On My Development Class

So I’ve had a few months to think about my int’l development orthodoxies class last semester. I couldn’t explain why, but I always had a thorn in my side about that class.

I ended up getting a B, even after talking on several occasions privately with my prof and usually being the lone contributor of the dissenting opinion in our weekly reading reports, published online for all the students to see.

I was really pissed about getting a B because I felt like I put forth more effort than most (in fact knowing for sure that many didn’t even do all the reading) and that I would contribute in more ways than just blowing hot air by making dumb, forced comments in class, which the prof always tried to get me to do more.

He claimed that I didn’t cite enough evidence for my claims, which is probably true to some degree but now that I think about it, I really do think there were ideological differences that played a part as well. I am notoriously bad at being thorough in justifying my opinions (you need only read this blog to see that) but in general my intuition is usually right. If you disagree with someone, it’s much harder to see their opinion as justified or backed up with good evidence. I was dealing with a class of future institutioners and a prof who had a history of institutionalized work.

I remember vividly one time in my globalization class (which had several of the same students) when I went off on some rant about Iraq because our book that week was on the Bush reasons for war. The professor stopped me after I’d said something to the effect of “well, the ultimate goal of capitalism is to achieve a monopoly, right?” She actually told me that that was impossible to prove and that we should move on… (I think I also said in the same class that we should’ve at least gotten a shitload of oil out of Iraq if the neocons were to succeed at their plan, and we even failed at that, another statement that received no feedback.)

That really rubbed me the wrong way because it seems so self-evident that a company’s basic goal is to make as much money as possible for its shareholders. The best way to do that is to push out all your competition and achieve complete pricing control. I don’t buy into the bullshit of corporate social responsibility very much except that hopefully it’s some bridge between raw capitalism and some future, enlightened state.

Read this article about the profit-maximization of businesses under Bill Gates’ “creative capitalism” proposal. There are three things that I see wrong with capitalism the way Americans are taught about it:

One, it requires a competitive market in order to work properly. The assumption is made that if the government is not involved, then any company that exists in a space is going to maximize efficiency. No, it’s maximizing profit and not necessarily benefit to the customer. Efficiency is not required in a monopoly or oligopoly. A competitive market, by the way, is not the same thing as a “free” market, which is what neoliberals want.

Large distortions take place when companies get the government to give them subsidies or legal protection or monopoly status. Which is what’s happened in a lot of areas in the US right now. Many of the most “successful” companies in the US live completely off sucking the teat of the US government in no-bid contracts and high-level networked deals.

Capitalism is war — companies SHOULD be fighting it out with each other. But the government has to ensure that that level playing field exists.

Two, that companies will be “good”. Muhammad Yunus describes this well in his latest writings. Basically, a company that purports to care about a community or about the environment or about political issues only cares to the extent that it doesn’t interfere with the true bottom line, maximizing profit. Usually being “socially active” helps some other agenda the company has, like establishing a presence in a foreign country or pushing policies that will help it get favorable status in an industry. Double and triple bottom lines are bullshit.

A company should always be assumed to make profit regardless of how it affects others. Business is warfare. Companies fight with the gloves off — there’s no “honor” or “generosity”.

I made the same analogy when I was in the military. We were soldiers, and we were trained to destroy and to kill. That’s it. That was our job. To make us win the hearts and minds was plain naive. To have us doing policing duties was stupid. To think that we could become good friends with Iraqis and Afghanis was what the government told the people to placate them. Our job was to kill, and whenever we were around with our weapons, missions, and intelligence, lots of people died. It’s like in the movie “The Siege”, when Bruce Willis, playing an officer, implores Congress not to deploy the Army to protect New York City during a terrorist threat. Of course, when the Army ends up coming in, it starts torturing suspects and intimidating the populace. Nature of the beast.

Three, the way that corporations work right now, it’s rare that the top executives and board have much of a stake in the success of the company any more. People are involved in multiple boards of directors and they tend to cash out fairly quickly once making a profit. And bad CEOs continue to be hired by other companies after destroying the last one. So you have a CEO class that takes turns leading companies without any accountability, while their salaries and bonuses and options packages continue to bring them more money. The idea that it’s in a company’s long-term interest to serve its customers and deliver the best product or service is not necessarily true because the owners are no longer always stake-holders.

This would seem to contradict my claim that companies seek to maximize profit. So I guess the point is that everyone is basically following the maxim “get rich or die tryin'”. In other words, the floating executives are earning as much easy money they can no matter what the negative impact will be, and so are companies as a whole. Long-term success is devalued.

Francis Fukuyama is often quoted for his “End of History” theory that stated basically that after the Cold War ended, there was no ideological opponent for capitalism. This has certainly been true in the US. “Government” is such a bad word in the US that companies have run amok. But really you need a government to represent the commons and the people, because for companies, they are going to keep innovating new ways to monetize whatever they can, as they should. It is warfare, and you need both sides.

What’s funny is that for anyone to say this publically is suicide. Claims of socialism and communism and big government quickly follow. But man, I’m all about capitalism and entrepreneurship and exploiting niches. But I at least have the sense to look at the bigger picture, and know that there should be laws and standards and regulations to stop me from going too far.

So going back to that development class, we kept being told that the Washington Consensus was pretty bad, but what else is there? If we can’t deny that no country has succeeded without economic growth, then how can we toss that out as a metric? Aren’t the World Bank and IMF and development agencies better now that they’re not trying to force structural adjustment programs on unsuspecting countries?

Every week in my dissent paper I would dispute those challenges… Intuitively, but perhaps not empirically, I’d resist what we were being taught.

Now, with some hindsight and more reading, I understand more about why I resist the main development line being espoused right now. It makes me far more suspicious about the entire development field. It makes me suspicious of my fellow development colleagues who will end up pushing a top-down agenda at the World Bank, USAID, and self-righteous NGOs. Isn’t there a third way? Or multiple other ways to help reduce poverty and encourage freer markets and encourage bottom-up democratic movements?


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Filed under Business, Economics, Education, International Affairs

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