The World Bank, the Monetary Fund, and Poverty

...As of 1990, these banks "had got rid of half of all developing country debt on their books in 1984...

...My belief is that the IMF's programs have created or contributed to poverty, as well as to joblessness, depressed earnings, and often severely reduced social spending in debtor countries...

...T]he president of the Bank stated that sustainable poverty reduction was the "overarching objective" of the Bank...

...All such rescheduling was conditioned upon an agreement with the IMF being in place...

...Its programs, according to one of the most competent observers, reflected these priorities, "rather than the realities of economic adjustment...

...IMF conditionality "prompted reduced food subsidies at some point in a majority of countries" under IMF surveillance, with "substantial" reductions being carried out in twenty-four of them, including Argentina, Brazil, Hungary, the Philippines, India, and Poland...

...Even if economic performance were measured by only the most aggregated indicator, this term is nevertheless an understatement, for the fact is that at the end of 1989 the region's average per-capita gross domestic product was 8% lower than it had been in 1980 and was the same as that of 1977...

...We will see that such measures depress wages and salaries, and are intended to do so...

...in 1970, the figure has been $3.4 billion...

...Princeton: Princeton University Press, 1992), p. 90...

...That becomes evident when we examine the IMF's insistence upon reducing budgetary deficits by client countries and the effects of such reductions on social welfare outlays...

...Capital flight or "reverse resource flows" —the flow of capital out of, rather than into, developing countries—is disregarded even though well documented...

...17 Peter Heller, "Fund-supported adjustment programs and the poor," in The Path to Reform, Issues and Experiences (Washington, D.C.: International Monetary Fund and World Bank, Sep...

...16 The purpose of IMF demands that such items as food subsidies be reduced or abolished is for prices to "find their own level," which is always higher than the subsidized price...

...The programs also resulted in restricting internal demand and devaluing exchange rates, so as to free resources for debt service (devaluation makes imports dearer, exports cheaper), and thus introduced models of economic development favored by international capital...

...and that their goods had to be delivered in a raw or semi-finished state, final manufacture usually being reserved for the importing industrial nation—all these factors should have been reason not to insist on a harsh and deflationary foreign trade policy...

...The commercial banks were essentially bailed out: much of the debt and interest owed them was repaid by way of new loans extended to the indebted countries by official creditors as well as by way of tax credits granted by the Treasury for their developingcountry loan loss writeoffs...

...The pessimism of the World Bank in regard to the persistence of global poverty beyond the year 2000 may also be interpreted as an indication of the low probability of success of an export-based growth strategy, inasmuch as it spells continued low consumption standards and politically and socially unacceptable income inequalities...

...If to this is added the fact that such decline had a markedly regressive bias, then it can responsibly be asserted that, in terms of the level of material well-being of FALL • 1993 • 501 World Bank, Monetary Fund, and Poverty the Latin American and Caribbean population, the 1980s witnessed a decline of capital proportions...

...12 Miles Kahler, Politics of Economic Adjustment, citing Jeffrey D. Sachs, p. 105...

...Bankruptcy becomes possible, as do runs on the banks by depositors fearing loss...

...Hence, both the World Bank and the IMF have insisted that "renewed access to the international capital market" would be obtained "first and foremost [by] strong implementation of an adjustment program that lays the foundation for stable growth...

...Capital flight has greatly contributed to these countries' foreign indebtedness and aggravated the scarcity of capital from which they have suffered...

...q Notes I Miles Kahler, "External influence, conditionality, and the politics of adjustment," in The Politics of Economic Adjustment, S. Haggard and R.R...

...Thus, private lenders have virtually withdrawn from such lending...

...That developing countries were forced to concentrate on exports at a time of weakening world prices for the commodities in which they specialized...

...Moreover, export-based growth presumes expanding world markets over a lengthy time span, say, twenty-five years...

...98, 99...

...13 Declining flows of long-term capital represented a key factor here...

...it helped "privatize" international finance...

