History of the world economy|
Date: Fri, 12 Jan 1996 21:35:22 GMT
Sender: Activists Mailing List <ACTIV-L@MIZZOU1.missouri.edu>
Subject: IMF's "Contract on the World"
From: firstname.lastname@example.org (Workers World Service)
The IMF's "Contract on the World"
By Sue Bailey, in Workers World,
4/11 January 1996
"Neoliberal capitalism carries injustices and inequity in
its genetic code. Latin America is poor, and its people are
poor because they have been exploited by the rich."
Who said this? Some might guess Fidel Castro. No, these
words came from Honduran Archbishop Oscar Andres Rodriguez
Maradiaga at the Latin American Bishops Council last May.
Why were the bishops talking about neoliberal capitalism?
Because the number of people living in poverty in Latin
America has nearly doubled since 1980--reaching an alarming
200 million people, 40 percent of the population.
Neoliberalism or new liberalism--the brainchild of Milton
Friedman, F. Von Hayec and the Chicago school of bourgeois
economists--asserts that the economic crises of the 1970s
was due to "excessive government intervention in economic
Neoliberalism advocates the survival only of those
companies that set up rules to maximize profits with no
obligation to the environment, health-and-safety standards,
or provisions to assure job security and a living wage.
The Contract with America and downsizing are
The International Monetary Fund and the World Bank
implement neoliberal policies around the globe, especially
in the developing countries. For instance, in order to
borrow money, a country has to develop an IMF-approved
Structural Adjustment Program, or SAP.
For countries representing 80 percent of the world's
population, the SAP has become the dominant economic policy--with
consequences that are all too predictable.
In Zimbabwe, SAP is called "Suffering for African People."
And it is.
For developing countries, SAP is the late 20th-century
version of sharecropping. Once entangled with the IMF, it's
almost impossible to get out of debt. Independence is
For instance, in Africa, south of the Sahara--where 18 of
the 20 poorest countries are located--the foreign debt has
tripled since 1980 to $180 billion.
The debt burden was 110 percent of the region's Gross
National Product in 1991. Just to service the debt costs $10
billion each year--four times the amount spent on health and
For the entire Third World, the debt went from $100
billion in 1970 to $1,350 billion--or $1.3 trillion--by
The IMF and World Bank, which control vast amounts of
finance capital, agree to lend money to cash-starved
developing countries only in exchange for a thorough
reorganization of that country's economic, political and
The loan, which is needed for industrial development, is
actually a noose. As Cuban President Fidel Castro said at
the Fourth Latin American and Caribbean meeting last
January, they [the U.S. and Western bankers] want to be the
owners of the principal industries with which they would
undermine the independence of developing countries--not only
actually, but officially.
Fidel is so right. SAPs wrench open the economies to
imperialist takeover; divert money from vital social
programs for interest payments to foreign banks; destroy
indigenous agriculture by gearing the production of
foodstuffs for export rather than consumption; and create
cheap labor pools for multinationals that manufacture goods
for export to the home country.
SAPs also destroy national industries by first privatizing
and then selling them to foreign investors. As the United
Nations Development Program admitted in a 1993 memo,
privatization has been a "garage sale" to the largest
The results have been devastating.
In Peru, massive privatization took the jobs of 300,000
workers. In Poland, the transportation system has been sold,
and fares have risen 61 percent.
Nine out of 10 of the largest privatized enterprises in
Hungary were purchased outright by U.S. and other
transnational corporations. In Mexico, over 1,000 state-
owned enterprises were sold.
These are life-and-death issues of our class.
[Based on a talk given at the Dec. 2-3, 1995, Workers
World Party national conference.]
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