Might makes right

Issue: 140

Mona Dohle

Kate Bayliss, Ben Fine and Elisa van Waeyenberge (eds), The Political Economy of Development: The World Bank, Neoliberalism and Development Research (Pluto Press, 2011), £22

In 2006 the World Bank issued its Deaton Report, conducted by several established economists, assessing its own research. A number of well known critics of the World Bank, including Kate Bayliss, Ben Fine and Elisa Van Waeyenberge, subsequently published The Political Economy of Development in response. Contrary to its rather broad title, the book addresses the specific topic of the quality of the bank’s research.

Since the 1990s the devastating impact of the Washington Consensus—neoliberal structural adjustment and similar measures imposed on developing countries by institutions such as the World Bank and IMF—has been at the centre of criticism by governments of the Global South, NGOs and social movements. One attempted response is the Post Washington Consensus, which claims to reform the World Bank’s theory and practice. However, the key intellectual forces behind the Post Washington Consensus, for example Joseph Stiglitz, are former employees of the bank. While they acknowledge the importance of institutions in explaining market failures, they fail to mount a serious challenge to the undemocratic nature of the World Bank.

Rather the dominant approach has been to continue its devastating policies while simultaneously attempting to promote the World Bank as the “Knowledge Bank”. Consequently, this supposed challenge has been accommodated by the bank and publications such as the World Development Report have gained growing importance among scholars of development studies. Nevertheless, the political legitimacy of the World Bank continues to be questioned. The Deaton Report, which highlighted a large number of criticisms, as well as the resignations of World Bank researchers Joseph Stiglitz, Ravi Kanbur and William Easterley, illustrate an unprecedented crisis of legitimacy in the period previous to the outbreak of the global economic crisis.

The book attempts to take up the concerns raised in the report in order to highlight a much broader range of criticisms, situating World Bank research in an economic and political context. It consists of a series of papers published from 2008 to 2009 that assess the bank’s research on development subjects such as agriculture, banking, aid, HIV, water privatisation and violent conflict. While these topics are diverse and are assessed by specialists in their respective fields, a common pattern soon becomes clear. The authors illustrate the selective choice of evidence, glossing over criticisms and most importantly an inherent conflict of interest between the World Bank’s advocacy and research functions.

Van Waeyenberge highlights that about one third of research on aid is financed by donors and consequently remains focused on the aspect of efficiency, rather than equality. Carlos Oya illustrates how cherry picking evidence and ideological dogmatism of research on agriculture has aggravated the global food crisis. He shows how systemic factors such as the growth of financialisation and speculation on commodity prices lie at the heart of current food crises. Even research on HIV, praised in the Deaton Report, is based on an individualistic and abstract understanding of the disease. Deborah Johnston points out how this analysis fails to address the broader context of gender and inequality. A particularly striking example is the case of water privatisation. Kate Bayliss describes how the data in favour of privatisation is based on a constructed, counterfactual scenario whereby the authors aim to determine what would happen in its absence. She also highlights that supposed improvements in efficiency during the water privatisation in Guinea were not due to private sector investments but were financed by donors’ money.

The thematic organisation of chapters is both a strength and a weakness. On the one hand, the structure allows a relatively detailed assessment of World Bank research in each particular field. It also illustrates clearly how practices such as the selection of evidence, glossing over of criticism and the dubious use of data can be understood as a systematic pattern. On the other hand, the book remains vague as to why exactly the quality of World Bank research is so poor. As the authors themselves point out, the Deaton Report is one element of a longstanding crisis of legitimacy for the bank. However, seven years later, this crisis of legitimacy seems almost forgotten. In alliance with the Troika of the International Monetary Fund (IMF), European Commission and European Central Bank, the World Bank has re-established itself as a key political force responding to the current financial crisis. Interestingly, it has done so without any major changes in its theoretical understanding. The question therefore remains: how could they get away with it? A mere assessment of the bank’s scholarship is insufficient in explaining this paradox. History is full of scholars who tried to challenge dominant ideas with arguments. The ancient Greek philosopher Socrates protested against the then dominant claim that “might makes right”. His morally valid argument was ironically undermined by the fact of his execution by the Athenian state. In the case of World Bank research, clearly might does seem to make right. It is therefore essential to understand the dominance of World Bank research in a broader historical materialist context, which is linked to a political confrontation between economic classes. One interesting starting point could be the argument brought forward by Paulo L Dos Santos regarding the vital function of international financial institutions such as the bank in providing financial liquidity in times of recession. Unfortunately, this book does not sufficiently elaborate on that aspect.

To be fair, the authors of this book and other critics of the World Bank have already done substantial work in offering further background on the bank’s economic theory and political practice. A good example is Ben Fine and Dimitris Milonakis’s From Political Economy to Economics (2009), which describes the historical and philosophical context behind the emergence of neoclassical economics. Other works, such as Eric Toussaint’s The World Bank: A Critical Primer (2008), place much needed emphasis on the geopolitical power struggles around World Bank politics. Dos Santos has addressed the question of banking in contemporary capitalism extensively. The fact that “might makes right” is therefore by no means a reason to avoid critical research. On the contrary, the current economic crisis demands a reinforced investigation into how the World Bank has re-established itself as a political force. Such an investigation should take into account the interrelationship between World Bank ideology and economic recession. The collection of evidence assembled here will be useful in doing so.