...Is an economic order that tolerates this ignominy, even though some of its best defenders are ashamed, sometimes even tormented by it, sustainable...

...7 There arises the obvious question why a publicly funded financial agency should promote private interests...

...It tends to siphon the public resources needed for infrastructure and poverty relief...

...At the same time, IMF conditionality was now applied strictly in the interest of maintaining FALL • 1993 • 497 World Bank, Monetary Fund, and Poverty debt service: the stability of the world financial system took precedence over the economic welfare of the debtor countries...

...I° Jeffrey D. Sachs, "Introduction," in Developing Country Debt and the World Economy, Jeffrey D. Sachs, ed...

...5 Susan George, The Debt Boomerang: How Third World Debt Harms Us All (Boulder, Colo.: Westview Press, 1992), p. 72...

...ECLAC notes that "urban workers have suffered an absolute decline in their income and consumption capacity...

...it is worth quoting a pertinent paragraph: The term "lost decade" was used in past assessments to illustrate the extent of the economic setback suffered by the vast majority of the countries of the region...

...and almost never seems to require social welfare increases...

...So large a surplus (in countries, by the way, whose balance of trade should have been in the red, given their stage of economic development) not only meant the virtual abandonment of import substitution, by some estimates, but by some estimates also a 15-20 percent decline in domestic per-capita availability of goods and services...

...502 • DISSENT World Bank, Monetary Fund, and Poverty It must in fairness be conceded that numerous World Bank statements and publications are concerned with global poverty and inequality...

...ibid., p. 49...

...The terms under which the loans were made stipulated variable interest rates...

...interest rates are to be allowed to find their "real" levels (in other words, to exceed the rate of inflation) — the purposes of such decontrol being to increase private saving and private investment, which presumably would ensure sustained growth...

...That goal, where realized, must drive more people into poverty...

...The declines are not wholly attributable to IMF and World Bank policy, but they were exacerbated by it...

...And that, all the more so when one examines the actions of the wealthy in many of the debtor countries...

...1 Much of the World Bank's lending, like the IMF's, has been linked to ensuring its clients' debt service, at least since the mid-1980s — although within the broad framework of its function of promoting economic development...

...9 Ibid., p. 89...

...2 The World Bank Annual Report 1992 (Washington: The World Bank, 1992), p. 46...

...These adjustment loans became "a major focus of creditor [that is, Bank] policy" after 1985...

...True, their governments have not done this very competently, but weakening them is bound to worsen matters...

...The World Bank sees the question of capital flight entirely from the asset owners' point of view and has sharply rejected attempts by governments facing critical capital shortages to control it...

...It notes that whereas a few years earlier it had "identified a path of poverty reduction that would reduce the number of the poor in the world by 300 million between 1985 and 2000 . . . such a target appears no longer feasible" —the number then will be higher than in the earlier year...

...I do not believe so...

...Withdrawal from such lending was clearly signaled when Citicorp wrote off its large developing-country loan loss in 1987...

...The Bank assures us that its objective "is to help raise standards of living in developing countries by channeling financial resources to them from developed countries...

...The setback that these data suggest has found eloquent expression in a report by the Economic Commission for Latin America and the Caribbean (ECLAC...

...The adjustment loans have been designed to improve the "efficiency" of debtor countries' economies...

...An IMF official has written that adjustment measures "seek to restrain the growth in wages," and that, although such measures may spell hardship for middleincome workers in the "formal" sector, the lowering of real wages may create job opportunities for lower-income workers.'' That is reactionary nonsense, and underlines the poverty-inducing, deflationary effects of IMF conditionality...

...Such integration also requires far more private capital than is willing to invest in developing countries...

...1: Analysis and Summary Tables (Washington: The World Bank, 1991), p. 46...

...The official creditors eased the terms of their loans to the debtor countries and rescheduled (stretched out) debt service...

...Hence, real per-capita consumption expenditures, which had substantially grown during the 1970s, stagnated or contracted subsequently in a number of middle- and low-income countries...

...Such reductions of public investment in infrastructure and human capital seriously jeopardize . . . private investment...

