Dr. Jeffrey Sachs’ “The End of Poverty”:

A Political Review

by

George Caffentzis

At length the term-day, the fatal Martinmas, arrived, and violent measures of ejection were resorted to. A strong posse of peace-officers, sufficient to render all resistance vain, charged the inhabitants to depart by noon; and as they did not obey, the officers, in terms of their warrant, proceeded to unroof the cottages, and pull down the wretched doors and windows,--a summary and effectual mode of ejection, still practiced in some remote parts of Scotland, when a tenant proves refractory.

-Sir Walter Scott, Guy Mannering or The Astrologer (1829)

Neoliberal globalization entered into its first major crisis seven summers ago, with the so-called “Asian Financial Crisis.” Since then the ideological power of this form of capitalism has been slowly ebbing. The once attractive image of the creative powers of humanity finally being brought together in the process of globalization for the “general welfare” by borderless transfers of money, capital and labor at the speed of light now seems to be a nostalgic relic. Since 1997, along with the continuing economic crises and stagnation of Europe, South America, and Africa, neoliberal globalization has faced two major ideological reversals. The first reversal is associated with a city (Seattle) and the second with a date (September 11, 2001).

The street blockades that temporarily halted the World Trade Organization meetings in Seattle at the end of November 1999, brought to planetary consciousness the existence of a global movement of resistance to neoliberal globalization. This movement had been growing in the literally thousands of “IMF riots,” general strikes and guerrilla wars in the Third World since the mid-1980s against structural adjustment programs (the “wedges” that opened economies previously resistant to complete control by international capital). But the sudden appearance on streets of the Microsoft’s headquarters city of a movement capable of stopping the apparent unstoppable locomotive of globalization made it clear that there was another reality that was not buying a future whose only aim was to put the world up for sale to the highest bidder. On the contrary, the movement was able to project an image of globalization as resulting in unprecedented immiseration for people throughout the planet unless it was stopped.

The September 11, 2001 destruction of the World Trade Center Towers and the killing of three thousand people were followed by a “war on terrorism” that revealed the military aspect of globalization: globalization’s invisible hand required an equally global iron fist. Instead of dealing with 9/11 as a crime whose perpetrators were to be apprehended, tried and convicted on the basis of international law, it was seen by the Bush Administration as a symbolic attack on the US’s status as the hegemonic power guaranteeing the operation of the rules of the world market. George W. Bush soon after 9/11 expressed this vision when he identified the real enemy as “the axis of evil”--Iraq, Iran and North Korea—and any of the other unnamed 30 or 40 other “rogue,” or potentially “terrorist-harboring” states throughout the planet. Indeed, Osama bin Ladin and his project for founding a new Caliphate was all but forgotten in the rush to discipline nation states that for one reason or another were not completely open to global capital flows (Iraq in particular). But this image of globalization as requiring a literally “infinite” war against recalcitrant states and populations (branded by Bush’s neoconservative advisors as “anti-democratic”) was hardly inspiring, especially since it undermined globalization’s promise of a closer, more interdependent world where it was in everyone’s interest to “just get along.”

Globalization’s ideological crisis had deepened to the point that by the end of 2004 all the major efforts to extend the “globalization” agenda (CAFTA, FTAA, the Doha Round, etc.) were being stalled on both the street and the diplomatic levels. Jeffrey Sachs wrote and published his book, The End of Poverty: How We Can Make It Happen in Our Lifetime (as well as a series of related op-ed articles in the New York Times), in early 2005 to respond to this ideological and political crisis. For Sachs represents those who are convinced that neoliberal globalization, if properly managed, is the only path to a future without abject poverty and misery for billions of people (and indeed is the only alternative for the survival of capitalism itself). The book’s publication was timed to reach its greatest audience in early July when the G8 “leaders” met in Scotland to consider a new “anti-poverty package” for African nations that was developed by a variety of agencies from the British Foreign Office, to the UN, to academic centers like Earth Institute that Sachs heads in NYC, to the organizers of the “Live8” concerts like Bob Geldorf and Bono.

There is much that is unattractive about the book, besides its ideological purpose. The End of Poverty is one part self-congratulatory memoir of Sachs’ roles as advisor to the governments of Bolivia, Russia, Poland, India, China and part world-historical tract justifying the ultimate rationality of neoliberal capitalism (if it is properly applied to “sick” countries by “clinical economists” like himself). In the first part of the book Sachs tells us what he advised these governments to do during the time of his involvement, but invariably he adds an upbeat note, even when the results were patently catastrophic (e.g., it is estimated that millions of Russians, especially men, died prematurely because of the collapse of wages and the public health system during the time that Sachs was advising the Yelstin government—perhaps equal to the death rate of a “moderate” nuclear war!) But Sachs’ panglossian comment on this episode is: “Looking back, would I have advised Russia differently know what I know today?...To a large extent, the answer is no….Most of the bad things that happened—such as the massive theft of state assets under the rubric of privatization—were directly contrary to the advice that I gave and to the principles of honesty and equity I hold dear (Sachs 2005: 146-147).”

