MacroScan (Printable Version) - Is there an Alternative?

It is important to be clear about the precise source of the pressure upon countries like India to "globalise". The most remarkable aspect of the contemporary international economic scene is the great fluidity of finance capital. This does not mean that investors are simply pushing funds around, different groups in different directions, without any systematic implications. No doubt there is considerable flow of "hot money" by private speculators, including nationals of the Third World countries. But the shifting of funds by private speculators too is triggered off by the behaviour of multinational banks, whose estimates of the creditworthiness of particular countries acts as an important signal to the private speculators. There is in other words a method in the speculative madness: the attitudes of the multinational banks, at least as far as the Third World countries are concerned, have a sort of "multiplier" effect upon those of private speculators including their own nationals. The upshot of the fluidity of finance capital therefore is that a few multinational banks in effect decide, not of course by any design, the pattern of distribution of international finance across countries. In short an implicit international mechanism has been created which can potentially suck out, and often actually does suck out, finance from particular countries for investment elsewhere if certain circumstances obtain in those countries.

These circumstances which as a rule do obtain in most Third World countries are: balance of payments difficulties, domestic social or political turmoil, incurring the displeasure of powerful capitalist countries etc. The potential damage inflicted by the emergence of such circumstances in other words cannot be "contained"; the State cannot undertake particular countermeasures of a "trouble shooting" kind within an overall economic regime of an interventionist variety. It is forced to tailor the economic regime in a bid to prevent the sucking out of finance capital, including by its own nationals. As a matter of fact, the complete collapse of State interventionism of any kind in the former Soviet Union (and hence by implication the complete collapse of the Soviet economy), i.e. the fact that while dismantling the structures of the old "command economy" the Soviet Union could not stabilise itself with some sort of a social democratic regime as many early reformers (including perhaps Gorbachev) had hoped is a reflection precisely of this phenomenon: the Soviet nationals themselves, including those in charge of State enterprises siphoned funds out of the Soviet Union (through for instance large-scale non-repatriation of exchange earnings) which subverted any autonomy in the choice of the economic regime.

It is obvious that any autonomy in the choice of economic policies or of the overall economic regime is threatened by this fluidity of finance capital. The basic presumption underlying the activities of an interventionist State is that there are certain socio-economic goals whose fulfilment requires purposive action. This presupposes that there is a "controlled area", i.e. that the domain over which such action is undertaken is to an extent insulated from the effects of simultaneous actions by other powerful agencies. The fluidity of capital, and its proneness to being sucked out of the economy in accordance with the mood in international financial markets tends to destroy the possibility of having such a "controlled area" and hence subvert any meaningful State intervention. There can scarcely be much scope for autonomous State action if finance is being sucked out of the country; and if this sucking out is a response to the very existence of an interventionist regime whose exercise of controls irks international finance, then the untenability of such a regime is even greater. It is unrealistic to believe that State controls, especially exchange controls, can entirely prevent the outflow of capital; as long as the ex-ante tendency for such an outflow exists, there would be an actual outflow despite controls (except in very special kinds of command regimes), not as large of course as would occur without controls, but large enough to make the regime untenable over time.

We have here indeed a curious example of self-fulfilling desire. Control regimes interfere with the freedom of financial flows, and hence are not to the liking of international finance. This very fact by encouraging surreptitious outflows of finance undermines as we have seen the tenability of control regimes. And then this is used to mount pressures against such regimes that they "do not work" and should be scrapped, pressures that have been quite successful of late. The theme of the conflict between multinational capital and the nation-State is an old one; in the sixties however in the writings of many authors like Dumont and others the preoccupation was with the conflict between multinational corporations and the nation-State. Today the far more significant aspect of this conflict has to be located in the sphere of finance, where the inability of the nation-State to act in defence of its autonomy derives in large measure from the fact that the antagonist is an intangible entity and includes many of the country's own nationals who are not motivated by any malevolence but are merely responding to the dictates of capitalist decision making.

Now, two broad kinds of strategy have been adopted by the Third World countries in the face of this tremendous international fluidity of capital. The first is the strategy favoured by, and imposed by, the Fund and the Bank upon a host of them. The basic presumption behind this strategy is that if these countries removed the control regime, dismantled State ownership wherever possible, gave full freedom to capital, including in particular international capital, to operate in the domestic economy, and undertook sufficient devaluation-cum-deflationary measures, then they would be able to attract international finance in adequate quantities to overcome foreign exchange worries, become internationally competitive, through the entry inter alia of direct foreign investment, in several spheres to be able to achieve high rates of export growth, and attain a greater degree of overall economic dynamism through more efficient resource use. In short, the way to prevent finance being sucked out of the economy, and to encourage the inflow of finance is to move towards a free-trade, free-market regime with minimal State intervention.

