ENTRY
[ESC]DOC TAYROC'S [UNSOLICITED] BOOK REVIEW - THE WORLD BANK by Éric Toussaint
Further update for all those concerned, the family health emergency largely seems to have been resolved, there is one follow-up appointment on Thursday, with a blood test for the family member, here's hoping that gives the full clean-bill of health. Now, without further ado...
Available DRM-free here.
In a recent book review, namely this one about Debt or Democracy by Mary Mellor, I discussed how different economists and/or sociologists/anthropologists discuss debt. Of course, I brought up the classic book Debt by David Graeber, which you really should read if you haven't (also available as a very good audio book, if you want to treat it like a podcast). I also brought up Toussaint's The World Bank, with an assumption I had reviewed it already. To my shock, I hadn't. So, here I go rectifying that omission.
Alan Greenspan is dead. I began my training as an economist in 2010, in the shadow of the 2007/08 financial crisis. As future guest of this blog Joseph Stiglitz points out in Freefall, Mr Greenspan is not entirely to blame for the 2007/08 collapse, but he played an extremely large role, and if there was any one person to blame the most, it would likely be him. For the purposes of today's review, Alan Greenspan was the academic behind the American half of the re-framing of sovereign debt as the cause of the 1970s stagflation crisis, a thesis that has since proven problematic to reprove, since it seems to have mostly had to do with out of control energy costs, in no small part thanks to a largely unregulated 'big oil' sector (Crude Capitalism by Adam Hanieh review coming in the future) as well as a good mixture of British/American racism in foreign policy and a gross mishandling of the OPEC oil crisis. Instead, in Britain and America the popular thing to blame was the national debt, and the poors at home. Greenspan's particular gift for this was the availability of cheap credit for home buyers, which later became known as 'subprime mortgages' and basing American credit on 'home equity', which was fine until it REALLY wasn't, and know we're living in the messy aftermath, because no one has figured out how to out neo-liberal Alan Greenspan.
But the fears of sovereign debt had to come from somewhere, right? Surely there's a sensible reason for the people of Britain and America to be afraid of irresponsible debt to GDP ratios! (One of these days I'm going to write a blog post about all the reasons several economists are becoming less and less fond of GDP). At the risk of sounding glib and oversimplifying complex mid-to-late 20th century politics, this is a geopolitical round of 'projection is confession'. What do I mean by that?
I mean what Toussaint means by that. In previous posts I discussed how one of the undoings of the Bretton-Woods/Keynesian economics system was the invention of a notorious new kind of socialism, 'socialism for me, but not for thee', which is of course not proper socialism at all. Nonetheless, at the beginning of the system, the 'me' was the entire nation-state, the UK and/or the US, as brought by Clement Attlee or Franklin Roosevelt, depending on which local flavour you got. (Assuming here that you're British or American, and I know a lot of you aren't, sorry, but these are the groups I'm familiar with). Of course, this is an oversimplification, as the 'me' was typically white people from the UK and/or the US, with certain politicians and/or groups taking great strides to make sure that racial minorities within Britain and the US benefited as little as possible from the new social programmes. This racism, born of the 18th and 19th centuries, but persevering until today thanks to the wonders of institutional stickiness and the proclivities of certain high-profile white South Africans, also dictated a considerable amount of British and American foreign policy both in the establishment of the 'Post-War Order' (as demonstrated in the excellent book The Imperial Discipline by Alexander Davis, Vineet Thakur, and Peter Vale, which I will review soon) and the establishment of the World Bank itself.
It is common knowledge that in the aftermath of the Second World War, continental Europe was divided in two, with the Western half of Germany, Austria, Italy, Switzerland, France, Spain, and Portugal making up the 'free half', aligned with NATO, and the Eastern half of Germany, and the Eastern Countries making up the Warsaw Pact, or outright being absorbed into the Soviet Union proper, as Stalin sought to return the USSR's borders to their Imperial Tsarist Russian extent and insure no further Western European adventures into Russian soil. The point of today is not to debate Stalin or NATO, but it is to highlight how Britain and America responded to this partition of Europe, which would become known as the 'Iron Curtain', after a speech given by former Prime Minister Churchill in 1946, who by the late 1940s realised that Americans love to worship leaders in a way that the British never will, and so began trying to build his reputation in the states, away from Britain's love/hate relationship with our political system. (The Americans made The West Wing, we made In the Thick of It, I think that about sums up one country's penchant for self-deification and the other's for self-deprecating). Similarly with this common knowledge is the fact that this division became ground zero for the ideological clash known as the 'Cold War', the alleged series of confrontations between the Capitalist West and the Communist East that outside of Europe had less to do with Soviet confrontation and more to do with the paranoid delusions of the far-right Dulles brothers and the American John Birch Society, who saw Soviet boogeymen under every rock, even at a time when the main concern of the Soviet Union was less 'global conquest' and more 'rebuilding after Operation Barbarossa and the extensive scorched earth tactics seen on the Eastern Front'. Nonetheless, both the Soviets and the US and UK put a considerable amount of resources into the rebuilding of Post-War Europe, with an aim towards scoring international good will and favour towards their specific economic system.
