SDGs caught between development and underdevelopment

It is time for new alternatives based on old critiques

Brecht De Smet (UGent) joins Jan Orbie and Sarah Delputte in their criticism of the SDGs, but goes one step further and dissects the underlying economic processes of development and underdevelopment. The underdevelopment of the Global South is not a temporary deviation, but rather the necessary condition for the development of the Global North. The growth model underlying this inequality is at odds with the sustainable transition that the SDGs aspire to.

In the blog that launched this series, Jan Orbie and Sarah Delputte rightly question the UN Sustainable Development Goals (SDGs). Most of these goals are just common sense: achieving good health, welfare, quality education, gender equality, clean water, affordable and clean energy, decent work, sustainable cities and communities, responsible consumption and production, climate action, peace, justice, strong institutions, protection of biodiversity, reduction of inequality and an end to poverty and hunger. These goals express a broad consensus on how the world could and should be made a better place. 

Yet, this is not a program for a global ecological and social sustainable transformation. At first sight, these objectives seem rather vague, which means that a government, company or institution can use cosmetic policy measures to put the SDGs high on its agenda. As Orbie states, this opens the door to practices such as greenwashing – all the more so because Agenda 2030 does not clearly define the way in which we need to achieve these goals. 

Moreover, the SDG discourse takes for granted that the SDSs are compatible with each other and that the achievement of one goal is not at the expense of the other. However, the question is how economic growth and commitment to industry, innovation and infrastructure – two of the SDGs – relate to climate action and responsible production and consumption? 

The SDGs’ shaky assumptions

It is not only unclear which coherent, strategic policy choices are needed – Orbie and Delputte cite fair trade and debt relief, for example – but also which political and economic power relations need to be built to achieve these goals. Is the current world order at all capable of making such far-reaching policy choices? 

The SDGs are not neutral, as Jonathan Matthysen clarifies, but embedded in an implicit ideological framework, of which eco-modernism, free trade, capital accumulation and growth are premises that are beyond questioning. It is not the SDGs themselves, but this underlying ideological framework and the political and economic interests it represents that make a global sustainable transformation impossible. 

If we want to talk about social and ecological sustainability, we must not only talk about end goals, but also about the paths we should take to reach them, and the obstacles we will encounter on the way. Take SDG 8 for example: “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. The concrete target indicators speak, on the one hand, of 7% growth in the GNP of the ‘least developed countries’, higher productivity through diversification, technological innovation, industrialization, access to financial institutions, globalization, and, on the other hand, of full employment, decoupling economic growth from environmental degradation, protection of labour rights, etc. 

The underlying, shaky assumptions are: 1. Economic development is a ladder that has to be climbed individually by each country; 2. Trade and participation in the global economy automatically promote economic growth and development; 3. Environmental degradation is mainly a technological or behavioural problem that can be addressed through innovation and education; 4. Credit leads to autonomy rather than dependence.

Free trade = underdevelopment

The idea that economic development is a process that takes place primarily within a nation state that is competitive in the global marketplace goes back more than 200 years. Adam Smith already argued that the division of labor was the source of wealth: specialization leads to higher productivity and output. This principle applies to individuals, companies and countries alike. Countries need to specialize in the production and export of the products they are ‘best’ at. 

David Ricardo radicalized Smith’s understanding through his law of comparative advantage: countries must specialize in the one product that they can produce most efficiently, i.e. cheapest. Through free trade in the products that each country is best at, optimal production efficiency and, consequently, material output can be obtained. 

As early as the 19th century, Smith and Ricardo’s vision was criticized for the fact that the economic starting positions of countries, even within Europe, were unequal. One of the founding fathers of the development economy, Friedrich List, argued that free trade was to the advantage of the commercial and industrial superpower Great Britain, but to the disadvantage of an – at that time – agricultural country like Germany. 

After all, what a country was ‘best’ at economically was not ‘natural’, but was already the result of historical development. Instead of pulling each country further up the development ladder, free trade pushed countries back down: development in one area led to underdevelopment in other areas. List’s solution was protectionism and protection of early industry through import substitution – an economic strategy successfully pursued by countries such as Japan, South Korea, and China, in the twentieth century. Contemporary development economists such as Ha-Joon Chang continue to build on List’s ideas.

Free trade = unequal exchange

It has thus long been disputed that free trade and the integration of economies into the global market automatically lead to greater development and prosperity. After the Second World War, this insight was further elaborated by so-called ‘dependency theory’. In 1949, Raúl Prebisch and Hans Singer empirically established that the prices of goods from the Global South – mainly agricultural products and raw materials – were systematically falling compared to the prices of finished industrial products from the North. 

Several authors – Paul Baran, Paul Sweezy, Andre Gunder Frank, Arghiri Emmanuel and Samir Amin – pointed to the structural legacy of colonialism that these countries continued to underdevelop even after their formal independence. It was not the lack of free trade or ‘globalization’, but the integration of these ‘underdeveloped’ economies into the global market that encouraged their ‘backwardness’. 

