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by Róbinson Rojas Sandford (September 1999)

The world economy began to be globalized in late XV century when Western European pillage of the rest of the world resources became the main occupation of the ruling classes in Portugal, Spain, Netherlands, Britain, France, and finally United States. Genocide, slaughtering, and robbery acquired the category of heroic deeds giving to the perpetrators the right to become national heroes in their countries of origin. The heroes developed a set of colonial powers, the victims, a set of colonized societies. The world was globalized.

Aldo Ferrer (1), in 1998, stated that "ever since the advent of an economic order encompassing the whole planet, countries' relations with the international environment have determined their level of development. Capital formation, technological change, the distribution of resources, employment, the distribution of income and macroeconomic equilibria are, indeed, strongly influenced by relations with the international system"..."The current debate on globalization's nature and range is nothing new. It goes back to the same historical problem of how can each country solve its development dilemma in a global world so as to avoid getting caught in a network of relations administered by the main interests and powers for their own benefit".

In the 1990s, of course, the "main interests and powers" are connected to transnational corporations and five major economic powers: United States, Japan, Germany, France and United Kingdom. From here, "styles of development" in former colonies in Africa, Asia and Latin America are shaped by the "main interests and powers". Globalization today has a name: structural adjustment programmes. Globalization today has a philosophy: deregulation of the market. Globalization today has a gospel: the dynamics of the capitalist market, otherwise advertised as free market.

John Eatwell (2) described how in the late 1990s the trend toward liberalization of international financial flows had accelerated dramatically, and that "liberalization is now spreading rapidly to emerging economies. Yet it is not clear that the optimism that underpins this global libralization effort is warranted"..."An examination of the record of financial liberalization reveals that many hoped for benefits have failed to materialize. Liberalization failed to improve the allocation of global capacity by moving resources from capital-rich to capital-poor countries, and only produced opportunities for savers, not lower costs for borrowers"..."Moreover, the potential for instability in today's massive capital markets induces both governments and private- sector investors in the real economy to pursue highly risk-averse strategies. The result is lower growth and higher unemployment".

In 1996, L. Taylor and U. Pieper (3) argued that the economic and social effects of structural adjustment programmes could be summarized as "slowing growth", make income distribution even more concentrated, "increase poverty and reduce social well-being".

On 12th July 1999, Human Development 1999, arguing for the need to put a human face to globalization, stated:

"Globalization is more than the flow of money and commodities, it is the growing interdependence of the world's people through shrinking space, shrinking time and disappearing borders. This offers great opportunites for enriching people's lives and creating a global community based on shared values. BUT MARKETS HAVE BEEN ALLOWED TO DOMINATE DE PROCESS, and the benefits and opportunities have not been shared equitably. The result is a GROTESQUE and DANGEROUS POLARIZATION between people and countries benefiting from the system and those that are merely passive recipients of its effects."

To illustrate the above, Human Development Report 1999 wrote that "the fifth of the world's people living in the highest income countries has 86 per cent of world gross domestic product (GDP), 82 per cent of world export markets, 68 per cent of foreign direct investment, and 74 per cent of telephone lines. The bottom fifth, in the poorest countries, has about one per cent in each category".

The Report argues that the "inequitable effects of globalization driven by markets and profit are far wider and deeper, touching all aspects of human life"..."Care, the invisible heart of human development, is threatened because today's competitive global market is putting pressures on the time, resources and incentives for caring labour, without which individuals do not flourish and social cohesion can break down".(Box 1)

By and large, a style of development as an outcome of capitalist market liberalization is taking place. The model explaining this style of development is as follows:

Structural adjustment programmes call for:
        1) Fiscal discipline (reducing expenditure in social welfare)
        2) Trade and financial liberalization (opening up weak economies
                                               to powerful capitals)
        3) Stronger emphasis on market mechanisms (reducing the capacity
                                               of a large sector of the
                                               population to feed itself)
        4) Greater reliance on private investment (which will misallocate
                                               scarce resources to the
                                               production of luxury goods
                                               instead of social goods)
        5) New incentive and regulatory systems (giving more protection
                                               to capital and less to

