December 3, 1991
David C. Korten
The People-Centered Development Forum
The world’s official development institutions are currently pursuing policies
based on invalid assumptions about
economic growth, a globalized world
economy, and international assistance.
These policies are the antithesis of
those appropriate to sustainable development. Our new orientation must
recognize that the current level of
human economic activity has filled the
earth’s available ecological space.
Further improvements in human
well-being must be achieved without
increasing the economic system’s physical throughput. A dramatic reduction in
wasteful consumption in the North is
essential if the world’s poor are to have
a decent life. The global economic system must be transformed to curb the
power of transnational capital and
establish a strong connection between
capital, place and people. Loan funded
international assistance and the
organizations that administer it will
need to be phased out.
Japan has a special role, in part
because there are so many positive
lessons from its own domestic development experience, and in part because
its aid and investment policies in the
South have been so at odds with both
that experience and the requirements of
sustainable development.
It is an honor to be invited to address
this important symposium on the “Significance and Implications of Sustainable Development.” I’m greatly reassured to know that key leaders in the
Japanese development assistance program are taking up this important topic.
I believe that how the world addresses
the topic of sustainable development
during this decade will determine the
quality of the lives of all our children
for many generations to come.
The two countries likely to play the
most influential roles in making the
choices we currently face are Japan–your country–and the United States–mine. Unfortunately, both countries
have committed the full weight of their
political and economic resources to
policies that seriously threaten the
future of our planet and its people.
These policies, shared by most of the
world’s official development institutions, are built on three premises:
Sustained economic growth is the
key to human progress.
Total integration of the world
economy is a key to growth and
beneficial to all but a few narrow
special interests.
International assistance and investment work to build strong economies in less fortunate nations and
are important to the progress of
their people, especially the poor.
Policies based on these assumptions are
actively exacerbating poverty, environmental destruction and the
disintegration of the social fabric in
nearly every country of the world.
They are the antithesis of the policies
required in support of sustainable
development.(1)
In my brief presentation I will explain the reasoning behind this conclusion. I will also point to significant
positive aspects of Japan’s own development experience from which the
world would greatly benefit. Allowing
others to apply the lessons of your
experience, however, will require a
basic reorientation of your foreign
assistance policies.
Growth
The crux of the dilemma of sustainable
development is starkly revealed in a
collection of essays by prominent
economists quietly released by the
Environment Department of the World
Bank in July of this year.(2) It is interesting that this piece has been produced
by a group within the World Bank, as
it implicitly challenges the most fundamental premises of the Bank’s current
policies and commitments.
According to the authors of the
working paper, society has built its
economic theory and institutions on the
premise that the total demand that
human economic activity places on the
environment is inconsequential relative
to the scale of the ecology’s regenerative capacities. In short, contemporary
economic theory and policy assume an
“empty world.” We now face a new
reality. The available data regarding
global warming, ozone shield rupture,
land degradation, and human
appropriation of earth’s biomass and
hydrology indicate that the aggregate
scale of human economic activity has
grown to the point at which it virtually
fills the available ecological space. We
now live in a “full world.” Indeed, in
some areas we are already making
demands that significantly exceed the
ecology’s sustainable limits–such as its
ability to absorb greenhouse gases.
This new reality forces us to face
some very uncomfortable truths.
- Economic growth based on increasing the physical throughput of
the economic system by depleting
earth’s store of natural capital has
reached or exceeded its natural
limits. - The high consumption life style
enjoyed by approximately twenty
percent of earth’s population and
held out as a promise to the other
eighty percent is unsustainable and
forever out of reach of those to
whom it has been promised. - The price of the resources consumed by the fortunate twenty
percent is the displacement, deprivation, and marginalization of the
least fortunate twenty percent.
Development can no longer be defined
primarily in terms of economic growth.
Development and growth are not the
same. Growth means more. Development means better. Historical we have
based human advancement on the ever
expanding colonization of ecological
space. Now our primary concern must
be to reallocate how we use the space
already appropriated to assure that all
inhabitants of the planet, present and
future, have the opportunity to live a
full and human life. This is the task of
sustainable development.
Two priorities emerge at the top of
the sustainable development agenda.
- We must dramatically reduce the
demands placed on the available
ecological space by the wasteful
extravagance of the world’s one
billion overconsumers. - We must curb the explosive population growth that is expected to
double the number of people competing for our planet’s available
ecological space by the middle of
the next century.
Unless we are successful on both of
these priorities, we may expect that at
least half the world’s population–including quite possibly many of our
own grandchildren–will be living in
absolute poverty in the mid-21st century.
