Banking on development
p. 24 · Read in the full issue
WHEN I was growing up, I remember learning that you weren’t supposed to hide your money under your bed. You had to move it all to the bank. Once there, all manner of miracles would be performed and the money would ‘grow’, just like you. Chances were, of course, that by the time you had enough money to open an account, you’d stopped growing. Or, that you spent it before it had time to grow. But the moral of the story was that banks deserved a special kind of respect, rather like policemen. They were trusted benefactors that protected your interests and even sprinkled some kind of magical fertiliser on your
savings.
To some extent this generous view of banks still holds for many of us in the Pacific. And it extends, moreover, to the biggest and most powerful amongst them, the World Bank and the Interna tional Monetary Fund, which out of the
goodness of their hearts are currently ‘helping’ numerous island states get into the fast (ie growth) lane of the global market economy en route to ‘development’.
One person who has no illusions about the World Bank as a beneficent situation, and who recently did a magnificent hatchet job on the myths that still surround it, was well known author Susan George. In the year of the bank’s golden anniversary, her latest book (currently at press) is a critique with a rather provocative purpose “I hope to give them an unhappy 50th birthday!” Not exactly the most conven tional of birthday sentiments, but the point was well taken by an enraptured audience attending one of two public lectures in Suva, Fiji, recently.
The ideological fuel that drives the massive World Bank machine are powerful and (for some) persuasive arguments about economic growth and, to coin Ronald Reagen’s term, the ‘magic of the market’. Market-friendly thinking and the growth bug are proving quite contagious in the Pacific as many a national or regional development report will confirm.
A case in point is Fiji’s historic (she loves me, she loves me not) 1994 Budget which is positively bursting at the seams with bank initiatives, rhetoric and zeal.
Amongst the hallmarks of the new economic fundamental ism (much of which crystallises in carbon-copy structural adjustment programmes) are policies of deregulation and export promotion, government expenditure cutbacks (on health, education etc), privatisation or corporatisation of public enterprises, concessions to private investors, so-called tax ‘reforms’, and some stringent wage and labour controls.
All told, the private sector is having a field day.
But one of the major handicaps of the economic growth model and its market policies is that the environment, along with the human beings who depend on it, have become visible casualties. Indeed there is a long list of environmental and human catastrophies associated with bank projects around the third world. The destruction of subsistence
agriculture, deforestation, forced mi gration, rising poverty levels and plunging health standards are amongst the destructive by-products of a run away (growth) rollercoaster. As George puts it, the watchdog of the World Bank is ‘grow now and protect the environ ment later’.
In our own region, we are already beginning to see some of the same writing on the wall (witness the fall-out from mining and logging, the Bougain ville crisis, the female sweatshops that sustain some of our booming export manufacturing sectors, and the rising levels of urban poverty). All that plunder and production mania may be doing wonders for our foreign exchange and GDP ratings, but at what human and environmental cost? (More on this another time).
Probably the most persuasive feature of George’s eloquent critique is that she
tackles the economic growth/market economy ideology on its own terms, exposing in laconic, dispassionate and quite humorous ways, its internal contradictions and flaws. The trouble with the bank, she says, is that if confuses natural capital (ie our natural environment and resources) with income, treating the former as if it were expendable or renewable, and implying that you can get around to ‘protecting’ the environment after all that growth has been achieved. The bank’s philosophy effectively “assigns to the environment a value of zero. And if you do this, your equation will be that the destruction of the environment doesn’t cost anything”.
As for the market, this can work fine for some things, George concedes, but once you seriously begin to consider people’s needs and interests, it can be woefully inadequate.
For one thing, “the market tells you too late when costs on natural capital are excessive. It can only give you a snap shot today. Therefore counting on the market to do the job of looking after the environment is contradictory”. Similarly, if decisions about public expenditure are to be based on an anticipated rate of return, then you might as well say goodbye to education, housing and just about anything else that offers to improve people’s livelihoods.
As George puts is, “If you believe that the market will provide education, health care, employment etc for everyone, you are wrong. It is not the task of the market to do this.
If it does provide jobs, this is a by-product of its basic aims of accumulation and profit. The market if left to its own will naturally tend to increase the gulf between the rich and the poor”. Despite her biting criticism of bank policies, George does not believe that there is anything inherently wicked about the institution. “The bank is not a collection of moral monsters. They are members of a religious organisation, a medieval church. They have the truth and they are damn well going to ensure that everyone accepts this truth.”
But the truth, even decked out in the most seductive garb, can be a pretty relative thing. As my father has often chided me “It all depends on where you sit!” □