From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Oct 17 2004 - 19:16:56 EDT

appeared on LBO-talk via another list


Giovanni Arrighi

My observations at the Workshop on "Africa: the Next Liberation
Struggle" will focus on two related statements contained in papers
pre-circulated by John Saul. The first is what Saul calls Adam
Przeworski's "chilling utterance" to the effect that "Capitalism is
irrational, socialism is unfeasible, in the real world people starve
... the conclusions we have reached are not encouraging ones"
(Przeworski 1991:122; Saul 2003a: 2). And the second statement is the
paradox that Saul has invited us to explore in the panel on
"Socialism and Development."

Capitalism as a global system is ever more ascendant, in the wake
both of the collapse of the decadent "state socialism" of the Eastern
bloc and the aggressive assertion of both its own inherent
globalizing tendencies and the political actions of its main
protagonist, the United States military machine. And yet the system
continues to produce the grossest of inequalities and, for an
increasing number, the direst of poverties. The situation might seem,
therefore, to cry out more strongly than ever before for the
intensified articulation of both a socialist political/economic
practice and a socialist-inspired scholarship. The fact that this has
not generally been the case, and the implications of that fact,
defines one of the key subjects to be explored by this panel. (Saul

In the first part of the paper I assess the validity of Przeworski's
chilling utterance and Saul's claim that the system continues to
produce the grossest of inequalities. In the second part of the
paper, I turn to alternative interpretations of actual trends in
world poverty and inequality and what they may imply for the future
of Africa.

Absolute Poverty , Inequality and Uneven Development

The irrationality of capitalism usually refers to a fundamental
reversal of the relationship between the accumulation of (economic)
capital and the satisfaction of human needs. Under capitalism, the
accumulation of capital in money form ceases to be a means to the end
of satisfying human needs-as it had been in all previous social
systems-to become an end in itself. Most economists find this
accumulation of money capital for its own sake so incomprehensible
that they refuse to contemplate it and prefer not to talk about
capitalism at all. More sophisticated apologists of capitalism, such
as Joseph Schumpeter, acknowledge the apparent irrationality of the
reversal but justify it on the ground that, historically, it has
resulted in a far greater satisfaction of human needs than any prior
social system. Since Schumpeter's claim was also advanced by Karl
Marx, socialist critics of capitalism (especially Marxist critics)
have to contend with the difficulty of demonstrating that a more
direct satisfaction of human needs (such as that advocated by
socialists) would actually be more effective than their satisfaction
as the unintended by-product of the accumulation of capital for its
own sake. Indeed, the appeal and hence the feasibility of socialism
as a substitute for capitalism depend on whether such a demonstration
is at all credible. Thus, the sharp decline of the appeal/feasibility
of socialism over the last 15-20 years has been the obverse side of a
widespread perception that, for all its irrationality, capitalism can
still satisfy human needs to a greater extent than socialist

The question then arises of whether this perception has any factual
foundation. In part, the question relates to Przeworski's claim that
"in the real world people starve." For this to have been the case,
the incidence of absolute deprivation must have increased with the
capitalist displacement of socialist alternatives. Whether absolute
deprivation, as measured by "world poverty," has increased or
decreased over the last quarter century remains a highly
controversial issue. The most powerful centers of "thinking for the
world" on economic issues-first and foremost, the World Bank, the
IMF, the US and UK Treasuries, backed by opinion-shaping media such
as The Financial Times and The Economist-have championed the argument
that not just the proportion but even the number of people worldwide
living in absolute poverty have decreased substantially since 1980.
In the words of the president of the World Bank, James Wolfensohn,
"Over the past 20 years the number of peple living on less that $1 a
day has fallen by 200 million, after rising steadily for 200 years"
and "the proportion of people worldwide living in absolute poverty
has dropped steadily in recent decades, from 29% in 1990 to a record
low of 23% in 1998" (as quoted in Wade 2004: 571). After a thorough
examination of these claims, Robert Wade concludes that the World
Bank numbers "substantially underestimate the true numbers of the
world's population living in absolute poverty, and make the trend
look brighter." But while it is hard to come up with reliable
estimates of the absolute number of the world's population living in
extreme poverty at different points in time, the increase of the
world population over the past 20 years "is so large that the Bank's
poverty numbers would have to be huge underestimates for the world
poverty rate not to have fallen" (Wade 2004: 574; emphasis in the

It follows that in the aggregate (that is, for the world as a whole)
the displacement of socialist-inspired by capitalist-inspired
practices has not resulted in a dramatic increase in the incidence of
extreme poverty. The absolute number may have increased but the
relative number has probably decreased. A focus on absolute
deprivation for the world as a whole thus provides no conclusive
evidence either for or against the perceived superiority of
capitalist-inspired practices in satisfying human needs.