Global Economic Integration
After growth itself, the major policy
commitments of the Bretton Woods
institutions [the World Bank, the International Monetary Fund, and the General Agreement on Trade and Tariffs
(GATT)], the regional development
banks, and most of the OECD governments and bilateral assistance agencies
is to the total integration of the world
economy. Their goal is to remove all
barriers to the free flow of trade,
investment, and services. Both the
arguments and the reality are too
complex to cover fully in a presentation
this brief. I will try, however, to
present the basic issues as briefly and
succinctly as possible.
As goods and money move freely
across national borders at great speed
and in enormous quantities, governments find they are losing their ability
to manage their own economies. Many
governments are negotiating away their
right and means to determine their own
trade, investment, and monetary policies–often under pressure from the
World Bank and IMF. In their place,
economic decisions become vested in
gigantic corporations that lack attachment or responsibility to people, place,
or nation and are virtually unaccountable for the social and ecological
consequences of their activities.
Free to grow without limit through
mergers and acquisitions, a few of the
more successful corporations are gaining increasingly oligopolistic or even
monopolistic positions in world markets. This limits the possibility for
smaller and possibly more efficient
competitors to become established. If
they do become established they are
absorbed by acquisition.
The fiercest competition in a globalized market turns out to be not between firms but between governments
competing for the investment capital of
these free roaming corporations. The
winners are generally those governments able to offer the cheapest most
compliant labor, the weakest environmental, health, and safety standards,
the lowest taxes, and the most fully
subsidized infrastructure. Individual
corporations find it difficult not to
respond to such offers for fear of
becoming non-competitive against those
that do.
Originally created for the purpose
of expanding international trade and
investment, the Bretton Woods institutions are fulfilling their functions
beyond the most optimistic dreams of
their founders. Structural adjustment,
probably the number one priority of the
international assistance community
during the 1980s, has been a major
instrument for forcing this agenda on
debt burdened countries. The major
beneficiaries have been the institutions
of transnational capital, which have
found the restraints to their growth and
power falling away at every hand.
There is an important role for the
market in sustainable development, but
not for the unrestrained markets of a
lawless cowboy economy. One reason
that national governments are becoming
increasingly powerless is because economic power is being centralized at the
global level, while the political power
of government remains decentralized to
national or sub-national levels. The
balance of forces essential to democratic pluralism is lost, resulting in a
market tyranny every bit as destructive
as the state tyranny that characterized
the Communist empire of Eastern
Europe.
In our search for environmental
sustainability we must work toward an
institutional framework based on economic decentralization that attaches
economic power to place and assures
its accountability to societal interests.
This probably means a system of
relatively small self-reliant regionalized
economies geared to living within their
ecological means and featuring local
control of productive assets, strong
local civic institutions, an effective
framework of regulations, market
incentives, and community norms that
internalize full social and environmental costs in product pricing,
encourage virtual one hundred percent
recycling, and assure a just allocation
of available ecological resources.
Anti-trust measures that keep
corporate power in check and maintain
the competitiveness of international and
local markets will need to be
institutionalized in international treaties. Strong, democratically accountable governments will be needed to
manage regional and local economies
for sustainability and social justice.
These governments will need the technical ability and authority to implement
a wide range of measures intended to
balance economic activity with the
regenerative capacities of the region’s
natural capital.
International Assistance
In recent years substantial attention has
been directed to the social and environmental failures of individual development projects. In the name of development, large-scale dams, export-processing zones, mono-culture tree
plantations, large-scale commercial
fishing, export-oriented agricultural
estates, and mining projects have
displaced tens of millions of people and
devastated the ecology of vast areas.
Often these projects benefit from
official funding. Commonly they
support major international commercial
interests. A few benefit. The many
suffer.
Growing numbers of civic organizations concerned with poverty and
environmental issues are coming to the
conclusion that on balance international
assistance as currently practiced has
become enormously damaging to both
the poor and the environment. I believe
they are correct. Failing to recognize
that the fundamental issue is the
increasingly intense competition for
available ecological space, most bilateral and multilateral “assistance” agencies continue to promote policies and
projects that have the primary consequence of assuring continued supplies
of cheap resources and labor to sustain
the unsustainable high consumption
lifestyles of the world’s over-consumers. The South’s debt burden, to which
loan funded official assistance has
made a major contribution, has given
bilateral and multilateral agencies
enormous leverage in imposing policies
that transfer control of the economies
of borrowing countries to the institutions of transnational capital.
Vandana Shiva points out that national governments are being subordinated to a new superstate governed by
the Bretton Woods institutions and
committed to advancing the rights and
power of transnational capital. The
growing power of this institutional
alignment, defended as a necessary
engine of global economic growth, is
rapidly weakening, if not eliminating,
democratic accountability and society’s
institutional capacity to implement
policies that protect the interests of
community and ecology.
