Chapter FOUR of Edition 2
Understanding the World Development System
[Note: This appendix, with its version of Chapter 4 from the second edition of the IFs book, is no longer in print. The discussion of causal dynamics and the discussion of world views will, however, still be of utility to many student readers.]
The central dilemma of this volume remains How do we act in the face of an uncertain future? Chapter 1 suggested, however, that we could proceed more efficiently by decomposing that question into three others:
1. Where do current changes appear to be taking us?
2. What kind of future do we value?
3. What leverage do we have in bringing about the future we value?
Chapters 2 and 3 explored where current changes appear to be taking us. Our principal approach to forecasting, especially in Chapter 2, was trend extrapolation. This chapter shifts our attention to preferred futures and to our leverage with respect to them. In order to address these issues, it is necessary to add investigation of causality to our tool kit of forecasting techniques.
As we looked at trends and attempted extrapolations in the last two chapters, we quickly found that simple linear and exponential extrapolations were very often inadequate. Some growth processes are clearly limited. For instance, literacy cannot surpass 100 percent of the population and oil production cannot grow indefinitely in the face of a fixed resource base. We therefore began to introduce alternative forms of extrapolation, such as S-shaped and bell-shaped curves, that implicitly recognized those limits.
Causal analysis helps us explicitly recognize such limits and more generally assists in understanding how complex processes might evolve in the future. At the root of causal analysis is the distinction between independent and dependent variables or between cause and effect, respectively. Up until this point we have discussed population growth as it were a phenomenon independent of any other. We all know, however, that a large number of factors affect population growth. For instance, the availability of contraception changes birth rates. So too, does the availability of opportunities for employment of prospective mothers. Similarly, the quality of medical care affects death rates, as does the prevalence of diseases such as AIDS and cancer. Thus changes in availability of contraceptives, employment of women, medical technology, and existence of disease are all causes (independent variables) of population growth (the dependent variable).
We generally divide causal relationships into two categories. Positive relationships exist when an increase in the independent variable (such as AIDS) leads to an increase in the dependent variable (such as death rate). In such instances, of course, decreases in the independent variable lead also to decreases in the dependent variable. In contrast, negative relationships exist when an increase in the independent variable (such as contraception availability) causes a decrease in the dependent variable (such as birth rate). In those cases, decreases in the independent variable will also lead to increases in the dependent variable. Parameters control how strong both positive and negative relationships are.
It is, however, sometimes difficult to distinguish independent and dependent variables that clearly. For instance, a high rate of population growth in an Asian country might lead (cause) the government to institute a family planning program and increase the availability of contraceptives, which we have already suggested might cause population growth rate to decline. In such a situtation we have a system of variables that feed back on each other in complex cause and effect relationships.
If population growth gives rise to family planning programs that control that same population growth, the process is reminiscent of a home thermostat that controls temperature by turning heat on and off as necessary (when temperature increases, the thermostat assures that heating ceases, which in turn leads temperature to decline). Figure 4.1 portrays the two causal linkages in both the family-planning and home-heating examples. Note that one linkage in each case is positive and one is negative and that changes in a variable like population eventually feed back in a loop of linkages to that same variable. We call such a combination of linkages a negative feedback loop, and, as these two examples suggest, such loops tend to produce relative stability in the processes they represent. A feedback loop becomes a negative loop whenever it includes an odd number of individual negative linkages (for instance, one, three, or five negative linkages out of six or seven total linkages).
In contrast, consider what might happen if the death rate from AIDS in an African country overwhelmed the medical establishment in that country, which in turn made it impossible to cope medically with AIDS and led the incidence of AIDS to rise further. This would be similar to the situation of a thermostat with its "wires crossed"—sensing too high a temperature this rogue thermostat turns up the heat. Figure 4.2 portrays the two causal linkages in each of these examples. We call the dynamics in these examples positive feedback loops. Note in the heating example that both linkages are positive. A feedback loop will be positive or self-reinforcing whenever there is an even number of negative linkages (such as zero, two, or four). Thus the AIDS example is also a positive feedback loop. Processes in positive feedback loops tend to either collapse precipitously (like population in the AIDS-ridden country) or to grow without bound (like the temperature in the afflicted home).
Many growth processes are combinations of positive and negative feedback loops. Consider, for instance, the growth of world oil production. On one hand, increases in production facilitate further increases in production (for instance, by leading to improved technology or by fueling deeper drilling). On the other hand, increases in production begin to deplete resources, which leads to restraints on production. If the first and positive loop is dominant, as it was globally for most of this century, oil production grows exponentially. When the second and negative loop becomes dominant, as it has been in the United States and may soon become globally, oil production stabilizes and eventually declines. It is specific parameters in the equation representation of the loop linkages that will determine dominance. Figure 4.3 represents this interacting pair of feedback loops.
Causal models greatly help us understand change. All of us already have at least rudimentary causal models concerning the world development system in our minds. As a way of helping you think about your own causal models, and to help you compare yours with those of others, the rest of this chapter sketches five common models (and some variations) that many individuals draw upon. Each of the five tends to focus heavily on a single aspect of the evolving global system:
1. States (countries) struggling with the eternal need to provide their own security in the face of potentially hostile power from other states.
2. Communities of people, both local and global, seeking stability and peace, and bound together by increasingly integrated and powerful markets providing an abundance of goods.
3. Rich and poor classes interacting in structures that tend to maintain their relative position in those structures.
4. An ecosystem in which humanity is only one species, but one whose growth strains many elements of its physical and environmental environment.
5. Knowledge and technology conferring benefits on humanity in a process via which human progress begets still more progress.
Each of these models can organize a very rich understanding of the world. In fact, the models can be so rich that some individuals rely almost exclusively on one or a select set of them. These models thus become their worldviews and we will so refer to them. As we sketch in turn each of these causal models or worldviews, consider how they compare with your own.