1 to 5 will have an impact on:
                 1) sustainability of the style of development;
                 2) globalization of the internal economy;
                 3) creation and reduction of poverty;
                 4) unequal social relations;
                 5) environmental protection;
                 6) human development;
                 7) participation in public policy;
                 8) institutional development;

If the market forces are not harnessed by the people through the state,
then the style of development will be characterised by all of some of
the following types of growth:

a) JOBLESS GROWTH    -the overall economy grows but fails to expand
                      job opportunities;
b) RUTHLESS GROWTH   -the rich get richer, and the poor get nothing;
c) VOICELESS GROWTH  -the economy grows, but democracy/empowerment of
                      the majority of the population fails to keep pace;
d) ROOTLESS GROWTH   -cultural identity is submerged or deliberately
                      outlawed by central governments;
e) FUTURELESS GROWTH -the present generation squanders resources needed
                      by future generations;
f) DEPENDENT GROWTH  -the economy grows, but to meet the needs of
                      transnational capital, producing for industrialized
                      countries markets and not domestic markets.

In 1997, the United Nations Conference on Trade and Development argued
that there are "seven troublesome features" of the 
contemporary global economy:

 1.- Although there are significant exceptions at the country level, 
     overall the world economy is still growing too slowly -- whether
     to generate sufficient employment with adequate pay or 
     to alleviate poverty; 

 2.- Gaps between developed and developing countries, as well as within 
     the latter, are widening steadily.  In 1965, average GNP per capita
     for the top 20 per cent of the world's population was 30 times that 
     of the poorest 20 per cent; 25 years later, in 1990, the gap had 
     doubled -- to 60 times;

 3.- The rich have gained everywhere... and not just in comparison to 
     the poorest sections of society; "hollowing out" of the 
     middle-class has become a prominent feature of income distribution
     in many developing and developed countries; 

 4.- Finance has been gaining an upper hand over industry, and rentiers
     over investors. In some developing countries, debt interest payments 
     have reached 15 per cent of GDP; trading in existing assets is thus 
     often much more lucrative than creating wealth through new 

  5.-The share of income accruing to capital has gained over that 
     assigned to labour. Profit shares have risen in developed and 
     developing countries alike. In four out of five developing 
     countries, the share of wages in manufacturing value added
     today is well below that in the early 1980s;

 6.- Increased job and income insecurity is spreading. As rising
     interest charges have eaten into business revenues, corporate
     restructuring, labour shedding and wage repression have become 
     the order of the day in much of the North as well as parts of 
     the South;

 7.- The growing wage gap between skilled and unskilled labour is 
     becoming a global problem. Already an established trend in many
     developed countries, absolute falls in the real wages of unskilled
     workers   20 to 30 per cent in some cases -- have been common in 
     developing countries since the early 1980s.

In September 1999, the World Development Report 1999/2000 was honest
enough to state that:

"Fifty years  of development experience have yielded four critical
 Fist, macroeconomic stability is an essential prerequisite for
       achieving the growth needed for development;
 Second, growth does not trickle down; development must address human
         needs directly;
 Third, no one policy will trigger development; a comprehensive approach
        is needed;
 Fourth, institutions matter; sustained development should be rooted in
         processes that are socially inclusive and responsive to
         changing circumstances."

Of course, like UNDP was arguing in 1992 (4), to avoid the social and
environmental catastrophe gathering through globalization, there is a
need of creating a new world order, based on five concepts of a people-
centred world order:

-New concepts of human security, stressing security of people.
-New models of sustainable human development, stressing full use of
 human capabilities.
-New partnerships between between state and markets, combining market
 efficiency with social compassion.
-New patterns of national and global governance, to accommodate the
 rise of people's aspirations and the steady decline of the nation-state.
-New forms of international cooperation, to focus directly on the needs
 of the people rather than on the preferences of nation-states.

