June 2015


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The Caribbean is living through its most protracted development crisis since independence. This is reflected in a series of acute challenges relating to stalled growth, soaring debt burdens, deteriorating governance, crime and violence, regional disintegration, and climate change. Shortly before his untimely passing, Norman Girvan suggested that these problems collectively amounted to truly ‘existential threats.’ To have any chance of dealing with them successfully, a concerted regional response is required.

However, these difficulties are emerging at the exact moment when the regional integration process is itself in marked decline. Since 2011, the CSME process has been ‘paused’ and there is a very real sense of foreboding regarding the future of CARICOM. In any case, regardless of the extent of the malaise, even were these institutions operating smoothly, they were designed for a very different time: one that was considerably more benign than a contemporary era characterised by this daunting list of problems.

As the Caribbean tries to get to grips with these challenges, the wider context has also changed dramatically beyond the global crisis in quite contradictory and confusing ways. On the one hand, the broader dominance of a liberal international economy in which multinational corporations and mega-trading blocs are relentlessly globalising trade seems increasingly entrenched. Yet on the other, the hyper-neoliberal capitalism of the past is actually also becoming rather passé as powerful emerging countries such as the so-called ‘BRICS’ – Brazil, Russia, India, China and South Africa – engage in what are often quite unorthodox and distinctive development strategies. These broad shifts, then, are re-shaping the contours of a new structural order into which the Caribbean must insert itself and find new ways to approach its own development.

The problem, though, is that our intellectuals and policymakers are often fighting the battles of the past. Two broad narratives and separate communities have dominated Caribbean development debate over the past few decades. One group takes up a radical position, and is deeply suspicious of global capitalism, seeing primarily threats and new patterns of exploitation that mirror the neo-colonialism of the past. The other, which is considerably more orthodox and neoliberal, tends to be excessively optimistic regarding the opportunities available to the Caribbean by becoming ‘competitive’ in a global market economy by making the ‘private sector’ the ‘engine of growth’ and letting the market weave its supposed magic. Neither group listens to each other, and both are to some extent stuck in the past: the former are still rehearsing the arguments of the 1960s and 1970s; the latter continue to play the tired Washington Consensus hits of the 1980s.

In 2015 the world is changing rapidly, and the Caribbean desperately requires a more sophisticated understanding of development. A key aspect of this is a nuanced grasp of the relationship between the public and private sector, and the role that this plays in development processes. In short, between the two positions briefly caricatured here, there is space for a genuinely ‘developmentalist’ synthesis.

This is something that is characterised not by unthinkingly ‘opening up’ or ‘closing off,’ but rather by a genuinely strategic approach that seeks to shape economic processes to serve developmental outcomes. We wonder continually why the Caribbean private sector has failed to stimulate high growth rates for the past thirty or forty years: the radicals had the answer, which is that we have a fundamentally rent-seeking, extractive capitalist class which engages in import-buy-sell activity rather than production. This cannot be overcome without purposeful State intervention to change these logics of behaviour, but too many are still wedded to the trite orthodoxies that have been passed down from Washington and Brussels over the years that State intervention is always ‘bad’ and the market is always ‘good.’

Yet this is clearly far from the case. Of course, a vibrant private sector can certainly be a boon for growth and development. But it can also be rapacious and parasitic, misallocating capital and extracting wealth rather than generating it. So, arguing about a bigger role for the private sector rather misses the point: it is the nature of private economic activity that matters, not the extent of it. The same is true of the State: debates about a ‘bigger’ or ‘smaller’ State are insultingly glib: we need a developmental State that intervenes selectively to shape the context in which private actors engage, in order to stimulate private sector activity that is developmentally-inclined.

Today, all of those countries that are enjoying rapid growth and development are doing so with just these kinds of penetrating institutions. Of course, countries as disparate as China, Brazil and India, as well as smaller countries like Malta, Singapore or Mauritius, are certainly globalising themselves, and working hard to find their niches within globalisation, as the Caribbean must too. But they are not doing so in a passive way. Global change is not happening to them: they are rather seeking to construct and sculpt the context in which their entrepreneurs and businesses are engaging with the world, and also challenging them to produce real innovations and wealth, not to simply extract rents behind privileged and protected market positions.

This is the primary lesson that Caribbean policymakers need to take on board, and quickly. Development will never occur if it is left to either chance encounters with often-destructive global market processes, or a largely rent-seeking local private sector. The Caribbean urgently needs to build purposive public institutions, at the regional level, that can shape, as effectively as possible, its engagement with the new global context by simultaneously restructuring internally and negotiating externally. This is what Mariana Mazzucato, in one of the most influential books of the past year or so, terms The Entrepreneurial State. It should be required reading for everyone in the region.

Dr Matthew L. Bishop is a Lecturer at the Institute of International Relations, The UWI, St. Augustine. This is an abridged version of his presentation at the Forum on the Future of the Caribbean, “Situating the Caribbean within the new Global Political Economy of Development.” The full text of that presentation can be read here.