The state is a universal modern variant of what we can call "security groups"—that is, of organizations devoted in significant part to assuring the physical security of their members. Other examples include tribes, empires, clans, criminal associations, and street gangs. Every state (or street gang) has a territory with reasonably well-established borders, a defined population, functioning government, and recognition by other states as a legal equal. We more commonly designate states as countries (although Taiwan is a country that some states do not recognize as a sovereign equal and therefore do not treat as a state).
States have functions other than the provision of security for their citizens. The security function is so central to their existence, however, that we frequently define their pursuit of it as "high politics" and designate struggles over economic, environmental, or other benefits they might provide as "low politics."
The world has no organizational units that can dictate to states or maintain order in conflicts among them. In fact, the global environment for states is fundamentally anarchic. Thus states act to provide their own security, although they may enter into alliances of convenience with other states. Again one can see the analogies with a society that has powerful clans or street gangs, but lacks effective central police authority (like Somalia in recent years). Alliances of convenience also form in such societies, but seldom persist. Is is often said that “states have permanent interests, but no permanent friends or enemies.”
According to the world view we call realism, the world is a "self-help" system. States that want to protect or enhance their own security must rely on their own efforts and skills to do so. Frequently this requires the development of substantial military capabilities. Power is a central concept or variable in the realist world view. Power is such an important means to an end (enhanced security) that it practically becomes an end of its own. Central to the purposes of states must be the protection and enhancement of power.
The pursuit of power may set in motion positive feedback loops. Those states that have power may be able to use that power to obtain still more. In the colonial era, for instance, Spain used its naval power to conquer most of Latin America and to extract gold and silver from its new territories. It could then use that plunder to build more ships and motivate more soldiers. Figure 4.4 represents that positive loop.
Similarly, an economically powerful country like Britain during the eighteenth century could use its high productivity to conquer foreign markets and exchange its products for raw materials that it could bring home and use to further enhance its productivity. Moreover, it could use those economic strengths to hire nationals in its colonies to create overseas military capabilities with limited drain on its domestic resources. The overseas military forces could then, in turn, assist traders in opening up further markets for the British. For instance, the British shipped opium produced in India to China. When the Chinese banned the import in 1839, the British responded with military action. A series of opium wars and treaties following British victories opened an increasingly large number of ports in China to British trade. History abounds with examples of power begetting power that are perhaps less odious, but little less clear-cut.
As these examples suggest, power includes but is not limited to military capabilities. Power also benefits from economic and demographic strength. The most powerful countries of the world today are, in general, the economically and demographically largest: the United States, Russia, China, India, Japan, and Germany.
While a country's own power may enhance its security, that power will threaten others. Those others will normally react by establishing counterbalancing capabilities, thereby bringing under control the power of any state that threatens to become dominant and potentially aggressive. In so doing they will not only increase their own security, but lessen the probability of conflict. Conflict among relative equals will inevitably be expensive and the outcome will be uncertain. Therefore a balance of power makes conflict an irrational enterprise and less likely (see again Figure 4.4). Realists argue, however, that some military conflict is inevitable in relations among countries because there will always be conflicts of interest among them and there is no central abritrator.
It is, of course, not always possible to offset the power of others by building one's own—Turkey could hardly have been expected to cope alone with the build-up of the Soviet Union during the Cold War. Thus alliances become necessary because they augment the negative, counterbalancing feedback loop on power. Most of Europe joined an alliance against Napoleon's France when that country's power was growing without clear limits. Similarly, Turkey joined with much of Europe in the North Atlantic Treaty Organization to counteract the growing power of the Soviet Union after World War II. One might argue that most of Europe has now also joined an economic alliance called the European Union (EU) to balance the overwhelming economic power of the United States and, more recently, Japan.
Realists also often argue that the growth of potentially overwhelming state power (through the positive loop of power breeding power) is further controlled by the economic burden it begins to place upon the country. Historically, empires have not always ceased to grow simply because they met opposing power. They sometimes have overreached their ability to sustain a military buildup and thereby weakened the economic base of that military. Paul Kennedy (1987: xvii) argued that the Hapsburg monarchs "overextended themselves in the course of repeated conflicts and became militarily top-heavy for their weakening economic base." The United Kingdom did the same in the nineteenth and early twentieth centuries and, according to Kennedy, both the Soviet Union and the United States reached critical points more recently. Figure 4.4 represents this additional negative feedback loop as well.
The prescriptions of the realist view are quite obvious from its causal portrait of the world. Each state, in the absence of any protective central authority, must fend for itself in the anarchic global system. It can do so in two ways. First, it can build its own power and wisely use its existing power to attain still more. Second, it can join in temporary alliance with other countries to oppose any state that threatens to achieve a dominant position.
There are, as with any recipe, complications in the implementation. Consider modern Germany, faced with the very proximate power of Russia. To what degree should Germany rely upon building its own counterpower? There are dangers there, including overburdening the economy and eliciting attempts by other states to balance the power of Germany in turn. And to what degree should Germany trust other countries to be faithful in their NATO alliance commitments to Germany, should Russia once again become a significant military threat? There are also dangers there.
In the modern world economy, the United States faces a significant economic challenge from both Japan and the EU. Should it react primarily by strengthening its domestic economy or should it enter into economic alliance, perhaps with Canada and Mexico? Realists see international politics as much more an art than a science. Great diplomats and leaders have historically been able to strike the critical balances among strategies, while lesser souls have failed.
The Growth of Global Community: LiberalismThere is another prescription, however, that competes with the realist set. It rejects the premise of inherently antagonistic relations among politics such as Germany and Russia or between economies such as the United States and Japan. It argues instead that extensive and ongoing cooperation is possible on a broad scale internationally. It views the world not solely through the lens of state system anarchy, state interest, and power, but in considerable part through the lens of growing global community.
