THE POLITICS OF THE WORLD MARKET
PAUL CAMMACK
Paper presented at the 9th Pan-European Conference on International
Relations, Giardini Naxos, Sicily, 23-26 September 2015
THE POLITICS OF THE WORLD MARKET
The starting point for an analysis of systemic change in the international
system should not be the ‘system of states’ but the world market. This is not at
all to suggest that the logic of the world market, in the classical Marxist sense,
has been systemically dominant in the international system since its
emergence, let alone from the beginning of time. On the contrary, it is a
relatively recent development, gathering in intensity over the last 30 years or
so, and with some time still to run. It is entirely missed by scholars working in
a security/power transition/Cold War-post-Cold War paradigm, with fatal
consequences for understanding the logic of contemporary world order.
Marx argued that the logic of capital would assert itself fully only when the
world market was established on a genuinely global scale. In that context, the
position taken here is that it is now genuinely global in scale in terms of
exchange, but even so the great majority of the world’s population have only
recently been sufficiently drawn into it for mechanisms that transform the
social relations of production to begin to bite. The global workforce is far from
fully proletarianized, with as much as two thirds of it only partially accessible
and imperfectly exploitable by capital, and whether capitalist relations of
production proper will continue to spread until they do become truly global
remains to be seen. What is certain, though, is that we are at a relatively early
point of the development of capitalism on a global scale as it was theoretically
conceived by Marx and Engels: the conjoint extension of the world market
through trade or exchange and the spread of thoroughly capitalist social
relations of production is still a work in progress, as is the symbiotically linked
transformation of means and processes of social reproduction. But precisely
because we are at a point where the world market in terms of exchange is near
enough complete, and the question of the transformation of social relations of
production and reproduction are posed on a global scale, with the consequence
that ‘the functions of the worker and the social combinations of the labour
process’ (Marx, 1976: 617) are undergoing revolutionary transformations
across the world, their analysis is more topical and to the point than
alternative approach proposed since they sketched it out in the midnineteenth century.
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The role of international organizations
If we take international organizations at their word, they operate on behalf of
the common good, on a global scale: according to their websites (September
2015), the G20 is ‘the premier forum for its members’ international economic
cooperation and decision-making’; the ILO ‘promotes jobs and protects people’;
the World Bank ‘works for a world free of poverty’; the IMF is ‘working to
foster global monetary cooperation, secure financial stability, facilitate
international trade, promote high employment and sustainable economic
growth, and reduce poverty around the world’; the OECD promotes ‘better
policies for better lives’; UNCTAD pursues ‘prosperity for all’; the UNDP aims
to deliver ‘empowered lives and resilient nations’; and the WTO seeks to
‘ensure that trade flows as smoothly, predictably and freely as possible’. In
actual fact, their role is rather different. Increasingly, and in an increasingly
coordinated fashion, they work to develop production and exchange (and
productivity and competitiveness) on a global scale, in ways that vary from
time to time in accordance with the state of the world market as a whole and
from place to place in accordance with the situation of individual states. In
short, they work to expand the power and reach of global capital.
In recent years the focus on productivity and competitiveness on a worldwide scale has intensified, around a conjunctural focus on responses to the
‘global financial crisis’, alongside the deeper strategic focus on ‘structural
reforms’. The latter aim at extending global value chains, promoting industrial
policy, pursuing the formalization of labour, reforming labour markets and
social protection, and lowering barriers to trade, in ways that reflect the
‘completion of the world market’ in terms of exchange, and pursue its
extension at the level of social relations of production. The latest instalment of
this project, the World Bank’s 2015 World Development Report, Mind, Society
and Behavior, manifests the focus of current global policy - to induce people
around the world to conform in thought and behaviour to the requirements of
globally competitive capitalism. It is the logical culmination and the cutting
edge of 25 years of increasingly focused and coordinated work on the part of
the international institutions charged with governing the global economy, and
it is where one should look to discern the logic of the new world order.
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The origins of the world market project
Since the 1970s, the OECD and the World Bank have been engaged in what has
become a shared project, aimed at building an inclusive global capitalist
economy. In broad terms, they act, more recently in concert with the IMF, the
UNDP and the WTO, to promote competitiveness across the world market as a
whole. This involves much more than proposing and disseminating rules
relating to competition policy (a particular focus for the OECD), or trade (on
which the WTO now leads), or the treatment of capital and foreign investment
(where the IMF is prominent). It goes further too than issues of private versus
public ownership, or the domestic and international regulation of business
(key aspects of the structural adjustment programmes advocated by the World
Bank from the 1980s onwards). Most of all, working with and through states
and sometimes around them (Carroll, 2012), these organizations aim to
transform social relations, or change the ways that people behave and think,
in order to inculcate the attitudes and behaviour conducive to global
competitiveness. The OECD and the World Bank are of crucial importance,
primarily because of their broad remit, their explicit focus over forty years on
the world market as a whole rather than on the policies of individual states
considered in isolation from it, and their unswerving commitment to the
promotion of capitalism on a global scale.
Of course, these two organizations did not themselves bring about the major
shifts that took place in the period from the 1970s – the virtual ending of
colonial rule, the ‘rise of China’, the collapse and disintegration of the Soviet
Union, the expansion and crisis of the welfare state, and the transformation of
the conditions of global competition that resulted. Their roles were premised
upon and subsidiary to changes driven by longer-run historical and structural
forces. And although both were created with global mandates in principle,
until the 1990s their range of action was in practice if not in aspiration less
than global in scale. The dramatic expansion of the world market from that
point on, itself the result of defeats for the working classes in different parts of
the world, changed the global balance of class forces. The OECD and the World
Bank responded by putting into place with impressive speed and acuity
ideological and practical projects wholly and uncompromisingly focused on the
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global sway of capital – projects that had taken shape through the 1970s and
1908s, and were ‘ready to go’ by the end of the latter decade. They were far
from limited to the issues of liberalization, privatization and deregulation,
though these elements were all important. They are not to be underestimated,
and certainly not to be derided as misdirected or failed.
