Is aid a contemporary manifestation of colonialism?

In March 2015, the UK government passed the International Development Bill, legally binding 0.7% of gross national income toward distribution of aid. In terms of cash, it could represent as much as £12bn a year (Moore, 2015). In times where money is much needed in many other departments of the government, the bill has sparked debates around possible flaws within the aid system, namely the connection between “UK’s aid budget and the promotion of British ‘soft power’ “ (Moore, 2015).

Such an issue is in reality at the heart of a larger debate. Scholars have long debated the Liberal claim that provision of Aid for the promotion of growth and free trade can reduce poverty and inequalities. As foreign aid is not always based on “pure altruism” (Moore, 2015), critical scholars have argued that it is part of a wider liberal agenda (Escobar, 2012). In such a capitalist context, some of the features displayed in the relations between donors and recipients have been found to be similar to those between colonial powers and colonies.

In order to assess if aid could be a contemporary form of colonialism, it is important to understand which aid, to whom and for which purpose it is given. Aid which is given in a purely altruist purpose does not appear relevant here. Instead this paper will focus on aid which could be given on a non-altruist basis, such as Official Development Assistance (ODA). The first chapter will therefore focus on explaining foreign aid within the modern project of development and as part of a wider Liberal framework. In contrast, the second chapter will present the critical perspective of both the theory and the practice of development.

The Liberal School

As early as the 18th century, Liberal ideology advocated the promotion of free trades and the development of international markets in order to give everyone the opportunity to accumulate wealth (Smith, 1976). Furthermore, through the theory of comparative advantage, it was later demonstrated that even unequal states can still both benefit from free trades (Ricardo, 1973). Liberalism believes in “the ability of the market to lead to prosperity” (O’Brien & Williams, 2013, p. 14). After the Second World War, the Liberal ideology became increasingly perceived as a way to guarantee peace between nations as well as a mean to salvation for the under-developed world (O’Brien & Williams, 2013).

The reality of the disparity which existed in the 1950’s between the US and Europe on one side and South America, Africa and Asia on the other side brought economic development at the center of discussions (O’Brien & Williams, 2013). If industrialization and military power aspirations were once perceived as key to modernization (Sen, 1981), “the quest for economic development has been a significant feature of the postwar international system” (O’Brien & Williams, 2013, p. 219).

To agree over a single definition of development has, nevertheless, been a subject of controversies. This is due to the various cultural, social, politic or economic aspects, which can be involved. However, it is also more generally view as a process toward the amelioration of these aspects (Dickson, 1997). Furthermore, it has been argued that the development project has participated in the acceptance from most nations of economic growth as the most effective mean to fight both poverty and inequalities (McMichael, 2012).

The next step of this chapter is to look at what is aid and how it relates to development and economic growth. Aid is increasingly being distributed according and in coordination with specifically set development plans (Riddell, 2007). For an overwhelming majority of the literature, and within the development discourse, the definition of foreign aid has been narrowed to Official Development Assistance (ODA) (Riddell, 2007). This implies that other forms of aid do exist such as emergencies and disaster relief or even military aid.

Furthermore, it is important to recognize the central “role of the state in accelerating growth and enhancing the development process” (Riddell, 2007, p. 173), in order to understand why aid has increasingly been used in supporting the state in this task (Riddell, 2007). At this level, aid is playing a major role in filling gaps of immediate needs, which otherwise would slow down the development project (Riddell, 2007). As the official aid recipient, the state has the important role to spend it in a way beneficial to the development of its society, and most importantly to achieve the purpose for which it was given.

Among the various debates around aid, the following question has been a subject of controversies (Riddell, 2007): Why do governments give ODA? It has been argued that not only the objectives of aid have been overlapped by the donors agenda (Tarp & Hjertholm, 2000), but its allocation determined by commercial and other interests (Riddell, 2007). Within the realm of national security, development and foreign aid have achieved almost the same important status as diplomacy or defense (USAID, 2004). From a commercial perspective, to give aid can have many benefits such as the expansion of “jobs and exports at home while development is boosted abroad” (Riddell, 2007, p. 99).

Another important aspect to understand how ODA supports development, and ultimately, economic growth, is to look at the system of conditionality attached with it. The World Bank, the IMF and most bilateral donors have long implemented a conditionality policy with the allocation of aid. A first point to make is that if conditions need to be attached; it reflects the divergence of opinions about how to use financial aid between the donor and the recipient (Riddell, 2007). The emergence of the Structural Adjustment Programs (SAP) was rooted exactly in this issue that donors needed guarantee for the results. To the recipients, it meant that making promises was simply not enough anymore, and aid could only be allocated if attached to real programs of action (Riddell, 2007). In recent times, these programs usually try to link economic growth and poverty alleviation. An example can be seen in the poverty reduction strategy papers (PRSP) or the poverty reduction and growth facility programs (PRGF) of the IMF and the World Bank. Ultimately, the importance of these conditions is central, as it acts as guarantor of the aid being used toward the intended purpose.

