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Special Report
Last Updated: 09/16/2003
A New Look at Economic Development
Patrick Hunout and Brent Shea

Considering the most recent developments in Western societies, there is a growing consciousness that a deep change is needed in the type of economic development as well as the social values that are currently pursued. The International Scope Review was created at the end of 1998 to bring an answer to this situation. In 2002, The Social Capital Foundation was created to support and manage the Review and to set up other types of actions likely to make the public aware of alternative approaches. This article discusses the underpinning theory and practice of the Foundation.

Considering the most recent developments in Western societies, there is a growing consciousness that a deep change is needed in the type of economic development as well as the social values that are currently pursued.

The International Scope Review was created at the end of 1998 to bring an answer to this situation. In 2002, The Social Capital Foundation was created to support and manage the Review and to set up other types of actions likely to make the public aware of alternative approaches.

The TISR Model is based on a research conducted over a period of more than 10 years. First elaborated in the years 1995-1996, it was thereafter adopted by an international academic team in order to be elaborated collectively and disseminated at the editorial level. It constitutes an attempt to reach global understanding of the transformations occurring in our contemporary societies.

The model posits the existence of an increasingly integrated ruling class in the Western countries. It suggests the consistency that exists between three dimensions of this new power’s policy: economic flexibility that produces precariousness, immigration that produces anomie, and individualism that produces a cellular, atomistic society.

These three trends contribute to further destruction of the social bond that keeps us together within society.

1- Economic Policies: Profit versus Employment

The first reason is that economic growth in these countries is slow, especially in the creation of new jobs.

In the last two decades of the last century, the neo-liberal governments of Anglo-Saxon countries have tried to deal with the problem of unemployment, but the final structure of employment in these countries was dramatically different from the previous one.  Unskilled, precarious, and low-wage service jobs had replaced the skilled jobs of the Fordist era of industrial production. Now the US economy seems to accelerate in its growth, but this growth is mainly financial: Profits increase, but proportionate job creation does not follow.

The central fact is that this pattern, even though it may be emphasized by short-term developments, underpins all the economic development of the most recent decades. Actually, substituting capital for labor seems to be one of the most prominent features of corporate policies of the past 20 years.

American capitalism is known as a short-term, stock-exchange funded, profit-oriented type of capitalism, among others possible. In this type of capitalism, employment suffers more than in others. Not only does this capitalism emphasize external flexibility and mobility of the workforce, favoring short-term contract relationships and individual career paths from one company to another. But it also considers the workforce as nothing more than an “adjustment variable” likely to undergo variations in perimeter or volume according to the needs, real or unreal, perceived by  management.

This type of capitalism, clearly, is hostile to the spirit of community that has underpinned other models of capitalist economic development. It is articulated with liberal and neo-liberal ideologies, characterized by individualism and social class egoism, and it favors an abstract, mathematical view of economics seen as an intellectual domain apart from other social sciences.

In reality, the economic policy followed in these countries has created a new working class, living off poor jobs or social welfare, with no prospects for the future. Immigrants have been used to reconstruct this new working class, economically poor, educationally impoverished, and politically passive - although it powerfully spreads its values over very broad factions of society, notably among youth who do not necessarily belong to the underclass. This is effected through a new language, music, and fashion with values of abandonment to short-term pleasure, limitation of personal or collective ambitions, and laissez-faire attitudes in all areas - a kind of “underclassization” of society.

In the final analysis, this economic policy was actually also - and probably foremost - a social policy.

It did not involve only the US and Britain. It appeared later in Continental Europe and elsewhere.  Social-democrat and socialist parties also helped its implementation. What had been called “capitalism from the Rhineland”, a type of capitalism inspired by community spirit, that involved more social welfare and corporate staff stability and had proved its efficiency in Germany and Scandinavia (as well as in Japan), is disappearing under the impact of the “new” American model exported and spread through the globalization process. Thus, in the last decade, German management, for example, has become more hierarchical and individualistic, following the American influence - among other similar evolutions.

There can be no prosperous economy if business is not reinserted in the Community. This requires an in-depth, practical reflection about both economic policies at a macro-level and corporate policies in order to achieve a society- and environment- friendly to economic development. 

2 - Ethnic Policies: Anomie versis Cohesiveness

Massive immigration policies have been implemented by the governments of the Western countries since the middle of the last century. These policies have been accelerated in the two last decades, and have taken proportions that have dwarfed any migration that ever happened before in history. 