The perception may nonetheless be based not on absolute but on
relative deprivation. Relative deprivation refers to unequal
distributions of life chances. World-historically, the theory and
practice of national development, whether capitalist- or
socialist-inspired, originated in a promise (of the new hegemonic
power) and in an aspiration (of newly independent countries) to
overcome the huge inequality among nations inherited from nineteenth-
and early-twentieth-century capitalism and colonial imperialism.
Whether socialist- or capitalist-inspired, in the Cold War era most
developmental efforts failed in this respect, thereby creating a
favorable political and cultural environment for the neo-liberal
counterrevolution of the early 1980s (Arrighi 1991).

Relative deprivation, as measured by income and other kinds of world
inequality, may increase even if absolute deprivation does not. In
the passage quoted above, Saul claims that of late both kinds of
deprivation have increased. As we have just seen, all we can say on
the basis of the scanty and shaky data available is that over the
last 20-25 years the incidence of absolute deprivation has certainly
not increased in a dramatic way and may even have decreased. As for
relative deprivation, the data are more abundant and reliable but the
picture that emerges is far from univocal, with inequality rising in
some directions and declining in others, and above all being
characterized by extreme spatial unevenness.

Focusing first on different measures of inequality, the overall
trends since 1980 can be summed up as follows.

1) Between-country income inequality measured at market exchange
rates has increased more or less significantly depending on the
particular indicator we use. Measurement at market exchange rates is
particularly suitable to capture differences in wealth. In terms of
wealth, therefore, relative deprivation has at best remained the same
and at worst increased significantly (Wade 2004; Korzeniewicz and
Moran 1997; 2000).

2) Between-country income inequality measured at purchasing power
parity (PPP) has increased if we use equal country weights (China =
Haiti) but it has been constant or falling if we weigh countries by
population. Measurement at PPP captures differences in material
well-being or welfare better than measurement at market exchange
rates. In terms of welfare, therefore, relative deprivation has
increased for the citizens of a large number of comparatively less
populous poor countries but has probably decreased for the world
population as a whole (Wade 2004; Firebaugh 1999; 2001).

3) Income inequality within countries has increased markedly,
probably more than between-country inequality however measured
(Firebaugh 2001; Goesling 2001; Galbraith 2002). We should
nonetheless bear in mind that, in all likelihood, increasing income
inequality within countries has been partly counterbalanced by
increases in the upward/downward mobility of households and
individuals. In the case of between-country inequality, in contrast,
any such counterbalancing is likely to have been much less
significant, because of the very limited upward/downward mobility of
countries in the global hierarchy of wealth (Arrighi and Drangel
1986; Babones 2002; Arrighi, Silver and Brewer 2003). Indeed, such a
mobility has been so low as to make the interstate hierarchy of
wealth resemble a caste rather than a class system.

All the above observations refer to aggregate trends. Instructive as
they are in cautioning us against attributing to the world as a whole
tendencies inferred from local, national and world-regional
experiences, they all miss what is probably the most important
tendency of the global political economy over the past 25 years: the
extreme spatial unevenness of the overall trends. For these trends
are the expression not of uniform but of radically different
world-regional experiences. More specifically, the overall trends are
the result of two sharply divergent trends, namely, the economic
collapse of Sub-Saharan Africa and Latin America in the 1980s and of
the former Soviet Union in the 1990s on the one side, and of the
rapid economic ascent of East Asia through the 1980s and 1990s (and
to a lesser extent India in recent years) on the other. Take China,
and to a lesser extent India, with their huge demographic weight out
of the picture, and the overall trend turns into an unequivocal and
sharp increase not just in relative but also in absolute deprivation
worldwide. But if you take out of the picture Sub-Saharan Africa,
Latin America, and the former USSR (the combined demographic weight
of which, be it noted, is less than that of India and China
combined), the overall trend turns into an equally unequivocal and
sharp decrease not just in absolute but also in relative deprivation.

