IMF & World Bank admit to inequality crisis, but they helped create it

21.10.17 Originally written for War on Want & published by the Morning Star

The World Bank and the International Monetary Fund (IMF) have been forced to admit to the crisis of soaring inequality. But it is the policies they have spent 40 years forcing on the world’s poor that led us here.

This charm offensive is unlikely to signal a significant shift in their approach but it may be an indication that the cracks in the system run deeper than they appear.

This isn’t the first time that the IMF and World Bank have changed their tune. It happens about once every 20 years, when the gulf between their real-world impact and their stated aims of sustainable development, democracy and poverty reduction grows a little too wide to explain.

Like the gap between rich and poor, it’s the widest it’s been since the IMF and World Bank were founded after World War II.

Then, the US towered over a wrecked world economy and the systems it produced still reflect that balance of power. At the World Bank today, the entire African continent now has a collective vote share of 0.16 per cent.

Since the 1970s, their development model has hung quite openly on the brutal realities of global capitalism: a carnival of resource extraction, exploitation, privatisation and plunder which devastates the Global South to the benefit of corporations based in the Global North.

That’s an old pattern going back through the colonial era to the transatlantic slave trade. By the 1960s, however, the success of anti-colonial struggles threatened access to valuable resources and cheap labour in the former colonies. But the rise of neoliberal ideology offered up new mechanisms of control.

Periodic rebranding aside, the neoliberal development story has remained essentially the same and, like most myths, it is best understood from the beginning.

The history of global capitalism is a string of unprecedented debt crises and another exploded in the late ’70s. It was then that the first major rebrand occurred and the neoliberal “Washington consensus” first put itself in the driver’s seat of international development.

People in the Global South were about as responsible for that crisis as people in the Global North were for the sub-prime mortgage crash of 2008.

And similarly, the storm clouds cleared to reveal those least responsible had been left with the bill, in this instance owed to their former colonisers. The economies of the Global South were crippled.

The emergency-response loans issued by the IMF and World Bank, in place of rightful reparations for generations of slavery and exploitation and which the South was in no position to refuse, came with a set of conditions that have perpetuated poverty, dependency and oppression ever since.

These “structural adjustment programmes” forced countries to lower living standards for their own people; to cut wages, social spending, public healthcare and education; and open their fledgling economies to predatory transnational corporations, all to expedite the repayment of that toxic debt.

Structural adjustment was a major cause of global poverty and instability and its aftershocks are still being felt today. They had their justifications: that if the financiers, the “real creators of wealth” could be repaid, that wealth would trickle down. Above all else, the debt had to be repaid for the sake of future generations — even as children went hungry.

If the story sounds familiar, it is. Its was trialled in the South long before they dared to share it with a European audience.

When the IMF first sounded the alarm over the impacts of austerity in Europe in 2013, you’d never guess they’d spent a generation ignoring them in the Global South, where growing human cost simply reflected growing profit margins for Northern banks.

Falling short of its stated aim — development — reflected the achievement of neoliberalism’s true goals: profits for the few, dependence for the many.

As renowned US diplomat George Kennan put it in a startling moment of straight talk just a few years after the institutions were founded: “We have about 50 per cent of the world’s wealth… Our real task in the coming period is to devise a pattern of relationships, which will permit us to maintain this position of disparity without positive detriment to our national security.”

Poorer, post-colonial societies being the testing laboratory for austerity means there is much to be learned from their history.

The first lesson is that the neoliberal development model has not failed. It is doing what it was designed to do: perpetuate poverty and economic dependence in the former colonies.

That is why it’s worlds away from the development path taken by today’s global powers, which centered on self-sufficiency, economic regulation and investment in social welfare.

The second lesson is that contradictions betray weakness. Over the 1980s, another “lost decade of development,” the collective debt of poorer countries soared from $596 billion to $1,419bn — this despite repayments over $1,660bn, which cost countless lives.

At this point, when the centrality of corporate interests became a little too transparent, the Washington consensus became the post-Washington consensus and “structural adjustment” became “poverty-reduction.”

The rules of the game stayed the same but it is a sign of weakness that these goliath institutions again now lack the confidence to say what they mean.

