If the gloomy predictions are to be believed, this crisis of capitalism will potentially prove worse than that of the 1930s Great Depression.
It is not hard to imagine that occurring, with world economies more closely linked than ever before and multinationals so deeply embedded in Third World economies.
With the US and Europe in recession, the International Monetary Fund (IMF) has cut 2009 growth forecasts for Third World economies to 4.5% from a previous 6.4%. According to RTT News, even a 1% drop in growth rates could push a
This would lead to a surge in demand for loans and development assistance from the IMF and World Bank, meaning underdeveloped countries will be saddled with more debt and ever tighter credit conditions.
Such conditions involve debtor countries cutting back government spending on essential services and increasing access to First World corporations.
The World Health Organisation (WHO) has called on developed countries, despite the economic crisis, to maintain their official development assistance to the Third World, as the poorest sections suffer the most from any economic downturn.
The Third World is already ravaged by health problems that could easily be managed if funds and resources were available.
In parts of Africa, the AIDS epidemic, which could be controlled with access to medicines currently out of the reach of the poor, is wiping out millions of people every year. In sub-Saharan Africa, life expectancy is now 47 years, where as without death from AIDS it would be 62, according to Avert.org.
Trachoma, which causes blindness, is a preventable illness that has disappeared in the US and Europe. A 2006 New York Times article reported that, according to the WHO, 70 million people suffered from trachoma globally, with millions in Ethiopia alone.
The situation is set to get worse.
In a statement released on February 12, the World Bank estimated that between 200,000 and 400,000 more babies could die each year between now and 2015 if the global economic crisis persists. Already, 11 million children die each year because of lack of health care, sanitation, food and clean water, according to the statement.
World Bank president Robert Zoellick has called on wealthy countries to allocate a portion of their stimulus packages to a "vulnerability fund" that would support the global South.
However, with an estimated 53 million more people living on US$2 a day in 2009, the last thing that is needed is yet another development assistance package steeped in First World bureaucracy and profiteering.
The devastating global poverty that billions suffered even before the current economic crisis hit reveals that not only is capitalism a failed system when it comes to meeting people's needs, but that the institutions that grow out of it (such as the World Bank and IMF) are inevitably flawed as well.
When a square peg doesn't fit in a round hole, it's usually time to pick up another block.
Rather than simply aid from First World countries, what is required is a break from the policies promoted by institutions like the IMF and World Bank, which work to increase the exploitation of the Third World by multinationals and help ensure that the underdeveloped and poor stay that way.
The Third World needs control over its own resources, markets and industries, in order to promote sustainable development that can tackle the needs of the poor.
In this vein, the Venezuelan government has led a mass movement to secure control over the nation's oil wealth and invested in social programs aimed at meeting the needs of the poor.
Real (inflation-adjusted) social spending has more than tripled since President Hugo Chavez was first elected in 1998. Poverty has halved since 2003 and extreme poverty by almost three quarters in the same period, according to a study released on February 6 by the Centre for Economic and Policy Research.
Access to health care and education, free of charge, has dramatically expanded. Illiteracy has been eradicated and, between 1998 and 2006, infant mortality fell by a third.
Venezuela also proposed the Bolivarian Alternative for the Americas (ALBA) trading bloc in 2004 as an alternative to the Free Trade Area of the Americas (FTAA) pushed by the US. ALBA promotes mutually beneficial trade, rather than competition and exploitation, with a strong emphasis on promoting the type of social programs so effective in Venezuela.
As well as Venezuela, current member countries are Cuba, Bolivia, Nicaragua, Honduras and Dominica. Policies have included the exchange of discounted Venezuelan oil for Cuban doctors who work in Venezuela's poor neighbourhoods, the cancellation of Nicaragua's debt, and health and education programs in Bolivia.
Another example is "Mission Miracle", whereby hundreds of thousands of Latin Americans have been flown by Venezuela to Cuba to receive operations to restore their eyesight — all free of charge.
Though in its early stages, ALBA could easily be the paradigm for regional trade agreements that bypass the IMF and World Bank and lead to real progress for the underdeveloped world.