A War on Global Poverty

The Lost Promise of Redistribution and the Rise of Microcredit

Joanne Meyerowitz

• Publisher: Princeton University Press
• Year: 2021
• ISBN:
  9780691219974
• Topic: Geschichte
• Subtopic: Weltgeschichte

A history of US involvement in late twentieth-century campaigns against global poverty and how they came to focus on women A War on Global Poverty provides a fresh account of US involvement in campaigns to end global poverty in the 1970s and 1980s. From the decline of modernization programs to the rise of microcredit, Joanne Meyerowitz looks beyond familiar histories of development and explains why antipoverty programs increasingly focused on women as the deserving poor.When the United States joined the war on global poverty, economists, policymakers, and activists asked how to change a world in which millions lived in need. Moved to the left by socialists, social democrats, and religious humanists, they rejected the notion that economic growth would trickle down to the poor, and they proposed programs to redress inequities between and within nations. In an emerging "women in development" movement, they positioned women as economic actors who could help lift families and nations out of destitution. In the more conservative 1980s, the war on global poverty turned decisively toward market-based projects in the private sector. Development experts and antipoverty advocates recast women as entrepreneurs and imagined microcredit—with its tiny loans—as a grassroots solution. Meyerowitz shows that at the very moment when the overextension of credit left poorer nations bankrupt, loans to impoverished women came to replace more ambitious proposals that aimed at redistribution.Based on a wealth of sources, A War on Global Poverty looks at a critical transformation in antipoverty efforts in the late twentieth century and points to its legacies today.

PART I

A War on Global Poverty

What matters today, the issue which blocks the horizon, is the need for a redistribution of wealth.

—FRANTZ FANON, THE WRETCHED OF THE EARTH

CHAPTER ONE

The Trouble with Foreign Aid

IN HIS 1961 inaugural address, President John F. Kennedy called attention to the world’s poor. “To those people in the huts and villages of half the globe struggling to break the bonds of mass misery,” he promised “our best efforts to help them help themselves … not because the communists may be doing it, not because we seek their votes, but because it is right.”¹ In his first year in office, Kennedy established the Peace Corps to send American volunteers overseas, the Alliance for Progress to promote economic growth in Latin America, and the United States Agency for International Development (USAID) to provide economic assistance to the poorer nations of the world. Over the course of a decade, the new agencies pursued a variety of “modernization” approaches. They built dams, power plants, and highways, dispersed high-yield seeds in what came to be called the “green revolution” in food production, and encouraged villagers overseas to participate as active citizens in “community development” plans. None of these modernization schemes was new in the 1960s, but taken together they pointed to a pervasive optimism that the United States could export infrastructure, technical expertise, and democratic processes and thereby develop the “underdeveloped” nations of the world.

Within a few years the optimism had vanished. In late 1961, the UN, inspired by Kennedy, had pronounced the 1960s the “development decade.” In 1966, George D. Woods, president of the World Bank, worried that it would instead “recede into history as a decade of disappointment.”² In the second half of the 1960s, development programs were under attack and on the decline. Large-scale infrastructure projects had created some monuments to modernity, but they had, by all accounts, failed to make a serious dent in global inequities. The high-yield seeds of the “green revolution” had benefited larger landowners who could afford irrigation and fertilizer, and displaced landless and small-holding farmers. Community development programs, too, had reinforced the local hierarchies in which powerful landlords exploited peasants. Development projects had increased the debt and impinged on the sovereignty of postcolonial states, and they had diverted funds to authoritarian leaders at the expense of the poor.³ In Kennedy’s “huts and villages,” and in cities as well, poverty remained unquestionably rampant.