...Much of the urban population in Latin America, reports ECLAC, "have gradually become poorer and increased in number and have also had to suffer greater overcrowding . . . , shrinking opportunities for wage-earning employment, a rate of inflation which exceeds the rate of increase in their income, and cuts in state services and subsidies...

...During the 1970s many developing countries took on large amounts of debt, made available to them by commercial banks and other private lenders from the enormous funds accumulated by the oil-exporting countries...

...11 The same observer stated that "the burden of debt servicing serves as an effective tax on adjustment...

...Levinson also points to the utter neglect of issues of social equity that accompanied import-substitution policies—the failure to create a broad tax base, reliance on a capitalintensive infrastructure in the presence of large unemployed reserves of labor, highly concentrated land ownership, inadequate educational and health delivery systems, and so on...

...That same ideology, promoted by clever academicians, consultants, and other advisers, is now infusing IMF and World Bank policies...

...Toward the end of the 1980s, a degree of debt relief was initiated under the Brady plan, named after Nicholas Brady, then the secretary of the treasury...

...2 The reasons advanced for this assessment—slower worldwide economic growth, weaker world prices for debtor countries' exports, etc...

...When that ratio reaches a certain level, defaults eat into banks' invested capital...

...Apart from divergent interests, they feared lack of future access to the international capital markets...

...The IMF's and World Bank's insistence upon structural change in the direction of privatizing public enterprise, financial deregulation in the interest of private investors, and competition unencumbered by tariffs or other barriers was a new development, one characteristic of the 1980s...

...n Jeffrey Sachs, ibid., p. 31...

...Under conditionality, the debtor country had to agree to boost its foreign trade earnings so as to generate the foreign exchange needed for debt service...

...High unemployment levels in the industrial countries clearly signal these limitations...

...any gains made are siphoned off to the benefit of outside creditors...

...It rose slightly in 1988, but again declined thereafter, turning negative in the early 1990s...

...Yet, it doubts that this objective can be reached in the foreseeable future...

...Again, ECLAC has written: A phenomenon linked with the gradual slowdown in the Latin American and Caribbean economies in the 1980s was the marked decline in net investment...

...For example, they are meant to facilitate fiscal reform so that budget deficits may be reduced, particularly deficits arising from the losses of public enterprises (such enterprises are common in many developing countries, and were created mainly because of the failure of private enterprise to organize the 498 • DISSENT World Bank, Monetary Fund, and Poverty pertinent productive functions...

...Treasury Department...

...When the Federal Reserve caused interest rates to soar after 1978 in pursuit of a ruthless policy to crush inflation by making credit scarce, interest rates on the banks' foreign loans likewise rose to levels that made the repayment or "servicing" of these loans by the borrowing countries vastly more costly...

...has also been instrumental in fostering the growing global consensus on the need for the local private sector to be the primary engine for development...

...14 ECLAC, p. 35...

...As a result of the decline in the terms of trade and the rising external debt service, which was accompanied almost always by a decline in the inflow of external capital, net potential investment resources shrank considerably...

...But from the creditors' point of view, it was successful...

...Sound macroeconomic policies and appropriate structural reforms are .. . likely to be important elements in solving the problem," it has written...

...14 The World Bank confirms this tendency with regard to agriculture, writing that "in almost all the developing countries, the rate of [public] investment dropped markedly in the 1980s, and the capital stock deteriorated...

...Traditionally, the World Bank has made project loans—loans for specific, mostly infrastructure investments...

...4 Adjustment loans are also meant to compel financial reforms...

...Adjustment loans are furthermore designed to promote reforms of a country's trade regime...

...But the rate of expansion of world markets has been slowing, FALL • 1993 • 503 World Bank, Monetary Fund, and Poverty and the increasing output of still rising industrial capacity cannot be readily absorbed...

...The U.S...

...The likelihood of default on debt service threatened an international financial crisis: The banks' loan-to-capital ratio had reached unprecedented heights...

