Global Issues: Harmful Economic Systems--the Major Barrier to Peoples' Welfare and Development
(Last updated February 14, 2008) The standard economic model of how things work is that people produce and exchange goods. Governments exist to provide “government goods”— things that people cannot provide for themselves, such as national defense. Thus the standard economic view is that activities are essentially productive. While this view has made for a thriving profession of economics, it is not a correct view of reality. The principal difficulty is that there is economic activity that is unproductive and harmful (from the point of view of those being harmed), and that this is a key feature of the economic organization of societies. What follows is a brief analytical description of these societies.
Many societies are run on this basic set of principals. Take and maintain control of the government. Use powers of the government to obtain income. Key elements of this process are described in five sections:
A fifth section International aspects/imperialism discusses international aspects of harmful economic systems, which many would say is the key part of harm. A sixth section discusses the Impact on development. A final section Reducing harm gives a too brief discussion of what people are doing to improve matters.
The influence on development of poor nations is profound. For many governments, the government/people in the government, in spite of lip service to the contrary, are not principally engaged in helping the people of the country, but rather in helping themselves. This has had and continues to have a disastrous effect on development and the incomes of poor people. The final section of this article discusses this more fully. This article exists to provide an analytical framework to understand the situation and events in many countries, which, considered separately, may be confusing.
The basic idea and activity in productive societies is helping to produce goods— things that are useful to someone— food, light bulbs, cars— and then exchanging the income received for goods that are desirable to you. This fundamental economic mechanism exists in “harmful” economic societies as well. Unfortunately, also existing, and why we describe these societies as harmful, a certain strata— usually the top— also exists to obtain goods through means which may be described as unproductive or extractive.
The principal ways in which income is obtained in a harmful economic system are twofold: 1) obtain it through the government, or, 2) use the government to maintain, consolidate and increase sources of income that are (apparently) obtained in other ways. The first is most typical or at least most evident in developing countries. Armed conflict--typically the fight for control of the government or territory, frequently with natural resources, by groups deserves a separate discussion, because it has been throughout history the principal way in which harmful economic societies have been established and because of its importance in the world today.
There are a wide variety of means in which government officials and others obtain revenue from the government. The first thing to recognize is that people at the top of government, or those who have significant control over the government but who are not government officials--often entrepreneurs or corporations) can and do plunder resources coming into the government. Government revenue is often not devoted to productive services but siphoned off by those in control of the government. A nation expects that its national resources will be used for the benefit of the nation. However very large amounts of such revenue are often used to enrich those in charge of the government. People at lower levels of government can plunder resources too, by not providing services which they are paid to provide, by charging for services which they should provide, or by taking goods, such as medical supplies or automobiles/trucks, which should be used for government service.
Often corruption and other factors affecting government performance are summed up in government performance rankings.
New ranking of African governments says Mauritius best-governed, Somalia worst-governed, and Rwanda most improved BBC News September 25, 2007 (You will leave this site.)
Elites obtaining resources from ordinary people has gone on throughout history.
There is also "private enterprise" harmful economic activity, where individuals, groups, and firms play a key role. Slavery would be an important example from the past. In the present, the term is "forced labor." An invaluable International Labor Organization report, Forced Labor describes the various types of forced labor. More than 12 million are trapped in forced labor worldwide. International Labor Organization
Crime and looting are examples of harmful economic activity in which poor people can participate. Crime, frequently a terrorist activity--using terror to obtain income ("your money or your life")--happens everywhere. Even legitimate governments such as in the United States typically deal only partially with crime. Many neighborhoods in the United States are subjugated to gangs that sell drugs, kill people, and maintain control of their activities through intimidation and murder.
