“Impoverishment of Poor Countries by World Bank and IMF”

Dear colleagues,

Nowadays, it is a truism that poor countries are facing stringent conditions in order to gain access to World Bank and IMF development finance. These two international organizations were supposed to alleviate poverty in poor countries, but such is not the case. The proliferation of IMF and World Bank conditions is forcing highly controversial economic and social policy reforms on poor countries, such as trade liberalization and privatization of essential services.

The International Monetary Fund and the World Bank have long been criticized for the onerous influence they exert over the domestic policies of many states. Especially since the 1990s, they have been excoriated for imposing policies—such as structural adjustment reforms and austerity measures—on client states that deepen inequality in the Global South, which, in turn, benefits the powerful countries of the Global North. How do we understand the structural origins of this global imbalance? One fairly standard view is to place the blame solely on neoliberalism. This perspective argues that the IMF and the World Bank—institutions that date back to World War II—at one time allowed for a more equitable system of economic governance under the Bretton Woods system of global monetary management, which collapsed in the early 1970s. In its place, the argument goes, free market economic policies began to dominate. Cemented by the elections of Ronald Reagan and Margaret Thatcher, these institutions moved in a decidedly neoliberal direction throughout the 1980s. By the 1990s, the Democratic Party had made its peace with this ideological revolution. Under Bill Clinton, the IMF and the World Bank furthered their embrace of economic shock therapies. In this way, the turn to neoliberalism is blamed for the Third World Debt Crisis, the Asian Financial Crisis of 1997–98, and the pillaging of Russia and the former Eastern Bloc countries after the fall of the Soviet Union. Yet, in his new book, "The Meddlers: Sovereignty, Empire, and the Birth of Global Governance," Jamie Martin challenges this standard narrative. Martin, soon to be an assistant professor of history and social studies at Harvard University, argues that if we truly want to understand the disastrous consequences of the IMF's and the World Bank's interference in the domestic policies of sovereign states, it is necessary to understand the first international institutions of economic governance, such as the League of Nations and the Bank for International Settlement, which emerged in the wake of World War I.