The corrosive disappointment reached beyond the limits of specific programs. By the early 1970s, scholars had repudiated modernization theories, which had provided the intellectual underpinnings of Kennedy’s foreign aid. They disputed the notion that the United States stood at the apex of development, providing a universal model for modernizing the world. They argued against the theorists who imagined that infrastructure or capital-intensive industry could jump-start the economies of poorer nations into self-sustained growth, they pointed to the environmental damage caused by unquestioned faith in technology, and they exposed the ways that economic development involved manipulation, coercion, and upheaval.⁴

For the American public, too, optimism sank. With its bombings, napalm, massacres, and daily death tolls, the war in Vietnam deflated the fantasy of US benevolence overseas. Economic assistance seemed to drag the United States into international muddles, buttress repugnant armed interventions, and bolster repressive regimes. And when the domestic war on poverty sputtered and when inflation rose and the trade deficit grew, fewer claimed that the US economy stood as the yardstick for prosperity in the rest of the world. Money spent on foreign aid, some critics complained, only contributed to “chronic deficits” in the United States. “The Americans,” the Economist reported, “bogged down in Vietnam, frustrated in the search for quick solutions, long for … disengagement.” In this inauspicious climate, support for foreign aid dwindled and the funding for economic development collapsed. In 1963, the US government spent $3.3 billion (in constant dollars, indexed to 1961) on development assistance; ten years later the figure (again in constant dollars) had dropped to $1.8 billion. The United States, which had once given more per capita than any other nation, now ranked twelfth in per capita giving among the sixteen noncommunist nations that contributed substantially to nonmilitary foreign aid.⁵

In the late 1960s and early 1970s, advocates of foreign aid scrambled in response. They conducted studies, held conferences, drafted legislation, and reformulated policies. They were pushed to the left by international protests that cast aid as imperialism and attacked from the right for wasting money overseas. As they wended their way through the rocky terrain, they crafted a new orthodoxy that relied less on Cold War arguments about national security and more on ethical arguments about the injustice of inequality and the immorality of deprivation. In the early 1970s, they vented their frustrations with the failures of modernization and embraced a growing global antipoverty movement.

In a striking reorientation of development discourse, they turned their attention to projects that aimed to benefit “the poorest of the poor.” They focused less on building the economies of poorer nations from the top down and more on lifting the poorest people in the poorer nations out of the worst of poverty. Most crucially, they rejected trickle-down economics. They disputed the prevalent models in which national economic metrics indicated on-the-ground progress in the fight against global poverty. Economic growth, they conceded, might not help the poor. If developing the nation did not reach the neediest, then development programs would have to shift their scale to the local level.

Soon the US government, the World Bank, and others joined the campaigns against global poverty. In Congress, government agencies, and international institutions, various officials repeated the repudiation of trickle-down economics and expressed a growing interest in targeting poverty directly. But in the mainstream institutions the promise of redistribution could go only so far. In new development programs, officials would not agree to any significant commitment to reallocation of resources. Instead they focused on redirecting development programs to address the labor and technologies of the rural poor. They continued to promote a “politics of productivity,” less at the national level and more at the village level, less in industry and more in agriculture.⁶ Still, they helped promote the new consensus, repeated again and again in the collaborative networks of development economists and policy makers: trickle-down economics had failed. They placed their faith instead in small-scale local projects that addressed the poor.

“Assaulted by Waves from Left and Right”

In 1966, when George Woods despairingly warned that development could devolve into disappointment, he hoped to reverse the decline. A year later, at an informal weekend meeting in England, he hatched a plan with a small and clubby group of like-minded foreign aid advocates. Organized by Barbara Ward, a prominent British author and popular economist, and William Clark, the head of Britain’s Overseas Development Institute, the group turned to the Marshall Plan of the late 1940s for their inspiration. Earlier (and later) foreign aid advocates had frequently invoked the Marshall Plan as an ideal and a model. They remembered how the United States had contributed billions of dollars to rebuild the war-torn nations of Europe, and they wanted the United States and Europe to make similar commitments to the poorer nations of the world. They knew, of course, that industrial nations decimated by war were not the same as agricultural nations that exported natural resources and imported manufactured goods. Economic recovery was not economic development. Nonetheless, they used the Marshall Plan as an evocative touchstone to imagine another massive infusion of funds. As Clark remembered it, “all of us … had been touched enormously by the Marshall Plan, and our enthusiasm for something similar was really one of the prime things in our approach.” The weekend confab proposed a commission, similar to the one in 1947 that had drafted the details of the European recovery plan. Shortly after, at a speech in Stockholm, Woods made the proposal public with a call for an international committee of recognized experts—a “grand assize”—that would investigate and report on the past and future of development aid.⁷