...Yet, IMF and World Bank policies have contributed to making the eighties a "lost decade" in alleviating world poverty...

...In what follows I offer a critique of IMF and World Bank policies...

...Furthermore, devaluation, which lowers export prices and represents an aspect of "export-based growth," promoted by the Bank and the IMF, also raises import prices and thereby erodes the model of economic growth that especially Latin American countries have favored since before World War II—growth based on import substitution and facilitated by relatively low-priced imports of intermediate goods needed to build up domestic industry...

...The IMF, with the support of the American financial authorities, now took the lead in compelling the banks to continue lending to the debtor countries in order to ensure continued debt service...

...Privatization aggravates these inequalities...

...that global demand for their goods was suffering from synthetic substitutes...

...The Treasury Department, then Under Secretary William Simon, encouraged such recycling action, praising the banks as "efficient intermediaries...

...Import substitution, the economic growth strategy of Latin American countries, required a relatively large public sector, the subsidizing of vital industries, overvaluation of the currency to keep imports relatively low-priced, low interest rates and some control over capital investment, and reliance on foreign capital...

...over the 1982-89 period, they averaged a $26-billion surplus annually...

...Continued integration of these countries in the world capitalist economy is in any case predicated upon such acceptance...

...Thus, the region's net investment coefficient dropped from nearly 23 percent in 1980 to 16.5 percent in 1988...

...Fund conditionality in its broadest sense tends to require expenditure reductions in social welfare...

...Yet, the Bank's staff has written, "With the pressure to reduce public sector deficits, many governments substantially reduced their investment programs (and current expenditures for maintenance of infrastructure...

...IMF loans were extended mainly to finance balance-of-payments deficits that in the earlier decade had been covered chiefly by the commercial banks...

...World Development Report 1990: Poverty, p. 5. [T]he number of absolute poor in the world at the turn of the century will probably be higher than in 1985...

...In some of its publications, the IMF expresses concern with global poverty...

...Tariff reductions are pressed and export is intensified, exposing industry to greater domestic and foreign competition...

...3 Under the so-called Baker plan, proposed by then-Secretary of State James Baker in 1985, the "obstacles" to economic growth were to be overcome so as to restore the creditworthiness of debtor countries...

...4 "Effectiveness of adjustment programs," in Country Economics Department, Adjustment Lending Policies (Washington, D.C.: The World Bank, 1990), p. 21...

...The Bank makes thorough economic feasibility studies before granting such loans and closely monitors their implementation and effectiveness...

...The harsh conditions imposed by both the International Monetary Fund (IMF) and the World Bank upon developing countries belie the concern with poverty expressed in the quotations above...

...the total declined by 33 percent and 16 percent (after deducting interest paid on debt...

...Government that "non-payment of interest on the foreign debt constitutes a major breach in international financial relations, a major breach in normal relations with the United States ." 10 Thus, unmistakably, the government of the United States backed up the IMF as the "[institutional] vehicle through which the international financial community manifests to the borrowing member countries its priorities...

...True, some repatriation of flight capital has occurred since 1988, but it is low relative to assets held abroad, for example, by Mexican nationals, estimated by the IMF at $50 billion...

...Capital flight from Mexico, for example, averaged $5.3 billion per year between 1980 and 1987, equal to 15 percent of that country's outlays for such investment...

...The vulnerability of the banks in terms of their capital-loan ratios was unprecedented...

...There is the further question of how a private-sector "engine for development" would address, let alone cope with, the great and urgent problems of poverty and unemployment besetting most developing economies...

...Considering the burden of compliance with IMF policy, on top of the debt burden, why did not affected countries— most of Latin America and sub-Saharan Africa—combine to default...

...6 But that remains a most dubious prospect, and the statement also obscures the systemic inability of international finance to provide adequate capital to the poorer countries, and to refrain from imposing conditions that rend these countries' social fabric...

...It also sees to it that its loans are repaid, repayment being important not only for its own funding but for its standing in world capital markets and the Congress...

...its actions have deepened it...