For the West, the single largest programme was the US Marshall Plan, which was aimed primarily at the rebuilding of post-war France, Italy, and Western Germany, which were the parts of Western Europe which had seen the most extensive fighting, and therefore the most extensive loss in human life and damage to infrastructure and property. Without going too deep into the ins and outs of the Marshall Plan, it was essentially a blank cheque from the US to capitalist aligned governments across Western Europe. The idea was to rebuild a Europe that favoured British/American liberal democracy over the various Communist movements that were gaining momentum in France, Germany, and Italy. Of course, there was also more... overt violent anti-Communist suppression going on, see Operation Gladio and Operation Paper-clip, and other fun little CIA adventures in post-war Europe, not to mention the eternally fun antics of one Charles de Gaulle who managed to see France through yet another constitutional collapse. For the purposes of this post, this is what you should retain for the Marshall plan, it was a 'blank cheque' for the parts of continental Europe sandwiched between the still fascist Iberian Peninsula (Francoist Spain and Salazar's Portugal) and the Communist East. The larger narrative is the Marshall plan largely worked, and this is unsurprising. With the notable exception of Pearl Harbour, the US hadn't actually seen any of its 'metropole' attacked. At this point, with Hawai'i not becoming a state until 1959, you could argue that Hawai'i itself was still more colony than metropole. The US hadn't seen the extensive bombing that its closest ally, Britain had seen, nor had it seen long drawn out land-based engagements like most of continental Europe and the Soviet Union had seen. There had been no widespread destruction of American infrastructure, no systematic bombing of its factories, compared to every other belligerent in the Second World War, the US had staked little and suffered little, and benefited immensely from war profiteering. This isn't a uniquely Marxist take on the matter either, this was a concern of centre-right leader Dwight Eisenhower, who, whilst in office, noted that the military-industrial complex, swelled by this war profiteering, was coming to dominate US politics and foreign policy. He didn't do much to stop it, but sure did make a speech about it.
Similar blank cheques were also extended to Japan, Taiwan, and South Korea, as Harry Truman's 'falling dominoes' theory of Communism meant that American policy in Asia sought to 'contain the spread' of Communism. Of course, if capitalism was so superior, why would Communism need to be contained is a different question for a different day. Britain extended similar blank cheques to Hong Kong (still a British Overseas Territory until 1997) and Singapore, as British policy towards the Commonwealth also shifted to 'containing the spread of Communism', as well as maintaining British influence in the Empire as it made the transition to the Commonwealth. What exactly the Commonwealth is remains remarkably contested, even by the Commonwealth itself.
My PhD is, broadly speaking, in 'Development Economics'. For the PhD and my Second Master's Degree I focused on Western Africa, specifically Nigeria, for the first Master's Degree I focused on South Asia, India and Sri Lanka specifically, and for my undergraduate thesis (for what that's worth) I focused on Eastern/Southern Africa, specifically Mozambique, but with considerable work on and in Kenya. Anyone who has ever worked around 'Development' knows that the World Bank, and the broader 'field' have certain development darlings they like to showcase. Korea, Singapore, and to a lesser extent India are amongst these darlings. India was one of these darlings in the late 1990s and up until the early 2010s, when the impacts of Manmohan Singh's liberalisation were being felt across the Indian economy, before the stagnation set in and the whole Modi thing happened. Japan also frequently comes up as a development darling. These 'development darlings' are frequently thrown at the feet of those of us who specialise in Africa and/or Asia outside of these cases, with it being heavily implied, 'just whip your country into this shape, and it'll be better'. It's not infrequently in my field that I come across papers comparing the entirety of Sub-Saharan Africa (SSA) to South Korea, a comparison so absurd that I can't help but notice its frequency, especially amongst authors of white or Asian backgrounds. For the record, SSA includes over 3/4 of the African continent, with 49 independent countries with 49 unique histories, hundreds of languages and cultures, a wide variety of geography, and 1.1 billion persons, compared to South Korea's one country, relative monoculture, singular history, tiny geographic area, and 51 million persons.
