Metta Spencer

Development and Nationalism

From Encyclopedia of Nationalism, Vol.1. 2001: Academic Press

Metta Spencer * and John Bacher +

* University of Toronto, + Peace Magazine, Toronto


civic nationalism A sense of belonging to a common nation, as defined by citizenship in the same national state.

dependency theory The theory that under the capitalist system, economic development can take place in one country only if another country is kept underdeveloped, thus accounting for the widening economic gap between developed and underdeveloped nations.

development Changes toward societal goals that are widely desired and guided, especially by the leaders of national states.

ethnic nationalism Loyalty based on membership in a common ethnic community.

Human Development Index A weighted measure of success in human development in terms of a country's typical longevity, knowledge, and standard of living.

militarism The practice of spending large portions of a national budget on weapons and military units.

neoliberalism An approach to development that recommends liberalizing markets and freeing them from government regulation.

political restructuring Reforming governmental administrative systems and/or encouraging democratic participation.

virtuous cycle Pattern of change that multiplies positive effects through the feedback effects of preceding changes.

Since World War II, colonialism has become replaced by nation-building programs of economic, political, and social development. There have been three main approaches guiding this process-modernization theory, which portrayed development as resulting from the transfer of industrial technology; dependency theory, which pessimistically predicts that poor countries will find it difficult to develop because they are exploited by richer countries; and neoliberalism, which assumes that privatization and markets foster the other aspects of development. The historical events of the past half-century have cast doubts on all these models without providing any clearly superior alternative. A main challenge for development today, in the poor and rich countries alike, comes from the rapid increase in globalization, with its negative effects on democratization, which is almost necessary for development. Also, militarism particularly threatens development, both by jeopardizing democracy and by wastefully using countries' resources to buy the means for repressing their own citizenry.


Judging from the experience of the 20th century, there will be enormous changes on Planet Earth during the 21st century-some that we can anticipate and plan for now, and others that will take people by surprise. Insofar as we anticipate changes and organize to bring them about, we participate in development, the changes toward societal goals that are widely desired and guided, especially by the political leaders of national states. Development has several aspects: economic growth (mainly through industrialization), political restructuring (improving administrative effectiveness and democratic participation), and sociocultural modernization (which some do, and others do not, equate with Westernization).

Development rarely happens spontaneously, but today is usually organized by states-a political process that in newly independent states is sometimes called "nation-building." This article will explore various approaches to development, especially its relationship to nationalism.

This is no simple matter. It is necessary to state immediately that the two topics of primary concern here-nationalism and development-are causally linked in a variety of ways as part of a single system. Numerous other variables and distinctions must be considered in even a basic discussion. For example, we shall distinguish between two types of nationalism, ethnic and civic, that have been strong in different periods, yielding different results. We shall distinguish between different types of development, sustainable and unsustainable. We shall distinguish among three theoretical approaches to development, modernization, dependency, and neoliberalism, that have dominated policymaking in different decades. We shall examine the way in which nationalism and development are both shaped by the political context of a given country-how militarized it is and whether it is a dictatorship or a democracy. And since democracy is such a fateful third variable, we shall identify some of the factors that determine its chance of flourishing-such factors as whether the country possesses oil riches or not. We shall mention some of the insights of economists, such as the principle of internalizing costs, that may enable markets to help resolve the harmful environmental side effects of development.

To be sure, all these factors will complicate our story, but there is an encouraging side to it. We are dealing here with a system: each of several variables is in a relationship of mutual influence with others. For example, we shall find that underdevelopment tends to breed militarism, and militarism in turn breeds more underdevelopment, creating a vicious cycle of harmful effects. But, fortunately, anything that tends to reverse a vicious cycle can be a particularly effective type of intervention, for it will turn it into a "virtuous cycle" that multiplies positive effects. Thus, interrupting the vicious cycle of underdevelopment and militarism creates this virtuous cycle: development allows for disarmament and disarmament allows for further development.

One should not, therefore, be dismayed by the complexity of the systemic relationships, for every system multiplies the possible ways of improving the whole society. Whether you are working, say, to (a) democratize a society, (b) reduce its militarization, or (c) overcome ethnic discrimination, because these variables constitute an interdependent causal system, you will be working to improve all of them. This will become clear later, but first let us start with a simpler topic-a short history of theories concerning social change.


The notion of development implies that society is, or can be, moving in a favorable direction, like an arrow in flight toward a target. However, not all societies have thought of social change as development. In ancient times the vast majority of human beings did not believe in progress, but instead assumed that events would continue to repeat the past. Indeed, some cultures, such as Hinduism, have required that people be guided by tradition rather than innovate. History was considered as stability instead of change, and any radical changes were assumed to arise only from supernatural interventions.

On the other hand, there have also been theories that anticipate ups and downs-cycles without overall progress. Thus the ancient Greeks assumed that human history follows a cyclical path, repeating the same patterns endlessly. Even in our own day, there are domains of social life in which cycles occur instead of constant movement in a particular direction. For example, business cycles are characteristic features of modern economies; when stock market prices shoot up too quickly, they often fall back in market "corrections." Nevertheless, economists also assume that there can be development-that the business cycle can fluctuate within an overall trend toward some favorable direction, as a wiggly line can move more upward than downward on a graph.

From the second half of the 18th century, the belief that change is mostly cyclical was abandoned in favor of an expectation of continual progress. In the forefront of this new way of thinking were philosophers of history and social theorists who emphasized that advances in scientific knowledge would necessarily enable humanity to exploit its unique capacity for "indefinite perfectibility." The result, they believed, would be perpetual social and moral progress. The earliest sociological theorists, such as Auguste Comte and Herbert Spencer, postulated a benign tendency for societal structures to advance from the simple to the complex. Also, according to Spencer's analogy, societies are like growing organisms. He supposed that all societies at the same stage of growth must be similar in many respects. "Advanced" societies were presumably those that resembled the Western societies of his day.

Today few people believe any more in a fixed, universal set of stages through which all societies must move in their development. Nor does anyone consider progress inevitable; after all, some of the most terrible events of human history, such as World War II, the spread of totalitarianism, and the use of weapons of mass destruction, have occurred at the same time as the greatest innovations in science and technology. But if progress is not inevitable, change is. Everyone expects massive social changes to take place and believes in trying to ensure that they are beneficial. Thus the idea of progress remains alive-at least as an ideal to hold out before ourselves when organizing the future institutions of society.

Development has been realized in many places throughout the world. Within a short period life expectancy has been extended, even while the population has doubled and redoubled. Health, education, and the amenities of modern technology have become available to large numbers of people around the world, who have become aware of each other and conscious of themselves as global citizens. If the challenges of future development sometimes seem overwhelming, it is important to recall the great advances that have already been realized. Yet it is equally important to keep in mind the possibility of error many theorists have proposed developmental theories that have resulted not in progress, but in tragic outcomes. For example, the spread of communism around the world began as a noble experiment inspired by high ideals, but led to failures almost everywhere. Progress is not inevitable.

Nationalism is an ideology promoting nationhood, a strong sense of collective identity and solidarity among a wide population (a so-called "nation") on the basis of their common language, culture, heritage, religion, or citizenship in a state. It is important to distinguish between two types of nationalism which are sometimes called "civic" nationalism and "ethnic" nationalism.

Civic nationalism is a sense of belonging to a common nation-as defined by citizenship in the same national state. This patriotic sentiment is often admired for the inclusive solidarity that it generates among citizens. It tends to evoke enthusiasm and inspire the citizens to sacrifice, when necessary, to build a modern state where all members share similar political rights and guaranteed freedoms. At times civic nationalism does arouse jingoistic loyalties and rivalries against the citizens of another state, especially during wars. However, since post-World War II decolonization it has been actively promoted by the leaders of most post-colonial states, who urge their people to put aside their "tribal" or "communal" ethnic differences and join together in the process of nation-building. A popular sense of national (countrywide) identity is commonly believed to contribute to a society's political cohesion, help define its boundaries as a community, and make people willing to endure hardships in the absence of costly coercion or material incentives. In principle, then, a fervent civic nationalistic movement should enable a state to pursue its development plans while permitting considerable pluralism and democratic freedom.

Ethnic nationalism, on the other hand, is a kind of loyalty based on membership in a common ethnic community. It is one of the numerous exclusionary ideologies that can be found in the modern world-doctrines that limit the members' loyalty to one particular subset of the citizens among whom they live. For example, communism is an exclusionary ideology that assigned a special position to all members of the "vanguard party"; Nazism was an ideology that excluded Jews, homosexuals, blacks, and Gypsies (Roma). There are other exclusionary movements based on ethnicity whose members discriminate in favor of their own religious or linguistic group and against other ethnic communities within the same society. Moreover, ethnic nationalists typically hope for a separate state that will be ruled by members of their own ethnic group, where other people will be expelled or treated as second-class citizens.

Civic nationalism is widely believed to have a benign influence on human affairs by rousing solidarity for nation-building. Ethnic nationalism, on the other hand, has effects that almost always divide, exclude, and create mutual animosity between groups. Patriots believe that civic nationalism is required for the development of internally cohesive European states. Whether or not that is so, during the first part of the 20th century many wars between rival states were the result of civic nationalism. No one who recalls that history would conclude that civic nationalism is consistently less harmful than ethnic nationalism.

However, at the end of the 20th century, almost all wars were internal instead of international. These civil wars arise from conflicts between two or more groups of ethnic nationalists within one existing state.

In both types of nationalism conflicts emerge because people identify with their nation' (however it is defined) and fiercely claim a higher status for it than a rival group is willing to concede. Yet identification with "nation"-whether it be a national state or an ethnic group-is a product of the imagination, not of immutable reality. Such identities should not be regarded as natural, permanent, or essential. Each ethnic group arises as a social category under specific historical conditions and will not exist forever.

Moreover, it is possible for people to change their ethnicity several times in a lifetime, perhaps by marrying out, converting to a different faith, or migrating and assimilating to the local culture. In a multicultural society many people have mixed ancestry and handle their identity issues in a variety of ways. Some of them choose to identify with only one branch of their family tree, while others ignore ethnic identification altogether and consider themselves simply as citizens of their national states: "Americans," say, or "Yugoslavs," "Sri Lankans," or "Canadians." Identity can be remarkably fluid, even if ethnic nationalists generally are ideologically zealous and inflexible.

