Consumerism and Development: 
Dilemma of the Third World[1]

Development contributes to the well-being of the society. Through development members of the society are provided with articles of consumption. Development can get sidetracked by consumerism. The difference between development and consumerism is not a question of degree but of basic approaches to social organization. Development is a fundamental need, consumerism is an aberration of capitalism. Consumerism has supplanted sound market economy as a sinecure for creating jobs and keeping people entertained and busy.

Developing countries have to cope with the complex of universal free trade, volatile international capital markets, permeation of cultures by globalized media, and the apparent triumph of consumerism. Yet, in that global context, they need to balance their development with the constraints of environmental protection and take into account pressures for human rights and workers' rights.

These intertwined factors put Western post-industrial consumerism at odds with Third World development needs and can cause serious international crises. They must be examined and mediated.


What is development? It is the process of growth [2]: from the Latin words de + velo: to open up, to unwrap. The acorn opens up into a tree. The human individual turns from embryo into child, adolescent and adult. In that process, development is both physical and mental. A community (country) develops as it provides the means and processes for its members to develop: adequate food, housing, health care and education. The country is made up of its individual members who partake in it. They organize themselves in different ways to provide for their needs. The means that are provided and the processes that are elaborated reflect the nature and composition of a country's population, the relationships of its members with each other and with their environment, and their view of life and standards of living.

Whatever those standards, and they shall be reviewed later, for the country to maintain its standards of living at a constant level, it should keep its GDP in step with its population growth. The country may develop or decay if its GDP and population are at variance. The effects of the variance will not only be quantitative but also qualitative. If the population grows rapidly and the economy of the country does not keep up with it, there will be less overall nourishment, health care and education, resulting in the deterioration not only of the standards of living but also standards of behavior: discontent, social conflict, hoarding, theft, repression etc. During rapid population growth the variance in population and production arises from the fact that the young, who have needs, cannot contribute to the production before a certain age. 

A rapid increase in a country's GDP in relation to the rate of population increase can also disrupt heretofore established patterns of distribution -- and justification of wealth -- transform social relationships and bring about behavioral, social and political changes and upheavals. Rapid increase in production may be caused by discoveries, innovations and a society's inclination towards progress -- the process of moving from one standard of living to another which is assumed to be higher.

Developmental variations within a country have international dimensions. When a country's economy deteriorates, the crisis can spill over into other countries. The country may no longer be able to provide its goods and services to other countries. Its trade and current account can suffer. And its population may migrate to countries where better opportunities and employment are available, providing cheap labor, but also creating cultural and social problems for the host country.

When a country's economy has an expansive and accelerated rate of development it can provide a bigger market for other countries and/or it can attempt to penetrate more aggressively into other markets. Depending on the stage of its development, a country may suck in capital and run up international debts and balance of payment deficit, or it may generate a foreign currency surplus and invest its capital in other markets. Its development may burden the environment with adverse effects for other countries such as air and water pollution or excessive exploitation of international public resources such as the oceans. 

While through the ages discoveries, innovations and inventions -- from the discovery of fire to tool-making, to agricultural revolution, urban revolution, industrial revolution, nuclear revolution and now electronic revolution -- have been at the root of changes in perspectives on standards of living and value systems, the greatest impacts for change have come from interactions between cultures. Take, for example, the invention of gunpowder and the compass by the Chinese, their transfer to the West and their use in war and as instrument for high seas navigation by the West. Most isolated people, whether in Amazona, Africa or Australia, kept unchanging living standards and patterns of development for millennia.

The degree of impact of different developmental patterns have thus had to do with the degree of communication, intercourse and penetration of different cultures into each other. When the industrial revolution began in the West, its early impacts were among countries with cultural affinities, close to and interacting with each other. Those affinities and interactions facilitated adaptations to change but also resulted in competition, rivalry, conflict and upheavals within and among the Western cultures.

The industrial revolution permitted European cultures to develop their means of communication, which they used for expanding beyond their own part of the world. Originally those expansions were not aimed at the export of industrial revolution and transfer of technology to other parts of the world, but at the use of those areas for further development of the industry, the standards of living and power structures in the West. The result was colonialism: extraction of raw material, creation of markets and settlement of territories for the more efficient use of conquered lands. As Westlake put it a century ago: "In the early times of international law, when the appropriation of a newly discovered region was referred to the principles which were held to govern the so-called natural modes of acquisition, the occupation by uncivilised tribes of a tract, of which according to our habits a small part ought to have sufficed for them, was not felt to interpose a serious obstacle to the right of the first civilised occupant. The region was scarcely distinguished from a res nullius"[3]. Thus the non-Western countries could not keep on a traditional track and sit on their natural resources which the West could develop more efficiently and benefit from. 

