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Mutualist Blog: Free Market Anti-Capitalism

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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Location: Northwest Arkansas, United States

Thursday, April 21, 2005

A Perfect Fit: Wolfowitz at the World Bank

Jude Wanniski writes:

That's what the World Bank is all about. It was created as an adjunct of the United Nations at the end of World War II, along with its brother institution, the International Monetary Fund. On paper, its function was to lend money to developing countries to help them grow. Its real job has been to serve the interests of the major money-center banks and the multinational corporations who make the big bucks in World Bank development projects. The Bank, which is really a "fund," persuades a poor country like Ghana, for example, to build a new industrial complex in order make stuff for export. It will lend the money to Ghana -- which it gets from global taxpayers including you and me -- and arrange for the complex to be built by one of the favored corporations in the military-industrial complex. The list always includes Bechtel Corporation, Halliburton, and Kellogg Brown & Root, a division of Halliburton. These outfits go in and build the projects because the locals have no expertise....

If this seems harsh, as if I'm writing about something new under the rocks on which our Uncle Sam perches, I suggest you read my 1978 book, "The Way the World Works," which describes how the British Empire worked in exactly this fashion. My best example was the first multinational corporations, the British railroad builders. Once they ran out of places to build rail lines in the U.K., they persuaded Parliament to promote railroads in the colonies, and were enormously successful in talking the Raj into criss-crossing India with railroads in the mid-19th century. It was one thing in England, where the companies could only build where there was a clear sign the line would be profitable, because it was their own money at risk. In India, the locals borrowed the money from the Bank of England and hired the builders to put in rail lines that couldn't possibly be profitable. India was burdened with debts from these schemes well into the 20th century.


Blogger Adam said...

So what's the bigger influence on WB policy:

1)Directly subsidize domestic corporations who get the contracts,


2)Bring the developing countries into the world market by building import/export infrastructure and saddling them with debt (requiring export to pay off)


April 22, 2005 6:28 AM  
Blogger Kevin Carson said...

Good question. I wish I knew the answer. Just as a guess, I tend to think that systemic concerns outweigh crony capitalism in elite decision-making. They may not quite function as a disinterested "exec. comm. of the ruling class," but the more blatant pocket-lining is still just a minor individual perk. In Mideast policy, for example, my hunch is that the strategic need to secure the Persian Gulf and Caspian oil supplies for the corporate economy was the main consideration, and goodies for Halliburton and Bechtel were an afterthought.

April 22, 2005 4:01 PM  
Anonymous P.M.Lawrence said...

That's a better discussion than the original commenter, which selectively describes British Empire stuff. In particular, railways were a strategic necessity, and India wasn't monolithic in the first place. Railways made commercial sense by diverting existing resources through them, just as they did in the Chinese railway concessions.

But for India, under British control, the railways were the strategic chicken that laid the commercial egg. Strategy came first. We know this from the strategic significance of the Grand Trunk Road.

BTW, I don't see how the British companies were the first multinational ones; they didn't have much multi-national aspect. As far as I know, that came in with Anglo-Dutch stuff, often in the oil industry. If you only count overseas operations, not diversity of ownership, then the Dutch VOC was the first.

Also BTW, I am preparing some comments offline on various recent threads, partly because this window is so small on my browser. While you wait you might like to look at my publications page. Although nothing there is obviously based on your sort of thinking, it is there behind the lines and some of my policy proposals make most sense as part of a transition in the right long term directions. But I think you'll find the Scottish and Indian comments awfully familiar.

April 24, 2005 8:14 AM  
Anonymous Anonymous said...

"Its real job has been to serve the interests of the major money-center banks and the multinational corporations who make the big bucks in World Bank development projects."

oh dear, perhaps you ought to get in touch with all those World Bank employees who genuinely believe they are doing something to try and alleviate poverty, the poor saps.

P.S. aren't the shadowy captains of the industrial complex a bit dim?

If I were in my secret underground layer, with all the world's institutions under my control, I like to think that I could come up with a better scam than making them pay me to build industrial estates in all those frightful grotty poor countries.

April 25, 2005 7:58 AM  
Blogger Kevin Carson said...

P.M. Lawrence,

If I understand what you're saying, I agree that railroads made sense for capitalists in the UK. They were necessary to make overseas capital investment profitable. As for multinationals, most of the "imperialism" finance-capital engaged in in those days was via portfolio investment--there were few if any true multinational firms, operating across national lines. So you're right-calling the railroads TNCs is a bit of a stretch.