The perspective of liberalism generally begins with an attack on realism. First, it criticizes the assumptions that states will behave as rational, unitary actors. Misperception of power balances and the intentions of other actors are so common that those balances do not sufficiently dampen conflict. Internal forces within a state (from intense nationalism to religious or ideological dogmatism) may drive even experienced and otherwise cautious leaders into unwise foreign adventures. Thus, say liberals, the realist is too sanguine with respect to the ability of power-seeking and power-balancing to produce security and relative peace. Remember that Iraq attacked Iran in 1980 and invaded Kuwait in 1990. Neither war secured the gains that Iraq anticipated, but both cost very large numbers of lives (casualties in the Iran-Iraq war approached 400,000). Efforts at power balancing in the Middle East by Iran, Saudi Arabia, the U.S., and even Iraq itself did not succeed in avoiding catastrophe.
The critique goes further. The attempt to balance power with power, say the liberals, often sets up a destructive positive feedback loop. What one state views as a defensive buildup in reaction to the overly great power of another, the second will likely view as a potentially offensive threat. Thus it will, in turn, undertake a buildup. Both realists and liberals know this logic as that of the security dilemma. Liberals argue that the logic sets up arms races that increase the probability of war. They point to the arms race before World War I as one example. Perhaps increasing levels of arms will by themselves raise the probability of their use. Perhaps one state will finally achieve an advantage or recognize an imminent disadvantage and therefore initiate conflict. Figure 4.5 represents such a destructive pattern of interaction and Figure 4.6 shows one possible real-world result of that dilemma, the arms race between the U.S. and U.S.S.R. during the Cold War.
I
If it is too dangerous to rely on rational judgment of states in power balances, and the competitive logic of the security dilemma constantly works to initiate and fuel dangerous arms races, what can liberals offer in place of the realist vision? Fundamentally, they put forward a competing vision of growing global community, accompanied by increasing levels of cooperative interaction (see Figure 4.7); the mutual strengthening of community and cooperative interaction creates a positive feedback loop that makes war increasingly expensive (by disrupting valuable interchange), unproductive, and difficult to initiate, thereby encouraging peace.
Liberals point to the increased integration of world economies via trade and financial flows. They draw our attention to steadily increasing levels of interpersonal contact across borders through tourism, business travel, and governmental linkage. They argue that rising demand for international approaches to transboundary environmental problems underly additional cooperative initiatives. They claim that the sharp rise in numbers of intergovernmental and international nongovernmental organizations that we saw in Chapter 2 verifies the climb in global community and cooperative interaction.
Realists are quick to point out that increased interaction does not always lead to cooperation. The United States had a lower level of interaction with Europe during the nineteenth century than during the twentieth and managed in the former century to avoid most involvement in European disputes; Britain had closer interaction with much of Asia prior to 1950 than subsequently and its relationships have been better in the post-colonial period.
Liberals acknowledge this issue and emphasize that it is the combination of growth in global community and increased interaction that is beginning to dampen international conflict. Moreover, to the extent that the global community is becoming increasingly unified around the principles of Western liberalism (individual freedoms, market economies, and political democracy), that community promises to be even more peaceful. While democracies have frequently fought with nondemocracies, it is perhaps impossible to cite examples of true democracies going to war with other democracies. Some have suggested that the War of 1812 and the American Civil War are such examples. Yet the War of 1812 between the U.S. and Great Britain preceded the British Reform Bills of 1832, 1867, and 1884 that granted voting rights to the middle and working classes. The Confederacy that fought the Union not only protected slave-holding but never existed prior to the Civil War. In the case of essentially all exceptions, the commitment of one or both countries to democracy appears shallow.
A close relative or variant of the political liberalism we have been discussing is commercial liberalism. Although Europeans will recognize classical liberals as those who support free-market oriented Liberal parties in Britain, France, and elsewhere, citizens of the U.S. will confusingly identify commercial liberals as economic conservatives. The U.S. political system has quite thoroughly adopted commercial liberalism and its emphasis on free markets—thus modern economic conservatives want to preserve (conserve) that orientation. In much of the rest of the world, however, restrictions on free markets are more common, so commercial liberals in Liberal parties often seek to change the system by freeing the market, while Democratic Socialist parties often become the "conservatives" (in Russia after the breakdown of the U.S.S.R., the communists ironically became the conservatives and the free market or commercial liberals became "radicals"). This volume adopts a more universal terminology because it wishes to clearly and directly associate commercial liberalism with liberal or free markets, both domestically and internationally. It is very useful to have concepts that are less place- and time-bound than contemporary political labels in the U.S. or elsewhere.
At the core of commercial liberalism stands the proposition that freely functioning markets produce benefits for all participants in them. Economic exchanges must reward both buyers and sellers, whether they trade goods, labor, or capital; otherwise the transactions would not occur. Free domestic and international markets lead to an expansion of economic product because participants can specialize in the production of whatever they make with relatively greatest efficiency—that in which they have a comparative advantage.
On regional and even global bases, free exchange will therefore lead to increasing specialization of production in a division of labor. In much of the eighteenth and nineteenth centuries, the United States and the countries of Central Europe (such as Poland) provided grain and other agricultural and mineral products to England, France, and Germany. Those more industrialized countries (especially England) provided the capital and equipment to build the railroads that brought such products from the American heartland to the coastal ports. The expansion of output facilitates reinvestment by producers into the capital (buildings and machinery) with which they can produce still more goods or services for the open markets. More output and trade leads to even more capital investment, setting up a strong growth cycle.
Figure 4.8 portrays in simplified form these positive feedback loops at the heart of commercial liberal thought. Economic output both benefits from and contributes to capital formation and increased market exchange. Because of these positive feedback loops (or virtuous cycles) both political and commercial variants of the liberal perspective incorporate an inherent sense of progress. In fact, as we saw earlier, many international political liberals look to the progressive expansion of world markets as one of the driving forces behind the growth of global community.
The emphasis by liberals on positive feedback loops continues still further. Figure 4.8 indicates also that the processes of capital formation and participation in free markets will lead to ongoing economic restructuring. Economic structures and divisions of labor, once established, do not remain fixed. Changing technology and the steady march of capital accumulation continue to alter the most efficient divisions of labor. In general liberals feel that economies will progress through stages, although the progression will be far from uniform across countries or time.