In its expansion the West came in contact with cultures which, although not having experienced the Western industrial revolution, had their own civilized patterns of traditional development. But as these cultures were not party to the Western international law, which regulated the relations of the Western powers among themselves, Western powers often applied the notion of res nullius to those cultures: territories and peoples outside the law which the first Western power imposing itself on them could claim as its possession. Of course, from there on, those possessions became subject to arrangements and conflicts among Western powers according to their international law. So the British eventually claimed India, the Dutch Indonesia, the French Indochina etc.

Three aspects of this process are of interest to the present study: 

1. The resentment of the non-Western civilizations and eventually their clashes with the West. Due to Western superior fire power and technology, overall, the early clashes ended in Western powers' victory. But their defeats awakened the non-Western cultures to their need for national identity. Such were, for example, the Opium War of 1839 and the Sepoy (Delhi) Mutiny of 1857. 

2. The tendency in non-Western civilizations to emulate Western industrial culture -- and sometimes its institutions. At times adaptations permitted the non-Western culture to thwart Western penetration as after the Meiji Restoration in Japan. At other times, the attempts failed to stop the Western sway because the culture held onto its traditional ways which were not compatible with industrial patterns, as was the case of the Zeng Kuofan's "T'ung Chih Restoration" -- which attempted to graft Western technological "functions" onto the Confucian "substance." As time went by, however, the exploited countries, while resentful of Western penetration, caught on to the ideas of modernization and development.

3. The overseas possessions of the Western powers' enhanced competitions and rivalries among them. Latecomers to the colonial game like Germany wanted their share while the United States, with its own vast territory, but an expanding economy, was eager to open the doors of the overseas colonial markets closed to them by the European powers.

European rivalries and conflicts eventually ended in the two World Wars. In WWI, while European powers were fighting with colonial goals in mind, the United States' entry into the war with her Open Door Policy, the Bolshevik Revolution in Russia causing the collapse of the Russian Empire, and the creation of the League of Nations after the War altered the Western powers' approach to the development of non-Western territories. There developed, on the one hand, the principle of recognizing non-Western countries as parties to the international law, albeit an international law elaborated by the West; and, on the other hand, a Mandatory System calling on the "advanced nations" to engage in the development of the "peoples not yet able to stand by themselves under the strenuous conditions of the modern world.[4] Rather than economic development per se, the Mandate System aimed at 1) creating political and administrative mechanisms for independence in some territories lost by the Central Powers as a consequence of their defeat in WWI, 2) recognizing the control of Western powers over their overseas territories, and 3) securing trade opportunities in those territories for other members of the League such as the United States. Thus, the Mandate System was not altogether an abandonment of the idea of colonialism but its modification. It was neo-colonialism, and in its confused state was sending mixed messages to disgruntled powers which were still actively seeking territorial expansion: Italy invaded Ethiopia, Japan invaded China and Nazi Germany sought Lebensraum within Europe. The League of Nations' failure to provide adequate frameworks for peace, control and satisfaction of its members contributed to the advent of WWII.

The consequences of the Second World War made development an imperative and a universal economic principle. The post-WWII development ideas and processes were influenced by the interactions of two divarications: I. the distinction between developed and underdeveloped economies, and II. the divergence between socialist and capitalist ideologies and methods of development. The interactions gave rise to different patterns of development.

There were, of course, the Western European countries and Japan which had been devastated by the war and needed reconstruction. They had a modern "model" of development. Their economies, levels of education and available skills and aptitudes permitted them to soak in assistance programs and take advantage of market economy favors provided by the United States as well as the financial structures put in place by the International Bank for Reconstruction and Development (IBRD - The World Bank) and the IMF.

The Soviet Union did not join the IBRD and the IMF. The Iron Curtain soon descended over Eastern Europe and the Soviet Union pursued the socialist path for its own reconstruction and the edification of communism by tying its satellites into its own economy. China, with the end of the civil war in 1949 and an underdeveloped economy, chose the socialist road to development, inspired by Mao Zedong's experimentations of the Hundred Flowers Campaign of 1957, the Great Leap Forward of 1958-60 and the Cultural Revolution of 1966-76. 

In its Charter, the United Nations Organization (UN) set itself the goal of promoting: "higher standards of living, full employment, and conditions of economic and social progress and development."[5] It is notable that the criteria were not the maintenance of traditional economic and social patterns but the universal application of Western concept of progress. As distinct from the developed Western capitalist democracies and the Soviet socialist world, the UN program was primarily concerned with the underdeveloped countries which came to be known as the "Third World." Of course, if the UN were to achieve within a reasonable time a certain well-being in the Third World as well as peaceful and friendly relations among nations, the transition of the Third World from traditional to modern cultures could neither take as much time as it took the West, nor could Third World countries go through the trials and tribulations and wars and revolutions which befell the developed world as it transformed. To accelerate the process, the UN needed to bring technical assistance and financial and logistic help to the Third World. The UN was a universal organization and both capitalist democracies and socialist countries were its members. Its technical assistance and development programs had to be multilateral and not under the control of either camp. That did not greatly motivate the ideologically-oriented member states to make substantial contributions to those programs. The areas where the UN could be effective without controversy were those covering humanitarian and health programs. Indeed, UN programs of the fifties and the sixties greatly contributed to the eradication of some diseases, reducing infant mortality and increasing life expectancy in the underdeveloped countries, exacerbating the discrepancy between population increase and GDP growth. The developed countries which could afford (those which were not in dire need for reconstruction) or had an ideological design to help, preferred to control their technical assistance and aid through bilateral government to government programs rather than through contributions to UN. And they did so for different rationales corresponding to their own ideology.

