Sunday, 28 July 2013


 Human rights and international lending on the large scale that the World Bank Group is involved simply do not go together. Besides the financial, trade, and investment considerations that go into the Bank's decision-making process, there are always political factors. When Robert McNamara took over the World Bank in 1968, he tried to change some of the bank's image as a purely pro-big business institution that offered development loans linked to strengthening large domestic and especially foreign capital investment in targeted areas. He introduced anti-poverty programs and pro-environmental divisions within the Bank, largely because he saw that America and the world were changing and it was necessary to address both of those issues. These changes were made within the Bank's basic mission as a sister institution to the IMF that linked austerity measures to securing "stabilization loans", after which followed development loans in targeted areas, such as electrification projects, steel mills, etc. 

The World Bank Group operates like a bank whose purpose is to strengthen large private capital on a world scale and promote free trade and investment across national borders. Its mission to strengthen finance capital would be compromised in a substantial manner if it tried to take into account human rights as an objective criteria, regardless of where it is lending. For example, it will take human rights as a political criteria only if it came to making a loan let us say to Iran, but not to a pro-US-pro-EU Arab country that is just as authoritarian as Iran. Therefore, the World Bank Group is a political institution as much as it is a financial one. It is important to note that the Bank's real value is not so much the amount of the money it loans, but the political and symbolic significance of its loans. Therefore, if it were to carry out the McNamara spirit into its logical conclusion toward a more human-rights-oriented path, it would have a monumental impact in the world.

The history if the sister banks created by Bretton Woods is one of strengthening large private capital, especially emanating from core countries, while weakening the state apparatus so that it becomes inexorably dependent on large foreign and domestic private capital. In short, the IMF austerity measures followed by World Bank development loans are mere tools used as leverage to undo the Keynesian policies that many countries were pursuing from the Great Depression and thereafter. The result is perpetual transfer of capital from the periphery (developing nations) to the core (industrialized) and the cycle of dependency never ending. Under such conditions, one has to wonder is the methods of the sister banks (IMF-World Bank) are not conduits to preventing development and by extension contributing to poverty in the Third World, with all the human rights consequences that widespread poverty entails.

In some respects this is an issue of the Northern vs. Southern hemisphere conflict that many have addressed, including the United Nations. In another respect, given what has happened in the last five years as a result of the global recession, it is clear that the nature of the North-South conflict is no longer valid, given that Spain, Portugal, Greece, Ireland, and most of the Balkans and Eastern Europe are in the same "austerity-neoliberalism program" as nations in the Southern Hemisphere. Human rights violations that were perhaps more visible in the Southern Hemisphere are now just as visible in Northern Hemisphere nations, and those too are linked to economic policies.

The World Bank is part of the problem to human rights abuses and the cycle of poverty, despite the fact that it employs experts in these fields. It has an image to protect as an institution that tries to solve the problems of poverty and human rights, but the core of its concern is the image it must maintain, because in essence the Bank only exacerbates existing problems. 

It is extremely difficult to dismantle institutions in the absence of dismantling the system that has given birth to such institutions. For many years, I have found myself in forums with individuals from different ideological perspectives who argued that the solution is to reform the IMF and World Bank so that they serve the needs of ordinary people instead of large corporate and financial interests. Another groups of people argues in favor of doing away with the sister banks.

1. Reform scenario: Let us assume that the sister banks are reformed and they do take into account not just the interests of large banks and multinational corporations, but also the interests of the middle class, workers, and peasants. In the end, the banks can only operate successfully if they are furthering the interests of finance capital on which they themselves rely and whose purpose it is to support. They can only throw crumbs to the masses, but only if they first cater to the larger interests of finance capital. Otherwise, finance capital has no need of them.

2. Abolishing IMF-World Bank scenario: OK Tomorrow they no longer exist. Does this change anything even in the slightest manner inn the capitalist world economy? The gap that they will leave behind will easily be taken up by large commercial banks. After all, did the IMF-World Bank exist before 1944? Did we not have capitalism.

Conclusion: These institutions are actually part of the superstructure in the political economy and they act to manage what the ordinary person wants to believe is a "free market system". The world economy is actually managed by central banks answerable to governments, the WTO, IMF, World Bank, European Investment Bank, European Central Bank, etc, The world system of capitalism is managed in order to maintain itself, so that we do not have a repeat of an uncoordinated system as we did in the interwar era when the Great Depression took place. If the IMF-World Bank did not exist, something else would have to be in their place to assist in the management of the world economy.

My response to comments from LINKEDIN groups:

 When I was a guest research at the World Bank archives, I must confess that the staff was extraordinarily cordial, informative, and indeed well aware of what people outside the Bank think of its policies. The IMF was a bit more stuffy, but they were trying to follow along the path of the Bank. The people who work there are well-meaning, nice people. This has nothing to do with the policies that they must implement.

Karl Marx associated with capitalists in his life and did not blame them, for choosing to appropriate capital from labor. He argued that the political economy of the free market made them what they were, so the individual is a product of the system. If there was a different system, these people would not be appropriating capital from labor as far as Marx was concerned.

The great Italian intellectual and political activist during the Mussolini era, Palmiro Togliatti, had the audacity in an audience at Moscow University where Josef Stalin was present not to blame people who became Fascists because the system was such they had to survive. If a worker had a choice between the idealism of opposing the Fascist regime. which meant starving his family, and becoming a card-carrying Fascist, then the worker would join Mussolini's party because survival is natural to all species.

However, I wonder if people are indeed defined by their choices, as Existentialists like Jean-Paul Sartre have argued. Assuming a modicum of free will, does this not say a great deal of who we are by the choices we make as human beings? The points that Marx and Togliatti were making were valid about focusing on the system instead of the individual who is indeed shaped by the system and its values. However, why is it that some individual make a conscious decision to pursue a career path that they know is unethical in the sense that it is detrimental to social justice. Do the people who control through computers the DRONES have any qualms when they discover that these planes kill innocent people, including children? Did they not know that the nature of their work would include killing children? Same goes for the well-refined and otherwise fine people of the IMF and World Bank, institutions that have a devastating impact on the lives of hundreds of millions around the world.

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