George Orwell had a word for this: doublethink. In his dystopian classic 1984, he explored how people could be taught to believe things to be their opposite: “War is peace, freedom is slavery, ignorance is strength.” In the same way, for 50 years inequality has meant development. Clearly, the cracks in that theory have grown too big to hide.

Last week’s meetings were crawling with contradictions. Their anti-inequality rhetoric was met by an powerful challenge from global civil society to change course.

152 organisations from 45 countries launched a global campaign against their public-private partnerships, which have impoverished governments, undermined democracy, human rights and social support for women and children.

The World Bank also came under fire for increasing fossil fuel investments to a quarter of its total over recent years, while warning publicly of the “acute threat” of global warming.

They will work hard to appear to be closing these gaps but, like last time, rebranding won’t rewrite the rules.

The 1990s post-Washington consensus was presented as a moderate version of its predecessor, prioritising good governance and social provision, but it paved the way for a host of dangerous public-private partnerships, while undermining democracy and sovereignty for the Global South.

The third lesson is to understand the system that exploits us is a global one and look to the Global South not just for learning but for leadership.

I’ve been reminded of that working with War on Want, which supports a range of powerful social justice movements across Asia, Africa and Latin America, where communities on the front line are going toe-to-toe with the banks and corporations.

It is where people have been hit the hardest and have the most to lose, that some of the most radical alternatives and courageous resistance is emerging. Wherever this happens, it demands our support; and it shows us what’s possible.

The eight richest people in the world own as much wealth as the poorer half of the global population. All 3.8 billion of them.

This is what it had to come to before the World Bank and IMF would finally, after 40 years of delusion and denial, admit what most of us see around us every day: inequality is tearing us apart.

War on Want is one of over 100 organisations calling out these institutions over their role creating inequality around the world.

With another embryonic debt crisis in the Global South and subprime mortgages back in business in Britain, these are prime conditions for another global economic shock.

Whether that shock acts as cover for a renewed neoliberal offensive by international finance or opens the door to radical alternatives — that will be decided by what we do now.

#JezWeCan : A Personal Account of the Death & Potential Resurrection of the Labour Party

“I am not interested in power for power’s sake, but I’m interested in power that is moral, that is right and that is good.” – Dr. Martin Luther King Jr.

When I was five years old I watched my grandmother, with narrow eyes and a heavy sigh, tear Labour’s 1995 manifesto into pieces. She left them on the kitchen table and went straight to call head office and cancel her party membership, breaking generations of family tradition. At the venerable age of five all I knew about politics was that we had two choices – Labour and Tory – and Labour were ‘the good guys.’ So I asked her why she’d left.

She told me that Tony Blair had scrapped something called Clause 4: a promise to put the public in charge of the services they needed and the places where they worked. “It’s about the right of ordinary people to control their own destinies,” she explained. It was a bit poetic, perhaps an echo from a more optimistic generation, but she was absolutely right. That’s what it’s always been about and precisely what’s at stake now.


I didn’t think much about Clause 4 growing up. But I did think a lot about was the war in Iraq. I was 12 when it started. We watched the historic anti-war march in London – the biggest march in British history – and then watched the government go to war regardless. That was when I learned that democracy in Britain was not working the way it was supposed to. It was our first truly televised war, and I was transfixed by the coverage: dispassionate reporters parroting official sources while women wept over their kids in ruined buildings, endless parades of tanks, Iraqis fighting and dying in the streets while our artillery boomed like the voice of an angry god. I watched as the party that said it couldn’t afford to educate me managed to finance all those long years of occupation, during which time the truth about the WMDs, the civilian casualties, the military incompetence, the oil interests all spilled out into the light of day.

In their desperation for an ‘electable’ leader too many have been willing to sweep these crimes, which once horrified and enraged us, under the carpet. Some are even tapping an argument or two from the man himself, whose considered position is “even if you hate me don’t vote for Jeremy Corbyn.” I put it to anyone willing to swallow that line that they have forgotten the fundamentals of what the Labour Party is for and how it became a political force to begin with.

labourThe People’s Party? 

