The Bretton Woods institutions were set up in the 1940s to make the world stable for business to invest and profit, for trade to grow and presumably for 'development' to occur. But critics argue that this 'development project' was simply a way for the First World to retain control of the Third World
The ‘development project’, to use a term from sociologist Philip McMichael, dominated the globe—including post-independence India -- for decades after World War II. In the pre-war world ‘development’ was not a globally touted concept. Much of the pre-war world was colonised. For example, one-fifth of the world’s area and 25% of its population were under British rule. At the beginning of the 20th century, almost 90% of Africa was under direct European domination.
Colonies existed for the purposes of cheap labour, extraction, exploitation and unfair trade. Under such circumstances, any notion about ‘developing’ them—even in purely economic terms -- would have been absurdly contradictory. Of course the colonisers periodically saw themselves as being responsible for civilising and improving the lives of the poor backward natives. The British government in 1939, for example, passed a Law of Development and Welfare of the Colonies. But the formerly colonised world largely corresponds to the Third World today in some measure due to this world’s colonial history. Other factors stepped in post-independence: rigid perceptions of ‘development’, corrupt states, dictatorships. But that is matter for separate, more specific, analysis.
For large portions of the globe to participate in any kind of economic development required decolonisation and independence. By the end of the war, many colonising countries had suffered huge war losses and faced internal economic collapse. Many became economically and militarily incapable of overseeing big empires. Growing independence movements across the globe soon forced a wave of decolonisation in the late-1940s, ’50s and ’60s.
The US , the emerging hegemonic power, argued that colonial monetary policies and policies of exclusionary trade (of both the European and Asian empires) had contributed to a global economic crisis. This in turn had led to conflict and large-scale war. Colonialism, the US argued, involved unsustainable trade barriers and unfair economic competition.
US policymakers wanted to eliminate the political and economic causes of conflict by fundamentally re-shaping relations among the States of the world. Critics have argued that the overriding concern was to expand markets for the US and ensure a supply of raw materials. US policymakers argued that independent States should join together to form a collective structure. This would ensure mutual protection against predatory States and sound political and trade policies to promote global growth. The UN was organised as a global political institution. It held its first general meeting in San Francisco in June 1945.
Alongside, the Bretton Woods institutions -- the World Bank, the International Monetary Fund, the General Agreement on Trade and Tariffs (GATT, later the WTO) -- were formed at Bretton Woods in New Hampshire in 1944. Delegates from 45 countries participated. These institutions aimed to address economic problems and ensure global economic and financial stability. Together, they became the global institutional pillars of the new interstate system.
Through such measures as controls on exchange rates or on import and export quotas, the idea was to make the world stable for business to invest and profit, for trade to grow and presumably for ‘development’ to occur.
The IMF would use the contribution of wealthy subscribers to provide emergency funds to pay debts and avoid currency depreciation. This would stabilise global financial markets.
The World Bank would provide loans to ease cash shortages . Trade was to be restored by advancing credit to revitalise regions devastated by colonialism: the global banking operation would re-distribute funds to stimulate new production. The Bank was headquartered in Washington , DC . Its five biggest shareholders, beginning with the US , dominated the Bank. Until the 1990s the 10 richest industrial statescontrolled 53% of the Bank’s votes; 45 African countries controlled just 4%.
The third tier of Bretton Woods, the GATT, was proposed to renegotiate terms of trade, reduce trade barriers, and settle disputes between trading partners. It started out as the International Trade Organisation and, in 1947, became the GATT.
Put together, the mandate of Bretton Woods was ‘ multilateral developmentalism’: to create conditions for expanded trade, investment and economic growth. This set in motion an elaborate post-war system of influences and pressures whereby, some argue, the First World attempted to retain its control of the Third World under the guise of the ‘development project’. The project promoted ‘development’ according to Western methods and primarily economic conceptions. This was the 1950s, the time of modernisation theory’s ascendancy. The UN declared the 1960s and ’70s as ‘development decades’.
Over the years, the Bank promoted heavy technology transfer, established an institutional presence in Third World countries, promoted intensive agriculture, supported megaprojects: in short, pushed its ‘development’ model across the globe, including India . There are several examples of the disasters unleashed by this model in the early decades. For example, since the mid-1970s, the World Bank, USAID, the governments of Netherlands , France , Germany , the UNDP, and several others, began to give aid to a project to resettle (poor) people away from the densely-populated Indonesian mainland to the Irian Jaya rainforest areas of eastern Indonesia .
Not surprisingly, people were not willing to be moved in this manner, and the inhabitants of the rainforests were not willing to have such invasive changes introduced in their lives. The Irian Jaya project has been disastrous: the Indonesian army was brutally violent in the eviction and resettlement processes, homes and fields were burnt, social unrest exploded. At least 300,000people were thus moved to transmigration sites (or an original target of 20 million). Many returned to the cities from where they had been forcibly moved. The project’s only success was to export poverty from Java -- where it is visible -- to the island -- where it is hidden.
At times, such projects took the form of big dams. In India , the Tehri and Narmada projects are prime examples. The Aswan Dam on the Nile in Egypt , completed in 1966, is another example. Millennia-old agricultural rhythms around the Nile changed as a result of the dam. Work that used to be seasonal, depending upon when the plains flooded, became work round the year. New agricultural technology (chemical fertilisers, high-yielding grains, electricity-driven pumps) was introduced; the government started regulating what could be planted; railway networks were built to transport the produce. All this in a sense meant ‘progress’. It led to increased crop yields, and more income for some. But salinity levels also eventually rose, and fertility fell. In the old days, the farmers were dependent on the weather; now they were dependent on technology, railways, the government, chemical processes, and international markets.
