Words&Dirt

“The IMF issued its first full-fledged ‘structural adjustment’ program in 1983.  For the next two decades, every country that came to the fund for a major loan was informed that it needed to revamp its economy from top to bottom.  Davison Budhoo, an IMF senior economist who designed structural adjustment programs in Latin America and Africa throughout the eighties, admitted later that ‘everything we did from 1983 onward was based on our new sense of mission to have the south ‘privatised’ or die; towards this end we ignominiously created economic bedlam in Latin America and Africa in 1983-8.’

Despite this radical (and highly profitable) new mission, the IMF and the bank always claimed that everything they did was in the interest of stabilization.  The fund’s official mandate was still crisis prevention––not social engineering or ideological transformation––so stabilization needed to be the official rationale.  The reality was that in country after country, the international debt crisis was being methodically leveraged to advance the Chicago School agenda, based on a ruthless application of Friedman’s shock doctrine.

Economists at the World Bank and the IMF admitted this at the time, although the admissions were generally made in coded economic language and restricted to specialized forums and publications for fellow ‘technocrats.’  Dani Rodrik, a renowned Columbia University economist who worked extensively with the World Bank, described the entire construct of ‘structural adjustment’ as an ingenious marketing strategy.  ‘The World Bank must be given credit,’ Rodrik wrote in 1994, ‘for having invented the successfully marketed the concept of “structural adjustment,” a concept that packaged together microeconomic and macroeconomic reforms.  Structural adjustment was sold as the process that countries needed to undergo in order to save their economies from the crisis.  For governments that bought into the package, the distinction between sound macroeconomic policies that maintain external balance and stable prices, on the one hand, and policies that determine openness [like free trade], on the other, was obfuscated.’

The principle was simple: countries in crisis desperately need emergency aid to stabilize their currencies.  When privatization and free-trade policies are packaged together with a financial bailout, countries have little choice but to accept the whole package.  The really clever part was that the economists themselves knew that free trade had nothing to do with ending a crisis, but that information was expertly ‘obfuscated.’  Rodrik meant this comment as a compliment.  Not only did this bundling work in getting poor countries to accept the policies selected for them by Washington, but it was the only thing that worked––and Rodrik had the numbers to back up his claim.  He had studied all the countries that adopted radical free-trade policies in the eighties and found that ‘no significant case of trade reform in a developing country in the 1980s took place outside the context of a serious economic crisis.’

It was a staggering admission.  At this point in history, the bank and the fund were publicly insisting that governments the world over had seen the light and realized that the Washington Consensus policies were the only recipe for stability, and therefore democracy.  Yet here was an acknowledgement, made inside the Washington establishment, that developing counties were submitting to them only through a combination of false pretenses and bald extortion: Want to save your country?  Sell it off.  Rodrik even conceded that privatization and free trade––two central pieces of the structural adjustment package––had no direct link with creating stability.  To argue otherwise, according to Rodrik, was ‘bad economics.'”

––The Shock Doctrine: The Rise of Disaster Capitalism, by Naomi Klein, pg. 205-6

“‘Nathan?’

He scuttled sidewise, getting the fire entirely between us.

‘Nathan, pray hear me.  I was sincere when I begged your pardon.  I fear you mistook.’

He nodded, and kept stirring the pot.  ‘And your pardon, Rupert, if I offended.’

‘The fault was mine, I am hasty and choleric.  I hope you can forgive me for it?’

‘Aye, Rupert.’  A flat dissembling voice: he was still afraid of me, though his lips curved upwards towards cold blue eyes.  A real viper’s mouth.  I felt in my cheek the smart of the bitten place.  Let me once get you alone, I swore to him in my heart, you’ll know what it is to be bitten.  It was like promising myself the best wine, and on the strength of it I smiled on him almost tenderly.  ‘Be so good, Nathan, as to tell our friend Ferris we are reconciled.’

‘Aye, Rupert.'”

––As Meat Loves Salt, by Maria McCann, pg. 170