Shaping the new world order: the OECD
To say that the OECD’s mission is to make the world market work is simply to
take it at its own word. Its founding Convention signed in Paris in December
1960 and coming into force on 30 September 1961 committed it to promote
policies designed ‘to achieve the highest sustainable economic growth and
employment and a rising standard of living in Member countries, while
maintaining financial stability, and thus to contribute to the development of
the world economy; to contribute to sound economic expansion in Member as
well as non-member countries’, and to contribute to the expansion of world
trade on a multilateral, non-discriminatory basis in accordance with
international obligations’ (emphasis mine). Its Development Advisory
Committee and Development Centre (the latter proposed in 1961 by President
Kennedy) have played a significant role in relation to non-members, especially
in the promotion from an early stage of export-oriented development.
The twenty original members inherited from the OEEC were joined by Japan,
Finland, Australia and New Zealand between 1964 and 1973, but after that no
further expansion took place until after 1990.1 In the late 1970s, Henderson
reports, the objective of talks within the OECD framework was ‘rarely if ever to
achieve a common policy’, but rather ‘to promote parallel action, that is, to
harmonize national policies ...’ (Henderson, 1981: 793-794). The OECD was a
vehicle for building consensus among the core capitalist states, who at the
1
Two more decades would pass before a second phase of expansion brought
in two newly industrialising economies (Mexico, 1994, and Korea, 1996)
alongside Turkey, which was already a member, and three former Central
and Eastern European states (Czech Republic 1995, Hungary and Poland
1996). Since the mid-1990s membership has expanded outwards from the
core of 24 mostly advanced economies as of 1973 to 34 at present and
potentially in excess of 40 in due course – with a primary focus on new
members Central and Eastern Europe and from Latin America.
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time were seeking to hold the line against ‘less developed countries’ that were
‘becoming highly competitive in the world market in such areas as textiles,
footwear and electronic appliances’ (ibid: 809). At the same time, whereas
national delegates were ‘unabashedly state-centric’, the OECD secretariat,
concerned with the ‘maintenance of the viability and good health of world
capitalism’, exhibited ‘a pronounced systemic or international orientation’
(ibid: 810). What is more, its focus was not on Cold War rivalry between
systems, but only on the capitalist portion of the world economy: ‘one is struck
by the phenomenon that everyone at the OECD constantly refers to the state of
‘the world economy’ when in fact what is being alluded to is the world market
or capitalist economy. The planned economies are treated as a world apart’
(ibid).
As long as the interests of the core capitalist countries and the viability of
world capitalism seemed one and the same, the OECD could still appear to be a
‘rich country club’ (Clifton & Díaz-Fuentes, 2011: 555), operating on behalf of
its members. But with change already under way, the OECD was quick to
register it and respond. In June 1978, the OECD Council at Ministerial level in
June 1978 agreed that ‘As they progressively exploit the opportunities offered
by competition and specialisation among themselves, the advanced industrial
countries increasingly need the spur to efficiency and the curb to inflation
provided by the increased involvement of NICs in world production and trade’:
the logic of the world market could not have been put better, and it remains at
the heart of the world market project today. It was spelled out further in a
1979 report on the sensitive issue of The Impact of the Newly Industrialising
Countries on Production and Trade in Manufactures (OECD, 1979). Pitched
into the context of ‘North-South’ confrontation over calls for a New
International Economic Order, and of crisis and readjustment in the advanced
and developing economies alike in the wake of dollar devaluation and the
subsequent efforts of OPEC to nationalize production and raise oil prices, it
represented an early invocation of the mutual benefits that would flow from
enhanced access to advanced economy markets for industrial production in
the ‘dynamic new exporters’ it termed the ‘NICs’ (including Greece, Spain and
Portugal!). OECD Secretary-General Emile Van Lennep’s foreword focused on
increasing productivity, in advanced and newly industrialising countries alike:
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For the advanced industrial countries these benefits take the form of
cheaper goods for consumers, a spur to increased productivity and reduced
inflation at home, and new and prosperous markets abroad. For the newly
industrialised countries they include higher investment, productivity and
real incomes, and the foreign currency needed to help finance accelerated
economic development (ibid: 5).
This reflects a classical liberal approach to political economy: the export of
manufactures to the advanced economies will extend the world market, and
keep inflation under control in the advanced economies by providing wage
goods (consumer goods) more cheaply than the domestic producers can do.
This will necessarily expose advanced economy producers to competition,
which in turn is a ‘spur to increased productivity’: the producers affected will
either reorganise the way they work or invest in new technologies, thereby
becoming more productive, or go out of business, freeing workers to be
employed in more productively elsewhere. At the same time, producers in
newly industrialised countries will compete with each other on the world
market, and with newer producers in new ‘NICs’ as integration and structural
transformation become universal. This is the logic of the new world order,
premised upon the decentralisation and fragmentation of production
processes and the development of new forms of international division of
labour, as spelled out in a 1989 publication with the significant title One World
or Several? (Emmerij, 1989: 10). At the commemorative 25th anniversary
event it recorded, OECD Secretary-General Jean-Claud Paye made a case for
OECD global leadership, identifying a gap between ‘a world economy that is
increasingly integrated and globalised’ and ‘an institutional political
superstructure that does not mesh very well with the integrated economy’
(ibid: 12); and the OECD advocated structural adjustment in advanced,
industrialising and less industrialised developing countries alike, and for
‘simultaneous as opposed to sequential world economic growth and
development’ (ibid: 18) – all countries were urged to embrace the rules of a
world market characterised by competitiveness.
