comparative advantage of a few goods whose production was ramped up for
international competition. It sometimes meant that entire economies became
dependent on the world market price of one or two products. This had some
cataclysmic effects. The fates of Ethiopia, Burundi, and Uganda when the world
price of coffee fell in 2001 are prime examples (Francis/Francis 2011). It also meant
that the diversity of what was harvested at home was reduced significantly, leading
to a simultaneous dependence on world market prices for imports. This type of
double dependency becomes especially problematic when world prices are affected
not simply by actual supply and demand changes but, as price hikes of up to 200 %
for some grains showed in 2006–2008, food is also susceptible to financial
speculation.
In addition, as the UN Conference on Trade and Development (UNCTAD)
points out in its 2013 Trade and Development Report, producing for the world
market means that every cent in wages is a cost to be avoided. Production for
domestic markets, on the other hand, means that higher wages mean more purchasing power on the demand side. From a macroeconomic perspective this benefits
everyone because price elasticity goes up. UNCTAD points out that statistics from
almost all export-driven countries demonstrate how real wages in the export sectors
have not increased with productivity gains over the last two decades. Coupling this
with slow growth and demand on a global scale leads the authors of the report to
conclude that “export-driven development is no longer viable” and that “economies
will perform better with more balanced strategies” aimed at “balanced growth” and
“a greater role of domestic demand” (UNCTAD 2013).
Long before these empirical numbers were gathered, Max-Neef had been
arguing that human need-satisfaction strategies should emerge from each individual
context, respectful of social practices, forms of organization, political models and
values as well as the natural systems in which they are embedded. This may lead to
less rapid increases in economic output as measured in GDP, but ensures a more
balanced and therefore resilient change process controlled by the people it affects.
Once the need for subsistence is no longer threatened, it may well deliver more
happiness than running after GDP per capita jumps.
3.1.3 Checking Human Happiness and the Link
with Income
The scholars cited at the beginning of this chapter second Polanyi in his assessment
that making endless gain or growth the polestar of societal aspiration might have
been the most transformational idea of the Enlightenment movement. It overarches
the third prime idea in mainstream economics: the pursuit of greater happiness or
utility (need satisfaction) is best done through more consumption. While the subchapters above have shown the limiting blind spots of these reductionist models of
3.1 How Mainstream Economics Views Human Needs and Their Satisfaction
67
international competition. It sometimes meant that entire economies became
dependent on the world market price of one or two products. This had some
cataclysmic effects. The fates of Ethiopia, Burundi, and Uganda when the world
price of coffee fell in 2001 are prime examples (Francis/Francis 2011). It also meant
that the diversity of what was harvested at home was reduced significantly, leading
to a simultaneous dependence on world market prices for imports. This type of
double dependency becomes especially problematic when world prices are affected
not simply by actual supply and demand changes but, as price hikes of up to 200 %
for some grains showed in 2006–2008, food is also susceptible to financial
speculation.
In addition, as the UN Conference on Trade and Development (UNCTAD)
points out in its 2013 Trade and Development Report, producing for the world
market means that every cent in wages is a cost to be avoided. Production for
domestic markets, on the other hand, means that higher wages mean more purchasing power on the demand side. From a macroeconomic perspective this benefits
everyone because price elasticity goes up. UNCTAD points out that statistics from
almost all export-driven countries demonstrate how real wages in the export sectors
have not increased with productivity gains over the last two decades. Coupling this
with slow growth and demand on a global scale leads the authors of the report to
conclude that “export-driven development is no longer viable” and that “economies
will perform better with more balanced strategies” aimed at “balanced growth” and
“a greater role of domestic demand” (UNCTAD 2013).
Long before these empirical numbers were gathered, Max-Neef had been
arguing that human need-satisfaction strategies should emerge from each individual
context, respectful of social practices, forms of organization, political models and
values as well as the natural systems in which they are embedded. This may lead to
less rapid increases in economic output as measured in GDP, but ensures a more
balanced and therefore resilient change process controlled by the people it affects.
Once the need for subsistence is no longer threatened, it may well deliver more
happiness than running after GDP per capita jumps.
3.1.3 Checking Human Happiness and the Link
with Income
The scholars cited at the beginning of this chapter second Polanyi in his assessment
that making endless gain or growth the polestar of societal aspiration might have
been the most transformational idea of the Enlightenment movement. It overarches
the third prime idea in mainstream economics: the pursuit of greater happiness or
utility (need satisfaction) is best done through more consumption. While the subchapters above have shown the limiting blind spots of these reductionist models of
3.1 How Mainstream Economics Views Human Needs and Their Satisfaction
67