Whereas economies may initially specialize in agricultural products and minerals (the primary economy), they will eventually begin to produce manufactured goods (the secondary economy). In fact, the relative poverty of many food producers in largely agricultural economies will attract industrial capital because it will mean low wages and low costs of production. Hence, we can understand the rush of British capital to the United States late in the nineteenth century, the movement of American capital to Latin America in much of the twentieth century, and the surge of Japanese investment throughout Asia in the late twentieth century. Eventually, however, increased investment and production lead to such high labor demand that wages rise. Moreover, the satisfaction of many material demands by industrial production begins to shift the attention of consumers to other issues including education, health care, and leisure time. Thus economies increasingly become more mature and service-oriented (the tertiary economy). Canada, the United States, most of the countries in Europe, Australia, New Zealand, and Japan are at this advanced stage of development. Other countries around the world, liberals generally argue, will follow similar paths of economic development.
These constantly ongoing economic restructurings, which the steady advance in capital formation and technological progress drive, and which open domestic and international markets facilitate, contribute to steady advance in economic output. They thereby set up additional positive feedback loops in the simplified liberal model (see again Figure 4.8) and further improvement in average well-being.
Most classical liberals recognize, however, that even while average well-being improves, the condition of some may stagnate or even deteriorate. Early in the industrialization process of any country, only a few really benefit. For the large mass of farmers, conditions of life may not change at all. For those in the sweat shops of new industry, conditions may actually deteriorate.
Both the specialization within international divisions of labor and the transformations in those divisions obviously have costs for some in society. English farmers in the 1800s found it difficult to compete with food imported from countries richer in land and inexpensive labor. Those who wanted to begin manufacturing businesses in Central Europe or the United States found it difficult to compete with producers in countries possessing well-established industrial sectors that boasted advanced capital and skilled laborers. When the U.S. economy industrialized rapidly in the late nineteenth and early twentieth centuries and dramatically improved efficiency in agriculture, its less productive agricultural producers suffered. As it transforms itself into a predominatly service-oriented economy in the late twentieth century, many manufacturing workers suffer.
While classical liberals recognize the burdens borne by those working within sectors in relative decline, they believe the gain to be temporary and to be offset by increased opportunities elsewhere. Thus after a transition period, the manufacturing jobs of mid-twentieth century America provided greatly improved living standards for the farmers who initially struggled to survive in a declining sector and then abandoned their farms for the cities. Presumably the "Okies" who lost their land and migrated to California, sometimes surviving only as seasonal farm laborers, doubted that the new industry of California would ever offer much to them or their children, but it eventually did so.
Similarly, it is argued, service sector jobs will eventually improve the conditions of those forced from manufacturing in the U.S. during the contemporary era, while new manufacturing jobs in Mexico and Taiwan will similarly improve the conditions over time of those leaving the farms in those countries.
Thus the effects of economic growth and restructuring on equality are complex in the liberal model. Any restructuring, but perhaps particularly the early stages of industrialization, condemns some to relatively and even absolutely worse conditions, thus lessening equality. In the later stages of the restructuring, however, large numbers of workers enter the newly dynamic economic activities and equality improves. The Kuznets Curve (Figure 4.9) shows the pattern of equality that this process should generate across countries at different levels of GNP/capita (as a proxy for different stages of economic development). In reality, however, the empirical evidence for the relationship is very mixed and the debate remains quite intense. Moreover, the Kuznets curve grew out of analysis of restructuring associated with industrialization. It does not explicitly represent that associated with the transformation to service-oriented economies.
Commercial liberals do not, however, restrict their attention only to overall economic performance. The logic of individuals rationally pursuing improvement in their economic conditions through exchanges in the market has more general implications. For instance, individuals may also make rational decisions with respect to family size in order to improve their economic conditions. In poor societies it may be rational to have large families. The costs of raising children may be low when they do not expect expensive brand-name clothing and college educations. The benefits of raising them may be high when they go to work on the land or on the street at a very young age and later care for their aged parents. In rich societies, the cost-and-benefit calculus changes dramatically.
Liberals thus provide a causal basis for the model of population growth that demographers characterize as the demographic transition (we discuss it in more detail later). As economic well-being begins to improve, individuals quickly (and rationally) improve their diet, sanitation, and health care and thereby lower their death rates. This raises population growth rates. Over time, the increased income begins to lower birth rates through the logic just described, and the population growth rate falls.
The same assumptions of individually rational economic behavior help liberals to elaborate many more specific causal understandings of the world that Figure 4.8 does not show, but that models like IFs capture. For instance, liberal economists emphasize how higher prices lead to decisions by consumers to reduce consumption of a product. Empirical studies allow economists to estimate the percentage reduction in consumption of a specific good such as natural gas, for every percent increase in its price. They express the ratio of the percentage reduction in consumption to the percentage change in price as a parameter called the "price elasticity of demand." Similarly, they can express the percentage increase in demand for cars as a ratio to the percentage increase in income of consumers as an "income elasticity of demand." The IFs model takes advantage of such elasticities in many of its calculations.
The prescriptions of the liberal model follow quite clearly from its elaboration. Most important, we should not interfere in any significant manner with the workings of free markets or capital accumulation, because these are the mainsprings of an efficient economic system. In fact, we should work to increase the extent of both. Many modern liberals, sometimes called "compensatory liberals," do argue, however, that society should ease the pain of transition for those who suffer it most.
A school of economic realists called mercantilists has argued for centuries that economic and political power reinforce each other and that the state must act to protect and enhance both. With respect to economic power, mercantilists desire a strong economy capable of producing all that the state needs, including the instruments of war and the goods necessary to survive economic isolation during war (thereby increasing military power). In addition, mercantilists desire the accumulation of wealth in the hands of the state, either in the form of gold and silver reserves or in the form of claims upon the resources of other states (in holdings of their currency). And mercantilists favor putting their own citizens to work within their own country rather than seeing potential jobs lost to other countries. Figure 4.10 represents the simple mercantilist view.
