by Leila Foreign aid is not the solution to global poverty given its colonial overtones and limited effectiveness. Neither, however, are microloans equipped to address poverty. Ultimately, Microcredit and Foreign aid are birthed from the same ideological foundation and so are similarly handicapped in terms of effectiveness and morality. Foreign aid and microlending both focus more on bringing development to the poor and serving the donour’s interests than on truly relieving poverty. Peter Bauer argues in Equality, the Third World and Economic Delusion that the granting of foreign aid is motivated by Western guilt. Western guilt, he says, is based upon the false perception that the West is responsible for the poverty of the Third World – be it through unequal trade, exploitation of labour / resources, or disruptive social practices, such as slavery. Bauer explains that when we adhere to ideas of Western guilt we, “patronize the Third World by suggesting that its economic fortunes…are determined by the West,” and that its future depends “largely on Western donations.” Bauer claims that the discourse of Western guilt is of Marxist-Leninist origin, and therefore claims that foreign aid is a Marxist-Leninist phenomenon. This analysis misunderstands the politics and theoretical inspirations of Foreign aid. For example, Bauer points out that Marxist-Leninist critique has characterized foreign investment as exploitive and neo-colonial. It is then logically inconsistent for Bauer to claim that Marxist-Leninism would advocate Foreign aid as this often occurs in the form of foreign investment. In truth, rather than support foreign aid, Marxist-Leninist ideology is more likely to criticize its structure as colonial. Strangely, while launched from an opposing political viewpoint, Marxist-Leninist analysis would most likely share Bauer’s sentiment that Foreign aid is patronizing in its suggestion that the “Third World” needs Western donation in order to advance. Foreign aid is rooted in modernization theory. Modernization theory understands the “underdeveloped” nations of the world as traditional societies. At some point in history all societies were “traditional. ” These societies were able to progress to modern social organization through innovation and technological growth, particularly within a capitalist system where capital is privately owned. Capitalism encourages the individual to constantly strive toward improving her product. Growth is promoted by this push for out-performance, while costs are minimized and efficiency promoted. Therefore, just as modernization and capitalism push a nation to modernity, the poverty of the developing nations can be attributed to their failure to innovate, resulting in technological and therefore economic deficit, and a consequent inability to modernize. Modernization theory plots the organization of the world’s societies along a two-pole continuum. The traditional society, characterized as redundant and stagnant, is at one pole, while modern society, understood as rational and profit driven, is at the other. As modernist stage theories make clear, such as the one Walt Rostow outlined in 1960, identifying the five phases of the progression from traditional to modern, modernism views the societal continuum as unidirectional; nations begin as traditional and progress to the superior modernized form.

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