The World Bank Group headquarters building in Washington, D.C. Photograph Source: Shiny Things – CC BY 2.0
Rick Baum
When I was a graduate student in the 1970s, a professor suggested I read Michael Hudson’s Super Imperialism and do a paper on the World Bank. It was one of the bodies criticized by Hudson for its role in helping to cement and promote U.S. imperialism after World War II.
In a recent interview, Hudson said:
And what I discuss [in] Super Imperialism is how the World Bank and the International Monetary Fund were created as a means of imposing a neoliberal, anti-government structure on the world to prevent other countries from regulating their industry or from regulating their agriculture.
The function of the World Bank basically was to make Third World countries, the Global South, dependent on the United States for their food supply, by only funding export agriculture, export plantation crops, not growing their own food.
I ordered the Bank’s 1974 Annual Report. The cover photo is of bent over rice farmers working in a field in Bangladesh perhaps reflecting the mentality of an institution of western imperialism,.
While seeking materials for my paper, I came across a speech given by then president of the World Bank, Robert Strange McNamara, a leading planner of the murderous Vietnam War. In his speech with the title The Third World: Millions Face Risk of Death given on September 30, 1974 before the Board of Governors of the World Bank Group in Washington, he said
…among the 2 billion people living in the more than 100 developing countries the Bank serves, there are hundreds of millions of individuals barely surviving on the margin of life, living under conditions so degraded by disease, illiteracy, malnutrition and squalor as to deny them the basic human necessities. …a condition of life so degrading as to insult human dignity.
McNamara spoke of how the World Bank “would begin to deal with these issues…[with a] primary emphasis not on the redistribution of income and wealth” even though that could be “justified.” Instead, the emphasis would be “on increasing the productivity of the poor” to provide “for a more equitable sharing of the benefits of growth.”
One must wonder how malnourished people “barely surviving” could increase their productivity. Furthermore, how often does an increase in productivity provide “for a more equitable sharing of the benefits of growth?”
McNamara went on to describe the Sahelian countries of Africa:
Due to the most devastating drought in their history, Mali, Niger, Upper Volta, Mauritania, Senegal and Chad have been unable to take advantage of the favorable world prices of their chief exports: groundnuts, cotton, and livestock. The surge in petroleum prices has driven the cost of their essential fuel imports from 10 percent of their export earnings to 30 to 40 percent, at the same time that their food import requirements—literally to stave off mass starvation—have risen drastically. (emphasis added)
From the Bank’s 1974 Annual Report
How did the Bank respond to what McNamara described about the conditions in the Sahelian countries of Western Africa? Acknowledged in the annual report on page 24 was McNamara’s description. “The Sahelian drought—the worst of the century and now in its sixth consecutive year—has continued unabated.” The drought has spread from six countries to other parts of the region. The results:
Agricultural output has continued its sharp decline, and cattle herds have been further reduced. The cumulative losses from the years of drought now amount to as many as 4 million head—30% of the economic livestock of the six countries [Chad, Mali, Mauritania, Niger, Senegal and Upper Volta]… The drought has also created social problems: refugees from drought areas have flocked to towns, adding to urban unemployment and tensions. The lack of protein in the diet, due to the massive loss of livestock, has already severely affected the productive capacity of many adults, and is likely to impair the physical and mental growth of children. (emphasis added)
In a year in which the total loans of the bank came to $3.2 billion and total credits to $1.1 billion, the bank provided the six countries with just $14 million for drought relief which was part of an international aid effort in the form of a relief project that “aims at helping people in the drought-affected areas to regain their self-sufficiency through the redevelopment of their farms and herds.”[1] Nothing in the description suggests that the money would be used for immediate relief from the drought in the form of food and medicine.
Other money provided by the bank included an $8 million general development credit for Upper Volta intended to foster agricultural exports. As described in the report, “The cotton to be grown in the area will be exported, as will about one-third of the livestock.”[2]
Bank Money for Niger to Foster the Export of Food
According to the Bank’s Annual Report, credits it provided to Niger totaled $8.2 million. Of this total, $1.2 million was for roads and $2 million was part of the above mentioned $14 million in drought relief for the six Sahelian countries.
On page 28 of the report, the reader is informed about the purpose of the remaining $5 million which was not to provide immediate relief for those suffering from the drought but to make improvements at Niger’s Niamey airport.
The bank’s explanation for the credit was that “Niger, confronted with the technological demands imposed by the evolution of air transport” must improve its airport or “suffer eviction from the intercontinental network.” The project was to “lengthen and strengthen the runway; add aircraft parking positions; and help stimulate exports [not imports] of meat and vegetables which, because they are perishable, must rely on air transport.” (emphasis added)
Obviously, this project could be viewed as exacerbating problems associated with the drought and was likely to further give rise to a lack of protein in the diet, presumably leading to the impairment of children.