Police have been operating in and around the slum since May. Rio authorities say more shanty towns will be targeted. Photo: BBC
Brazilian police attack drug gangs in Rio shanty town (drug gangs control about half of Rio's shanty towns) BBC News June 30, 2007 (You will leave this site.) War on Rio's drug gang slums BBC News June 28, 2007
Armed Conflict. There are many examples of armed conflict in the world today. Examined more closely this conflict is typically over control of the government or specific territory--often territory with natural resources. Thus this conflict is over who will establish control over government/territory and subsequently over control over resources, including the power to tax, arrange oil leases, and so on. In conflict, in addition to the struggle for control over resources, there is typically great harm done to ordinary people, such as murder, amputation of limbs, rape, taking of family food and other resources. (This can be so bad that an end to conflict, even if it then means establishment of an organized system of oppression, is preferable to people.) Revolution against an unjust government (see section below) also causes conflict. It is often difficult to decide if armed conflict is a way to gain resources, or a reasonable reaction against injustice, or a reasonable reaction by government to what is viewed as dismemberment of its territory. This in a particular circumstance is usually debatable, however it is possible to form an opinion based on the evidence. Were severe human rights violations in Bosnia, or Rwanda and Burundi justified for example? Who is correct, the government of Sudan or the people of Darfur? What is the current conflict in Somalia about?
To see 2007 stories for Somalia and Darfur, see
In essence, there is part of the population that is living well because of their control of assets and people. The people whose assets and income have been reallocated don’t like this and thus there is the threat of revolution— overturning the minority in benefit of the majority. This is prevented in a number of ways.
One way is by killing or imprisoning opponents. Opponents of the government kill or capture people as well.
Killings on the campaign trail: 50 Guatemalan candidates, activists have died in run-up to election Manuel Roig-Franzia Washington Post September 9, 2007 (You will leave this site and be required to register [once] with the Post.)
Red Cross recovers 11 bodies of Colombian legislators killed by rebels BBC News September 9, 2007 (You will leave this site.)
Jailed policeman accuses former South Africa president De Klerk of ordering murders of anti-apartheid activists Mohammed Allie BBC News July 27, 2007 (You will leave this site.)
Mr. Chen campaigned against official abuses. Photo: AP
Blind Chinese human rights activist beaten in jail where he is imprisoned BBC News June 21, 2007 (You will leave this site.) Access to Hunger Notes by Chinese citizens is blocked by the government of China, evidently because of our publication of articles concerning rural people, like the one above. To see if a website is blocked, see the Great Firewall of China's site http://www.greatfirewallofchina.org/test/
A classic way is through military force.
Musharraf's military reaches deep into Pakistani society Griff Witte Washington Post June 27, 2007 (You will leave this site and be required to register [once] with the Post.)
Military force is often employed in clandestine ways.
Paramilitary ties to elite in Colombia are detailed: commanders cite state complicity in violent movement Juan Forero Washington Post May 22, 2007 (You will leave this site and be required to register [once] with the Post.)
One favorite way of maintaining oppression is to stay in power for a long time, frequently by manipulating or subverting an ostensibly democratic legal framework. Election fraud/rigged elections is a principal way of staying in power. A second way— certainly a very clear way— of keeping people oppressed and unable to move to a situation that might be characterized as democratic, is terrorizing the subject population, including murder and torture. Especially important is killing leaders of the subject population(s) or otherwise keeping them from being a source of unrest (by such means as imprisonment, exile, or bribery).
The delay in Kenyan vote results has sparked disorder on the streets. Photo: AFP
Kenya's opposition leader Raila Odinga calls on President Mwai Kibaki to admit defeat in national elections and accuses him of electoral fraud BBC News December 30, 2007 (You will leave this site.) Kenyans vote in tight race BBC News December 28, 2007
Zimbabwe is a country where its President, Robert Mugabe, has used various means to stay in power for a long time. See Zimbabwe stories
Restriction on press freedom reduces people's knowledge and ability to organize against injustice. Press freedom declines in sub-Saharan Africa Freedom House May 3, 2007
There are two powerful ways of changing a harmful economic system--through revolution, or through democracy. Revolution has been the most common way to attempt to do so in the past--though frequently thwarted by successful opposition by the existing government and its allies or by a revolutionary movement evolving into an oppressive government. Currently the most frequently used method is by democratic change. See the further discussion under Reducing harm below.
This is very similar to preventing revolution. However, what is emphasized in this section is preventing overthrow by others who would maintain a structure of harm. Put in another way, how is a structure of harm maintained?
Here are news stories about trying to cause and preventing overthrow--most require no elaboration.
Guinea: Soldiers warn of more protests if demands not met. (Troops want the government to give them 300 billion CFA francs (US$77 million) President Conte allegedly promised them to end their 1996 mutiny! For now, soldiers pillage the citizenry.) IRIN August 17, 2007 (You will leave this site.)