The above measures are necessary to avoid what UNDP called "obscenities"
of the market. Obscenities that make impossible creating styles of
development consistent with the idea of sustainability both material and
human. "These are obscenities of excess in a world where 160 million
children are malnourished, 840 million people live without secure sources
of food and 1.2 billion lack access to safe drinking water. These
inequalities demand action".

Surely, the problem about taking "action" is that these "obscenities"
are the "efficient" outcome of a free-market system and not the
"excesses" of some individuals. Thus, if the free-market system
is going to be accepted at face value, we will have to get used
to see millions of human being being victimized by the "obscenities"
of a barbaric system of production (see R. Rojas, "Notes on economics:
assuming scarcity"). (see Table 1)(See BOX 2)


                Poorest 20%     Middle 60%       Richest 20%
Year 1960          236            980               7,069
Year 1993          187            731              14,629
Change 1960-93     -21%          -25%              +107%
Data processed by Dr. Róbinson Rojas, using the 
Human Development Report 1997 tables as sources.
Of course, polarization of such magnitude cannot be only caused by
poor management in less developed societies, the market effect is also
present, the following two tables describe part of the market effect in
a globalized economy:

Table 2_______________________________________________
Diverging prices for commodities and manufactured goods in the
international market during the process of globalization:

of manufactures       OIL  All            
exported by                groups food   agric.     minerals, 
France, Germany,                         raw        ores,
Japan, United Kingdom,                   materials  metals
and United States
1960        100       100  100     100     100       100
1965        108       102   98      98      78       115
1970        117        95  108     103      70       148
1975        221       251  132     164      56        91
1980        329       556  102     106      74       108
1985        275       503   81      83      64        83
1990        446       230   63      61      53        76
1996        504       184   63      62      55        69
2006        529       570   81      59      52       169 
1960-80 (%) 6.1       9.0  0.1     0.3    -1.5       0.4
1980-06 (%) 1.8       0.1 -0.9    -2.2    -1.3       1.7
Source: From UNCTAD Handbook of Statistics (2007) database at:
        (data processed by Dr. Róbinson Rojas).

The above pattern, where globalization exerts pressure on further
deterioration of terms of trade for less developed commodities, appears
also when we look at the behaviour of net factor income from abroad,
which is net from inflow and outflow of resources for a country,
including aid. Table 3 below illustrates the pressures on less developed
societies leading to further outflow of capital to industrialized
Table 3
                        1960-1992            1960-1975   1976-1992

TOTAL                 -3065221.19           -672230.50 -2392990.70
PER Day                   -254.48              -115.11     -385.66
PER HOUR                   -10.60                -4.80      -16.07
AFRICA/per hour             -2.21                -2.01       -2.39
LATIN AMERICA/per hour      -3.26                -1.52       -4.90
ASIA/per hour               -1.79                -0.72       -2.79
INDUSTR>/per hour           -3.35                -0.55       -5.98
Note: Six industrialized countries received more than 95% of the
      above flow (United States, Switzerland, Japan, Germany,
      Luxembourg and France)

===Source: World Bank Tables 1995===processed by Robinson Rojas===

Therefore, a constant deterioration of the ratio exports price/imports
price, and a constant flow of capital from poor countries to rich
countries is very much part of this globalized style of development.

How the market creates this situation of contradiction between "social
efficiency" and "economic efficiency"?


The matrix below (The Dynamics of a Capitalist Market) based on
standard teaching of economic theory, can help to solve the riddle.


Persons Total
Output Price TR MR AC MC TC TR-TC Comments
20 1 20 1 20 20 20 5 5 5 15  
19 1 39 2 19 38 18 5 5 10 28  
18 1 57 3 18 54 16 5 5 15 39  
17 1 74 4 17 68 14 5 5 20 48  
16 1 90 5 16 80 12 5 5 25 55  
15 1 105 6 15 90 10 5 5 30 60  
14 1 119 7 14 98 8 5 5 35 63  
13 1 132 8 13 104 6 5 5 40 64 Maximum abnormal profits
12 1 144 9 12 108 4 5 5 45 63  
11 1 155 10 11 110 2 5 5 50 60  
10 1 165 11 10 110 0 5 5 55 55  
9 1 174 12 9 108 -2 5 5 60 48  
8 1 182 13 8 104 -4 5 5 65 39  
7 1 189 14 7 98 -6 5 5 70 28  
6 1 195 15 6 90 -8 5 5 75 15  
5 1 200 16 5 80 -10 5 5 80 0 Maximum normal profits
4 1 204 17 4 68 -12 5 5 85 -17  
3 1 207 18 3 54 -14 5 5 90 -36  
2 1 209 19 2 38 -16 5 5 95 -57  
1 1 210 20 1 20 -18 5 5 100 -80  

