The World Bank and the International Monetary Fund (IMF) are intergovernmental institutions founded in 1944 which greatly influence world development and financial order. They are also known as the Bretton Woods Institutions, built with the intention of rebuilding the international economy after World War II. Unfortunately, although it has great potential in creating an ever-evolving world economic system, it seems that the Bretton Woods Institutions are a mere tool of imperial influence in their modern form. Of course, this is a strong claim as such institutions pride themselves on being apolitical. Due to the limitations of the article format, I will not be able to completely convince you otherwise. However, I will direct you to a few points that should start you questioning.
An important part of Bretton Woods Institutions history is the dismantling of its monetary system and later championing neo-liberal doctrines, also known as the Washington consensus — promoting free-market economic policies such as deregulation, privatization, and trade liberalization implemented through Structural Adjustment Programs (SAPs) and other similar programs. The SAPs is a set of economic reforms that a country must comply with to secure loans from the IMF and the world. A study in Africa by Ann-Louise Colgan about the SAP showed: “The past two decades of World Bank and IMF structural adjustment in Africa have led to greater social and economic deprivation and an increased dependence of African countries on external loans.” Furthermore, economists such as Cohen and De Long, Nobel economics laureate Stiglitz, and Ha-Joon Chang have demonstrated that the US and countries of Western Europe have practiced opposite policies in their development. In addition, the Asian tigers further proved the deficiency of neo-liberal concepts in the development of economic policy. Yet, the SAPs and other similar programs are used to this day to force compliance upon any country in need of vital loans. Why is this the case?
This could be attributed to different reasons. Firstly, one of the conditions of the structural adjustment programs is to privatize companies that many corrupt leaders such as Pinochet had controlled. However, such privatization should be done with a just spirit whereby national corporations and national assets are sold equal to their value. Unfortunately, as we’ve seen in African and Latin American countries and as documented by Naomi Klein, it’s never the case. Valuable national assets are usually sold at dirt cheap prices, profiting multinational companies.
Other reasons or critiques of the Bretton Institutions vary from voting rights skewed towards the US, European countries, and Japan. Others discuss how the US has veto power over any major decision. Also, both institutions have effective impunity against any harm done— not to mention its creation of inequality and reduction of labor union power which has been well documented (Bretton Woods Project, 2019). Their overall aims are to eradicate poverty and increase economic growth and stability, ultimately contributing to global welfare and the fulfilment of human rights. However, the majority of data shows the cause of the majority of poverty’s decline was actually due to China (Observer Winter 2017-2018). Furthermore, the IMF’s own conditionality review in 2018 found several programs where “debt overshot projections by significant margins, reflecting disappointing growth and higher fiscal deficits.” These findings do not even mention the non-economic severe effect their policies have on equity and gender.
No one can doubt the vital role of an organized intergovernmental economic organization or the essential infrastructure projects that the World Bank has funded. However, such an organization shouldn’t be a mere tool of power on display but rather an actual intergovernmental organization that benefits all parties involved.