I could not believe that the description of the purpose of the loan was accurate. A few years after first reading the Bank’s annual report, I wrote letters to the bank itself. Eventually, I heard back from Peter C. Muncie who responded on World Bank letterhead (and wrote under his name Information and Public Affairs). In his words,
I am pleased to answer your question, “Was one of the purposes of that loan (IDA credit of $5 million to Niger to help modernize the Niamey airport) to help stimulate the export of meat and vegetables.” The answer is “yes.”[3]
I took that to be a definitive answer that the Bank was acting to drain a country of food that provides needed nutrition and protein that presumably would result in premature deaths. How could those who run the bank be so clueless about something a child would easily understand they should not be doing?
Another person from the Bank also with the title of Information and Public Affairs, Pusha N. Schwartz, wrote back in June 1979 describing conditions and the reasons for the $5 million grant.
The statement on page 24 [of the 1974 World Bank annual report] refers to the actual protein deficiency that the people of Niger suffered from the catastrophic drought-induced livestock losses in 1974. Cattle herds declined by almost half, small stock herds by about one-fourth, and some 75,000 families were estimated to have lost almost all their animals.
Schwartz went on to explain that Niger has traditionally been a net meat exporter, “and they continue to have a long-term comparative advantage in raising livestock,” a sector that “accounts at present [1979] for 18% of Niger’s Gross Domestic Product and 17% of its export earnings. Fuller development of this activity depends on more efficient and cheaper transport, including air transport.”
Schwartz continued,
increased agricultural exports from [Niger] have not materialized fully as yet, because of the prolonged drought, but they are expected to in the long run and they should have a positive developmental impact on the economy.[4]
Left unclear is whether the “positive developmental impact on the economy” results in a positive impact on the lives of most residents.
Maybe the agricultural exports had not fully materialized because the protein deficient and starving people acted to eat the food rather than export it!
The bank money may help some of the people of Niger. However, nothing is mentioned that the bank resources would be used to provide immediate relief to many people there who are presumably among those McNamara described as “barely surviving on the margins of life,” and provide for the children whose “physical and mental growth,” according to the Annual Report, is likely being impaired due to the “lack of protein in the diet.”
Comparative Advantage
Schwartz provides the rationale for the actions undertaken which is based on the theory of comparative advantage that one finds in economic textbooks covering trade policies. The advocates tout the supposed benefits of free trade, of which there certainly can be many.
The basic argument made is that countries should specialize in producing commodities in which they are supposedly more efficient at producing than producers in other countries, or to focus on producing commodities they produce relatively more efficiently than other commodities they produce.
By specializing, in theory, more than is needed is produced. The extra quantity can then be exchanged with those who also specialize in producing another needed commodity that they produce more efficiently. According to the theory, the result of the trade exchange will be mutually beneficial. Both parties will be better off with more to consume or use for production than they would otherwise have available if, instead of entering trade relations, they each produced, on their own, both commodities for their own use.
Generally ignored is the relative power of the trading partners that may result in forcing a poorer country into specializing in what the more powerful country desires (and keeping its price low) even if detrimental to most people living in the poorer/weaker country.[5] Additionally, what is labeled as efficient is likely a function of the cheap price of the commodities being exported that results from forcing farmers to accept low prices for what they produce or by paying the workers who produce them poverty level wages.
In other words, trade rationalized by those citing comparative advantage may not be beneficial. It may have more to do with the greater exploitation of producers in poorer countries and with maintaining imperial domination, power imbalances, and dependency. As Hudson suggests, aid programs from institutions like the World Bank are utilized to foster the growth of these unequal relations.
Schwartz did not discuss what Niger would be receiving in return for its export of meat and vegetables. The money provided to Niger for improvements to its airport may strike one as an example of the use of the theory of comparative advantage to rationalize what turns out to be murderous policies, looting and economic exploitation.
The first page of the World Bank’s Annual Report informs us that The World Bank Group of institutions “help to raise standards of living in developing countries by providing financial and technical assistance.” No doubt that some beneficiaries of World Bank money may prosper, but that appears to happen at the expense of those whose grave needs are not being met. The grant used to improve Niger’s Niamey airport appears to be an example of Super Imperialism “success.”
Notes.
1) 1974 World Bank Annual report page 28 ↑
2) Ibid. page 26 ↑
3) ↑
4) Ibid. PDF ↑
5) As is the case with many such theories, comparative advantage is logical and makes much sense. The problem that arises is when it is examined in the context of the real world of the trading partners. For a clear explanation of the problem in which is examined a key example used by Ricardo to justify the comparative advantage theory—see Harry Magdoff’s Imperialism: From the Colonial Age to the Present, chap 5., Monthly Review Press 1978
Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.