ANGOLA: From politics of disorder to politics of democratization? Steve Kibble April 23, 2006 An excellent article from last year that describes how Angola continues divided into two parts by political and economic interests--in spite of words to the contrary by the politicians.
Clearing the path for the 'Scion of Egypt': Hosni Mubarak's son climbs party ranks as country's leaders undercut his rivals Daniel Williams Washington Post March 10, 2006 (You will leave this site and be required to register [once] with the Post.)
Some see hand of former governor behind Muslim clash in Afghanistan Craig Witte Washington Post February 20, 2006 (You will leave this site and be required to register [once] with the Post.)
Countries have "elites" and people.
Here is a description of Sudan's elite. Sudan's Unbowed, Unbroken Inner Circle Emily Wax Washington Post May 3, 2005 (You will leave this site and be required to register [once] with the Post.)
A major barrier to entry is limiting access to worthwhile employment, as well as other social advantages such as education and ability to marry outside of one's class.
A 'broken people' in booming India: low-caste Dalits still face prejudice, grinding poverty Emily Wax Washington Post June 21, 2007 (You will leave this site and be required to register [once] with the Post.)
African-American Names Penalized During Employment Process, Study Finds Richard Morin Washington Post, August 3, 2003. (You will leave this site and be required to register [once] with the Post.)
Other barriers to entry are lack of education, poor health, not being sufficiently 'presentable'--all 'natural' barriers that arise from poverty.
Stopping intellectual genocide in African universities Prince Kum'a Ndumbe III University of Yaoundé, Cameroon July 18, 2007
Another way is "putting people down." Typically minorities/ordinary people have been disparaged in some way--for their supposed (lack of) intelligence, personal appearance or for some other reason. People can be marginalized because of their skin color, ethnic origin, income level or indications of same, such as names This diminishes people's sense of self-worth, and, combined with actual labor market discrimination based on the same sort of factors, is a major barrier to entry. There has been a reaction against this in many ways in many countries, but it still persists.
Ethnic pageants restyle the American beauty contest Robertha Budy heard the insult when she was a little girl, and now, even at Georgia State University in Atlanta, she still hears it. "You're Liberian? Isn't that in Africa? You don't look like it. You're pretty." Darryl Fears Washington Post October 19, 2005 (You will leave this site and be required to register [once] with the Post.)
There are major international aspects to harmful economic systems. In fact many would say that international aspects are the most important. In order to focus attention on these international aspects, we mention these aspects in a separate section. However international aspects could as well have been included in specific sections above.
The politics of United States aid in Venezuela Tom Barry Americas Program, Center for International Policy August 7, 2007
Iran and Nicaragua in barter deal. US has warned Nicaragua that closer ties with Iran could harm its relation with Washington BBC News August 5, 2007 (You will leave this site.)
Enabling the Indonesian military Conn Hallinan Foreign Policy In Focus July 18, 2007
US military involvement in Africa exists and is increasing.
Corruption as a form of gaining income is described in the Lynch article.
U.N. Panel Says 2,400 Firms Paid Bribes to Iraq. Oil-for-Food Program Report Alleges $1.8 Billion in Payments Colum Lynch Washington Post October 28, 2005 (You will leave this site and be required to register [once] with the Post.) Oil-for-food scandal: key reports BBC News (You will leave this site.)
The Bond article presents the idea that resource wealth has been taken from Africans to the benefit of developed countries.
Dispossessing Africa's Wealth Patrick Bond November 24, 2005
The impact on development of harmful economic systems has been enormous. Try to think about some of the consequences of what has been described above. They include war, continued devastation over centuries, and control of the government and productive resources, that have left hundreds of millions confronting starvation, while those who "govern" and "own" live very well. A recipe for disaster! And we should not blame the victims--poor people across the world. Rather we should think about how we can help them.
War War, caused by armed groups seeking to control the government, or territory or resources, has devastated vast regions of the world, and more importantly, vast numbers of the people of the world.
Fifteen years of conflicts have cost Africa around $300 billion--equal to the amount of international aid received Oxfam International October 12, 2007 See the full Oxfam study
Where is there major armed conflict now? These countries include Iraq, Afghanistan, Sudan, Somalia, and Israel/Palestine. Where has there been major conflict in the past which has abated (in varying degrees), but which has still greatly affected the society and its progress? The Democratic Republic of the Congo, Angola, Mozambique, Liberia, Rwanda, Burundi, Sri Lanka, Peru, El Salvador, Guatemala, Northern Uganda, and Colombia--to name a few. Governments, including tax collection, essential public services, and a fair judiciary, are not easily reestablished after a war (if they ever were established in the first place).
