Making Poverty: A History

177 Pages·2008·0.932 MB·English

by  Thomas Lines

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THOMAS LINESis a freelance consultant specializing in
international agricultural markets. He started his
working life as a journalist reporting on the com-
modity and financial markets in London and Paris, and
later became a lecturer in international business at
Edinburgh University. He has worked as a team leader
of agricultural aid projects and a policy advisor for UN
agencies, leading NGOs, and fairtrade and trade
union organizations.
The author has worked in more than 40 countries
and speaks fluent French and Russian. He was a candi-
date for the Green Party in the 2005 UK general
election.
His recent work as a research consultant made him
look at world markets and their impact on poverty
from numerous angles, according to his clients’
requirements. This unusual wealth of experience leads
the author to some troubling questions about the way
the globalized economy affects the Earth’s poorest
inhabitants.
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Making Poverty
A HISTORY
Thomas Lines
Zed Books
LONDON & NEW YORK
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Making Poverty: A History was first published in 2008 by Zed Books Ltd,
7 Cynthia Street, London N1 9JF, UK and
Room 400, 175 Fifth Avenue, New York, NY 10010, USA
www.zedbooks.co.uk
Copyright © Thomas Lines 2008
The right of Thomas Lines to be identified as the author of this work has been asserted by
him in accordance with the Copyright, Designs and Patents Act, 1988
Cover designed by Andrew Corbett
Interior designed and set in 11/12.5 pt Perpetua by Long House, Cumbria, UK
Printed and bound in Malta by Gutenberg Press Ltd
Distributed in the USA exclusively by Palgrave Macmillan, a division of
St Martin’s Press, LLC,175 Fifth Avenue, New York, NY 10010
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted,
in any form or by any means, electronic or otherwise, without the prior permission
of the publisher.
A catalogue record for this book is available from the British Library
US Cataloging-in-Publication Data is available from the Library of Congress
ISBN 978-1-84277-941-5 hb
ISBN 978-1-84277-942-2 pb
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Contents
List of Tables and Figure / vi
List of Abbreviations / vii
Foreword / ix
Introduction / 1
1 Those who have fallen behind / 5
2 How poverty is made / 29
3 Do the market’s job for it / 61
4 Not farming but gambling / 93
5 Getting out of the trap / 118
6 Can we put history behind us? / 140
Bibliography / 150
Index / 160
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Tables and Figure
Table 1 The countries with the highest human development indicators10
Table 2 The countries defined as of low human development 12
Table 3 Average world primary commodity prices
over three-year periods, 1977–9 and 2004–6 40
Table 4 Changes in terms of trade of some country
groups, 1980–2 to 2001–3 43
Table 5 Commodity-dependent developing countries (2003–5)
grouped by the character of trade access to the US and EU of
their leading commodity export 74
Table 6 Vegetable trade in sub-Saharan Africa, 1990 and 2005 81
Table 7 Sub-Saharan Africa’s trade in staple foods and sugar 121
Figure 1 Types of commodity supply management
(limiting supply) 87
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Abbreviations
A&P Great Atlantic & Pacific Tea Company
ACP Africa, Caribbean and Pacific
AERC African Economic Research Consortium
ASEAN Association of South-East Asian Nations
c (US) cent
CAADP Comprehensive Africa Agriculture Development
Programme (under NEPAD)
COMESA Common Market for Eastern and Southern Africa
cu. m cubic metre
DR Congo Democratic Republic of Congo
EIC East India Company
EU European Union
EurepGAP European Retailers’ Protocol for Good Agricultural Practice
FAO Food and Agriculture Organization of the United Nations
GATT General Agreement on Tariffs and Trade
GCDS Global Cassava Development Strategy
GDP gross domestic product
GlobalGAP Global Good Agricultural Practice
GNP gross national product
HD human development
HDI Human Development Index
HIPC Highly Indebted Poor Countries
HIV human immunodeficiency virus
ICA international commodity agreement
ICO International Coffee Organization
IFAD International Fund for Agricultural Development
IFPRI International Food Policy Research Institute
ILO International Labour Organization
IMF International Monetary Fund
ITC International Tin Council
IUF International Union of Food, Agricultural, Hotel,
Restaurant, Catering, Tobacco and Allied Workers’
Associations
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viii ABBREVIATIONS
kg kilogram
lb pound (weight)
LDC Least Developed Country
NEPAD New Partnership for Africa’s Development
ODI Overseas Development Institute
OPEC Organization of the Petroleum Exporting Countries
PPP purchasing power parity
PRSP Poverty Reduction Strategy Paper
SAP structural adjustment programme
SDR Special Drawing Right
SM supply management
sq. km square kilometre(s)
SSA sub-Saharan Africa
TNC transnational corporation
TRIMS Trade-Related Investment Measures
TRIPS Trade-Related Intellectual Property Rights
TVEs township and village enterprises (in China)
UK United Kingdom
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Programme
US United States
Ush Ugandan shilling
USSR Union of Soviet Socialist Republics
WTO World Trade Organization
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Foreword: crisis year
Events move fast during a crisis, and so it has been since this book was
written in the middle months of 2007. When I started writing it, loan-
financed ‘private equity’ funds were busily buying up famous companies
while speculative ‘hedge funds’ were well-established investors, among
other things, in primary commodities, including foodstuffs such as maize
(corn), wheat and rice. Indeed, we were told that a commodities
‘supercycle’ had placed the prices of foods, metals and other commodities
on a long-term rising trend, which might even banish the boom-and-bust
character for which their markets have always been renowned.
Then suddenly, in the usually quiet holiday month of August, the credit
markets suffered what a leading banker called a ‘heart attack’. Financiers
lost confidence in the new debt instruments which lay behind the boom, the
banks stopped lending to each other, and the financial authorities were left
scratching their heads, since the methods they had applied to previous
financial crises would not work on this one.
The world of high finance might seem a long way from the struggle for
survival of smallholders, pastoral herders, rural labourers and their families
in Ethiopia, Mongolia, Moldova, the Solomon Islands, Haiti and other poor
countries, about whose plight this book is written. But in the world of global
free markets which has developed since the 1980s, they are closely linked.
Poor countries have been required by financial institutions to set their future
on exports, which in most cases means primary commodities and more often
than not the produce of their fields, trees and animals. The prices they receive
for them are set in global markets and by corporations which order the
produce and sell it on to the world’s consumers.
These countries were advised to forget traditional concepts of food
security, according to which they should ensure that their people will be fed
without the need for supplies from abroad. Many abandoned food reserves
which they had maintained as a safeguard against natural disaster and
economic adversity. They were assured that, as long as export revenues were
sufficient, food could always be bought on international markets.
If only life – and the world economy – were that simple. This book
examines the policies of freeing up world markets, which have led to such
unfathomable wealth for those who have worked in finance over the past 20