The IMF and the WF are not needed anymore

The IFM and the World Bank spawned from Bretton Woods, wherein the underlying idea was “the economic restructuring of Europe after WWII and the prevention of another global crisis on the order of the Great Depression of the 1930’s” (4 TWOE).  One would think that when a tool is used and its necessity fulfilled it would be placed back in the toolbox and locked away.  But these two institutions, which were indeed a significant tool in the immediate post-war world and functioned as screws for the building of a global economic model, have implemented Neoliberal restructuring of Third World economies and created gargantuan debt, in which case the word “screw” can be used to describe such a phenomenon as a verve instead of a noun.  If the presidents of the World Bank, or of the IMF, don’t tire of stating that their heart’s deepest wish is to reduce poverty within needy nations, then their next statement should be that they have not only failed but exacerbated the situation by destroying local industries with Neoliberal policies and by placing upon the metaphorical shoulders of humble nations the yoke of exponentially increasing debt.  Furthermore, it is worthwhile to note that the ideology of the spawns of Bretton Woods has changed throughout the years, not in an insignificant way but rather a sort of one hundred and eighty degree turn.  At first the idea was that there needed to be more governmental control over an imperfect market system, but over time the opposite theory, Neoliberalism, was adopted, which views the market system as benign and self-correcting if left alone by government.  One could argue that the shift in policy may have followed the switch of focus from rich countries to poor countries, wherein the unwritten emphasis shifted from economic development to exploitation of cheap labor and natural resources, though in both cases the truly assisted ones are those of the lighter skin color . However, one thing is undeniable, namely, that the IMF and the World Bank are not fulfilling their original functions. As such, I would argue that it is necessary to have those institutions abolished. 

Under the guise of lending a helping hand to countries that are strapped for cash or have trouble paying debt, the assistance that the IMF provides paradoxically results with exponantially more debt.  Nor only that, but there are also undue restrictions on how a country’s government can run its economy, restrictions that promote Neoliberalism. The countries are not allowed to protect their domestic industries and provide much public services. The argument goes that “protectionism” stifles economic activity and fetters the “invisible hand” that guides the “free market” in its allocation of goods and services to where they are most needed.  However, even if we trust that the IMF is acting out of pure ideology and that it believes that such values, if strictly followed, will lead to “prosperity” for the nation that follows those values, the double-standard that we witness in the fact that the U.S., the nation that has the most power in the IMF and the WB, does indeed protect it domestic industries, such as corn production, by subsidizing it, is intolerable because other IMF participating nations are not allowed to do likewise.  If the IMF and the WB want to base their legitimacy on the premise that they wish to end poverty, they should find a new premise.  It seems to be that “Western banks loaned money, often at variable interest rates, to fund development projects, many of which were ill-conceived… lenders, such as the World Bank, turned from development strategies to debt recovery as the value of their loans rose” (6 TWOE).  If I lend the reader a dollar to buy a bag of peanuts because the reader is starving and on the brink of death, but then demand the return not only of the dollar, but of 50 dollars in interest rates, and a promise that the reader will not use governmental services to aid his or her plight now and in the future, and concluded by saying “I do this for your own good”, would I speak truthfully?  An experienced observer would say that I have done these things merely to profit from other’s misfortune, and the observer would be right.  Likewise, in Mexico, as our book How to Succeed in Globalizaiton: A primer for the Roadside Vendor explains, has paid its debt many times over (195 Fisgón).  People then say that the Mexican economy isn’t doing so well because Mexicans are lazy, yet extremely rarely does one hear about the IMF and the WB’s role in keeping sovereign states in debt slavery.  Instead of trying to solve the problem of national poverty by sending “remesas”, the IMF and the WB should be abolished, as well as their cousin, NAFTA.  

Beside the unreasonable restrictions placed on needy nations, we must all pause and wonder about the legitimacy of the IMF and the World Bank.  Indeed they are entities that are backed by major governments, however, these entities themselves are not subject to direct democracy from the people whose lives they so deeply affect.  These entities are not subject to the Constitution of the United States, or of any other State for that matter.  If therefore, these organizations do not acquire their reason to be from no supreme law, neither artificial nor divine, then what legitimacy and authority does it have to demand Neoliberal openings of protective economies?  I wonder what the penalties are for nations who disobey the IMF and the WB, such as Argentina.  If a country doesn’t like the policies that the IMF and WB have imposed on them, is there an appeals process to an authority higher than the IMF and the WB?  What legitimacy does such an organization, whose officials are not democratically elected, have on deciding the economic fate of millions and millions of people who have no voice in that organization?  Although it indeed has a claim for the money it lends to nations, for those who borrow owe to their creditors, what right does it have to dictate how the governments should run their economies? Our book explains that in exchange for debt reduction, countries are told to cut government programs which for the most part are there to soften the fall from the holes and flaws that are present in Capitalism. It is not right, however, that a bank should support any ideological system at all.  Banks exist to lend and save money, not to be promoters of political theories, especially failed ones like Neoliberalism. Would it be acceptable if the IMF decided to impose Stalinist Communism on the countries that it lended to?  How about Liberation Theology?  Most would disagree that a bank has any business promoting any ideology at all, as it ah as much a right to do so as the cashier at the local supermarket whose job is to handle arithmetic in a just manner and execute a material transaction.  Even as banks the IMF and the WB have failed, which is another reason why they should not exist anymore.  Banks are supposed to jumpstart and protect “prosperity”, not exacerbate devastating poverty.  Therefore, since the purpose of the IMF and the WB in the past WWII reconstruction has expired, and because it has failed to live up to its professed ideology, they must be immediately and unconditionally abolished.


(I cite from the book The Wages of Empire)

Designed by Tim Sainburg from Brambling Design

Published by


Facebook page:

Leave a Reply

Your email address will not be published. Required fields are marked *