A. Civic Nationalism and Nation-Building

Nationalism began in Europe during the 18th century. In contrast to the chauvinism of 20th century nationalism, that first surge in nationalism was civic in nature and usually fostered inclusiveness, liberalism, and the replacement of religion by secular authority as a legitimating political principle. Under its influence, early nation-builders amalgamated small regional duchies and encouraged the widening of identifications to encompass the newly enlarged and unified state.

Language played a part. When the countries of today's Europe began taking shape, literacy rates were low and most people spoke a local dialect that might not be understood in neighboring villages. Spelling and punctuation were not standardized. As small states were welded together, the grammars were standardized throughout the new realm and children were educated in a dialect that had been chosen for the whole country. For example, in France a single vernacular soon was understood everywhere.

The printed text also, in its turn, became a unifying force. As Benedict Anderson has shown, national identity became common only with the spread of literacy and printing, which in combination with capitalism created mass reading publics around the world. As newspapers in regional languages were established throughout the colonies, their local readers came to identify with their vernacular and to imagine themselves as constituting a common nationality, such as, for example, "Indonesians"-a community that had never previously existed. These new loyalties constituted a relatively benign form of civic nationalism with liberalizing, empowering, and civilizing effects. Instead of setting people against each other, it unified them within new, inclusive states where the control of the state would belong to the nation-the entire citizenry.

After World War II, Europe's overseas empires crumbled, with local political groups winning independence and undertaking nation-building of their own. Although the founder of each new state-such as Nehru in India, Sukarno in Indonesia, Nkrumah in Ghana, or

Kwan Yew in Singapore-elaborated his own special approach to economic, political, and social development, these leaders alike fostered civic nationalism, encouraging people to transcend their varied ethnic loyalties and develop fervent commitment to the new multinational state.

Between the 1950s and 1980s scholars attempted to identify the conditions required for nation-building to succeed. The most obvious of those conditions was often the most difficult-for each state to maintain its territorial integrity instead of fragmenting into new, smaller states under the separatist impetus of ethnic nationalism.

B. Ethnic Nationalism, Separatism, and Democracy

We turn now from civic to ethnic nationalism, which has its origins in a seemingly harmless cultural movement of the late 18th century, German romanticism. In northern Europe, nationalism arose as a celebration of cultural diversity. It did not treat any ethnic group more highly than the others. The romantics thought of humankind as comprising a number of such groups, each with its own collective spirit. One supposedly was bound to one's group by "blood." This ethnic definition of nationhood would create trouble in the future by confounding race, geographic territory, collective spirit, language, and culture. This reification of groups yielded the political doctrine by which Hitler would justify genocide.

Nor was Nazi Germany the end of the matter. The 21st century may witness as much ethnic nationalism as the last half of the 20th. Now, however, the wars between ethnic groups are rarely international in scope, but are civil wars between local ethnic groups demanding self-determination and resorting to violence in their attempts to secede. Comparing the 1990s year by year, between 40 and 50 percent of all wars identified by Project Ploughshares were wars of secession.

Ethnic nationalists share a preference for states comprising only a single ethnic community, as opposed to multicultural states. This exclusionary doctrine was not found during previous historical epochs. The great empires of the past were multicultural, and in their urban centers diverse social groups mingled, each by their example stimulating cultural innovations and development among the others. Throughout most of history, the only monocultural societies were those too isolated and underdeveloped to be active participants in the wider civilization of their region; such unfortunate groups were often described as "barbarian." It is ironical that cultural segregation is today an ideal toward which millions of nationalists aspire. A common way of pursuing this goal is to attempt secession from an existing state.

Why has separatism become so widespread? To answer that question, we must consider the political context of today's ethnic nationalisms and their demand for separate sovereign states.

National states seem to become democratic in waves. During surges of democratization, waves of divisive nationalism also tend to take place. One theory has been proposed to explain the connection between democracy and nationalism. It points to an increase in the significance of voting after a state has become democratic. In a dictatorship, whatever happens in the voting booth has few consequences, but when a nation begins making decision by voting, the outcome of an election may influence one's life markedly. In a multicultural democratic society, if the various ethnic groups have incompatible goals, their disputes will be settled by voting. Depending on their relative size, spatial distribution, and the prevailing system of democratic voting, ethnic groups will achieve unequal results in elections. Some of them may find themselves outvoted every time by the ethnic group that constitutes the majority of citizens.

But suppose an ethnic group is concentrated compactly in one region of the country where it constitutes a majority locally, though it remains a minority in the country as a whole. In such a case, everyone can see the potential advantages of seceding: By forming its own independent, sovereign state the group will no longer be outvoted every time. Instead, it will command a majority in its own separate state.

Fortunately, certain alternative voting arrangements exist that are fully democratic, yet offer real political opportunities to such ethnic groups if they remain within the larger state instead of attempting to secede. We recommend these alternatives as treated by M. Spencer and L. Guinier, for example, to the attention of those concerned with the developmental disadvantages resulting from separatist movements.


Colonies around the world began achieving independence while the Cold War was dividing the globe into two mutually hostile spheres of influence, each with its own economic and military institutions. Both blocs sought to attract the new states through coercion, economic inducements, or both. But the policies of new national states were also influenced by the prevailing theories of development. During the 1960s (the so-called "decade of development") there were two main schools of thought on the topic, modernization theory and dependency theory, which were respectively associated with capitalism and socialism.

Modernization theories often portrayed societies as typically changing through the influence of science, technology, and industry, converging to form fully modern societies that are markedly similar. According to this account, modern people, whether they live in Hong Kong, Moscow, Helsinki, or Buenos Aires, tend to be rational, secular, well educated, and politically engaged, whereas traditional societies had been extremely dissimilar. Modernization theorists sought to determine how countries might hasten their transition to modernity. They usually assumed that plural, democratic systems of government and private ownership were most conducive to this modern life. Unlike subsequent theorists, their liberal, democratic recommendations generally paid as much attention to political and sociocultural aspects of development as to the strictly economic aspects. For example, their modernizing program would include providing education, access to the mass media, excellence of health care, civil liberties, jobs, housing, opportunities for participation in political parties, trade unions, and voluntary organizations, all of which contribute to political and sociocultural development.

Contrary to this usual pattern, however, the single most influential Western theorist of the 1960s focused primarily on economic growth. This was W. W. Rostow, who treated the economic challenge of development as a straightforward problem of acquiring sufficient investment resources to move a society from bare subsistence into actual growth. After that critical stage, which he described by analogy to an airplane in the "take off phase," he expected that enterprises would be able to plow some of the profits back into projects that would continue the growth.

Nor was Rostow the only optimist among the modernization theorists, most of whom expected that industrialization and other improvements would proceed ever faster as soon as the inertia of traditional ways had been overcome.

As events unfolded, though, the 1970s cast doubt on that optimism. There were revolutions and coups throughout the Third World, with radical regimes taking control in Vietnam, Grenada, Nicaragua, Angola, and other places. Moreover, the turmoil of the 1960s in the advanced industrial countries undermined the previous admiration of the most modern countries and thereby leveled a serious criticism against modernization theory itself

Dependency theory, on the other hand, had never offered many optimistic projections and therefore gained instead of lost credibility from the negative world trends of the T970s. This theory was applied primarily to analyses of Latin America, but its basic idea can be traced to V.1. Lenin's theory of imperialism. Lenin had argued that capitalist markets inherently must keep expanding and therefore that capitalists always seek trade outlets abroad in other states or in their overseas empires. In this competitive situation, he said, capitalist states inevitably get into conflicts among themselves and often go to war against one another. And for their part, the smaller, weaker countries cannot defend their own interests against the richer capitalist states and therefore continue to be exploited within the global capitalist system.

Dependency theory was elaborated mainly as an explanation of the gross disparities of wealth and well-being between rich and poor nations. Basically, it blames the rich countries for poverty in the poor countries. Unlike modernization theory, it does not attribute much importance to democracy as a factor contributing to development. The most prominent exponent of dependency theory, Andre Gunder Frank, argued that the underdeveloped states can never catch up with the rich countries because the very process of industrialization and development in the rich countries has been possible only because they exploited and weakened the underdeveloped countries. In Latin America, for example, mercantile capitalism had not modernized the peasants but instead had created large rural estates on which they had to work in feudal conditions.

During the colonial period the "mother countries" had imported raw materials from their colonies and exported capital to them, making the colonies economically dependent and powerless to change the situation. But dependency theorists such as Frank and Fernando Henrique Cardoso pointed out that this economic predicament had not vanished just because the colonies bad won independence. The industrial states were continuing to sap the newly sovereign states of their natural resources and keeping them from becoming self-sufficient manufacturers of finished products for their domestic economies. Although the Third World countries were euphemistically called "developing" nations, their relationship to capitalism (especially through transnational corporations) suggested to dependency theorists that many of them were actually "underdeveloping" countries-going downhill instead of up.

There was no clear remedy for their plight, but in any case dependency theorists advised political leaders of Third World states against trying to develop their economies by making deals with foreign capitalists. Instead, they advised them to pursue a policy of autarky, steering clear of worldwide markets, transnational corporations, and industrialization, producing for domestic consumption, and substituting local products for imports. In this way, dependency theory attempted to marry Marxism with civic nationalism as the aspiration to maintain a deliberate economic isolation. It was not at all congenial to ethnic nationalism, which had no place within the communist system. Marx had emphasized the importance of social classes over other types of group solidarity and was internationalist. Accordingly, within the dependency literature, class analysis generally took precedence over the rhetoric of civic nationalism, but there was some effort to combine the two types of analysis.

Because dependency theory attacked capitalism, it became the accepted doctrine in the communist countries from the 1960s to the 1980s. It was also widely accepted within the nonaligned Third World countries-those that had joined together as a movement in 1955, attempting to stay independent from either the Eastern or the Western bloc during the Cold War. Even in some capitalist countries (e.g., Canada) dependency theory also impressed left-wing analysts, who promoted autarky in their societies too, calling it "economic nationalism." It was chiefly the American economic and cultural influences from which these nationalists tried to steer clear.

For the most part, however, it was the poorer nations that tried to build their own economies autonomously, Cuba being especially admired by dependency theorists. However, after the United States placed an embargo against trade with Cuba in response to its expropriation of American-owned businesses, Cuba became dependent on the Soviet Union.

In no country did autarky fulfill the expectations of dependency theorists and result in satisfactory economic development. However, during the 1970s, when the Communist bloc seemed to be winning the struggle against capitalism, dependency theory was in its heyday, eclipsing modernization theory.

