[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 <[EMAIL PROTECTED]>
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.
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