IMF/World Bank/WTO: The Free Market Fiasco
Edited by Eric Toussaint and Peter Drucker
Notebooks for Study and Research No. 24/25
International Institute for Research and Education (IIRE)
1995. 116 pp., US$8.75
Reviewed by Eva Cheng
The Free Market Fiasco is a collection of 15 articles from a wide range of sources that deals with a burning problem — the origin and dynamics of the neo-liberal agenda which is being practised across the globe, and its particularly grave social consequences in the Third World.
The articles focus on the central role played by three global institutions — the International Monetary Fund, World Bank and the World Trade Organisation (which replaced the General Agreement on Tariffs and Trade last year, but with a broader and more powerful agenda) — in restoring, safeguarding and enhancing the capitalist world order since second world war, especially since the big shake-up triggered by the so-called Third World debt crisis which exploded in the early 1980s.
Though these supranational bodies are supposed to act for the best interest of their entire membership (which comprises most countries of the world), in reality they are geared to serve the needs of the main imperialist countries which control them; in the case of the IMF and World Bank, control is on a dollar-a-vote basis.
A key mission of the "Holy Trinity" is to find a safe and profitable outlet for the mounting piles of surplus goods and capital being churned out by the powerful socialised productive forces of capitalism. But the job was made increasingly difficult because workers aren't paid adequately (if they are lucky enough to have a job) to meet their basic needs in many cases, let alone to be profligate consumers.
The IMF, World Bank and GATT did their job until the postwar expansion tailed off in the 1970s. Crisis management after the explosion of the Third World debt debacle is the focus of these articles, particularly how the key creditor countries dictated an overhauling of the national priorities of debtors and kicked open the doors to their markets for capital and goods (under the WTO and its regional hybrids, which in Asia is Asia Pacific Economic Cooperation — APEC).
But under the weight of military expenditure (which directly drags down the development of productivity and competitiveness) and the need to "stimulate" domestic consumption, the US is now an outstanding example of how creditor countries can also incur big public debt. In fact, it slipped from being the biggest creditor in the world to the biggest debtor a decade ago.
As the collection's foreword points out, the issue of Third World debt is part and parcel of the "sea of debt" that the world capitalist system is swimming in. It is also through it that some of its fundamental contradictions are expressed. However, written for their specific purposes, none of the articles goes into a more structural analysis of these fundamental contradictions of capitalism.
Greater clarity at this level could increase understanding of this collection's other parts. It could use a clearer explanation of why unsold goods are piling amidst growing impoverishment (which is happening in the First World as well); why big agro-businesses' bumper harvests never reach the billions who are still living in hunger; and why capital is in "surplus" and much of it is devoted to speculation rather than to addressing the most urgent human needs.
The first section of the book, on a transformed world economy, covers globalisation and debt, the current and future roles of the World Bank and the IMF, how GATT crushes the Third World, and the new meaning of internationalism amidst this apparent contradiction between powerful global institutions and nation states.
The second section focuses on the debt question: its global and integral character; the current state of the debt crisis (including the Mexican crises in 1982 and 1994); the failed "solutions" and the activist international campaign for debt cancellation; and what the IMF's "structural adjustment" and "stabilisation" prescriptions mean in practice, including the grave social costs for Third World people.
The World Bank's record of gross and persistent disregard of the environmental costs of the "development" projects it supports is well treated in the third section. Also discussed are the question of the First World's ongoing attempt under the WTO framework to systematically privatise and pillage Third World biodiversity (a question of profound implications) and the First World's production of food dependency, insecurity and, in a growing number of cases, famine in the Third World.
The implications of the IMF's structural adjustment programs in Latin America, Africa and Russia are separately examined in the last section. The part on Latin America is thorough, backed by useful statistics, and tries to debunk the myth of economic "recovery" there since 1991.
Most articles in this collection give a useful treatment of the subjects they deal with, and some incorporate a clear discussion on the strategy for activists in opposing this "Holy Trinity" regime. The exception is Susan George's "World Bank and IMF at Century's End" which is submerged in an uncritical acceptance of the World Bank and IMF charters and objectives at their face value. She defends the "aspirations" and even "motives" for their creation as "unquestionably admirable", and says that the problem now is that they have more power than they were intended to be given and their original mandate has been "betrayed".
Eric Toussaint and Denise Comanne's "Globalization and Debt" is weakened by some loose assertions which seem to be based on an imprecise understanding. The initial "expectation" and later assertion that the Japanese authorities "are" filling the holes in their speculative financial system (including rescuing bankrupt credit institutions) with repayments from the Third World, does not incorporate a crucial distinction between private and public debt, obscuring the reality that repayment for private debt will generally not be used for rescue operations. There is no particular ground to support the assertion that one element of the public revenue — repayment from the Third World for Japanese government loans — would necessarily go to a particular item of expenditure — rescuing credit institutions.
It is not clear whether their comparison of the Third World debt in 1980 of US$567 billion and the repayment up until 1992 of $1662 billion is already inflation adjusted, or is a rough indication based on crude summation of the yearly figures. Their assertion that South Korea is enjoying an "autonomous" status as opposed to the "total" dependency of other Asian "tigers" on multinationals — and on Japanese capital in particular — requires extensive qualifications.
Despite this, The Free Market Fiasco as a whole is a valuable publication and a useful resource for all activists, who need to understand the actual mechanisms through which monopoly capital and its agents are striving to maintain a thoroughly dehumanising social system.
The Free Market Fiasco is a joint effort of the Amsterdam-based IIRE (Postbus 53290, 1007 RG Amsterdam, the Netherlands; email: iire@antenna.nl) and the Brussels-based Committee for the Cancellation of the Third-World Debt (29 rue Plantin, 1070 Brussels, Belgium).
This is one in a series of very useful publications from the IIRE. Some other recent publications in the series include: Do the Workers Have a Country?; October 1917 — Coup d'Etat or Social Revolution?; The Fragmentation of Yugoslavia; Factory Committees and Workers' Control in Petrograd in 1917; Women's Lives in the New Global Economy; and Lean Production — A Capitalist Utopia?