I’ve been reading an article about starvation in Malawi in the current issue of the New York Times Magazine. Describing the changes in attitudes during the 1990s of the entities most responsible for international aid, the article said this:
(you can read it online at www.nytimes.com - requires free registration)
I am emphatically NOT an economist, but I can’t quite fathom how it was deemed logical that free markets were somehow more “efficient” or would better serve the poor. The one overriding principle of a truly free market is that everything – prices, quality, etc. – is “whatever the market will bear.” Therefore, money = power. How could anyone think the poor would have a chance in a system like this, where they are disadvantaged from the very beginning?
From my layman’s viewpoint. capitalistic democracy only seems to really work well when the a) there is a modern infrastructure that allows development, and b) there is actually a market for any products poduced.
Malawi, and apparently much of Africa, has neither of these things. In the article I quoted, a person says their sister was very smart because “she went to school up to the second grade.” (!)
No country where people are so uneducated is going to develop a modern infrastructure; where would the brainpower to design and build it come from?
As for African access to markets, I don’t really know enough to comment on it. But the point of this thread was: How did aid organizations like the IMF and World Bank get their ideas, and why do they keep clinging to them, when all signs point to their being mistaken? Are international eonomics really a zero-sum game?