The matrix assumes a society of 20 people with distribution of income at a maximum differential of 1 to 20. From the added income of each individual we can build the demand curve for the system, which will go from 1 unit demanded at 20 units of money as the price, to 20 units demanded at 1unit of money as the price. 

Thus, producing 1 unit at 20 unit of money as the price will be extremely inneficient from the social point of view, while producing 20 units at 1 unit of money as the price will supply "the whole society". It will be socially efficient. But then, this is a capitalist market, producer will attempt to maximize profits not output. 

My model then incorporates the variables to calculate at what level of output and what level of price suppliers will maximize profits. Standard economics is utilized here, where "normal profits" will occur when suppliers sell their output at cost price (this is because profits, interest, rent and depreciation of the capital utilized is included in "costs" as "opportunity costs"). My model also consider a perfectly competitive industry of identical firms. Assuming that input prices are fixed (due to perfect competition), the long-run industry supply curve will be represented by AC (average costs). 

Thus, following textbook economics, long-run output adjustments in the industry are achieved by changes in the number of firms, each operating at the minimum point of their average cost curve (in this case a constant 5 units of money). Therefore, in this first case, "market equilibrium" is where the industry supply and demand curve intersect, yielding an output of 16 and a price of 5 (average cost equals price, or cost = price, which is the golden rule of textbook economics). 

Now suppose the industry is monopolised such that each of the previously independent firms becomes a plant under a common owner, or common management, or agreed management, etc. Output can be varied by altering the number of plants in operation, and so the monopolist's marginal cost (MC) and average cost (AC) schedule is the same as before, the AC column, that is. But now, "abnormal" profits can occur, profits above normal profits. Now, cost price is lower than price, and we can know where abnormal profits will maximise substracting total costs (TC, which is 5 times output) form total revenue (TR, which is Price times output).

 This yields an output of 8 at a price of 13, and abnormal profits being 64 units of money. Monopolisation (globalisation, transnationalization, oligopolization, real markets behaviour) has led to a reduction in output, increase in price and dramatic growth of extra profits for the supplier. When the market was still not globalized, 16 people out of 20 were able to buy one unit of output each. Only 20% of our population was excluded from the market. Moreover, income not utilized to satisfy demand of this particular commodity was Total Income - Total Revenue, that is, 200 - 80 = 120. There was demand for producing 1.5 times more. In textbook economics, this income not utilized is known as "the consumer's surplus". If we assume 20% profits on total revenue, suppliers will have 16 units of money as "the supplier's surplus". Clearly, this first case will be the case of a market working for the consumer. 

After the market is globalized, only 8 people out of 20 were able to buy one unit of output each. Consumer's surplus will be 132 - 104 = 28. There was a demand for producing 28/104 more ( 0.26 times more). Assuming the same rate of normal profits, suppliers will pocket 20.8 as normal profits plus 64 as abnormal profits. Clearly, this second case will be the case of a market working for the supplier. This case is known as a case of "economic efficiency" in textbook economics. Now, unlike in the first case, 60% of the people is excluded of the market and, conversely, will yield 84.8/20 times more profits. 4.2 times. 

