Development Economics: a Sachful of discomfort and confusion

I’ve recently started “The End of Poverty,” by Jeffrey Sachs (2005), and I’m about a third finished. I’m not too familiar with how the book is perceived today, 9 years later, or with much of Sachs’ current work. In a sense, that’s good, as I came at the book without a notion of what I “should” or “shouldn’t” think about it. I was thinking it’d been a while since I’d read anything about development and I had previously heard of Sachs.  However, we’re 85 pages in, and I’m coming into some real frustration.

In the second chapter, Jeffrey Sachs explains how subsistence agricultural lifestyles were common – across the globe. He goes on to begin explaining the historical divergence that occurred between world economies. Where my friction starts. The following quote:

“Let me dispose of one idea right from the start. Many people assume that the rich have gotten richer because the poor have gotten poorer. In other words, they assume Europe and the United States used military force and political strength during and after the era of colonialism to extract wealth from the poorest regions, and thereby to grow rich. This interpretation of events would be plausible if gross world product had remained roughly constant, with a rising share going to the powerful regions and a declining share going to the poorer regions. However, this is not at all what happened. Gross world product rose nearly fifty-fold. Every region of the world experienced some economic growth (in terms of size of economies, and even when measured per person), but some regions experienced much more growth than others.”

Read the bold text. Consider the following:

Five economies, each with a Gross National Product (GNP) of $100, for a total Gross World Product (GWP) of $500. Each year, Economy A takes $1 from the other economies. Year 1, Economy A has $104, the others have $99 each. Year 2, Economy A has $108, the others have $98 each. This is the straw-scenario Sachs is rightfully dismissing. Obviously, GWP has not been static.

Ok, so consider an ALTERNATIVE scenario:

Five economies, each with a Gross National Product (GNP) of $100, for a total Gross World Product (GWP) of $500. Each year, each economy grows by 2%. Each year, Economy A takes $1 from each of the other economies. Year 1, each economy grows to $102. Then, Economy A acts, and ends up with $106, while the remaining economies have $101 each. In Year 2, they each grow by 2% again. Economy A grows by $2.12 (to $108.12), the other four grow by $2.02 (to $103.02). Then, Economy A acts again, growing to $112.12, while the other four are all at $102.02.

Is it plausible that all economies could expand concurrently, while some stronger economies simultaneously exploit other ones? Yes, absolutely. I have no idea why those two concepts would be mutually exclusive.

Reading the above quote, I was initially quite angry, but I read on. It’s not that Sachs doesn’t understand the economic burdens of colonialism. He does, and gives them an appropriate weight in his later pages, in specific detail.

Page 41: “European imperial powers forced Africans to grow cash crops they chose. Colonial authorities imposed head taxes, compelling Africans to work in mines and on plantations, often hundreds of miles from their families and homes. European investors and governments commandeered natural resources, including mineral wealth and vast woodlands in Africa and Asia.”

Later, on page 173 (I flipped across this one, looking for confirmation or falsification of my anger): “By the middle of the nineteenth century, Britain was the clothier of India, with British mechanized mills displacing millions of Indian hand-loom operators. The textbooks often paint this as a picture of market forces shaped purely by technological advance. The textbooks neglect to add, however, that Britain imposed trade restrictions on India’s textile exports to Britain during the pivotal 18th century…”

I’ve also read that these trade restrictions applied to India textile sales within India (can you imagine the impotent fury one would feel, if those rules were imposed on you, within one’s own country?) as well as those exported to Britain, but I can’t find a source online. Nonetheless, Sachs’ point alone is a salient one regarding Britain’s role in the (under)development of India’s economy.

Page 174: “Britain also showed a disdain for Indian industrialization, at least the kind of industrialization that might threaten British industrial interests back home. The infrastructure was built to exploit India’s raw materials, such as cotton for British mills, and not maily to industrialize India itself.”

Again, Sachs shows a historical understanding of the role of colonial powers in specifically, intentionally, underdeveloping the economies of colonized countries.

So. I highly doubt that Sachs is blithely ignorant of the example I showed above – where development and exploitation happened concurrently. He acknowledges colonial exploitation very explicitly.  I can only assume his point is one of semantics. Technology (industrialization) was the main, primary reason that economic divergence happened – both in importance and chronology. And all other points, military, political and economic domination, were secondary reasons, outcomes that poured from that initial divergence. Hence, economic divergence is not “really” the result of rich countries exploiting poorer ones. It’s a hefty bit of logical footwork, but I haven’t yet found another interpretation that reconciles the above statement with his obvious understanding of recent history. That is how I am currently interpreting him.

I have to hope I am incorrect. That distinction is an extremely weaselly one, particularly for someone who shows attention to nuance in other areas of the book (differential diagnosis for poverty reduction, for example).

Further, aside from the squirming discomfort of that distinction, it also places a confusingly sharp demarcation on the point of “divergence.” I would argue that the fuel of The Industrial Revolution was not only coal, but also the labour and resources (metals, wood, textile materials) that were harvested from colonized countries during Britain’s expansion.

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2 comments

  1. I didnt find Sachs to be a sufficient source on development and it’s links to colonialism either. A good follow up to his book is White Man’s Burden by Bill Easterly. A lot of it is a response to The End of Poverty.

    1. Hi, thanks for the recommendation. I’ll have to look into it.

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