You protest too much, Dr. Sachs. Is it possible to be so nice in our discriminations of the “good” versus the “bad” things, especially when dealing with the primitive accumulation of capital? Can Sachs have forgotten the “fire and blood” that set the stage for the triumph of Scottish Enlightenment thinkers like David Hume and Adam Smith he so admires: the massacres of the Highlanders at the end of 1745 rebellion and the clearances that followed throughout the end of the 18^th and 19^th centuries (so deftly described by Scott in the epigraph of this piece). The ghosts of those dead Highlanders greeted the G8 leaders in Gleneagles and perhaps spoke a little truth that was not drowned out by the fairy tale of pacific capitalist development Adam Smith began to tell and Sachs continues to this day. A more sober assessment of the process of introducing neoliberal globalization into societies where there are commons-based systems of reproduction would have been called for, given the realities of collapsing incomes and increasing “poverty” in many countries that have given over the direction of their economies to the “experts” like Sachs.

The main point of my political review, however, is not to slay once again the ailing dragon of neoliberal globalization theory. It is to interrogate the definition of Sachs’ overt project and then to delineate its covert political purpose.

Sachs claims not be a doctrinaire neoliberal economist, but a clinical economist who uses the tools of neoliberal theory to diagnose the causes of economic diseases and to provide appropriate therapies (Sachs 2005: 71-89). The disease he is attacking in this book is “poverty,” and the last part of his book is a plan to end poverty by 2025 (an attractive date since the bulk of his readers have a relatively good chance to reach it alive!) To be precise, the ending of the economic disease of “extreme poverty” is a goal only the most doctrinaire neoliberal or fanatical neoconservative would openly find fault with (although some of them have objected to Dr. Sachs’ prescription). Yes, the ending of “extreme poverty” (after creating so much of it), in twenty years would be a triumph of neoliberal capitalism. But with one plan after another to “end poverty” since Robert McNamara’s World Bank years in the 1970s, launched by the usual suspects—the UN, the World Bank, the development BINGOs (Big International NGOs)—leading to the intensification of “misery” in Africa, and a political rejection of neoliberal economics in South and Central America (including the violent expulsion of one of Sachs’ coworkers, Sachez de Lozada, from the presidency of Bolivia by thousands of indigenous protesters in the period of the “gas wars”) there is much justifiable suspicion of Sachs’ claims.

Indeed, since Dr. Sachs claims to be an economic clinician, he should remember that one of the most important Hippocatic maxims is: do no harm! Why is Dr. Sachs so sure he understands the poverty that he claims his plan can end? Should we trust that he and his “Live8” colleagues will, at least, do no harm? A reason for doubt are the two different, non-synonymous definitions of “extreme poverty” he offers: (a) “extreme poverty means that house holds cannot meet basic needs,” and (b) extreme poverty means an “income of $1 per day per person, measured at purchasing power parity.” Many an African or South American villager can testify on the basis of his/her own experience that these definitions do not have the same meaning. There are many villages where “basic needs” of their residents as they conceive them are satisfied, but whose collective income is less than $365 a year per person. Are these villagers extremely poor and, if so, in what way?

Technically, (a) is a “use value” definition while (b) is an “exchange value” definition. Such definitions, however, are systematically non-synonymous (as the famous “water/diamonds” parable has illustrated since Adam Smith’s day, although now, with the privatization of water, it has become less salient!). For example, in many villages in Africa adults (including, in certain areas, women) have access to (although not ownership of) land that they can use for subsistence. This is an enormous wealth (“use value”) that cannot be alienated and hence does not have an “exchange value.” But if each adult has land accessible to satisfy his/her basic needs, is that person poor even though, e.g., access to similar land in other part of the country might be “worth” a few hundred dollars? Is the imputed value of the common land, divided by the number of commoners, part of the annual income of the villagers? Similar points can be made about children. In many parts of Africa, children are “shared” by villages or extended families and their actual income is below $1 a day per person. These children often have their “basic needs” satisfied in a collective manner. Are these children extremely poor, even though the caring hands they pass through on their way to adulthood satisfy their basic needs? Though they get water to drink, not diamonds to wear, is that extreme poverty?

