Defunding the Fund, Running on the Bank
by Patrick Bond
Two once-impenetrable financial institutions--the International Monetary
Fund and World Bank--have finally come into activists' focus, in a way that
in turn sharpens what are often fuzzy discussions surrounding globalization
and popular resistance. Around 30,000 protesters joined the Mobilization for
Global Justice in Washington on April 16, capping a week that began ominously
with a chilled, poorly attended Jubilee 2000 USA debt relief rally on April 9
(controversially addressed by neoliberal Clinton economist Gene Sperling), a
"No Blank Check for China" AFL CIO demonstration of 15,000 workers at the
Capitol on April 12, and dozens of other related events. Auspiciously, the
bulk of the A16/17 protesters rallied around a call for the IMF and Bank to
be defunded (not reformed), taking further the Seattle spirit that had
divided "shut-down" demonstrators against the World Trade Organisation from
reformist leadership of big labor and greenwashed environmentalism. God
smiled on the 16th, giving the Mobilization the warmth and sunshine denied
the Jubilee protest, and many more
people left Washington convinced that taking away the IMF and World Bank's
money is a logical next step.
Socialists across the world should be heartened. With momentum thus captured
by the far more radical Mobilization, enormous ideological progress and
political maturity can be claimed and consolidated. A16/17 was built upon a
militant, internationalist platform and slogan "Break the Bank, Defund the
Fund, Dump the Debt!" endorsed by a coalition of forces as strong and
diverse as
Seattle's. The legal rally/march was joined by initially nervous trade
unionists, NGO developmentalists and left-leaning environmentalists.
Skillfully, the Mobilization's official core of left leaning Washington
thinktank and NGO
staff--notably, 50 Years is Enough, Alliance for Global Justice, Center for
Economic and Policy Research, Center for Economic Justice, the Nader group
Essential Action, and Jobs with Justice--helped to at least temporarily merge
the
very different agendas of inside Beltway bureaucrats and grassroots
activists. Labor/NGO/green officials have historically wobbled when faced
with global political economy issues, as a result of the disadvantageous
balance of forces prior to Seattle, their often debilitating ties to the
Democratic Party (and fears of being seen in alliance with Republican
IMF/Bank bashers), and a faux professionalism heightened by dependence upon
bourgeois funders. The AFL CIO even supported the $18 billion
recapitalization of the IMF in late 1998, after
obscure deal making with the Clinton administration.
The activists, in contrast, were anxious to conduct a joyous symphony of
Seattle like lockdowns and street parties to blockade the Bank/IMF Spring
meetings. To do so, they introduced a cultural liberation ambience virtually
unknown to Washington, utilizing radical participatory democracy and affinity
group cell structuring in strategy sessions and trainings facilitated by
striking young
talents from the Direct Action Network. In this milieu, Michael Albert
reported in Z magazine,
The various tactical wings of the movement whether seeking to get arrested,
to militantly protest, to make a public but peaceful statement, or just to
learn or teach worked together marvelously. Diverse tactics did not trump
one another. Tension was minimal. Intercommunication was considerable.
Coalitions were strengthened rather than dissolving into tactical disputes.
There was in the
street mutual aid, careful planning of venues and events, and pre
demonstration communication of aims.
Results included abundant forms of civil disobedience and 1,300 arrests
(although the first 600 were unwilling, as police used dramatic force during
an
April 15 Free Mumia protest march and also shut the activists' Convergence
space on absurd fire code charges). Encouragingly, unlike Seattle, the 1,000
strong
Revolutionary Anti Capitalist Bloc of black clad anarchists worked in harmony
with those carrying out civil disobedience, and had the honor of attracting a
police
helicopter devoted solely to trailing their movements across Washington on
April 16. Commitments were made to hone tactics for upcoming Philadelphia and
Los Angeles political party convention demonstrations.
But most importantly for our purposes here, the Mobilization drew the eco
socio economic concerns of the Global South far deeper into the fabric of the
US
movement than ever before. Granted, the protest failed to obstruct the
IMF/Bank meetings due to the massive police presence. No matter, the
combination of thorough preparation and the large size of the turnout in
Washington
_ helped raise public consciousness about the IMF and Bank to unprecedented
levels,
_ brought sympathetic activists from different constituencies into
successful coalition,
_ taught organizers a great deal about Washington logistics (and how they
can really be gummed up next time),
_ showed South allies the extent of solidarity possibilities (encouraging
them to intensify their own local critiques of the IMF/Bank), and also
_ facilitated a long overdue split amongst development NGOs (a group of 22
conservative organisations under the banner of "Interaction" sent a bizarre,
self
discrediting endorsement note to the Bank and IMF).