The Soviets saw in aid to the developing countries an opportunity to industrialize them and thus create a proletariat which would bring about the proletarian revolution.[6] Initially, their aid went to regimes which professed socialism. But eventually some Soviet aid went also to countries which were not aligned with the Soviet ideology. The Soviet assumption being that regardless of current tendencies of the regime, the ultimate goal was the creation of a proletarian class.

Capitalist democracies' aim in bringing aid to the Third World countries was to make the latter complements and partners of Western economies. Creation of jobs and raising the standards of living in the Third World would bring about a large middle class which would constitute the core of a bourgeois liberal democracy.

In the complex of development, however, other factors were involved which produced outcomes not corresponding to the capitalist and socialist designs. Many Third World countries were busy nation-building. Their leaders, most of whom had been educated in the West, could see colonial patterns in the efforts made by the "North", whether capitalist or communist. The consciousness of the underdeveloped countries about their identity as the "Third World" gave rise to political developments such as the Bandung Conference of non-aligned nations and economic thoughts such as dependency theory.[7]

The early attempts of some of the Third World nations to shed Western hegemony over their economy encountered stiff reactions from the West. Such were Ho Chi Minh's war of independence, Mossadegh's attempt to nationalize the Iranian oil or Nasser's nationalization of the Suez canal. But the fact that these events were taking place set the course towards new economic arrangements. To defuse potential crises in oil production, for example, oil companies, in exchange for compensation and new concessions, recognized the national ownership of the oil resources by the oil producing countries and entered in new partnerships with them. 


By the early seventies the stage was set for a turning point in the economic relations between the North and the South. The Vietnam war had glaringly demonstrated the cost-noneffectiveness of gunboat diplomacy. The ruinous effects of that war on the American economy contributed to Nixon's decision in August 1971 to close "the gold window" which pegged major currencies to the dollar and the dollar to gold. That decision was the beginning of the end of the Bretton Woods system. In 1972 the Chicago Mercantile Exchange began the International Money Market trading in currencies. Currencies, instead of being means of exchange, were thus turned into commodities -- the dollar, no longer convertible into gold, was considered overvalued and futures in currencies were deemed speculatively profitable.[8] By March 1973 exchange rates were officially left to float in the open market. 

The pivotal event, however, was later that year when Arab oil producing countries put an embargo on the supply of oil to the West and it worked. The Third World had stood up to the West and closed the faucet, oil companies had abided by that decision and the West had sent no gunboats to stop it.

The price of oil quadrupled. That caused economic crisis in the West and put a heavy burden on underdeveloped countries which had no oil resources of their own. Oil producing countries were getting rich beyond their capacity to absorb their new riches for the development of their own economy. Excess petrodollars were going to flood the floating exchange markets. Suggestions for control of that flood through international institutions lost to the American preference for letting the financial markets take care of the situation. Commercial banks became involved in the business of lending to the Third World countries for their development programs, and Walter B. Wriston, the then chairman of Citicorp proclaimed that "sovereign borrowers do not go bankrupt!" The funds available were much more substantial than what had been offered by international organizations and government to government grants. But the nature of the funds and their liabilities had also changed. Loans from commercial banks to sovereign borrowers were not new, but not at those levels. As we shall see later, the financial capital that was eventually generated went beyond the bloated price of oil.

For the developing countries, as the source of capital for development was an international debt, the deal was feasible if the capital borrowed could produce internationally marketable goods which would permit the borrowing country to generate foreign exchange in order to pay back the principle and the interest on the debt. Development was thus geared to exports rather than providing food, housing, health care and education for the population. The assumption was that as the economy developed, the free market economy would meet the needs of the population.

If the flow of foreign capital into the developing countries were to finance efficient production of goods marketable in the North and on international markets, it had to be accompanied by transfer of technology. Some countries with social philosophies more adaptable to Western cultures and with longer associations and greater exposure to industrialized economies were successful in combining international finance and technology transfers to develop modern industrial infrastructures such as Singapore, Hong Kong, Taiwan and South Korea. Other countries, notably in Latin America and Africa had greater difficulty in putting international capital to productive use. In some cases much of the foreign currency coming in as loans was turned around and deposited in numbered accounts in foreign banks by unscrupulous leaders and businessmen. In other cases the developing countries catered too much to the needs of the North and international markets and specialized in exportable commodities to the detriment of their own agricultural needs, or developed tourist industries with only trickling benefits for their own population. Within these countries the rich became richer enjoying some of the fruits of progress and the poor masses became poorer losing the care of their traditional cultures.