...In 1980-81, the nineteen "severely indebted" middle-income countries averaged a trade deficit of $4 billion...

...A further consequence of these unfavorable capital flows has been an absolute decline in the domestic investment in plant, equipment, and infrastructure...

...16 IMF Conditionality: 1980-1991 (Arlington, Va.: Alexis de Tocqueville Institution, 1992), pp...

...This has meant sacrificing the imports required for physical investment...

...that devaluation further undermined export prices and earnings...

...8 Liliana Rojas-Suarez, "Risk and capital flight in developing countries," in Determinants and Systemic Consequences of International Capital Flows (Washington: International Monetary Fund, March 1991), p. 85...

...3 Barbara Stallings, "International influence on economic policy: debt, stabilization, and structural reform," in The Politics of Economic Adjustment, p. 78...

...7 David C. Mulford, "Evolution of U.S...

...this plant turned out to be more internationally competitive than anyone had thought possible...

...Together with the restrictive effects of those programs, the resulting scarcity of capital has further degraded developing-country economies...

...The Treasury's deliberate passivity in this matter, and its hostile reaction to proposals advocating a responsible official policy, had its source in an ideology of deregulation and privatization, which powerfully contributed to the disastrous indebtedness of developing countries, and to the (foreseeable) difficulty of overcoming it...

...When Denis Healy, a former British chancellor of the exchequer, proposed an official international scheme for recycling the surpluses, he found the Americans to be "hostile" to such a scheme...

...9 Those reforms are thus defined in the interest of private asset owners, rather than of the people whom the governments presumably serve...

...it fell steeply thereafter...

...reductions in two of the three categories in 62 percent...

...Be it noted, however, that the IMF, like the World Bank, serves priorities defined by the financial authorities of the seven leading industrial nations, especially the U.S...

...Social welfare spending is largely a function of total public spending...

...We cannot detail here an alternative model of economic development—one that would combine development with social equity and assign priority to eliminating poverty...

...But the IMF's and World Bank's ultimately successful opposition to import-substitution strategies was unconcerned with these problems...

...Over the 1978-88 period, capital originating in these countries and invested abroad—most if not all of it in the industrial countries—represented the equivalent of between two-fifths and one-half of the indebtedness of the "highly indebted developing countries" (as defined by the IMF...

...they are not to affect the overall objective outlined...

...Such "recycling" was viewed favorably by the U.S...

...Cutbacks of budget deficits aim to restrain inflation, reduce the public-service work force and publicly owned industry, and thus narrow the reach of government...

...nor has an improvement occurred since the mid-eighties...

...their ability to satisfy their depositors' withdrawal needs is imperiled...

...In so thoroughly privatized an economy as that of the United States, 10 percent of the population requires food stamps...

...Nevertheless, the economic model prescribed by the international financial institutions is likely to prevail for some time to come, since global capital flows to developing countries largely hinge upon how well these countries respond to the conditions imposed by them...

...Whether implementation of IMF and World Bank adjustment policies ultimately leads to renewed economic growth is not very likely...

...A major objective of the IMF's and World Bank's focus upon debt service has been to enlarge the flow of private capital that the observance of pertinent terms would engender...

...The World Bank Annual Report, 1992, p. 46...

...For example, Mexico protested the financing of private companies by one of the multilateral development banks, fearing that this shift in the emphasis of international financing would diminish the resources available for power, water, and sewerage works...

...Those who believe that it does assume, inter alia, that the export-based growth model pursued by such nations as South Korea, Indonesia, and Singapore can be successfully replicated, together with the financial policies that apparently ensured their success...

...The decline averaged — 1.4 percent per year for the middle-income developing countries, and — 4.1 percent for the low-income countries over the 1982-90 span...

...reductions in the three combined in 67 percent...

...Intervention by the Federal Reserve averted the crisis...

...The debt crisis into which the developing countries were plunged in the early eighties was itself largely the outcome of the actions of private agents (that is, the commercial banks) and of the deliberate passivity of the U.S...