By the 1980s, it was Communism's turn to fail. The Eastern bloc was in serious economic trouble, requiring drastic reforms. Yet when Mikhail Gorbachev came to power in the Soviet Union in 1985, his reforms opened a Pandora's box, giving a platform to millions of people with pent-up grievances, especially nationalists who wanted independence. Within seven or eight years, the Soviet Union and its client Communist states had all collapsed. Although this change revived modernization theory to a degree, its main effect was to strengthen neoliberalism.

Neoliberalism "liberalizes" the market by freeing it from governmental regulation. It brought remarkable growth rates to some countries that privatized enterprises, reduced government intervention to a minimum, and adopted strategies based on exporting to the world market. This classical version of capitalism gained popularity from the example of a few small Asian countries who leap-frogged ahead of the Third World with spectacular rates of economic growth. The International Monetary Fund (IMF) and the World Bank, two international institutions that are responsible for encouraging development and stabilizing currencies in times of crisis, not only promoted neoliberalism but required countries to implement many of its policies through "structural adjustment programs" as a precondition for receiving loans. Although these were painful exercises in national belt-tightening, most political leaders came to regard them as necessary for their country's economic future. Indeed, by 1994, when one of the leading dependency theorists, Fernando Henrique Cardoso, became president of Brazil, he promised not to implement his own previous autarkic policies but rather to approach development questions with conventional, neoliberal principles, promoting export-led development.

By 1997, it was neoliberalism's turn to have doubt cast on it as a development policy. Vast quantities of money slosh around the globe electronically, seeking short-term profits and then moving on to other countries. When such money departs from a country, foreign investors sell their holdings in the local economy and the national state must make up for the loss by borrowing from the IMF or other international financial institutions. In t997, the Thai government devalued its currency and precipitated a grave economic recession throughout most of Asia. The following year, Russia and Brazil almost collapsed as well, and it became clear that the IMF no longer had the capacity to maintain stable exchange rates. According to some experts, the main problem was the lack of financial regulation in the rapidly expanding global market, combined with the prevalence of speculation and cronyism in Asian investment decisions. Other experts believe that the Asian financial markets were not especially mismanaged, and that we must expect to see other similar crises elsewhere. In any case, economists agreed that the imminent possibility of a 1930s-type depression could no longer be denied. Though neoliberalism had promoted growth, it had loosened regulations on the international flow of speculative capital and even orthodox economists worried and agreed that a means should be developed for pumping in liquid funds instantly whenever such a crisis occurs and/or new mechanisms were needed for regulating the international financial markets. At their 1999 meeting the G8 industrialized countries introduced a limited regulatory regime and a moderate debt forgiveness plan for the poorest countries, but it is uncertain that either of these will be adequate for the problem.


Economic nationalists continue to advocate a world in which the fundamental political unit is the national state. This imagery portrays the countries of the world as sovereign entities, each one enclosed within a hard "shell" that keeps foreign states from influencing what goes on inside. This notion of national sovereignty had become the legitimate international order in Europe with the Peace of Westphalia, which ended the Thirty Years War in 1648.

Over the years, however, this international system has been changing into a system of global governance in which the leaders of each state are accountable to international law and to regulatory organizations that address such global problems as air traffic control and the narcotics trade. This growth of international institutions is one aspect of globalization.

Since World War 11, globalization has increased, with the United Nations being the most conspicuous global institution. Dictators who commit atrocities in warfare soon can be charged with crimes against humanity, captured, and put on trial in the new International Criminal Court; their cherished right to "national sovereignty" offers no refuge from justice.

Even more remarkable are the changes in the area of international economics. Binding trade agreements (mostly multilateral) are being established around the world. Increasing trade benefits countries economically, especially the small ones that cannot provide all necessities of life through domestic production. However, there are serious problems connected with globalization.

The most obvious problems stem from its typically undemocratic nature. Few international organizations can be called truly democratic; even delegates to the United Nations are appointed by states instead of being elected directly by citizens. Multilateral trade agreements are now increasingly adjudicated by bureaucrats, who are bound by treaties that the national citizenry has never debated. If the public were able to influence policies of the international regulatory system, perhaps it would be an improvement over the protectionist policies of national governments, but no such democratic global economy is envisioned.

Today most national leaders have declared themselves believers in the neoliberal maxim that the market will regulate itself without being governed. All economies are heavily influenced by private corporations and banks, some of which have assets exceeding those of small governments and whose executives are accountable only to stockholders-not to the workers, consumers, environmentalists, or others whose lives they affect.

A. The Recent History of Globalization

Globalization began in a major way during World War II at a conference in Bretton Woods, New Hampshire, where 44 Allied nations met and created two new institutions-the International Monetary Fund (IME) and the International Bank for Reconstruction and Development, better known as the World Bank. They did not

succeed at that time in creating a third organization, the International Trade Organization, but did create the General Agreement on Tariffs and Trade (GATT) in 1947, which was superseded finally by the World Trade Organization in 1995. Greatly influenced by the economist John Maynard Keynes, the conference agreed that the Great Depression had mainly resulted from a lack of free exchange of currencies among nations, and that byperinflation in Germany had contributed to Hitler's rise. These faults were to be limited in the future by the new institutions.

The World Bank was created to help finance reconstruction and development in Europe after World War II. After that was done, it sponsored other development projects in the Third World, where it makes longer-term loans available for productive projects.

The IMF was designed to help the member states exchange their currencies with a minimum of restrictions. The fund has at its disposal rather small sums of money that it can offer as stabilization loans to countries facing short-term balance of payments difficulties. However, if the IMF shows its approval in this way, the effect can be substantial in leveraging additional loans elsewhere.

Without having an IMF program accepted, no country is likely to receive much outside money. Hence the Fund wields very great power indeed, and it generally imposes policies of neoliberalism on states applying for its loans. The IMF successfully maintained a stable exchange rate among the countries with convertible currencies until 1971, when the United States, needing money to pay for the Vietnam War, abandoned its promise to buy' and sell gold at $35 per ounce. This ended the immensely constructive Bretton Woods system of fixed exchange rates.

Over the following two decades, the global economy experienced grave problems. Oil-producing countries, especially the Arab ones, created a cartel, OPEC, and sharply hiked the world price for petroleum. The immense new wealth from these oil sales was sent to Western banks, whose officers could hardly imagine how to invest so much surplus capital quickly. They expanded their staff of bankers with inexperienced people whom they sent around the world to make loans wherever p05sible. Often such loans were inappropriate; without being investigated carefully, large sums were approved for dictators who had little practical knowledge concerning investments or development. In some cases, they immediately embezzled this money and sent it back to

Western banks, leaving the poor citizens responsible for paying the debt. Other loans were approved for ill-conceived megaprojects such as dams that would never pay for themselves.

In the West, the bankers encouraged farmers to borrow money to upgrade their machinery, anticipating that their yields would increase enough to repay the loans. In the Third World, bankers made loans that would increase the production of other commodities for export. Indeed, in most such cases the new machinery did result in increasing production, thereby increasing the total supply of the commodities on the world market. However, increasing the supply of any goods or services above previous levels had an effect that everyone should have anticipated: it lowered the price, so that producers might sell their bumper crop at prices yielding an even lower income that in previous years. In the West, many farmers defaulted on their payments and lost their land and homes. In the underdeveloped countries, the crisis was even more tragic.

In 1979, as commodity prices were collapsing, OPEC raised the price of oil again, prompting the industrialized countries to raise interest rates. This plunged their own economies into a recession, and had even more tragic consequences for Third World economies. The combination of higher oil prices, lower income from their commodities, and soaring interest rates created the famous "debt crisis" for most developing countries. During the decade of the 1980s, development stopped or was even reversed in a number of poor countries. Yet the citizens were obliged to continue paying off the loan or restructuring their debt to pay it off over a longer interval, paying interest on the interest. This means that the total amount of money a poor country has repaid sometimes far exceeds the amount that was borrowed initially, yet there is little prospect that the debt will ever be paid off entirely. The IMF became the mechanism for forcing the poor states to pay their debts; it imposed strict rules, structural adjustment programs, to enforce a reduction of subsidies on such social programs as health care and education-the projects that do the most to overcome poverty in the society.

During the same period, the rich countries, under the influence of neoliberalism, were reducing their direct financial aid to the poor countries and at home were selling off state-owned productive enterprises and privatizing services. Investment was taking the place of aid.

B. The Collapse of the Eastern Bloc

Nor were the socialist countries exempt from the crisis of the 1980s. Although it was not yet entirely visible, the Soviet economy was seriously falling behind, chiefly because of the inherent inefficiency of planning and the leaders' intention to gain military supremacy. However, part of the crisis can be attributed to the country's p0sition in the world's oil economy.

During the 1970s, when the Soviet Union was the world's largest oil-producing country, it benefited from OPEC's success in raising world oil prices. While the Soviet economy itself was becoming less productive, the oil bonanza enabled the Communist party to "paper over the cracks" in their crumbling economy. Had the leaders invested the windfall profits into their dilapidated agricultural infrastructure, perhaps their country's catastrophe might have been averted. Instead, they imported food, gave pay increases to workers, and diverted vast funds to the military sector, so as to be able to "project power" great distances around the world. This allowed the deterioration to continue.

In 1985 Mikhail Gorbachev came to power in the Soviet Union. Surprised by the hidden facts about the country's economic decline, he took steps to rectify the situation. Improving relations with the capitalist world, he was able to reduce military expenditures in favor of the domestic economy. However, at about that time world oil prices dropped. Defining Soviet revenues immediately disclosed the truth about the accelerating poverty of the country. Soviet farmers, in the absence of roads, silos, freezing equipment, and the like, were unable to provide a good diet to the urban population, yet few people realized the true cause of their predicament. Gorbachev's economic reforms were neither brilliant in conception nor successful in execution, but they were not to blame for the country's economic crisis, as most citizens supposed.

While losing credibility because of the economic collapse, Gorbachev was also facing an upsurge of nationalism. People throughout the Eastern European client states demanded autonomy, and during the autumn of 1989 were able to eject the Communist leaders and leave the Soviet bloc. Moreover, nationality groups within the Soviet Union itself were calling for the dissolution of the union. After a coup was attempted in August 1991, this disintegration accelerated. A referendum was held in Ukraine and when the citizens chose to leave the union, Boris Yeltsin, the president of Russia, which was then one republic within the union, called together the heads of some other republics and reached an agreement to dissolve the Soviet Union.