These moves cannot be attributed solely to the will of the migrants, even though they are influenced by the prosperous and lax image that the West gives of itself. The migration streams have been voluntarily encouraged, stimulated, organized, and regulated by the governments and private interests. Nationality laws have been reformed in order to weaken the biological and cultural elements at play in the definition of nationality to the advantage of administrative decisions, and an intimidating legal arsenal has been put in place to artificially repress the reactions of the local populations of the receiving countries, the cultural identity of which is vascillating.

Firstly, mass immigration erodes wages by emphasizing competition on the labor market. In effect, the very first reason of the recourse to immigration was that it lowered the cost of labor and thus increased the rate of profit, while avoiding investment and maintaining the same organization of work as before.

Secondly, mass immigration helps maintain the older systems of governance. Thus, the main objective of this policy rapidly became to reconstruct a new working class, a class that was disappearing since the XIXth century, not only in terms of financial resource level but also in terms of submission to authority and social stratification. This is due to the fact that immigrants are generally at the bottom of society, and that they tend, due to the immigration situation, to be more submissive to political and managerial authority. It is all the more true because this ethnicized new working class had neither the same demands for social promotion nor the same socially progressive values (such as professional progress and acquisition of knowledge) as the old working class. Then, the call for immigration took a less economic and a more sociopolitical character. This indeed has political consequences: a society with a more hierarchal class structure is not governed like a society with weak social stratification. In the former case, the upper class tends to become even less controllable by the rest of society; in the latter case, the rather educated and rich middle class can play a bigger role in the steering of society - which globally favors democracy. Thus, the call for mass immigration is thoroughly conservative, and linked with the persistence of authoritarian, anti-equalitarian schemes of governance. 

Thirdly, mass immigration creates a huge crisis in cultural identity in the Western countries.

As it jumbles cultural benchmarks and breaks ancestral community links, mass immigration raises the level of anomie in our societies. This makes worse the mental health of the global population, increases crime and delinquency, and diminishes congeniality. The loss of cultural benchmarks among ethnic majorities and minorities alike entails a disintegration of social cohesiveness with which an increase in environmental stressors and an upsurge in psychopathology are associated.

It is not actually the problem of the integration of minorities that is essential, but the global problem of the integration of the whole society. The sociologist of the “Chicago school of   sociology”, Louis Wirth, described the type of development we are experiencing by saying that if a society is a set of common views, a system of reciprocally recognized beliefs and expectations which are expressed into actions, it follows that a human aggregate cannot be regarded as a society in the full sense of the word; the degree to which the members of a society lose their common sense, the proportion in which the social consensus is undermined, indicates the extent to which a society is disorganized. 

In the final analysis, the only democratic way to handle cultural identity is to respect it as it is and to let it be where it is rooted, both in receiving and migrant nations.

Reversing the current immigration policies by giving a clear, sincere signal that they will be stopped and dismantled, in association with more efficient help to economic development for the countries the migrants come from, as well as restablishing a reasonable proportion of ancestral components in the definition of nationality, is the necessary way to handle what has become the crucial question of cultural identity in the Western countries. 

3 - Values: Individualism versus Community

Researcher David Myers could speak of a very “social recession” coexisting with the relative “economic expansion”.

We are better paid, better fed, better housed, better educated, and healthier than ever before.We have faster communication and more convenient transportation than we have ever known, and our average disposable income in constant currency is more than double that of the mid-1950’s. From 1900 to the present, life expectancy has risen from 47 to 76 years.

However, from 1960 until the early 2000’s, our countries slid into a deepening social recession that dwarfed the comparatively briefer economic recessions that often dominate news and politics. Since 1960, the divorce rate has doubled, the recorded violent crime rate has quadrupled, the prison population has quintupled, the percent of babies born to unmarried parents has sextupled, and cohabitation (a predictor of future divorce) has increased sevenfold. The American National Commission on Civic Renewal combined social trends such as these in creating its 1998 “Index of National Civic Health” which has plunged since 1960. Suicide mortality has increased by around 60% in the past 45 years:  Suicide is one of the five leading causes of death for people 15-24 years old.

The concept of “social capital” is another way to formulate the problem. Social capital, according to a definition by sociologist Francis Fukuyama, is an instantiated informal norm that promotes cooperation between individuals. It is therefore embedded in traditional virtues like honesty, the keeping of commitments, trust, reliable performance of duties, reciprocity, and the like.

