The Western world spends hundreds of millions of pounds on aid to developing countries. But what if this aid, so far from reducing misery, is actually increasing it? This is the startling view which a distinguished economist puts forward here, together with the outline of a radical new approach to the whole problem.
MASS UNEMPLOYMENT (as distinct from the limited unemployment which might arise out of Britain’s present economic crisis) has been unknown for almost 30 years, ever since the “Keynesian revolution”— in most of thedeveloped countries, that is to say. It is quite different in large parts of the “developing” or underdeveloped world.
“Developing countries,” says a recent study in the International Labour Review, “cannot include the goal of full employment among their immediate planning targets.” The Third Five-Year Plan in India showed higher unemployment at the end of the period than at the beginning. Much the same is true of Turkey and, in fact, of most of the larger developing countries.
In short, mass unemployment in these countries is being accepted as inevitable and unconquerable, even as “necessary for sound growth,” in much the same way as was the case in the advanced countries before Keynes. The arguments, to be sure, are somewhat different. The developing countries, it is said, cannot have jobs for all because they are short of capital.
Unemployment and under-employment in developing countries are most acute in the areas outside a few metropolitan cities; so there is mass migration into these cities in a desperate search for a livelihood: and the cities themselves, in spite of “rapid economic growth,” become infested with ever-growing multitudes of destitute people. Any visitor who has ventured outside the opulent districts of these cities has seen their shanty towns and misery belts, which are often growing 10 times as fast as the cities themselves.
Current forecasts of the growth of metropolitan areas in India, and many other developing countries, conjure up a picture of towns with 20, 40 and even 60 million people—a prospect of “immiseration” for a rootless and jobless mass of humanity that beggars the imagination.
No amount of brave statistics of national income growth can hide the fact that all too many developing countries are suffering from the twin disease of growing unemployment and mushrooming metropolitan slums, which is placing their social and political fabric under an intolerable strain.
The suspicion has been voiced (and cannot be dismissed out of hand) that foreign aid, as currently practiced,may actually be intensifying this twin disease instead of mitigating it; that the heedless rush into modernization extinguishes old jobs faster than it can create new ones; and that al the apparent increases in national income are eaten up, or even more than eaten up, by the crushing economic burdens produced by excessive urban growth. It is rather obvious that a man’s cost of subsistence—something very different from his standard of life—rises significantly the moment he moves from a small town or rural area into “megalopolis”.
No wonder, then, that there is a widespread search for a new approach. If the current methods and types of foreign aid produce such questionable results, it is perhaps a bit superficial merely to demand an increase in the volume of aid. Let there be such an increase by all means, but only when we are sure that we are on the right road. How can we judge whether we are on the right road or not
Central planners take as their decisive criterion the rate of growth of Gross National Product, that is, the developing country’s aggregate of money incomes. This is highly misleading. If the rise in G.N.P. is accompanied by rising unemployment and an increase in social tensions, the outcome of the enterprise is unlikely to be satisfactory.
The first task of any society is surely to avoid the extremes of misery and frustration. If “the people” are left out of development planning; if economic growth merely intensifies, as it tends to do, the appalling features of the “dual economy”—a small sector of opulence surrounded by an ocean of misery; then the final outcome will be disastrous.
The primary task of developing countries now afflicted by mass unemployment and mass migration into a few metropolitan areas would therefore seem to be clear: to go straight into battle with these evils. This means:
- Workplaces have to be created in the areas where the people are living now, and not primarily in metropolitan areas into which they tend to migrate;
- These workplaces must be on average, cheap enough so that they can be created in large numbers without this calling for an unattainable level of savings and imports;
- The production methods employed must be relatively simple, so that the demands for high skills are minimized, not only in the production process itself but also in matters of organization, raw material supply, financing, marketing, and so forth;
- Production should be largely from local materials for local use. These needs can be met only:
- If there is a “regional approach” to development;
- If there is a conscious effort to develop what might be called an “intermediate technology”
A given political unit is not necessarily of the right size as a unit for economic development. If vast and expensive population movements are to be avoided, each “district” with a substantial population needs its own development. To take a familiar example, Sicily does not develop merely because Italian industry, concentrated mainly in the north of the country, is achieving high rates of economic growth. On the contrary, the developments in the north of Italy tend to increase the problem of Sicily through their very success, by driving Sicilian production out of existence and draining all talented an enterprising men out of the island.
If no conscious efforts are made to counteract these tendencies in some way, success in the north spells ruination in the south, with the result that mass unemployment in Sicily forces the population into mass migration. Similar examples could be quoted from all over the world. Special cases apart, any “district” within a country, if it is being by-passed by “development,” will inevitably fall into mass unemployment, which will sooner or later drive the people out.
Each “district,” ideally speaking, would have some sort of inner cohesion and identity, and would possess at least one town to serve as the district centre. While every village would have a primary school, there would be a few small towns with secondary schools, and the district centre would be big enough to carry an institution of higher learning.
This need for internal “structures” is, of course, particularly urgent in large countries, such as India. Unless every district of India is made the object of development efforts, so to say, for its own sake and in its own right, all development will concentrate in a few places—with devastating results for the country as a whole.
