By KEN WALDEN
Tens of thousands took to the streets in Seattle and Washington, D.C., to protest the policies of the WTO, the IMF, and the World Bank. Should the goal be to reform or to replace financial institutions that parasitically exploit working people around the world?
The World Trade Organization (WTO), The International Monetary Fund (IMF) and World Bank were thrust into the headlines in this country with the Seattle demonstrations at the end of last year. Tens of thousands of people took to the streets. The demonstrations were followed this spring by smaller ones in Washington, D.C., against the IMF and the World Bank.
This is the first time demonstrations of this scope have been launched against these organizations in this country. And this has prompted projections of a new radicalization in the population-especially among young people.
People are right to oppose these institutions and to solidarize with the workers around the world who are oppressed by their policies. Those in the anti-sweatshop movement, for example, have exposed the fact that workers in Vietnam are paid a few dollars a day to build Nike shoes that sell for over $100 a pair.
Those active in various environmental movements are well aware of the devastating impact of policies and programs implemented by the World Bank, the IMF, and more recently the WTO, in which pristine forests are clear cut in Africa, Southeast Asia, and South America-leaving a desert behind. And workers who have watched their wages drop steadily understand the difficulty of fighting corporate giants whose production facilities and diverse industries span the globe.
These institutions didn’t just fall from the sky a half century ago. They are an outgrowth of the functioning of this system. To understand them, let’s take a look at their origin, what they have done, and what we can do about them.
Function of IMF and World Bank
These institutions were developed by the major imperialist powers, starting in the mid 1940s, to broker the competing interests of the finance capitalists, to settle their differences at the conference table rather than on the battlefield.
I mean by finance capitalists those capitalists who are not linked to any specific arena of production like auto or steel but control enormous amounts of capital through the banks and other financial institutions and invest wherever they can realize the greatest return.
If we look at the development of this process, we see a consistent history of exploitation. The early period of capitalism witnessed the competition between different European capitalist powers over colonizing the people and resources of the world. The United States was once one of those colonies.
The wars caused by inter-colonial rivalries eventually led to agreements on dividing the world into colonial regions. These agreements were, however, of a limited duration. The constant drive for more resources, areas of investment, and new markets resulted in inter-imperialist rivalries that led to the catastrophes of the two world wars of the last century.
In the final days of World War II, the basis of the World Bank and the International Monetary Fund were created by the U.S. and British governments at Bretton Woods, New Hampshire.
At least, that’s one way to say it. Another more accurate way would be that the representatives of finance capital from the soon-to-be two victorious nations met to decide how to govern the world and attempt to prevent future imperialist clashes from leading to open warfare. Following the end of the war, 29 nations signed the pact and created the IMF and the World Bank.
The initial focus was not on what many refer today as the Third World-but on Europe. Europe was devastated by the war and deeply unstable. There were huge movements of the working class confronting virtually powerless Western European capitalist governments. The goal of the victors of the war, the U.S. and British capitalists, was to stabilize Europe and establish their economic and political control.
The roles of the IMF and the World Bank have not changed greatly since then. By its own definition, the World Bank focused on making loans to governments in order to rebuild the infrastructure-the roads, railroads, highways, bridges, ports-and essential portions of the economy that are capital intensive but not necessarily profitable to own or operate. The cost has been borne by the populations of these countries, whose taxes go up and social services are cut to pay the enormous debts assumed by their governments.
The self-described mission of the IMF is to smooth world commerce by reducing foreign exchange restrictions and using its funds to lend to governments that are confronting problems paying their loans or having balance of payment problems so they can continue to trade without interruption. This “pump priming” benefits the largest exporters; at the end World War II that was the United States.
In other words, the United States through the IMF lends money to countries that are bankrupt, so these countries can purchase goods produced by U.S. corporations-sinking those countries deeper into debt. When that mission was accomplished in Europe, the finance capitalists shifted more of their focus and some of their capital to the rest of the world-the former colonies of Europe.
