It is no doubt true that, in some cases, deregulation of internal markets and foreign trade, as well as the reduction of the role of the state in the economy, has permitted people to gain new freedom of action. Nevertheless it is important to think carefully about how patterns of social change under conditions of continuing economic crisis and adjustment are affecting the capacity of societies to provide a minimal framework of stability and justice, within which people can interact productively.

Over the past several decades, the efficiency of modern institutions has been severely eroded by the combined impact of economic crisis and free-market reforms in many Third World countries. Particularly in Africa, it is not too much to say that prolonged recession seems to be reversing the process of modernization which was the hallmark of post-independence development. The school systems, health services, public enterprises and government agencies established to support construction of national economies and secular, national societies are all too frequently in ruin.

Furthermore the coping strategies adopted by many different kinds of people, as they confront severe challenges to livelihood, reverse earlier trends toward occupational specialization. Workers and civil servants in Africa, for example, are increasingly devoting a part of their time to farming on the outskirts of their towns, or in the countryside. Teachers and nurses in many countries now opt to supplement miserable salaries by opening small shops, selling street foods, and so forth. Professionals may drive taxis. Such diversification of activity requires devoting attention and time to a number of concerns in different places. This affects the quality of work and weakens the commitment of employees to the institutions they serve.

Multiple survival strategies also weaken the kinds of institutions which modern societies have developed for the defence of group interests. Trade unions, farmers' associations, mutual insurance societies and so forth depend for their effectiveness on the commitment and financial support of their members. As professional or workplace identity erodes, however, and as the interests of members become more diffuse, these institutions lose much of their ability to represent their constituents in formal bargaining processes.

Although it is often noted that strong "vested interests" can block needed reforms, it is also true that weak interest group representation can make it harder for governments to design an effective response to economic crisis. In the first place, dialogue between policy makers and key sectors of the society becomes more difficult; and agreements on issues such as wage and price restraint — even when drawn up — are less likely to be kept. This kind of problem stands behind many of the failed efforts to forge pacts in support of stabilization programmes in African and Latin American countries during the 1980s.

In the second place, growing fragmentation and diversification of interests in response to crisis affect the coherence of the economic planning process itself. It becomes very difficult to predict the impact of policy on the behaviour or life chances of different groups when the latter are extremely heterogeneous. Thus, for example, the benefits of targeted credit schemes intended to assist small enterprises in the urban informal sector quite frequently find their way into the hands of the middle class. Or incentives designed to promote one form of behaviour within a part of the population may in fact promote an entirely different one. This has, of course, always been an unresolved problem in economic policy-making; but it is particularly acute today.

Finally, the erosion of a structure of modern interest groups in many indebted Third World countries affects the strength of political parties and thus the capacity of political systems to create stable governing coalitions. Violent and unorganized protest is likely to take the place of more formal bargaining procedures when a growing part of the population does not feel represented by any intermediate level organizations.

As many states lose both capacity and legitimacy, there has been a resurgence of regional, religious and ethnic movements, most particularly in Africa and the former Soviet bloc. Sometimes people reactivate traditional ties for very practical reasons: they are the only available way to fill the gap in social service provision left by the withdrawal of the national government. Thus in villages in Guinea-Bissau, for example, the crisis of the modern educational system has forced parents to rely on Koranic schooling. And for many impoverished city dwellers in West Africa, herbalists, soothsayers and religious sects are once again becoming a popular alternative to modern medicine.

On a deeper level, however, the sharp sense of uncertainty and insecurity generated by recession and restructuring — by the threat of unemployment, the collapse of wages and the deterioration of public services — provides fertile ground for fundamentalism. And the growing fragmentation of livelihood, as households explore multiple survival strategies, is likely to reinforce the need to reassert primordial loyalties.

Finally, it should be remembered that the pronounced widening of income differentials within many countries over the past few decades has played a significant role in weakening broader networks of social interaction and solidarity. The poor tend to be poorer now, not only in absolute but also in relative terms — as some members of society have been able to take advantage of the unusual new opportunities created by free-market reforms. Frequently there is a marked cultural dimension to this process of polarization. The most lucrative activities often involve growing involvement in international markets and integration into global consumer culture. In consequence, the bases of national culture (often of recent creation in Third World societies) are narrowed and challenged.

3 This section is based on Yusuf Bangura, Economic Restructuring, Coping Strategies and Social Change: Implications for Institutional Development in Africa, Discussion Paper No. 52, UNRISD, Geneva, July 1994.