The problems with this strategy have been discussed above The basic balance of payments problems persist, and get accentuated as the debt-service obligations on the loans incurred in the initial phase of import liberalisation begin to pile up. This sets up expectations of exchange rate depreciation, as a result of which the sucking out of finance continues, with no amount of actual depreciation succeeding in curbing "bullish" expectations regarding foreign exchange price. At the same time the actual depreciation keeps imparting inflationary impulses into the economy which necessarily affect the living conditions of the poor who are already hit by the deflationary measures (causing unemployment) and the withdrawal of whatever fiscal subsidies used to come their way. Unemployment and economic hardships result in large-scale "criminalisation" in society, a tendency towards authoritarian forms of government, and an atmosphere of civil strife in which the much-hoped-for inflow of direct foreign investment, which could conceivably have promoted exports and turned the economy around, does not take place. The country in other words gets caught in a vicious circle of economic and social retrogression.

The case of Latin America, and, of late, Eastern Europe so clearly illustrates the above denouement that one would have thought any further argument on this score to be unnecessary. But the proponents of this strategy invariably attribute its failure either to the viciousness of the pre-liberalisation regime, or to the insufficiency of liberalisation, or to the brevity of time over which the strategy has been in place, all of which makes the belief in its efficacy a matter of "faith" (almost of a religious kind) rather than a testable proposition. But even those who have this faith would be hard put to argue that in the current situation of recession into which the advanced capitalist world is rapidly sinking, a strategy of integration with the global economy can hold out much hope for the Third World, no matter how good this strategy might have been under other circumstances.

Putting the matter differently, if under a controlled regime there is surreptitious outflow of finance capital, it does not follow that the removal of controls, merely by legalising financial outflows, would eliminate them. On the contrary, such legalisation would merely compound the problem, and squeezing the poor in the economy and destroying its extant productive base in the hope of building up the "confidence" of international creditors and potential direct foreign investors, would merely amount to chasing a chimera.

The second strategy which is quite different from the above, though the difference is usually glossed over by the proponents of the above, is a strategy of neo-mercantilism, such as has been followed in many East Asian countries, notably South Korea. Here we do not have a move towards "free trade" and the "free market"; the State remains highly interventionist though the nature and mode of intervention from what prevailed over much of the Third World earlier; the entry of imports into the economy is controlled, as is the capital account of the balance of payments; at the same time, strenuous efforts are made, under State patronage, to push out as much of exports as possible (which is why the term "neo-mercantilism" is so apposite); the sheer magnitude of export growth enables the economy to borrow from abroad, not for financing indiscriminate import liberalisation, but for stepping up the investment ratio; this together with very high domestic savings rates permits the maintenance of phenomenal investment rates, which in turn lead to such impressive growth rates as contribute to the maintenance of foreign creditors' confidence.

Much has been written by way of analysis of this strategy: about the nature of the State that can be so interventionist without being "dirigiste" in the old sense, about the necessity of land reforms as a pre-condition for such a strategy, about the role of near-universal literacy in making this strategy a success, and so on, and we need not repeat all that here. But there are at least two factors which put a question mark on the viability of this strategy, and these deserve a discussion. The first of these is the international context. There can be little doubt that for such a neo-mercantilist strategy to succeed, there has to be a deliberate policy in other countries, especially the advanced countries, of accommodating exports from these countries. The neo-mercantilist policy pursued by Germany around the turn of the century was so successful because other countries, notably Britain which was interested in preserving the Gold Standard, were willing to absorb large amounts of German exports. Like- wise, the post-war Japanese miracle could not have occurred, if the United States, for strategic reasons (having to do with the containment of Communism) had not provided such substantial market access to Japanese exports. And the same can be said of the other successful East Asian countries.