The following year, when Robert S. McNamara replaced Woods as World Bank president, he took up the baton. He invited Lester B. Pearson, former Canadian prime minister and Nobel Prize winner, to head the Commission on International Development. In 1969, the commission released its report, Partners in Development. “The widening gap between the developed and developing countries,” it stated in its opening sentence, “has become the central issue of our time.” The report acknowledged that “the climate surrounding foreign aid programs is heavy with disillusion and distrust,” and it called, as others had earlier, for a renewed commitment to economic assistance to poorer nations. Donors, it claimed, had expected “too much too soon” from their contributions. Now they needed to give again and give more. The report hoped to reinvigorate the optimistic vision of a world made better through foreign aid.⁸

From the 1950s on, those who endorsed US foreign aid had made three key arguments—political, economic, and humanitarian—in its favor.⁹ The political argument claimed that poverty overseas undermined US security. In this view, people in poorer nations were discontented and potentially violent. But with generous economic aid the United States could win friends, calm the restless poor, stabilize the regimes of allies, and thereby reduce threats to US political interests. More specifically, advocates for economic assistance saw it as a key way to court postcolonial nations and prevent them from turning to communism. At its crudest, the political argument saw foreign aid as a tool for Cold War hegemony. In 1962, for example, Kennedy bluntly told an audience, foreign aid “is a method by which the United States maintains a position of influence and control around the world.” The Pearson report, though, took a decidedly softer approach. “Cooperation for development,” it conceded, could “establish or strengthen a friendly political relationship.” But it warned against using aid for “short-term political advantage.”¹⁰

The economic argument posited that “underdeveloped” economies impeded the expansion of markets, food supplies, trade, and investment. Foreign assistance, it claimed, would bring poorer nations further into the global economy and thereby advance economic growth by creating goods, consumers, and investment opportunities for wealthier nations as well as poorer ones. On an ideological level, the economic argument reflected an abiding belief that expanding capitalism would benefit everyone. On a grubbier plane, it appealed to those who hoped to profit from the business of aid to impoverished nations. The US policy known as “tying” bound recipient nations to spend economic assistance funds on American products and services, thus guaranteeing that substantial sums redounded to US contractors, shippers, farmers, and manufacturers. Here the Pearson report supported “enlightened and constructive self-interest” but backed away from any appeal to naked gain. With a win-win vision of capitalism, it found that all nations could benefit from the “fullest possible utilization of all the world’s resources” and supported “the general increase in international trade which would follow international development.” But it stated outright that “development will not normally create, nor should it be expected to create, immediate economic windfalls for a donor country.” It recommended gradual change in “a sequence of steps leading to progressive untying.”¹¹

The humanitarian argument depicted poverty as a wrong, an evil, and a source of human misery, and presented foreign assistance as a moral route to ending it. This argument appeared frequently in the public speeches of politicians, the popular writings of development experts, and the funding appeals of charities. It sometimes served as a rhetorical veneer for self-serving policies, but it also reflected conviction. As Didier Fassin has written recently, humanitarianism, even at its most sincere, veers toward a condescending paternalism, “always directed from above to below, from the more powerful to the weaker, the more fragile, the more vulnerable.” But it can also lean in the direction of social justice, solidarity, and redistribution in the face of inequities.¹² Even hard-core realists, who saw economic aid primarily as a way to advance US interests, responded on occasion to various moral claims. The Pearson report, too, placed its bet in the humanitarian corner. In answer to the question “why aid?” its “simplest answer” was “the moral one.” It echoed Kennedy’s inaugural address in posing foreign aid as “right”: “It is only right for those who have to share with those who have not.” The report spoke of “world community,” “international cooperation,” and mutual obligation, and asked wealthier nations to refuse “to tolerate the extreme and shameful disparity in standards of life.”¹³

The Pearson report advanced a long list of recommendations, including more international trade with better terms for developing nations, more private foreign investment, and support for debt relief, population control, and international organizations. But it focused at heart on increasing foreign aid with greater commitments from...