Thus, economic efficiency makes 4.2 times more profits for suppliers, and exclude 60% of the population from average levels of consumption. Conversely, social efficiency satisfy 4 times more consumer's need, but reduces suppliers' profits to a quarter. This is a clear case of "economic efficiency" reducing welfare in society and multiplying welfare for the capitalist class. An important point to note is that this welfare is reduced not because individuals are paying a higher price for the goods they consume under monopoly/globalization, but rather because there are some people who do not consume the good despite the fact that their income exceeds the marginal cost of production. In a word, they are denied welfare in order to maximise profits by the big corporations. Like Robert Reich, former US secretary for labour, wrote in the Financial Times: "what may be rational for each individual corporation is irrational for society". (5)

 How economic efficiency is shaping distribution of income in the world in an "obsecene and grotesque" pattern is dealt with in BOX 3.

 Conclusion: sustainable development is not possible in a globalized economy UNLESS the capitalist class is forced to produce at the level of maximum social efficiency through a new international economic and political order and a new national economic and political order.



New York, 12 July 1999 A powerful plea for a re-writing of the rules of globalization—to make it work for people and not just for profits—is made in the Human Development Report 1999, commissioned by the United Nations Development Programme. 

Globalization, it says, is more than the flow of money and commodities —it is the growing interdependence of the world’s people through "shrinking space, shrinking time and disappearing borders." This offers great opportunities for enriching people’s lives and creating a global community based on shared values. But markets, it argues, have been allowed to dominate the process, and the benefits and opportunities have not been shared equitably.

The result is a "grotesque" and dangerous polarization between people and countries benefiting from the system and those that are merely passive recipients of its effects.

The fifth of the world’s people living in the highest income countries has 86 per cent of world gross domestic product (GDP), 82 per cent of world export markets, 68 per cent of foreign direct investment, and 74 per cent of telephone lines. The bottom fifth, in the poorest countries, has about one per cent in each category. Of the foreign direct investment in developing countries and the countries of Central and Eastern Europe in the 1990s, more than 80 per cent went to just 20 countries, mainly to China.

Such disparities are glaring enough. But the Report argues that the inequitable effects of globalization driven by markets and profit are far wider and deeper, touching all aspects of human life.  Care, "the invisible heart of human development," is threatened because today’s competitive global market is putting pressures on the time, resources and incentives for caring labour, without which individuals do not flourish and social cohesion can break down.

Breakthroughs in technology, such as the Internet, can open a fast track to knowledge-based growth in rich and poor countries alike, but at present benefit the relatively well-off and educated: 88 per cent of users live in industrialized countries, which collectively represent just 17 per cent of the world’s population. The literally well connected have an overpowering advantage over the unconnected poor, whose voices and concerns are being left out of the global conversation.

Money also talks louder than need in defining the biotechnology research agenda, says the Report—"cosmetic drugs and slow-ripening tomatoes come higher on the list than a vaccine against malaria or drought-resistant crops for marginal land."

"Even as communications, transportation and technology are driving global economic expansion, headway on poverty is not keeping pace," says CNN mogul Ted Turner in a special contribution to the Report. "It is as if globalization is in fast-forward, and the world’s ability to understand and react to it is in slow motion."

The "breakneck" speed of globalization is also making people’s lives less secure, as the spread of global threats to well-being outpaces action to tackle them.

The East Asian financial crisis, for example, will have reduced global output by an estimated US$2 trillion between 1998 and 2000, putting millions of people out of work and prompting cutbacks in social services all over the world. The crisis was not an isolated accident, warns the Report, because financial volatility is an inherent feature of globally integrated financial markets.

Job insecurity is also increasing in both industrialized and developing countries, in the wake of economic and corporate restructuring and the dismantling of social protection measures.

Culturally, many people feel threatened by the predominantly one-way flow. The single largest export industry for the United States is not aircraft or cars, but entertainment.

Criminals—"among the most enterprising and imaginative opportunists"—are beneficiaries of globalization, with the six major international syndicates believed to gross $1.5 trillion a year. And the illicit trade in narcotics, weapons, labour, goods and money contributes to crime and violence that threaten neighbourhoods around the world.