The second problem relates to internal opposition. A neo- mercantilist strategy is necessarily associated with a degree of suppression of workers' rights, a shift in income distribution against the working class and in favour of business profits, and, in a large economy, a growth in regional disparities. All these are difficult to accommodate within a framework of representative democracy. Such a strategy therefore, no less than the Fund-Bank strategy, is associated with bureaucratic-authoritarian forms of government. This however only suppresses internal opposition but does not reduce the degree of its hostility. In a society where the legitimacy of governance is founded upon the legacy of a revolutionary struggle, or even of a mass anti-colonial struggle, such an economic strategy runs the serious risk of succumbing to an internal upheaval. Moreover whether or not it so succumbs, one can legitimately question the desirability of any strategy that requires for its success the suppression of workers' rights, and hence, by implication, of democratic rights in general. And finally, since "outward orientation" (though of a neo- mercantilist sort) is an essential component of this strategy, its viability in the context of the emerging world capitalist recession is open to serious doubt.

The question which immediately arises is: does an alternative viable economic strategy exist for the Third World, which, while not taking us back to the earlier "dirigisme", can avoid both the Fund-Bank trap, as well as the temptations of an authoritarian neo-mercantilism. In one sense of course the question is absurd, though in another sense it is not. Economic strategies are not chosen like one chooses a shirt or a pair of socks; they emerge out of a complex social reality, and reflect the interplay of different classes and social groups within that reality. So the question is not one of picking out some sort of an optimal strategy. Nonetheless a discussion of possibilities, whether or not they realise themselves, does constitute an important intellectual task. Before we can even think of changing the world, we should have some preliminary idea of the direction in which we should be changing it.

The main problem highlighted above, namely the outflow of finance from the Third World in an international economy characterised by great capital fluidity, derives its strength from one basic fact mentioned above: given the pattern of income distribution and tastes in the Third World country, there is a wide divergence between the extant structure of production and the structure of demand, and this divergence is never bridged. This necessarily means a one-way flow of innovations: the Third World is all the time trying to catch up in the production of those commodities which are currently being produced in the metropolitan countries and for which a demand exists within the Third World as well. This perpetual product cycle, in which the Third World is lagging behind the metropolitan countries, is the primary cause of the pressure on its external payments, which gets compounded by the fluidity of capital mentioned above.

To get out of this syndrome, while controls over imports and over the capital account of the balance of payments are essential, they are obviously insufficient. There has to be a sufficient growth of exports. While the relentless export drive characteristic of neo-mercantilism need not be endorsed, there is no gainsaying the fact that most "dirigiste" regimes earlier tended implicitly to discriminate against exporting. This anti- export bias is counterproductive. Export-led growth, which, whether the proponents of the Fund-Bank strategy admit or not, is logically inherent as the central thrust of their strategy, offers no solution to the Third World; but pushing out sufficient exports inter alia to ensure that the balance of payments are not put to undue strain is essential for any development programme.

At a more fundamental level however the need is to break out of the grip of this peculiar product cycle. Greater equality in the pattern of asset and income distribution is a necessary condition for this, since the ex-ante demand for metropolitan goods per unit of income is likely to be greater for the upper income groups than for the poor. This calls not just for the use of the fiscal instrument, but for a reorientation of the development strategy. Land reforms, the provision of minimum employment and basic amenities, health and education facilities, the development of rural infrastructure etc. must take precedence over the setting up of large import-intensive projects on the basis of borrowed technology with negligible employment-generating effect upon the domestic economy.

Income redistribution alone however would be insufficient. In the long-run there is no getting away from the need for a change in tastes and a self-liberation, not a State-imposed one, from the culture of Western-style consumerism. This is not to argue for a turning of one's back upon modern technology, but for a selectivity in the import of technology and an effort at an independent trajectory of innovations.

For all this of course the role of the State is absolutely essential, but as the experience of the earlier "dirigiste" regimes suggests, it is equally essential to enforce accountability of the State. This of course is a big issue in itself. But the need for accountability is by no means obviated, as is often erroneously thought, by the mere substitution of a "market-friendly" economic regime for a "dirigiste" economic regime. Perhaps the very alteration in the development strategy suggested above, with greater emphasis upon the immediate provision of better living standards for the poor, would throw up new institutions (for more decentralised decision-making) as well as new levels of consciousness and popular participation that would make greater accountability of the State a meaningful reality.

Notwithstanding the constraints imposed by the international economy there exists a path of sustainable democratic development for the Third World. But the combination of social forces required for arriving at this path and remaining on or near it is not easy to organise.



