Jeffrey Sachs is known as an advocate of aid and debt cancellation – a cause he’s championed through the UN’s Millennium Development Project, the Make Poverty History campaign (and its global cousins), and in his own writing. Now, aid and debt cancellation are not, as we know, without their detractors. So when I picked up his book, The End of Poverty, I was expecting a practically-focussed blow-by-blow plan of action – how much money, where, when, on what, how, etc. In short, I expected a similar read to the Africa Commission Report, although I knew from various reviews to expect a little autobiography of Sach’s work in various LEDC economies as well. And, the second two thirds of the book provides all this. What I didn’t expect is what Sachs provides in the first third of the book – a giddying birds-eye view of human history through the economist’s eye, and in the process, a superbly neat statement of the importance of economic growth to development. In short, before delving into specifics, Sachs gets the big-picture stuff out of the way, establishing a framework for his proposals – and does so brilliantly. The first chapter demonstrates this approach. Called “A Global Family Portrait,” it begins with a description of crushing poverty in Malawi. I’d seen an excerpt from it in Time magazine, and I’ll admit it – well, kind of bored me to tears. All the stock Africa clichés were there: a village with all the men dead from Aids; children dying from the lack of a plastic tarpaulin costing just a few dollars; even the dread phrase, right there on the first page, “the rains have failed.” This is the new era of development? Famine of biblical proportions? Was Sachs simply dragging us back to 1984, as his critics have suggested? Fortunately not. For chapter 1 contains more than one family portrait. From Malawi he takes us to Bangladesh, and shows us young women working in garment factories. The idea that low-paid, hard labour for the benefit of Western consumers is the route out of poverty hasn’t gone uncriticised. But in short order, Sachs makes his case that these women’s lives have been improved: their education levels, their personal freedom, but most of all the realisation that the “demographic transition” – the lusted-after transformation from a high-birth, high-infant mortality society to a low-birth, low-infant mortality society – has been sped beyond all expectation by the advent of work. When Sachs asks a group of female workers how many children they plan to have, an overwhelming majority say two. As recently as the 1960’s, Sachs notes, six or seven would be the norm. Simply by being plugged into the global economy, Sachs is arguing, these women have made in one generation steps which the West took two hundred years ago. From there, Sachs moves on to India, to show the next step on his developmental ladder: aspirant young IT professionals. Before making the case for aid, or debt relief, Sachs is outlining the process which these policies must aim to bring poor countries into: the process of capitalist economic development. These portraits are more than a random selection. Rather, they represent the classes into which, Sachs argues, the world can now be divided: not just “rich” and “poor,” but:

  • 1 billion rich people;
  • 2.5bn middle-income people, epitomised by the Indian IT workers;
  • 1.5bn poor people, exemplified by the Bangladeshi garment workers; and
  • 1bn extremely poor people, as represented by the Malawian villagers.1

Sach’s definition of extreme poverty here involves more than simply an income level (although the $1/day standard is one he uses elsewhere). It refers to those who “too ill, hungry, or destitute even to get a foot on the first rung of the development ladder;” that cannot even begin to enjoy the benefits of trade or industry. The goal of ending poverty by 2025, he then argues, can be broken down into two related tasks:

  1. To place the bottom 1bn onto the ladder of economic development; and
  2. To ensure those on the bottom rungs of the ladder are not prevented from climbing it.2

So chapter 1 is audacious in its scope, neatly summarising the current state of development through three simple illustrations. For the second chapter, though, Sachs has an even more whistle-stop tour in mind. The title – which could easily be the title for a 1000-page tome – gives a clue: “The Spread of Economic Prosperity.” I won’t even attempt to summarise what is already an incredibly compressed summary of, well, just about all of human history. Newton, the Renaissance, the steam engine – it’s all here. None of it new, of course – it’s A-level History stuff – but it’s an elegant summary, and crucially, Sachs ties it in strongly with the story of development. A few key points:

  • The “great rupture” of modern economics – the gap between the richest and the poorest countries – is not some great historical truth. Indeed, during the European “dark ages” of the fifth-fifteenth centuries, it was China that could claim to be the world’s wealthiest and most technologically advanced civilisation. Overall, though, the gaps between nations were almost insignificant until very recently – at the start of the nineteenth century, everyone was very poor by our modern understanding, with high birth and mortality rates and low life expectancy.
  • It’s the coming of the Industrial Revolution in Europe, in around 1800, that first sees the gap between countries grow. All countries and areas of the world have grown since then – not only in population and income, but in income per capita – but the wildly differing rates of growth, exacerbated by some areas’ lower starting point, leads us to the massive divides we see today. The difference between 1% and 2% average growth, over 200 years, amounts to a great deal.
  • Several key advantages enabled England to lead the Industrial Revolution – relative political stability and openness; freedom from threat of invasion; access to and dominance of the seas; abundant coal; a strong showing of scientific genius, from Newton to steam engine pioneers James Watt and Matthew Boulton; and access to the near-limitless markets of North America. Industrialisation brought with it specific changes, amongst which were changing gender roles and the demographic transition – so even as population rocketed, birth and infant mortality rates dropped. Above all, the Industrial Revolution brought with it immediate rises in living standards.3
  • Industrialisation spread across Europe through a mixture of trade and plagiarism. However, it reached much of the rest of the world through colonialism. Contrary to the resurgent view that colonialism benefited the colonised, it gave them a twisted version of modern economic growth that worked primarily to the benefit of the colonisers, and left them without the educated classes or infrastructure to develop proper economies on independence.
  • The incredible growth of per capita income – even with massive population growth – in the two hundred years since the Industrial Revolution shows it is the correct path to development. The poverty of the poorest countries stems from their failure to fully undergo this process at the same pace that the rich world has. But it is possible for every country to achieve this transformation, because the primary factor fuelling it – technology, and therefore, scientific knowledge and innovation – is “nonrival,” economics-ese for “able to be shared widely without any one holder’s share being reduced.”

It’s striking from this chapter that, for all the ire he’s attracted amongst the more free-market economist community, Sachs is clearly in favour of globalisation and of markets. He doesn’t explicitly attempt to rebut the various theories that argue capitalist development is not the best route towards development – but he puts forward a convincing case that the poor countries of Asia, Africa and South America, far from representing the downside or “losers” of capitalist development, are in fact simply suffering from a lack of it. But that doesn’t mean that Sachs accepts the argument, common amongst economists, that all development requires is to remove barriers to international trade. The thrust of the book is that some countries need assistance to plug into that system. It’s clear that he wishes to occupy a middle ground between the evangelists of free trade and those who strongly oppose it. Of course, such an argument requires a detailed examination of what it is that has prevented poor countries progressing at full speed up the development ladder so far. It is this issue he tackles in chapter three. More on that tomorrow.

1. UPDATE: James Wolfensohn, former President of the World Bank, uses a similar but slightly different division.
2. On that latter point, Sachs explicitly refers to the risk that “the rules of the game” may prevent such progress. He’s clearly attempting with this two-fold mission to bridge the issues of aid/debt and trade rules, much as Make Poverty History and co. have done. In doing so, he also attempts to pre-empt those who argue that the poor state of progress made by those on the lower rung of the ladder shows trade is the wrong route to development – a view I’ll look at in more detail later.
3. Sachs doesn’t feel the need to qualify or explain this point, though it’s been pointed out that the conditions of industrial workers in the first few decades of the Industrial Revolution were in fact substantially worse than in agriculture at time. But like most economists, Sachs is concerned with averages and aggregates, and factoring in reduced child mortality and so on, he’s probably right. Certainly, in the long run, it’s accurate.