Professor Robert Putnam, Director of the Center for International Affairs at Harvard University, fed a debate on the erosion of social capital in the US in an article published in 1995 called “Bowling Alone”, and later in his book Bowling Alone: The Collapse and Revival of American Community. True, practically nobody bowls alone, nor does Putnam claim they do. What he does show is that people who used to join bowling leagues have, in recent years, dropped out and instead simply bowl with friends. And the same holds for membership in practically all other voluntary associations: Since the mid-sixties, religious affiliation, membership in labor unions, affiliation with parent-teacher associations, and membership in (and volunteering for) civic and fraternal organizations have declined more or less steadily. Similar observations can be made about the decline in participation in national, state, and local elections over the last three decades. Similar (or even greater) relative declines are evident in responses to questions about attending a political rally or speech, serving on a committee of some local organization, or working for a political party.

Yet many students of the new democracies that have emerged over the past decade and a half have emphasized the importance of a strong and active civil society for the consolidation of democracy.

If social capital is an instantiated norm, a set of norms or mental attitudes underlying actual behaviors, it follows that the manifestations of the decline of social capital in our countries derives from the transformation of these norms and attitudes. The erosion of the social link - and beyond that, the erosion of underlying social capital - must therefore be analyzed in terms of systems of values. The less the systems of values include social capital, the less they will induce actual behaviors likely to strenghthen the social bond.

Radical individualism is familiar in contemporary values. They encourage people to think that they can find happiness and self-accomplishment WITHOUT the community, instead of finding them WITHIN the community. Paradoxically, however, it seems difficult even for the most reclusive personalities to find happiness without some sort of harmonious interaction with others. 

Individualism, though, is not the only component of the new system of values that started to spread within our societies in the late 1960’s. A second important element is based on the concept that self-accomplishment and happiness are to be found in pleasure. This is the HEDONIC component of contemporary morality. This covers sexual pleasure, as shown by the success in the 1970’s of the novel Emmanuelle (and its cinematic derivatives), by Emmanuelle Arsan, for which an unrestricted sexuality was becoming an honor, inverting, more than rejecting, traditional values. In this culture, personal attractiveness and youth become capital values (see, e.g., the French novelist Michel Houellebecq). Consuming goods also can be a source of this pleasure that is supposed to guarantee happiness in opposition to the sterner former morality, which insisted on the accomplishment of duties and responsibilities, on work and constructive values. Of course, the Communitarian Movement was also on the track as it suggested balancing individual rights with responsibilities.

A third major component of contemporary Western morality is CONSUMERISM. A lot has been said about the consumption-oriented society. Control over others, through processes of possession, domination, and seduction, are the main mechanisms at work here. Possessing material goods (or the wealth that allows possession of them) is supposed to be the natural aim of human action, and the sole source of prestige, respect, and social status. This is of course encouraged by advertising and marketing campaigns that sometimes run very deep, such as those purveyed by the automotive industry. In some cases, one can observe people who withdraw from business and worldly preoccupations, and turn towards the wisdom of India or other far East countries where spirituality is still rooted in the culture. (Gandhi had defined Indian identity as a spiritual one, opposed to Western “materialism”.) This is a reaction against the excesses of the POSSESSION values, for which this wisdom substitutes DETACHMENT. In general, as American novelist James Redfield rightly observed, spiritual consciousness and preoccupations are progressing significantly in the Western countries, in one way or another, as one can see through clothing or hairstyle fashions, musical trends, or trendy restaurant decor which express the fascination Westerners feel for the spiritual far East.

In the heart of the quest for the “self” that contemporary individuals believe to be a process that frees them from the weight of societal and family constraints hides thus a new, infinitely subtle form of slavery.

Awareness-generating campaigns about such issues are a necessity, as well as urban and family community-friendly policies. People participating in decision-making through jury duty, committees on social issues, and national and local referenda asurvive ibnsociwillre among the possibilities for expressing the voice of the community in social and political life, which should both lead to and be facilitated by the downsizing of state bureaucracy. 

In total, it is remarkable how closely the basic interests of the “New Leviathan” are reflected in the current evolutions:

Individualism first helps develop “autonomous” and “proactive” individuals, whose behaviors adapt in a quicker and easier way to economic and technological changes in the market economy, and whose sophisticated tastes (presented as a way to “personal identity”) allow some outlet for innovative, though often useless, products.

By contributing to the destruction of ancestral community links, individualism then facilitates the recourse to peopling mass immigration that emphasizes class inequalities and favors the authoritarian governance of society.

In turn, multiethnicity breaks further the ancestral community links, and thus contributes to strenghthening the individualism that eventually tends to become the only way to survive in a society deprived of a collective project.

In these conditions, society has become very fragile. In the next decade, new threats to society will most probably grow and require some reaction. This agenda for social change must be started now.

Patrick HUNOUT is the President and Founder of The Social Capital Foundation and of The International Scope Review. Brent SHEA is a TISR Editorial Executive Board Member and Professor of Sociology at Sweet Briar College, Virginia, USA.