How many people live lives of greatly diminished productivity (and happiness) due to conflict!
Sudan survivors answer your questions Amber Henshaw BBC News October 26, 2007 (You will leave this site.)
Darfur camps almost full BBC News March 20, 2007 (You will leave this site.) Darfur was worst abuse of 2006, according to State Department human rights report BBC News March 6, 2007
Disaster threat hangs over Chad. Interethnic fighting along the border with Darfur has displaced more than 120,000 Chadians. BBC News February 15, 2007 (You will leave this site.)
Conflict in northern Uganda displaced hundreds of thousands of civilians forcing them into crowded camps. Photo: Manoocher Deghati/IRIN
Uganda: Lord's Resistance Army to remain in the bush until International Criminal Court indictments are lifted IRIN July 9, 2007 (You will leave this site.)
Armed Conflicts Now the Leading Cause of Hunger Emergencies, FAO Says (May 23, 2005) See also the excellent earlier study by Messer, Cohen and D'Costa Armed Conflict and Hunger.
The past five centuries or so have seen considerable hardship for the people living in many (now often past) societies. Africans may be taken as a key example
There has been a struggle for thousands of years by human beings in many different ways against the sort of subjugation described above. To name just one very important example, the world's religions have worked to establish a set of principles for human relationships that were very much against oppression, and though the religions were persecuted for doing so, they did manage to establish at the very least a set of guidelines for human behavior. In all countries of the world there has been a struggle against injustice, and attempts, which have met with increasing success, to establish the societal frameworks for a more just and equitable society. This is a long (and inspiring) story which we cannot recount here. The current efforts in the world to reduce harm include reducing corruption, moving to more democratic governments with established rights and processes (by means such as reducing the influence of the military and improving the fairness of elections--and having them! and reducing police brutality), and, internationally, reducing the advantages which developed nations have assigned to themselves through their control of international institutions, such as United Nations, the World Bank, and the World Trade Organization.
In 2007, there have been important efforts to have elections that express the will of the people and to implement policies that reflect an electoral mandate. Nations are evolving from power structures that have been based on some combination of military, economic and political control to ones that reflect the wishes of the (often very poor) people. This evolution has not been easy. Five countries covered in somewhat more detail here include Venezuela, Bolivia, Ecuador, the Democratic Republic of the Congo, and Nigeria.
The countries of Latin America are countries where a minority have, since the Colonial period, controlled the government and sources of income and wealth. Venezuela, Bolivia and Ecuador are three countries where dissatisfaction with government policies has led to voters installing more populist governments. (Others include Brazil, Argentina, and Peru.) These governments are now under severe strain as they have tried to implement policies favoring the majority.
The policies of the previous governments of these countries (and many others, including Brazil and Argentina) have been described as 'neo-liberal,' meaning ones that
The citizens of a country own the national resources of the country. (This may be difficult for people in the United States to understand, given that the United States has typically given these rights away to individuals and corporations in the United States.) Examples include land, mineral rights (the right to extract what lies under the land--a somewhat strange concept, as it divides up land rights, but nonetheless, one that exists in U.S. law), and the broadcast (radio, TV, and other communications) spectrum. One important issue is that these governments are attempting to improve the benefit that citizens receive from these rights.
Chavez defeated over reform vote BBC News December 2, 2007 (You will leave this site.) Voting ends on Venezuela reforms BBC News December 2, 2007 Old allies abandon Chavez as constitution vote nears Juan Forero Washington Post November 29, 2007 (You will leave this site and be required to register [once] with the Post.) More Venezuela stories
Exxon Mobil seeks arbitration over a stand-off with Venezuela about the takeover of its oil assets BBC News September 13, 2007 (You will leave this site.) Chavez tour ends with energy deals with Argentina and Bolivia. Chavez criticizes the US government for trying to dominate world energy supplies BBC News August 11, 2007 (You will leave this site.)US oil giant ConocoPhillips says that its decision not to accept a minority stake in its operations in Venezuela may cost it $4.5 billion BBC News June 27, 2007 (You will leave this site.) Four oil companies agree to new agreement with Venezuela that would leave them with minority, instead of majority, stakes in production. Two U.S. companies reject the proposal. BBC News June 26, 2007 (You will leave this site.)
