As tensions have mounted in many countries, governments have felt compelled to increase their coercive authority. Most Third World governments, in the past thirty years, have found themselves on the horns of a dilemma. They are being pressured by First World governments and organisations into both deregulation of economic activity, which requires increased coercive authority, and the ratification and implementation of human rights programs and principles.
This increasing politicisation of both the police forces and court systems has delegitimised both sets of institutions in the eyes of many people in Third World countries, leading to increasing fear and tension within Third World nations and to further political repression.
In the Third World, where so many people live off the land, agricultural development is crucial. Ghana provides a startling case study in how to wreck the farm sector. The means was the agricultural marketing board—a statutory monopoly that bought farmers' crops at controlled prices and resold them either at home or abroad. The prices paid to farmers were kept artificially low, on the assumption that farmers ignored price signals.
An important feature of Western European nationhood has been the 'nationalism' of its people, their apparent identification with the nation-state and its political and bureaucratic organisations, and acceptance of the state's directive legitimacy. Because most Third World national governments have great difficulty in gaining and maintaining acceptance from their populations, we need to understand how European nation-states attained and maintain legitimacy.
Between 1963 and 1979 the price of consumer goods went up by a factor of twenty-two in Ghana. The price of cocoa in neighboring countries went up by a factor of thirty-six. But the price paid by the cocoa marketing board to Ghana's farmers went up just sixfold. In real terms, therefore, the returns to cocoa farmers vanished. The country's supposedly price-insensitive farmers responded by switching to production of other crops for subsistence, and exports of cocoa collapsed. Peru and Ghana are extreme cases, but they show in the starkest way that prices do matter in the the Third World and that rejecting market economics carries extremely high costs.
In order to ensure that the necessary 'structural adjustments' were made to Third World economies so that they might benefit from the increased competitive advantages that it was assumed would accrue from an unfettered 'enterprise economy', governments needed to be firmly in control, able to apply the 'pain' which would, necessarily, precede the economic 'gain' of this radical shift from welfare economics to free market economics.
This shift coincided with a rapid increase in Third World indebtedness following a sharp increase in oil prices in the early 1970s. From the late 1970s, lenders became increasingly concerned at the mounting debt of Third World countries. As Dan Connell has said, 'From 1970 to 1989, according to UN reports, Third World debt skyrocketed from $68.4 billion to $1,262.8 billion, leaving several nations owing more than they produce in annual income' (1993, p. 1).
The developmentalist models of Third World development experts, which placed emphasis on the role of government in stimulating and guiding economic development, came into disrepute during the 1970s. At about the same time, the Keynesian economic models of the West came under siege from neoliberal alternatives. In their place the neoliberal monetarist policies of Margaret Thatcher in Britain and of conservative politics throughout most of the Western world during the late 1970s and the 1980s and 1990s, became the stuff of development specialist advice in the Third World through the 1970s and since that time.
This came to a head in the early 1980s, when international creditors decided it was time to act to protect their investments. For most, the central consideration in ensuring the economic viability of Third World nations was the 'downsizing' of government and the deregulation of all economic, financial and fiscal activity.
Like Purvis, many Western commentators believe that most of the Third World's woes can be traced to the forms of government which have emerged over the past forty years. Autocratic governments, dominated by corrupt, self-serving politicians, have mismanaged economies and increased their own wealth and power at the expense of their electorates. In order to overcome these problems, it is considered necessary to return to Western governmental practices, to multi-party, democratic government.
Since the collapse of the Soviet Union, the Western powers have increasingly insisted on a return by Third World governments to multiparty political systems based on Western democratic ideals. As Andrew Purvis claimed:
Not only was private enterprise the new key to development, it was also argued that if security was left in the hands of Third world governments, politicians would use this as a means of leveraging international businesses operating in the country. It became increasingly acceptable for transnational companies to hire 'security firms' to ensure the safety of their operations in areas of political instability and lawlessness. This was justified by corporations as being very similar to their use of such private security agencies in Western countries. If the scale of security operations was greater, this was simply because security problems in many Third World countries are more acute.
In the 1990s, privatisation became the name of the game. It was argued that the reason why Third world governments had failed to 'develop' their countries was that they had incompetently interfered in economic activity. This was much better left to the 'market-place'. The new emphasis was introduced to Third world peoples through a variety of structural adjustment programs (SAPs) imposed by the World Bank and the IMF.