Things had been going wrong for a while by the time Blair came into power, of course. In 1976 the flows and fluctuations of our free market system cast Britain adrift in an economic crisis and forced Wilson’s Labour government into a £4 billion loan from the International Monetary Fund (IMF). Of course there’s no such thing as a free lunch with the IMF – in exchange they forced Labour into deep spending cuts and wage controls. By 1979 the unions were going on strike just to be heard by their own party. Conceding to the IMF’s terms had put Labour on the opposite side of the fight from its core supporters.

That dividing line has been in place ever since. Opposition to the Conservatives through the Thatcher years was a unifying force, but the 1990s dawned on a new era of personalistic, poll-based electioneering. To maintain profits in the post-war economy, corporate interests had painstakingly cultivated a new culture of individualism. Brands developed personalities and so did their products. Buying those shoes or that car became an expression of who we were, or aspired to be. You no longer had to be American to buy into the American Dream.

Psychoanalysts and focus groups were becoming an intrinsic part of doing business, and the rise of Thatcherism brought this ethos into the political establishment as well. Inspired by Bill Clinton’s presidential campaign strategy, which was guided by focus groups of swing voters, the Blairites wanted to ‘modernise’ the Labour Party. Their argument wasn’t about policy or even politics. It was a marketing strategy. After eighteen years of Tory rule they were determined to win power. It was no good banging on about exploitation, social justice and the working class, they insisted. No one was listening anymore. No one wanted to self-identify as working class, since the rise of cultural consumerism and political individualism made it a source not only of struggle, but of shame. We could all be aspirational consumers now – and if you weren’t one, you had only yourself to blame. No one could sell a socialist manifesto in a climate like that.

Of course, politicians aren’t supposed to work like that. They’re not car salesmen. They’re supposed to have real values and convictions; to put the public interest first; to respect us enough to win votes through actual debate, votes that are supposed to be more than a commodity you bid for; they represent a mandate of trust from the people. But New Labour had just won a leadership election, led by a bright eyed young Blair promising to bring down taxes, benefit scroungers and young offenders. It was a manifesto pulled straight from the focus groups of suburban swing voters. Clause 4 didn’t stand a chance.

Diagnosis of a Dying Party

Over the past twenty years we’ve seen where this ‘New Way’ leads. Today the party’s active base is a fraction of its former self, its relationship with the unions in tatters and its relationship with my generation non-existent. There is no question about it. Whatever was achieved by his government can never mitigate the damage done to our public services, not to mention to our international standing after an illegal invasion that destabilised the Middle East and a fifteen-year long War on Terror that has divided our communities and eroded our civil rights. Under Blair, the Labour Party lost its vision: the vision that gave us the post-war welfare state and gave the party its sense of self.

Nothing showed this up so well as the general election. Miliband, most agree, was a thoroughly uninspiring leader and he ran on a thoroughly uninspiring platform of ‘austerity-lite’. The right is quick to claim it was the ‘lite’ and not the austerity part that cost him victory. But as has been repeatedly pointed out and ignored, his tokenistic leans to the left, like trading the bedroom tax for a mansion tax and freezing energy prices, were usually the only thing boosting popularity at all. Labour used to win elections on slogans like this: ‘The rich man’s power is in his purse, the poor man’s power is in his politics. Don’t surrender your power to the rich man, he already has too much. Vote Labour.’ But as others have argued, by adopting the Conservative line on austerity (‘cupboard is bare, credit card maxed out, fiscal responsibility for the poor’,) Labour was just kicking the ball towards its own goal.

15383153675_d51dc2fbec_oThe Labour Party has been chasing power by any means necessary. It was the wrong choice in 1994, and it’s the wrong choice now. As a strategy it reflects an existential crisis for a party whose leaders have forgotten it wasn’t built to seek power for its own sake; that being in government was only as good as it empowered them to empower labour (that’s us – the public.) So we lost faith. Call it social democracy, loony leftism, call it a cat with a hat on, it’s about social justice. We’re about social justice. And when it became clear that the Labour Party was no longer fit for that purpose, we left.