Some oil producing countries in the Middle East such as Kuwait adopted programs of development to achieve higher standards of living while keeping some of their traditional cultures. Their progress, however, was soured by their neighbors' approaches to development and progress, notably Iran and Iraq. 

The Iranians, under the Shah, attempted to push for modernization without adequate preparation for change at the traditional base and with little mechanism or regard for the distribution of wealth. The discrepancy between classes increased. A small modern middle class had emerged, but the traditional masses resented the alien nature of the progress and did not see its benefits. The transfer of technology was in many cases controlled by foreign management and was taking place at a rate disproportionate to the preparation of the people. The end result was the overthrow of the regime by the Mullahs. The fundamentalist approach of the Islamic regime in Iran disturbed the amalgam of traditional and modern patterns of development in the neighboring Gulf states.

Iraq, with its oil money, embarked on a military, socialist and nationalist path for progress. To the intrusions of the Iranian Mullahs it responded by invading Iran. By building a military power, Iraq was adopting an unrealistic policy of conquest. It became a threat to its neighbors and Western interests in the Persian Gulf. Its aggression against Kuwait brought upon it the "Desert Storm" of 1991 -- a new version of gunboat diplomacy financed by the Persian Gulf states to maintain the status quo.


Looking at the developing countries' efforts towards progress outlined so far, one finds that their salient characteristic has remained the overwhelming influence of the "North" -- a fact which presently has yet greater potentials to destabilize the developing societies. With the events of the early seventies noted above, a new era had begun. The particularity of the new era was that while financial ingredients remained the same, their characteristics underwent dramatic change. Money, which as means of exchange was assumed to have an intrinsic value corresponding to its purchasing power, was turned into a commodity subject to speculative fluctuations on the international markets. Capital, classically assumed to represent accumulated labor and means of production, bloated on the international financial markets -- initially due to petrodollars -- with no reference to tangible productive assets. There had been windfall increases in capital on international financial markets in the past, but the range of operations afforded by petrodollars to the financial institutions pointed to them the way for the creation of financial capital beyond productive financial bases and in critical proportions. The lines between traditional banking, speculation and usury began to blur.

As of the late seventies in the West -- mainly in the Anglo-Saxon countries -- finance companies, insurance companies, money market mutual funds, pension funds and investment funds became major players in the financial markets. Together with commercial and investment banks they began trading and offering new deals and financial arrangements which they marketed as "products". These "products" include futures and options on currencies, commodities, bonds, stocks, stock indexes, treasury bills and interest rates. They are traded through such techniques as "matrix trading", "pairs trading", "cross trading", "straddles", "swaps", "as-you-like option", "barrier options", "down-and-out call/put", "up-and-in call/put", "collar", "contango", "quanto option" etc.[9] These "products" are appropriately called "derivatives" -- they are derivatives of real capital. In the volatile market they have created, derivatives have appropriately also created their own raison d'être: that of permitting those who actually traded in commodities and stocks or needed foreign currency for their productive business to hedge their risks. But it has been impossible to stop derivatives from becoming major instruments of speculative finance. For example, of the daily $800 billion to a trillion dollars traded on the international currency markets, it is estimated that only a fraction -- in the order of $25 to $30 billion, i.e., about 3% of transactions -- is exchanged to cover global trade in goods and services. One of the symptomatic aspects of these capital creating processes were junk bonds. Again, the fact of taking risks by borrowers and lenders with high interest rates for questionable investments was not new in itself. What was new was the magnitude and liquidity of junk bonds in the financial markets of the eighties which the changing nature of capital markets had made possible.

Financial markets in the Western developed countries have shown their capacity and flexibility to absorb the non-labor, non-productive and non-asset based capital that is churned out every day -- every moment. The rapidity of electronic transfers and their extended networks have changed the nature of the risks involved. With the development of such instruments as money market CDs, mutual funds, deposit insurance and electronic networking, panic runs on commercial banks for cash can probably be more easily met. The insolvent bank may eventually collapse, but the ripple effects of its collapse are more likely to be controlled. Financial systems now have other vulnerabilities such as downward spirals and panic sell commands on the stock market triggered by program trading. Some controls have been put in place to serve as floodgates. Some speculation and securities regulations have been set up and there are mechanisms to secure orderly markets and suspend operations when things get out of hand. But even without crisis, in the everyday fluctuations of the financial markets enormous gains and losses occur.

With the globalization of financial markets, the IMF and World Bank policies to push developing countries to privatize their industries, and the opening of stock exchange markets in developing countries connected to the international financial network, the volatility of international finance can creep into and jeopardize the development projects of developing countries. A privatized industry in a developing country may suddenly see its capital base collapse because its shares on the international financial market lose their value (an operation which may have even been triggered to force that industry to call on new international financing and control).