The NICs would have to provide ‘a numerous, disciplined, educated and
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skilled labour force … an active and efficient entrepreneurial class and an
adequate degree of political stability’ (ibid: 11) in order to succeed. But the
main message was addressed to the OECD’s own members, primarily advanced
economies. These should not resort to protectionism to keep out competitive
imports. Instead, workers who used to produce goods now imported ‘can be
employed to produce something else’, while ‘labour-saving investment and
rationalisation to meet competition from low labour-cost countries’ will bring
about further productivity gains. In the process some jobs will be lost, with
women and the unskilled particularly affected, some wages will fall, and the
intensity of work will be speeded up. In other words, ‘serious frictional
adjustment problems’ were to be expected (ibid). The policy conclusions that
follow (ibid: 12-17) dwell on the need to manage short-term pain for long-term
gain: while the long run is positive, ‘over the shorter term ... there is no
guarantee that the necessary adjustments will come about smoothly or
painlessly’ (ibid: 14).
As problems began to accumulate in the economies of the West, then, the
OECD became a strong proponent of reform within the leading capitalist states
rather than a passive coordinator of their interests, urging them to accept and
embrace competition from the developing world. A key moment here was the
convening in October 1980, following nearly a decade of work on the issue
culminating in the crucially significant 1978 McCracken Report, of a highlevel conference on ‘the welfare state in crisis’. James Gass, the Head of the
Directorate for Social Affairs, Manpower and Education (created in 1974),
argued that ‘we cannot escape the necessity to remodel our social policies
while continuing to ensure a minimum of protection’, while van Lennep
advocated ‘new relationships between public services and private action [and
the need] to reinforce every one’s personal responsibilities’ (Leimgruber,
2012: 296).
A fully-fledged global project emerged in the 1990s, responding in just the
same way to the ‘crisis of the welfare state’ on the one hand and the continued
development of the world market on the other. Three interventions in
particular, the OECD Jobs Study (1994a, 1994b, 1994c, 1995), Linkages:
OECD and Major Developing Economies (1995) and 21st Century
Technologies: Promises and Perils of Dynamic Future (1998) capture the
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character and scope of the comprehensive project. Running through all three
is unswerving commitment to the further development of the world market –
its consistent stance, as in 1979, was to advise all states on the changes they
should make in order to accommodate what was both an inevitable and a
desirable future.
The 1994 Jobs Study, commissioned by ministers in 1992, was prefaced by a
statement from Secretary-General Jean-Claud Paye that ‘Trying to slow the
pace of change and artificially to protect uncompetitive activities would only
make delayed adjustment more painful. All policies should therefore be
harnessed to promote adjustment to change, while taking care to reinforce
social cohesion, a condition for the long-term success of the recommended
strategy’. The document went to announce the ‘basic conclusion’ that ‘it is an
inability of OECD economies and societies to adapt rapidly and innovatively to
a world of rapid structural change that is the principal cause of high and
persistent unemployment’ (OECD, 1994: vii). In its analysis, the OECD traced
the structural problem back to the late 1960s, and the ‘weakened capacity of
collective bargaining to keep increases in income in line with economies’
capacity to pay’ (ibid: 63), compounded later by the failure of labour market
institutions to respond to the changed circumstances after the first oil shock
(except in the US, where real wage growth was contained. The problem, then,
was the failure to make reforms in the 1980s, ‘particularly on the structural
side and especially in the labour market area’ (ibid: 65).
The report spelled out what these strategically placed global policy makers
saw as the principal impediments to a new world order focused on global
competitiveness – and the primary obstacle was unambiguously identified as
the populations of the OECD countries themselves. Adaptation was
fundamental to progress in a world of new technologies, globalisation and
intense national and international competition’, but OECD economies and
societies were ‘inadequately equipped to reap the gains’:
Policies and systems have made economies rigid, and stalled the ability and
even willingness to adapt. To realise the potential gains, societies and
economies must respond rapidly to new imperatives and move towards the
future opportunities. To many, the change is wrenching (ibid: 2).
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The task of governments, then, was to steer societies ‘through the adjustment
to new technologies and new forms of global trade’; their challenge was ‘to
embrace change rather than succumb to pressure to resist it through
protectionism or other measures to restrict competition’; and in facing the
task of ‘designing and redesigning a range of policies across the economy and
society in order to help foster – or in some cases, stop hindering – adaptation to
evolving ways of production and trade’, they would need to transform their
societies: ‘Businesses, trade unions and workers need to be innovative to
develop the new products, processes, and ways of working that will create new
jobs, and help to shape skills to fit with the jobs of the future (ibid). In this
context, explicit policies would also need to be developed to secure social
cohesion, with particular attention to those who would find it difficult or
impossible to adapt:
Some people, however, will have particular difficulty in making the needed
adaptation. The most successful economies and societies will be those which
plough back some of the gains from change into accelerating the process by
helping them to adapt. Even so, some in society will find it impossible to
adapt to the requirements of advancing economies. Yet they, too, must
benefit from the progress. Their exclusion from the mainstream of society
risks creating social tensions that could carry high human and economic
costs (ibid: 1-2).
This succinct statement demands close attention for two reasons. First, it
spells out an agenda that is considerably broader and more sophisticated than
the litany of liberalization (of trade), privatization (of state industry) and
deregulation (of business) that is generally held to be the core of ‘neoliberal’
reform in this period. As we shall see, the same is true of the World Bank,
though it is important that the analysis here is applied to the core capitalist
economies themselves. Second, as alert readers will immediately have
recognized, it is an agenda that matches exactly Marx’s account of the
‘immanent laws of capitalist production’: technological revolution, new forms
of production and trade, increased competition, and the resulting need for
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‘variation of labour, fluidity of functions, and mobility of the worker in all
directions’, as a ‘general law of social production’ (Marx, 1976: 617-618).