These protests have set an excellent stage for several years of intense
grassroots campaigning across the globe aimed at closing the Bretton Woods
twins, thus fundamentally reorienting our understanding of development
finance, and in the process rejigging power relations in ways that could
benefit radical political movements across the South. Of course, an activist
focus purely on the
institutional forms of global capitalist (mis)management the Bank, IMF and
WTO would detract from an understanding of both the capital accumulation
process and
class based resistance, and hence could lead to partial and imperfect
strategic insights about power and social transformation.In addition, a focus
on these global
institutions might lead us to neglect national and regional issues and areas
in which resistance might be more fruitful. Such debates have inspired this
article, which attempts to interrogate the main lines of thinking within the
Mobilization and allied groups, and to brainstorm about the different ways
forward for the growing movement. The main conclusion reached is that
"bond-boycotting" the Bank and
defunding the Fund should be supported as integral and unifying components of
a broader mobilization for class, gender, ethnic, and environmental justice.
The IMF, the Bank and the Financial Explosion
In 1944, the Bretton Woods resort in New Hampshire hosted a conference of
delegates cochaired by Harry Dexter White representing the US Treasury, and
John Maynard Keynes representing Britain (but more broadly, the interests of
the
vast majority of countries then in debt). The overarching problem was,
simply, the restoration of global capitalist order at a time when capitalists
were profoundly
discredited (partly thanks to associations with Nazism) or were otherwise in
political economic retreat, and when socialism appeared a dangerous specter
(not only because of the USSR's durability but because communist and labour
movements were resurgent in Europe). Reflecting the power of U.S. capital,
White was able to establish the dollar as the world's primary currency and to
construct the Fund and Bank so they could be controlled from the White House
and U. S.
Treasury.
Although the Fund initially encouraged nation-state exchange controls so as
to limit capital flight, the two institutions founded at Bretton Woods would
soon
reverse that formula by promoting the globalization of capital over the
globalization of people. The Fund was meant to balance the accounts of
payments between countries (through money exchanged in trade and financial
transactions), while the World Bank would make injections of project finance
starting in war-ravaged Western Europe, and later in the South. A few years
later, the World Trade Organization's seeds were sewn in the founding
conference of the General Agreement on Tariffs and Trade (GATT) in Havana.
But it was only in the late 1970s that the full significance of the Fund,
Bank, and GATT became evident, as institutions which could solidify the
control of capital in the North over that in the South during a period of
capitalist crisis marked by a financial explosion and stagnating wage
compensation, intensifying environmental degradation, and the crash of the
living standards and cultures in the South. They proved very useful in
stalling and shifting the costs of various crises (the Third World debt
crisis of the
early 1980s, energy finance shocks in the mid-1980s, crashes of international
stock and property markets in 1987 and 1992-93, long, terribly deep crash of
non-petroleum commodity prices from 1973-1999, and a spate of bank failures),
from the rich capitalist nations onto those less powerful. And they
contributed to the collapse of several decades' worth of ordinary people's
living standards across
the South since the late 1970s, in Eastern Europe since the late 1980s, and
in Emerging Markets since the mid 1990s.
A socialist analysis of the dynamic behind finance is critical to
comprehending the power of the IMF and Bank. What were eloquently explained
by Harry Magdoff and Paul Sweezy as "financial explosion" symptoms of crisis
may have stemmed from what some Marxist scholars argue is a general tendency
to capital "overaccumulation." This condition is usually a precursor of
massive debt buildup and speculation and subsequent depression and has
recurred
periodically (1825 45, 1872 92, 1929 48, and 1973 present). Consequent with
growing gluts in local and then global markets, the supply side of capital
responds to falling profit rates by seeking higher returns in increasingly
speculative financial outlets. On the demand side, ever amplifying uneven
development assures that the growing crisis can be "displaced" (moved around,
across space and
through time), permitting flows of funding to switch from one to another
circuit of capital, sector of investment, geographical location and even
level of activity (from
local to global and back). Financial markets are central to this process for
they facilitate near instantaneous movement of capital across the world, and
they convert an obligation to pay in cash now for consumption into a future
liability, so that gluts of overproduced commodities can be (at least
temporarily) whittled away by credit.
