Dambisa Moyo is wrong about the global economy – here’s why
Western media can’t seem to get enough of Moyo: her ideas stray little from old neoliberal mantras so endlessly recycled by establishment elites in the US and Europe.
Dambisa Moyo has a lot of fans these days. When she appeared at a recent Oxford Debate the crowd was packed with admiring students eager to take her side. I get it. She’s a compelling figure, and commands international stages with her bold confidence and cool style. But as heroes go, she’s a strange choice – a millionaire who sits on the boards of major Western banks and extractive companies, including Barclays, Chevron, and Barrick Gold. Peel away the slick image and you find that her ideas stray little from the dusty old neoliberal mantras so endlessly recycled by establishment elites in the US and Europe. Yet the Western media can’t seem to get enough of her – and perhaps that’s precisely why.
Moyo’s new book, Edge of Chaos: Why Democracy is Failing to Deliver Economic Growth, is a perfect case in point. If you’ve heard of it, it’s probably because of the controversy over her outrageous idea that we should “fix” democracy by introducing a system of weighted voting, whereby the votes of people who have specific qualifications and higher levels of education would count more than the votes of those who don’t. Maybe it was always just a PR gimmick – a way to get media attention. But while critics obsess over the voting thing, the rest of Moyo’s book has gone unchallenged. And that’s where the real trouble lies.
Moyo wrote The Edge of Chaos because she’s worried about the backlash against globalization and the rise of political movements – on the left and right alike – that want to regulate markets for the social good. Indeed, this is why she proposes weighted voting: because she thinks these ordinary folks don’t know what’s best for them, and we can’t trust them to decide on important matters of economics. What they’re asking for – more state intervention in the economy – is too short-termist, she says.
Now, Moyo acknowledges that globalization hasn’t worked for everybody and admits that inequality has been getting worse, with the rich accumulating eye-watering piles of wealth while real wages stagnate and social mobility collapses. But while scholars see inequality as a consequence of neoliberalism since the 1980s, Moyo argues that it’s because we haven’t been neoliberal enough. The solution, she says, is more free-market ideology, not less.
In this sense, the book feels wildly out of step with the times. It has a kind of desperate tenor to it – a frantic defense of an economic paradigm that is hemorrhaging credibility. Right now the world is scrambling for ways to make our economy fairer: better wages, stronger unions, progressive taxation, universal basic income, fairer trade rules, an end to illicit financial flows. But Moyo doesn’t truck in such sensible reforms, presumably because it would mean interfering with the almighty hand of the Free Market. And – for devout capitalists like Moyo – that is simply not allowed.
Moyo offers no evidence for her claim that more neoliberalism would help matters. The only argument we get is that it would be good for growth. And growth, she says, is what all those angry people who have been hurt by globalization secretly want. No joke, Moyo literally claims that the major social movements that have erupted over the past few years – the Arab Spring, the Gezi Park uprising in Turkey, anti-World Cup protests in Brazil, anti-TTIP marches across Europe, Trumpism in the United States and Brexit in Britain – are driven by a demand for higher rates of economic growth. And if they want growth, Moyo says, then what they need is neoliberalism.
It’s a strange claim, and Moyo provides not a shred of evidence to back it up. Never mind that literally all of these movements have explicitly said they are against neoliberalism, and indeed in many cases have rejected precisely the things that politicians promised would bring more growth: like TTIP, or EU membership, or the World Cup. What these people say they want is a fairer economy – one not captured by elite interests. But Moyo inexplicably recruits them nonetheless for her own hyper-capitalist agenda, as if the protestors had everything in common with the old boys over at Barclays and Chevron.
If Moyo’s analysis of social movements is eerily fact-free, so too is her claim about neoliberalism bringing more growth. Indeed, exactly the opposite is true. During the bad old days of Keynesian policy, per capita GDP growth rates in the OECD averaged 3.5% per year. By contrast, the neoliberal reforms that were imposed beginning in the 1980s slashed growth rates down to 2% per year. The shift was even more dramatic across the global South. During the 1960s and 70s, global South governments used tariffs, subsidies, price controls, capital controls, and land reforms to brilliant effect, growing GDP per capita by 3.2% per year. This came crashing to an end during the 1980s and 90s, as free-market principles were forcibly imposed by the IMF and World Bank. Growth rates collapsed to 0.7% during the neoliberal period. Sub-Saharan Africa was hit particularly hard, and its average real income is only now recovering 1970s levels.
The historical record is clear: neoliberalism has been bad for growth. But it’s been great for the incomes of the rich, which have soared as a result. Indeed, one can argue – as David Harvey does – that this was always the point. Either way, it’s no surprise that Moyo and the Barclays set are so keen to keep this arrangement in place.
But all of this begs the question: is more growth really what we need right now? The bizarre thing about Moyo’s book is that it feels like it was written last century, before anyone was talking about things like climate change and ecological breakdown. Her call for aggressive growth at all costs simply makes no sense in today’s world of carbon budgets and all the new research on planetary boundaries and ecological overshoot.
Of course, growth may be necessary in poorer nations in order to raise living standards. But much of Moyo’s book is about how we need more growth in rich nations, where per capita resource consumption already exceeds safe levels by a factor of four, and carbon emissions exceed safe levels by a factor of twenty. Indeed, virtually all of our ecological overshoot is being driven by overconsumption in rich nations. How does Moyo reconcile this with her demand for growth? She doesn’t even try. The book is striking in its refusal to engage with this problem. All we get is a vague reference to “green growth” – the idea that technology will help us decouple GDP from resource use and emissions. But, again, Moyo offers not a shred of actual evidence for this. If she had taken time to read the literature she would find that all of the available data shows that green growth is not a thing. Study after study concludes that continued economic expansion in rich nations is incompatible with ecological sustainability.