Most importantly, none of those 49 independent states ever received a blank cheque quite like South Korea did.
One of the most persistent debates within my field for the duration of my time in it has been around how exactly one measures development. The classic, of course, is the GDP, but GDP has several obvious flaws, including a complete lack of measure of distribution of wealth. An early answer to this was the introduction of the GINI coefficient, but GINI's weakness is an over focus on either income or expenditure, which negates historic wealth and/or capital gains. The GINI also 'breaks' when there are extreme outliers, a fact that the Palma ratio tries to fix. Of course, this is all strictly focusing on income and money alone, surely there are other means to focus on like education and life expectancy, right? This was Sen's argument which gave us the Human Development Index, an attempt to quantify several qualitative indicators, giving statisticians everywhere new headaches as we now had to explain the different behaviours of discrete variables compared to continuous variables to our bosses/clients who clearly couldn't care less and just wanted mathematical justification to do whatever they had already decided they were going to do anyway, which begs the question why do you want me to write an entire book you're just going to ignore anyway.
Not speaking from personal experience, or anything.
What is this obsession with measurement? It is born of the neo-liberal (here defined as policies from 1977 afterwards) impulse to make everything into a capital/free market problem. Born in the interest of cultivating new markets for capital to flourish in, with a promise that a 'rising tide will lift all boats', and that wealth will 'trickle down', despite mounting evidence to the contrary. Indeed, despite capital's assertion that making countries more 'business friendly' will help in their development, the opposite has proven true time and time again. This truth is acutely true in SSA, where debt has been used against the continent almost as quickly as the 'independent' nations adopted new flags. If we measure development in strictly capitalist terms--the presence of capital, it is little surprise that the places we have sent capital with no strings attached have capital. That's Korea's secret.
That's where debt comes into play again. Toussaint's book is an excellent companion to Graeber's Debt, as this book focuses on the ways in which we have used debt in many countries as a mechanism of control. The World Bank, from its beginnings was about maintaining a status quo in which capital could extract maximum surplus, much like how Slobodian argued it would in the book I reviewed here. In the case of post-independence African states, the first round of debt was assigned to them often included any costs that the coloniser had incurred whilst colonising them. As Toussaint points out, imagine if the US had, during the implementation of the Marshall plan, held France accountable to Germany for any costs Germany had incurred whilst invading them. This is roughly the same level of absurdity, holding Nigeria, for example, liable for any and all costs Britain and had incurred whilst occupying Nigeria. The people of Nigeria, who had not elected to be conquered by the British, were now being held responsible for the money Britain spent on oppressing them, and even fighting their various attempts at independence before 1960. The next round of debt came in the late 1980s, early 1990s as a rebuke to any and all attempts at socialism across the African continent, carrying with it the stick of 'structural adjustment programmes' that similarly held with them the same flavours of neo-liberal austerity that was dismantling welfare and social programmes across the US, Britain, and Europe. The World Bank began to hold The Economist's 'ease of doing business index' as a measure for economic development. To make matters worse, when this invariably led to an explosion of corruption in Africa, as it had in Europe and the US, it led to the convenient narrative that Africa's 'failure to launch' was due in no small part to the inherent corruption in Africa, following a racialised notion of corruption that has plagued discussions around Africa since the 18th century.
Toussaint argues that the World Bank's efforts in Africa have failed to 'develop' Africa because they were never designed to 'develop' Africa, at least not in lines with most definitions of development. Rather, they were designed to maintain access to cheap raw materials and cheap labour from Africa, and other post-colonial states for the corporations that had been exploiting them since the colonial era. The World Bank, Toussaint demonstrates over this admittedly lengthy tome, was largely funded by the colonial powers with an eye towards continuing control and extraction over their former colonies. If this sounds familiar to early Austrian designs on pan-Europeanism or Graeber's assessment of personal debt as a proverbial stick to contain and control the proletariat, you're seeing exactly why debt as we currently do it is in dire need of critique and assessment. Toussaint's work is also an excellent way to start to question underpinning assumptions around economic development. What is economic growth? Who does the growth benefit? Why do we measure growth the way we do? Why do economists get to call themselves scientists?
Read Toussaint, read Graeber, read Slobodian. Amongst others.
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