Themes > Economic Briefs


In the Changing Global Scenario of Unipolarism and Rapid Economic Integration, Is It Possible for India to Pursue the Traditional Policy Course? What are the Options that the Country has?

It is important to be clear about the precise source of the pressure upon countries like India to "globalise". The most remarkable aspect of the contemporary international economic scene is the great fluidity of finance capital. This does not mean that investors are simply pushing funds around, different groups in different directions, without any systematic implications. No doubt there is considerable flow of "hot money" by private speculators, including nationals of the Third World countries. But the shifting of funds by private speculators too is triggered off by the behaviour of multinational banks, whose estimates of the creditworthiness of particular countries acts as an important signal to the private speculators. There is in other words a method in the speculative madness: the attitudes of the multinational banks, at least as far as the Third World countries are concerned, have a sort of "multiplier" effect upon those of private speculators including their own nationals. The upshot of the fluidity of finance capital therefore is that a few multinational banks in effect decide, not of course by any design, the pattern of distribution of international finance across countries. In short an implicit international mechanism has been created which can potentially suck out, and often actually does suck out, finance from particular countries for investment elsewhere if certain circumstances obtain in those countries. These circumstances which as a rule do obtain in most Third World countries are: balance of payments difficulties, domestic social or political turmoil, incurring the displeasure of powerful capitalist countries etc. The potential damage inflicted by the emergence of such circumstances in other words cannot be "contained"; the State cannot undertake particular countermeasures of a "trouble shooting" kind within an overall economic regime of an interventionist variety. It is forced to tailor the economic regime in a bid to prevent the sucking out of finance capital, including by its own nationals. As a matter of fact, the complete collapse of State interventionism of any kind in the former Soviet Union (and hence by implication the complete collapse of the Soviet economy), i.e. the fact that while dismantling the structures of the old "command economy" the Soviet Union could not stabilise itself with some sort of a social democratic regime as many early reformers (including perhaps Gorbachev) had hoped is a reflection precisely of this phenomenon: the Soviet nationals themselves, including those in charge of State enterprises siphoned funds out of the Soviet Union (through for instance large-scale non-repatriation of exchange earnings) which subverted any autonomy in the choice of the economic regime. It is obvious that any autonomy in the choice of economic policies or of the overall economic regime is threatened by this fluidity of finance capital. The basic presumption underlying the activities of an interventionist State is that there are certain socio-economic goals whose fulfilment requires purposive action. This presupposes that there is a "controlled area", i.e. that the domain over which such action is undertaken is to an extent insulated from the effects of simultaneous actions by other powerful agencies. The fluidity of capital, and its proneness to being sucked out of the economy in accordance with the mood in international financial markets tends to destroy the possibility of having such a "controlled area" and hence subvert any meaningful State intervention. There can scarcely be much scope for autonomous State action if finance is being sucked out of the country; and if this sucking out is a response to the very existence of an interventionist regime whose exercise of controls irks international finance, then the untenability of such a regime is even greater. It is unrealistic to believe that State controls, especially exchange controls, can entirely prevent the outflow of capital; as long as the ex-ante tendency for such an outflow exists, there would be an actual outflow despite controls (except in very special kinds of command regimes), not as large of course as would occur without controls, but large enough to make the regime untenable over time. We have here indeed a curious example of self-fulfilling desire. Control regimes interfere with the freedom of financial flows, and hence are not to the liking of international finance. This very fact by encouraging surreptitious outflows of finance undermines as we have seen the tenability of control regimes. And then this is used to mount pressures against such regimes that they "do not work" and should be scrapped, pressures that have been quite successful of late. The theme of the conflict between multinational capital and the nation-State is an old one; in the sixties however in the writings of many authors like Dumont and others the preoccupation was with the conflict between multinational corporations and the nation-State. Today the far more significant aspect of this conflict has to be located in the sphere of finance, where the inability of the nation-State to act in defence of its autonomy derives in large measure from the fact that the antagonist is an intangible entity and includes many of the country's own nationals who are not motivated by any malevolence but are merely responding to the dictates of capitalist decision making. Now, two broad kinds of strategy have been adopted by the Third World countries in the face of this tremendous international fluidity of capital. The first is the strategy favoured by, and imposed by, the Fund and the Bank upon a host of them. The basic presumption behind this strategy is that if these countries removed the control regime, dismantled State ownership wherever possible, gave full freedom