Moyo says we need more growth in order to improve people’s lives. But is this true? Again, she provides no evidence for the claim. But consider this: in the United States today average real wages are lower than they were in the 1970s, and the poverty rate is higher, despite a doubling of GDP per capita. Meanwhile Europe has better social indicators than the US across the board, despite 40% less GDP per capita. The truth is that there is no automatic correlation between GDP and human well-being – it all depends on how the yields of our economy are distributed. It is inequality that matters, precisely as those protestors have been saying. Once we grasp this fact, it becomes clear that we can improve people’s lives right now, without any growth at all, simply by distributing existing income more fairly and investing in universal public services. Our Earth is an abundant place and already provides more than enough for everyone; if we share what we already have, we won’t need to plunder the planet for more.
So why are Moyo and the Barclays boys so desperate for more growth? Here’s one possibility: because the benefits of growth accrue almost exclusively to the rich. Roughly 90% of new income from global growth goes to the richest 1%. Meanwhile, only 5% trickles down to the poorest 60% of humanity. This is why people are angry. It is obscene to pretend that more growth is somehow magically going to solve the violent inequities of growth. At the present rate of trickle-down, it will take more than 200 years to lift everyone above the poverty line of $5 per day, and we’ll have to expand the global economy to 175 times its present size. That’s 175 times more extraction and production and consumption than we’re already doing, which, in a context of ecological emergency, is clearly insane.
But the strangest move is yet to come. While Moyo frames the book as a battle cry for market liberalism, she suddenly switches gears halfway through and plumps for precisely the opposite ideology, heaping praise on China as a paragon of sound economic policy. Why? Because China’s government manages the economy for the long term, in the interests of long-term growth. Of course, she’s right – China’s economic success is due precisely to the fact that it was not subjected to neoliberal structural adjustment, unlike most of the rest of the South. But this is a dizzying about-face from her opening position, and the internal incoherence makes it difficult to take the book seriously.
Moyo needs this pivot to set up her next big argument. She says the reason China does so well on economics is because its government isn’t beholden to the short-termist pressures of democracy. Democracy, she concludes, is an obstacle to growth (as the subtitle of her book implies). Suddenly we’re in completely new terrain. Moyo has temporarily dispensed with her earlier argument about neoliberalism being the Only Way, and discarded all her worries about those pesky protestors who are clamoring for more state intervention in the economy. Now the good guy is state-led capitalism, and the bad guy is … democracy.
Having lashed herself to this mast, Moyo has no choice but to downplay all the nastier sides of Chinese policy: the authoritarianism, the surveillance, the violent clampdowns on dissent. All of this is tolerable, she says, because it’s a small price to pay for rapid growth. And we must have growth at all costs. What’s dangerous here is that Moyo is going around promoting this as a reasonable path forward for developing countries. Focus on growth first, she says: do democracy later.
This is a completely false dichotomy. There are plenty of state-regulated economies that are also robustly democratic. Just think of the New Deal in the post-war United States, which Moyo herself cites approvingly. Franklin Roosevelt, the architect of the New Deal, was democratically elected – four times – by a landslide. He was one of the most popular American presidents ever. But there’s also virtually all of Western Europe: the social democracies of Scandinavia, and the post-war Labour government of the United Kingdom, which built that country’s economy on the back of nationalization, social housing, and free public healthcare (the National Health Service remains Britain’s most popular institution). Indeed, these radical interventions were only possible because of democracy – because ordinary people intervened to harness capitalism for the social good.
But it’s not just the global North. During the South’s post-colonial decades, those successful Keynesian policies I mentioned earlier were rolled out by democratically-elected governments: Nkrumah in Ghana, Mossadegh in Iran, Arbenz in Guatemala, Allende in Chile, and many more. This legacy of progressive economics was destroyed by neoliberal structural adjustment, which worked only because it effectively shifted power over macroeconomic policy from the national parliaments of Southern countries to bankers and technocrats in Washington, New York and London. There was no democratic consent for neoliberalization. It was imposed from above – against a tsunami of popular riots.
The real issue with this book is that Moyo fundamentally misdiagnoses the problem. She accuses democracy of being short-termist. But it’s not democracy that’s short-termist – it’s capitalism. The logic of capitalism is to seek short-term gains at the expense of more important things: workers’ welfare, people’s health, the ecosystems on which we depend. Austerity, privatization, fracking, deforestation, cuts to wages and public services … all of this is conducted in the name of short-term growth. At the altar of capital, all that is sacred is profaned. Moyo’s book adds just one more log to the sacrificial pyre: if democracy stands in the way of capitalist growth, then it too has to go.
These are uncertain times. Young people are turning away from capitalism in their millions, across the world, eager to build a fairer, more ecological system that has a chance of seeing us through the 21st century. But just when we most need fresh thinking, Moyo urges us to double down on the status quo. Meanwhile, the voices of real thinkers across the African continent – from Liepollo Pheko to Nnimmo Bassey – never find a platform in the global media. As we seek inspiration for the future, we’ll need to look beyond the shiny millionaires that are handed down to us from the corporate boardrooms of the West. Real heroes aren’t found on primetime TV. They’re working in real communities, with dirt under their fingernails, raising up a new world from within the cracks of the old.