Furthermore, in his work Development as Freedom, Sen (1999) makes the point that while growth can be seen as a mean to development, the objective is the achievement of freedom, including the freedom of education, health and trades. Related to the greater Liberal ideology (Smith, 1976), the support of a free market ultimately leads to prosperity for all. However, a vast majority of the poor are lacking both this freedom and the attached prosperity, hence the importance of development, and aid, as a mean to achieve what must be perceived as a greater good (Smith, 1976). In terms of results, it has been accepted that “aid does tend to speed up growth” (Collier, 2008, p. 100) and as a matter of fact, aid given to the billion poorest people over the last 30 years has made the difference between stagnation and decline (Collier, 2008).

The final aspect concerns the question of trade liberalization. The link between free trade, economic growth, aid and development may not always appear so obvious. UN researches and analysis (UNDP, 2003) have shown that developing countries with “the highest rates of trade growth have faster income growth and greater poverty reduction” (UNDP, 2003, p. 28). As it was highlighted by Ricardo (1973) in his theory of comparative advantage, “trade is positive sum-game” (O’Brien & Williams, 2013, p. 111) in which all participants can benefit.

In conclusion, this chapter has attempted to dissect the liberal environment surrounding aid giving. Starting from the classical liberal theories (Smith, 1976) (Ricardo, 1973), it has been explained how free market can lead to prosperity, therefore placing trades and economic growth as engines of development. As it was then explained, the distribution of aid in this context is understood in terms of official development assistance. Furthermore, three factors needed also to be explained: the importance of the role of the state in its quality of recipient, the liberal reasons behind the attribution of aid and finally, the system of conditionality linking the donor and the recipient for the promotion of free trade, economic growth and development. As stated earlier in this chapter, the greater goal is to achieve freedom, including freedom of trades, which can potentially provide wealth and prosperity to all participants.

A Critical Perspective

The previous chapter has given a description of the development project as a whole, illustrating the role of aid within it. However, both the development theories and its practical applications have been criticized, and therefore leading to different forms of interpretation. The following chapter will re-examine the role of aid, as perceived in the same context of liberalization and development, but from a critical perspective.

In the context of global political economy, the critical perspective is originally rooted in traditional Marxism. As opposed to Liberalism, the Marxist view does not embrace an individualist approach, but rather focus on the concept of classes within the structures of production (Marx & Engels, [1848] 2008). A particular emphasis is given to the struggle of workers over conflicting interest with the owners of the means of production. In this context, market relations are seen as exploitative and even conflictual since it is characterized by the antagonism between two classes, one trying to exploit the other for the purpose of accumulating capital (O’Brien & Williams, 2013). This further reflects the opposition with Liberalism, particularly the concept of comparative advantage explained in the first chapter. Instead, the critical perspective has advanced the dependency theory (Frank, 2008). While Liberalism demonstrates a comparative advantage where everyone would benefit from a free market, the critical view suggests that in fact it is a zero sum game, where only one can benefit through exploiting the other (O’Brien & Williams, 2013).

This perspective then offers an opposing explanation of the global political economy. This is reflected further within the sphere of development by stating that the advanced development of the richer countries is due to the exploitation of the poorest, and therefore the biggest obstacle to the development of the third world (Santos, 1970). In this context, liberalization of markets and trades in poor countries becomes an opportunity for TNC’s to come and exploit resources (O’Brien & Williams, 2013). This approach suggests a concentration of the global financial capital within the richer countries. It is this feature of centralization of capital, as seen with the TNC’s, which has been described as “a key feature of imperialism” (O’Brien & Williams, 2013, p. 18). Finally, in this perspective, the distribution of aid, in form of ODA, under conditionality policies, for the promotions of liberalization and the sake of economic growth, becomes nothing less than a tool to facilitate exploitation (Escobar, 2012).

After having presented briefly the critical argument, the remaining of this chapter will focus on explaining in more details some of its key elements, in contrast with those presented earlier. Consolidating the dependency theory, Frank (2008) has argued, with the support of historical studies, that underdevelopment has been, and still is, the result of the “very same process which generated economic development: the development of capitalism itself” (Frank, 2008, p. 261). It is the very idea that capitalism is a zero sum game, in which one participant benefits at the expenses of the other.