to capital, including in particular international capital, to operate in the domestic economy, and undertook sufficient devaluation-cum-deflationary measures, then they would be able to attract international finance in adequate quantities to overcome foreign exchange worries, become internationally competitive, through the entry inter alia of direct foreign investment, in several spheres to be able to achieve high rates of export growth, and attain a greater degree of overall economic dynamism through more efficient resource use. In short, the way to prevent finance being sucked out of the economy, and to encourage the inflow of finance is to move towards a free-trade, free-market regime with minimal State intervention. The problems with this strategy have been discussed above The basic balance of payments problems persist, and get accentuated as the debt-service obligations on the loans incurred in the initial phase of import liberalisation begin to pile up. This sets up expectations of exchange rate depreciation, as a result of which the sucking out of finance continues, with no amount of actual depreciation succeeding in curbing "bullish" expectations regarding foreign exchange price. At the same time the actual depreciation keeps imparting inflationary impulses into the economy which necessarily affect the living conditions of the poor who are already hit by the deflationary measures (causing unemployment) and the withdrawal of whatever fiscal subsidies used to come their way. Unemployment and economic hardships result in large-scale "criminalisation" in society, a tendency towards authoritarian forms of government, and an atmosphere of civil strife in which the much-hoped-for inflow of direct foreign investment, which could conceivably have promoted exports and turned the economy around, does not take place. The country in other words gets caught in a vicious circle of economic and social retrogression. The case of Latin America, and, of late, Eastern Europe so clearly illustrates the above denouement that one would have thought any further argument on this score to be unnecessary. But the proponents of this strategy invariably attribute its failure either to the viciousness of the pre-liberalisation regime, or to the insufficiency of liberalisation, or to the brevity of time over which the strategy has been in place, all of which makes the belief in its efficacy a matter of "faith" (almost of a religious kind) rather than a testable proposition. But even those who have this faith would be hard put to argue that in the current situation of recession into which the advanced capitalist world is rapidly sinking, a strategy of integration with the global economy can hold out much hope for the Third World, no matter how good this strategy might have been under other circumstances. Putting the matter differently, if under a controlled regime there is surreptitious outflow of finance capital, it does not follow that the removal of controls, merely by legalising financial outflows, would eliminate them. On the contrary, such legalisation would merely compound the problem, and squeezing the poor in the economy and destroying its extant productive base in the hope of building up the "confidence" of international creditors and potential direct foreign investors, would merely amount to chasing a chimera. The second strategy which is quite different from the above, though the difference is usually glossed over by the proponents of the above, is a strategy of neo-mercantilism, such as has been followed in many East Asian countries, notably South Korea. Here we do not have a move towards "free trade" and the "free market"; the State remains highly interventionist though the nature and mode of intervention from what prevailed over much of the Third World earlier; the entry of imports into the economy is controlled, as is the capital account of the balance of payments; at the same time, strenuous efforts are made, under State patronage, to push out as much of exports as possible (which is why the term "neo-mercantilism" is so apposite); the sheer magnitude of export growth enables the economy to borrow from abroad, not for financing indiscriminate import liberalisation, but for stepping up the investment ratio; this together with very high domestic savings rates permits the maintenance of phenomenal investment rates, which in turn lead to such impressive growth rates as contribute to the maintenance of foreign creditors' confidence. Much has been written by way of analysis of this strategy: about the nature of the State that can be so interventionist without being "dirigiste" in the old sense, about the necessity of land reforms as a pre-condition for such a strategy, about the role of near-universal literacy in making this strategy a success, and so on, and we need not repeat all that here. But there are at least two factors which put a question mark on the viability of this strategy, and these deserve a discussion. The first of these is the international context. There can be little doubt that for such a neo-mercantilist strategy to succeed, there has to be a deliberate policy in other countries, especially the advanced countries, of accommodating exports from these countries. The neo-mercantilist policy pursued by Germany around the turn of the century was so successful because other countries, notably Britain which was interested in preserving the Gold Standard, were willing to absorb large amounts of German exports. Like- wise, the post-war Japanese miracle could not have occurred, if the United States, for strategic reasons (having to do with the containment of Communism) had not provided such substantial market access to Japanese exports. And the same can be said of the other successful East Asian countries. The second problem relates to internal opposition. A neo- mercantilist strategy is necessarily associated with a degree of suppression of workers' rights, a shift in income distribution against the working class and in favour