So you don't believe corporate interests play a major role in formulating international financial policy? And you don't believe a major interest of corporations is to externalize as many of their operating costs as possible on the taxpayer, so as to increase their profit margins?

I believe if you reference the policy discussions in the U.S. Treasury late in WWII, you'll find the World Bank was understood in pretty straightforward terms to subsidize the export of capital, and prevent the capital surplus in the U.S. from leading to a renewed postwar depression.

That's quite a strawman, reducing something as sophisticated as the power elite theory of C. Wright Mills to a vast conspiracy operating from an underground bunker.

I'll give you credit, though. At least you didn't reference black helicopters or tinfoil hats, or call me an antisemite.

Thanks for trolling by.

April 25, 2005 9:48 AM  
Blogger Kevin Carson said...

BTW, Anon, you might try reading the chapter "Dan Smoot, Phyllis Schlafly, Reverend McBirnie, and Me" in G. William Domhoff's *The Higher Circles*, for a sophisticated discussion of how power elite theory differs from "conspiracy theory."

And I'm not sure what the beliefs of rank and file employees of the Bretton Woods agencies has to do with anything. They may well believe they're doing good, but (given their own institutional culture) their idea of what it takes to "alleviate poverty" coincides pretty closely with what Western corporations need to invest profitably overseas. You know, what's good for GM is good for the world.

April 25, 2005 9:56 AM  
Anonymous msw said...

it will lend the money to Ghana -- which it gets from global taxpayers including you and me

The world bank gets its money by issuing bonds to investors.

April 25, 2005 4:53 PM  
Blogger Kevin Carson said...


Well, you've at least succeeded in pushing the overt state involvement back a bit. Those bonds are a pretty attractive investment--they're rated AAA, seeing as how they're "backed by IBRD's 184 sovereign shareholders and their capital...." [World Bank website]

April 25, 2005 10:52 PM  
Anonymous Anonymous said...

hi there!

you misunderstand me - I didn't mean to cast aspersions on the sophisticated power elite theory of C. Wright Mills (as if!) merely to gently suggest that Jude Wanniski might be talking out of his/her ass.

I think that there's some distance between acknowledging that corporate interests are one of the factors that shape international financial policy (and who knows, perhaps rightly so?) and believing that the World Bank's "real job" is to "serve" corproate interests.

But of course my experience of the matter must clearly be limited to that of "rank and file". Perhaps one day I will be initiated into the inner sanctum, and the scales will fall from my eyes.

you don't perhaps think that your confident assertion that World Bank employees are corporate dupes might be, oh I don't know, grossly insulting, you armchair smartarse?

April 26, 2005 12:50 AM  
Blogger Kevin Carson said...

"grossly insulting"? "smartarse"? Well, if that's the case, then it's no wonder you gravitate to this blog.

Look, most large institutions have a legitimizing ideology that's quite a bit different from what they actually do. That doesn't require positing any grand conspiracy where the people in the inner circle laugh at the dupes on the outside who actually believe the mission statement, and then say "Now let's get down to our REAL business." It also doesn't preclude people in the organization sincerely trying to do good. But the exploitative function of the Bretton Woods agencies, and their primary purpose of serving corporate interests, are pretty heavily documented by people like Walden Bello and Cheryl Payer.

Just about every organization I've ever worked for has had a grandiose-sounding purpose in its mission statement, vision statement, and values statement, while actually serving the ends of those in power. And I've tried my best to do good while working in such organizations. But I never identified with them so much on a personal level that I felt "grossly insulted" on behalf of their leadership.

Most of us work for organizations whose purposes and policies we have little or no control over, and we do the best we can.

No doubt many in the Soviet Communist Party sincerely believed they were working to build a better future of "full communism" for the Soviet people. But somehow the ideals of "full communism" were defined in such a way as to dovetail nicely with the present power interests of the Party apparat. That's the way legitimizing ideologies work.

I've been as conciliatory with you as I'm going to. If you feel "grossly insulted" by my blog, perhaps you'd do better to spare yourself the aggravation. And if you can't behave like a proper guest here, your future posts will be deleted.

April 26, 2005 10:28 AM  
Anonymous Anonymous said...

I don't know what world you live in. Private sector businesses are pretty open about their purpose: making money. Mission statements are marketing fluff and nobody takes them seriously. There's no "actually serving the interests of those in power" about it. NGOs, lobbies, etc usually pretty clear what they're up to to. So what are you talking about - goverment agencies?

so just to be straight, if you were sat infront of a room of World Bank employees who told you that every day they go to work and try to figure out ways of reducing poverty, and trying to make it happen, you would tell them to their face that no, their "primary purpose" is serving corporate interests. And if they think otherwise, well they've just bought a "legitimising ideology", their sincerity notwithstanding.

