Today determines the lives of millions and millions of people around the whole world. Policies are dictated and imposed that affect all countries of the globe in the areas of health, education, food supply, investment, privatization, jobs, taxes, the openness of markets, currency devaluations etc. The International Monetary Fund (IMF) is responsible for most of the debt generated in poor countries, and the social movements that in the last several years have sprung up in the world against privatization of health services, education, the electrical sector as well as the banks, water utilities, government oil and gas companies amongst other strategic resources.

2004 marks 60 years since the creation of the IMF and the World Bank (WB) which together with the Inter-American Development Bank (IADB) and other multilateral banks pressure ever more, in a coordinated manner, for the neo-liberal agenda on behalf of the most powerful economies and transnational corporations. It is most important for this reason that society understands better the functioning of the cycle that feeds this mechanism that is more and more impoverishing populations, and concentrating property and wealth in the hands of fewer and fewer.

However, now we give you the words of a Nobel Prize winner in Economics and ex-World Bank functionary. His opinion is based on his direct experience, not because he has been directly affected by World Bank policies, those are the poor, but because he worked with the people that designed these policies. Joseph E. Stiglitz, since 1997 when the East Asian financial crisis arose until 2000 worked at the World Bank as Chief Economist and Vice-president, “Where I saw first hand the devastating effects that globalization can have for developing countries, and especially the poor in those countries” (P.11), which he wrote in his book “Globalization and its Discontents” (Penguin Editors, 2002). He was also Chairman of the President Clinton’s Council of Economics Advisers. This Council was composed of three experts named by the President to assess economics issues: “Unfortunately, but not surprisingly, I quickly discovered in the White House (….) and in the World Bank that decisions were taken according to ideology and politics” (p12). Stiglitz also received the Nobel Prize for Economics and has received financial assistance from the Ford, Macarthur and Rockeller Foundations, the Canadian International Development Agency (CIDA) and the United Nations Development Program (UNDP).

All of the following quotations cited here pertain to the same book. They say nothing new that many economists, political analysists, intellectuals, academics and also the poor, unemployed and unions, indigenous and social organizations haven’t said many times before. However, for people to understand and be aware of what is happening it is necessary that he says these things again:

-          “the policies of the IMF, based in part on the out dated assumption that markets automatically generate efficient outcomes, have blocked desirable government interventions” (pg.14)

-          “(…) I believe in privatization (meaning the selling of public monopolies to privates companies) but only if the companies will be more efficient and reduce prices to consumers”. (pg.13)

-          “in the World Bank just as in the White House their existed  a distant  relationship between the policies I recommended in my previous economic work, which was fundamentally theoretical, and associated in most part with the imperfections of the market”.(pr13)

-          “The models that economists have employed for generations have argued that markets function perfectly - including the denial of the existence of unemployment- or argued that the only reason for unemployment was based in excessive salaries, and they have suggested the obvious: reduce them.” (pg.14)

-          “(…) I was pleased by the emphasis on transparency during the global financial crisis of 1997-1998, but not the hypocrisy of institutions like the IMF or the treasury of the United States of America, that was highlighted by them in East Asia when they were the least transparent that I have encountered in my public life”. (pg.15)

-          “(…) I emphasized the necessity for better transparency, the improvement in the information that citizens have concerning these institutions that permits those affected by the policies to have more to say in their formulation”. (pg.15)

-          “(…) if markets are the center of the economy, the State has to fulfill an important role, however limited”. (pg.15)

-          “(…) it was as wise to believe that the State could remedy all the failures of the market, as it would be foolish to believe that markets can resolve by themselves all the problems of society”. (pg.15)”

-          “(in the IMF) decisions were adopted using a curious mix of ideology and bad economics, a dogma that on occasion hardly seemed to mask veiled interests. When the crisis hit, the IMF prescribed old solutions, inadequate although standard, without considering the effects they would have on the people (…) there was only one recipe and other options were not investigated”. (pg.16)

-          “Ideology informed the policy prescription and it was hoped that countries would follow the IMF’s criteria without protest” (pg.16)

-          These attitudes provoked protest in me: not only because the results were mediocre, but also for their anti-democratic character. In our personal life we would never blindly suggest ideas without seeking alternative council, however countries all over the world were instructed to do exactly that “. (pg.16)

-          “The structural adjustment policies of the IMF (…) produced more hunger and unrest (…) the benefits were distributed disproportionately in favor of best off, whereas the poorest sank ever more into deeper misery. But what astonished me more was that these policies were not questioned by those who directed the IMF ". (p.16)