Economies such as those of Japan, Hong Kong or Taiwan, even though at times jolted by stock market crises, can afford to be integrated in the global financial network because they have already put in place stabilization mechanisms and also have substantial financial investments abroad which could provide them with a cushion in times of crisis. That is not the case of developing countries like India, China, Indonesia or Malaysia with weak international financial infrastructures. Hasty liberalization of these economies can put them at risk in the volatile international financial markets.

Presently world finance is in flux. International debts of many sovereign states, for example, will obviously not be paid in any foreseeable future. But in many ways that fact has become irrelevant because those debts have become part of the electronic financial process subject to swaps, baskets and other derivatives. Banks in developed countries have, over the years, with the acquiescence and help of central banks and manipulation of interest and exchange rates, set aside reserves for cases of default.[10] International debts are now diluted into the future and the banks periodically reschedule and refinance them against hefty fees. 

Another example of the financial flux is the global currency market which since the events of the seventies has had little internationally organized control. It is evident that the central banks, even collectively, do not actually have sufficient foreign currency reserves to intervene effectively and either change the direction or halt an ascending or descending exchange market. Their interventions have only a psychological effect signalling to the financial markets that the wishes of the governments are to slow or reverse the trend, asking the financial institutions to apply self-control. Sometimes it works, sometimes it doesn't. Financial institutions live, and speculators thrive, on fluctuations of interest rates, yields, currencies and prices (inflation). Too much stability is not in their interest and now they have a global network to play in; and that network, to a large extent, escapes the control of any single country.[11] The central banks' monetary policies or manipulation of interest rates play into the hands of global financial markets which ride the waves of those policies and manipulations and shift the focus of their transactions to take advantage of them.

Political and economic systems of countries, however, are dependent on, and influenced by, the international financial network. Governments of developed countries in the North are too much involved in that complex to be able to effectively create international mechanisms and institutions for the control of speculative capital. Some of the major developing countries which as yet are not overwhelmed by the international financial network are in a better position to spearhead an international movement for the creation of institutions and mechanisms to stabilize and regulate international financial markets. It is in their interest to do so. Globalization of financial markets is a good thing insofar as it represents stable capital. But it should have an international regulatory framework and controls on speculative encroachments on currencies which should be given sound exchange bases. Volatile speculative capital which appears on the computer screen on the same footing as labor- and industry-generated capital bloats the market, enhances inequalities around the globe and handicaps long term development projects. Speculative capital's chase after instant optimum profit through program trading, constant evaluations of P/Es and growth rates, and volatile manipulations of stocks and currencies become particularly detrimental to long term development projects when put in the context of other post-industrial evolutions in the West. Those evolutions include, notably, the rapid globalization of the entertainment industry due to advances in electronic and space technologies, growth of the service sector and, the drive towards ever greater consumption. These are distinct but intertwined aspects of post-industrial West which we need to and can best examine under the title of consumerism.


Consumption was recognized as an integral part of the economy from the inception of capitalism. It was part of the loop of enterprise, investment, production, distribution, sale (for consumption), profit and on back to enterprise. In different epochs and depending on prevailing ideologies, different segments of the loop have been considered crucial. Western post-industrial culture today emphasizes consumption. Consumerism, however, is not simply the rush of customers to shops. It covers a whole evolution of the capitalist culture. Consumerism is the fulcrum for jobs which keep people busy and permit redistribution of wealth. Consumerism stimulates the use of speculative capital and is promoted through ever more refined and enticing marketing and conditioning methods by the vast and expanding media networks.

Consumerism modifies the criteria for development outlined at the beginning of this paper. Consumerism does not only jolt a developing society out of its traditional groove, it also alters the society's perspective on progress.[12] Permeated by prints, waves and beams of the media penetrating across the border, a developing country may have its population exposed and enticed to superficial aspects of the Western way of life which are not in synch with its own stage of development. Fashion catalogs and shows may make a population crave for fancy clothing and cosmetics before caring about replacing their outhouses with indoor plumbing. Rupert Murdoch may be pleased to claim that "the satellite TV is an unambiguous threat to totalitarian regimes everywhere". However, the purpose of his enterprise is profit: attracting commercials for mass consumers requires broadcasting programs with the lowest common denominator to appeal to the masses -- a fact which does not develop social responsibility among the viewers but rather their appetite as consumers.

Where to draw the line between actual legitimate needs and consumer cravings is not always easy. One can even make a case for the production and marketing of an electric toothbrush which may be the legitimate need of a person with an arthritic wrist. By and large, however, distinctions between needs and cravings can be established. According to statistics the average American consumes 3,700 calories a day which is 1,000 calories more than what he needs. The American is enticed to eat and then is offered programs and products to lose weight. The process is similar to the behavior of the Romans at the height of their imperial prosperity who, in order to continue a gluttonous feast, stuck a feather in their throat to activate vomiting in order to eat more. 