Many of these desires of mercantilists obviously put their states in direct conflict with other states. Not all states can simultaneously export more than they import, thereby providing jobs for their own citizens and increasing their treasury's holdings of gold and foreign currencies. Figure 4.10, like much state-centric mercantilist thought, ignores these obvious systemic problems with the argument. Because mercantilism suffers from such obvious contradictions at a systemic level, few elaborate it explicitly as a creed; nonetheless, it remains the implicit basis for many urgings to restrict market access by other countries and simultaneously to increase market penetration of those countries.
Mercantilist proposals directly contradict those by liberals for letting markets work, even at the expense of periods in which imports exceed exports. Liberals argue that such periods are inevitable and self-correcting—when exports of a country become large relative to imports, attempts by other countries to obtain currency of the exporting country in order to pay for those exports will drive up the value of the exporter's currency. When the value of a country's currency rises, it automatically raises the prices of its exports, decreasing demand for them, and also encourages the mercantilistic country's citizens to import relatively inexpensive foreign goods (see Figure 4.11). Thus mercantilist policies may work for a while, but inevitably prove fruitless. The steady rise of the Japanese yen in recent decades will, liberals say, ultimately balance its trade (all else being equal).
The structuralist perspective moves equality from the peripheral position it holds in liberalism (and in realism) to the center of consideration. Structuralists see inequality to be a direct result of the concentration of economic power in relatively few hands. Structuralists do not make a strong distinction between politics and economics. On the contrary, they argue that concentrations of political and economic power strongly reinforce each other in a positive feedback loop. Figure 4.12 portrays that loop and its implications for equalty (namely an increase in inequality).
Much like realists, structuralists claim that power begets power. Those who have economic power are able significantly to affect the terms of exchanges. While liberals focus on the fact that no two parties will freely enter into an agreement unless both benefit, structuralists draw our attention to the fact that they may benefit very unequally. In a society with much unemployment, for instance, an employer may be able to hire the labor of a worker for little more than survival wages, while selling the fruits of that labor for a very considerable price. Similarly, a rich country with the capability of producing most of what it needs itself will find itself in an enviable bargaining position relative to a country with little to sell other than bananas or coffee and no ability to produce cars or computers.
In such unequal relationships, the economically more powerful country may be able to influence strongly the terms of trade, that is the prices of the goods it sells relative to the prices of the goods it buys. Similarly, the richer individual or society may be able to shape the terms (interest rate and repayment period) at which it lends money to the poorer, as long as the desire to lend money is less pressing than the need to borrow. The desperation of many Latin American and African debtors in the 1980s, a decade many label the "Lost Decade" for those countries, suggests the power that comes with lending money.
On the political side, we have already discussed (with respect to realism) how political-military power may be self-reinforcing. We can extend that to a discussion of political-economic power. When rich countries set up the formal institutions that give guidance for international trade and capital flows (such as the World Trade Organization, the World Bank, and the International Monetary Fund), and often reserve for themselves an overwhelming majority of the votes within those institutions, it is likely that those institutions will seldom challenge the interests of their founders.
Thus Figure 4.12 shows two loops that reinforce the concentration of political and economic power, via the terms of economic and political interactions that the rich and powerful set in dealings with the poor and weak. Together with the loop linking political and economic power, the system suggests a very powerful self-reinforcing dynamic that works against any relative advance of those at the bottom of it.
Structuralists disagree among themselves, however, with respect to the degree to which this cluster of positive feedback loops works to increasingly intensify the divisions among global classes or simply works to maintain them. Some structuralists argue that the developed world emerged only in the process of "underdeveloping" the rest of the world and that the process of impoverishment continues with little diminished intensity. Others see some advance in the absolute position of the global poor and weak, even while the relative gap between them and the rich and powerful remains undiminished. In light of the empirical evidence we saw in Chapter 2 with respect to the absolute advances made around the world in life expectancy, literacy, and even income, it is difficult to accept the former and stronger structuralist position.
One source of the dispute about the degree to which these positive feedback loops continue to work against the poor and weak is some uncertainty with respect to the negative loops at the top of Figure 4.12. Traditional Marxist perspectives foresaw increased inequality leading to increased pressure for political/social/economic transformations that would redress the balances by elimininating the concentrations of economic and political power (the transformations would transfer that power to the masses). Marx and others believed, however, that the inequality would intensify to the point of a social explosion and that the transformations would be revolutionary. That is, they saw the negative feedback loops as having a threshold character—they either functioned or did not.
It is possible that the processes of transformation may be more continuous, at least in some societies. Thus some ongoing transformations may occur that redress at least partly and intermittently the concentrations of wealth and power, thus restricting the growth of inequality. One could argue that the New Deal policies of the Roosevelt era and, more generally, the welfare states established by all developed Western states illustrate the possibility of such partial transformations. One could also argue, however, that these examples simply illustrate the ability of rich states to buy off their own relative poor, while the global system provides no such option to the Nicaraguas or Haiti of the world.
Structuralists do not ignore economic growth. In fact, they commonly argue that reducing inequality will facilitate that growth. Illiterate, underfed workers are not highly productive ones. Studies have investigated the relationship between economic growth and the emphasis by a less-developed country on basic human needs such as food, housing, and medical care. For many years, for instance, structuralists pointed to Sri Lanka as a success story of a country that achieved growth by satisfying basic needs. Like the studies looking at the liberals' Kuznets curve, however, those linking attention to basic needs with growth have not been definitive.
Although the model of structuralist thought in Figure 4.12 oversimplifies the complexity of that perspective, it does suggest some of the key leverage points for improvement that structuralists identify. For instance, some reforming structuralists look for ways to weaken the positive feedback loop linking concentration of economic power to the terms of trade and financial interaction. Examples include global agreements that would purposefully alter the terms of trade or forgive indebtedness. Similarly, other suggestions target the second lower feedback loop of that figure, including substantial revisions in the voting and operating structure of international financial institutions (IFIs) like the World Bank. Proposals in the 1970s for a New International Economic Order (NIEO) included many such elements.