Put differently, what you see depends on where you stand. At a
workshop on Sub-Saharan Africa it is essential to keep our feet
well-grounded in, and our sights well focused on, the subcontinent's
realities. But in order to understand those realities, and
especially, in making inferences about capitalism, socialism, and
development, it is just as essential to bear in mind the broader
global context of which those realities are an integral component. I
have provided elsewhere a provisional and tentative explanation of
the dramatic bifurcation of the economic fortunes of Sub-Saharan
Africa and East Asia since circa 1980. I argued that the bifurcation
can be traced to the drastic change in US economic policies that
occurred between 1979 and 1982 on the one side, and to the radically
different pre-colonial, colonial, and post-colonial legacies of the
two world regions on the other. I argued further that there was
probably little that the African governments could have done to avoid
the collapse of the 1980s, but that there was definitely something
they could have done both to reduce the extent of the collapse and to
improve the welfare of their populations despite the collapse
(Arrighi 2002).

I will not repeat the argument here but I may bring it up at the
workshop if the occasion arises. What I will do here by way of
conclusion is to make some observations concerning the interpretation
of the trends sketched in the previous section. I shall focus on the
issue of whether and to what extent those trends justify the
widespread perception that capitalism, in spite of its irrationality,
continues to reduce both absolute and relative deprivation more
effectively than socialist alternatives would.

Whose Golden Age?

As previously noted, the leading institutions of the capitalistic
interpretation of the world have championed the view of a significant
worldwide reduction of both absolute and relative deprivation. In
addition, they have also championed the view that this reduction has
been due to the adoption of the capitalist-friendly policies they
have been advocating for the former Third and Second Worlds. This
view flies in the face of the basic fact that, comparatively
speaking, the three world regions that have experienced the greatest
increase in both absolute and relative deprivation are also the
regions that willy-nilly have been subjected more extensively or
intensively to the structural adjustment or shock therapy advocated
by the institutions in question. In light of this, asks James

Is this the golden age of capitalism, really? Or is it something
closer to a golden age of reformed socialism in two places (China and
India)-alongside an age of disasters for those who followed the
prescriptions favored by The Economist? In truth, countries that
followed the IMF-World Bank prescriptions to the letter-Argentina,
say, or Russia in the early 1990s-have seen catastrophe worse in
every way than the Great Depression of the 1930s was for us.
(Galbraith 2004)

Ironically, socialists (especially radical socialists in the global
North) have unwittingly facilitated the capitalistic appropriation of
the Chinese success in reducing absolute and relative deprivation, by
writing off economic reforms in the PRC as a straightforward
transition to capitalism essentially indistinguishable from that
occurring in the former USSR. The spread of capitalistic practices in
the PRC has undoubtedly been rampant, and one of its main effects has
been a rapid growth of income inequality within China-an inequality
that is estimated to have become among the largest in the world
(Riskin, Zhao and Li 2001). Closely related to this tendency, only a
limited number of (predominantly coastal) provinces have contributed
(and benefitted from) the reduction in global absolute and relative
deprivation. By restraining the growth of the domestic market,
increasing inequality within China reproduces the dependence of the
Chinese economic expansion on the willingness and capacity of the
United States and other wealthy countries to absorb ever increasing
labor-intensive imports. More important, it is likely to engender
social and political tensions that may jeopardize further growth and
even wipe out whatever is left of China's socialist past (cf Perry
and Selden 2000).

Granted this, the conflation of the PRC's economic reforms into a
generalized tendency towards the restoration of capitalism conceals
more than it reveals about ongoing transformations of the global
political economy. It conceals, first of all, fundamental differences
between the displacement of socialistic by capitalistic practices in
the former USSR and in the PRC. In the former USSR, the displacement
has been sudden and complete, both formally and substantively,
resulting in a major increase in absolute and relative deprivation
nationally and internationally. In the PRC, in contrast, the
displacement has been gradual and partial, not just formally (the
Communist Party still being in power) but substantively as well,
resulting in an increase of relative deprivation nationally but in a
major decrease of absolute and relative deprivation internationally.
In key respects, and with one important difference, the PRC's
economic reforms of the last twenty years resemble less the late
twentieth century restoration of capitalism in the former USSR than
the NEP experience, which Lenin initiated and Stalin eventually
liquidated. The difference, of course, is in the national and
international political-economic contexts in which the two
market-oriented experiments were carried out. While both contexts
were extremely unfavorable to the success of the NEP, they have thus
far been quite favorable to the success of the PRC's reforms. In so
far as China is concerned, Galbraith's claim that we are experiencing
a golden age of reformed socialism rather than a golden age of
capitalism is probably accurate.

