Taking Note
R., F.
IMF: One Step Closer to a Global State When the International Monetary Fund (IMF) and World Bank held parallel annual meetings in Washington last month, Latin America portfolio managers were...
...And soon, being the head of a national bank like, say, Mexico's Banamex, will be like being a branch manager of Fleet Bank in Poughkeepsie, N.Y...
...Same as the old state...
...Governments going beyond these limits will be looked upon unkindly at the lending window...
...As they say on Wall Street, "markets believe" that programs of debt relief and poverty control can boost profitmaking by restoring purchasing power and easing social discontent...
...Just a little bit bigger...
...f we learn nothing else from a close observation of these meetings, it is that the managers of the global free-market project know it cannot work without an effective global government, a government whose function is exactly what Adam Smith said it should be in 1776, to create the best conditions for the functioning of markets and the accumulation of capital...
...IMF: One Step Closer to a Global State When the International Monetary Fund (IMF) and World Bank held parallel annual meetings in Washington last month, Latin America portfolio managers were paying attention...
...To "improve incentives for private sector activity," said Camdessus, national governments must reduce "unproductive outlays" in order to "make more room for spending on such critical areas as health and education...
...Simple economics gives the industrialized countries sufficient reason to assist the developing countries," Wolfensohn told the press, putting a bit more spin on the story for the investors...
...With the aim of keeping those money managers happy, the parallel annual meetings reiterated a commitment to free-market reforms and continued privatizations, but also acknowledged that those policies were insufficient to guarantee a stable investment climate in the developing world...
...As they say on the Street, it's not the programs but the spin on the programs that counts...
...As the multilaterals become proxy governments, and transnational banking institutions become truly global, being the president of, say, Mexico has become much like being the mayor of Detroit...
...Indeed, transnational banks are well placed to inherit many of the region's collapsing banking systems...
...The money folks were also watching for any new programs designed to aid the poor of Latin America, although when it comes to lending a hand to the poor and the indebted, the brokers are of two minds...
...The perceptions and subsequent discussions that emerge from the meetings," a Latin America specialist at Salomon Brothers told the Mexican newspaper El Financiero, "will be the pivotal event for markets in the coming weeks...
...Investors wanted to know if the IMF would succeed in doubling its capital base to 200 billion dollars, and-a related issue-if it would be able to finance a reduction in developing-country debt burden...
...And they have the power of the purse-and the one-dollar-one-vote representation-to act on their concerns...
...So meet the new state...
...A likely direction here is the globalization of banking...
...It is about transforming it into an effective vehicle of private capital accumulation...
...With their 4.5 billion people, these are the markets of tomorrow...
...And neoliberal Latin America depends more than ever on that short-term confidence...
...The stability and legitimacy of profitmaking are now global responsibilities...
...The most urgent task for the multilaterals, said the managing director, was to take care of "the Achilles heel of the global economy today-the fragility of national banking systems...
...Even more important, he said, national governments must be reformed to create an atmosphere in which there is "no tolerance for corruption in any form...
...Having successfully created conditions for short-term profitmaking by taking the developing world through privatization, labor discipline, budget cuts and deregulation, the world bodies are now concerned with questions of social and economic stabilization...
...In the guise of fighting corruption, the world bodies will now oversee sovereign activities more closely than ever, setting tight limits on the proper range of state activities...
...At the same time, the very same "markets believe" that such programs cut into profits by distorting markets and raising costs of production...
...Or to paraphrase John Maynard Keynes, money managers don't really know very much about the long-term prospects for Latin American development, but they do keep very close tabs on the short-term confidence of other money managers...
...Neoliberalism is not about abolishing the state...
...The two multilaterals stressed the need for programs to combat the poverty and income inequality their very own policies have exacerbated...
...Both World Bank President James Wolfensohn and IMF Managing Director Michel Camdessus reiterated the need-and pledged support-for national economies to engage in "social investment" to combat poverty in order to create a more stable investment climate...
...Wolfensohn and Camdessus are just telling it like it is: national governments and financial systems-especially in Latin America-have been weakened, perhaps beyond repair...
Vol. 30 • November 1996 • No. 3