After all, what does the “exchange value” measure of extreme poverty--the quantity $1 a day measure when considered from the point of view of purchasing power parity (PPP)—come to? The definition of PPP Sachs and the World Bank use is “the number of units of a country’s currency needed to buy in the country the same amount of goods and services as, say, one US dollar could buy in the U.S.” Consequently, according to the definition, an extremely poor person is someone who “lives” on the “goods and services” that one can buy for $1 a day in the US. It is clear that definition (b) implies definition (a), in that surely one cannot satisfy one’s basic needs on a dollar a day in the US alone, but even that statement is too weak, for according to the common understanding of what can be bought in the US for $1 a day, the people that fall under this definition ought all to be dead. But they are not. How is this possible? There must be non-monetary ways that the more than 1.1 billion people who fit the definition of “extremely poor,” according to Sachs, have organized to reproduce their and their families’ lives.

It is notoriously “difficult” for economists to determine the value of unwaged reproductive “services” even in a fully monetarized society, it certainly is even more so in a form of life where the unwaged portion overwhelms the waged. Consequently, the surveys that are used to determine the monetary value of “goods and services” the poor consume are so unreliable they can add or subtract hundreds of millions from the category of extreme poverty on the basis of an arbitrary accounting change (see, e.g., the internal World Bank debate between Angus Deaton (2002), who finds no change in the number of “extremely poor” since the early 1980s, and Shaohua Chan and Martin Ravillion (2004), who find a 400 million decline in the number of extremely poor people on the planet, mostly in China).

This “difficulty,” arbitrariness and evasion is an old story as far as the notion of the poverty is concerned, since the real definition of being poor is that of one who ought not to be alive…according to the rules of the capitalist system…but is! For the historical moment (some time in the nineteenth century in Europe) when the wage stopped being the badge of the poor (and the stigma of a lack of independence) and began to guarantee the capacity to reproduce the worker within the system, the wageless poor were logically doomed.

Yet, though the wageless poor were not to be reproduced by the capitalist system, still they survive as living paradoxes. Their “irrational” existence has meant to generations of capitalists that they were a priori criminals (often violating yet undreamed of statutes!) To many Marxists, these wageless ones--the urban “lumpen proletariat” or the reactionary peasant “rural idiots”--being undisciplined by the wage, were to be treated with suspicion until they too could be brought into the waged working class proper. But to many other anti-capitalists, the poor became the evidence of the existence of a communal continent that existed below the surface of capitalist reality waiting to emerge, both in the planet’s countryside and its cities. This continent has been the object of many studies made by anthropologists and political activists as well as intelligence agents (often shifting identities in the course of a career). Though its existence has often been debated, its earthquakes have certainly created political tsunamis across the planet. After all, the major revolutionary movements of the twentieth century--from Zapata’s peasant column entering Mexico City through the nomadic Chinese Red Army through the Viet Cong fighters to the EZLN cadres’ insurrection against NAFTA on January 1, 1994—arose out of these wageless ones and shook the world.

Consequently, for capitalists there is an ambivalent anxiety concerning the wageless poor. They are fearful of this land of the “living dead,” but they cannot do without it. After all, the existence of the extremely poor is the basic disciplinary threat to be used against the waged workers of the world. On the one side, they are to be the “horrific” image of what could happen to a waged working class, if it refuses to accept the dictates of neoliberal capitalism and, on the other side, they are to be a standing “reserve army” in case capital decides to pick some subset of them for “development.”

But the world does not wait on capital, the “extremely poor” necessarily have created non-monetary reproductive systems that have demonstrated the power of communal relations to be able to resist enclosures and provide subsistence in ways that the Scottish Highlanders could never have imagined. On the basis of these systems the poor are beginning to set off new political earthquakes (especially in South America) or, in the face of increasing demonetarization, their reliance on communal relations is creating a situation where they stop being credible potential competitors on the international labor market (especially in Africa).

The “poor,” therefore, constitute contemporary capital’s Scylla and Charybdis. Poor people’s attacks on and exits from globalization must both be quelled to give neoliberal globalization a new impulse according to Dr. Sachs’ diagnosis. Therefore, it is important to see why it is that Sachs is so insistent on only attacking “extreme poverty” and assisting more than a billion people to break out of the “poverty trap” that keeps them from grasping “the first rung of the development ladder.” The poverty he wants eliminated by 2025 is one that makes it difficult for the poor person to be a waged worker, even potentially. It used to be said that in a capitalist society the only thing worse for a worker than being exploited, is not being exploited at all. But Sachs recognizes the adage cuts both ways, the only thing worse for the capitalist system than a reduction of exploitation is the reduction of the exploitable! Putting aside Sachs’ moral imperatives and his appeals to the heritage of the Enlightenment, the pragmatic consequence of Sachs’ medicine is that the pool of potential competitors in the world’s wage labor market should be dramatically enlarged once again.