Second, the conflation of the PRC's economic reforms into a
generalized capitalist restoration misses the broader implications of
the reforms' success for the global political economy. As Martin Wolf
has claimed i n the first of a series of articles in The Financial
Times, " Asia's rise is the economic event of our age."

Should it proceed as it has over the last few decades, it will bring
the two centuries of global domination by Europe and, subsequently,
its giant North American offshoot to an end. Japan was but the
harbinger of an Asian future. The country has proved too small and
inward-looking to transform the world. What follows it-China, above
all-will prove neither.. Europe was the past, the US is the present
and a China-dominated Asia the future of the global economy. That
future seems bound to come. The big questions are how soon and how
smoothly it does so. (Wolf 2003)

The Asian future envisaged by Wolf may not be as inevitable as he
seems to imply. As I have just mentioned, the unevenness of the
Chinese economic expansion does not augur well for its sustainability
in the longer run. Nor does the lack of ecological responsibility
that has characterized the expansion. True, the so-called "fourth
generation" of PRC leaders, headed by Hu Jintao and Wen Jiaobao, has
shown greater awareness than previous generations of the social and
ecological problems of energy-intensive uneven development. While
retaining ambitious economic growth targets, it has put a new
emphasis on ecological responsibility and especially on balanced
development between rural and urban areas, between regions, and
between economy and society (Bradsher 2003; Kynge 2003; The Economist
2004). It nonetheless remains an open question what this new emphasis
will amount to in terms of actual social reforms, and whether it will
succeed in making continuing economic growth socially and
ecologically sustainable.

Equally important, China cannot expect the world's most powerful
states, first and foremost the United States, not to attempt to
disrupt its continuing economic expansion. This at least is the
conclusion (half prognosis and half prescription) of John
Mearsheimer's The Tragedy of Great Power Politics-the most ambitious
product of recent US international relations theorizing.

China is still far away from the point where it has enough [economic]
power to make a run at regional hegemony. So it is not too late for
the United States to... do what it can to slow the rise of China. In
fact, the structural imperatives of the international system, which
are powerful, will probably force the United States to abandon its
policy of constructive engagement in the near future. Indeed, there
are signs that the new Bush administration has taken the first steps
in this direction. (2001: 402)

As it turns out, in response to 9/11 the Bush administration has
moved in a quite different direction. By getting itself bogged down
in the Iraqi quagmire, it was forced to deepen rather than abandon
the constructive engagement of China. Better still for China, the
self-inflicted troubles of the United States in West Asia have
created conditions favorable to the re-emergence of Chinese economic
and political centrality in East Asia (Arrighi forthcoming). It is
possible that by the time the United States has disentangled itself
from the Iraqi quagmire, Chinese centrality in the East Asian region
(as well as US dependence on Chinese cheap credit and commodities)
will be so consolidated as to bring to bear on the United States
different kinds of "structural imperatives" than the ones envisaged
by Mearsheimer. But it is also possible that the United States will
in any case attempt to preserve its global dominance by disrupting
Chinese economic growth.

It is hard to tell what the outcome of such an attempt would be. For
our present purposes, however, two conclusions follow. First, we are
in the midst of a world hegemonic transition to a yet unknown
destination. If the past is any guide to the future, whatever the
destination, the transition can be expected to last decades rather
than years. Moreover, US resistance to adjustment and accommodation
makes us suspect that the US war on Iraq might be just the beginning
of decades of struggle and worldwide chaos (Arrighi and Silver 1999;
Arrighi forthcoming). This is the most likely global context of
whatever economic, political, and social development will unfold in
Africa in the foreseeable future. Any discussion of Africa's future,
therefore, must attempt to figure out what challenges and
opportunities that context might create.

Second, Africa's "next liberation struggle," if there is going to be
one, cannot remain neutral as to the eventual outcome of the ongoing
hegemonic transition. It is hard to imagine what a China- or
Asian-centered global political economy might mean for the future of
Africa. The only thing we can be confident about is that such a
re-centering of the global political economy would mark the demise of
an international hierarchy of wealth that, as previously noted,
resembles more a caste than a class system. As one of the main
victims of this "caste" system, Sub-Saharan Africa has little to lose
from its demise. What remains an open question is whether African
governments and movements will actually do what is in their power to
ensure that the emerging system be more equitable and peaceful than
its predecessors.


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