The prime source of extreme chronic poverty and destitution globally is the unsustainability of livelihood options for people living in rural communities.
My first reaction to that statement was that it depends on what you mean by ‘unsustainability’. Villages in India have had specialized members of the community in hereditary crafts and trades for hundreds, if not thousands of years. From an environmental perspective, these practices are the definition of sustainability. Yet in a globablized world where Colgate manufactures a Rs. 15 plastic toothbrush, suddenly the environmentally sound and infinitely sustainable practice of using twigs from a tree to brush your teeth is suddenly economically unsustainable for the twig vendor. Ironically, Colgate simultaneously makes the environmentally sensible option economically unviable and the economically expedient option environmentally unsustainable.
Proponents of using business to tackle chronic poverty are well-served to remember that modern business and modern poverty are the Siamese twins born of the same mother greed. Though we like to pretend that they’re separate entities, careful consideration often reveals that they’re connected at the heart and that enrichment of the few is freakishly proportional to the impoverishment of the many.
The knee-jerk response of every economist is to disagree, pointing out that trade is not a zero-sum game but a value-adding transaction by virtue of the simple fact that it took place (if both parties weren’t better off, why would there be a transaction at all?). That’s all good and well, but economists operate within the opaque bubble of ceteris paribus [all things being equal] and the devil is often in those details just beyond where they’re willing to look.
Modern capitalism has its roots in the Industrial Revolution that started in 18th century England. The nutshell history goes something like the following: some guy rich enough to not have to work to survive figured out a way to use a machine to do part of the job that his workers normally did, thereby making himself even richer. Thus began a race by many other rich people to get even richer (ya gotta keep up with the Jones’) by using machines to do the work of people. The first big problem they had was that nobody was willing to work in their hot, unclean, and unsafe factories (going from a village to festering, reeking London wasn’t on the top of anyone’s to-do list). No problem, they just convinced their rich friends in government (nobles) to enact the Enclosure of the Commons whereby villagers no longer had right to use, or even live on, the common land of their ancestors. Thus was born the first chronic poverty in rural communities. This made the decision a simple one for the villager: work in a factory or starve to death. Since factories were just a notch above being dead, off to the factories they went. Soon, these few newly minted super rich industrialists could make more stuff in their factories than the entire domestic needs of England. No problem, just create an empire of colonies that supplied you with raw material in exchange for finished goods from your factories. Nice concept, except there were already local sources of finished goods in every corner of the world. No problem, just use your governmental and military authority to systematically dismantle indigenous industries around the world so they have no other option than to be raw material suppliers for your factories. Thus was born global chronic poverty in rural communities.
The American Industrial Revolution has a distinctly different feel than that of Europe. There was always a shortage of labor, typical of migrant entry into unspoiled land. The use of machines to do the jobs of humans was more of a necessity and didn’t involve the deliberate impoverishment of rural people to feed it. Instead, America relied on the tired, poor, and huddled masses displaced by natural and man made disasters & persecutions already perpetrated by the Europeans to fuel the economy. And of course, imported slaves. America’s growth, and ultimate emergence as a global superpower was rooted in the manifest destiny of expanding (genocidally) into Native American land, while strategically trading with squabbling European powers battling for territory around the globe. While WWI is outwardly traced to the assassination of Archduke Franz Ferdinand and an intricate web of alliances that entangled all of Europe into conflict, its rooted in the continuation of enmities exacerbated by the growing wealth of industrialization and the development of better killing machines that seduced the elite of each country into believing in the possibility of usurping the sovereignty and riches of their rivals. Let ’em duke it out for a couple rounds from the safety of about an ocean’s width away, and voila, emerge as a superpower.
I could write paragraphs and paragraphs about the genius with which America operates on the world stage, but suffice to say that its fundamental principles of operations have not strayed too far from the New World Order rooted in European mercantilism. Funny how closely Colgate copies the British Raj.
Which brings us back to the core question: does/can business have a role in alleviating global poverty?
On Sunday, I’ll be participating in a new ‘Article Club’ (like a book club, except shorter!) asking this exact question. An excerpt from from what we’ll be discussing.
There have been a bunch of stories recently about how large corporations are finding ways to make money selling to poor people, and (supposedly) helping them in the process. Is this a new way to address poverty on a large scale? Is it just a big scam? Is there a better way to address poverty that is economically viable? Come give your 2 cents!
Cookies & tea will be provided. Friends welcome. There will be a pop quiz at the door to make sure you read the articles.
1) The Fortune at the Bottom of the Pyramid
by C.K. Prahalad and Stuart L. Hart
2) Using Big Business to Fight Poverty
by George Lodge
3) Interview with David Wheeler, author of Creating Sustainable Local Enterprise Networks (November 2005)
Send me an email if you’re interested in participating, or share your ideas remotely by posting here.