this time the death toll was even higher. Nineteen million Indians died of starvation, bringing the total body count to 29 million. Almost 30 million is a difficult number to imagine. Laid head to foot, the dead would stretch the length of England eighty-five times over.

The economic transformation was dramatic. 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.

Defeated on the diplomatic front, Britain turned to drugs. Desperate to finance their growing trade deficit, they started selling opium – grown in colonial India – on China’s black market. And when Chinese authorities clamped down on this illicit trade, as any sovereign country has the right to do, the British retaliated with a military invasion. Thus began the Opium Wars, fought by the British between 1839 and 1842, and by an Anglo-French alliance from 1856 to 1860. China, unprepared for naval combat, was brutally defeated. But Britain and France refused to relent until China agreed to abolish restrictions on European access and hand large chunks of territory over to European control. The treaties that followed granted sweeping trade privileges to Europe but conceded nothing to China in return. According to these ‘unequal treaties’, as they came to be called, Europeans could sell their manufactured goods on China’s markets while protecting their own markets against Chinese competitors. The consequences were devastating. China’s share of the world economy dwindled from 35 per cent before the Opium Wars to an all-time low of just 7 per cent. What is more, China’s loss of control over its grain markets led in part to the famines that China suffered during the same droughts that hit India. And, as in India, 30 million people in China perished needlessly of starvation during the late 19th century, after having been integrated into the London-centred world economy.

During the colonial period in India, there was no increase in per capita income from the time the East India Company took power in 1757 to the time of national independence in 1947. In fact, during the last half of the 19th century – the heyday of British intervention – income in India declined by more than 50 per cent. And it was not just incomes that collapsed. From 1872 to 1921, the average life expectancy of Indians fell by 20 per cent. In other words, the subcontinent was effectively de-developed. 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.

I was in the East End of London (a working-class quarter) yesterday and attended a meeting of the unemployed. I listened to the wild speeches, which were just a cry for ‘bread! bread!’ and on my way home I pondered over the scene and I became more than ever convinced of the importance of imperialism . . . My cherished idea is a solution for the social problem, i.e., in order to save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial statesmen must acquire new lands to settle the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists.

their reach across 90 per cent of the continent. Britain controlled a huge swathe of land stretching all the way from the Cape to Cairo, plus Nigeria and a few outposts along the north-west coast. France controlled most of West Africa, Madagascar and part of the equatorial region. Germany took Namibia, Tanzania and Cameroon, while the Portuguese laid claim to Angola and Mozambique, and Belgium ended up with the Congo. Once the dust had settled, only Ethiopia and Liberia remained independent.

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

Successive colonial administrations introduced policies designed to do exactly that. As early as 1857, they began forcing Africans to pay taxes, which compelled African households to send family members to the mines and plantations for work. Those who didn’t pay taxes were punished – so there was always the threat of violence lurking in the background. On top of this, they began to systematically push Africans off their land in a process that mimicked the enclosure movement in England. The Natives Land Act of 1913 restricted African land ownership to a series of ‘native reserves’ or ‘homelands’ that totalled only 10 per cent of the country’s area. The division was brutally enforced: Africans were gradually and systematically forced off their land and into the reserves. And because the reserves were on marginal, unproductive land inadequate to support the population, Africans had