Something almost unprecedented has occurred – I’ve finished an article early. Oxfam Peru is a redoubt of intellectuals and every year publishes an annual collection of essays on the state of Peru and development in general. This year they’ve asked me to focus on shocks and change, so I’ve donned my false beard and cardigan and had a go. Here is a short summary of a longer (2,500 word) paper. All suggestions for improvements welcome, either based on the summary below or the full paper.
As we face a world where multiple overlapping shocks (political, economic, ecological) seem inevitable, it is worth considering (if only to cheer ourselves up), what underlying changes they are likely to trigger.
In 2012, we can foresee some shocks – the ‘known unknowns’ in Donald Rumsfeld’s useful typology (about the only worthwhile aspect of his legacy). Financial crises are likely to continue their forty year trend and become more frequent and more catastrophic, with the Eurocrisis the most prominent of today’s risk hotspots. For many poor communities, repeats of the food price spikes of recent years would be even more devastating than financial meltdown. Thirdly, the current rate of climate change appears to be outpacing even the most pessimistic projections of climate scientists, promising further increases in the frequency and severity of ‘extreme weather events’ . The international community currently appears paralysed in response, but eventually a rethink of humanity’s relationship to nature is the only way to avoid catastrophe.
First, the ongoing global financial crisis. Looking forward, the most likely source of further financial turmoil is a disintegration of the Eurozone and ensuing recession. The most immediate impact outside Europe would be on those countries most integrated with the EU economy (e.g. North Africa and Eastern Europe and Central Asia). Were the Eurocrash to lead to another drying up of global financial flows, there would be wider knock on effects on financially integrated economies in Latin America and elsewhere, via bank shutdowns and the collapse of trade finance as in 2008. A euro-crash might revive interest in re-regulation, but it could also undermine the global standing of positive aspects of the European model, such as inclusive state welfare systems and labour rights. There are risks and opportunities in abundance here, and progressive movements will need to engage far more with issues of financial architecture and regulation in the years to come.
Rises in food prices, like those in transport fares, have a long history of triggering social unrest and the recent spikes are no exception. Such unrest has been credited as a factor (one among many) in the insurrections of the Arab Spring, has prompted deep changes in how governments think about food, leading to greater attention to building national food security and reducing dependence on volatile international trade. While this has some positive aspects – for example, an increasing level of investment in smallholder agriculture in many countries – it has several extremely negative ones. Countries with money but little food production have resorted to a series of land grabs to obtain long-term access to food supplies, often at the expense of local populations. Food exporters have reacted to high prices by slapping on export bans in the hope of bringing down their domestic prices and securing supply, thereby pushing up world prices still further, to the detriment of food import-dependent countries. Again, progressive coalitions will play an essential role in seizing opportunities and minimising risks created by food shocks.
Since the Second World War, massive economic growth based on fossil fuels has brought material benefits to millions. But now we are entering an age of global scarcity – of water, fertile soil and, above all, carbon. Here the historical record on shocks and change is not encouraging. Much of the technology required is already there or nearly there. But the only precedent for this kind of rapid technological transformation is the wholesale shift of industrial plants to producing arms during wartime. And the difference in this case is that we cannot wait for external shocks to trigger action. By the time sufficient climate chaos strikes the main carbon emitters, forcing them to rework their economies, it will already be too late for much of the world’s tropical belt (where its poorest people live) and the polar ice caps.
Extreme weather events, perhaps especially those in the geopolitically powerful countries, will provide key opportunities to press for the kinds of change required. Progressive forces will need to become more adept at recognizing and seizing such chances as they arise.
Certain underlying challenges emerge from all three forms of shock. Whether through an accident at work, sickness, crime, drought or flood, the lives of poor people are characterised by the almost total absence of security and safety nets. Increasingly, the attention of governments and aid agencies is turning to ways of tackling such vulnerability by building nascent welfare systems in poor countries. This is echoed at a global level in the efforts to stabilise the wild gyrations of financial markets. Dampening volatility (and ameliorating its impacts) is likely to play an increasing role in development thinking.
A second overarching challenge is inequality. In a world of ecological limits, trickle-down economics that feeds the poor with crumbs from an ever-expanding cake is no longer an option. Whether within or between countries, distribution and redistribution of wealth, power and opportunity within a bounded system will become more urgent and important than ever. The resolution of such debates will be highly political, requiring profound shifts in the relationships between less and more powerful communities and individuals. It may not be a peaceful process.
Responses to both financial, food price and ecological shocks require a combination of global coordination and local action. Global coordination is essential if countries are not to indulge in beggar-they-neighbour tactics that become self defeating; and local interaction between active citizens and effective states lies at the heart of successful development.
And successful development is what is at stake. For all that still remains to be done, the 60 years since the decolonization of much of the world has seen unprecedented progress, a veritable ‘age of development’ in terms of education, literacy, life expectancy, poverty reduction, improved health or the spread of human rights. Those gains are now threatened by the pitiless buffeting of financial, food and environmental shocks. Whether these shocks are allowed to wreak disaster, or become catalysts for the many changes needed to complete the development journey will be the ultimate test of our species in the decades to come.