Few of the nationalists believed that the breakup of the Soviet Union would have serious economic consequences. They were mistaken. The union's economy had been planned, but the planning was not always wise. For example, a factory might be the only one in the entire USSR to manufacture its particular product. Its raw materials might be procured thousands of miles away, and its finished products might be shipped thousands of miles to other Soviet sites. In a market economy, the inefficiency of this kind of arrangement would have been recognized; competitors would have created several other factories and would have identified more profitable ways of buying and selling in local areas or across the borders of neighboring nations. The breakup of the Soviet Union severed many of these trade relations. As a result, the economies of all the newly independent countries suffered.

The economic, social, and political development of the societies suffered too. Already, before the breakup of the union, male life expectancy had actually been declining. After the breakup, mortality increased sharply for almost all sectors of the population, as also did such social pathologies as alcoholism, divorce, and crime. The erratic Russian leader, Boris Yeltsin, who lacked the vision and principles of his predecessor in the Kremlin, launched armed attacks against his political enemies in Moscow and in such places as Chechnya. It is fair to attribute the catastrophic collapse of Soviet society to two factors: nationalism and faulty approaches to development-overcentralization, rejection of the market economy, overemphasis on the military, destruction of the independent peasantry, repression, and the crushing of democracy and civil society. The combination of these factors intensified the negative effects of each one.

The switch to capitalism was hardly more successful than the efforts to reform socialism. Within a few years most productive enterprises throughout the former Soviet Union were privatized, without, however, generating funds for development. Corruption, crime, and disorganization were the order of the day. Taxes could not be collected and the new banks functioned virtually without regulation. In 1998 the collapse of the economy in Asia spread to other weak countries, including Brazil and Russia, where the local currencies plummeted in value. Some 20 million people worldwide suddenly dropped into poverty.

This "domino effect" convinced many economists that globalization had rendered all the world's national economies vulnerable.

C. The Future of Globalization

By the 1990s most political elites around the world had come to accept the market system-even countries such as China that are still officially Communist. It seemed that the expansion to international trade meant that neoliberalism had decisively defeated the policies of dependency theorists.

On the other hand, the weakness of the international system was increasingly apparent, and even orthodox economists agreed now that some of the following four changes would be necessary: (a) financial institutions must be regulated everywhere so that foreign lending institutions shall not be able to cut off borrowers in panic reactions when a crisis appears on the horizon; (b) substantial liquid funds should be ready at all times to pump into an economy if the market is suddenly collapsing; (c) the daily flow of short-term money into and out of countries should be reduced by new means; and (d) the Bretton Woods institutions should become more open, transparent, and governed by votes allocated on a basis favorable toward developing countries. One proposal aiming to reduce the transnational flow of capital was the so-called "Tobin Tax." Every trans fer of funds across national borders would be taxed, thereby discouraging such transfers while also generating revenues for the alleviation of poverty and the funding of global institutions, including the United Nations.

Having pointed out these proposals, we should nevertheless pay attention to some of the dissenting appraisals of the future. Public opinion now generally holds that globalization is a powerful, unstoppable trend in the world that is fast replacing the nations with a new form of transnational economics and governance. In terms of that analysis, all nationalists (including those with civic rather than ethnic loyalties) are living on a defunct ideology that time will reveal to be delusional.

This image of the future may prove correct, but it may be a mistake to regard it as inevitable. Certain indicators suggest that nationalism retains plenty of energy and that national states are still economically relevant in this globalizing world. Borders are far from meaningless, so far, and economic issues have not erased all other concerns.

Indeed, it is not even true, as widely assumed, that economic interdependence has risen to an all-time high. In the early 1990s, cross-border investments were no higher than in 1913. After World War II, international trade had collapsed and did not fully recover until about 1990.

Moreover, it is neither true that interdependence inevitably increases cooperation between states, nor true that the collapse of one market will pull the other markets down with it. After the Asian collapse, American and European markets flourished and hostility between states has not diminished. The leaders of every state remain more devoted to the economy and security of their own population than to the inhabitants of other countries. For better or worse, globalization has not yet superseded either nations or nationalism.


Is it true, as we so often hear, that "the gap between the rich and the poor is getting wider"? Yes and no. At an earlier time, during the 1960s and 1970s, the human population could be classified, without great distortion, into two groups: rich and poor. Today, however, it is more accurate to classify humankind into five groups of equal size, or "quintiles," ranging from the richest 20 percent at the top to the poorest 20 percent at the bottom. Over the last two or three decades of the 20th century, four of those five quintiles experienced improved standards of living, including such life changes as educational level, health, nutritional intake, and life expectancy. The lowest quintile, on the other hand, has experienced no such overall improvement and in many cases is worse off than ever before. The income disparity between humankind's top 4/5 and bottom 1/5 has widened, with that bottom group generally continuing to experience poor health, high infant mortality, widespread illiteracy, and lack of clean water or decent sanitation facilities.

If we make historical comparisons, the proportion of the human population living in such conditions of poverty is lower now than at any time in history. Because of rapid population growth, on the other hand, in terms of absolute numbers, the wretched of the earth are more numerous than ever before-as are also the numbers of affluent and middle-income persons. Perhaps the most remarkable change is the expansion of the middle class around the world-those individuals in the three middle quintiles, who belong neither to the richest nor to the poorest class. These people are experiencing considerable improvements, though not as many as the richest quintile, who are amassing a disproportionate share of the world's growing wealth. The income gap between the top and bottom quintiles of the world's population has doubled within a generation, primarily because of a grave and continuing deterioration of the economies in Africa. However, the gap is rapidly closing between the top quintile and the three middle quintiles. The real problem is the situation of the lowest quintile.

The good news is that, according to the United Nations Human Development Report 1998 (HDR 1998), a child born in a developing country that year can expect to live 16 years longer than a child born 35 years before. The infant mortality rate in such countries has been more than halved since 1960. Child malnutrition rates have dropped by a quarter. Combined primary and secondary school enrollment has more than doubled.

Some of the other news is neither intrinsically good nor bad. One such fact, as the HDR 1998 describes it, is that "only 21 developing countries worldwide achieved growth in GDP per capita of at least 3 percent each year between 1995 and 1997." On the other hand, these 21 are mostly Asian countries, and they include China, India, and Indonesia-three countries that alone account for almost half the human population. This means that economic growth during those years was usual rather than exceptional. It is misleading to portray poverty as the most common condition around the planet; if that were the case, we would not witness the astonishing degree of improvement in overall life expectancy and wellbeing that most human beings have experienced. Remarkable development has become normal and even expected. A majority of people live in Third World countries where the average incomes are growing much more than in the developed countries.

On the other hand, there are enormous inequalities and tragic levels of human suffering that could be corrected with better development policies. Humankind's poorest quintile has an inadequate diet and their children generally receive less than five years of schooling.

Before discussing the ways in which these disparities may be addressed, we should pay some attention to the methods used to measure development success.

National states are increasingly evaluated in terms of their success in meeting human development objectives. This has become most clearly expressed since 1990 in the annual publication of the above discussed Human Development Report, which rates every sovereign nation state according to its Human Development Index (HDI). This is a weighted measure of success in achieving human development in terms of three basic dimensions: longevity, knowledge, and a decent standard of living. It is measured by life expectancy, educational attainment (adult literacy and combined primary, secondary, and tertiary enrollment), and adjusted income. Though it does not reflect some important aspects of development, such as human rights and environmental protection, the index is probably the best single numerical value to use in portraying the level of development in different societies. With it, comparisons of scores can be made across almost all the countries of the planet, which in 1998 varied from a high index score of 0.96 for Canada to a low of 0.185 for Sierra Leone, a West African dictatorship that holds the lowest rating among all the 174 states examined for development success.

How do experts approach the issue of poverty?

Economic planners pursue development with two different goals in mind: (a) to reallocate the wealth within a society so as to make the distribution more equal, and/or (b) to promote rapid economic growth (usually by increasing the productivity of work through the introduction of new, improved technologies). Preferably both of these approaches should be combined; indeed, neither approach achieves fully satisfactory results alone without the other. Still, it is not clear how the two can be combined best, since the policies that most effectively foster equality often are not the ones that encourage economic growth-a fact that creates dilemmas for development planners.

Left-wing politicians have always emphasized the former strategy-the redistribution of wealth in favor of greater equality-and socialist countries were fully committed to that approach. When the Communist regimes fell in the late 1980s, it was largely because nowhere in the Communist world could one find acceptable rates of economic growth. Each socialist society did indeed divide its economic "pie" relatively equally among its citizens, but the pie remained small, leaving people frustrated with the size of their portions. Worse yet, because every Communist government owned and controlled its society's economic institutions, almost invariably it trampled on the democratic rights and freedoms of citizens.

Growth is not a factor that rational planners can afford to overlook. It is what determines the wealth of the society. Growth does not benefit everyone in the society to the same degree (which is why redistributive interventions are required to maintain some level of equality) but virtually everyone does benefit from it, whether they live inside or outside the country. Growth relieves poverty in the underdeveloped countries and provides outside traders with new business opportunities. As the developing countries become richer, they become new customers for the rest of the world. Developing countries are expected to account for two-thirds of the increase in world imports over the first two decades of the 21st century.

While Robert Reich was teaching at Harvard he sometimes asked his students whether they would prefer that the United States grow by 2 percent and Japan by 3 percent, or both countries grow by 1 percent. Most students preferred the latter option, since this would keep their country in its leading position, even if it grew slower. But actually, as Reich pointed out, for most purposes the country's absolute, not relative, rate of growth is most important. And absolute growth depends on the productivity of the domestic economy, which is generally greater in countries facing keen competition from foreign producers. In 1950, the United States accounted for half the world output. By the 1990s, it had fallen to less than a quarter of the world output, yet America had become far richer as its trading partners also became richer. In the future the rich countries will benefit from the growth of the Third World, which will become a vast market for consumer goods.

Despite this overall benefit, there are particular sectors in the rich countries that will not be happy about the growth of their competitors in the Third World.

Free competition in a global market forces some companies to close down and throw their workers into the ranks of the unemployed. However, so long as the rich countries have the higher productivity (as they will do if their educational levels, managers, and infrastructure remain superior), their workers will earn higher wages than those in developing countries. Although Americans real earnings grew more slowly during the 1980s, this was not because of foreign competition, but rather because of lagging American productivity.

