[Follows an email exchange between Henry Liu and Mine Doyran, followed by Doug Henwood's recent article in "The Nation". The subject-matter is the fate of the World Bank's "World Development Report". Kanbur got pushed out because his draft report was too controversial for World Bank panjandrums. As Henwood says, " Ravi Kanbur, an outside economist whom Stiglitz brought aboard to supervise the writing of the bank's annual World Development Report, resigned "in anger" (as the New York Times put it) in June when he was ordered to revise the document to conform to the party line that growth is the highest good of economic policy."
There are two issues here (at least): when is the continuing evidence of chaos and ideological decay in Washington, symbolised by the collapse of the "Washington Consensus". This is the reality behind the triumphalist neo-liberal cry of TINA "There Is No Alternative". There all too obviously ARE alternatives to the IMF/Washington gospel of enforced "structural adjustment" programmes, global integration, closure of public services etc.
It is important to remember that the world deflationary crisis now lapping at the feet of the Great and the Good in London,l Paris and Washington has been a lived reality for most of the world's poor for decades: at least since the FIRST (1973) oil-crisis which put paid to any hopes of 3rd World development. Now the Fourth and Final Oil-Shock has begun. For people in the rich west the flood water can rise a long way before they hurt too much; for the peasants in Asia (quite literally in today's flood-stricken Mekong Delta or flood-stricken Bangladesh), who are already up to their necks in water, a single ripple is enough to drown them. But the Oil-Shock is not a ripple, it is an economic Tsunami of devastating force.
So something has gotta give. The Washington Consensus is already a thing of the past, but this huge, tempestuous new crisis which is about to crash down on the capitalist world-system, will also be the final nail in the coffin of the Neoliberal social experiment.
The second point about this exchange is the insight it once again provides into the intellectual and political corruption of the US liberal-left.
Mark]
[Fwd: FWD: Henwood on Kanbur and Stiglitz] From: Henry C.K.Liu <hliu at mindspring.com> Date: Wed, 20 Sep 2000 21:42:49 -0400
Comments on Ravi Kanbur's resignation "The tussle about what the WDR [World Development Report] should and should not emphasize demonstrates that there are forces inside and outside the World Bank hostile to even a modest modification of the dominant paradigm on development. The Bank may want to signal that it is turning into a caring organization but, like a leopard and its spots, it cannot change even if it wants to." The Hindu, 26 June, 2000 "Everyone is shocked and deeply saddened that Ravi left. Many of us see this as a real blow to the empowerment agenda; and if I've learned anything from my work it's about the powerlessness of being poor." World Bank source "Ravi Kanbur has recently decided to leave his position as Staff Director of the World Development Report "Attacking Poverty." Ravi's decision is a source of regret for the Report's team, for colleagues in the Bank and for many people outside the Bank who have been working on the WDR. In leaving Ravi said he had some reservations on the emphasis of the main messages that were likely to emerge in the final version of the Report. We believe these reservations to be unfounded." Jo Ritzen, Vice President, Development Economics, World Bank "The Washington Consensus has emerged from the Asia Crisis with its faith in free markets only slightly shaken. Poverty eradication is now the menu, but the main dish is still growth and market liberalisation, with social safety nets added as a side dish, and social capital scattered over it as a relish. The overall implication of the resignation is fairly clear. The US does not want the World Bank to stray too far from its agenda of economic growth and market liberalisation. Ravi Kanbur's draft has raised a few too many doubts about this agenda, and strayed too much towards politics." The Nation, Bangkok, 5 July, 2000 "To keep the Bank afloat Wolfensohn has to steer between two major constituencies. The first are the critics, the second is the US Treasury. You don't need to be a World Bank economist to do the cost benefit analysis. To save the Bank, and his own reputation, it is essential that the Bank's policies and public pronouncements do not err too far from its main shareholder and political protector, the US Treasury." Focus on Trade, Number 51, June 2000 "A rare individual has the courage to resign, but what about the thousands who don't? We need to question all reports and documents and data coming from the World Bank which the media and others use as their source of truth about the South. This is the tip of the iceberg of the reports that are produced under such intense politicization" Michael Goldman, editor Privatising Nature, Political Struggles for the Global Commons "At the World Bank, the high church of development economics, a widening schism over how to fight poverty is sending ripples around the world. Ravi Kanbur, a top Cornell economist and the man hired by the bank to oversee the writing of its World Development Report, resigned in anger recently when he was ordered to rewrite his staff's draft. The report is extremely influential among economists, and Mr. Kanbur's version questioned how well developing countries adapt to capitalism. In fact, it questioned whether the West's standard prescription for reform does enough to help the poor." Joseph Kahn, New York Times, 25 June, 2000 http://www.brettonwoodsproject.org/update/18/18a.html#2
