From email@example.com Thu Sep 21 13:31:29 2000
Sadanand, Nanjundiah (Physics) <firstname.lastname@example.org>
To: Mike Alewitz <ALEWITZM@mail.ccsu.edu>
Subject: Why the World Bank/IMF need to be shut down
Date: Thu, 21 Sep 2000 11:40:49 -0400
A few months ago I used this column to argue that the World Bank was destroying health and education in the developing world.
In Zambia, for example, the conditions the bank had attached to its loans—cuts in state spending and the privatisation of services—had contributed to a 25% increase in infant mortality since 1980 and, as parents now have to pay to have their children educated, a disastrous decline in school enrolment.
The bank, oddly enough, didn’t seem to be too happy about my
It is simply false, Mats Karlsson, one of its
to claim that the World Bank is further
impoverishing people. It was, he insisted, lending developing
countries more money for health, education and poverty reduction than
This is perfectly true. This year, for example, the World Bank will be handing out some $1.9bn for schools in poor countries. It will also be destroying schooling worth many times this amount by continuing to insist that countries put debt repayments ahead of public spending. It has yet to explain why on earth it is making dollar loans for schools in the first place, when nearly all their costs are incurred in local currencies. Only if local provision is to be replaced by foreign contractors, or if children are to be given computers before they are taught to read or write, does lending hard currency for basic education make sense. First they break your legs, then, by way of compensation, they offer you a pedicure.
At their grand summit in Prague at the end of this week, the World
Bank and the International Monetary Fund will insist, as the
IMF’s former managing director has claimed, that they are now
the best friends of the poor. The bad old days of
adjustment—forcing all the countries they deal with to accept
precisely the same neoliberal prescriptions—are over. Instead of
being obliged to accept policies imposed by the first world, debtor
nations will now be allowed to devise their own
This sounds fine, until you discover that, as the World Development
Movement has documented, the recipient countries can request whatever
they want as long as it’s neoliberalism. As one senior bank
official pointed out, the new scheme is a
compulsory programme, so
that those with the money can tell those without the money what they
need in order to get the money.
To me, the abiding mystery surrounding the World Bank and the IMF is
why anyone still believes that they are capable of reform. The New
Economics Foundation concludes its devastating critique of the two
bodies by suggesting only that they should
overhauls. Even the Guardian’s usually far-sighted economics
editor, Larry Elliott, has argued that those who believe the World
Bank and IMF are inherently corrupt
are not only wrong, but are
giving succour to extremists on the right who oppose all but
minimalist government and despise internationalism. There is, most
commentators agree, no alternative to the existing global financial
This is not a consensus that John Maynard Keynes would have joined. In 1944, he warned that a financial system which imposed penalties and strictures on debtor nations but not creditor nations would ensure that the rich became richer and the poor became poorer. He proposed a global financial institution which would charge interest on both debt and credit. Creditor nations would thus be encouraged to spend their surpluses in debtor nations, automatically correcting imbalances in trade.
The US proposed an alternative system. Help for debtor nations would be confined to a fund and a bank which lent them money when they got into trouble. These would both be based in Washington and effectively controlled by the creditors. As Keynes foresaw, the US proposal would ensure both that debtor nations fell further into debt and that creditors—the US in particular—could exercise ever-greater economic and political power over them. But the US told Britain that if we didn’t accept its proposal, we wouldn’t get our war loan.
The World Bank and the IMF, in other words, were conceived as the policemen for a coercive and grossly unbalanced world order. The idea that they could deliver anything but disaster for the world’s poor is laughable. If, as they will claim in Prague, they want to help build a fairer world, then they must start by closing themselves down.