Although we have emphasized the importance of economic growth, we must not exaggerate its value to the exclusion of concern about equality. Some countries have overemphasized economic growth and as a result they have problems of their own. The policy of focusing strictly on growth comes from the classical capitalist, neoliberal model of development. The vulnerability of that system became apparent in t997 and 1998 when the world's financiers panicked and caused economies to collapse in Asia, Russia, and Latin America.

Planning must therefore aim to balance the two strategies of development-both growth and equality-within a pluralistic, democratic framework. Democracy is no less significant than the question of balancing growth and equality.

Although development planners do not all place the same emphasis on equality, this is only part of the story anyway. What counts for even more is the political means by which equalization is carried out. For example, almost all Communist countries were remarkably egalitarian but their ruling parties used totalitarian methods to maintain their high levels of equality, thereby negating the benefits of that equality. In contrast, several East Asian economies achieved far more by combining the market mechanism with an active government that implemented land reform and expanded education and health care.

Instead of trying to equalize wealth directly, it may be a better development strategy to maintain a "floor"-a basic guaranteed minimum level of health, education, and social insurance-for all members of the society. Above that level, moderate inequality may still exist without necessarily being iniquitous. Moreover, a social safety net can be maintained in a democracy with a market economy, whereas only a system of state ownership can maintain high levels of equality as a direct political policy. This should be a serious consideration, since whenever the state owns most of the economy, the country is almost invariably totalitarian, with consequences even more painful for the people than poverty itself. Many left-of-center social scientists who favor democracy seek "a third way" in which there can be a role for both the state and the market. We shall return later, therefore, to a review of democracy's importance.


Whether carried out by capitalist or socialist methods, economic growth frequently has an undesirable impact on the environment, both by depleting natural resources and by polluting the air, water, and soil. Indeed, the lasting side effects of industrial production are so severe that many people have argued seriously that growth cannot be continued at the present rate into the next century without making the planet unlivable for successive generations of humankind.

Is development necessarily a self-limiting phenomenon? To address this question, in 1983 the United Nations created the World Commission on Environment and Development, which in 1987 issued its report, Our Common Future (commonly called the "Brundtland Report" because the commission was chaired by Gro Harlem Brundtland of Norway). The report concluded that it will be possible for economic growth to continue, bringing a decent living standard to earth's entire population, but only if great care is taken to choose technologies that neither deplete nor pollute the planet and its resources. The report thus brought into public discourse the notion of sustainable development."

A key concept in discussing sustainability is the so-called "carrying capacity" of a particular region that is home to a population of living beings. One may ask, how many people can the earth support over a long period? How many people can inhabit a particular country over many generations? United Nations demographers project that some 9.5 billion human beings will inhabit the planet in the year 2050, and that this total will probably not increase significantly thereafter. Whether the world can support 9.5 billion people depends in part on the standard of living that the word "support" implies. Humankind cannot continue living as we do now for the next 50 years, but as we make the necessary changes, probably some of them will seem to be improvements and others will seem to amount to a qualitative deterioration. Meat-eating, for example, will probably become uncommon; while some may celebrate this change as a step forward, others may consider it a hardship.

When we consider pollution, we find that generally the poor countries actually create more of a mess in the global environment than do the developed ones. However, the rich countries consume far more than their fair share of the world's natural resources.

The concept of "carrying capacity" implies that it is a fixed and unchangeable limit. In fact, the prevailing technologies determine the amount and quality of products that the land can yield. Innovative human decisions increase the carrying capacity of the land, just as unwise human decisions deplete it. While the carrying capacity must have some upper limits, no one can say now what those limits may be. Can we learn anything about our future prospects by examining the past?

A. The Collapse of Past Civilizations

Historically, it seems that depletion is not a rare outcome. The decline of past civilizations does not allow anyone to be sanguine that humankind will recognize the nature of our problems and change quickly enough to solve them. Though we hear today about the destruction of the Amazon rain forest, according to Clive Ponting we have forgotten that 95 percent of western and central Europe used to be forest, whereas today it is only about 20 percent forest. This deforestation accompanied the growth of the population, for people can he fed only by farming, which inevitably disrupts the natural ecosystem and may result in a depletion of environmental sustainability.

Collapses of carrying capacity caused the fall of empires elsewhere, as in Mesopotamia, where agriculture was developed. Population growth required farming based on irrigation, which brought salt to the surface where evaporation left it in thick layers. If population pressure had been less, the land could have been left fallow for years at a time to restore its fertility, but this could not happen. Soil salinization increased. According to Ponting, by 2000 B.C.E., the earth turned white and no wheat could be grown. A large bureaucracy and army could not be maintained, so the city state became vulnerable to Babylonian conquest.

The Mediterranean region also fell into ecological disaster as a result of population growth. Originally the region was a deciduous forest, but the land was cleared for farming and flocks of animals limited the vegetation to scrub brush, eroding the agricultural land and allowing silt to erode and block the water courses. Asia Minor, Greece, and Italy today are mostly treeless regions; Rome itself is surrounded by deserts that were created by human decisions.

The great stone monuments left by the Mayan civilization of Central America, which developed in the tropical jungle from about 2500 B.C.E., have often puzzled historians. At least one Mayan city may have had a population of 50,000 inhabitants. Extensive terracing was built to support raised fields that were intensively cultivated. Unfortunately, before 800 A.O. the population had outstripped agriculture and skeletons from this period onward show signs of malnutrition. Conflicts intensified between cities, with increasing warfare. With increasing death rates, the population collapsed suddenly and it became impossible to maintain the huge stone monuments of the civilization. Here too, a great society rose and then fell. We should not take it for granted that our own civilization will maintain a more stable relationship with the environment; success will depend on the anticipation and wise implementation of necessary changes. Let us consider some of the solutions economists suggest for these problems.

B. Externalities and Unsustainability

Many economists are occupied with the search for incentives to reduce pollution and waste so as to make development more sustainable. A concept of explanatory significance in this discourse is that of "externalities." When a product is manufactured, the producer must normally include all the costs of production in the selling price. If, however, some of those costs can be passed on to other persons, this will of course benefit the manufacturer's profits. For example, if the waste products of a factory can be dumped into a neighbor's backyard or into a river instead of being trucked away to be incinerated or buried, the company will gain a competitive advantage. These costs still will have to be borne by someone-the neighbor whose backyard is contaminated or the town downstream whose drinking water will have to be purified. Such costs are not only financial. For example, the prevalence of asthma or cancer in a community subjected to pollution is a cost that might be avoided if the contaminants had been captured and disposed of in a safe manner. The term "externalities" refers to any costs (or sometimes benefits) of production activities that are borne by society in general or by individuals other than those engaged in the manufacturing, supplying, or consuming of the product. To illustrate, consider that electricity can be generated in a variety of different ways-including water power, coal burning, and nuclear reactors. However, some power companies may be able to fob some of their costs off onto taxpayers, their workers, or even the inhabitants of adjacent countries. For example, though nuclear power plants do have to pay for their reactors, their uranium, and their workers' salaries, they do not include the cost of disassembling the reactors after they become obsolete or of keeping the radioactive waste products safely hidden underground for 10,000 years. If such externalities had to be included in the price paid

by consumers for electricity, then nuclear power would be too expensive to compete with other sources of electricity, such as dams, coal furnaces, wind power, or solar power.

Environmental economists all recommend that the producers be required to reassume the obligations of all the externalities involved in the manufacture and distribution of their product. They will then, of course, pass those costs on to the consumers, who will compare the prices of various alternatives and in so doing allow the market mechanism to enhance efficiency and environmental sustainability. The most popular way of "internalizing" the externalities is to levy taxes and fines on those who have previously been avoiding some of the costs of doing business. For example, some places have begun to impose a "carbon tax" on all organizations and individuals (such as car owners) in proportion to the fossil fuels and carbon dioxide that they spew out. If externalities are eliminated, the market will foster environmental sustainability.

C. Militarism and Sustainability

According to the Brundtland Report, one challenge that contemporary global civilization must meet if it is to develop in a sustainable way is the problem of "militarism"-the practice of spending large portions of a national budget on weapons and military units. Militarism is both a cause and an effect of developmental failure, which means that it is a vicious cycle. Underdevelopment causes militarism, and militarism causes more underdevelopment, creating a downward spiral of mutually reinforcing bad consequences. It is worth devoting attention, then, to the causal connection between underdevelopment and militarism. We could start the discussion from either end, militarism-as-cause or militarism-as-effect of underdevelopment, so let us arbitrarily choose the former.

Militarism causes problems for the implementation of development primarily by diverting urgently needed resources away from projects that would contribute valuable benefits to society. Throughout the Third World, in the last 30 years military spending has risen three times as fast as in the industrial democracies. In 1990, developing countries spent 5.5 per cent of their GNP on the military, compared to a combined 5.3 per cent on education and health. These nations have eight times as many soldiers as physicians. However, some countries, especially in Latin America, Eastern Europe, and the former Soviet Union, have scaled back these expenditures.

Militarism also directly harms by polluting the environment and depleting scarce natural resources. For example, about one-quarter of the world's jet fuel is used by armed forces. The U.S. military is the largest consumer of oil in the world. In one year it purchased enough oil to run all of the U.S. public transit systems for 22 years.

Globally, the military use of aluminum, copper, nickel, and platinum is greater than the entire Third World's demand for these materials. In the United States, approximately 100,000 square kilometers, or the equivalent of the entire state of Virginia, are allocated to military use. The world's military forces are responsible for the release of more than two-thirds of the chemical CFC-1 13 into the ozone layer, where it accounts for 13 percent of the overall ozone depletion. And when it comes to global warming, the total release of carbon dioxide as a result of military activity may he as high as 10 percent of total global emissions. It is hardly necessary to cite additional statistics before concluding that sharp cutbacks in military expenditures may be the most promising place to make a real contribution to humankind's breakthrough to development.

It is chiefly nationalism that prompts national governments to pay out these huge sums to maintain their armed forces. Nationalism has these effects in two ways:

(a) as civic nationalism it supports power struggles between countries, and (b) as ethnic nationalism it stimulates groups within the country to challenge the state in hopes of gaining a state of their own. Thus we must recognize both forms of nationalism as serious threats to socioeconomic development.

Now let us consider the other half of the vicious cycle equation-that militarism can also be an effect of underdevelopment. As Thomas Homer-Dixon has shown, underdevelopment, with its prevailing scarcity of renewable resources, can produce conflict, instability, large and destabilizing population movements, racial and ethnic tensions, and threats to political and social institutions. Governments generally try to manage these problems by maintaining strong military establishments; therefore, the usual consequences are militarism and increasing levels of violence.