Mine Aysen Doyran wrote: * This piece has emerged on the _International Political Economy_ listserv today, and originally appeared in the _Nation_ magazine, where the author of the article presents an overly positive view of the former chief economists of the World Bank, Stiglitz and Kanbur, and praise them for being "humane reformers who sincerely care about the world's poor". I am posting the article as an evidence of the left liberal position on international affairs and "humanist imperialism" of the World Bank. This is evidently a pro-system journalism, so I am telling _in advance_ to avoid another _Business Week_ friction. Since this is the trendy position among the left in the US today, It is always important to be updated about their views. * Mine Aysen Doyran * PhD Student * Department of Political Science * SUNY at Albany * Nelson A. Rockefeller College * 135 Western Ave.; Milne 102 * Albany, NY 12222 * ------------------------------------------------------------------- -----
Subject: FWD: Henwood on Kanbur and Stiglitz Date: Wed, 20 Sep 2000 * * This article presents one view of the policies at the WB and IMF. * * The Nation - October 2, 2000 * Stiglitz and the Limits of 'Reform' Doug Henwood It's global protest time again. When Bill Gates and other members of the global elite gathered in mid-September for the World Economic Forum in Melbourne, Australia, thousands of union members and activists filled the streets to protest the effects of unfettered free trade. The next opportunity to trouble a convocation of the world's bigwigs is in Prague at the end of September, when the World Bank and International Monetary Fund hold their annual meetings. In April, their midyear meetings brought thousands to Washington and shut down the city There's a long-standing split among those who protest and criticize these institutions - and their close relative, the World Trade Organization - between those who'd reform them and those who'd prefer to shut them down. Two forced departures from the World Bank have made the limits of reform irrefutably clear. The first was the exit of former chief economist Joseph Stiglitz at the end of 1999. Stiglitz had made one too many public criticisms of the economic policies preferred by the bank and its ultimate master, the US government. And more recently, Ravi Kanbur, an outside economist whom Stiglitz brought aboard to supervise the writing of the bank's annual World Development Report, resigned "in anger" (as the New York Times put it) in June when he was ordered to revise the document to conform to the party line that growth is the highest good of economic policy. Stiglitz was appointed to his World Bank post in December 1996. Long regarded as one of the leading theorists in his field - and frequently tipped as a future Nobelist - he served on Bill Clinton's Council of Economic Advisers from 1993 until his move over to the bank. Despite this respectable pedigree, Stiglitz started causing trouble almost from the first. He attracted worldwide notice with a January 1998 lecture in Helsinki in which he criticized the "Washington consensus" - the austerity, privatization and deregulation agenda that had become the standard policy prescription for much of the world - as misguided and often disastrous. He pointed out that the historically unprecedented rapid economic growth in East Asia - and with it the increases in life expectancy, literacy and other social indicators - was the result of the sort of state intervention that the bank frowns on. He also pointed out that the 1997 financial crisis that interrupted that growth was in large part the result of the reckless decisions of private investors. But instead of drawing the proper conclusions, Stiglitz noted, market ideologues were using the crisis to discredit state intervention and promote more market liberalization. He further argued that moderate inflation is pretty harmless, budget deficits aren't necessarily evil, privatization isn't a panacea and deregulation of domestic and international financial markets can do serious harm. For a senior World Bank official to say these things is a bit like a Pope denying the Virgin birth. As his tenure progressed, Stiglitz elaborated on these themes. He publicly rued the fact that workers and small businesses were "getting screwed" because they were inadequately represented in decision-making. He criticized the IMF - without mentioning it by name - for making the Asia crisis worse by imposing austerity programs instead of stimulating imploding economies and shoring up social safety nets. He proposed that restricting the freedom of global capital movements could make the world less crisis-prone. He mused that the disastrous results of economic reform in Russia were "not just due to sound policies being poorly implemented" but to "a misunderstanding of the foundations of a market economy"earning him a public rebuke from World Bank president James Wolfensohn. The accumulation