People's Democracy

Is Sustainable Capitalist Development Possible?

Jayati Ghosh

RECENTLY in Johannesburg, South Africa, another United Nations summit was held on sustainable development. While this turned into yet another ritual in which good intentions were spouted even as the policy went in completely another direction, the exercise was not completely useless. At any rate, it did serve to focus attention on some of the more important problems that developing countries have to cope with, in terms of having a development path that delivers growth and also preserves the natural environment.

Of course, everyone knows how unequally the world’s natural resources are currently spent, and how unequally the environment is being destroyed as well. One of the problems that has recently got a lot of attention is "global warming", supposedly caused by the excessive emission of what are called "greenhouse gases" from certain kinds of production. Developing countries, including India, are constantly being told that we have to cut down on these to prevent major environmental damage to the planet as a whole.

But consider who is primarily responsible for this problem in the first place. Even today, after the claimed "clean up" of production facilities in the North, per capita greenhouse emission in the United States are 19 times that of India, 107 times that of Bangladesh, and 269 times that of Nepal. The current US government is shameless about these differentials. President George Bush not only refused to attend the Johannesburg Summit, he had earlier refused to sign the Kyoto Protocol on such emissions, and recently declared that "American lifestyles are not up for negotiation".

While this is obviously unequal and unfair, even this may not be the real problem for developing countries. Instead, the real danger at the moment is that the developed industrial countries, in an effort to clean up their own natural environment, will export the polluting and destructive industries to the developing world.

This argument was made several years ago by Lawrence Summers, then the Chief Economist of the World Bank. His famous memo, in which he argued that developing countries should be grateful to receive polluting industries through foreign direct investment, caused a big outcry when it was made public. But actually, developed countries and their multinational companies have already been practicing this for some time, without bothering to put any theory there to justify it.

The United States is not alone in this. In the European Union, strict environmental standards have shifted a lot of parts of the production process which were considered undesirable, to be located in developing countries. Japanese capital has practiced this for decades now. For example, Japanese consumption was responsible for 70 per cent of the timber logged in the Philippines, most of which was anyway done illegally. Throughout East and Southeast Asia, especially in the rapidly growing economies, there is evidence of massive toxification and pollution caused by Japanese transfer of these parts of the production process to these locations.

There is real danger, therefore, that the countries that aspire to become the workshops of the world, will end up becoming the wastebasket of the world instead. And the trouble is that many of the problems caused by excessive mining, deforestation, overfishing and other environmental damage, cannot be reversed. So developing countries may find that, while their development project remains incomplete, they are in addition saddled with huge new difficulties resulting from of a ravaged environment, high rates of pollution as well as denudation of natural resources.

In fact, it seems as if the more recent form of foreign direct investment in developing countries is once again turning to these areas, after a phase in which relocative manufacturing investment was searching for cheap labour rather than only for resources. In 1997, investment in natural resource and extractive industries, such as mining, accounted for 97 per cent of all foreign direct investment into the developing and formerly socialist economies.

In addition to all this, the new danger is that international capitalism, in its relentless search for new markets, is desperately trying to commercialise aspects of life that had previously remained out of its purview. The latest example is water, one of the most basic of human resources, which is increasingly being subject to a barrage of attempts at commercialization. The focus on water delivery – far from being a concern of all those who desire the public provision of basic needs – has turned into the dominant concern of multinational companies which have been lobbying very effectively in the WTO. The attempt is to move access to clean water from being a basic economic right of all people, to something which must be purchased, and which therefore only the well-to-do can afford.

So it seems that there is a lot that should worry citizens of developing countries as far as the environment is concerned. But in fact, as long as international imperialism continues to operate through the IMF, WTO and similar institutions, and as long as countries are forced to interact in unequal terms in world markets simply to survive, environmental damage is likely to continue.

Many would argue, therefore, that capitalism as a system is incompatible with sustainable development. Since, unfortunately, capitalism is the system we are stuck with for now, the only option is to try and mitigate its worst effects, and regulate it as far as possible.