To avoid warfare and civil strife, societies facing resource scarcity can adapt in two possible ways: either use their resources more efficiently or lessen their dependence on such resources. Both of these responses are intelligent approaches toward development, and both require social and technical ingenuity, says Homer-Dixon.

Of course, militarism is not just linked to underdevelopment, for even rich countries may depend on their military prowess and become aggressive superpowers. However, whatever reduces militarism and the dependence on scarce resources tends to make development more sustainable. Toward that end, former president of Costa Rica and 1987 Nobel peace prize laureate Oscar Arias Sanchez is promoting an "International Code of Conduct on Arms Transfers." It stipulates that any country wishing to purchase arms must meet certain criteria, including the promotion of democracy, the protection of human rights, and transparency in military spending. It would also prohibit arms sales to nations that support terrorism and to states that are engaged in aggression against other nations or peoples.

Finally, we should note the close connection between dictatorship and militarism. High military expenditures are characteristic of military dictatorships. Burma devotes 6 percent of its GNP to the military. Its ally China, whose People's Liberation Army fires upon its own people, has 5.7 percent of its GNP directed toward defense-more than it spends on health and education. Oil-rich Brunei spends fully 6 percent of its GNP on the military. Its neighbor, oil-rich Malaysia, spends 4.5 percent of its GNP on the military. We shall understand these facts better when we review the connections between oil wealth and dictatorship.


Writers referring to "development" often have in mind only the economic aspects of a society's development, for in fact the problems of Third World countries are mainly the result of poverty, and the challenge is largely one of bringing economic well-being. Nevertheless, a society's political development is also immensely important, both because it impinges upon economic development and because participation in political decision-making is fulfilling in itself. The development of an up-to-date political system is often called "modernization," but the ideals behind it were articulated more than two centuries ago.

A. Democracy and Civic Nationalism

The ideal of natural rights and social contract theory was not realized during the lives of the philosophers who shaped these democratic dreams. Even the United States, which in the 18th century loudly proclaimed these goals in its founding constitutional documents, fell short of institutionalizing full political participation for all adult inhabitants. The United States did not achieve full civil rights for its black and Native American minorities until almost two centuries after its declaration of independence.

Both Martin Luther King and Abraham Lincoln can be understood as American champions of civic nationalism, which promoted the extension of full political rights to all citizens. This humanistic type of nationalism contrasts sharply with various antidemocratic exclusionary ideologies based on white supremacy, which in the United States ranged from the separatist Confederacy to racist states' rights movements.

Europe had an even rockier road toward meeting the liberal democratic ideals that emerged in the 18th century. The democratic revolutions of the late 18th century could be considered the first wave of global democratization, but did not establish enduring democratic regimes. In France early efforts in the revolution to establish democracy were marred by widespread human rights abuses known as the Reign of Terror. By 1798 democracy in France became replaced by the military dictatorship of Napoleon. A similar disaster followed the second wave of 1848 in France, Prussia, and throughout the Habsburg Empire, as a new wave of authoritarianism enveloped Europe. A third democratization wave after World War I in eastern and central Europe was largely snuffed out by 1940 by the combination of the rise of fascism and German armies.

Exclusionary ideologies-ethnic nationalism and political extremism-long delayed the progress of democracy in Europe. Fascist movements, through which various ethnic groups sought to gain control over states, were the dominant barrier to democracy. Sometimes (such as when the Hitler-Stalin pact was functioning) these fascist groups would collaborate with Leninist authoritarians, who sought to confine political participation to an elite vanguard party.

Despite these setbacks, democratic norms eventually became universal in western Europe with the end of the last dictatorships in Europe west of the Iron Curtain:

Portugal, Greece, and Spain. With the fall of the Iron Curtain, democracy has spread eastward. Although a wave of military dictatorships from 1964 to 1980 engulfed almost all of Latin America, the democratization of the Western hemisphere is nearly complete. Democratization has also made major inroads in Africa, South Asia (where all the successor states of British India are recognized as semidemocracies), and the Far East. What are the causal relations among development, nationalism, and democracy?

B. The Connection between Democracy and Economic Success

In 1959 Seymour Martin Lipset published an article that became a central element of modernization theory. In it he pointed out that "democracy is related to the state of economic development. The more well-to-do a nation, the greater the chances that it will sustain democracy.

Although his thesis has been debated at great length over the years, it has stood the test of time and Lipset's own further research on the topic, which he summarized in a 1993 article, "The Social Requisites of Democracy Revisited." Note that he does not claim to be describing the prerequisites of democracy, since it is clear that democracy sometimes comes into existence in poor countries. Lipset's point is that the continued survival of democracy under such conditions is less likely than in more economically developed countries. However, sometimes a "premature" democracy does survive, and he argues that it does so mainly by promoting other conditions that favor democracy, including universal literacy and a pluralistic civil society. Later we shall review some cases that illustrate this point: Costa Rica and Kerala, India.

Extremists of both the left and the right tend to disparage the connection between democracy and development. On the left this is done by Marxist dependency or world systems theorists, who maintain that wealthy countries deliberately extract income and resources from poorer states. These theorists have advocated socialist revolution as the main prerequisite to effective development. Empirical research over the past decade or two generally fails to support that notion, however, whereas it does support Lipset's observations.

One of those substantiations of Lipset's thesis can be seen in the "Map of Freedom" prepared by the human rights organization Freedom House, which reveals the strong connection between economic success and democracy. Most full democracies, or "free states," are the higher-income nations; the list of"partially free" nations encompasses the world's medium-income nations; and most "not free" totalitarian states are the lower third of underdeveloped nations. Generally the richest countries in the world are democracies, while the nations that suffer the greatest human misery are dictatorships.

Whereas Lipset considered economic development as an independent variable that affected the prospects for democracy, other analysts have reversed the hypothetical direction of causality, seeing democracy as an independent variable favoring economic development. Thus democracy and economic development seem to form a mutually reinforcing, self-sustaining pattern. One fact that illumines that systemic relationships is the connection between famine and political system.

C. The Connection between Famine and Lack of Democracy

Theorists of both the Marxian dependency school and of the right-wing Chicago school of economics tend to ignore the connection between famine and the absence of democracy. The Nobel laureate development economist Amartya Sen asserts that in the terrible history of famines in the world, no substantial famine has ever occurred in any independent and democratic country with a relatively free press. This has been exhibited in various nations ruled by antidemocratic ideologies of the extreme right and left. For a government to tolerate mass starvation in a democracy is an act of political suicide, even in the most imperfect of semidemocratic states.

In the late 1990s famine is largely confined to war-torn Sudan, one of the world's worst human rights violators. International observers are frequently barred from the most famine-stricken areas, so that Western television screens will not create political outrage by showing mass starvation.

In west sub-Saharan Africa in the 1970s and 1980s, drought engulfed democratic Botswana and Zimbabwe and also authoritarian Ethiopia, Somalia, and Kenya. Death and starvation did not rise, however, in democratic black Africa. Government famine relief efforts were so effective in Botswana and Zimbabwe that the incidence of illness from malnutrition actually declined.

As Amartya Sen has also shown, famines do not necessarily occur in places where there is a shortage of food. (Sometimes, indeed, food is being exported from the country while the famine is going on.) In such cases, the reason for the famine is an insufficiency of purchasing power by the masses, often resulting from disastrous levels of unemployment or other economic hardships.

Famine ended in India with independence and democracy. The British had famine codes to eliminate hunger through public works projects to provide income to those made unemployed by crop failure. Unfortunately, the lack of democratic pressure on British rulers had kept these laws from being enforced before starvation began. One example of the effect of undemocratic British rule in India was the Bengal Famine of 1943. This took place during World War II when fundamental civil liberties were suspended. It resulted in 3 million deaths.

Although India has had similar problems of food disruption since democracy and independence, these have not resulted in famines because of the enforcement of British-developed famine codes which provide public employment such as road building during crises.

Democracy is one of the best antidotes for irrational economic policies. This was not available to the victims of the laissez-faire capitalism in Ireland in 1833, of Stalinist and Maoist collectivization of agriculture, or of the current Islamic fundamentalist genocide and ethnic expulsions in Sudan. Such antidemocratic manias, based on exclusionary ideologies such as Leninism (with its exclusive vanguard party) or religious extremism, could not survive the vengeance of the ballot box. Although the Irish famine took place in a liberal United Kingdom, those suffering from starvation could not vote. The famine victims in Ireland or Bengal and those who were slaughtered from the ideological extremes of Mao's China and Stalin's Russia had one thing in common: they had no opportunity to select their political rulers every few years, by fair and universal suffrage and the secret ballot.

D. The Connection between Democracy and Nationalism

Despite the numerous excellent reasons for developing countries to adopt democratic systems of governance, we must not overlook certain potentially negative results. In the 1980s and 1990s when formerly socialist countries have been democratizing, there has been a rash of ethnic nationalist movements around the world. The reasons for this are worth considering further. One simple account suggests that democracy allows people to express nationalistic sentiments that may have been present all along but previously suppressed by dictatorial rule. While this may be true, it is probably not a full explanation for the events of recent history. In many cases, the new nationalist movements seem to have been nonexistent shortly before. To the extent that this is true, we have to ask why citizens become preoccupied with their ethnic identity just when their state is undergoing dramatic changes.

Some astute observers argue that nationalism never appears spontaneously as a grassroots movements. When it erupts onto the political scene, it is always the result of manipulation by political leaders who have something to gain from it. Even so, their effort to whip up intolerance would not succeed if their people were not searching for some new ideology or political realignment. When people who have lived most of their lives under Communism (or any other collectivist ideology) are suddenly deprived of an enemy, they may find it hard to adjust to a system of pluralism and mutual tolerance, but may seek instead some new doctrine that will tell them whom to blame for their problems. Zarko Puhovski, a Croatian writing about the crisis of the former Yugoslavia, says that "ethnonationalism was almost tailor-made to replace the old ideological schema." The leaders of several republics within the former federation of Yugoslavia seized the opportunity to promote a new set of enmities that gave them each a power base. Nor was Yugoslavia alone in this; leaders in other countries throughout the Soviet Union and its satellite states saw the same way of creating states in which they could continue as dictators by using some of the instruments of democracy in states where citizens have been accustomed to centralized, unaccountable forms of governance.