The 1995 study, Linkages, which explored the connections between OECD
countries and the economies of China, India and Indonesia in particular among
a larger group of twelve MDEs (Major Developing Economies), took the same
starting point as the 1979 report on the NICs: the need to integrate new actors
from the developing world into the mainstream at a time of prolonged and
intense recession and far-reaching structural adjustment among OECD
countries, which had proved ‘particularly demanding and difficult’ because
structural changes and ‘deep-rooted unemployment and underemployment
problems in industrialised countries’ had become linked for some with ‘the
emergence of low-wage competitor countries with less stringent social and
environmental standards (OECD, 1995: 12). At this point the OECD
commented directly on the politics of the integration of the rising powers into
the new world order it saw in the making: noting that ‘the challenges posed to
OECD countries by these important new partners are the challenges resulting
from the successful dissemination of a model of development promoted by the
industrialised countries themselves’, it advised its readers that:
Not illogically, the countries aspiring to this model also have a powerful
expectation that acceptance of the mainstream international system and its
rules will bring with it their full and equitable integration into the system
(ibid).
The conclusion that ‘the emergence of the MDEs as major players in the world
economy and the changes in prospect as a consequence do pose challenges for
OECD Members along with the opportunities to benefit from a more dynamic
world economy’ (ibid: 16) was not new. On the contrary, it was a central
element of its strategic approach to global governance. This was one reason,
but not the only one, for its conviction that the primary task facing all states in
the global economy was to change the attitudes and behaviour of their own
citizens to bring them into conformity with the envisaged new world order.
Reviewing the ‘promise and perils’ of 21st century technology three years
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later, three authors from the Advisory Unit to the OECD Secretary-General
reflected on the social implications of impending revolutions in computing,
genetics, brain technology, new materials, energy, transportation and
environmental tools and systems, reporting the ‘widely-held view’ at the
conference from which their paper stemmed that ‘the prospects for prosperity
… over the next twenty-five years will probably hinge on actively encouraging
changes equal to, if not greater than, those already experienced in the
twentieth century’ (Miller, Michalski, & Stevens, 1998: 7). They identified
three ‘perils’. The first and second were the unleashing of destructive potential
that might be difficult to control, and the risk of system breakdown. The third
related to ‘ethics, values and mindsets’: foreseeable changes (in human cloning
and computer-based intelligence, or even life-forms, for example, could ‘pose
unusually strong challenges to existing ethical ands cultural standards, and
put greater burdens on people’s tolerance of the unknown and foreign,’ and
‘end up generating serious social unrest’ (ibid: 15). Managing risks, therefore,
meant managing social and political choices. At the micro-level, this required a
focus ‘on the one hand on the specific organisational patterns of families,
households, enterprises and government agencies, and on the other, the
decisions made by individuals in their roles as members of a household,
workers, managers, civil servants or politicians’; macro-level factors were ‘the
overall socio-economic circumstances within which households and
enterprises must operate’, primarily product, labour and capital markets
shaped by ‘national monetary, fiscal and regulatory policies that can alter the
predictability of borrowing conditions (interest rates), price levels,
competitors entering a market and changes in employment rates’; and ‘global
framework conditions’ concerned ‘the management of, for example, the
international system of trade, investment and technology flows and planetwide environmental interdependence’, with ‘the rates at which ideas,
technology and competitive pressures diffuse around the globe’ a vital factor
(ibid: 15-16). National and global managers faced the challenge of getting
people to adopt new attitudes and accept alternative approaches to risk
management, and equipping them for different decision-making structures
(ibid: 16). People are ‘naturally resistant to giving up familiar strategies for
achieving economic and social success’ (ibid: 19); but:
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radical, technology-enabled changes in the microlevel organisation of work
or in the familiar model of passive mass consumption could seriously
disrupt or destroy a range of established mechanisms for managing or
reducing the costs and risks of organised activity. Some of the most basic
assumptions that underpin what people know and expect in the workplace
and the home could be called into question. For instance, with the explosive
development of technologies such as the Internet, there is likely to be an
accelerating trend away from the reassurances, subtle information-sharing
and planning assumptions that were once offered by stable career patterns,
fixed responsibility pyramids, familiar local shops, and face-to-face
encounters at work or in the schoolyard or doctor’s office. … Leaving behind
the habits of the mass production, mass consumption era will not only
overturn numerous comforting firm- and household-level traditions, but
also demand the introduction of new mechanisms that are at least as
capable of furnishing reliable and inexpensive information and expectations
as yesterday’s world of top-down orders and standardized choices (ibid: 2021).
These micro-level challenges will unfold in an environment characterised by a
number of ‘basically positive framework conditions’ at the macro- and global
levels: ‘the persistence of widespread adherence to economic policies aimed at
non-inflationary growth, structural adjustment and reductions of public
deficits and debt’; ‘the continuation of steady growth in productivity as
competition drives forward innovation and the accumulation of intangible
capital (technical, human and organisational), particularly in the service
sectors of developed countries and the industrial sectors of the developing
world’; ‘the continued reduction of restraints on market functioning at
domestic level through deregulation and privatisation of such sectors as
transportation and communication’; ‘the further liberalisation of international
trade (including services), foreign direct investment and cross-border
technology flows’; and ‘the ongoing integration of more and more countries,
some of them with huge domestic markets, into the global economy (ibid: 21).