And you don't think that's grossly insulting, or perhaps mind-bendingly patronising, to these smart hardworking people.

I have worked in such agencies, and I know people who still do so. maybe I flatter myself but I don't imagine there's much you can tell me about the pressures that you come under, the compromises that have to be made, and the frustration and disappointment involved in those jobs. But if you cannot see how you might just come across as a smartarse sat there explaining what's really going on, then you need to think again.

Of course for you the "exploitative nature" of these agencies is a "documented" fact, nevermind what anybody else might think, and once you start from there, I guess everything else follows doesn't it.

April 26, 2005 10:50 AM  
Blogger Kevin Carson said...

I can see how I might "come across as a smartarse" to someone in your occupation. Unfortunately, so long as we allow powerful organizations to be critiqued by those outside them, instead of taking their institutional culture and professed values at face value, those kinds of hurt feelings are going to happen--especially when people who work for such organizations are unable to separate criticism of their employer from personal criticism of themselves.

Every day in this country, most political debate involves discussing the activity of government agencies, corporations, and other institutions in ways that don't exactly cater to their self-perceptions. Conservatives denounce welfare state and educational bureaucracies in pretty negative terms without intending any personal insult to every caseworker or teacher, and liberals likewise denounce the "military-industrial complex." Implicit in all this is an understanding of "present company excepted," and a reservation that such broad denunciations do not necessarily apply to every person working in such organizations or impugn their personal integrity.

Such debate sometimes even involves organizations I have worked for or belonged to, and beliefs that I have shared or movements that I have supported. I have never taken such criticisms as a personal affront. There's so much fodder for hurt feelings, if people take such criticisms personally, that I'm surprised we don't all commit suicide.

It's impossible to discuss issues of the structure of power in society without viewing many institutions in a less than flattering light. I'm glad you're lucky enough to have found a calling in which you identify so personally with your employer. But if you can't avoid personalizing political critiques of your employer and taking them as a personal affront, perhaps you should avoid the blogosphere (and newspapers and TV talking head shows), and take up reading detective novels instead.

April 26, 2005 12:00 PM  
Anonymous Anonymous said...

well Mr Carson I appreciate your efforts to engange me sensibly and your points are well taken. I agree, it has to be possible to criticise organisations without worrying about personally insulting their employees, and I agree all sides of the political spectrum do so all the time.

But I have some remaining gripes.

You see I think that when conservatives talk about teachers etc as if they are bloodsuckers, I think teachers are right to be insulted and I think it shows up how such conservatives are wrong, because teachers are, in general, not as characterised. Likewise I think that when liberals or mutualists characterise state agents or corporate managers as knowingly or unknowningly amoral, serving mammon or however you'd have it, I think managers and bureuocrats are right to be insulted and I think it shows that liberals and mutualists are wrong, because their views imply things about these people that are, in general, just not true.

Furthermore, I do not think it is just a matter of being able to separate personal critiques from critiques of the employer, because some of the hardworking dedicated people I know (alas, not myself) are of a sufficiently senior level that the distinction cannot be made - they are the ones involved in creating and executing policy, and if you say they are really serving corporate interests then you are slighting them directly. And I also think that people in less senior positions would not accept the separation between themelves and their employers. When I worked for a state (not US) agency in a fairly lowly position, what we did in certain countries was largely my call.

You may say that I should avoid the blogosphere if I cannot take the rough and tumble, well that can be turned back on yourself. I you can't take some invective, don't post such tripe.

NB I haven't read the long post above on this subject, so perhaps some of what I've written here will turn out to be misplaced

April 26, 2005 1:06 PM  
Blogger Kevin Carson said...

Thanks for your comments. I'll try not to be grossly offended at the characterization of my commentary as "tripe."

If it makes you feel any better, I don't believe even all senior people at the WB are Snidely Whiplash villains, twirling their moustaches and chortling with glee. I would even concede that some WB employees develop projects that do some good to eliminate poverty. But all, well-meaning or not, are limited by the structural imperatives resulting from what the agency was originally set up to do.

And even in cases where it really is "your call," and you're acting in good faith with the intent of alleviating poverty, it's still fair to describe the real effects of your agency's actions as having a contrary effect--without it being a gross insult to you personally. It's the same difference as that between considering my ideas (which I identify with a lot more than any employer) as "tripe," and considering me personally an "arsehole."