In the Global South the export sector was ‘developed’ in function of the demand of capitalism in the Global North, but other economic sectors remained underdeveloped. This led to the marginalization of large groups of the population, who ended up in unemployment or the informal economy – an immense ‘reserve army’ of labour that exerted downward pressure on wages in the export sector. These artificially low wages in the export sector resulted in low export prices and consequently in ‘unequal exchange’ between the Global South and the North. Thus, free trade is actually unequal exchange and the expansion of one economic sector is actually based on the stagnation or even destruction of many others.

Global production chains and their human cost

The emergence of multinational and transnational corporations deepened these unequal relationships. Authors such as Immanuel Wallerstein and, more contemporary, Jennifer Bair and Benjamin Selwyn demonstrated that global capital accumulation, driven by profit maximization and competition, led to transnational goods and production chains. 

Profits are generated by economic growth and competitive advantages, which in turn are realized through ever-increasing consumption (e.g. through credit and debt), larger investments, economies of scale, stricter (intellectual) property rights, institutional violence and the reduction of social and environmental costs. 

The global capitalist profit economy as such – with or without a neo-liberal character – is therefore at odds with social and environmental sustainability and the fulfillment of the SDGs. Today, more than ever, the origins of wealth and ‘development’ in the Global North lie in the exploitation of wage labour, the unequal exchange and the externalization of social and ecological costs of the production and distribution process, to entire population groups and their immediate environment, in both the Global South and North. 

Companies like Apple benefit from supply chains from Europe across Asia to Africa, not by owning the entire supply chain, but by outsourcing the least economically viable activities to third parties. Thanks to a strong (monopoly) position, they are able to force low prices on suppliers and distributors, who, in a relationship of unequal exchange, have to sacrifice part of their profits in order to gain a place in the production network. 

Since most production costs (machinery, raw materials, transport, etc.) are inelastic, these second-tier companies in turn try to reduce costs by increasing exploitation rates (through longer working hours and/or lower wages) and externalizing production costs to households, communities and ecosystems.

Invisible theft

Within one and the same ‘developed’ production chain – for example from R&D in the West over production in China to raw material extraction in Africa – there are immense wage differences that cannot be explained by differences in productivity. The poverty of the populations at the bottom of the production ladder is caused by a transfer of the value of their unpaid labour up the supply chain. 

Realizing the SDGs centered on poverty, equality and labour rights requires tackling this invisible theft, which in turn requires a radical transformation of the global economy away from profit maximization and capital accumulation. 

This theft of value also takes place outside the economic sphere. The workers at the bottom of the production ladder, whose low wages do not suffice to cover the cost of their existence, manage to survive by doing extra unpaid work in addition to their already hard wage work. This additional burden mainly falls on the shoulders of women, which adds a strong gender dimension to exploitation in the Global South. On top of these indirect socio-economic costs comes the heavy toll on family life, the physical and psychological damage that is not compensated in any way.

A global form of NIMBY

Passing on the social costs of production to households also includes shifting ecological costs to the environment and vulnerable communities: CO2 and other greenhouse gas emissions, chemical pollution, logging, loss of biodiversity, destruction of the habitat of indigenous peoples, and the list goes on. Here, an unequal ecological exchange takes place, whereby the Global North externalizes the most polluting activities to the Global South – a global form of NIMBY. 

The trade in emission rights is a pressing example of this, but we might as well refer to the production of electric cars, where the clean air in the cities of the Global North is achieved on the back of the Global South, where the polluting extraction of, among other things, lithium for electric batteries takes place.

Old critiques and new alternatives

It is impossible to achieve the SDGs from a binary view on ‘development’ and ‘underdevelopment’; free trade and protectionism. Contemporary production chains intersect both the Global North and the Global South and include both ‘developed’ and ‘underdeveloped’ links. In fact, the high degree of exploitation and ecological pressure at the bottom of the production ladder do not constitute a deviation that will disappear if there is sufficient ‘development’. On the contrary, these are the necessary conditions for profits and economic growth at the top of the ladder. 

Social and ecological corporate responsibility does not solve the problem: this is not a question of bad capitalists, rather of a logic of profit maximalization that forces companies to strengthen their competitive position by reducing the most elastic economic costs: wages and living environments. 

The debates outlined above, which take us back to the 20th and even 19th centuries, show that this logic of profit and growth is not limited to the ‘neoliberal turn’ that has plagued the Western welfare state and post-colonial development states since the 1970s. This logic is at the heart of capitalist modernity – a system of property relations, (neo)colonial structures and ideological choices that is fundamentally at odds with the principles of social and ecological sustainability promoted by the SDGs. 

What, then, are potentially adequate answers to these internal contradictions of the SDGs? Possible alternatives, which I have summarized with my colleagues, can be read here. They include debt relief, a green transition that is not based on the plunder of natural resources in the Global South, reparations for the human and material cost of colonialism, the tackling of tax havens and the democratization of international institutions.

Brecht De Smet is a postdoctoral researcher at the Department of Conflict and Development Studies at Ghent University, where he teaches Politics of Development and Politics of the Contemporary Middle East.

The Dutch version of this blog is published on MO*Magazine.