Economic Corridors as Infrastructures of Extraction

Economic Corridors

Economic corridors are geographically targeted development initiatives currently under construction on nearly every continent of the planet. While hard infrastructure such as transportation links, power generation, ports, and industrial zones contrive a spine, economic corridors are distinguished by accompanying “soft infrastructure” including business-friendly policies, regulations, and institutions to facilitate trade and investment. They feature prominently in foreign policy and development initiatives worldwide and have provided scaffolding for billions of dollars’ worth of infrastructure investments. They will likely do the same for those spurred by the “Build Back Better World (B3W) Partnership” recently announced by the G7. Yet despite being around for over twenty years, relatively little has been written about economic corridors beyond the grey literature supported by multilateral development banks.

Notable exceptions to this dearth of conceptual engagement include those framing them as technologies of nationhood (in Malaysia), a form of licenced larceny (in Africa), tools of containment and enclosure (in China), and neoliberal institutions and new frontiers of capital (in India). In an article recently published in the Review of International Studies I contribute to this literature on corridors and infrastructure by proposing we should understand economic corridors as an essentially extractivist paradigm: a constellation of policy prescriptions that advance processes of valorisation and accumulation based on the subjugation of human and extra human nature to intensified exploitation. The adjective “extractivist” here denotes a process whereby capital draws on its multiple outsides as it depletes the social bases of wealth. This includes but is not limited to the plundering of the earth and biosphere, extending also to social dimensions of exploitation, such as the reorganisation of production and social relations that enable production.

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Informal employment and the social reproduction of value

In the last year, the rise and spread of the COVID-19 pandemic has laid bare the fictitious nature of some of the categories we deploy to conceptualise the world of labour. Indeed, it has revealed the contingent nature of the separation between productive and reproductive spaces, times and realms when it comes to labour processes.

According to estimates produced by Janine Berg, Florence Bonnet, and Sergei Soares, when the crisis hit, around 30% of North American and Western European workers were in occupations that could allow home-based work, as opposed to only 6% of sub-Saharan African and 8% of South Asian workers. This is to say that in the Global North, the pandemic could de facto manufacture million homeworkers overnight, following national lockdowns. In many cases, these would still be contributing to formal sectors of the economy.

It is rather unsurprising that this shift to homeworking could not materialise in the Global South. Labour relations here are largely characterised by informal employment, in its double character – namely, employment in the informal economy and informalised employment in otherwise formal settings. While homeworking represents one segment of informal employment, its major share is composed instead of precarious forms of casual employment, far more difficult to immediately insource in home-settings. By the time the crisis hit, according to the ILO, informal employment constituted 69.6 percent of employment in the Global South and, given the share of working people it hosts, it constituted over 60 percent of total employment on our planet.

One of the key characteristics of informal employment is the interpenetration between productive and reproductive dynamics, activities and realms. The ever-growing reality of informal employment forces us to reflect and revise theories of value generation and extraction, and ultimately the basis of exploitation worldwide. That is, they force us to re-engage in the study of key Marxian categories of analysis, in ways that may account for how the majority on earth labours. These ways must necessarily account for the centrality of social reproduction in the working of labour processes and relations worldwide.

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Challenging the Orthodoxy: Race, Racism and the Reconfiguration of Economics

Books abound on what is wrong with economics (Chang 2014Keen 2011Nelson 2018Mazzucato 2018Raworth 2018Stanford 2015), and what we would have to do to change it. Given the little change we have seen in economics training and policy-effective economic thinking since the global finance crisis of 2007/08, and in light of the global environmental, inequality and health crises, it is to be seen whether these interventions can make any meaningful impact. What is good though: Half of these impactful books were written by female economists. Despite this ‘wind of change’ in an overtly male discipline, it is striking that these books still offer a glaring lacuna: the issues of race and racism (except for brief mentions in Nelson 2018 and Stanford 2015). For many people around the world, these are no mere ‘issues’, but integral to their daily struggles and experiences in White majority countries. These are part of a differentiated life– a life differentiated so much that it can be full of unrealized potentials, suffering and trauma, physical harm and violence, and premature death in the worst of cases. Therefore, while we could move on, building on these interventions and many others (e.g., Obeng-Odoom 2020Sarr 2019 or here), to discuss what would have to change in economic thinking (which includes economics training), policy and praxis to help achieve a “safe and just operating space for humanity” (Raworth 2018), the goal of this blog entry is more firmly tied to the question of how economic thinking would change if race and racism were taken seriously as structural-relational problems?

Much of economic thinking happens via economics. Therefore, my entry will often refer to economics as an institutionalized field. That said, expertise about the economy is not just rooted in economics. In fact, economists should not hold an intellectual monopoly over explaining how the economy works and should work (even though many of them, ironically, seem to appreciate that monopoly). That is why I as an economic geographer dare write this post. Pluralizing the economy, economics and economic thinking are separate but still interconnected projects. Some of the arguments that follow apply to other disciplines, too. Nevertheless, economics is singular among the social sciences in terms of its socio-demographic homogeneity (at least in countries of the Global North), prestige, student intake volumes, policy influence and partial self-isolation from other disciplines. It thus deserves particular scrutiny.

