By Alfredo Saad-Filho
Development Studies must always be critical, or it becomes just an apology for the status quo, for exploitation, for the reproduction of inequality within and between nations, and for the destruction of the conditions of life on Earth.
We live in times of converging crises, across the economy, democracy, health, the environment and more, with sprawling implications for ways of living around the globe. These crises and their mutual relationships offer the opportunity for new understandings of the problems of development and possible ways forward, which will inevitably be contested. These debates can be examined historically, focusing on the implications for our discipline.
An overview can start from the period before the Washington Consensus. Politically, it was marked by a strong anti-communism, with the Soviet model offering a plausible alternative to developing countries going through a rapid process of decolonisation and intense left activity. Economically, the dominant notion of development in the West was related to the idea of modernisation as the pathway to an ideal-type advanced capitalism, illustrated by the USA. In turn, economic policy referred to state intervention to provide the economic infrastructure for industrialisation, including public ownership of key industries, substantial aid distributed according to Western policy imperatives and commercial interests, and support for authoritarian regimes aligned with the West. Although the pre-Washington Consensus would now appear extraordinarily progressive, it was heavily contested by scholarship, with Latin American structuralism and dependency theory figuring prominently, and highlighting the inequitable economic structures, social relations and processes that systematically disadvantaged countries in the Global South.
The Washington Consensus emerged in the late 1970s as a dramatic right-wing reaction against the perceived economic and political weaknesses of the previous Keynesian-developmentalist consensus. The Washington Consensus included three main elements. First, the hegemony of mainstream economics within development theory. Second, the hegemony of the World Bank and the IMF setting the agenda for the study of development and the implementation of development policy and, third, ideologically, the attachment of the Washington Consensus to neoliberalism, including the commitment to a notion of ‘free markets’ standing inconsistently between Hayek and Friedman, but unified in claiming that governments were the source of both inefficiency and corruption. While the Washington Consensus claimed to be leaving as much as possible to the market, what it really did was to rebuild the state to intervene on a discretionary basis to promote a globalising and financialised capitalism.
The Washington Consensus was followed, in the 1990s, by the post-Washington Consensus, which was more sensitive to the non-economic domain, and rationalised the ongoing transitions to political democracy in the Global South through appeals to institution-building and the imperative of good governance to limit corruption. Presumably, these goals would be better achieved in a democracy, leading to the conclusion that democracy was good for growth. The promotion of democracy in the South was supported by a development industry parasitic on the poor countries which, suddenly, found reasons to support the World Bank and the IMF, instead of criticising them from financially parched margins.
Financialisation and the degradation of state capacity
Retrospectively, it appears that, from a mainstream perspective, the Washington institutions had stumbled upon the best of all possible worlds: the neoliberal reforms transferred the power to allocate resources to a globalised financial market, while political democracy legitimised the neoliberal state. At the same time, the neoliberal reforms degraded state capacity; multiparty legislatures weakened the Executive; and a supposedly independent judiciary ensured that the neoliberal reforms, an independent central bank, inflation targeting regimes and the conditionalities imposed in return for aid were locked in – all in the name of “democracy” and the “rule of law”.
This arrangement was criticised heavily within Development Studies. The first criticism came through the notion of the developmental state, that was shown to have violated Washington’s prescriptions across the board, for example, through protectionism, directed finance, price and wage controls, and so on. The second criticism focused on the notion of adjustment with a human face, and the impact of the neoliberal reforms on the poor. The third criticism came through the notion of post-development, which highlighted the value and agency of the subaltern.
The field of development has now been transformed again, by the ongoing slowdown in the advanced economies, with global repercussions: even former star performers have been affected, especially since their own transitions to neoliberalism. In parallel, we notice the degradation of neoliberal democracies. They were already circumscribed by an institutional apparatus to insulate economic policy from any form of “interference” by the majority, which dramatically reduced the policy space available to nominally democratic states. The consequence in practice was that those who lost out the most under neoliberalism also tended to be ignored by its institutions.
With the destruction of the left in the previous period, these tensions opened spaces for anti-systemic forces polarised by what may be called ‘spectacular’ authoritarian leaders. These are supposedly ‘strong’ people, that cultivate a politics of resentment, appeal to common sense, claim to be able to ‘get things done’ by force of will, and promise to confront the outsiders who undermine ‘our’ nation and harm ‘our’ people. But, when they reach power, those spectacular leaders always impose policies intensifying neoliberalism, under the veil of nationalism and a more or less explicit racism, and they are often shadowed by the rise of neo-fascist movements. This was the situation until early 2020, and the pandemic only intensified those tensions. Economies imploded, and authoritarian neoliberal systems became catastrophically perverse, often imposing health policies that killed millions and entrenched Covid-19 so it will never be eliminated.
Authoritarianism and Environmental Collapse call for a Transformation of Development Studies
Contemporary economic and political systems are being slowly but relentlessly overwhelmed by the environmental crisis. This crisis relates, fundamentally, to the contradiction between the limitless search for profits and the limited capacity of the Earth to sustain a climate compatible with the continuation of life as we know it. In turn, the search for solutions is limited by tensions between the accumulated emissions by leading Western economies and the rising emissions in developing countries claiming the right to development today, and by the structure of the global economy, in which several countries are invested in the production of fossil fuels even though this is unsustainable, but they refuse to exit. These tensions have been intensified by financialisation, that tends to raise emissions and block mitigation because financialisation feeds procyclical behaviours that reinforce existing economic structures, increase volatility, and concentrate income, wealth and power. This is incompatible with climate adaptation, strategic industrial policy, or redistribution.
Development Studies must always be critical, or it becomes just an apology for the status quo, for exploitation, for the reproduction of inequality within and between nations, and for the destruction of the conditions of life on Earth. Today, Development Studies faces a neoliberal modality of capitalism whose prosperity relies on speculation, despoliation, extraction and fraud, and which may be sliding into permanent economic underperformance, new forms of fascism and environmental collapse. It is urgent to advance a transformative agenda from within Development Studies. These crises ought to be confronted together for reasons of practicality and legitimacy, through a democratic economic strategy, including political democracy, focusing on the restoration of a collective sphere of citizenship, the expansion of rights, the distribution of income, wealth and power (focusing on the decommodification and definancialisation of social reproduction, starting with universal public services), and a green transition in the economy.
The difficulty is that those alternatives must be underpinned by new social movements and new structures of representation, from political parties to trade unions to community associations, corresponding to the current mode of existence of a society that has been extensively decomposed domestically, imperfectly integrated globally, that has distinct cultures but is connected through internet-based tools. There is nothing more important for Development Studies, today, than to support these critiques of neoliberalism, and support the new movements to reshape our mode of existence.
Alfredo Saad-Filho is Professor of Political Economy and International Development at the Department of International Development, King’s College London.