...The decline in infrastructure, agricultural, and other physical investment is attributable not only to debt service and low capital flows but to IMF policies as well...

...We argue that the Bank's policies, like the IMF's, contribute to the profoundly disquieting prospect just outlined...

...As of 1990, an enormous percentage of net lending to the developing countries-77 percent— stemmed from "official creditors" — mostly the World Bank—compared with 34 percent ten years, and 57 percent five years earlier...

...During the 1980s, the Bank adopted a program of what it called structural and sectoral adjustment loans, evidently unrelated to its project loan functions...

...Kaufman, eds...

...cit., p. 81...

...Although the IMF may not be the only lender, other (private or public) lenders will likely be guided by the IMF's action...

...In 1991 Under Secretary of the Treasury for International Affairs David Mulford laid out the basic orientation of the two international financial institutions...

...The cost of the bailout was thus shifted to the tax-paying public in the United States...

...Jerome Levinson, a former general counsel of the Inter-American Development Bank, has stated, "In the three decades of the 1950s through the 1970s this model [of import substitution] succeeded in creating a sizable middle class, and a strong indigenous industrial plant, particularly in Brazil and Mexico...

...The Bank's World Development Report 1990: Poverty is a work of massive facts and figures and critical observations, whose underlying message is that economic development is not sustainable without the elimination of world poverty...

...As mentioned, the banks' funds for developing country loans on so large a scale were derived from the "recycling" of surplus funds from the oil-exporting countries, vastly enlarged by earnings from steep price increases...

...More important, they had been warned by the U.S...

...The time of such systems as means to forcing economic growth has passed...

...5 The pressure on "official lenders" (which include the governments of the OECD [Organization for Economic Cooperation and Development] countries) to supply badly needed capital comes in a time of great budgetary stringencies and intensifying competition for such capital from Eastern Europe and Russia...

...the total dollar amounts involved ran four times as high...

...In what the World Bank terms "severely indebted" middle-income countries, barely any rise occurred in per-capita GDP between 1981 and 1987...

...I do not question the need for international bodies that mediate a just global distribution of financial resources...

...Their purpose was to reduce inflation (which invariably benefits the creditor), and to limit the role of the state...

...Development Strategy," Additional Material Submitted for the Record, in Quota Increase of the International Monetary Fund, Hearing before the Subcommittee on International Development, Finance, Trade, and Monetary Policy of the Committee on Banking, Finance and Urban Affairs, House of Representatives, July 10, 1991 (Washington: U.S...

...It is possible that the import-substitution model of economic growth has been exhausted, or nearly so, and that some features of the adjustment demanded by the World Bank and the IMF have become acceptable to debtor countries...

...do not directly concern us here...

...During the eighties the IMF approved half again as many stabilization programs as it had during the seventies...

...Debt relief followed the recognition, mentioned above, that debt repayment would be impossible without economic growth and "structural reform" that would increase export earnings...

...After 1982, writes an IMF author, "capital flight resulted in net transfers of resources [from] (indebted developing) countries...

...The Bank's adjustment loans were to be contingent on a concurrent stabilization (that is, deflationary) program negotiated by a debtor country with the IMF...

...The decline in imported intermediate and investment goods has had adverse long-term effects," writes the World Bank...

...The present economic order, imposing the priorities of finance capital through its political allies and politicized banking institutions, has proved unable to eliminate world poverty...

...Leaving aside the question whether it helps bring about sustained growth, the decontrol of interest rates redistributes income to the more well-to-do, and the elimination of credit rationing channels funds into investments that are not necessarily productive...

...banks that were major lenders to Mexico, for example, had tied up the equivalent of 45 percent of their capital in loans to that country (the "normal" ratio has been less than 5 percent...

...Claiming that during the 1950s and 1960s state ownership or management of developing economies "did not work," while strategies giving the market "a major role in the development process" did—claims for which he adduced no facts—the under secretary stated that "this evidence gave rise to an emerging focus on structural policy reform .. . to foster efficient, market-oriented economic choices and resource allocation...

