Does not the response to the massive tidal wave in south-east Asia,â€ the UKâ€™s chancellor (finance minister) Gordon Brown asked on January 6, â€œshow just how closely and irrevocably bound together ... are the fortunes of the richest persons in the richest country to the fate of the poorest persons in the poorest country?â€ The answer is no. It is hard to imagine how the fate and fortunes of the richest and poorest could be further removed. The ten richest people on earth have a combined net worth of $255bn - roughly 60% of the income of sub-Saharan Africa. The worldâ€™s 500 richest people have more money than the total annual earnings of the poorest three billion.
This issue â€” of global inequality â€” was not mentioned in either Brownâ€™s speech or Tony Blairâ€™s simultaneous press conference. Indeed, I have so far failed to find a reference to it in the recent speeches of any leader of a G8 nation. What the neoliberals â€” who promote unregulated global capitalism â€” tell us is that there is no conflict between the whims of the wealthy and the needs of the wretched. The Economist magazine, for example, argues that the more freedom you give the rich, the better off the poor will be. Without restraints, the rich have a more powerful incentive to generate global growth, and this growth becomes â€œthe rising tide that lifts all boatsâ€. Countries which intervene in the market with â€œpunitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justiceâ€ condemn their people to remain poor. A zeal for justice does â€œnothing but harmâ€. Now it may be true that global growth, however poorly distributed, is slowly lifting everyone off the mud. Unfortunately we have no way of telling, as the only current set of comprehensive figures on global poverty is â€” as researchers at Columbia University in the United States have shown â€” so methodologically flawed as to be useless.
But there is another means of testing the neoliberalsâ€™ hypothesis, which is to compare the performance of nations which have taken different routes to development. The neoliberals dismiss the problems faced by developing countries as â€œgrowing painsâ€, so letâ€™s look at the closest thing we have to a final result. Letâ€™s compare the UK â€” a pioneer of neoliberalism â€” and Sweden, one of the last outposts of distributionism. And letâ€™s make use of statistics the Economist is unlikely to dispute: those contained within its 2005 World in Figures.
The first surprise, for anyone who has swallowed the stories about the UKâ€™s unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as Britain. In 2002 its GDP per capita was $27,310, and the UKâ€™s was $26,240. This is no blip.
Surprisingly, Sweden has an account surplus of $10bn and the UK a deficit of $26bn. Even by the neoliberalsâ€™ favourite measures, Sweden wins: it has a lower inflation rate than Britain, higher â€œglobal competitivenessâ€ and a higher ranking for â€œbusiness creativity and researchâ€. In terms of human welfare, there is no competition. According to the quality of life measure published by the Economist (the â€œhuman development indexâ€) Sweden ranks third in the world, the UK 11th. Sweden has the worldâ€™s third highest life expectancy, the UK the 29th.
The contrast between the figures is stark enough, but itâ€™s far greater for the people at the bottom of the social heap. Unsurprisingly, the Economist does not publish this data, but the UN does. Its 2004 Human Development Report shows that in Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day). In the UK the figure is 15.7%. In the UK, according to a separate study, you are more than three times as likely to stay in the same economic class you were born into as you are in Sweden. So much for the deregulated market creating opportunity.
The reason for these differences is straightforward. During most of the 20th century, Sweden has pursued, in the words of a recent pamphlet published by the Catalyst Forum, â€œpolicies designed to narrow the inequality of condition between social classesâ€. These include what the Economist calls â€œpunitive taxesâ€ and â€œgrandiose programmes of public spendingâ€, which, remember, do â€œnothing but harmâ€. These policies in fact appear to have enhanced the countryâ€™s economic competitiveness, while ensuring that the poor obtain a higher proportion of total national income. In Sweden, according to the UN, the richest 10% earn 6.2 times as much money as the poorest 10%. In the UK the ratio is 13.8.
So for countries hoping to reach the promised land, there is a choice. Thatâ€™s the theory. In practice they have no choice. Through the International Monetary Fund and the World Trade Organisation, the G8 governments force them to follow a model closer to the UKâ€™s, but even harsher and less distributive. Of the two kinds of capitalism, Blair, Brown and the other G8 leaders have chosen for developing countries the one less likely to help the poor.
Unless this changes, their â€œMarshall plan for the developing worldâ€ is useless. Brown fulminates that five years after â€œalmost every single countryâ€ signed up to new pledges on eliminating global poverty, scarcely any progress has been made. But the very policies he implements as an IMF governor make this progress impossible. Despite what we have been told over the past 25 years, it is still true that helping the poor means restraining the rich. â€”The Guardian