How much more can be done to promote consumerism in the West is an open question. A recent article in American Demographics underscored the want that can be created by retailers through the exploitation of the "whine factor" in children, obliging parents to make purchases.[13] Credit cards, once the privilege of a few but popularized in the West in the seventies, are still proliferating and are great contributors to consumerism. The "buy now and pay later" motto of credit cards in the West at once creates the incentive to buy and contributes to velocity and liquidity in the market place. The motto, of course, results in relatively high rate of defaults. But again, the developed financial structures in the West have been able to set up mechanisms to absorb the losses.

While consumerism in the West is still in flux, its international sustenance depends on the evolution of the relationships between the developed and the developing countries. Consumerism is accelerated in the West by the globalized economy. The "whine factor" is made possible by the toys made in China. Credit cards can proliferate as long as consumer goods are made abundantly available by Newly Industrialized Countries (NICs). The relationship between Western consumerism and developing economies is complex and has its paradoxes.

While infrastructure projects of developing countries find limited and controlled financing through loans and bonds backed by international financial institutions, their market economy, as it is liberalized and becomes integrated in the global economy, is funded by international free market capital to adapt itself to the broad patterns of Western consumerism. International free market capital flows in to cater to the wants created in the developing countries due to exposure to international media -- fast food chains, cosmetic boutiques and shopping malls sprout -- and to produce goods appealing to the international market.

Developing countries' industries also become cogs in international globalization of production, building parts of wholes -- cars, TVs, computers, airplanes, factories etc.[14] That development is in itself a welcome evolution towards an interdependent world where conflicts will become harder to sustain. But the desirability of interdependence will depend on the way capital, technology, management, labor and raw material are meshed together. It is assumed that the flow of foreign capital into a country is good because it creates jobs. That, however, depends on how the proceeds of the enterprise are distributed. Therein, in fact, lies part of the developed/developing country relations' paradox. If the labor in the developing country is adaptable but cheap, foreign capital flows in. While the workers who may have had marginal traditional occupations will find jobs and their living standards fractionally improve, it is the foreign capital which benefits the most. The low cost of labor permits its products to be competitive on the international markets and bring in good profits for the investors. But that hurts labor in the developed countries. The labor unions in the developed countries will ask for protective barriers and within democratic systems like that of the United States will push the government to address the issue of workers' rights in its foreign policy. The idea is to make labor in the developing countries claim more benefits and thus become more expensive and less competitive. But that would make enterprises in the developing countries -- their earnings and therefore their P/E -- less attractive to the international capital which would then look for greener pastures.

The competitiveness of an exploitation in the developing country may also be due to access to untapped natural resources and/or industrial techniques using less sophisticated and less expensive methods and sources of energy. The extraction and depletion of the natural resources -- such as forests -- and the pollution caused by fuel and waste can become an issue for environmental protection. Stringent application of environmental protection measures may again render the products of the developing country less competitive on the international markets and cause the flight of international capital.

Workers rights, development of social programs and environmental protection are, however, essential and worthy goals which a developing country should pursue. But although in the long run projects aimed at such goals make a society more efficient -- providing better health, education and quality of life -- they are costly and not profitable measures in the immediate. Above all, the premature liberalization of a developing country's markets will make development of social programs more difficult. Health care, social security and education will be harder to finance. If the economy is taxed heavily for that purpose foreign capital will flee. If those programs are left to the market forces, inequalities will increase, handicapping a country's efficient use of its human resources for development.


What is striking in the review made so far is the constant lopsided image of development presented to the developing countries by the West. In the colonial and neo-colonial periods when the West was imposing development on non-Western cultures, it transferred its technology, industry and administration to those regions to the extent which made those cultures appendages of the West. Except for proselytism by different Christian churches, Non-Western cultures were not exposed to the philosophies and value systems which had launched the West into its modern age. In the present post-colonial era, developing countries are exposed to and are emulating a phase of Western evolution which, in many ways, is an aberration of the traditional philosophies which served as the bedrock of capitalism. 

For those philosophies and traditional value systems one needs to go back at least to thirteenth century Europe when major Christian constituencies like Franciscans and Dominicans who were, up to then, upholding spiritual growth and despising material gain, began to support reasonable and justified returns on labor and capital. With the Reformation and Calvinism developed what was later euphemistically labelled "Protestant ethics," but which, in reality, permeated the whole of Western culture: that of "moral duty of untiring activity, on work as an end in itself, on evils of luxury and extravagance, on foresight and thrift, on moderation and self-discipline and rational calculation".[15] That was the moral fiber of Western development. It was oriented towards production, not consumption. The psyche of the Western man, of course, like every other human being, resisted those harsh precepts and sought easy profit and pleasure. Not all rich Western men were pious. But the moral fiber inculcated by the emerging bourgeoisie made them feel guilty and fall in step with the prevailing social standards. The moral fiber and social standards provided discipline and guidelines for the Western evolution into capitalism, material and technological perspectives and industrialization.

Ironically, the moral fiber of dedicated hard work gave the Western man license to exploit his fellow men at home and abroad. And that was the image which was passed on to the non-Western world. For most non-Western cultures the West remained a technologically advanced culture which, by the standards of traditional cultures, if not immoral, was at best amoral. 