Structuralists also look to stengthening the negative feedback loops at the top of Figure 4.12. More moderate structuralists differ little from compensatory liberals in their calls for transfers from rich to poor as a way of reducing economic concentration. More radical structuralists see such measures, as well as most proposals in the NIEO, as mere palliatives. The only real solution they argue, is thorough system transformation through revolution, breaking once and for all the control by the rich and powerful over economic and political power.
The central concern of eco-wholism is sustainability. All species place demands upon the ecosystem(s) in which they function. Periodically, the numbers of a species grow because their food supply surges or a predator population declines. For nonhuman species such growth is, however, always temporary and limited. Ultimately, the population will bump up against new limits or old ones will re-emerge.
Ecosystems are seldom, if ever, in a steady state. Populations of some organisms grow and those of others decline. Cycles of growth often lead a species temporarily to exceed the long-term carrying capacity of an environment. For instance, deer protected from their canine and human predators will expand in numbers until they overgraze their environment (they "overshoot" a carrying capacity). After a delay, the despoiled environment will no longer support the overgrazing—in fact, because of destruction to the vegetation it will no longer support even the population that it could once comfortably feed. Therefore the population of deer will collapse as they become vulnerable to starvation in winter and to micro-predators (disease). Gradually the vegetation will rebound and the deer population will begin another cycle.
Figure 4.13 portrays a negative feedback loop that links human population to the environment in roughly the same way. The primary difference is that the demands of humans on their environment are more variable than those of deer on theirs. As humans increase the scale of their economic activities per capita, they multiply their individual demands on the environment—each person demands more water, energy, and other goods. While the demands that most animals place on their environment are limited to food inputs, humans require a variety of energy and mineral inputs as well. In addition, human outputs back to the environment include extensive waste from industrial activities. Both input demands and outputs detrimentally affect the environmental quality necessary to satisfy future human needs.
Negative feedback loops like those of Figure 4.13 often produce cyclical behavior around a target value (in this case the environmental carrying capacity). We earlier discussed a household thermostat as part of a negative loop linking the temperature of a home and its heating system. Although good thermostats maintain temperature within a fairly narrow range, temperature will alternately exceed and fall short of a specific target value.
Historically human populations have exhibited such cyclical variation in their interaction with the environment. There remains much debate over the causes of historic collapse in a variety of early Middle Eastern, Asian and American civilizations. Scholars attribute such collapse to invasion from the outside (potentially a result of the invaders having exceeding their carrying capacity or to the weakening of the invaded as they exceeded their own), to exhaustion of soils or their damage from salts in irrigation water (and therefore to famine), to social breakdown (sometimes a consequence of food shortages), and to a variety of other factors. The relationship between humans and their environment has often played a key role.
Obviously we cannot now know with certainty the distance into a condition of overshoot (use of the environment beyond sustainable limits) humanity has progressed, if at all. Nor can anyone predict accurately when collapse might occur and how severe it could become. Finally, no one can be certain how rapidly humanity might recover from a collapse. Eco-wholists emphasize, however, that the costs of recovery can often substantially exceed the costs of anticipatory and preventative action. For instance, it may be impossible to restore a tropical rainforest once destroyed; humans can drive a species to extinction, but we have no means of recovering a lost species. Similarly, heavy soil erosion may leave little choice but abandonment of agriculture over the area involved. In terms of the models of extrapolation we saw in Chapter 2, environmental change can involve threshold changes that we can make in only one direction. Eco-wholists therefore point out that the costs of preventative and ameliorating action are generally small in comparison with the potential costs of inaction.
The concept of carrying capacity is obviously very important to eco-wholists. They believe in the existence of reasonably definite limits to the sustainable level of economic activity in the long term, while generally admitting that such limits remain uncertain until activity overshoots them. A famous computer modeling project (Meadows, et al., 1972) produced forecasts suggesting that human population and economic growth faces a wide variety of interacting limits early in the twenty-first century. The project circulated the results in a best-selling book called The Limits to Growth. Brown (1981) also sought to specify the limits and argued that the fisheries, cropland, grazing land, and forest area of the world would ultimately sustain only about 6 billion humans. The world population will reach that level near the turn of the century. He argued that substantial parts of the world have already exceeded local limits.
There are by definition limits to what we call the nonrenewable resources of the world, including the mineral wealth and especially the fossil fuels. We saw in Chapter 2 that most of the world's energy now comes from such fossil fuels. Almost no one questions that the speed at which new fossil fuel forms is dramatically slower than our rate of its use. Thus with respect to those energy forms humanity has already significantly overshot the level of sustainability (although existing stocks may last for many decades).
Yet many eco-wholists devote less attention to the limits that affect inputs than to those on outputs, especially global pollution of air and water. Chapter 2 already documented the increase in environmental pollutants such as CFCs and carbon dioxide. Although collective global action is now rapidly reducing the production and use of CFCs, there is less prospect for substantial near-term reduction in the production of carbon dioxide, in part because fossil fuels have proven to be more plentiful than many pessimists believed twenty years ago.
Many analysts identify the nature of ownership as a factor that complicates the relationship of humans and their environment. When individuals control their own environment and can restrict access by others, they have an incentive to maintain it. Unless under great economic stress, ranchers do not build their herds so large as to destroy the vegetation on their own land. When individuals have common access to an environment, however, they have an incentive to derive as much utility from it as possible for themselves, even at the expense of others. Ranchers sharing access to government land have an incentive to add a few additional cattle, even it if reduces the viability of vegetation in the long term and the average weight-gain of each animal. Ranchers calculate that they will benefit from their own additional cattle and have little concern with the weight-loss of cattle owned by other ranchers. This collective destruction of an environmental area open to many is called the “tragedy of the commons.”
Consider another example. Should a single company be given a very long-term lease to the timber rights in a forest area, the company would have an incentive to see that the area continues to produce trees over that long-term. Were the government to permit multiple companies periodic access to the same area, each would want to extract the timber as quickly as possible, before its rivals did so. Very long-term leases begin to approximate private ownership and elicit similar concern with longer-term environmental quality.