So what would an economics that takes race and racism seriously as structural-relational problems have to look like? To what kind of epistemic and institutional practices would it have to commit itself in an effort to effectively engage with these lived realities? A partial answer is already provided by economists who do study race and racism in a field called stratification economics, not to be mixed up with the so-called economics of discrimination that is largely rooted in a neoclassical economics framework. Building on some the insights of the former, and adding a few more perspectives, we can call for at least 10 ways of how to challenge the broader field of economics (i.e. variants of neoclassical and behavioural economics, but much more than that, as we saw above!) via race and racism.

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Internal and external constraints: economic development without currency crisis

Simply speaking, development macroeconomics can be summarized as the challenge of improving productivity and production capacity in poor countries. This involves the conditions that need to be fulfilled for a development process to start as well as the policy framework and instruments that support it. Heterodox approaches consider the state’s role in steering productivity growth as essential (Cardim de Carvalho, 1997). Markets may be able to exploit price signals and adjust resource allocation correspondingly. However, they guarantee neither sufficient profitability of key sectors nor the demand for the goods produced. Both the profit rate and effective demand are conditions for investment to take place (Oberholzer, 2020). It is thus up to the government to make public investment in priority sectors and to apply instruments such as taxes and subsidies in ways that simultaneously allow for economies of scale, higher productivity large-scale employment and demand. This is what is generally referred to as industrial policy (see for example Chang, 2006; Oqubay, 2018).

But this is not everything. Policymakers have to pursue such a development strategy in face of an (often permanent) shortage of foreign currency. While domestic currency can be generated via the domestic banking system including public development banks, the availability of foreign currency is limited unless a country is able to increase exports or restrict imports. Since larger export capacity and a higher degree of import substitution are long-term goals, the current account is determined by domestic and foreign economic growth. This insight has come to be known as the balance-of-payments-constrained model or Thirlwall’s law, respectively (Thirlwall, 1979, 2013): it is reasonable to assume that demand for a country’s exports grows in income in the rest of the world while imports increase with domestic economic growth because a part of increasing incomes is reliably spent on imported goods. Therefore, stability in the balance of payments requires that imports do not grow faster than foreign exchange earnings via exports allow. A limit to the growth of imports implies a limit to the country’s economic growth, hence the balance-of-payments-constrained growth rate.

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Who will Benefit from the Bitcoinization of El Salvador?

On 8 June, El Salvador’s Legislative Assembly voted to pass the Ley Bitcoin(Bitcoin Law), with a majority vote of 62 out of 84. The legislation was presented to the Assembly days after President Nayib Bukele announced his intention to make bitcoin legal tender, speaking via video broadcast to the Bitcoin 2021 Conference in Miami. Effective from 7 September, all businesses in the country will be required to accept bitcoin alongside the United States dollar, El Salvador’s current currency. Since the bill’s passing, legislators in Panama and financiers in Mexico have expressed interest in recognizing bitcoin as legal tender.

Rather than China’s digital renminbi or Venezuela’s petro, El Salvador will not be pursing the creation of its own cryptocurrency. Bukele is adamant that at this stage Bitcoin will not make up any of the nation’s reserves, held in the Central Reserve Bank of El Salvador. Rather, a trust in the country’s development bank (BANDESAL) worth US $150 million will guarantee convertibility to dollars as a safeguard against bitcoin’s volatility. In doing so, the BANDESAL trust would make sure that the price of a commodity does not widely fluctuate between point of purchase and completion of transaction.

In Bukele’s address he made mention of the lack of financial inclusion for Salvadorans being a motivation for the law. In a country where informal employment makes up around 70% of the labor force, anonymous peer-to-peer cash transfers without the formal requirements of a bank account or the high charges of Western Union make sense as an alternative. Bukele has also expressed his hope that the move will make El Salvador “less dependent” on the United States, given that dollarization ceded monetary independence to the Federal Reserve. But given the increasing centralization of Bitcoin and its reliance on big tech money, it is far more likely that bitcoinization will merely make El Salvador dependent on a different section of US capital.

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A need to re-examine the temporality of anti-trust action

The structure of anti-trust laws is generally and neatly divided into ex-post enforcement and ex-ante regulation of market conduct and its participants. It is a matter of social and economic policy choice as to whether any regulation should precede ‘harm’ or follow it, as is the construction of ‘harm’ across statutes. For example, the requirement of a merger notification is an ex ante means to understand and assess the market impact of a merger. On the other hand, abuse of dominant position is an ex-post assessment once the dominance has set in, which may be in the long run. The determination of abuse is subject to a rule of reason and analysis by the competition authorities. Against this background, the question is what happens in the intervening period when an undertaking is slowly and surely inching towards domination, engaging in conduct which would be punished only once it becomes dominant ? What happens to the process of concentration of markets, along with the practices in concentrated markets? These questions are not borne out of academic interest alone and are not completely answered by a simple focus on anti-competitive agreements, as will be seen below. The analysis will zoom in on the Indian market conditions to make a case for questioning the timing of regulatory intervention and proceed to show that new economic methods may be required in this task.