...After subtracting debt service, these flows amounted at the end of the 1980s to only about one-half of what they had been at their beginning...

...It is unlikely that its consequences will be more benign than those that followed upon the "privatization" of recycling the oil-exporting countries' surpluses...

...15 Jerome Levinson in Quota Increase of the International Monetary Fund, op...

...Conditionality" means that the IMF's terms must be accepted by the borrowing country...

...The threat of destabilization of the system remained a longer-term problem...

...The principle of "conditionality" under which the IMF makes loans available is applied regardless of the hardship it may inflict...

...For Latin America alone, heavy reverse capital flows, representing debt service as well as capital flight, have been reported for every year since 1984...

...The banks, however, could not impose conditions that would affect the economic policies of the FALL • 1993 • 499 World Bank, Monetary Fund, and Poverty borrowing countries...

...government...

...The low- and middle-income economies' growth rate of per-capita gross domestic product, a crude but widely accepted indicator of a population's welfare, shrank 1.4 percent annually between 1981 and 1987, compared with an average annual advance of 2.6 percent over the 1973-80 period...

...13 United Nations Economic Commission for Latin America and the Caribbean, Changing Production Patterns with Social Equity (Santiago, Chile, 1990), p. 19...

...6 World Debt Tables, 1991-92: External Debt of Developing Countries...

...the nine U.S...

...The Bank is part of the warp and woof of international finance, but it should also be noted that its staff, drawing upon a great store of accumulated knowledge and experience concerning economic development, has gained much influence upon policy and is in sympathy with the needs of its borrowers...

...Neither it nor the IMF has made the 500 • DISSENT World Bank, Monetary Fund, and Poverty control of capital flight a condition of its adjustment aid...

...Treasury—the policy goals of these institutions being "delegated [to them] by their most powerful members...

...T]hey have suffered a radical reduction in real wages—in some countries by up to 50 percent—and the number of workers in modern industries has been either static or declining...

...But they forget that success depended on at times bloody repression of workers and popular movements, and upon authoritarian political systems (as also in Chile...

...Many workers of course lose their jobs in the process...

...Their basic purpose is to stimulate private investment and to broaden the tax base...

...In fact, it became involved when it realized that absent economic growth in the debtor countries debt service would be a mirage and private foreign capital flows would dry up (as they largely did anyway...

...Government Printing Office, 1991), p. 97...

...their opposition was grounded entirely in free-trade and privatization doctrine...

...According to the IMF Assessment Project reductions in at least one of three social welfare expenditure categories—housing, health care, and economic services— occurred in 92 percent of forty-eight IMFconditioned programs over the 1986-90 period...

...12 More important perhaps, the financial resources anticipated under the IMF's and World Bank's adjustment programs, or under the Baker and Brady plans, have not been forthcoming in significant degree...

...The influence of the IMF upon the economic policies of developing countries increased substantially during the 1980s...

...Banks were owed more than $250 billion by the developing countries in the early 1980s...

...By 1981, furthermore, the foreign-exchange earnings (needed to service the loans) of countries such as Mexico and Brazil lessened as a result of recession in the industrial countries, induced not least by the high interest rates...

...504 • DISSENT...

...However, the principle that the international financial system must not be impaired by insolvencies or by concessions which debt relief entailed was not to be disturbed...

...and important World Bank loan categories have been made subject to IMF conditionality...

...its action was followed by other large banks...

...Chicago: University of Chicago Press, 1989), p. 27...

...According to the World Bank, real social spending per capita on health, education, and economic support (for example, food subsidies) declined by 26 percent in sub-Saharan Africa between 1980 and 1985, and by 18 percent in Latin America...

...1990), p. 11...

...Even as regards the provision of such basic necessities as food (let alone housing and health care services), privatized markets cannot be relied upon...

...Interest-rate controls and credit rationing are to be abolished...

...Such capital flight of course aggravated the problems of internal productive investment...

...Social welfare outlays are at best to be "targeted" more "efficiently" to needy groups...