Using these and other institutions, loans were structured to build the infrastructure needed to integrate the economies of these countries into the world capitalist market; that is, to accelerate the process that had begun under the colonial regimes of producing cash crops for the market instead of producing food for local consumption, and opening up the natural resources-mines, oil, and timber-to exploitation by American, European, and later Japanese corporations.
It should come as no surprise that the United States, Britain, France, Germany, and Japan control 38 percent of the votes in the IMF. This seemingly small percentage is deceptive-but that is the controlling interest.
In fact, the 18 percent controlled by the United States is the controlling interest. Or I should say, it represents the controlling interest because in the final analysis it is not the votes inside these organizations that determines policy. It is power-both economic and military-that allows U.S. imperialism to dominate.
The IMF and the World Bank, along with the more direct intervention by imperialist governments and corporations, has tied the elites of the underdeveloped nations to their policies, rewarding them for their cooperation.
In most of these poor countries no developed capitalist class existed. Governments were created made up of members of the privileged classes, and as long as they did the bidding of imperialism they could enrich themselves and stay in power. Those who attempted to oppose the devastation of the banks and corporations were immediately confronted by the military might of one or more of the imperialist powers.
“Structural adjustment”
The 1970s and the ’80s opened up a new era for both the IMF and the World Bank. Not only did they direct the economic underdevelopment of much of the world through the loans they were willing to give and not to give, but countries were encouraged to borrow well beyond their abilities to repay the loans. Thus began the programs of what have been termed “structural adjustment,” in which the economies of entire nations were openly wrenched around to meet the needs of foreign capital.
In this hemisphere, we have seen this on a massive scale in Chile, Peru, Brazil, and Mexico. Subsidies for agricultural production and foodstuffs were eliminated along with tariffs and other protections for the local economies.
New mechanisms of control were imposed, sometimes referred to as “neoliberalism,” focusing on privatization of all aspects of the economy-which translates to opening these economies up to domination by foreign capital. Across the world skyrocketing food prices have pushed poor workers and peasants into the streets against these policies.
Today, this relentless drive for increasing profit continues with the latest addition to the alphabet soup of finance capital being the WTO (World Trade Organization), introduced in 1995. The WTO, like the other multinational arms of finance capital, portrays itself as the savior of the very economies it has devastated. It supposedly works to broker deals between countries, to create a “level playing field,” to promote “free trade,” and to eliminate protectionist laws-all of which basically give those with the capital increasingly free reign and control over every corner of the world economy.
Looking back over the last 50 years, according to the United Nations Human Development Report, 1994, “what emerges is an arresting picture of unprecedented human progress and unspeakable human misery, of humanity’s advances on several fronts mixed with humanity’s retreat on several others, of a breath-taking globalization of prosperity side by side with a depressing globalization of poverty.”
The largest corporations centered in the United States, Europe, and Japan possess wealth that far exceeds that of most of the countries they invest in:
- The combined revenues of just General Motors and Ford-the two largest automobile corporations in the world-exceed the combined Gross Domestic Product (GDP) for all of sub-Saharan Africa. The combined sales of Japan’s top six trading companies are nearly equivalent to the combined GDP of all of South America.
- Overall, 51 of the largest 100 economies in the world are corporations. Transnational corporations hold 90 percent of all technology and product patents worldwide.
Despite all our technological breakthroughs, we still live in a world where a fifth of the developing world’s population goes hungry every night, a quarter lacks access to even a basic necessity like safe drinking water, and a third lives in a state of abject poverty.
The United States-the largest economy in the world-manages, with less than 5 percent of the planet’s population, to consume nearly one-quarter of all fossil fuels, and more than one-third of all paper, while creating 50 percent of the world’s solid waste. Yet, the United States, now has the widest gap between rich and poor of any industrialized nation-and the gap continues to widen.
