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.
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Industrial
Development
|
Business
Development
|
Social
Development
|
|
1st World economies
|
A
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B
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C
|
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2nd World economies
|
D
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E
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F
|
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3rd World economies
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G
|
H
|
I
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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.
|
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Industrial
Development
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Business
Development
|
Social
Development
|
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1st World economies
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80% of Global Wealth, Production and Consumption
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|
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2nd World economies
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|
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3rd World economies
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80% of Global Population and Debt
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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).
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History
of Economic Development
