Beyond foreign aid : managing the wealth of nations as an international imperative for global wellbeing

Abstract

The taxonomy and architecture of foreign aid today is the result of a chaotic evolution that has made it into a flawed concept and project. The extensive literature on its effectiveness, dating almost as far back as aid’s own formal inception, has made issue of aspects related to volume, allocation and delivery; much less so of its paradigmatic conception. This literature has had little impact, so far. As a result, aid is increasingly considered to be relatively irrelevant as an agent of development, with perhaps a more tangible role in regard to humanitarian and reconstruction efforts. Based on the assessment that aid’s current paradigm rests on a dated economic growth model, an alternative model is proposed, leading to a new paradigm of “concerted wealth management.” A Wittgensteinian epistemological and ontological approach is followed, leading to a demarcation of what should or should not be the subject of the new paradigm. The resulting conceptual framework is built on the idea that it is through the management of wealth (i.e., its formation and use, and the prevention of its degradation, depletion, or destruction) that countries can achieve a self-reinforcing state, in which the wellbeing of the majority of its citizens is satisfied both in the short- and long-run. Value and wellbeing are conceived as an inter-temporal identity. The process through which wealth is managed, as well as the critical-paths that bound it, are situated in a possibility space defined by natural and socio-material limits (determined through a dynamic of rules and routines setting). These limits ensure that the physical realities of human existence (ecosystem) explicitly frame human activity. The actualization of value from wealth is contextual, and, long-term cycles (e.g., Kondratiev long-waves) provide such context. The wealth of nations is not defined by the monetary present value of the output expected from it over time, but by its increasing inter-temporal potential value (wellbeing) generating gradients. The ultimate goal of concerted wealth management is to achieve the convergence of better-off and worse-off countries in their respective capabilities and freedom to attain self-reinforcing state. Considerable practical implications result from the proposed new paradigm.