Thus democracy opens opportunities for ethnic nationalism and separatism. This is true even in affluent Western societies with a strong tradition of parliamentary democracy, such as Quebec, Scotland, and Belgium. In most cases, the conflicts that are created are resolved without resort to war (and in well-established democracies, without resort to secession), but where wars do take place, they can be remarkably violent

E. The Connection between Democracy and Peace

We should mention another reason why leaders of a developing country would be well advised to establish democratic political institutions: democracy brings peace-at least peace with other democratic countries, which in the present age cover a sizable part of the world. Long-term, rigorous comparative studies have established a remarkably robust finding: democracies do not make war against other democracies. It is true that democracies go to war with dictatorships. It is also true that democratic states sometimes exert hard pressure against other democracies without actually going to war. It is true that dictatorships go to war against each other and that dictatorships that are beginning their transition to democracy (e.g., Yugoslavia, Cambodia, and Russia) also sometimes go to war. But what has not yet been seen is a war between combinations of well-established democratic states.

Moreover, in a study of all independent countries from 1950 to 199~, it was found that no civil wars have taken place in democratic states during that period, whereas 90 percent of dictatorships have experienced civil wars. The explanation for this difference is obvious. Why would any group launch a war to control a state, involving the deaths of a thousand people or more, when they could pursue their goals peacefully through electoral participation?

Democracy also offers some protection against the crimes against humanity that are usually connected to intense civil conflicts. As Dean Babst and William Eckhardt have noted, of the 119 million victims of genocide in the 20th century, virtually all were killed in non-democracies, especially in totalitarian states. The reason is obvious. Democratic governments would be far less likely to kill their own people than dictatorships because they depend on their votes on election day. Democratic government protects human rights so as to prevent such disasters from happening.

During the 42-year study, only 23 percent of all democracies participated in foreign wars, as contrasted to 72 percent of dictatorships. The body of research on the relationship between democracy and peace is sound and amazingly convincing.

Everywhere in the world today, most national leaders at least pretend to value democracy, and in many cases they really do.

F. Oil Wealth as a Barrier to Democratization and Development

The triple evils of oil, dictatorship, and militarism are critical reasons for underdevelopment in the Third World. Oil dictatorships frequently spend two or three times more on their military systems than on health and education. The bulwark of antidemocratic movements around the world is the oil-rich Middle East. This region has recently expanded to include the most authoritarian successor states of the former Soviet Union, where movements for democracy are weak.

Petroleum wealth serves to disguise the relationship between development and democracy. More than 83 percent of the world's high-income countries have democratic regimes. The only exceptions are the Persian Gulf oil states, whose petroleum revenues vastly overstate their actual levels of development. Outside of the Persian Gulf, Singapore, a semidemocracy, is the only high-income country that is not democratic.

Oil wealth is the strongest barrier to democratization and development in the post-Cold War world. Military expenditures are rising only in areas involving disputes over oil, such as the South China Sea and the Persian Gulf. Most wars involve the interventions of oil-rich powers or dictatorships financed by great petroleum wealth.

The Middle East has almost half the world's remaining dictatorships and three-quarters of its oil. Of the world's 1,018,849,419 bbl in oil reserves, about 750,000,000 are in the Middle East. Of the 29 states in the Middle East, Freedom House ranks 22 as not free. This means that three-quarters are full dictatorships. In the region, only Israel, with no oil, is a full democracy. Five states--Turkey, Morocco, Kuwait, Jordan, and the Kyrgyz Republic--are partly free. Of these semidemocracies, only Kuwait is a substantial oil exporter.

The Middle East is the largest buyer and consumer of lethal arms in the Third World. The region's arms expenditures have come to $100 billion annually during the 1970s to 1990s. Over 13 million people have been killed, wounded, disabled, or displaced by various armed conflicts in the Middle East since World War II. Oil wealth sustains brutal civil wars in Algeria and Sudan, and the complex battles in the Kurdistan region divided among Turkey, Iran, and Iraq.

The contrasts between democracy and dictatorships in terms of development are even more exact when comparisons are made on the basis of HDI instead of per capita GNP. Many democracies rank significantly higher in terms of HDI than they do on per capita GNP-especially Chile, Costa Rica, Uruguay, Mauritius, Jamaica, the Dominican Republic, and semidemocratic Sri Lanka, which have no oil. The quality of life, in terms of life expectancy and literary, for the citizens of these largely democratic countries is far beyond what would be predicted purely by their levels of economic development.

Democratic nations do better in translating their income into human progress. Oil dictatorships perform very poorly in managing and distributing their economic growth for human welfare. Democratic Chile, Jamaica, Costa Rica, and Sri Lanka, although having lower per capita income, all outperform the oil-rich repressive states of Oman, Algeria, Gabon, Saudi Arabia, Cameroon, and the United Arab Emirates.

There is no necessary link between economic growth and economic progress. Costa Rica and Chile have shown that democratization can foster human progress surprisingly quickly and without rapid GNP growth. Apart from failed states such as Somalia, most developing countries are not too poor to pay for human development and take care of economic growth. Heavy' investments in female literacy, for instance, are one of the reasons for the success of Botswana, Zimbabwe, Costa Rica, Chile, and Uruguay as low-income democracies. These investments have produced lower fertility, reduced infant mortality, improved family nutrition, and lowered population growth.

The dictatorships of Yemen, Afghanistan, and Sudan all are either substantial oil producers or are allied to oil-rich powers such as Iran. Despite heavy casualties from severe civil wars, these nations have the highest population growth rate in the world, a problem perpetuated by widespread female illiteracy.

By comparing Oman and Costa Rica we can see a vivid contrast between the ability of a dictatorship and a democracy to use resources for human development. Oman, like most of the lightly populated oil-rich dictatorships of the Persian Gulf, has a relatively high level of per capita income. According to the Human Development Index's statistics for 1998, it was $9383. Costa Rica, in contrast, had only a per capita income of $5969.

Nevertheless, Costa Rica has a far better ranking in terms of HDI; it is ranked 34th among nations, whereas Oman is 71st.

Costa Rica, which has no army, has one of the lowest levels of security spending in the world-only 0.3 percent of its GNP. Oman, like most oil-rich dictatorships, is highly militarized. Its defense spending is 15.1 percent of its GNP. Reducing military expenditure in favor of spending on literacy and public health is one of the simplest and most effective ways for low-income democracies to improve human welfare.


A. Civic versus Ethnic Nationalism in India

So far we have compared certain countries, but it is instructive to notice as well that different regions of the same country may have quite different levels of development. A comparison of the various regions of India illustrates this point. In general, India has not been particularly successful in reaching its development goals; in 1998 its Gross National Product per capita was only $1422. But if we compare different states and regions within the country, we find patterns that confirm our observation that civic nationalism is a key factor in promoting economic development and constructive forms of redistribution.

Although the states of India do not have sovereign control over foreign policy, trade, and defense, as independent states do, they differ remarkably in their levels of human development. Civic nationalism is stronger in the south. Politics in the north is largely driven by the politics of ethnic nationalism and antidemocratic exclusionary ideologies. Some northern Indian states do not even spend all the funds available to them from the national government for health care and education, whereas the southern states have minimized poverty and underdevelopment through well-managed public policies.

Contrary to the views of dependency theorists, who encourage autarkic policies to escape from capitalist world trade, draconian measures are not needed to obtain major improvements in human development. The successful southern states of India have not challenged the world capitalist division of labor; one reason is that they could not adopt such measures as tariff barriers. They have, however, achieved a higher standard of human development by combating poverty through redistributive means. Policies of land reform, literacy, and improved health care do not require anyone to challenge global capitalism.

The contrasts in the level of human development in the various states of India are enormous. In no country in all of sub-Saharan Africa or the world are the infant mortality rates as high as the district of Ganjam in the northern state of Orissa. A similar pocket of underdevelopment is the district of Barmer in the northern state of Rajasthan. It has the world's lowest rate of female literacy, only 8 percent. In this state as whole the female literacy rate is only 20 percent. Combined, the populations of these districts exceed those of Sierra Leone, Nicaragua, and Ireland. Even entire states in northern India, most notably Uttar Pradesh, which has a population equivalent to Brazil and Russia, are about at the same level as the worst states in sub-Saharan Africa in terms of human development.

Unlike sub-Saharan Africa, the development problems of northern India have not been caused by war, military rule, famine, or declining rates of economic growth. What are critical are severe gender inequalities, especially widespread female illiteracy. This is a key developmental failure shared by both most of sub-Saharan Africa and northern India. In both regions only about half the people are literate, and most of these are male.

Gender inequality is worst in the northern state of Haryana, which has some of the worst conditions for women in the world. The number of women per 1000 men is only 865. Only 41 percent of the female population over the age of seven is literate.

Female literacy patterns account for the remarkable difference in fertility between the southern Indian state of Tamil Nadu and northern Uttar Pradesh. Tamil Nadu's fertility rate of 2.2 is a similar order of magnitude to the United States and Sweden. In contrast, Uttar Pradesh has a fertility rate of 5.1-one of the highest in the world. Very few countries have such a low female to male ratio as this northern Indian state. Only 10 percent of villages have medical facilities here. Some 68 percent of female children between 12 and 14 in Uttar Pradesh have never been to school.

While southern India in general has a better record in human development than northern India, the most remarkable success has been obtained in Kerala. This state of 30 million people on the southwestern tip of India, about half the size of Ireland, has a remarkable record of effective redistribution policies influenced by civic nationalism. Whereas in Kerala 92 percent of births are preceded by an antenatal checkup, for Uttar Pradesh this figure is only 30 percent. UNESCO recognizes Kerala as achieving 100 percent literacy, accomplished by a voluntary organization, Science for People, KSSP which focused on adult illiteracy. Artist groups performed street plays and sang, encouraging people to sign up for classes on literacy, nutrition, health, how to read a clock, gender equality, and the need for clean water.

Kerala's life expectancy of 72 years is remarkably better than the average of 60 years for India, despite its lower-than-average GNP per capita. One recent innovation was giving pregnant women folic acid supplements. This resulted in a 36 percent decrease in first-year infant deaths. Uniquely in India, 100 percent are vaccinated against child tuberculosis, polio, and whooping cough. Mothers in Kerala always breast-feed their children for at least six months.

Kerala's birth rate has dropped to its replacement level. Although HDI figures are not available on a sub-national basis, Kerala does well on a similar indicator, the Physical Quality of Life Index (PQLI). Kerala's score exceeds that of the most prosperous African state, including oil-rich nations. Kerala's life expectancy is far better than the Asian "tiger states" that have per capita GNPs many times larger. Kerala's success, primarily achieved through land reform, education, health care, and social services, illustrates the hope for lower-income nations based on democratic reform.