One of the more significant features of Western development was the expected change in the individual's attitude towards society: from traditional clannish and tribal loyalty and aristocratic fealty to modern social responsibility and accountability. It was the transformation of the political institutions and social organization from the "sovereign's officials" into "civil servants". In the traditional culture, it was assumed that obtaining services and favors from the prince's vassals and appointees implied offerings -- payment. After all, they sought their own enrichment and were tributaries to the prince. The civil society which evolved with the development of bourgeois capitalism and industrial revolution expected civil servants to render service impartially and against remuneration by the socio-political structures. Payment to civil servants for favors could warp the economic process and thus became an immoral act: corruption. Corruption could indeed jeopardize competitive free enterprise. Honesty of officials and their social responsibility and accountability became an essential expectation in Western culture's moral standards. But the transition was not altogether corresponding to basic human tendency towards clannish belonging, the drive for gain and the difficulty to identify with social abstractions; especially where renumeration was not adequate for a comfortable life -- or so deemed by the recipients -- and solicitations and temptations were present. The transition had to take place through social conditioning and inculcation of social moral principles. It was a continuous process and still is. 

The emphasis of early Western capitalist ethics on production rather than consumption produced surplus. Internationally, the surplus created stronger nations which competed with each other, expanded and clashed. Socially, concentration of wealth in few hands called for ways of making redistribution of wealth possible, giving rise to such concepts as Christian charity, socialism, communism and now consumerism. Each of these concepts has had its own flaws, generally because of their incompatibilities with human realities. The current trend of consumerism is expected, as mentioned earlier, to generate enough circulation of wealth to provide jobs for people and taxes for the government. The correlation between consumerism and creation of jobs and distribution of wealth is not obvious. Automation and computer technology are reducing the need for manpower and pushing the bulk of jobs to the lower rungs of services, not necessarily providing equitable distribution of wealth. 

Furthermore, consumerism clashes with environmental concerns. The West had the "good fortune" of spewing smoke out of its high stacks and releasing its waste into the rivers and seas in the much less inhabited world of nineteenth and early twentieth centuries, and graduated from carbon dioxide and industrial waste to carbon monoxide of cars and CFCs' of refrigerators and aerosol sprays. If the developing countries with their billions of population were to embark on that same path the air of the earth will soon become unbreathable and its waters undrinkable. It is not the developing countries that should emulate the West, but the West which should review its course of consumerism, derivative bloated capital and pervasive lowest common denominator entertainment. These are aberrations of basic Western traditional values. In the long run, these are not sustainable trends. The idea here is not to suggest that developing countries should not develop; but that in choosing their course towards development they could examine the value system that made Western development possible and by observing the West's mistakes avoid repeating them.

In order to make the point, one last, but by no means least, underlying aspect of consumerism should be underscored. The creation of jobs through consumerism is not only for the circulation and redistribution of wealth but to keep people busy. Many currents in Western culture are adamant to reduce working hours. In the course of its evolution, the West has been influenced by a combination of the church's objection to the rational emancipation of mankind,[16] capitalism's drive towards useful and functional training rather than well-rounded intellectual education of the masses, and more recently the extension of the idea of freedom to the process of learning -- and the option of not learning -- dispensing with the rigors of classical education. The combination has also been convenient for the political process permitting simpler levels of communication for aspirants to power and their constituencies. But the combination has tainted general education in the West and produced masses who, no longer enveloped by a traditional culture, do not know what to do with themselves when out of a job, contributing to the statistical realities of positive correlation between crime and unemployment.

By addressing the question of education with an open perspective, rather than emulating Western patterns, developing countries could lay the foundations for cultures which could improve on Western models. It is no longer practical to obstruct the tantalizing waves from TV satellites, but it is possible to sensitize the population and particularly the young to the environmental, social and cultural dead-ends of consumerism. Most developing countries still have traditional patterns and the elements of discipline within their educational systems. Rather than abandoning them for the more lax but specializing and limiting Western educational methods, they could adapt their educational systems to include the ideas of enlightenment, rational thought, the dignity of labor, and social responsibility, not as a one dimensional straight jacket of a job to keep people out of trouble, but as a productive process which contributes to the formation of productive capital and social development. By providing a well rounded education extending into adulthood developing countries can create the alternative of moderate consumption and enjoyment of life. It is through education, for example, that developing countries could drum up support for their public transportation projects countering the temptations of one person/one car culture which tends at once to alienate people, congest the traffic, pollute the environment and exhaust resources.

The reality is that following the consumerism pattern, the developing countries cannot get there from here. It is neither feasible nor desirable to provide cars for six billion people on the same scale as the United States. If the course is maintained, it may lead to socio-political crises. 