of sacrileges became too much, and Stiglitz's "resignation" was announced last November, an occasion that led Treasury Secretary Lawrence Summers to praise Stiglitz as a "major creative and intellectual force." The Clinton Administration said it had played no role in the exit. In fact, according to World Bank insiders Summers informed Wolfensohn that if he wanted another term as World Bank president, Stiglitz had to go - so Stiglitz went. Stiglitz was kept on as a consultant, but his contract was terminated in May. It's said the last straw was an article he wrote for The New Republic that, aside from reiterating his policy criticisms, contained this, passage: "The older men who staff the fund ... act as if they are shouldering Rudyard Kipling's white man's burden. IMF experts believe they are brighter, more educated, and less politically motivated than the economists in the countries they visit. In fact, the economic leaders from those countries are ... brighter or better-educated than the IMF staff, which frequently consists of third-rank students from first-rate universities." Policy disputes are one thing, but this was just too harsh a truth to utter in public. Ravi Kanbur was an inconvenient leftover from the Stiglitz days. Together they had opened up the drafting of the World Bank's annual World Development Report, its flagship document. A draft was posted on the web, and public comments were actively sought, Its drift was that contrary to standard development doctrine, growth wasn't enough to lift the poor out of poverty - policy had to be actively tilted in their favor. (It should be remembered that we're not talking about people who skip a meal now and then: The bank's definition of poverty is an income of less than $1 a day, a ration on which 1.2 billion of the world's people subsist.) This openness was a departure from past practice, in which the reports were written by staff economists under the supervision of elite journalists on loan from The Economist or the Financial Times. The US government, in the person of Summers, was outraged by Kanbur & Co.'s draft. As one participant in the process put it, the Clinton Administration had essentially embraced the trickle-down economics that Democrats had run against for decades. Kanbur was ordered to rewrite the report to be more "pro-growth." He resigned instead. In the final version, among other changes, discussion of the importance of income distribution to poverty reduction largely disappeared. A lot of bank staffers were upset by the departures of Stiglitz and Kanbur (though even Stiglitz's supporters concede he was a poor manager), but the public executions were a clear warning to any future dissenters. None of the sources for this article, for example, wanted to be quoted by name, even though the bank's mission statement swears that it is an institution based on an ethic of "personal honesty, integrity, commitment; working together in teams - with openness and trust; empowering others and respecting differences." Though ostensibly multilateral institutions, and formally part of the United Nations, the World Bank and IMF are essentially run by the US government. As MIT economist Rudiger Dombusch put it a few years ago, "The IMF is a tool of the United States to pursue its economic policy offshore." The bank has a reputation for being a bit softer than its neighbor across Washington's 19th Street; it is, by its mission and by the preferences of many of its staffers, devoted to poverty reduction and economic development, while the IMF is the guardian of financial stability and political orthodoxy. There are some good people with good intentions working for the bank; the fund is staffed mainly by disciplinarians. But the fates of Stiglitz and Kanbur make it clear that there are severe limits on how much good can be talked about, much less done, by the World Bank. Treasury Secretary Summers, who purged Stiglitz and Kanbur, was himself chief economist at the World Bank from 1991 to 1993. In that role, Summers made headlines when a memo attributed to him - suggesting that Africa was "vastly under-polluted" and that "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable" - was leaked to the press. This past April, when I asked Summers whether Africa was still vastly underpolluted, he said, after conceding that this was a "fair if not friendly question," that it's long established that he was merely being ironic and provocative. He also praised the 'moral energy" of the protesters who'd come to Washington to complain about the World Bank and the IMF, unaware that I'd overheard him just an hour earlier celebrating the "proactive" arrest of hundreds of them who hadn't committed any crime. Neither Stiglitz nor Kanbur is a radical by any standard; both are humane reformers who sincerely care about the world's poor. But even that was too much for the World Bank and the IMF. The impeccable logic by which they operate will hear no appeals; their decisions are final. ---- Doug Henwood, a Nation contributing editor edits the Left Business Observer. His latest book, A New Economy?, is due out late this year from Verso. _______________________________________________ stop-imf mailing list stop-imf at lists.essential.org http://lists.essential.org/mailman/listinfo/stop-imf
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