In his analysis, Escobar (2012) explains the concept of Space of Development, the hegemonic character of the development discourse, which is used to organize capitalist exploitation after the transition from colonialism to global capitalism, or a modern form of imperialism as he calls it. He elaborates further, the goal of development is the expansion of capitalism to new domains of exploitation through the promotion of free market (Escobar, 2012). Even behind the disguise of poverty reduction strategies, the conditionality policies mean the recipient must set in place a capitalist friendly framework (Waeyenberge, 2010). Regardless of the illusions created by the huge amounts of aid injected in the development projects, it still is a capitalist enterprise in which the “biggest exclusion remains the people, a most abstract concept moved up and down the chart of progress” (Escobar, 2012).

In such a context, the reality of poverty alleviation strategies does not appear as humanitarian as one could think. Through poverty reduction, Cammack (2004) argues that it is proletarianisation of the poor which is intended by the World Bank. Through the reshaping of social relations and institutions, the ‘deep interventionism’ policies of the World Bank aim to promote the integration of the poor countries into the global economy via their biggest asset, cheap labor (Cammack, 2004). Foreign aid distributed by major development institution and states, be it loans or grants, ultimately is used as a catalyst in this transformation of the third world (Cammack, 2004). On such grounds it has been argued that a primary objective of the World Bank is to promote capitalist development (Taylor, 2004). The role of such institutions is to “frame development” (O’Brien & Williams, 2013, p. 234), through their activities and loan conditions. Also while providing often much needed capital, financial development actors have been criticized for “putting profits before people” (O’Brien & Williams, 2013, p. 236) and donors interest before the recipients.

On the impact of aid, it has also been argued that donor-driven policies had detrimental impacts on the poorest population, largely due to the restrictions it brings on the ability of the recipient state to counter growing inequalities (Riddell, 2007). For example, recipient governments often have to reduce spending in health and social services, therefore directly affecting the poorest. The Structural Adjustment Programs (SAP) have too been criticized for hurting “the poorest, increasing women’s burden and not providing an effective solution to debt” (O’Brien & Williams, 2013, p. 232).

The acceptance of these programs, in exchange of which a lot of aid is allocated, has increased the dependency of the third world toward the developed countries through heavy debts, severely undermining the capacity to negotiate at international level (O’Brien & Williams, 2013, p. 240). Even if the creation of the G20 was an attempt to nuance this issue, the very existence of the G8 “ is a constant reminder that Third World governments do not shape the international agenda” (O’Brien & Williams, 2013, p. 241) and the voice of the poor remains inaudible.

If, as shown in the first chapter, liberalization of the global economy is supposed to bring prosperity to all, the critical perspective presents an interest in revealing serious setbacks. The role of foreign aid, in form of Official Development Assistance, does not appear as simple as it could sound. This is largely due to the fact that ODA is related to a wider Liberal development project, itself serving the purpose of capitalist exploitation (Escobar, 2012).

Behind this agenda, the current situation does indeed remind us of colonial times. One of the older criticism of aid assimilated it to an instrument of neo- colonialism to keep the recipient within the sphere of control of the donor (Arnold, 1985). Many of the third world countries had to fight for independence, against colonial systems of exploitation, dependency, inequalities and concentration of capital. Many of these features are unfortunately still present in our modern economic system.

Conclusion

In the first chapter, this essay has attempted to present the theoretical context in which aid is given. As seen with the ODA, the aim, as opposed to purely altruistic aid, is to achieve the greater purpose of free trades, economic growth and prosperity for all. Ultimately development is meant to achieve freedom (Sen, 1999). However, in the second part, I have presented a more critical perspective and the practical setbacks it presents. While proponents of the Liberal school talk about development, economic growth and official assistance, the more contrasted critical perspective answers with exploitation, dependency and debt burden.

The debates around development “reflect the inter-paradigm” debates in IPE (O’Brien & Williams, 2013, p. 224) with liberal theories seeking causes in external factors and the critical perspective looking at the role of global capitalism. When aid is mentioned alongside catchwords such as imperialism or colonialism, few distinctions need to be made. First, this association comes from a critical perspective of the dominant Liberal theories currently adopted by the official institutions. Secondly, it is not charity or direct relief, but such aid as in the context of economic development, ODA, which can be criticized. And thirdly, within this critical framework, it is not merely the concept of aid, but also the greater development and capitalist projects, which are pointed out for displaying exploitative features, reminding of what could then be termed contemporary colonialism.

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