It is popular today to frame the development debate in the context of two books by economists, the glass half-full story of Jeffrey Sachs The End of Poverty, and the glass half-empty story of William Easterly The White Man’s Burden. Both writers observed the world of foreign development aid for years. Sachs’ conclusion is that given the weak investment in remote third world villages, it is not surprising that development has not occurred. Demonstration villages for his ideas are now being funded in Tanzania and elsewhere, These villages are frequently featured in Sachs’ Scientific American column where he emphasizes that more fertilizer and infrastructure development will substantially increase yields and farmer profits. Easterly concludes the opposite. He notes that despite $2.3 trillion spent on foreign aid in the last fifty years, extreme poverty continues. He asks why if so much aid has already been spent without eliminating poverty, why spend more in the same way? Easterly believes that instead, development requires that African governments free capitalist entrepreneurs from the fetters of government regulation which he believes stunts market development. Irrespective of their disagreements, both economists agree that an absence of market activity is at the heart of the “development problem.”
The problem I see is that having two economists address poverty in subsistence farming societies is like asking fish about how to fly through the air. Economists are excellent at describing what happens when modern globalized markets focused on the buying and selling of goods are already established. In this respect, Easterly is correct to focus on the consequences of having too much government regulation of business—too many permits do stifle entrepreneurial efforts. Likewise Sachs is right to emphasize that market inputs are necessary if yields are to increase. However, neither economist describes how to introduce the culture of markets in a place like rural Tanzania where there never has been the market dominated society modern economics assumes is found everywhere. But the fact of the matter is that the poorest of the poor in Africa live in areas where subsistence ethics, not market ethics, dominate. Subsistence farming means that a family grows what they eat, builds their own houses out of local materials, has little cash, and lives more or less independently from the global marketplace. Loyalties to kin, clan, neighbor, and patron-client relationships, are important in these societies. Whether you eat or not is more dependent on the people you know personally, and not the anonymous invisible hand of Adam Smith’s marketplace.
Anthropologist Bronislaw Malinowski is among the classic writers who described how exchange in such pre-modern subsistence societies goes beyond the cash-based exchange focused on by economists. For example, as is typically described in Introductory Cultural Anthropology classes, Malinowski’s Trobriand Islanders developed elaborate gifting networks in kula necklaces made out of shell. Certainly these necklaces had economic value in a marketplace, as any passing museum collector with a few francs in their pocket soon discovered. But, as Malinowski also found out, kula necklaces symbolized cultural meanings regarding relationships, generosity, and a range of other emotions that the modern utilitarian museum collectors never saw. Most importantly Malinowski noted, gifting the necklaces acknowledged patronage relationships between previous and future owners which could be activated in times of famine, drought, attack, or other catastrophes.
But, what is taught in Introductory Economics classes, by economists like Sachs and Easterly, is that humans have a natural propensity to “truck, trade, and barter” in a fashion which focuses only on the supply and demand for an object in an anonymous marketplace. This assumption works really well if you live in a capitalist market economy, and are trying to decide whether to shop at Nordstrom’s or Wal-Mart. But it does not make much sense if you are trading a kula necklace which carries with it the meaning, sentiments, and responsibilities of previous and future owners.
Nor does the modern marketplace make much sense if you are a Tanzanian subsistence farmer selling a few extra bags of maize you produced with a hoe, into a global market dominated by the efficiency of the Iowa corn farmer. For example, if the hoe wielding subsistence farmer grows an extra 2,000 kg. of maize this season in Tanzania, this can be sold for about $290 in urban Dar Es Salaam, without accounting for the cost of seed, fertilizer, pesticides, transportation, etc. Spread across a family of seven, this $290 provides some extra cash to purchase medicine, pay school fees, and repair the family bicycle, but that is about it. But this is in effect what Sachs program in Tanzania, as well as thousands of other expensive development programs undertaken around the world assume. In other words such programs to encourage surplus maize production by subsistence farmers do not make much economic sense. But, what is often missed by the economists is that such production does make sense in the context of a subsistence economy in which affection for patrons (and even economists) is important. Perhaps what is happening is that the maize produced for Jeffrey Sachs’ new program symbolizes to peasant producers a relationship with a patron named Jeffrey Sachs. After all, he is a potentially powerful patron who can bail them out in the next drought. This is the only context in which the maize produced takes on meaningfulness for the peasant producer, since in monetary terms the value of the extra bags is trivial.
Where markets are significant in Tanzania is in the cities like Dar Es Salaam where differentiated labor markets are emerging. If you want to know more about how vibrant such markets can be, read Pietra Rivoli’s book The Travels of a T-Shirt in a Global Economy. Like Easterly and Sachs, Rivoli is an economist who investigated, among other things, how used clothing discarded in the Salvation Army bin in the United States is bought and sold in the robust modern markets of Tanzania’s capital city. She describes a world in which clothing is bought and sold for both its own utility, and to reflect the fashion sense of the new owners. As Rivoli points out, this is a good thing, because it encourages people to become calculating consumers in the global marketplace, and as a result Tanzania is better dressed. In effect Rivoli is doing what economists do best: focusing on how markets permit traders to create a more prosperous society. Sachs and Easterly would be well-advised to also focus on such places. Or when they do involve themselves in rural subsistence societies, they should also bring along an anthropologist who sees the culture beyond the marketplace.
But where does this leave the student assigned to compare and contrast the two more popular views of Easterly and Sachs? My feeling is that such students should borrow from anthropology, and point out that neither economist asks the right question about rural development. As Easterly points out, it is not about how much money you spend, but about whether robust market institutions develop. And as Sachs points out, this does not come cheap, and that expensive government owned infrastructure, especially good roads, are needed to make this happen. Both have a point. But what they both miss is that the markets they describe emerge only in modern settings, particularly cities, where subsistence ethics have dissipated, and impersonal market ethics dominate.
This is not to say that rural people and subsistence peasants should not be helped, as Easterly seemingly implies. They should be. But it is questionable whether encouraging hoe-wielding farmers embedded in subsistence ethics to compete in maize markets with price-setting Iowa agri-business is an effective poverty alleviation strategy. The capitalist Iowa farmer, and the Tanzanian subsistence farmer reflect fundamentally different types of social organization and attitude towards markets. Just ask Malinowski.
Easterly, William (2006). The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.
Malinowski, Bronislaw (1922). Argonauts of the Western Pacific
Rivoli, Pietra (2006). The Travels of a T-Shirt in a Global Economy.
Sachs, Jeffrey (2006). The End of Poverty: Economic Possibilities for Our Time
Waters, Tony (2007). The Persistence of Subsistence Agriculture: Life beneath the level of the marketkplace.