In these circumstances, two challenges are identified: the capacity to sustain
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the positive impact of “knowledge spill-overs” by encouraging ‘the high level of
information-sharing necessary to spark breakthroughs in socio-technical
organisation’, and the ‘establishment of an environment that encourages the
emergence of new patterns of productive organisation, income, employment,
consumption and public-private interaction’ (ibid: 21-22). In all of this, the
establishment of ‘open, transparent and co-operative framework conditions at
the global level’ (ibid: 26) will be fundamental. But among the various dangers
posed, ‘the power of technology and new forms of organisation could work to
undermine the effectiveness and legitimacy of important collective
institutions, from the centralised firm and national government to the family
and religious organisations. The current base of the pyramid upon which
global frameworks rest could begin to crumble as socio-technical dynamism
disrupts existing patterns of assuring social cohesion’ (ibid: 27).
Socio-technical dynamism will be driven forward by (i) the diffusion and
intensification of competition in existing and emerging markets locally,
regionally and globally, (ii) the transition to a knowledge economy, (iii)
growing economic, social and environmental interdependence, and (iv)
‘undiminished individual and collective aspirations – people’s hopes for better
lives’ (ibid: 29). But these will generate changes in the basic conditions of life
for most people, on a par with those associated with the industrial revolution.
Major transformations are to be expected ‘in the long-established patterns of
where people work, what they produce, when they engage in learning activity,
how they structure different phases of their life and day, what they consume,
who supplies them, and how they interact’ (ibid: 30). Along with the need for
new national and global policy initiatives, therefore, ‘sparking transformations
in values and culture will be an essential part of facilitating the necessary
tolerance of new ideas and diverse lifestyles’ (ibid: 31).
Skip forward a decade, and you find OECD Secretary-General Angel Gurría
stating that the role of the OECD is to be a ‘partner of countries in the political
economy of reform’ (OECD, 2007: Foreword); skip forward two decades, and
you find the Chief Economist of the OECD, Catherine Mann, noting that for all
countries, ‘the challenge is to pursue structural reforms to raise growth and
create jobs in a sustainable and inclusive way’, and warning members and nonmembers alike that ‘structural reform isn’t a finite list of measures with an
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end-date. It is an on-going process to build more productive, inclusive and
sustainable economies for our citizens’ (Mann, 2014: 13). In short, the OECD,
in common with the European Union (Grabbe, 2001; Grabbe, 2014; Gstöhl,
2015) and the WTO (Cattaneo & Braga, 2009), seeks to adopt policies
consistent with global competitiveness (Wölfl, Wanner, Kozluk, & Nicoletti,
2009; Koske, Bitetti, Wanner, & Barbiero, 2015). In seeking to develop the
world economy it is seeking to promote and tame the immanent laws of
capitalist production: to bring them to bear on capitalists, workers, citizens
and states, and to manage the consequences of doing so.
Programming the poor for capital: the World Bank
An argument commonly made is that in the late 1980s and the early 1990s
the World Bank (along with the IMF), strongly backed by the US government,
used ‘conditionality’ (making loans in exchange for agreed policy reforms) to
promote a ‘neoliberal’ reform programme, often described as the ‘Washington
Consensus’, which gave priority to the privatisation of state-owned industry,
the liberalisation of trade, and the deregulation of business. This programme
was relaxed, the same people say, from the mid-to-late 1990s onwards (the
‘post-Washington Consensus), to give more scope to such issues as sustainable
growth, the development of human capital, institutional reform, poverty
reduction, social safety nets, and in all of this an increased role for the state
(Babb, 2013). This is wrong, for two reasons. First, the trinity of privatisation,
liberalisation and deregulation offers only a superficial account of what the
World bank in particular was aiming for; and second, to the extent that the
project changed, the changes represented an intensification not a relaxation of
its drive towards more ‘market-friendly’ policies, aimed towards the further
development of the world market (Cammack, 2004; Ruckert, 2010). Since
1990 the Bank had been systematically promoting the proletarianisation of
the world’s poor (their equipping for, incorporation into and subjection to
competitive labour markets), along with the creation of an institutional
framework within which global capitalist accumulation could be sustained, and
legitimated through policies of controlled participation and pro-poor propaganda. I have described its objective as the systematic transformation of social
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relations and institutions in the developing world, in order to generalise and
facilitate proletarianisation and capitalist accumulation on a global scale, and
build specifically capitalist hegemony through the promotion of legitimating
schemes of community participation and country ownership. This description
still holds good. Erroneous notions about a narrow commitment to the
‘Washington Agenda’ of privatisation, deregulation and liberalisation
notwithstanding, the project remains what it has been from 1990 onwards, a
systematic programme for the establishment and consolidation of capitalism
on a global scale (Cammack, 2002; Cammack, 2004); as Gore has argued, its
activity is underpinned by a ‘normative economic internationalism’ (Gore,
2000: 792-793).
Between 1990 and the turn of the millennium, the World Bank developed a
programme that began with a focus on workers, moved out to consider broader
institutional aspects of society, and ended with an offensive aimed specifically
at persuading the poor to accept the inevitability and desirability of a global
capitalist order. The 1990 World Development Report, Poverty, called for the
‘productive use of the poor’s most abundant asset – labour’ (World Bank, 1990:
3); by mid-decade, in Workers in an Integrating World, sought to set wages at
market rates, and reshape unions as active agents promoting efficiency and
productivity (World Bank, 1995); at the end of the decade, Entering the 21st
Century (World Bank, 1999) and Attacking Poverty (World Bank, 2001)
concealed the agency of the Bank and its partners by literally naturalizing the
project as a ‘changing landscape’ whose ‘contours’ needed analysis, while
seeking to further embed domestic disciplines conducive to capitalist
reproduction, and wrap them in a rhetoric of empowerment and opportunity
(Cammack, 2002).