-          “The protests at the Seattle meeting of the World Trade Organization in 1999 were a shock, but since then the movement has grown and the fury has spread. Practically all the important meetings of the International Monetary Fund, the World Bank and the World Trade Organization are now equated with conflict and unrest. The death of a protester in Geneva in 2001 was the first of what could be many victims in the war against globalization. (….) The new development today is the wave of protest in developed countries”. (pg.27)

-          “(…) for many in the underdeveloped world globalization has not fulfilled its promise of economic rewards”. (pg.29)

-          “The growing gap between the haves and the have nots has left a growing mass in the third world consisting of the poorest living on less than one dollar a day”.(pg.29)

-          “Weighing the repeated promises about the alleviation of poverty in the last decade of the 20^th century, the number of poor has grown by almost 100 million. This occurred at the same time as world income has increased at an average rate of 2.5% annually”. (pg.29)

-          “Globalization has not achieved the reduction of poverty, nor guaranteed stability. The crisis in Asia and Latin America have threatened the economies and the stability of all developing countries”. (pg.30)

-          “Globalization and the introduction of the market economy have not produced the promised results in Russia”. (pg.30)

-          “(…) the market economy has been revealed to been even worse than predicted by its communist critics”.(pg.30)

-          “In 1990 the gross domestic product of China was 60% that of Russia, and at the end of the decade the situation had been reversed; Russia has registered a significant increase in poverty and China a significant decline”. (pg. 31)

-          “ The critics of globalization accuse western countries of hypocrisy, with reason: they forced poor countries to eliminate their trade barriers but maintained their own and they impeded underdeveloped countries from exporting agricultural products (…) The United States was, of course, one of the guiltiest”. (pg.32)

-          “Western banks benefited from the flexible controls on capital markets in Latin America and Asia, but these regions suffered from the flows of speculative hot money”. (pg.32)

-          “The Uruguay round strengthened intellectual property rights.. U.S. and western pharmaceutical companies  can now prevent Indian and Brazilian laboratories from “stealing” their intellectual property” (pg.33)

-          “Globalization has negative effects not only in trade liberalization but also in all its aspects”. (pg.33)

-          “When the agricultural and infrastructure projects recommended by the west, designed with the advice and council of the west, and financed by the World Bank fail, the poor people from the underdeveloped world still must repay these loans”. (pg.33)

-          “If the benefits of globalization have often been less then its supporters claim, the price paid has been higher, the environment has been destroyed, political processes have been corrupted and the speed of the changes have not allowed countries sufficient time for cultural adaptation. The crisis that ended in massive unemployment were followed in the long term by social disintegration – from the urban violence in Latin America to the ethnic conflicts in other countries, such as Indonesia” (pg.33)

-          “(…) the ever more vehement world reaction against the globalization policies represents a significant development”. (pg.33)

-          “Those that value the democratic procedures found that the “conditionality”- the requirements that the international lenders impose in exchange for cooperation- infringed upon national sovereignty”. (pg. 33)

-          “ (…) some defended even more the protectionist barriers against poor countries, those that have worsened their problems” (pg.34)

-          “ (those that) marched in the streets of Prague, Seattle, Washington and Genoa highlighted the urgency of the reform of the world development agenda”. (pg. 34)

-          “The most limited economic aspects of globalization are those that have been objects of controversy, the international institutions that have set the rules and established measures such as the liberalization of capital markets ( the elimination of the rules and regulations that many developing countries establishes to stabilize the volatile money flows enter and leave the country”. (pg.35)

-          “To learn what failed it is important to observe the three principal institutions that govern globalization: the IMF, the World Bank and the WTO”. (pg35)

-          “ The most dramatic change in the institutions occurred in the 80s, the period in which Ronal Regan and Margaret Thatcher preached the free market ideology in the U.S. and U.K. The IMF and the World Bank were converted into new missionary institutions , through which these ideas were imposed upon unwilling poor countries that urgently needed loans”. (pg.38)

-          “At the beginning of the 80s there was a purge at the World Bank (…) a new president arrived in 1981, William Clausen, and a new Chief economist, Anne Krueger (…) for Krueger the State was the problem. The solution of the problems of underdeveloped countries was the free market (…) in the 80s the Bank was focused more on the loans for projects (like highways or dams) and ministered help in the wider sense, in the form of structural adjustment loans; but only with the approval of the IMF, and with that came the conditions the IMF imposed on the country”. (pg.38)

-          “(…)  when the crisis worsened and even the bulging coffers of the IMF proved to be insufficient, the World Bank was called upon to loan dozens of billions of dollars in emergency aid (…)”. (pg.39)