Development agencies, James Fergusson, anthropologist at Harvard, argues, had to “move the money”-- to spend development money in order to get more and justify their existence. It was quickest and easiest to spend this on standardised projects and therefore to project countries in a way that made them seem like ideal ‘targets’. C ountry profiles on which projects were based had little resemblance to their reality. Fergusson calls this kind of development literature (which determined distribution of billions of dollars and affected millions of lives) as “myth-making” or “re-arranging reality”.
Within each country in the post-war interstate system, ‘development’ models varied. But development projects — as the examples illustrate -- imposed an essentially economic understanding of social life. Both the communist and capitalist variants shared a modernist paradigm: national industrialisation and modernisation was the vehicle of development. In many of the n on-aligned parts of the world too, industrialisation became the catchphrase. Development states emerged in the Third World , characterised by State-dominated planning, public investment, and centralised administration, in order to ‘catch up’. ‘Development’ became the formula which dominated the post-war world and which changed—but not necessarily always improved -- the lives of millions of its citizens.
Against this global background, India , newly-independent in 1947, and under the modernising influence of Nehru, set out to ‘develop’. In the tussle between the Gandhian vision—a less intensively industry-focused and more village-centric notion of development, opposed to the Nehruvian vision of heavy industrialisation and megaprojects, the fast-track plans of the first prime minister of free India won.
The country embarked upon a top-down, investment-heavy, environmentally-questionable project of ‘development’, often with devastating results. (See ‘The destruction of development’ by Jaideep Hardikar). After 50-plus years of this model, thousands of crores and millions of shattered lives, the country has slipped to 127 on the UN’s Human Development Report of life expectancy, literacy and income.
Simultaneous to the development project, emerged numerous critiques. Fergusson argues how the project (as pursued by the global agencies) erroneously saw its ‘targets’ as lying within neat, unitary and effective national governments, perfectly responsive to the blueprint of global planners. The State was seen as an impartial instrument for implementing plans. Not much mention was made of the political and class character of the State, or of the political, economic, structural and historical causes of inequality and poverty.
Over the years, some of the critiques have been noted and reflected in the World Bank’s changing—and some argue ‘softening’ – stance on ‘development’. It has introduced various ‘human’-centred notions of development into its policies, which take into consideration national and local priorities. Whereas in the past the WB and IMF were regarded as operational twins, the WB is now viewed as somewhat de-linked from the market fundamentalism of the IMF. Joseph Stiglitz, for example, former chief economist at the World Bank, or Ashim Dasgupta, finance minister of West Bengal , observe that the World Bank is responding to locally-specific ground reality.
However, alongside the changes in WB development policy has come the push from the IMF for countries to ‘open’ their economies, to liberalise: to introduce greater privatisation, relax currency controls, and introduce budgetary austerity (cutbacks on social spending), amongst other measures. The ever-growing World Trade Organisation (WTO) is working alongside the IMF to re-shape global trade policies. This is now often regarded as ‘neoliberalism’ or the new ‘globalisation’ – a forcible integration of the world economy to the advantage of the more economically powerful countries and transnational corporations—that will benefit some, that is, bring about some ‘development’, but push an even greater number into poverty and entail untold costs in terms of the environment.
Development from above has always been contested, but with growing globalisation, there is a growing multiplicity of opposition: or a ‘globalisation from below’. This is evident in the coming together of various anti-globalisation voices on such platforms as the World Social Forum (first held at Porto Allegre in Brazil in the year 2000, and held in Mumbai in January 2003). This, some argue, indicates an escalating tension between global (or universal) and local (or particular) understandings of how humanity should proceed.
Other movements worldwide reflect the resistance. Escalating fundamentalism, it has been argued, is one such form of opposition: Philip McMichael argues that fundamentalism (of different colours) has become a powerful means for mobilising people as the political and class coalitions of the development era crumble along with State power. McMichael predicts that the anti-Westernism of some fundamentalisms will be the major fault-line in the future as it challenges global developmentalism.
Environmentalism is another multi-pronged movement that points out the destruction of unchecked industrialisation, development and the now escalated ‘globalisation’. Environmentalists point to the dangers of a worldview that sees nature as external to society and progress. They caution against illusory gains in income and permanent losses in wealth.
Some environmental movements, for example, focus on protecting bio-regions from environmentally damaging ‘development’ practices: such as movements against commercial logging in tropical forests in South America , which draw attention to the growing conflict between local cultures and the global market. In Brazil , for example, there is a movement to create self-managing extractive reserves (the slain leader Chico Mendes was associated with it) for native tribes and rubber tappers to protect them from encroaching big-business ranchers
The local and global solutions proposed by environment movements are sometimes generally grouped under the term ‘sustainable development’. The term became popular in official literature after the Brundlandt Report (1987, of the World Commission for Environment and Development) which defined sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” How this may be achieved, McMichael says, remains a puzzle. Ecologist Wolfgang Sachs asks: what needs? And whose needs?
Many of the alternatives proposed to the new globalisation (promoted as a route to ‘development’) tend to reject centralism and economism and stress decentralisation and community empowerment. This has been called “cosmopolitan localism” (McMichael) or the “home perspective” (Sachs). It affirms local diversity over abstract homogenising ‘expert’ knowledge and calls for ‘decolonisation’ by breaking with the global enterprise of ‘development’.
One commonly quoted example in this regard is the Chiapas movement in southwestern Mexico : many argue this is a model for the post-national development era. The movement—spearheaded by Subcommandante Marcos -- advocates associative politics and the connecting of a broad range of social causes; it stresses community rights, and works on the basis of co-operation, not hierarchy. Chiapas calls for a re-thinking of the nation-state as the basis for top-down development, even as the institutions of the original development project continue to devise measures to ‘improve’ the conditions of the world’s populations.
InfoChange News & Features, January 2005