Flows of financial assistance from
North to South have helped mask the
reality of a highly unequal system of
North-South economic relations that
allows the one billion people of the
North to consume two-thirds of the
world’s production of important metals,
three-fourths of its energy and the
products of far more than its share of
the earth’s cultivatable land area. And
furthermore to generate two-thirds of
the greenhouse gases that are altering
the global climate.(3)
Southern poverty is not caused by
the insufficiency of financial charity
from the North. Money is nothing more
than an accounting figure. The problem
is the North’s extraction of real
resources from the poor of the South to
support its own extravagance. Until the
international economic system is
restructured in ways that allow the
people of the South to retain their own
real resources to meet their own needs
Southern poverty can only increase.
This restructuring must include ending
loan funded development “assistance”
and dismantling the agencies that exist
primarily to disburse it.
Japan’s Role
There is much in Japan’s development
experience that is highly relevant to the
world’s search for a sustainable
development model. You achieved a
zero population growth rate early in
your development process. You have
developed strong networks of rural
organizations. You have achieved
strong and universal basic education.
You implemented radical land reform
that broke up rural power monopolies,
distributed asset control, and established the basis for a thriving rural
economy based on high value added
per hectare of land. This strengthened
rural communities and established
strong, broadly based local markets for
local products. You have continued to
give preferential treatment to your
small farmers and small businesses,
protecting them against predatory foreign or domestic competition, as the
backbone of your local communities
and domestic economy. You have also
protected your own environment and
your forests, and maintained the beauty
and ecological vitality of your country.
Your policies have assured national
ownership and control of your land,
your economy, and your capital assets.
Government has set and maintained a
strong framework for market based
economic development in the
community interest. Domestic capital
and products have been favored by
public policy over foreign capital and
imported products. You have held
down the salaries of top corporate
executives to realistic levels. Your
workers have enjoyed good wages,
benefits and job security. You have
gained full command and control over
advanced technologies and virtually
eliminated the dependence of your
economy on foreign owned or controlled technology.
You’ve developed strong domestic
markets for your own products and
made them the foundation for your
successful export efforts. You have
push energy prices up to a level that
has provided necessary incentives to
achieve a high level of energy
efficiency. You have further maintained your
cultural identity and values, including,
at least until quite recently, a commitment to frugal lifestyles. These accomplishments are all consistent with the
requirements of sustainability.
Perhaps this is a slightly idealized
outsiders view. There are many problem that you know better than I. Japan
is not itself a sustainable society. The
point, however, is that you have a very
great deal of value to share with the
rest of the world in the quest for a path
to sustainable global development.
The tragedy of Japan’s role in the
world economy is that what Japan has
exported to the rest of the world,
particularly the Southern countries that
are recipients of its aid and investment,
is something quite different.
Japan has aggressively advanced a development model for others that transfers the national resources of assisted
countries to foreign control, keeps them
dependent on foreign technology, and
leaves them deeply in debt to foreign
institutions. The percentage of Japanese
international assistance devoted to
population programs is only about half
the average for OECD countries.
Japan’s investment projects, both
publicly and privately funded, have
driven rural people off of their land,
destroyed their forests and fisheries,
dumped toxic wastes on their land and
in their waters, mined their natural
resources, and otherwise ravaged their
ecology for the short-term profit of
Japanese corporations. In many respects, Japan’s foreign aid and investment have actively served to transfer the environmental and social costs of
Japan’s development onto others.
Japan’s aid programs, including the
Japanese funds channeled through the
Asian Development Bank, have been
major instruments of this travesty.
One may argue that Japanese aid
and investment have been doing to
Southern countries exactly what other
Northern countries have been doing to
them since the beginning of the colonial
era–though it seems to an outside
observer that Japan has been among the
more single minded and successful at
it. The result is the antithesis of
sustainable development.
The particular tragedy in the Japanese case is that Japan has so much to
offer from its own national experience
that is positive and is needed desperately by others, especially in the South.
Sharing the positive lessons of your
experience with other countries,
however, will require fundamentally
transforming your relationships with
them in ways that allow them to learn
about the real Japan, meld the lessons
of your experience with their own
reality, and work together toward the
creation of a more just and sustainable
global partnership.
NOTES
1. See David C. Korten, Getting to the 21st Century: Voluntary Action and the Global Agenda (West Hartford, CT: Kumarian Press, 1990).
2. Robert Goodland, Herman Daly, and Salah El Serafy, Environmentally Sustainable Development: Building on Brundtland, working paper,
Environment Department, World Bank, Washington, D.C., July 1991.
3. For example, the Dutch consume food, wood, natural fibers and other products of the soil that require the exploitation of five times as much
land outside the country as inside–much of it in Southern countries. These statistics are all from Alan Durning, “Asking How Much is Enough,”
in Lester R. Brown, et. al, State of the World 1991 (New York: W. W. Norton, 1991), pp. 153-169.