Kerala is governed by a disciplined, honest, democratic, reformist Communist party with strong roots in civil society. It has met development objectives without political violence or repressing human rights. Communism in Kerala was modified by Christian and Gandhian reformers. Kerala's location on the seacoast helped expose the region to new varied cultures. About 20 percent of the Keralans are Christian.

The state of Kerala did not exist at independence, but was created as the result of a social movement that did not champion separatism. One year after the creation of the state of Kerala in 1956 came the election of the first Communist state government with roots in KSSP, the trade union movement, occupational groups, and environmental organizations.

Kerala's civic nationalism is in vivid contrast to the ethnic communal violence in much of India. Ethnic nationalism has been countered in Kerala by the secularist KSSP; which ridicules appeals to bigotry through street theater. Unlike one-party Communist states, Kerala did not use police power to repress its critics, who also respected the democratic rules.


In examining the relationship between nationalism and development, we have found these two factors embedded in a larger system, so that the causal connections between them are mediated by other factors-especially the presence or absence of democracy. We have also needed to distinguish between various types of nationalism-civic and ethnic-and of development-sustainable and unsustainable. At present, ethnic nationalism seems to be a greater threat to peace, security, and development than civic nationalism.

Sustainable development can be attained only when waste and pollution are reduced, and we have found that the military is the most practicable place in which such reductions can be made. But militarism is causally linked to national security and to the civic nationalism that animates the desire to project military power. Militarism today is also fostered by the prevalence of separatist movements based on ethnic nationalism that threaten existing states and prompt national leaders to purchase arms to put down insurgent movements. Thus it seems that development can be sustainable only when nationalism is minimized.

Democracy is closely linked to socioeconomic development; rich countries have far more favorable prospects of maintaining democracies than poor countries, though poor countries also need democracy because it is a condition that tends to strengthen economic development.

There is another sense in which the type of economy prevailing in a particular country influences the prospects for sustainable democracy. If the country derives substantial revenues from oil, it is very likely that a dictator can gain control of the resource and prevent the emergence of democracy. The search for alternative energy sources is important, therefore, not only because oil is not a sustainable technology, but also because it perpetuates the existence of dictatorships. And dictators rarely meet the developmental needs of their people in such matters are health care, education, gender equality, technological advancement, and the flourishing of civil society.

The most widely accepted approach to development today is based on participation in a globalized market economy. This approach may or may not be compatible with the reduction of resource consumption required for sustainable development. If the market is to encourage care for the environment, the most promising way to effect this is by internalizing the externalities that polluters are now able to evade paying for as a regular cost of doing business.

Next let us reappraise the usefulness of the three theoretical accounts of development mentioned at the beginning. Modernization theory anticipated that the advance of technology, education, and urban living eventually would replace the varied traditions of the past with ways of life that are more alike. The global citizenry would share secular, rational, pragmatic attitudes and become prosperous, worldly wise, democratic, politically effective, and participatory. All the varied cultures could be expected to converge into a unified "Western" or "universal" one, making it easier for people to cooperate with each other as they participated in the same worldwide society, regardless of where they live.

In contrast to this image of the future there was a gloomy one shared by dependency theorists, who did not expect much economic development, even though people in the remote corners of the world were being drawn into a single system in which the "haves" of the world could be expected to exploit the "have-no ts" and become prosperous at their expense. The wretched of the earth would have little recourse. If any advice could save them, it would be to stand aloof from the international capitalist market system and produce only for a local, domestic economy.

Finally, the neoliberal theorists expressed no grave misgivings about the workings of an increasingly globalized capitalist system. For them, development could come only by participating successfully in an internationally organized market system in which there would be little regulation by national governments. Growth, the result of this success, would confer such prosperity on the winners that even the poorer members of the winning societies would have a share of the booty. The heyday of neoliberalism has been recent, for most development planners even now continue to recommend this approach, though the negative aspects have been more apparent since a collapse of markets in t997 and 1998.

Where do these old controversies stand in the new millennium?

Dependency theory has probably lost the most credibility of the three models over the years. It seems clear now that some societies do develop, and when they do, it is usually by successful participation in the globalizing market. The policy of autarky is bankrupt. Likewise, the Marxian dependency theorists' tendency to minimize the importance of democracy in development is seen today as a mistake. On the other hand, their aspirations toward egalitarianism remain an eminently defensible position-so long as the means of its pursuit are compatible with democracy. Development is fostered by guaranteeing at least a "floor"- certain minimum standards of social opportunity in education, health care, gender relations, and employment whereby ordinary people can find their way toward their own goals. It is also widely agreed today that there are valid roles for both government and private initiative in creating those opportunities, even if there is little certainty about what the optimum balance may be.

Neoliberalism, so recently celebrated, has lost its commanding authority with the rediscovery that the global marketplace is a dangerous place when trade and finance are inadequately regulated. However, although the G8 leaders are developing plans for regulating the international economy, the plans remain untested.

On the other hand, some aspects of the model remain credible. For example, a Nobel laureate economist, Amartya Sen, has noted that the success of East Asian economies is now well understood, and they include several neoliberal principles.

There is by now a fairly agreed-upon list of "helpful policies," and they include openness to competition, the use of international markets, a high level of literacy and education, successful land reforms, and public provision of incentives for investment, exporting, and industrialization. There is nothing whatsoever to indicate that any of these policies is inconsistent with greater democracy, or that any one of them had to be sustained by the elements of authoritarianism that happened to be present in South Korea or Singapore or China.

Sen, 1997

Finally, many observers have a renewed respect for modernization theory, which had never underestimated the importance of democracy and support for human rights. To concentrate on economic incentives alone (as both neoliberals and dependency theorists tend to do) while ignoring the political incentives provided by democracy is to seek development by inadequate methods.

Yet not everyone has accepted the universalism that modernization theorists envisioned. Samuel P. Huntington denies that societies are converging toward a common culture as they develop. Instead, he maintains that there are still alive about six major cultural traditions that are distinct enough to be considered as separate "civilizations." These are Western (based on Protestantism and Catholicism), Orthodox (in Russia and Eastern Europe), Islamic, Hindu, Sinic, and Japanese. In addition, he maintains that two other cultural areas-Latin America and sub-Saharan Africa-almost (but not quite) qualify as major civilizations. Instead of projecting a future in which the differences between these traditions diminish, Huntington anticipates an increase in rivalry between them-an increase in exclusionary ideologies. Indeed, the nationalistic conflicts of today

are supposedly manifestations of this trend, which will by no means decrease in the years ahead. The cultural differences between them may make them politically incompatible. Huntington supposes that the Islamic and Sinic (Chinese) civilizations, which have no history of democracy or human rights, will pose a military threat to Western societies.

To be sure, there are many concerns in the West about antidemocratic Islamic fundamentalist movements in the Middle East and about the refusal of some Far Eastern governments to commit to the Universal Declaration of Human Rights. Indeed, some of the "tigers" of Asia that developed their economies so rapidly have independently come to a position similar to Huntington's. For example, Lee Kuan Yew, the former prime minister of Singapore, defended his authoritarian regime as promoting "Asian values," which he claimed predispose Asians to success in economic affairs. These views constitute a challenge to modernization theory in that they anticipate an increase, not a reduction, in nationalistic conflict as countries adopt modern technology.

Time will tell, but in the short term, most observers are critical of Huntington's views and also of the whole notion of Asian values." For example, Seizaburo Sato points out that Huntington has disregarded the fact that contacts between different civilizations do not always lead to clashes, but sometimes to revitalization on both sides. Historically, it is true that when one highly advanced civilization met another civilization still in its formative stage, the more advanced one has usually dominated or annihilated the weaker one. But when the two civilizations were more nearly equal at the time of their contact, the less developed one frequently became stimulated and grew in a new direction, especially when the contact was not marked by military domination. This is the nature of the situation in many places today where there is contact between civilizations. Furthermore, as Amartya Sen has pointed out, one can find liberal traditions of freedom and individual responsibility even within non-Western civilizations. The question remains open, then: Will economic development around the world bring peace, a cross-fertilization of ideas, and the emergence of a worldwide democratic culture? Or will it bring conflicts between exclusionary ideologies, especially ethnic nationalisms? The answer will show what we choose for ourselves and our progeny.

Further Reading

Anderson, B. (1983). Imagined Communities: Reflections on the Origin and Spread of Nationalism. London: Verso.
Babst, D., and Eckhardt, W. (1992). How peaceful are democracies, compared with other countries? . Peace Res. 1.
Commission on Global Governance (1995). Our Globhal Neighbourhood. Oxford: Oxford Univ. Press.
Drèze, J., and Sen, A. (1989). Hunger and Public Action, pp.146-161. New York: Clarendon Press.
Drèze, J., and Sen, A. (1995). India: Comparative Development and Social Opportunity, pp.27-56. Oxford: Oxford Univ. Press.
Economist (Aug.27, 1994). Democracy and growth. p.15.
Guinier, L. (1994). The Tyranny of the Majority: Fundamental Fairness in Representative Democracy. New York: Free Press.
Huntington, S. P. (1996). The Clash of Civilizations and the Remaking of World Order. New York: Simon and Schuster.
Lipset, S. M. (1959). Some social requisites of democracy: Economic development and political legitimacy. Am. Political Sci. Rev. 53, 69-105.
Lipset, S. M. (1994). The social requisites of democracy revisited. Am. Sociological Rev. Feb., 1-22.
Ponting, C. (1990). A Green History ol the World. London: Sinclair Stevenson.
Puhovski, Z. (1995). The bleak prospects for civil society. In Yugoslavia, the Former and Future. Reflections by Scholars from the Region (P. Akhavan and R. Howse, Eds.). Washington, DC: Brookings Institute.
Rummel, R. (1999). Democracies don't fight democracies. Peace Mag., May/June.
Sen, A. (1997). Revision of an essay given at the Morgenthau Memorial Lecture at the Carnegie Council on Ethics and International Affairs, May 1, 1997.
Spencer, M. (1994). How to enhance democracy and discourage secession. In World Security: The New Challenge (Canadian Pugwash Group, Ed.). Toronto: Dundurn.
United Nations Development Programme (1998). Human Development Report 1998, pp. 166-189. New York: Oxford Univ. Press. Available on United Nations internet site.