-          “It is assumed that the IMF is limited to the macro-economic policy of the country in question, the budget deficit, monetary policy, inflation, trade deficit, external debt; and its assumed the World Bank is charged with structural questions: the priorities of government spending, the financial institutions of the country, the labour market, trade policy. But the IMF adopted an imperialist position: as almost any structural problem could affect the development of the economy, and therefore the budget or the trade deficit, it believed that practically everything fell into its area of action (…) both institutions were directed by the collective will of the G7”. (pg.39)

-          “The IMF has not fulfilled its mission (…) crisis have been more frequent (and with the exception of the Great Depression) deeper. According to some measures, almost one hundred countries have entered into crisis; and even worse, many of the policies recommended by the IMF, in particular the premature liberalization of capital markets, contributed to global instability. Once a country had suffered a crisis, the funds and programs of the IMF not only didn’t stabilize the situation but in many cases made it even worse, especially for the poor”. (pg.40)

-          “The IMF has not fulfilled it original mission of promoting global stability; nor has it met the new tasks it has been given, such as the directing of the transition of the former communist countries toward the free market”. (pg.40)

-          “The type of trade policies known as “impoverish your neighbour”- which encouraged countries to raise tariffs and protect their own markets at the expense of others were responsible for the deepening and lengthening of the Great Depression”. (pg.40)

-          “Even though the General Agreement on Tariffs and Trade (GATT) achieved a considerable reduction in tariffs, it was difficult to reach a definitive agreement”. (pg.41)

-          “The Keynesian orientation of the IMF, that highlighted the failure of the free market and the role of the State in creating jobs, was replaced by the sacredness of the free market in the 80s, as part of the new “Washington Consensus”.” (pg.41)

-          “The liberalization of capital markets was advocated in spite of the fact that there didn’t exist proof that it would stimulate growth. In other cases the economic policies derived for the “Washington Consensus” and applied to underdeveloped countries  were not the same as those proposed for those countries in the first stages of development or the first phases of transition”. (pg.42)

-          “(…) the majority of the industrialized countries – including the USA and Japan- built their economies with the wise and selective protection of certain industries, until those industries were strong enough to compete with foreign companies”. (pg.42)

-          “(…) too frequently liberalization was not followed by the promised growth but by more misery”. (pg.42)

-          “(…) European countries blocked the flow of capital until the 70s”. (pg. 42)

-          “(…) the flow of hot money entering and leaving countries, that so many times followed the liberalization of capital markets, caused damage (…) to the underdeveloped countries (…) recommended by the IMF,  meant to free them to navigate in a violent sea”. (pg.42)

-          “(…) The IMF and the World Bank (…) are the dominant players in the world economy. Not only the countries seek their help, but also countries that aspire to obtain their “seal of approval” to achieve better access to international capital markets need to follow IMF economic instructions, which reflect its ideologies and theories concerning free markets”. (pg.43)

-          “The result for many people has been poverty and for many countries social and political chaos. The IMF has committed errors in all areas it has involved itself: development, crisis and management and the transition from communism to capitalism. The structural adjustment programs did not contribute to sustained growth, not even in the countries, such as Bolivia, that pledged themselves to them: in many countries the excessive austerity drowned growth (…) the errors in sequence and rate led to greater unemployment and more poverty”. (pg.43)

-          “A multitude of criticisms have been launched against the structural adjustment programs, including evaluations of these programs by the IMF itself that have noted numerous defects”. (pg.43)

-          “With the Asian crisis in 1997 the policies of the IMF exacerbated the convulsion in Indonesia and Thailand”. (pg.44)

-          “The Argentinean collapse in 2001 (…)  the amazing aspect is not that Argentineans  rebelled but that they remained silent for so long. Of the countries that have experienced high growth they have seen as the benefits have been captured by the rich, especially the very rich – the top 10 percent”. (pg44)

-          “The problems of the IMF as with other international economic institutions underlined a problem of government: who decides what to do? The institutions are dominated by the richest industrialized countries as well as the trade and financial interests of these countries, which is naturally reflected in the policies of these groups”. (pg.44)

-          “Even though almost all the activities of the IMF and the World Bank affect the underdeveloped world, these organizations have always been controlled by representatives of industrialized countries (by custom or agreement at the IMF the president is always European, the president of the World Bank is always American) These positions are filled behind closed doors and it has never been considered a prerequisite that the president have experience of the developing world. The institutions are not representative of the nations they serve”. (pg44)

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