Dr. Sachs is committed to saving capitalism from a catastrophe that all but blind doctrinaire neoliberals (with their neoconservative allies) see approaching. These neoliberals simply assume that if the fickle finger of the world labor market consigns billions to wagelessness, the condemned will automatically disappear or, if they resist, they can be isolated, bombed and starved out. Sachs knows that this just a pipe dream. For the inability to keep expanding the world labor market, and the increasing refusal of many of the peoples of the former colonized regions to be profitably exploited by capital, will create a dramatic reduction in the average rate of profit. In his role as the early 21^st century John Maynard Keynes, he like Keynes is not interested in debating the justice (and even the ultimate fate) of capitalism, but he is not as sanguine as Keynes was that capitalists would be willing to accept a couple of per cent as a profit rate just to keep their interesting game going. Sachs is anxious, as a clinician to capitalism (his other, more troublesome patient!), that the world labor market (not the world population) grows in the future, providing the necessary control of the rest of the working class. This aspect of his argument gives his proposals a capitalist “hook.”

The confusing, non-synonymous definitions of “extreme poverty” Sachs uses, therefore, are essential to the political project he is embarked upon: (1) to sell to the world capitalist class (most directly represented by the club of G8 “leaders”) the proposition that a small investment in the reproduction of the wageless of the world in order to transform them into credible competitors in the world wage labor market will be crucial to save the capitalist system into the mid-21^st century and (2) to convince the militants of the antiglobalization movement to eschew their pessimism “about the possibilities of capitalism with a human face, in which the remarkable power of trade and investment can be harnessed while acknowledging and addressing limitations through compensatory collective actions” (Sachs 2005: 357). For if the PPP definition is taken as identical to the “humanistic” basic needs definition, then it would appear that the most efficient path to end extreme poverty in a society (hence satisfying the anti-globalization militants) is to simply put in place throughout the world the conditions for introducing wage labor at a rate greater than, say, 10 cents an hour (hence satisfying his capitalist audience).

But if the basic needs /“use value” definition is clearly distinguished from the “$1 a day” one, then the most efficient way to eliminate poverty in a society would be to decommodify people’s basic needs while returning all available resources (land, natural resources, etc.) to communal control. It is exactly this path of decommodification and communalization in the long-run that Sachs is hoping to avoid, even though his plan requires it in the short-run (i.e., until at least 2025) by providing to the poor free education, free nutrition programs, free antimalarial equipment, free drinking water, sanitation and cooking fuels. But it is exactly this tension between the short-run and long-run (which is the source of Keynes’ famous cynical epigram) that Sachs evades. For there is no automatic reason why people who have “escaped the poverty trap” through decommodification of basic needs and the development of their commons will necessarily rush to sell their labor-power to the first capitalist offering a wage.

In conclusion, Sachs’ prescription for his primary, though unacknowledged, patient, the capitalist class, is: invest in bringing more than a billion of the “extremely poor” into planetary labor market by 2025. The sugar coating on this pill is to make this effort appear as an altruistic act (and hence potentially attractive to some of the militants of the anti-globalization movement). But if the response of the G8 “leaders” at Gleneagles is any indication, the patient is still suspicious of the doctor’s prescription. As well it should be, for The End of Poverty marks a “return” to Keynesian “short-term” medicine, but now applied on a global scale, albeit to save neoliberal globalization in the long-run. This, however, is exactly what the neoliberal “revolution” has turned the world upside down to avoid over the last quarter century. Are the capitalists desperate to go back to their vomit?

What impact Dr. Sachs’ medicine might have on the anti-globalization movement is even more ambiguous. It cannot be assessed by comparing the number of viewers of the “Live8” concerts with the number of anti-G8 demonstrators arrested in Scotland. Its political fate will be decided the ultimate source of the anti-globalization movement, i.e., in the thousands of sites of confrontations around the control of natural gas and petroleum in Bolivia and Niger Delta, against the drug company super-profits in South Africa and Brazil, for the preservation of the commons in Columbia and Kenya….

Parma

July 15, 2005

Bibliography

Chan, Shaohua and Martin Ravallion (2004). “How have the World’s Poor Fared since the early 1980s?” World Bank Policy Research Working Paper 3341 (June).

Deaton, Angus (2002). “Is World Poverty Falling?” Finance and Development 39 (2).

Sachs, Jeffrey (2005). The End of Poverty: How We Canm Make It Happen in our Lifetime. London: Penguin Books.