Subject: [energyresources] Emergy Impact of WorldBank&IMF
Date: Thu, 20 Apr 2000 06:46:59 EDT
From: Htoeco@aol.com <mailto:Htoeco@aol.com>
Reply-To: energyresources@egroups.com
H.T.Odum re: Emergy evaluation of WorldBank and IMF impact on less developed countries: (See: international chapter, pages 208-219 of Environmental Accounting, Emergy and decision Making, John Wiley)
The emergy/$ ratios (after currency conversions to $) are much higher in the less developed countries than in developed nations. Where the ratio is 4/1 the repayment with interest in real wealth is equivalent to a 440% interest for a loan with a 10% interest rate. The raw resources bought by developed countries transfer 2 to 250 times more real wealth than is paid for in buying power of money exchanged. An undeveloped country can develop its own capital faster by using its real wealth at home than by trying to exchange real wealth for a fraction of its real value. For example, with shrimp pond mariculture in Ecuador the real wealth of the mangrove coastal zone was taken from the local people and sold to the U.S. for a fraction of its emergy value.
—Howard T. Odum
The creation of a world economy from several smaller-scale, self-sufficient,
regional economies should have produced, according to the liberal, free market
economists such as Adam Smith and Ricardo, a world- wide division and specialisation
of labour, allowing each country and area to concentrate on growing or making
the commodities it was best suited to produce. As a result of this specialisation
every area should, in theory, have benefited from the most efficient allocation
of resources. The theory, however, ignores the political constraints involved,
in particular on the selection of commodities that were produced —European
control enabled the colonial powers to ensure that the commodities they required
were produced and allowed them to enforce a highly asymmetrical series of exchanges
of products between the home country and the colonies. The words of Cecil Rhodes,
one of the driving forces behind the last period of British expansion in Africa,
reveal how different it all was in practice:
'We must find new lands from which we can easily obtain raw materials and at the same time exploit the cheap slave labour that is available from the natives of the colonies. The colonies would also provide a dumping ground for the surplus goods produced in our factories.'
The way in which one part of the world - the West (Europe, North America and the white colonies) - became 'developed' and the way another part - given the collective title the Third World - became 'underdeveloped' are not separate phenomena; they are inextricably linked. In the world market that was created by Europe, one region was able to extract a large surplus of products and natural resources from the dependent area. The dominant economies of the West were characterised by the production of capital intensive goods and relatively high wages and profits whilst the subordinate economies concentrated on producing crops, raw materials and minerals that were of low capital intensity and linked to low wages and low profits. Although development took place in the subordinate colonial economies, it was almost entirely geared to the needs of the home economies. Railways and distribution networks were built but they were largely confined to links between the inland regions and the ports and were designed to facilitate exports. There were few, if any, links between rural areas, or often even between adjacent countries where they were under different political control.
The achievement of political independence in the Third World did not bring economic independence. Economies remained tied into the global system created by the industrialised world and their structure, which had been largely determined by the colonial authorities, proved very difficult to change. A few countries managed to avoid this trap-those that retained their political and economic independence such as Japan, together with those that escaped European colonialism such as South Korea and Taiwan, 'those that had small populations and vast resources required by the developed world such as the oil-rich states of the Near East", and the trade-based economies of Hong Kong and 'Singapore. After independence the model of development adopted by many countries in the Third World was, not surprisingly, given their limited room for manoeuvre, based on accepted western models emphasising industrialisation, free markets and international competition. Only a few countries such as India and Brazil were able to make even modest steps in this direction and even here inequalities in the distribution of the benefits have been particularly marked. For most countriesin the Third World, particularly in Africa, but also the poorer countries of Latin America and Asia, the only available option was to increase production of a few cash crops or minerals in an attempt to raise income and exports. The problem with this approach was that increased production tended to lead to lower prices, lower income, increased dependence on a few commodities and greater vulnerability. Borrowing money from the West in order to finance development projects (often of dubious value or relevance to local conditions) led to even greater difficulties, as countries such as Egypt and Venezuela had already demonstrated in the late nineteenth century (long before the great debt crisis of the 19803) when they defaulted on their loans and were either occupied by foreign powers or had their revenues taken over in order to fund the debt. The people in the Third World who benefited most from this form of development were the elite, closely tied to the industrialised world, rather than the bulk of the population.
The consequences of this unbalanced development had profound effects for both the industrialised world and the Third World. Political and economic control of a large part of the world's resources enabled the industrialised world to live beyond the constraints of its immediate resource base. Raw materials were readily available for industrial development, food could be imported to support a rapidly rising population and a vast increase in consumption formed the basis for the highest material standard of living ever achieved in the world. Much of the price of that achievement was paid by the population of the Third World in the form of exploitation, poverty and human suffering.
—A Green History of the World; Clive Ponting; p. 221-2.