Click below to read the text of Joan’s speech at the Trinity College Historical Society’s Inaugural Meeting of their 240th Session. The event also starred world renowned development economist, Jeffrey Sachs, who people may remember for the work he did with Bono, who wrote the foreward of Sachs’ bestseller: ‘The End of Poverty’.
In the wake of the global financial crisis, the old model centred on market fundamentalism is thoroughly discredited and is beyond salvation.
We are not going back to the chaos of 2008. There is a need for a new approach, a holistic approach, an approach that recognises our obligations to each other, that respects the life projects of our neighbours, an approach grounded in an ethic of justice and fairness for all.
Economics cannot be separated from human realities nor can the injustices associated with the present inequitable distribution of wealth be accepted.
Neither the market nor individual initiative is sufficient to address the poverty that distorts the lives of so many in the developing world, for economic development is dependent on social progress.
The wealthier nations have a three fold duty of solidarity, justice and charity, a duty on whose fulfilment the future of civilisation depends.
In many nations of the developing world the challenges posed by systemically induced conditions of dependency have been aggravated by the ‘structural adjustment programmes’ imposed by the World Bank and International Monetary Fund which followed the collapse of commodity prices and the consequent economic crisis that enveloped the nations of Africa and Latin America in the eighties and early nineties.
A new and more nuanced perspective on the objectives of development policy is called for. The ‘capability’ paradigm, developed by the Nobel laureate Amaryta Sen might well offer just that alternative.
‘Capability’ in this context refers to a community’s capacity for self realisation, the opportunity to choose a life style that reflects its values, as a guide to the extent of development in a particular economy or society.
A focus on ‘capability’, Sen argues, shifts the centre of analysis from a consideration of means, such as conditions for economic growth, to a consideration of the ends to which those means (or that growth) is directed and sensitises us to the structures of deprivation.
Seen from this perspective, economic policies must be judged in terms of the social and cultural opportunities they make possible.
Such a perspective offers an integrated approach to economic and social development that recognises and prioritises the claims of justice and community.
Broadly similar arguments have been put forward by our guest this evening, the distinguished American academic and activist Jeffrey Sachs.
Jeffrey is sharply critical of the economistic approach to development favoured by the international financial institutions and the neo-liberal think tanks of the industrialised world.
The task of ‘ending poverty’, Jeffrey argues, calls for a global network of co-operation to alleviate the isolation, disease and environmental degradation that underlies Third World poverty.
In his view that poverty can only be contained through targeted investments in basic education, health care and infrastructure; reliance on market mechanisms alone will not accomplish the task.
In short there is a need for a moral re-awakening. A bottom line society driven by a reductionist vision of ‘winners and losers’ is doomed to ultimate failure, for in the long run such a world is simply unmanageable.
This has been long recognised. Certainly, in Europe since the First World War, the search among social democrats has been for humane, regulated markets that have people and their well being at their heart.
When Jeffrey spoke about Haiti and development, it brought me back in time to the early 80’s when I lived and worked in Tanzania in East Africa.
I recall that as I finished a three year stint as a lecturer at the University of Dar Es Salaam, the first men were arriving from the IMF, stabilisation and adjustment plans in hand.
Inevitably, these adjustment programmes attacked and reduced childrens’ access to education, particularly affecting young girls’.
They slashed spending on public infrastructure, from water to roads, undoing decades of painstaking development work.
Recent pictures from Haiti reminded me of the time when, as Chair of the European Council of Development Ministers, I frequently visited Rwanda in the aftermath of the genocide.
I remember the mayhem of chairing meetings between dozens of competing aid and UN agencies, each fighting their own corner rather than working together towards a common goal.
When you get a disaster on the scale of Haiti, quite honestly, you need a heavy military presence to restore order. If the port is destroyed, naval assistance may be required to help deliver aid.
So what has the world learned in terms of disasters such as the genocide in Rwanda and the earthquake in Haiti?
We need a rapid and effective response.
We need large scale logistical assistance, using the military where aid organisations are not suitably equipped.
Above all, we need a structure of organisation and command that brings hope and help to the afflicted.
And when the immediate job of rescue and relief is completed, we need medium-to-long term plans and assistance to help rebuild the country.
It is wonderful to see an economist of the stature of our guest tonight, Jeffrey Sachs, recognising and advocating the importance of marrying equity and justice to the basic theories of economics, and recognising the cultural and institutional environment in which markets must function.
Economics in the global sphere must recognise boundaries and it must recognise the aspirations of those who supply the labour – not just the capital – that creates wealth.
Interestingly, City bankers and Wall Street traders truly became the Masters of the Universe until, like Icarus, they flew too close to the sun.
And who picked up the pieces? You and I, the ordinary taxpayer.
One of the critical issues that has emerged with the advent of globalised markets is that nation states, even those as big as the US, and new political entities such as the European Union, have been simply unable to keep pace with market innovation.
Thus, we have global financial markets, but lack a global regulatory framework within which that accounting acquires meaning.
Thus we have global banking, but not necessarily global credit flows that allow small businesses to keep paying wages and suppliers.
Governance is important. Globalization cannot be the plaything of multinational corporations which, whilst benefiting disproportionately from the process, are neither mandated, resourced nor disposed to exercise the functions of governance.
In the traditional nation state model, powerful companies were pursued by the state to make a contribution to the provision of public goods, but in the globalised economy we have tax avoidance on a massive scale.
I welcome the proposals of people like President Obama, Nicolas Sarkozy and Paul Volcker to put manners on the all-powerful banking sector to counter the bonus culture and the irresponsibility which it breeds, to challenge the notion that greed is good.
I also welcome the growing consensus that companies making vast profits, profits arising from developing countries, but who don’t bear a fair share of the tax burden, much less recognise the social responsibilities which follow from their appropriation of the resources that generated the profits in the first place.
The limits of public tolerance have been reached. The notion that the future of the nation should be pawned multinational corporations with little connection to the countries whose resources they appropriate, that those of poor and the marginalised should pay for the errors of the elite, that a small section of the world’s population should appropriate a disproportionate share of the global ‘cake’, is simply unviable.
Yet unless the ideas which Jeffrey has put forward can be realised, unless effective social safety nets can be established, there is little hope of a fairer world in the short to medium term.
That, in a nutshell, is what we must do now.