First published as a paper in the September 2000 issue of the Project Management World Today E-zine of the PMForum web site:
Published here June 2001.

Abstract | Introduction | History of Economic Development
Social Spending | Project Management | Conclusion | References

Social Spending

While travelling in India I realised that development and project management where inextricably linked. Without project management development would suffer from ineffectual deployment of capital. I also realised that most projects could be grouped into three development sectors: industrial, business and social.

Industrialisation or industrial development is the shift from manual labour to mechanisation specialisation in manufacturing goods for profit as is evident in modern production and engineering (Encarta Industrial revolution 1997: CD-ROM). Commercialisation or business development is made up of complex operations in the lives of people concerning all those functions that govern the buying and selling of goods and services to make profit in a pattern of operation, strategy, marketing and distribution for consumption (Encarta Business 1997: CD-ROM).

Some scholars believe that the basic principles of socialism or social development were derived from the philosophy of Plato, the teachings of the Hebrew prophets, and some parts of the New Testament (the Sermon on the Mount, for example). Modern socialist ideology, however, is essentially a joint product of the 1789 French Revolution and the Industrial Revolution in England. Socialism has assumed a number of distinct forms in the Third World but only in Israel has moderate social democracy proved successful for long periods. At least of equal significance, however, are the cooperative agricultural communes (kibbutzim), which have flourished since 1948. Commentators have argued that kibbutzim more than anything else show the viability of socialist principles in practice; however, the peculiarities of Israeli conditions (for example, religious tradition and constant war readiness necessitated by the hostility of Israel's Arab neighbours) could not easily be duplicated (Grolier Socialism 1996: CD-ROM).

Elsewhere in the Third World, Marxism and various indigenous traditions have been predominant in socialist movements. In developing countries socialism as an ideology generally has been fused with various doctrines of nationalism, also a European cultural import but enriched by diverse motifs drawn from local traditions and cast in the idiom of indigenous cultures. In India, for example, the largest socialist movement has partially adapted the pacifist teaching of Mahatma Gandhi, and distinct native brands of socialism exist in Japan, Myanmar, and Indonesia.

Similarly, in black Africa native traditions were used in the adaptation of socialist, mainly Marxist, doctrines and political systems based on them. Socialism in these theories is usually understood as a combination of Marxism, anti-colonialism, and the updated tradition of communal landownership and tribal customs of decision making. Most of sub-Saharan Africa's socialist countries adopted free-market reforms in the late 1980s and early 1990s (Grolier Socialism 1996: CD-ROM).

Overtly Marxist movements, aided by the USSR, China, or Cuba, nevertheless seized power in such African countries as Angola, Ethiopia, and Mozambique. South Africa's AFRICAN NATIONAL CONGRESS (ANC) was strongly influenced by Marxist ideas. Socialist ideology, remains a popular and widely held political belief, and it has deeply penetrated other ideologies, as can be seen, for example, in the acceptance by many conservatives of the WELFARE STATE and limited planning. The worldwide spread of socialist ideas has been accompanied by a process of dilution of original principles, as in Western social democracy, and by the degeneration and falsification of its values, as in Marxist states (Grolier Socialism 1996: CD-ROM).

As no formal accepted definition for social development is prevalent, I define it as those activities of society which are essentially non-profit areas such as education, sanitation, healthcare, land reform and policeing. Economic development a producer of wealth must therefore lead and be synchronized with social development a consumer of wealth. To better understand this aspect a matrix (fig. 1) was constructed in which 1st, 2nd and 3rd world economies are related to industrial, business and social developments.





1st World economies




2nd World economies




3rd World economies




Figure 1. Economic / Development Matrix
Source: Own compilation

Examining fig. 1 by applying the Pareto principle, or 80-20 rule, to the World Bank’s 1998 world development indicators where total population of an economy includes all residents regardless of legal status or citizenship except for refugees (p45); Production or gross national product is the sum of value added by all resident producers plus taxes (less subsidies) (p15); Private consumption is the market value of all goods and services purchased or received as income p (211) and aid is disbursements of loans and grants made to promote industrial development and welfare in recipient economies (p345) the following is revealed:

Population: ABC=20%, DEFGHI=80%

Production: ABDE=80%, GH=20% Real GNP per capita in 1997 $

Consumption: ABCDEF=80%, GHI=20% in purchasing power parity terms.

Aid: CFGHI=80%, ABDE=20% in 1996 $

This means that 20% of the worlds population is responsible for producing 80% of the worlds wealth and consumes 80% of what is produced. Alternatively it means that 80% of the worlds population produces 20% of the wealth and consumes 20% of all goods and services. “ABDE” is 80% of wealth’s production and “I” is 80% of aid’s consumption. “AB” produces most of the world’s profit and “I” produces most of the world’s debt.

It can therefore be said that industrial development was our past, business development our present, and social development our future.





1st World economies

80% of Global Wealth, Production and Consumption


2nd World economies


3rd World economies

80% of Global Population and Debt

Figure 2. Economic / Development Matrix: Wealth & Consumption
Source: Own compilation.

As global unemployment figures continue to grow and world markets reach maturity, a slacking off of demand is experienced. By definition, the 1st world is developed, prompting people to realise that in order for the global economy to grow, 2nd and 3rd world economies now need to be developed.

The basic premise of the production function is that people work (Gills et al. 1996: 41). This is simply no longer true. There are several examples where people are paid not to work, or paid not to produce, with the result that two of the four factors required for economic growth i.e. the size and quality of the labour force and the availability of natural resources, are no longer valid. This has proved technology to be a competitor to employment, as it replaces people in the production function with more efficient machines and can be seen where several of the most successful commodities ever presented on the stock exchange require no natural resources.

Until the start of industrialization during the eighteenth centaury an extended family of approximately 40 people farmed about one hectare manually. Mechanisation improved efficiency to the extent that 80 people could now farm four hectares resulting in farms getting bigger and employing more people specialising in the different activities. In the year 2000 technology has progressed to a point that one man can farm 400 hectares on a fully automated farm or milk 400 cows in a fully automated plant. Furthermore, most food production today, is untouched by human hands from breaking the ground to the final product offered for sale at the point of consumption. First world technology deployed in third world countries does not create jobs but increases the number of beggars.

The World Bank and the International Monetary Fund have declared support of social development in lower developed countries to be a failure. At this point in time the world’s financial authorities have been requested to scrap the debt of all lower developed countries, as they simply cannot pay it back. It would seem that the key to continued global economic growth lies not in aid but in trade, together with continued technological development which is achieved by more efficient labour - not educated in knowledge, but skilled in methods of production.

Expenditure on social development without synchronized economic development to create employment is a lost cause. Baroness Blackstone, Minister of State for Education and Employment in the UK, stated in a guest editorial in Project Magazine (June 1998): In an increasingly global economy, Britain simply cannot afford to see its economic performance restricted by poor skills. The most successful businesses in the 21st century will be those that invest in the best-educated and trained workforce. As a consequence, the best way of getting and keeping a job will be to have the skill needed by employers. Furthermore, the concept of a job for life is no longer relevant.” In Britain, an additional 500 000 people are to be encouraged to further and higher education by the year 2002 (Blackstone. 1998: 3-7).

History of Economic Development  History of Economic Development

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