April 26, 2005 1:18 PM  
Blogger Kevin Carson said...

I meant to add, re your example of teachers above, that it's possible to denounce the professional culture of the public school system and teachers' colleges, and the gross mismanagement of local school districts, without disparaging the abilities or the legitimate contributions of any individual teacher.

April 26, 2005 1:21 PM  
Anonymous Anonymous said...

There is an implicit assumption here that, I think, explains why I think it is tripe to characterise the "primary function" of agencies like the World Bank as serving corporate interests and not, say, reducing poverty - and that is the assumption that the two interests are usually in opposition. Maybe you should consider the possibility that in many cases poverty is best reduced by policies that are also favorable to corporations. In which case it becomes absurd to point to the World Bank, and others, and say that contrary to reducing poverty, they are "actually" serving corporations.

"And even in cases where it really is "your call," and you're acting in good faith with the intent of alleviating poverty, it's still fair to describe the real effects of your agency's actions as having a contrary effect--without it being a gross insult to you personally"

really? so if somebody works hard to come up with a specific programme to reduce poverty, you don't think there's a personal criticism in saying, ah, no, you see you may think you're helping, but I, with my superior understanding of how the world works (structural imperatives and all), I can tell you that in fact you are perpetuating poverty and lining the pockets of wealthy capitalists?

I have had experience of misguided charities trying to do good, and making matters worse through their naivity and ignorance, and I know damn well that's a personal criticism of the people involved.

I don't think you can sidestep the personal insult in that by claiming that you are really criticising "the system".

anyway, this is hair splitting on a side issue and off the original point, which is that I just think you're world view bears precious little relation to reality. I think your lengthy post above on the World Bank illustrates that nicely.

April 27, 2005 1:10 AM  
Blogger Kevin Carson said...

Well, if we can't criticize the functioning of institutions without implicitly insulting everyone who works for them with the intention of doing good, then we're back at the old impasse. If it's insulting or patronizing to say that I think you're wrong, or mistaken, without questioning your good will, then I guess those are the breaks.

As for corporations, I have written about the issue at length elsewhere and won't rehash it all again in a comment thread that's already far too long. Suffice it to say I believe there's plenty of evidence that large corporations are too inefficient to survive without the state to subsidize their operating costs and protect them from competition; so they are in a zero-sum game with more efficient, decentralized ways of doing things, and survive only by crowding them out with help from the state.

April 27, 2005 8:54 AM  
Anonymous P.M.Lawrence said...

KC, I wasn't so much referring to "strategic" in the modern, almost metaphorical, sense of corporate strategy (although your observations about that are accurate enough). Rather, I was describing how railways throughout the world were being built with an eye on their military significance. India was no exception to that, and it hardly matters if there was an alignment of the military and the economic incentives. They too would have co-evolved, which I think is implicit in some of your other remarks.

On the repartee about people's motives and their corporate quasi-motives, so to speak, I am reminded of a Middle Eastern fable. Two birds were watching a man trapping birds. "Look", said one, "he is a kind man - see how he weeps to have to catch birds." "Never mind his eyes", said the other, "watch his hands."

April 27, 2005 10:30 AM  
Anonymous P.M.Lawrence said...

P.S., I notice I can't put in paragraph break tags. Is there another way to break paragraphs around here?

April 27, 2005 10:32 AM  
Blogger Kevin Carson said...

Heh. Reminds me of Carroll's ditty about the Walrus and the Carpenter.

On paragraph breaks, I'm the last person to ask--almost entirely html-illiterate. I just type stuff in, hit the return key, and let the Blogger software worry about the html.

April 27, 2005 10:43 AM  
Blogger freeman said...

anyway, this is hair splitting on a side issue and off the original point, which is that I just think you're world view bears precious little relation to reality. I think your lengthy post above on the World Bank illustrates that nicely.

Why is it that when some people don't understand something and/or are unable to refute any of it, they resort to mocking it?

April 27, 2005 3:28 PM  
Blogger Kevin Carson said...

Well, apparently he (she?) took it pretty personally, and felt a need to defend himself for some reason--which I don't understand, considering this blog caters to a fairly small left libertarian niche market and gets 100 visitors a day plus change. There's a lot more influential people than me out there saying pretty much the same thing--how did a guy (?) from the World Bank stumble across this, anyway?

Anyway, I hope that was a Parthian shot, because it's pretty energy-consuming to argue politics with someone who has that much invested in it emotionally.

April 27, 2005 9:24 PM  

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