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The limits of “design ethics” under capitalism

Working as a product designer in media for the past five years, I’ve witnessed the topic of “design ethics” raised at industry conferences, presentations, and meetups. Yet I’ve noticed that in our discussions, designers rarely mention the economic context within which we design. We hold up examples like news feeds promoting fake news and financial apps encouraging users to trade the riskiest stocks and we ask: how might we design better? Conventional discourse presents these unintended consequences of our work as technical problems: how might we design and code ethically, while maintaining profitability and growth? (Perhaps the most well-known example of this framing is The Center for Humane Technology’s “The Social Dilemma,” which confuses correlation with causation by attributing negative mental health and political trends to technology, with no mention of technology’s place in capitalism.)

We will not solve problems of authoritarianism, racism and xenophobia, misinformation and addictive technology, mental health and public health, or climate change with design ethics. While designers should thoroughly consider the consequences of our work, the problems facing the design and technology industry are not ones of individual bad actors (though some exist). Rather, we must acknowledge that design decisions are economic decisions––and in our current economic system, the economic interests of individuals often conflict with their social consequences. Technology firms are not cultural or ideological actors, but “economic actors within a capitalist mode of production…compelled to seek out profits in order to fend off competition” (Srnicek 2017, 3). If we truly want to design ethically, we must first consider how technology is embedded in capitalism. Our ability to make technology work better for society as a whole depends upon our willingness to reorder our priorities and redefine value as more than profit maximization.

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We Need to Talk about Economics

By Paulo L. dos Santos and Noé Wiener

What’s Wrong with Economics? The title of economic historian Robert Skidelsky’s latest book captures well a prevailing mood of popular disaffection with the dismal science. Many have come to associate the discipline with specific lines of political partisanship—including forms of market fundamentalism and the politics of austerity. Economics has also been widely criticised for its failure to grapple with actual, urgent economic problems. Within academic circles, the discipline has become widely regarded as insular and dismissive of the contributions other fields of social and historical inquiry make to the study of economic life. Among the public at large, the credibility of the discipline as a whole has faced considerable scrutiny, even while individual contributions by dissenting economists are widely debated and generally well received.

Recent political developments like the rise of the Movement for Black Lives and the #MeToo movement have helped broaden the sense of crisis in economics; encouraging examination of the discipline’s deeply problematic relationship with realties of race, gender, and other elements of people’s social identity. As a number of critics have noted, the problems are reflected most obviously in the profession’s basic institutional composition, which is grossly unrepresentative. In the United States women account for only 14 percent of full professors in PhD-granting departments. Of all doctorates conferred in the academic year 2015–2016, only 1.29 percent were conferred to Black or Latina women. This dismal performance was significantly worse than the 3 percent average across all STEM disciplines. That same year, only 3.6 percent of all full economics professors at PhD-granting institutions were Latino; a meagre 1.6 percent were Black.

The problem is also evident in prevalent attitudes and values among economists. Casual racism and misogyny among leading economists appears to have few or no repercussions. A 2019 survey of academic economists by the American Economic Association found that nearly half of Black economists reported being targets of discrimination in the profession. It also found that “only 45 percent of all . . . respondents (regardless of race) believed economists who are not White are respected in the field.” When the work on the economics of racial stratification by scholars like William Darity and Darrick Hamilton was finally included in the alphanumeric classification system for research topics in economics, it was placed in the last, residual category, “Z – Other Special Topics.” Recent work by Alice Wu uncovered evidence that these attitudes are prevalent among economics students, while work by Valentina Paredes, Daniele Paserman, and Francisco Pino found evidence suggesting that economics programs both attract and cultivate bigotry.

What has so far received comparatively less attention are the ways these attitudes are embodied in the basic concepts and analytical tools that most contemporary economists use to understand the world. Yet it is over this terrain that the discipline’s problems with issues of social identity prove most harmful to society at large.

The frameworks at the heart of contemporary economic thinking reflect analytical choices that ultimately betray the social position and outlook of those developing economic theory. In all of these choices, contemporary economic thinking has created a stilted conceptual terrain where it is easy to ignore or downplay the economic expressions of systemic inequities by social identity and class. This is evident in some of the discipline’s core analytical stances, like what is and what is not considered as economic activity, and in its rejection of social categories like gender, race, and class as useful in the analysis of markets and economies. It is also evident in the ways most economists think about the nature of discrimination, its relationship to market competition, and the statistical measurements of its effects on economic outcomes.

Given the outsized influence economics exerts across all fields of social inquiry and policy, these biases exert an insidious, conservative influence over public thinking and over the very framing of debates about those iniquities. Countering this influence requires understanding these biases, which in turn requires engagement with a few foundational methodological and technical issues in economic analysis. In what follows we draw on contributions by many critically minded economists and political economists, and on some of our own recent work, to contribute to a conversation among social scientists and political actors about these biases and about how they may be overcome.

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