Like the OECD, then, the World Bank is as much concerned with the attitudes
and behaviour of citizens as with the character of macro-economic policy
across the world. It aids and abets states in the task of intensifying
competitiveness, transforming the social relations of production, and changing
the way that citizens behave. In reflecting and seeking to legitimate and
extend the institutional, social and material changes associated with the
emergence of a truly global capitalist world economy, they stands with the
OECD at the forefront of a global assault on the capacity of individuals to
16
survive outside the world market, and as a consequence it devotes
considerable ingenuity to devising ways to have them conform to their lot. So
with behavioural economics, neuroscience, cognitive science, and psychology
in vogue in policy-making circles, it is not surprising that the 2015 World
Development Report, Mind, Society and Behavior, pitches the idea that ‘paying
attention to how humans think (the processes of mind) and how history and
context shape thinking (the influence of society) can improve the design and
implementation of development policies and interventions that target human
choices and action (behavior)’ (World Bank, 2014: 2). As Bank President ‘Jim’
Yong Kim puts it in the foreword:
Its main message is that, when it comes to understanding and changing
human behavior, we can do better. Many development economists and
practitioners believe that the “irrational” elements of human decision
making are inscrutable or that they cancel each other out when large
numbers of people interact, as in markets. Yet, we now know this is not the
case. Recent research has advanced our understanding of the psychological,
social, and cultural influences on decision making and human behavior and
has demonstrated that they have a significant impact on development
outcomes. Research also shows that it is possible to harness these
influences to achieve development goals (ibid: xi, emphasis mine).
At one level, the Bank is clear in its intention to ‘integrate recent findings on
the psychological and social underpinnings of behavior to make them available
for more systematic use by both researchers and practitioners in development
communities’ (ibid: 2). At another, it is not so forthright. Its presentational
focus is on the ‘set of tools and strategies for promoting development and
combating poverty’ (ibid: 3), but the underlying logic – always that of coaxing
and habituating individuals into forms of thought and behaviour conducive to
the rule of capital – is less explicit. In this, Mind, Society and Behavior
faithfully follows its precursor, Nudge, which moved artfully from persuading
kids to eat carrots and adult men to aim into rather than alongside urinals to
helping workers ‘save for tomorrow’ by signing up to the steady ratcheting
down of year-on-year real take-home pay (Thaler & Sunstein, 2008: 1-4, 12217
125). In short, the report is a celebration and an exploitation of ‘the cognitive
limitations of people in all walks of life’ as much as it is a corrective (in relation
to World Bank staff, for example) to this condition (World Bank, 2014: 4).
Mind, Society and Behavior represents an attempt to programme the poor on
behalf of capitalism on a global scale, making it the third wave in an assault
that began with structural adjustment programmes in the 1980s intended to
reform states along neoliberal lines, then morphed in the 1990s under the
tutelage of Joseph Stiglitz into the programme aimed at proletarianising the
poor and making them responsive to the needs of capital. Now, under the
guidance of lead author and Stiglitz associate Karla Hoff, another shift is under
way, from seeking to change behaviour through incentives (conditional cash
transfers, social protection and labour market reforms, and the like), to
working directly on the mental processes of the poor.
WDR2015 takes up with enthusiasm the task of ‘understanding and using
recent findings on human decision making’: ‘thinking automatically’, ‘thinking
socially,’ and ‘thinking with mental models’ (ibid: 25, my emphasis). Its
purpose, evidently enough, is not to understand society, but to change it. In
consonance with this goal, its approach is didactic and programmatic, aimed at
exploiting the potential of these features of human decision-making. So, if
much of our thinking is automatic, not deliberative, ‘simplifying the choice
environment can help people make choices and enact behaviors that benefit
them’; if humans ‘are not autonomous thinkers or decision makers but deeply
social animals, ‘recognizing the importance of social preferences and norms in
decision making can help policy makers improve program efficacy and develop
new tools for achieving development objectives’; and if individuals ‘do not
respond to objective experience but to mental representations of experience
constructed from culturally available mental models’, ‘showing new ways of
thinking can expand the set of mental models they draw on and their capacity
to aspire and can thus increase social welfare’ (ibid). So, drawing on
behavioural economics, social psychology, cognitive science, neuroscience and
the like, the report sets out a detailed blueprint for engineering social and
behavioural change, which depends on the view that people can be
programmed (ibid: 29-34). It is argued that such things as default options,
simplicity, sequence and timing of choices matter (ibid: 34-37), and that
18
tweaks, reminders and ‘commitment devices’ put people back on track (ibid:
37-8). ‘Sociality can serve as a starting point for new kinds of development
interventions’ (ibid: 43): as social preferences, networks, norms and learning
all affect decision-making (ibid: 43-54), ‘interventions may be able to target
social identities as a means of changing behavior’ (ibid: 46) and ‘achieve their
objectives by harnessing some social pressures and diminishing others (ibid:
50). And since ‘economic incentives are not necessarily the best or the only
way to motivate individuals’, ‘social incentives can be used alongside or even
instead of economic incentives to elicit desired behaviours;’ social norms can
be activated, worked around, or changed through legislation or persuasion, in
accordance with their utility, and ‘norm change may be a necessary
component of social change’ (ibid: 51-55). Finally, mental models (‘broad ideas
about how the world works and one’s place in it’) may be limited, obsolete,
dysfunctional or plain false, with destructive effects (ibid: 62); or they may
create beliefs that inhibit cooperation, trust and belief in the possibility of
positive change. Individuals draw on multiple such models, depending on
context and triggering, so that the salience of one or another can be
manipulated (ibid: 66-9). Those ‘that are not serving individuals well’ (default
assumptions) can persist because they influence what we ‘perceive, pay
attention to, and recall from memory’; because they are not tested by events
on a sufficient social scale; because they predispose us against precisely those
actions that would prove the model false (belief traps); or because they lead us
to ignore, suppress or forget observations that might undermine our beliefs
(ideology or confirmation bias) (ibid: 69-70). This being the case, carefully
calculated interventions can ‘improve the match of mental models with a
decision context’ (ibid: 70), through such strategies as political affirmative
action, embedding key messages in entertainment media (entertainment
education, combined with randomized controlled trials or RCTs, ibid: 76-7). In
sum, ‘a focus on mental models both gives policy makers new tools for
promoting development and provides new understandings for why policies
based on standard economic assumptions can fail’ (ibid: 72). In short, having
found that ‘people are malleable and emotional actors’ (ibid: 3), the World
Bank is set upon exploiting this discovery to beneficial effect.