Lifelong advocates like my grandmother left. People like me never joined. Ken Loach helped set up Left Unity. Mark Steel spent his time with the People’s Assembly, since it was representing labour values better than the party. (Both of them have been banned from voting in the leadership election.) The whole of Scotland broke a century of tradition and jumped ship to the Scottish National Party. We flooded into the Green Party, into new radical organisations and humanitarian NGOs, founding and joining whatever might help fill the hole left by the quiet moral death of the party. Disenfranchised and disillusioned, many just stopped doing anything at all, and in a self-fulfilling prophecy became what the Blairites always wanted: 15286607298_4a9b8c9d6a_opassive consumers.

What all of us (particularly Labour’s leadership candidates) need to understand is this: even if you want to, you can’t realise labour values with nothing more than passive consumer votes and a Labour Government in Power. Why? Because a Labour Government actually acting on Labour Values will necessarily go head to head with powerful vested interests: the energy companies, the landlords, the corporate media, the banks. And to stand up and win that government needs more than passive consumers at its back. It needs a politically engaged, self-educated and empowered electorate; strong trade unions and a mass movement ready not just to go out and vote, but to organise, demonstrate, even strike for our rights. It needs the things Corbyn’s been building outside Westminster all this time; that only he has the credibility to bring back to the party.

Open the Flood Gates

Blair’s way was never going to win us a better world. Today it can’t even win a general election. In 2015 Labour tried to play Blair’s game again but this time they lost, because Britain is not the same country it was twenty years ago. Twenty years ago the middle class was learning to aspire, wrapping itself in the mythology of the Self Made Man and preparing finally to put its eternal faith in the free market system. Today we are living in the smoking wreckage of that system. We had to bail out the bankers who lied for profit, and got paid our money by MPs who lied about their expenses. We’re drowning in debt and lining up at food banks. We’ve seen the BBC harbour paedophiles and the police harass black kids in our cities. Things are so bad, the top half of the country wants to leave. This does not inspire confidence. Public trust in these key institutions has never been so low, and with our faith so clearly misplaced we are becoming interested, again, in what my grandmother said *it* was all about: people controlling our own destinies.

The labour movement built the Labour Party to make that possible for everyone at a time it was the privilege of wealthy white man. My whole life I was convinced that the best of the Labour Party was confined to history books and sepia photographs. But last week I joined over 100,000 others and signed up as a supporter. This huge influx has the party leadership quaking in their suits. The Blairite group Progress, described by one of its own members as “an unaccountable faction dominated by a secretive billionaire” which has in turn dominated the party for years, now stands in the shadow of a tsunami. From this vantage point it’s clear that the leadership race is about much more than the next leader. Clearly they will stop at nothing to wreck the vote. One thing Yvette Cooper has right: it’s a battle for the soul of the Labour Party. And it’s a chance for us to correct that historic mistake I witnessed at my grandma’s kitchen table, when the party chose power over principle.

That makes him our best defence against the rise of the already bloated far-right, because he represents a break with the establishment driven by politics of hope, not hate. His straight talking sincerity, sorely lacking elsewhere, is raising the confidence of a betrayed nation. Despite his staunch anti-racism it’s even proving as popular with UKIP voters as with the Left. It would be a mistake to underestimate the array of forces he could unite behind him.

Whatever their differences, a vote for anyone else is a vote for austerity. The anti-austerity Syriza party in Greece and the SNP in Scotland swept the board because they promised real change; the same reason there’s a black man in the White House. The right said it would never happen. His supporters said ‘yes, we can,’ and they did. And if Labour could find the courage to be what it once was – anti-war, anti-austerity mass party – it could take the country by storm.

They said Syriza and the SNP weren’t credible. They said a black man in the White House wasn’t credible. But people can overcome a lot when they believe real change is imminent. If Labour could find the courage to be what it once was – anti-war, anti-austerity mass party – it could take the country by storm.

2015-08-26 15.58.23But here’s the point: even if he lost, at least we’d have the chance to build something we believed in again. So if you’re lucky enough to have a vote – and if the party let you cast it – ignore Tony Blair and vote Corbyn for all the reasons he says you shouldn’t. Do that, and rather than accepting it, we could fight back against whatever’s gone so wrong in our country, that one of Parliament’s only consistent voices for peace, democracy and social justice gets less of a hearing than the one former leader who should definitely be in prison. That’s the fight that really matters. There Is An Alternative. All this vote determines is whether the British Labour Party can be part of it again.

Originally published by The Critique