These human elements have been left out of the narrow, financially-based view of globalization that has prevailed so far—an omission which the Human Development Report 1999 challenges head-on: "Competitive markets may be the best guarantee of efficient production but not of human development."  "As long as globalization is dominated by economic aspects and by the spread of markets, it will put a squeeze on human development," says Sakiko Fukuda-Parr, director of the Human Development Report Office. "We need a new approach to governance, one that preserves the advantages offered by global markets and competition while allowing for human, community and environmental resources that will ensure globalization works for people and not just for profits."

The Report calls for a re-writing of governance for the 21st century.

Its suggestions and recommendations range from the global (reform of the United Nations and World Trade Organization), through the regional (collective approaches by groups of countries to international negotiations in trade and other areas), to the national (social protection against the effects of globalization) and local (greater gender balance in sharing the burden of providing care services).

There is no need to wait for action, it argues. A number of changes can be set in motion in the next one to three years:

• the establishment of high-level mechanisms in individual countries to coordinate policy on globalization;

• faster debt relief and a redirection of aid in favour of poorer countries and human development priorities;

• independent legal aid and an ombudsman process to support weaker countries in the World Trade Organization;

• International cooperation in the fight against global crime, including relaxation of bank secrecy laws;

• investigation of new sources of finance for the global technology revolution, such as a "bit tax" on Internet messages, and an international programme for the development of technology that serves the needs of poor people;

• a task force to review global governance, to include not only a range of countries but representatives from the private sector and civil society.  "The world is rushing headlong into greater integration, driven mostly by a philosophy of market profitability and economic efficiency. We must bring human development and social protection into the equation," says Dr. Richard Jolly, coordinator of the Report. "Globalization needs a human face."




The fifth of the world’s people living in the highest income countries has 86 per cent of world gross domestic product (GDP), 82 per cent of world export markets, 68 per cent of foreign direct investments and 74 per cent of world telephone lines: the bottom fifth, in the poorest countries, has about one per cent in each sector.

More than US$1.5 trillion a day is exchanged in the world’s currency markets. 

English is used in almost 80 per cent of websites although fewer than one in 10 people worldwide speak the language.

 The number of Internet hosts—computers with a direct connection to the Internet—rose from under 100,000 in 1988 to over 36 million in 1998. 

The percentage share of the market by the top 10 corporations in each sector in 1998 was:  telecommunications, 86 per cent; pesticides, 85 per cent;  computers, almost 70 per cent; veterinary medicine, 60 per cent;  pharmaceuticals, 35 per cent; commercial seed, 32 per cent.

The income gap between the richest fifth of the world’s people and the poorest fifth, measured by average national income per head, increased from 30 to one in 1960 to 74 to one in 1997. 

Tanzania’s debt service payments are nine times what it spends on primary health care and four times what it spends on primary education.

Organized crime syndicates are estimated to gross $1.5 trillion a year.

Industrialized countries hold 97 per cent of all patents worldwide.

Production losses from the East Asian crisis and its global repercussions are estimated at nearly $2 trillion over the three years from 1998 to 2000.

The 200 richest people in the world more than doubled their net worth in the four years to 1998, to $1 trillion.

Some 130-145 million legally registered migrants live outside their countries.

The value of the illegal drug trade was estimated at $400 billion in 1995, about eight per cent of world trade, more than the shares of iron and steel or of motor vehicles, and roughly the same as textiles and gas and oil.

Women occupy more than 30 per cent of parliamentary seats in only five countries; in 31 they occupy fewer than five per cent.

The cost of a three-minute phone call from New York to London fell from $245 in 1930 (in 1990 dollars) to 35 cents in 1998.

Foreign direct investment (FDI) reached $400 billion in 1997, but 58 per cent of it went to industrialized countries, and just five per cent to the transition economies of Central and Eastern Europe. Of the FDI that went to developing and transition countries in the 1990s, more than 80 per cent went to just 20 countries, mainly to China.

Tourism rose from 260 million visitors in 1980 to 590 million in 1996.

Only 33 countries achieved sustained three per cent annual growth in gross national product (GNP) per capita during 1980-96. For 59 countries, mainly in sub-Saharan Africa and the countries of the former Eastern Bloc, GNP per capita declined.