The six substantive issues with which the Report deals after setting out its
19
machinery of mind management and behavioural correction – poverty, early
child-hood development, household finance, productivity, health, and climate
change – are perfectly familiar. What is new is the way in which the findings
and techniques set out in the opening chapters are deployed to address them.
The whole approach constitutes a medicalization of development, in which the
mind-sets of the poor and other obstacles to healthy growth are seen as
pathologies, for which development practitioners offer both a scientifically
informed diagnosis and an appropriate intervention (the latter tested through
randomized controlled trials before being marketed as a certified cure).
Symptomatically, the series of chapters on psychological and social
perspectives on policy opens with the invocation of the poor father who
‘chooses not to enrol his son in secondary school,’ on which the report
comments that ‘The assumptions policy makers think underlie this decision
will likely affect the remedies they design to address low investment in
education and other behaviors associated with poverty’ (ibid: 80). The resort
to medical terminology is not innocent. Insofar as policy makers present
themselves (and perhaps see themselves effortlessly) in this way, they remove
policy making from the context of purposive action on behalf of a particular
set of interests, and present and experience it in terms of altruistic
commitment to bring unquestionably good things to the poor.
The way the report works can be illustrated by its approach to poverty,
where two inadequate ‘narratives of poverty’ are highlighted:
If policy makers assume that poverty results from poor people’s deviant
values or character failings .. or that poor people simply do not understand
the benefits of important investments like education, they might pursue a
strategy of persuasion to assist someone like this father [one who chooses
not to enrol his son in secondary school]. Or if they assume that the decision
to keep a child out of school results solely from a political and economic
system that is inherently stacked against poor people, they might advocate
quotas or a large-scale redistribution of resources. Both these narratives of
poverty offer an incomplete picture of decision making and choice. The first
places little emphasis on constraints beyond the control of the decision
maker—such as the fees associated with attending school or the absence of
20
enforceable compulsory education laws, which could coerce parents to send
their child to school. The second narrative does not address the cognitive
resources required to make a decision, especially when material resources
are in short supply and when people’s willingness to act upon their desires
may be constrained (ibid: 80).
The logic is clear: the large scale redistribution of resources is ruled out (by
virtue of a ‘deeply embedded and shared belief’ or mental model on the part of
policy-makers, as it happens), and persuasion will only work if the structure of
incentives that the poor face is appropriately manipulated. The field is open
for randomized controlled trials and other related technologies of power to be
deployed on behalf of the goal of changing the mindsets and hence the
behaviour of the poor, in response to the fact that poverty itself ‘can blunt the
capacity to aspire and to take advantage of the opportunities that do present
themselves’ (ibid: 85). The extent of willingness to experiment on the poor
without their knowledge or consent is itself a notable feature of the analysis.
In what follows in the Report, for each of the specific themes addressed, the
focus is relentlessly on shaping the neoliberal subject. As regards poverty
itself, the Bank notes that ‘poor households often benefit from forms of social
insurance, tapping resources from friends, neighbours, family, and social
groups such as burial societies, or rotating pools of credit’ (ibid). A good thing
too, you might think. But this is not necessarily so, as ‘norms that may require
investments in social capital to the detriment of private opportunities’ must be
eliminated. So when budding entrepreneurs in Kenya were found in a
laboratory experiment to be ‘willing to pay a price to keep their earnings from
a game hidden’, this outcome was seized upon to suggest that they might
‘benefit from financial products that allow them to insulate their income from
social demands’. And so it proved, in another field experiment in Kenya: ‘using
a simple metal box with a padlock and designating savings for a particular
purpose can help increase savings for people who must assist others in their
social network’ [86]. And so on, for each topic area considered. In each case,
an unreflective and uncritical account is given of micro-level case studies,
primarily of RCTs, that zero in on one or another aspect of the ideal neoliberal
citizen. In this case, if the poor cannot be made economically rational, they can
21
at least be selfish, which is a start.
A similar approach is taken to household finance, where the Bank assumes
that increased engagement with financial institutions would help, and
proposes that these should be ‘made more responsive to the behavioural
factors driving people’s financial decisions’ (ibid: 112). The presumption is
that the poor must be encouraged to save, and the challenge is to devise tools
that will ‘nudge’ them to do so. In particular, the soap opera, once pure
escapism in which the whole point was that there was always someone worse
off than yourself, has become a surreptitious tool for the promotion of thrift,
sobriety, and willingness to take any job rather than sponge off the state:
Overall, our findings suggest an important role for entertainment media as
an accessible and important tool for policymakers to deliver carefully
designed educational messages that resonate with the audience and can
potentially influence financial knowledge and behavior. Further, our
findings suggest that emotional connections and familiarity with media
personalities certainly play a role in motivating knowledge and behavior
change among viewers, and that harnessing such potential can be an
important channel for achieving development impact (ibid).