of business profits, and, in a large economy, a growth in regional disparities. All these are difficult to accommodate within a framework of representative democracy. Such a strategy therefore, no less than the Fund-Bank strategy, is associated with bureaucratic-authoritarian forms of government. This however only suppresses internal opposition but does not reduce the degree of its hostility. In a society where the legitimacy of governance is founded upon the legacy of a revolutionary struggle, or even of a mass anti-colonial struggle, such an economic strategy runs the serious risk of succumbing to an internal upheaval. Moreover whether or not it so succumbs, one can legitimately question the desirability of any strategy that requires for its success the suppression of workers' rights, and hence, by implication, of democratic rights in general. And finally, since "outward orientation" (though of a neo- mercantilist sort) is an essential component of this strategy, its viability in the context of the emerging world capitalist recession is open to serious doubt. The question which immediately arises is: does an alternative viable economic strategy exist for the Third World, which, while not taking us back to the earlier "dirigisme", can avoid both the Fund-Bank trap, as well as the temptations of an authoritarian neo-mercantilism. In one sense of course the question is absurd, though in another sense it is not. Economic strategies are not chosen like one chooses a shirt or a pair of socks; they emerge out of a complex social reality, and reflect the interplay of different classes and social groups within that reality. So the question is not one of picking out some sort of an optimal strategy. Nonetheless a discussion of possibilities, whether or not they realise themselves, does constitute an important intellectual task. Before we can even think of changing the world, we should have some preliminary idea of the direction in which we should be changing it. The main problem highlighted above, namely the outflow of finance from the Third World in an international economy characterised by great capital fluidity, derives its strength from one basic fact mentioned above: given the pattern of income distribution and tastes in the Third World country, there is a wide divergence between the extant structure of production and the structure of demand, and this divergence is never bridged. This necessarily means a one-way flow of innovations: the Third World is all the time trying to catch up in the production of those commodities which are currently being produced in the metropolitan countries and for which a demand exists within the Third World as well. This perpetual product cycle, in which the Third World is lagging behind the metropolitan countries, is the primary cause of the pressure on its external payments, which gets compounded by the fluidity of capital mentioned above. To get out of this syndrome, while controls over imports and over the capital account of the balance of payments are essential, they are obviously insufficient. There has to be a sufficient growth of exports. While the relentless export drive characteristic of neo-mercantilism need not be endorsed, there is no gainsaying the fact that most "dirigiste" regimes earlier tended implicitly to discriminate against exporting. This anti- export bias is counterproductive. Export-led growth, which, whether the proponents of the Fund-Bank strategy admit or not, is logically inherent as the central thrust of their strategy, offers no solution to the Third World; but pushing out sufficient exports inter alia to ensure that the balance of payments are not put to undue strain is essential for any development programme. At a more fundamental level however the need is to break out of the grip of this peculiar product cycle. Greater equality in the pattern of asset and income distribution is a necessary condition for this, since the ex-ante demand for metropolitan goods per unit of income is likely to be greater for the upper income groups than for the poor. This calls not just for the use of the fiscal instrument, but for a reorientation of the development strategy. Land reforms, the provision of minimum employment and basic amenities, health and education facilities, the development of rural infrastructure etc. must take precedence over the setting up of large import-intensive projects on the basis of borrowed technology with negligible employment-generating effect upon the domestic economy. Income redistribution alone however would be insufficient. In the long-run there is no getting away from the need for a change in tastes and a self-liberation, not a State-imposed one, from the culture of Western-style consumerism. This is not to argue for a turning of one's back upon modern technology, but for a selectivity in the import of technology and an effort at an independent trajectory of innovations. For all this of course the role of the State is absolutely essential, but as the experience of the earlier "dirigiste" regimes suggests, it is equally essential to enforce accountability of the State. This of course is a big issue in itself. But the need for accountability is by no means obviated, as is often erroneously thought, by the mere substitution of a "market-friendly" economic regime for a "dirigiste" economic regime. Perhaps the very alteration in the development strategy suggested above, with greater emphasis upon the immediate provision of better living standards for the poor, would throw up new institutions (for more decentralised decision-making) as well as new levels of consciousness and popular participation that would make greater accountability of the State a meaningful reality. Notwithstanding the constraints imposed by the international economy there exists a path of sustainable democratic development for the Third World. But the combination of social forces required for arriving at this path and remaining on or near it is not easy to organise.



© MACROSCAN 2002