Many global environments remain open to common use by humans who have no clear ownership. It is impossible to subdivide the atmosphere and it would be extremely difficult to allocate the deep ocean regions to individuals or countries. Even within countries, most waterways and many forests remain common property.
Although the establishment and enforcement of property rights over grazing land, energy resources, and forests may reduce the rate of their use dramatically, it cannot guarantee that the rate will drop to one sustainable in the long run. Eco-wholists see the continued growth of human populations and the scale of individual human activities as severe threats to the environment, whether collectively or privately owned. Given the centrality of population size to the simplified model in Figure 4.13, it should surprise no one that eco-wholists place especially great prescriptive weight on slowing or stopping global population growth. Chapter 2 traced the rapidity of growth in both human numbers and economic activity per capita.
Eco-wholists worry, however, that the growth in human population has a great deal of momentum and therefore will not cease in the near future. Those who bear children are overwhelmingly in the age categories between 15 and 45. Thus a good predictor of the growth in the population of a country for the next 30 years is the size of the population now under 15 and therefore about to enter the most fertile years. While the population under 15 in more developed countries averages 20 percent of the total, in less developed countries that age group constitutes 35 percent of the total (Population Reference Bureau, 1995).
It is often argued that population growth in the less developed countries will follow the same declining trend as that in the more developed countries. In the latter, birth rates and death rates were both high at the beginning of the ninteenth century. Death rates declined quite steadily over the next 200 years, falling at times enough below birth rates to cause population to grow at rates of 0.5 to 1 percent annually. Yet birth rates also declined and in recent decades they have come again to be so close to much reduced death rates that overall population growth in many rich countries has ceased.
The movement from high birth and death rates to low birth and death rates, via an intermediate period in which births exceed deaths, is known as the demographic transition. It is generally argued that a variety of improvements in the quality of life of Europeans gradually caused them to reduce their birth rates to the level of their death rates. As incomes of societies go up, the costs of raising children climbs while their contribution to the average family declines. More recently, as opportunities for women in the work force have increased, the costs of foregoing those incomes and staying home with children have climbed quite sharply. We earlier described this logic from the viewpoint of a liberal.
The decline of death rates in poorer countries began largely at the end of World War II and was so sharp that the gap between birth and death rates came quickly to exceed that in rich countries at any time during their own demographic transitions (see Figure 4.14). This led to population growth rates of as much as 4 percent annually—the rate that now characterizes Africa on average is 2.8 percent (Togo leads with population growth rate of 3.6 percent annually).
What worries eco-wholists is that this rapid growth in Third World population, with less outlet for migration than the European countries had when the United States was wide open for them, may so overwhelm the environment that the economic and social transformations that eventually slowed the birth rate in the developed countries will never occur. If environmental deterioration prevents improvements in income, the poorer countries could find themselves not in a demographic transition, but in a demographic trap (Brown, 1988)—a situation in which inadequate food supplies and economic opportunities prevent incomes from rising and from slowing birth rates. Continued high birth rates would in turn maintain the pressure on the environment. Figure 4.15 portrays the demographic trap in terms of a positive feedback loop. (Remember in examining any feedback loop first to assess the sign of each individual linkage by asking what happens to the variable in front of the arrow when that behind it increases; after determining the sign of each linkage, characterize an entire loop as positive if the number of negative links is zero or even.)
Even if the developing world and therefore the world more generally manages to escape the demographic trap, eco-wholists worry about the constantly increasing environmental impact of each individual human being. Figure 4.13 represented this scale-of-activity factor as external or exogenous to the feedback loop. We know, however, that it is closely tied to economic activity that exaccerbates the impact of humans on the environment. Year after year, the average human being places greater demands on the environment. Average calorie and protein consumption continue to climb and more of the protein comes from meat, thereby requiring still greater increases in agricultural output. Energy use rises, especially in developing countries, while fossil fuels contribute the bulk of the increase. The eco-wholist sees in this pattern the near certainty of overshoot and collapse in the relationship of humans to the environment.
Ironically, other observers often look to precisely the same trends in food and energy consumption as strong evidence of progress. They see in them increasing human mastery of the environment. We turn to that perspective.
The core of modernism is technological progress. Figure 4.16 represents that model in very simple form. The more important feedback loop in that model is the one that links human technological knowledge to itself. The stronger our existing base of understanding, the faster and easier scientists and engineers add still more to that base. This process creates what the discussion in Chapter 2 of trends called exponential and even super-exponential growth in knowledge. Modernists frequently point to the facts that more scientists and engineers live today than have lived in all of prior human history and that technical publications continue to proliferate at ever more rapid rates.
Whereas eco-wholists place humans squarely within their environment, modernists tend to put humanity in a privileged and superior position relative to it. The body of cumulative human knowledge, efficiently transmitted across generations and augmented in each, allows humans to increasingly control and shape their environment, for instance, to grow more food on a given area of land or to extract more oil from deeper pools. That increasing control in turn allows us to devote ever more resources to building the knowledge base for even greater control. The prospect that humans could actually put a relatively self-sustaining colony on the moon or Mars captures the enthusiasm that modernists often exude.
Note that the dominant loops in Figure 4.16 are positive and represent virtuous cycles of ever greater knowledge and therefore of steady improvements in human welfare. This contrasts sharply with the dominance of a negative feedback loop in the simple eco-wholist model (Figure 4.13).
Modernists frequently acknowledge the concerns that eco-wholists have with respect to the steady growth of demands upon the environment. They tend to see that growth not as overshoot of sustainable limits, however, but as the steady pushing back of limits that face other species or that faced humans in earlier eras. Certainly we now require more food than ever before, as both populations and average per capita consumption grows. Yet the productivity of agriculture in places like Japan, where rice yields are multiples of those in most of Asia suggest the tremendous potential for yet greater production. The benefits of the Green Revolution that began in Mexico in the 1950s continue to spread around the world; modernists attribute much of the difficulty that Africa has in meeting its food requirements not to environmental limits, but to the lesser impact that the Green Revolution has had there. Modernists argue that genetic engineering of plants and animals has only begun to push agricultural yields up to an even higher plateau.
