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Opinion

November 23, 2017

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Between you and me

“Just between you and me,” wrote Lawrence Summers, the then chief economist of the World Bank, in an internal memorandum that got leaked in 1991, “shouldn’t the World Bank be encouraging [more] migration of the dirty industries to the LDCs (least developed countries)?”
He gave three reasons for this. The gist of his explanation was that it would not only make Western countries more pollution-free but also uplift the LDCs economically by bringing more industries and employment to the region. Moreover, since the LDCs are already worse off on the pollution scale, these industries would only add an insignificant amount of pollution and inflict negligible harm to the already polluted environment.
The memo was severely criticised by environmental and humanitarian groups across the globe. Economists are often criticised for assuming several crucial factors from the equation of demand and supply that could hold catastrophic implications to finding an ‘equilibrium’.
If the assumptions are taken to be true and harmless, the logic of the argument becomes unquestionable. ‘Ifs’ are what the economic equilibriums are based on and it is the ‘ifs’ that economists often ignore. As a result, such ‘ifs’ also define our economic priorities. However, ‘ifs’ are factors that put important restrictions on economic rationales and often make them inadequate and indeterminate.
The memo eventually became a symbol of the mindset of neoliberal economists. One would think that more than two-and-a-half-years down the road, mindsets would have changed. However, the fact that Summers himself was a critical figure in the Obama administration shows how little a change the world’s legislating elite must have experienced. The neoliberal philosophy is arguably not just obstructing environmental protection but is also affecting gender, racial and class equality in both intra and inter-country relations.
The MDGs and SDGs have been criticised for falling

prey to neoliberalism. While criticising the MDGs, Samir Amin (2006) argued that Japan, the US and the EU’s triad has allowed for the domestication of the UN for implementing their hegemonic plans through the MDGs. Similarly, a major highlight of the Paris Agreement was that the world leaders agreed to not let the average global temperatures from rising beyond two degrees. It was criticised on the grounds that two-degree limits only protect the Global North while in the Global South, some countries have already crossed the two-degree limit, and even a two-degrees temperature increase could have appalling consequences. Now the COP23 summit has also built on a similar approach towards climate change and environmental protection.
In Pakistan, the influence of neoliberalism and the mentality of Summers’ memo can also be observed – particularly in the ongoing CPEC developments. Two aspects are crucial in this regard: energy projects and the participation of the female labour force.
China is investing billion of dollars under the CPEC initiatives. A large portion of Chinese investment is going toward the development of the energy sector, particularly the coal-based power projects. Recently, under public pressure, China has started to lower its reliance on coal energy at home because of its detrimental environmental consequences.
The question is: why is China investing in similar pollutants in Pakistan? The smog in Punjab is being compared to China’s problem of air pollution. Pakistan has reportedly even sent a team to China to learn from their experience and adaptation strategies on controlling the smog. But the question of whether coal projects would have severe consequences for Pakistan’s environment in the long run, and should hence be revisited, is off the table. It can be inferred that the neoliberal or, to put it more precisely in this case, Lawrence Summers’ philosophy of dumping pollutant industries into poorer countries – who will take anything for more jobs and economic growth – is at play here.
It is indubitable that more jobs for women will be created. However, the question is regarding the quality of jobs. China has long been criticised for having poor labour rights and low wages, which over the years has attracted several global industries to China to produce their products at lower costs. However, recent studies suggest that the country is losing its comparative advantage of low-cost labour. In such a scenario, the economic rationale raises a rhetorical question: what is a better destination to invest in and then exploit for its low wages, poor working conditions and pitiable labour rights than Pakistan?
In this situation, men are likely to get more jobs since there are more vacancies in the construction industry, as explained by Dr Hadia Majid and Karin Astrid Siegmann. Second, the worst of the jobs – with extremely low wages and poor working conditions – will go to working class women. Although more jobs for women will come forth, the gender gap may remain the same or might even worsen.
The current path reaffirms Hegel’s belief that “we learn from history that we do not learn from history”. In short, the global political economy as well as Pakistan’s economic policies are dominated by neoliberal Lawrence Summers’ assumptions. If these assumptions are not revised, they could cause even more damage. But the damage will be “just between you and me”.
The writer is pursuing an MPhil indevelopment studies at Lahore School of Economics and works as a research
associate at LUMS.
Email: [email protected]

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