About this Report:
Every year since 1990, the United Nations Development Programme has commissioned the Human Development Report by an independent team of experts to explore major issues of global concern. The Report looks beyond per capita income as a measure of human progress by also assessing it against such factors as average life expectancy, literacy and overall well-being. It argues that human development is ultimately "a process of enlarging people’s choices."

This year’s Report focuses on the positive and negative aspects of globalization. It argues that while many millions of people are being further marginalized by their lack of access to new technologies, including the Internet, growing inequalities are not inevitable. It recommends, among other things, stronger social policies and actions to buffer the effects of today’s "bust and boom" economy. It urges policymakers to balance their concern for profits with concern for people disenfranchised by the turmoil of the global marketplace. 

The Human Development Report is published in English by Oxford University Press, 2001 Evans Rd., Cary, NC 27513, USA. Telephone (919) 677-0977; toll-free in the USA (800) 451-7556; fax (919) 677-1303. Paperback price: US$19.95.

** *** **

Contacts: New York: Ian Steele (212) 906-5302 Fax (212) 906-5364
Washington: Sarah Burns (202) 331-9130 Fax (202) 331-9363
Geneva: Daniela Bagozzi (41-22) 979-9548 Fax (41-22) 979-9005
Copenhagen: Eva Arnvig (45-35) 46 7150 Fax (45-35) 46 70 95
Tokyo: Hidehiro Tsubaki (81-3) 5467-4751 Fax (81-3) 5467-4753



(from Forbes Magazine 1997, and Human Developmen Report 1998)
(Summary prepared by Dr. Róbinson Rojas)

  The ultra-rich

New estimates show that the world's 225 richest people have a combined wealth of over               $ 1,000,000,000,000, equal to the annual income of the poorest 47% of the world's people (2,500,000,000).

The enormity of the wealth of the ultra-rich is a mind-boggling contrast with low incomes in the developing world.

* The three richest people have assets that exceed the combined Gross Domestic Product of the 48 least developed countries, with a combined population of 585,000,000.

* The 15 richest have assets that exceed the total Gross Domestic Product of Sub-Saharan Africa. The population in Sub-Saharan Africa is 570,000,000 and its GDP (year 1995) was US$ 290 billion.

* The wealth of the 32 richest people exceeds the total Gross Domestic Product of South Asia, with a combined population of 1,571 million and an aggregate GDP of US$ 439 billion (year 1995).

* The assets of the 84 richest exceeded the Gross Domestic Product of China, the most populous country, with 1,200 million inhabitants and a GDP of US$ 745 billion (year 1995).

Another striking contrast is the wealth of the 225 richest people compared with what is needed to achieve universal access to basic social services for all. It is estimated that the additional cost of achieving and maintaining universal access to basic education for all, basic health care for all, reproductive health care for all women, adequate food for all and safe water and sanitation for all is roughly US$ 40 billion a year. This is less than 4% of the combined wealth of the richest 225 richest people in the world.

The country with the biggest share of the world's 225 richest people is the United States, with 60 (combined wealth of US$ 311 billion), followed by Germany, with 21 (US$ 111 billion), and Japan, with 14 (US$ 41 billion). Industrial countries have 147 of the richest 225 people ( US$ 645 billion combined), and developing countries 78 (US$ 370 billion). Africa has just two (US$ 3.7 billion), both from South Africa.
The ultra-rich, by origin, 1997
                          Distribution Combined wealth Average wealth
                          of the 225   of the ultra-   of the ultra-
                          richest      rich            rich
Region/country group      people      (US$ billions)   (US$ billions)
United States                60            314               5.2
Germany                      21            111               5.3
Japan                        14             41               2.9
Other industrial countries   48            174               3.6
Eastern Europe and CIS        4              8               2.0
 TOTAL INDUSTRIAL COUNTRIES 147            645               4.4

Asia                         43            233               5.4
Latin America/Caribbean      22             55               2.5
Arab States                  11             78               7.1
Sub-Saharan Africa            2              4               2.0
 TOTAL DEVELOPING COUNTRIES  78            370               4.7
TOTAL WORLD                 225          1,015               4.5