Similarly, some generally eco-wholistic studies in the 1970s (like Limits to Growth) suggested that the world was in imminent danger of exhausting its supplies of fossil fuels. They argued that the oil price shocks of that decade were harbingers of an era of very high prices and increasing scarcity. In fact, global energy produciton and consumption have continued to increase; natural gas production grew by 65 percent between 1976 and 1991 (British Petroleum, 1992: 21).
Modernists point out that when economists study economic growth, they often initially look for its roots in increasing quantities of capital (machines and buildings devoted to production) or of labor devoted to production. What they generally find, however, is that improvements in the quality of capital and labor, that is, in technological capability, provide 50 percent or more of gains in production.
Frequently such gains in productivity actually reduce the need for raw material inputs, including energy, and also reduce the outputs of waste to the environment. Consider the rapidly increasing power and capabilities of the personal computers with which most of us now process information. The desktop and laptop computers that we now use for word processing, information storage and retrieval, and communications would have filled a good-sized room a few years ago and required heavy duty air conditioning to cool them.
Aggregate data suggest the scope of improvements already obtained in such material use efficiency. Between 1974 and 1988 the world's economy grew by approximately 52 percent (CIA, 1990b: 36). Over the same period of time the world's use of energy grew by about 35 percent (Council on Environmental Quality, 1991: 302). These relative growth patterns have broken a longer-term pattern in which there was a nearly 1-to-1 relationship between growth in economies and energy consumption.
Agriculture provides an even more striking example. Between 1950 and 1989 total output in the U.S. grew by 87 percent. The Department of Agriculture estimates that total inputs to the sector actually decreased by 17 percent. Although chemical inputs increased very sharply during the period, labor requirements dropped rapidly and mechanical inputs stagnated (Council on Environmental Quality, 1991: 339). As a result of productivity increases such as these around the world, the price of U.S. wheat in constant 1980 dollars fell from $296 per ton in 1950 to $91 in 1990.
Modernists anticipate that the long-term trend for many individual human requirements (including food, energy, and minerals) will be downward, reflecting the ever increasing efficiency with which human technology satisfies needs. This contrasts sharply with eco-wholist expectations that such trends will be upward, thereby exerting increasing pressure on the environment.
Julian Simon, an active modernist author, convinced Paul Ehrlich, an outspoken eco-wholist, to place a wager on the price trend of commodities during the 1980s. Simon bet that prices would move down and won the wager. In reality, improvement in efficiency of input use have increasingly become an area of some common ground between eco-wholists and modernists. The former prescribe such improvements and insist that they are urgent; the latter anticipates that obtaining them will be relatively easy.
Because the output of pollutants back to the environment tends to be highly correlated with the demand for resources from it, modernists expect little difficulty in gradually reducing pollution. They typically point to improvements in air and water quality in much of the United States over the last two decades as evidence for what can and will be done globally. Between 1980 and 1992 the average number of days during which air registered unhealthy levels in 23 major cities dropped from 27 to 14 (The Universal Almanac 1995, 1994: 608). Over the same period the Environmental Protection Agency measured declines in national emissions of sulphur oxides, carbon monoxide, and ozone.
Few modernists even attempt to foresee the specific technologies that might arise to augment food production, provide new energy sources, improve the efficiency of commodity use, and reduce pollution. Many would agree with the old saw that "necessity is the mother of invention." Overall their model is much simpler than that of the eco-wholists and many would remain much happier simply extrapolating progress into the future rather than delving into complicated and uncertain causal analyses.
It is important to make clear that the International Futures model does not represent the worldviews sketched above in the form discussed here. Although understanding of and sensitivity to all of the worldviews helped in the structuring of IFs (Hughes 1985b), model development drew upon theory and research in areas as disparate as population growth, trade, and military spending. Worldviews influence theory in disciplines such as demography, economics, and political science, but that theory does not strictly elaborate those worldviews. In some instances no clear tie exists between causal linkages in the model and any worldview.
The causal model of IFs is actually considerably more extensive than these sketches of worldviews. You can explore that causal model by calling up the model’s help system and asking for model detail. That will allow you to investigate a large number of causal diagrams for various portions of IFs. You can, in fact, go one step further and look with the help system at the equations of the model.
There have been several reasons for this chapter’s presentation of worldviews. First, this discussion may have helped you clarify your own thinking about the world development system and may have added some complexity to your understandings. Second, the worldviews nicely illustrate causal dynamics, something that we must understand in thinking about the future. Third, because the worldviews all provide important insights into dynamics of the world development system, they have been very influential, if not determinate, in the design of IFs.
A fourth, and perhaps even the most important reason for our elaboration of the worldviews, however, is that consideration of their causal logic forced us into discussion of values and conflicts among values. What values do you bring to your thinking about the future and how do you rank them? For instance, do you value harmony with the environment? Do you also value human progress? Might progress ever disrupt the environment? Similarly, do you value economic well-being? How about equality of opportunity for individuals at birth? Is there any tension between the value you probably place on both well-being and equality of opportunity? For instance, might an emphasis on efficient economic growth lead to increased income rewards for highly productive individuals and therefore the birth of more children into homes characterized by relative poverty? Do you value maintenance of national security against external threat? Do you also value the development of cooperative and peaceful interaction among countries? If you value both, might there be some tension between those two values? For instance, might not actions intended to enhance national security, such as developing a new weapons system, actually threaten global peace?
If your eyes begin to glaze over in reaction to such a barrage of questions, you are not alone. Nonetheless, stop to think for a moment about those questions. None of them is unimportant. In fact, they are all central to choices about the human future. You do not need to answer them to your satisfaction now, and the fact is that you may never be able fully to resolve the trade-offs and hard choices they demand of you. It is, however, required of citizens in democracies that they regularly grapple with these questions.