CHAPTER TWO: RURAL DEVELOPMENT THEORIES AND CONCEPTS
2.4 RURAL DEVELOPMENT IDEAS: TIMELINE
2.4.4 Phase Four: Structural Adjustment (1980 →)
The development policy of the 1980s can be described as a failed paradigm, mainly to be attributed to the state. Hulme and Turner (1990:90-102) term it “an intellectual climate conditioned by the New Right” or an encapsulation of what some researchers
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call the “neoliberal” approach (Stockbridge and Dorward, 2014; Pieterse, 2010; Ellis and Biggs, 2001).
According to Turner (2008), neoliberalism is “an ideology that favours economic policies based on neoclassical theories of economics”. In addition, according to Turner (2008), the role of the state is minimised while the private business sector is maximised, with fiscal discipline and business-friendly exchange rates being the central focus. Pieterse (2010) argues that neoliberalism is based on the concept that economic growth is possible in the context of an unregulated market and an absence of government intervention. On the other hand, Harver (2005) is of the opinion that neoliberalism is a means whereby power can be restored to the rich, which makes the poor even poorer. During the 1980s, neoliberal policies continued to drive the global economic systems and those of both developed and developing countries.
This phase is characterised by an anti-state development programme, which is built on the premise that in the 1970s, the governments of the developing countries spent too much money on implementing the Integrated Rural Development projects model and meeting the basic needs of the people, thus causing budget deficits. The neoliberalist development approach supports the free market economy over government intervention as the agent of development. In this approach, development means economic growth that is achieved through structural reform in terms of deregulation, liberalisation, and privatisation, while reducing market-distorting intervention (Pieterse, 2010). The International Monetary Fund (IMF) and the World Bank promote this neoliberal approach through their Structural Adjustment Programmes (SAPs) and the granting of loans to developing countries in exchange for the implementation of structural changes in their economies (Stockbridge and Dorward, 2014).
According to Hulme and Turner (1990), the fundamental premise of this new ideology was that the state should withdraw and allow the market forces to take over. The latter should increasingly be in control and guide the allocation of and decision-making around resources. The role and responsibility of the government would be to construct and regulate a macro economic framework that would allow competitive markets to set prices and allocate resources. In its turn, the private sector would also feature as
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a dominant role player in that it would identify public needs and provide for them (Hulme and Turner, 1990).
The above-mentioned functions and responsibilities were drawn from the structural adjustment policies3 based on the Washington consensus and led by the IMF and the World Bank. These policies pushed for a free market system, for reductions in public spending, and for the transfer of assets from the public to the private sector.
Safety nets were implemented as a measure to compensate the poor and the marginalised and thus to mitigate the impact of these policies. As such, they were termed ‘structural adjustments with a human face’ (Cornia et al, 1988). Set in motion by UNICEF, these structural adjustments took cognisance of the fact that it was essential to overcome the macro economic problems facing developing countries and that these challenges could be overcome by making certain adjustments and by implementing compensatory policy measures targeting certain groups (e.g., supporting small-scale producers by investing in low-cost primary healthcare facilities and services and rural works programmes, and intervening in the nutritional field).
Trade liberalisation, privatisation, commoditisation, financialisation, the management of crises, and state redistributions were the main target areas of the neoliberal policies and their recommended strategies (Harver, 2005). According to Mahlati (2011), the negative impact of the neoliberal policies and strategies on the poor (whether real or perceived) has been raised globally as an issue to be placed on the agenda of social justice movements and trade unions world-wide. These policies and strategies have indeed become the motivating force behind the anti-poverty protest demonstrations at world trade conferences and at the annual G8 and G20 gatherings (Bhagwati, 2007;
Stiglitz and Charlton, 2005). The critical negative issues raised at these gatherings include the financialisation and “manipulation” of crises in the name of fiscal discipline.
Joblessness and a reduction in social spending have indeed had negative impacts on the rural poor (Mahlati, 2009; 2011). For example, according to Mahlati (2011), the fact that the exclusion and disempowerment of the poor - that has caused them to be
3 According to Mahlati (2011), these policies were prescribed as the “policy basis for developing countries with conditionalities for access to loans”
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classified as a “deprived” group – has not been adequately addressed and can be partly attributed to the financialisation of the global economic system. According to Foster (2007), “financialisation” refers to “the shift in the weight of economic activity from production to finance”. An example of the financialisation of the economic system in the context of an environment of peasant households strengthens the huge problematical aspects of the macro economic framework. The fact that the members of a peasant family have limited access to financial capital and are holders of “dead assets”, that are both undervalued and worthless (de Soto, 2000), underlies the enormity of the problem of financialisation on a global scale. Of further concern, according to Mahlat (2011) and IAASTD (2008), are the ever declining and appalling production conditions on small farms in the impoverished rural areas.
The above concerns have led to the promotion of the development of human and physical resources in rural areas. Thus, the fact that local people themselves should be the main implementation agents of development projects needs to be acknowledged. A detailed discussion about this approach is presented next - as Phase Five.