To a large extent the developing countries' crises of passage from their own non-Western traditional culture to a Western-style modernism stems from their inadequate exposure to the basic Western traditional values which permitted the West to develop. Translations of the works of Western philosophers and thinkers are available in the libraries of the developing countries and accessible to the intellectuals and the elite, but that may not be enough. Other than the elite -- whose exposure to Western values undoubtedly influenced their impact on their non-Western cultures, such as Sun Yat Sen, Ata Turk or Nehru -- developing cultures, as a whole, have ignored the Western traditional psyche. The West doesn't have only gunboats, Star TV and consumerism to offer. Having focussed on those realities of the West, and having labelled the West immoral or amoral for good, developing cultures have made Western traditional thought and psyche inscrutable to themselves. 

As Western experts, engineers, managers, lawyers, administrators and advisors go about day after day transferring their technology to the developing countries, it is not only their techniques but their psyche that the non-Western cultures could delve into. To rationalize an economy, to make it practical, one does not only use technology but rational thinking and pragmatism, dedication, motivation and a sense of social responsibility. These valuational aspects of Western culture are essential components of development and technology transfer.


Current Western excesses of speculative financial fluctuations, consumerism and global lowest common denominator entertainment can handicap the developing countries. Yet, these are aberrations of processes which are otherwise essential vehicles for development and could be fully taken advantage of by the adoption of appropriate policies.

Developing countries which are not yet too entangled in international financial debts and speculative investments could actively influence international financial organizations to put in place orderly patterns for the movement of capital and currency exchange guidelines -- not barriers to movement of capital and currencies, but orderly patterns to avoid economically harmful fluctuations caused by speculation.

Developing countries could reduce the impact of the permeation of their cultures by global lowest common denominator entertainment, not so much by physically banning satellite dishes -- hard to enforce -- but by actively engaging their public in critical debate of the life styles propagated by the media and the environmental, social and cultural flaws of consumerism. 

By avoiding recent evolutions in Western educational methods towards laxity and narrow specialization, by modifying and adapting the discipline and traditional patterns of their own educational systems, developing countries could lay foundations for producing well-rounded individuals free from superstitious beliefs and dogmatic ideologies.

By delving into Western traditional values of dedicated work ethics, productive labor, motivation, rational thought, pragmatism, and social responsibility; and emphasizing them in their own cultural, social and educational processes, developing countries would make technology transfer and development a coherent whole.

Anoush Khoshkish
November 1994 


[1] This essay was prepared for the Research Committee on Technology and Development of the International Political Science Association, Shaanxi Teachers' University, Xi'an, Peoples Republic of China, November 1994.
[2]For a review of recent development theories see Baeck, Louis, Post-War Development Theories and Practice, Paris, UNESCO & International Social Science Council, 1993.
[3]John Westlake, Chapters on the Principles of International Law (1894), Chapter IX, in The Collected Papers of John Westlake on Public International Law, Cambridge, Cambridge University Press, 1914. 
[4]Covenant of the League of Nations, Article 22.
[5]United Nations Charter, Chapter IX, Article 55 a.
[6]Kautsky, John H., Communism and the Politics of Development: Persistent Myths and Changing Behavior, New York, John Wiley & Sons, 1968.
[7]Dos Santos, Theotonio, "The Structure of Dependence", in American Economic Review, 60, 1970.
[8]Kurtzman, Joel, The Death of Money, New York, Little Brown & Co., 1993, p.148.
[9]Kurtzman, op. cit., pp.67-68, and Financial Times, November 16, 1994, "Derivatives," 5.V.
[10]Monteagudo, Manuel, "The Debt Problem: The Baker Plan and the Brady Initiative: A Latin American Perspective" in The International Lawyer, Spring 1994, Vol. 28, No. 1, pp. 59-81.
[11]Clarete, Ramon L. and John Whalley "Trade Restricting Effects of Exchange Rate Regimes: Implications for Developed-Developed Country Trade Negotiations" in John Whalley (ed), Developing Countries and the Global Trading System, Vol. 1, Thematic Studies from a Ford Foundation Project, London, Macmillan, 1989.
[12]Thorelli, Hans B., Consumer Emancipation and Economic Development: The Case of Thailand, in Contemporary Studies in Economic and Financial Analysis, Vol. 37, Greenwich, Connecticut, JAI Press Inc., 1982. See, notably, the loop of the LDC syndrome, p.249.
[13]June 1994, pp. 22-27. Lead article on "Kids in Stores" by Paco Underbill of Envirosell, New York.
[14]Alavi, Hamza, "Class and State in Pakistan" in Diptendra Banerjee (ed), Marxian Theory of the Third World, New Delhi and Beverly Hills, California, Sage Publications, 1993.
[15]Tawney, R. H., Religion and the Rise of Capitalism: A Historical Study, (1922), New York, Harcourt, Brace, and Company, 1952, pp. 247-8.
[16]As late as 1846, Pope Pie IX lamented the action of social reformers who "under the pretext of favoring human progress, do every thing to destroy the faith, submit it to reason and pervert the divine words." Quoted in Minois, Georges, L'Eglise et la Science, Paris, Fayard, 1991, Vol. II, p. 183. (Emphasis mine).
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