Home Mail Articles Stats/current Supplements Subscriptions Links

The following article appeared in Left Business Observer #95, November 2000. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.

LBO asked two prominent "abolitionists" - those who would shut rather than reform the IMF and the World Bank - what the world might look like after theywere gone. Patrick Bond, a frequent LBO contributor, teaches at the University of the Witwatersrand in Johannesburg. Walden Bello divides his time between teaching at the University of the Philippines and directing the Focus on the Global South in Bangkok.

After the IMF and Bank are gone

Patrick Bond wites:

Whether we thrive in a future world without the Bretton Woods Institutions (the World Bank and IMF) very much depends on why and how we get rid of them (not to mention the WTO). The radicalization of development finance is crucial, so that:

In practice, the main forces opposed to these goals are the Washington financial institutions. That's one reason for shutting the institutions down. But radicalization is only one of the scenarios: a more likely end of the Bretton Woods road, unless mass-popular campaigns are generated by the left, is stinginess and protectionism, led by Congressional Republicans' xenophobia.

Is there a basis for ongoing radical activist campaigning? I work in Johannesburg. Less than an hour's drive up the highway is Pretoria. There, for most of the 20th century, teams of brutal white men ran an extraordinary nation-state. Who helped? The apartheid state received $100 million in World Bank loans during the 1950s and 1960s so that white households could enjoy electricity and another $100 million to construct railways upon which black workers were transported from their distant township homes to work in the industrial sites. During those bad years, the Bank provided what was might best be described as underdevelopment finance for the majority of South Africans.

When the apartheid regime began experiencing economic and political problems during the 1970s, the IMF was quick to lend a helping hand: more than $2 billion in "balance of payments support" flooded in. By 1983, the U.S. anti- apartheid movement put a stop to any further such lending, but during the 1980s, these loans, like the earlier Bank loans, were repaid by society as a whole, even though black South Africans were by no means their beneficiaries.

This is why, under a more just international order, South Africa would logically tell the IMF and Bank, "You owe us, not the other way around!" The demand for apartheid reparations is being made by a vibrant network of activists, including Jubilee 2000, the Campaign Against Neoliberalism in South Africa and the AIDS Treatment Action Campaign.

Last year, these movements helped catalyze the World Bank bond boycott strategy, and have asked northern church, labor, community and student allies to have their institutions stop investing in Bank bonds. Other reparations campaigns are gathering steam through the Jubilee South network. In Nigeria, pressure against Swiss banks is compelling repayment of Sani Abacha's illegal deposits, hinting at prospects for deeper campaigns.

In short, the case is being made for an end to the globalization of Washington development finance, in favor of the globalization of people, corresponding to even John Maynard Keynes' 1933 injunction: "I sympathize with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel -- these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national."

Walden Bello writes:

What is my idea of an alternative system of governance to the Bretton Woods system? The answer lies in my fundamental critique of the Bretton Woods/WTO system as a monolithic system of universal rules imposed by highly centralized institutions to further the interests of U.S. corporations. To try to supplant this with another centralized global system of rules and institutions, even though premised on different principles, is likely to reproduce the same trap that have ensnared organizations as different as IBM, the IMF, and the USSR the inability to tolerate diversity.

Instead, today's need is for the deconcentration and decentralization of institutional power and the creation of a pluralistic system of institutions interacting with one another, guided by broad, flexible agreements and understandings.

It was under such a pluralistic system of global governance, where hegemonic power was far from institutionalized in a set of powerful multilateral organizations, that a number of Latin American and Asian countries were able to achieve a modicum of industrial development between 1950 and 1970. It was under such a pluralistic system under a GATT that was limited in its power, flexible, and more sympathetic to the developing countries that the East and Southeast Asian countries were able to industrialize through activist state policies that departed significantly from the free-market biases enshrined in today's system.

Of course, economic relations among countries prior to the attempt to institutionalize one global free market system beginning in the early 1980's were not ideal. But they did underline the fact that the alternative to an economic Pax Romana built around the World BankIMFWTO system is not a Hobbesian state of nature, the war of each against all. The reality of international relations in a world marked by a multiplicity of international and regional institutions that check one another is a far cry from the propaganda image of a "nasty" and "brutish" world that would prevail in the absence of the global behemoths. Of course, the threat of unilateral action by the powerful is ever present in such a system, but it is one that even the most powerful hesitate to take for fear of its consequences on their legitimacy as well as the reaction it would provoke in the form of opposing coalitions.

In other words, what developing countries and international civil society should aim at is not to reform the WTO and the Bretton Woods system but, through a combination of passive and active measures, to radically reduce their powers and to turn them into just another set of actors coexisting with and being checked by other international organizations, agreements, and regional groupings. These would include such diverse actors and institutions as UNCTAD, multilateral environmental agreements, the International Labor Organization, the European Union, and evolving trade blocs such as Mercosur in Latin America, SAARC in South Asia, SADCC in Southern Africa, and ASEAN in Southeast Asia.

More space, more flexibility, more compromise these should be the goals of the effort to build a new system of global economic governance. It is in such a more fluid, less structured, more pluralistic world, with multiple checks and balances, that the nations and communities of the South will be able to carve out the space to develop based on their values, their rhythms, and the strategies of their choice.


Home Mail Articles Stats/current Supplements Subscriptions Links