The politics of United States aid in Venezuela Tom Barry Americas Program, Center for International Policy August 7, 2007
Venezuela tries to create its own kind of socialism. Chávez taps oil wealth in effort to build system that favors 'human necessities.' Juan Forero Washington Post August 6, 2007 (You will leave this site and be required to register [once] with the Post.)
The Venezuelan government is expropriating privately-owned land in Los Llanos. Photo: BBC
Venezuelan land reform continues James Ingram BBC News June 21, 2007 (You will leave this site.)
Chavez rejects TV move criticism BBC News May 25, 2007 (You will leave this site.)
Chavez builds his sphere of influence--spends money to counter U.S. Juan Forero and Peter S. Goodman Washington Post February 26, 2007 (You will leave this site and be required to register [once] with the Post.)
Bolivia tense amid autonomy push BBC News December 15, 2007 (You will leave this site.) Bolivian assembly approves new draft constitution; to be considered by voters next year BBC News December 9, 2007 (You will leave this site.) Bolivian President Morales calls for a referendum on whether he and the country's nine regional governors should stay in office BBC News December 6, 2007 (You will leave this site.) Six of Bolivia's nine provinces hold a one-day strike against a new draft constitution BBC News November 29, 2007 (You will leave this site.)
Pressure for Bolivian 'people's president' Lola Almudevar BBC News August 6, 2007 (You will leave this site.) Populism for a price: bankrolling Morales's social initiatives, Chavez steers Bolivia from Washington Peter S. Goodman Washington Post August 3, 2007 (You will leave this site and be required to register [once] with the Post.)
Bolivia reclaims oil refineries--will use additional income to reduce poverty BBC News June 27, 2007 (You will leave this site.)
Bolivia's political fissures force Morales to shift course Monte Reel Washington Post January 22, 2007 (You will leave this site and be required to register [once] with the Post.)
Ecuador throws down oil gauntlet Jane Monahan BBC News December 13, 2007 (You will leave this site.)
Ecuador's president gains landslide victory in referendum on overhauling the political system BBC News April 16, 2007 (You will leave this site.) Ecuador's president gains landslide victory in referendum on overhauling the political system BBC News April 16, 2007 (You will leave this site.) Ecuador ends Congress stalemate BBC News March 20, 2007 (You will leave this site.) Ecuador: Political conflict escalates over referendum to rewrite constitution BBC News March 8, 2007
Democratic Republic of the Congo (Articles are on another page)
Elections are a key way for a government 'of the people' to be established. Nonetheless, having fair elections is very difficult. This is is illustrated by elections in Nigeria. Call for Nigeria election rerun BBC News April 22, 2007 (You will leave this site.)
Election rally in Sierra Leone Photo: AP
Sierra Leone's opposition wins presidential election with 53 percent of votes Will Ross BBC News September 18, 2007 (You will leave this site.) Sierra Leone opposition unites for rerun BBC News August 20, 2007 (You will leave this site.) Vote counting is under way in Sierra Leone following a high turnout in presidential and parliamentary polls. BBC News August 11, 2007 (You will leave this site.) The election issue--basic services IRIN August 10, 2007 (You will leave this site.) In pictures: Sierra Leone slum BBC News August 2007 (You will leave this site.)
Liberia lifts diamond mining ban BBC News July 28, 2007 (You will leave this site.)
Pakistan's President Musharraf has said he will fully accept a court decision to reinstate the country's chief justice, who Musharraf had suspended BBC News July 21, 2007 (You will leave this site.)
Mobutu left his country in ruins. Photo: BBC
Swiss to return $7 million of ex-Congolese president Mobuto funds. Congolese president Kabila disappointed that $1 billion more not returned. BBC News July 17, 2007 (You will leave this site.)
Zimbabwe is a country where political elites headed by Robert Mugabe, have managed to maintain themselves in control for many years, in the name of the people of Zimbabwe. This article considers the possibly democratic future of Zimbabwe. Zimbabwe: Change is coming: the first step in a long journey Mary Ndlovu March 29, 2007