In very real ways, displacement meant that when bubbles burst the Third
World debt crisis (early 1980s), energy finance shocks (mid 1980s), crashes
of international stock (1987) and property (1991 93) markets, and the long,
terribly deep crash (from 1973 99) of non petroleum commodity prices, not to
mention a spate of major bank failures it was feasible to shift the costs
onto those less
powerful. Hence the collapse of several decades' worth of ordinary people's
living standards across the South since the late 1970s, in Eastern Europe
since the late 1980s, and in Emerging Markets since the mid 1990s all felt
acutely by workers, peasants, women, children, the elderly, indigenous groups
and disabled people, as well as environments.
During this period, the Fund and Bank acquired a qualitatively new role:
coordination power over both economic policymaking and financial/aid flows in
subordinate countries (though still through the overall permission of the US
Treasury Department and consistent with the State Department's agenda). Fund
and Bank coordination has meant not merely the certification of countries'
policymakers as sufficiently pro-market (i.e., especially welcoming of
currency devaluation, state shrinkage, loss of national economic sovereignty,
and inflowing financial, trade and foreign direct investments, partly to
capture privatized assets at healthy discounts and partly just to speculate).
From the early 1980s, the Fund and Bank also played a crucial debt-policing
role, firming up the weakened balance sheets of those Northern commercial
banks and investment funds which stood exposed due to the
demise of unpopular client-dictators during the 1980s, and then late 1990s
"emerging market" stocks, bonds and property. Fund/Bank bailouts were
arranged so that New York, London, Frankfurt, Zurich, and Tokyo banks could
recover (and indeed prosper) from 1980s-era Third World debt (which remained
on the liability side of borrowers' balance sheets), as well as from the
devastation of currencies
associated with speculative runs on Mexico (early 1995), South Africa (early
1996 and mid-1998), Southeast Asia (1997-98), South Korea (early 1998),
Russia (periodic but especially mid-1998), and Brazil and Ecuador (early
1999).
The negative impact of World Bank and IMF policies was so stark and obvious
that professional and intellectual justification was required. The
protectionist and inward-oriented economic policies of many developing
nations
were attacked by proponents of a laissez-faire, "neoliberal" philosophy
consistent with the liberalizing interests of international
financial/commercial capitals. The "Washington Consensus," a market-Stalinist
world view imposed by the United States through the IMF and the World Bank,
and supported by associated think-tanks, insisted that the alleged merits
(future growth and prosperity) of
free-market "structural adjustment" outweighed the enormous short-term
economic, social, gender, generational, public health and environmental
costs.
IMF and Bank influence does not occur without contestation, but mass popular
resistance--the "IMF Riot"--has only rarely been coordinated to challenge
state power and neoliberalism more generally, and to evolve into more
durable, democratic movements combining Left critique and indigenous
organizing processes. At times, Third World nationalism has sounded
resurgent, as in Venezuela under Chavez. But this tradition just as quickly
fizzles out once
IMF/Bank screws are tightened, or worse, turns inward to repress the Left, as
in Mahathir's Malaysia and Mugabe's Zimbabwe. More hopeful signs include the
emergence of Zapatismo in 1994, Korean workers' fightback against IMF
restructuring, mobilizations by the Brazilian Movement of the Landless, the
graduation of India's National Alliance of People's Movements from world
class protests against dams and genetic engineering to campaigns against
neoliberalism
more generally (including Bill Clinton's recent visit), this January's
uprising of Ecuadoran Indians against neoliberalism, February's emergence of
Thailand's Forum
of the Poor at a major UN Bangkok meeting, the dramatic April revolt of
Bolivians against water privatization and protests in Chiang Mai, Thailand
against the Asian
Development Bank meetings in May. Though none generated conclusive victories,
they provide important if incomplete lessons for other protest trajectories,
alongside recent North led campaigns to halt the Multilateral Agreement on
Investment, ban landmines, halt toxic waste dumping, and prevent the WTO from
launching its Seattle round.
The IMF and Bank are central to imperialism's reproduction, both in terms of
their power to dictate how the poor countries will develop and their power
to
displace the effects of capitalist crisis onto the world