47% OF THE WORLD  2,500,000,000          1,015              0.0000004
 Average wealth of the 225 ultra-rich     US$ 4,500,000,000
 Average annual income of poorest 47%     US$           406
            The priorities of the capitalist system

                       ANNUAL EXPENDITURE IN US$

Basic education for all                 6 billion (*)
Cosmetics in the USA                    8 billion

Water and sanitation for all            9 billion (*)
Ice cream in Europe                    11 billion

Reproductive health for all women      12 billion (*)
Perfumes in Europe and the USA         12 billion

Basic health and nutrition             13 billion (*)
Pet foods in Europe and the USA        17 billion

Business entertainment in Japan        35 billion
Cigarettes in Europe                   50 billion
Alcoholic drinks in Europe            105 billion
Narcotic drugs in the world           400 billion
Military spending in the world        780 billion
* Estimated additional annual cost to achieve universal access to
  basic social services in all developing countries.
SOURCE: Euromonitor 1997; UNDP; UNICEF; UNFPA 1994; Worldwide
        Research, Advisory and Business Intelligence Services 1997;
        Human Development Report 1998.
*   For a definition of my concept of "sustainable
                development" see
    R. Rojas, "Sustainable development in a globalized economy", 1997
    Back to Top
(1) Aldo Ferrer, "MERCOSUR and Alternative World Orders", in
    AND THE CARIBBEAN, Edition N0. 53 (January-June 1998)
(2) John Eatwell, "International Financial Liberalization: the
    Impact on World Development", ODS Discussion Paper, 1997
(3) Lance Taylor and Ute Pieper, "Reconciling Economic Reform and
    Sustainable Human Development: Social consequences of
    neo-liberalism", ODS Discussion Paper, 1996
(4) UNDP, Human Development Report 1993, OUP, 1993, page 2
(5) Robert Reich, "A hand across the great divide", Financial Times,
    March 6, 1996
GDP of groups of countries as percentage of total GDP 
-172 market economies)
                                1960      1965      1970      1975
   TOTAL OECD [21]            82.082    81.798    82.219    79.435
   TOTAL WEST AFRICA[23]       0.809     0.814     0.887     1.143
   TOTAL E. & S. AFRICA[27]    1.627     1.487     1.371     1.380
   TOTAL N. AFRICA[5]          0.743     0.809     0.854     1.028
   TOTAL M. EAST[14]           0.978     1.544     1.704     3.143
   TOTAL S. ASIA[8]            3.834     4.027     3.082     2.411
   TOTAL E. ASIA & P.[27]      1.974     1.688     2.031     2.555
   TOTAL LATIN AMERICA[21]     6.160     6.316     6.259     7.048
   TOTAL THE CARIBBEAN[20]     0.396     0.410     0.431     0.420
   TOTAL DEV. EUROPE[6]        1.397     1.107     1.162     1.436
   TOTAL MARKET ECON.[172]   100.000   100.000   100.000   100.000
                                1980      1985      1990      1992
   TOTAL OECD [21]            77.408    78.955    82.083    82.536
   TOTAL WEST AFRICA[23]       1.387     1.084     0.479     0.425
   TOTAL E&S AFRICA[27]        1.413     1.071     0.947     0.876
   TOTAL N. AFRICA[5]          1.293     1.274     0.828     0.719
   TOTAL M. EAST[14]           4.135     3.863     2.195     1.800
   TOTAL S. ASIA[8]            2.203     2.460     1.919     1.485
   TOTAL E. ASIA&P.[27]        3.302     3.749     4.297     4.837
   TOTAL LATINAM[21]           7.188     6.126     5.470     5.540
   TOTAL THE CARIB.[20]        0.396     0.417     0.321     0.270
   TOTAL DEV. EUR.[6]          1.276     0.999     1.461     1.511
   TOTAL MARKET ECON.[172]   100.000   100.000   100.000   100.000
Data from the World Bank Database processed by Dr. Róbinson Rojas Sandford


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