It is obvious that this regional or district approach has no chance of success unless it is based on he employment of a suitable technology. Here we come to the crux of the matter.
Western technology has been devised primarily for the purpose of saving labour; it could hardly be appropriate for districts or regions troubled with a large labour surplus. Technology in Western countries has grown up over several generations along with a vast array of supporting services, like modern transport, accountancy, marketing, and so forth: it could hardly be appropriate for districts or regions lacking these paraphernalia.
This technology, therefore, “fits” only into those sectors which are already fairly modernised, and that means—some special cases apart—the metropolitan areas, comprising, say, 15 to 20 per cent of the whole population.
What, then, is to become of the other 80 to 85 per cent? Simply to assume that the “modern” sectors or localities will grow until they account for the whole is utterly unrealistic, because the 80 per cent cannot simply “hold their breath” and wait: they will migrate in their millions and thereby create chaos even in the “modern” sectors.
The task is to establish a tolerable basis of existence for the 80 per cent by means of an “intermediate technology” which would be vastly superior in productivity to their traditional technology (in its present state of decay) while at the same time being vastly cheaper and simpler than the highly sophisticated an enormously capital-intensive technology of the West.
As a general guide it may be said that this “intermediate technology” might be on the level of £70-£100 equipment cost per average workplace. At this level, it would be cheap enough to be “within reach” of the saving efforts of the more enterprising minority in these areas; it would be simple enough to catch on with them; its functioning would depend neither on the regular supply of highly refined raw materials nor on near-perfect systems of organization; in short, it would simply “fit” into the social context as a whole without depending on the availability of factors which, as experience shows, cannot be depended upon.
Some economists have argued, first, that such an intermediate technology would be a waste of scarce capital resources—that it would yield less output per unit of capital than could be obtained from the most highly capital-intensive mode of production; and, second, that the products of such a technology could never be competitive.
Both arguments deserve consideration. Countries short of capital would be foolish to squander their scarce capital resources on relatively unproductive projects and certainly must look for the highest possible output-capital ratio. But the question of what level of technology in fact produces the most favourable ratio is not a question of economic theory but of applied engineering. Dogmatic pronouncements on this point are worthless: let us have design studies, and we shall see.
This applies to the second objection. Labour-intensive methods of production may or may not produce goods at competitive prices; there are no laws of nature or man to decide the question in the abstract.
In this matter an ounce of practice is worth a ton of theory. What is wanted is nothing more nor less than a series of humble design studies. Let us see what can be done by relatively simple means, with mainly local materials, local labour, and low-cost capital equipment—equipment which would be simple enough also to be made locally.
Design studies undertaken in India have demonstrated that many products are suitable for “intermediate technology” production—practically all basic consumers’ goods, building materials, agricultural implements, and many kinds of equipment for the “intermediate technology” industries themselves—and that these products can be fully competitive with those of Western technology.
Every industrialist knows, of course, that there is still a long and arduous road to travel between a design study and its practical implementation. “Intermediate technology” is no magic wand. Countries like India need millions of additional workplaces, which modern technology cannot possibly provide within the foreseeable future. To provide them by means of an “intermediate technology” would be possible at any rate within the given and known limits of internal capital formation plus foreign aid. It would, to be sure, require a great organizing effort on the part of very many people.
Would such an effort be forthcoming? No one can say it would not. The lack of entrepreneurial ability, which the central planners in developing countries so frequently deplore, is itself largely the result of their present fixation on the naïve idea that what is best for the rich must also be best for the poor. Most of the ambitious planning currently undertaken leaves “the people” helpless and disheartened: it does not “fit” into their way of life and remains outside their power of self-help.
This is not to say that all projects on the level of Western technology are useless. Let them continue, although perhaps with rather more caution than has been shown in the past. What appears to be certain beyond doubt is that they will have to be supplemented by a determined effort to reintegrate the jobless millions into the economic process by means of something along the lines of “intermediate technology.”
Professor Gadgil, the doyen of Indian economists, has asked that “the process of evolving and adopting intermediate technology… should be the centre of interest of the plan of industrialisation of the country.” Foreign aid will be fruitful, instead of destructive, only if it recognizes these paramount needs and makes Western intellectual resources available to meet them.
This is not a long, expensive, or particularly difficult task. Fragments of this “intermediate technology” exist all over the world, in the advanced countries no less than in the poverty-stricken ones. A new approach is needed, a systematic effort to collect them and develop them into practical blueprints for industrial action. To quote Professor Gadgil again, this “should claim the attention of the ablest scientists and technicians in the country.”
What stands in the way? Perhaps a kind of technological snobbishness which regards with disdain anything less than ultra-modern? Perhaps a certain callousness in the attitudes of privileged minorities towards the immense suffering of their homeless, jobless, miserable fellow-men? Or is it lack of imagination on the part of the planners in resplendent offices who find ratios and coefficients more significant than people?
Whatever it is, millions of people in the wealthier countries are today moved by a genuine desire to help those who live in misery, and this elemental force should be capable of overcoming all petty preoccupations. “Intermediate technology” can help the helpless to help themselves.