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SECTION 1 2 3
EXTREME INEQUALITY
The same economic medicine worldwide
In countries around the world, during the 1980s and 1990s, increases in
government debt led creditors (principally the IMF and the World Bank) to
impose a cold shower of deregulation, privatization, and financial and trade
liberalization, alongside rapid reductions in public spending, an end to price
stabilization and other public support measures to the rural sector. Generous
tax cuts were provided for corporations and the wealthy, and a ‘race to the
bottom’ to weaken labour rights began, while regulations to protect employees,
such as maternity leave and the right to organize, as well as anti-competition
laws to stop monopolies and financial rules to protected consumers,
were abolished.
In East Asia, the shift to liberalization started in the early 1990s and was
accelerated following the 1997 financial crisis that paved the way for IMFimposed
public sector reforms, known as ‘structural adjustment programmes’.
These programmes were implemented in many countries, such as Thailand,
South Korea and Indonesia, which subsequently experienced an increase in
levels of economic inequality. In Indonesia, the number of people living on less
than $2 a day rose from 100 million in 1996 to 135 million in 1999; 263 since 1999
inequality has risen by almost a quarter. 264
Across Africa, rapid market liberalization, under structural adjustment
programmes, increased poverty, hunger and inequality in many
countries. Between 1996 and 2001, the number of Zambians living below the
poverty line rose from 69 to 86 percent; in Malawi, this number increased from
60 to 65 percent over the same period. 265 In Tanzania, inequality rose by 28
percent. 266 By 2013, across the continent an extra 50 million people were undernourished
compared to 1990–92. 267
In the countries of the former Eastern bloc, market fundamentalism after
the fall of communism in 1989–91 led to economic reforms which focused
on liberalization and deregulation, and resulted in a significant increase in
poverty and inequality. In Russia, the Gini coefficient almost doubled in the
20 years from 1991, and the incomes of the richest 10 percent of the population
are now over 17 times that of the poorest 10 percent, an increase from four
times in the 1980s. Meanwhile the wealthiest one percent of Russians – who
greatly benefitted from the opaque process of privatization during the 1990s –
now hold 71 percent of the national wealth. 268
Increases in poverty and inequality were lower in the countries of East Central
Europe, such as Hungary and the Czech Republic, where the governments
played a key role in regulating the market and responded to soaring levels
of poverty. 269
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