Posted on 08/28/2002 10:36:32 AM PDT by lds23
World Development Report
Sustaining hope
Aug 22nd 2002
From The Economist print edition
Is the World Bank turning Marxist?
STRANGE goings-on at the World Bank. Not long ago, its director for the environment, Kristalina Georgieva, asked her team a question: why care about nature? Given the bank's focus on poverty, she said, the reason was surely its impact on human welfare. After all, as the bank itself has noted, environmental problems such as air and water pollution are the leading preventable cause of health ailments in poor countries. Yet when she made that point, half the audience disagreed. One green staffer even left the room in a huff.
Now comes another apparent sign of heterodoxy. On August 21st the agency published its annual World Development Report (WDR). The theme and timing of this year's report coincide with the United Nations summit on sustainable development, which starts in South Africa on August 26th. If the World Bank seemed a shade green before, a casual reader might think it has now turned positively red.
For a start, the report suggests that economic growth, long seen by liberal economists as the surest route to poverty alleviation and environmental improvement, is not enough. It explains that sustainable development is “about enhancing human well-being through time”, which means helping people to improve such things as their “sense of self-worth” and not just their net worth.
The WDR also rejects the view that despoiling nature is an unavoidable yet reversible companion to economic growth. Environmental problems are, “at their root, social problems. The distribution of assets, and of the costs and benefits of different policies, as well as the role of trust, are all critical to the ability of societies to develop competent rules and institutions to address environmental, social and economic problems.” The report argues that the “poor and disempowered” must have much greater access to assets if growth is to be sustainable and the world is to avoid social unrest.
So does the WDR really add up to a neo-Marxist call for the redistribution of assets? Not at all, insists Zmarak Shalizi, its lead author: “Our arguments are grounded in neoclassical economics and game theory.” He notes that his team defines a society's assets as including far more than merely land, labour and capital. Property rights, the rule of law, transparency and even trust count, too.
Besides, Mr Shalizi argues, these assets are already being “appropriated” in many societies by powerful individuals, governments, firms or bureaucrats. That explains why otherwise sensible policies—including ending environmentally damaging subsidies—are often thwarted. “The benefits of such policies are often dispersed, but the costs concentrated, so the policies get captured by a few.” Strong institutions must compensate for this, he insists.
The bank argues that its emphasis on asset allocation need not provoke a backlash from fat cats: future economic growth will create plenty of new assets to spread around. Over the next five decades, the authors reckon, world output could quadruple, to $140 trillion, and the world's population rise to 9 billion, with humans a chiefly urban species for the first time in history. To most of those heading for the summit, this will sound like a nightmare. Yet, while acknowledging the pressure this will put on the planet, the WDR authors insist these trends could be good news too.
For a start, they note that the real news on population is that its growth rate is moderating. As a result, the coming years will see a boom in people of working age. Mr Shalizi adds that economic growth deriving from this will create an enormous stock of new assets that can be shared with the world's poorest. Even the migration to cities can be positive, for it means the poor can share in the new jobs, educational opportunities and housing stock to come.
All this, the WDR reckons, adds up to an opportunity to make growth more inclusive and sustainable. That is a surprisingly hopeful stance, given that sustainability gurus are usually a gloomy bunch. The summiteers in Johannesburg could do worse than to read this report.
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