Keeping The Rabble In Line Essays - Foreign Relations, Government

Keeping The Rabble In Line Keeping the Rabble in Line Copyright ? 1994 by Noam Chomsky and David Barsamian Introduction | Next section | Contents | Archive | ZNet The World Bank, GATT and Free Trade April 20, 1992 DB: In 1944 at the Bretton Woods conference in New Hampshire the World Bank and the International Monetary Fund (IMF) were both created. What function do these two major financial entities play? Their early role was in helping to carry through the reconstruction of the state capitalist industrial societies that had been wrecked by the Second World War. After that they shifted to what is called development, which is often a form of controlled underdevelopment in the Third World, which means designing and supporting particular kinds of programs for the Third World. At this point we move into controversy. Their effect, and you can argue about their intention, is overwhelmingly to integrate the South, the old colonial areas, into the global society dominated by concentrated sectors of wealth within the North, the rich society. DB: You know that old song, Where Have All The Flowers Gone? Well, where have all the billions gone? The World Bank has lent tens of billions of dollars. Who lent what to whom exactly? What did it do there? You can't answer that simply. In the advanced industrial societies [that money] helped carry out a reconstruction from postwar damage. In the Third World [lending has] had mixed effects. It's had effects in changing the nature of agriculture, developing infrastructure, steering projects towards particular areas and away from other areas. It's been part of the long process of trying to undercut import substitution and move toward export oriented agriculture. By and large [World Bank loans have] been a subsidiary to the policies of those who control it. The United States has an overwhelming role in the financial institution because of its wealth and power. And the United States and its immediate allies have designed programs of what they called development throughout the world. The money may have gone into anything from dams to agro-export producers to occasionally some peasant project. DB: The International Monetary Fund has been vilified in the Third World for the draconian measures that it has imposed on those developing countries. Take a Latin American country today. There is a huge debt crisis. Remember that the Bretton Woods system basically broke down in the early 1970s. The Bretton Woods system involved regulation of currencies, convertibility of the dollar for gold, all sorts of other rules which essentially made the United States an international banker. By 1970 or so the U.S. could no longer sustain that. It was very advantageous to the United States in the 1950s and 1960s. It allowed enormous overseas investment by American corporations. But by 1970 the U.S. was unable to sustain [the role of international banker]. President Nixon dismantled the system in 1971. That led to an enormous amount of unregulated currency floating around in international channels. The world was awash with unregulated capital, particularly after the rise in the oil prices. Bankers wanted to lend that capital, and they did. They lent it primarily to Third World countries, which means to elite elements. For example, Latin Americ an dictatorships would go on huge borrowing binges. The results were praised in the West as economic miracles, like the Brazilian miracle under the generals which left that country saddled with huge indebtedness. When the 1980s came along, U.S. interest rates went up and started pulling money toward the United States and increasing interest payments on the debt. The Latin American economies started going into free fall. Capital flowed out of them at a rapid rate. They were unable to control their own internal wealthy classes. The capital export from Latin America may not have been at the level of the debt, but it probably wasn't very far below it. There was a flow of hundreds of billions of dollars from south to north, partly debt service, which far outweighs new aid by the late 1980s -- payment of interest on the debt, and so on, and other forms of capital flight. By now, deeply impoverished African countries are even exporting capital to the international lending institutions.