The entire process has been one of degradation of human society and the environment. And it is little wonder that the WTO, IMF, and World Bank have received the attention they have. But holding them solely accountable for this mess is like blaming the local bank for rising interest rates or the gas station owner for soaring gas prices.
And those raising their opposition to these institutions do so for very different reasons. In Seattle, we heard the likes of Pat Buchanan spewing his right-wing nationalist, protectionist, and thinly veiled racist rhetoric. We saw trade-union officials pointing their fingers limply at the corporations while shaking their fists at workers in other countries. And there were “progressives” of all hues and shades with a wide range of strategies ranging from proposals to reforming these institutions to abolishing them.
Is reform the answer?
Putting pressure on these institutions is like pressuring the tobacco companies to change; all we will see is the equivalent of smokeless cigarettes that still cause cancer. These organizations will work to present cleaner images of themselves and include more so-called representatives of labor, the environment, and indigenous communities on various commissions. They can change their face but nothing of substance will change.
Demanding to sit at the same table as the bankers and explain to them the horrors of their actions will not change a thing. Even if one powerful family-like the Fords or Rockefellers-were dissuaded from carrying out these policies, it would raise some eyebrows, gain a few headlines, and possibly shift some capital to some beneficial projects, but more than anything it would just leave a vacuum for other finance capitalists to fill.
The demand for openness and public accountability may be a way to expose the inherent lack of democracy in this system-because there is no openness anywhere in this system.
Are the tens of thousands of workers who are thrown out of work each year consulted as the corporations merge or shut down offices and production facilities?
Are workers consulted about the distribution of the wealth they have produced as the corporations report record profits?
Do we get to vote whether we want to subsidize the military or a specific war, the way we can choose whether or not to vote on bond issues to increase the funding of education for our children?
Are we consulted as we watch public facilities handed over to corporations to run for profit?
Some say that these super-national institutions are taking power out of the hands of people on the local level. It is true that decisions are being made that affect us all by an increasingly smaller group of wealthy and powerful finance capitalists.
But longing for the so-called” good old days” of national capitalism and “protectionism,” which were never very good nor free, is like trying to turn the clock back more than 100 years.
Siding with capitalists whose operations seem to have a national basis as opposed to those that are clearly transnational will not solve the problems we confront. And calling on the U.S. government to oppose the policies of these organizations is just appealing to the same person to use one hand to slap the other.
The World Bank, IMF, and WTO and the governments that participate in them are just part of the economic tool kit used to carry out economic activity on a world scale by those who today lay claim to the majority of the world’s wealth.
Prevailing on institutions and elected government officials will not change the problems we face. For it is their job to keep things running smoothly. We face a systemic problem and it is this that we have to confront.
This system is based on production for profit. A profit that can be generated one way and one way only-not through superior technology, not through brilliant inventions-but through exploitation. The functioning of a profit-driven system is antithetical to meeting human needs.
I am a revolutionary socialist because I do not believe this system can be reformed to meet the needs of humanity. I am an abolitionist, like those who opposed slavery rather than asking for reforms in the methods of enslaving African people-such as reducing the days of work from seven to six, not using corporal punishment, keeping families together, improving diet, and allowing for literacy.
I certainly would not have been opposed to the betterment of life for people living under slavery. But I don’t believe that people should have to live under the conditions of slavery at all!
And today, revolutionary socialists look at this system of exploitation and degradation and do not believe that just relaxing the yoke of oppression and modifying it will allow working people to conduct their lives to its full potential.
We need to overturn and abolish this system of exploitation, of wage slavery, in the same way opponents of chattel slavery fought to overturn that brutally inhumane institution.
But the analogy stops there. We cannot maintain the system that is the basis of our enslavement, trading one form of oppression for another. It is possible and it is necessary to replace this system of exploitation with one that is controlled by the majority-that is, by the working class. Society can and must be operated in our interests and under our control.
We want a society that is a free association of human beings-a socialist society.
