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To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Wednesday, February 16, 2005

Another Great Hildyard Article on Neoliberalism

Nicholas Hildyard. "Public Risk, Private Profit: The World Bank and the Private Sector" (July 1996) .

"For years," Hildyard writes, "bilateral and multilateral aid agencies have provided a multi-billion dollar source of subsidies to commercial enterprises in both the North and the South." For some reason, though, in the course of his excellent article he makes a great deal of the fact that such World Bank-subsidized aid is provided through private corporations, instead of national governments.

Such figures confirm what critics of the development industry have long maintained: namely, that official aid functions largely as an export subsidy for companies in the Northern industrialised countries. However, globalization and market liberalisation are rapidly changing both the form and the means by which the MDBs now subsidise the powerful.

Traditionally, Northern companies have benefited from the MDBs through contracts awarded for public sector projects such as roads, airports and irrigation schemes. Although governments still provide 90 per cent of the money spent on infrastructure projects worldwide, however, the trend is increasingly for projects to be undertaken by the private sector with governments acting as "facilitators rather than financiers". One reason is that many of the state enterprises which previously operated public projects have been privatised; another is that governments do not have the money to undertake the work.
But of course the actual money comes from the MDBs, not many people's idea of "private sector" funding. So the only significance of the "private sector" angle is to show another example of neoliberal "privatization" (which ain't privatization a-tall). What's important, now as ever, is that (as Hildyard says) the aid is "an export subsidy": the money, whether funnelled directly through governments or indirectly through crony capitalist camp followers, goes to subsidize the operating costs (especially transportation and utilities) of Western-owned production facilities overseas, without which most exports of capital could not possibly be profitable.

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