In the South African soap featured as an exemplar (it sounds unmissable), the
main character ‘depicted poor financial behaviour before changing her habits’
(Berg & Zia, 2013: 5). From the summary provided, the plot sounds every bit
as dire as that might lead you to expect, so (spoiler alert) I will fast forward
you to the happy ending, in which ‘Maletsatsi gets Daniel to help her structure
a simple savings plan. She is going to put a part of her salary into a special
bank account from which she cannot draw and which will give her good
interest on her savings (ibid: 49).
As in the household, so in the world of informal work, where the Bank is keen
to boost productivity, and finds the prevalence of other types of thinking
distressing. In Ghana, small-scale entrepreneurs who are given cash loans use
them in part to finance household needs or help relatives. In Kenya, bicycle
taxi drivers do just enough work to meet their daily needs, rather than
maximising their income, and shop keepers waste time wandering about in
22
search of small change instead of coming to work with a float. In India,
fishermen fish less as the value of their catches increases, opting for days off
instead of going out to sea. The Bank takes these illustrative cases from the
nearly 60 per cent of the world’s labour force who are self-employed as
evidence that ‘divides between intentions and actions and the neglect of
potential opportunities may loom even larger [for the self-employed] .. because
they do not have contracts with an employer interested in their level of effort
or explicit work arrangements that dictate what is expected of them’ (ibid:
135). In other words, the Bank assumes that it would be in the interest of
these self-employed workers to exert themselves to the maximum. At the
same time, however, the source on which it draws suggests that the benefits
from extended effort are relatively small – from 5 to 8 per cent additional
income, for example, in the case of Kenyan bicycle taxi drivers (Dupas &
Robinson, 2014). As the reference to ‘neglect of potential opportunities’ shows,
the Bank simply assumes that maximising income is the right choice to make,
rather than one option at the extreme – so it talks about difficulties in turning
intentions into action, or failure to notice an opportunity, and reports on
interventions that are likely to ‘improve things’ (World Bank, 2014: 135). This
imputation to workers of what we used to call ‘false consciousness’ is simply a
consequence of the mental model with which it works. From a critical
perspective, the fact that these individuals make the choices they do reflects
their ability to resist the logic of capital – the failures and difficulties are not
those of the individuals concerned, but of capital. That, of course, is the real
problem, as far as the Bank is concerned – a shift has taken place from the
notional question, why won’t the poor do what is best for them?, to a rather
different one – why won’t the poor do what we need them to do?
Convergence on a global project
I have elsewhere summarised in ten points the ‘politics of global
competitiveness’ promoted by the OECD and the World Bank in particular.
They are that all countries should pursue competitiveness in the global
economy; country ‘ownership’ of reforms is essential; international
institutions must be ‘strategic partners in the political economy of reform’;
23
their task is to promote national reforms that contribute simultaneously to
national and global competitiveness; sound macro-economic policies are still
the indispensable starting point; but beyond that, all governments must create
and maintain a ‘good climate for investment’; they must then provide an
abundant and productive labour force; public expenditure should be directed
to growth supporting infrastructure and accelerated human capital formation;
entrepreneurship and innovation should be promoted at all levels; and there
should be a particular focus on the empowerment of women (Cammack, 2009:
45-47).
This is still an accurate representation of the Bank’s shared project, and the
Bank’s 2013 Report, succinctly entitled Jobs, sits directly in line not only with
its own emphasis on work from 1990, but also with the OECD’s 1994 jobs
strategy: the report opens with the statement that ‘Jobs are the cornerstone of
economic and social development’, adding immediately that ‘Economies grow
as people get better at what they do, as they move from farms to firms, and as
more productive jobs are created and less productive ones disappear’ World
Bank, 2012, #40875@2}. It is immediately noticeable that the extended global
crisis has not quenched the faith of the Bank in the prospects for global
capitalism, and in fact both the Bank and the OECD have used it to press
harder for structural reform. At the same time, a wide range other
international and regional institutions have come together around a drive to
push further the global division of labour and the further development of the
social relations of production. Over the last few years there has been a flurry of
activity around four key themes: extending global value chains, promoting
industrial policy, pursuing the formalization of labour, and lowering barriers
to trade. All of these seek to increase the productivity of labour on a global
scale, and all seek to intensify the ‘uninterrupted division of labour, and .. the
application of new and the perfecting of old machinery precipitately and on an
ever more gigantic scale’ of which Marx wrote at the end of the 1840s. Global
value chains, as ‘borderless production systems’ that feature the
‘fragmentation of production processes and the international dispersion of
tasks and activities within them’ (UNCTAD, 2013: 122) represent the ultimate
division of labour, in which every individual step in a manufacturing process
can be assigned to the most appropriate workers, anywhere in the world. With
24
the proliferation of global value chains, firms in the most advanced economies
have a direct interest not only in the productivity and efficiency of their home
industries or foreign subsidiaries, but also in the productivity and efficiency of
every step in the global value chain, and their capacity to bear down on their
current partners and search for new ones continually ratchets up the level of
competition across the global economy. As the OECD comments:
With companies and countries now embedded in international networks of
production, GVCs [global value chains] increasingly challenge policy
thinking about competitiveness. Today’s economies no longer rely
exclusively on domestic resources to produce and export goods and
services; instead, their exports increasingly embody the technology, labour
and capital of the countries from which they import intermediate goods. As
a result, the competitiveness of national economies increasingly depends on
the competitiveness of their partners (OECD, 2013: 182).
Nothing could connect more directly to the programme laid out by the same
organization from the 1970s onwards, to create a seamless global economy
characterised by mutually reinforcing competitiveness. In the meantime, a
massive systemic change has come over the international system. But it is not
so much the end of an era, unless one thinks of it as an era of transition, as the
birth of a new one – genuinely global capitalism. It makes international
relations as a discipline both obsolete and redundant.
25
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