Category Archives: social justice

Review: Imperial Nature

The subtitle reads “The World Bank and struggles for social justice in the age of globalization”. This, along with the highly suggestive title, should hint as to the intellectual direction of the book.

Imperial Nature is critical look at the extant relations between the ‘developed’ North and the ‘underdeveloped’ South, with the myriad aid agencies that mediate these relations, especially in the spheres of development. The World Bank has emerged as a highly influential global actor in these relations (or networks), and the book analyses how the Bank got to the enviable (and equally notorious) position that it finds itself in.

The book revolves around a concept called ‘Green Neoliberalism‘, which essentially is how neoliberalism has been promoted using the necessity for ‘sustainable’ development and protecting the environment from ‘indiscriminate’ and ‘rapacious’ forces of poverty in developing countries.

We begin with a history of the Bank, from its roots as an instrument to rebuild the devastated economies of Western Europe after WWII, to its present mandate to develop the underdeveloped Southern half of the Globe. In the beginning, most of the money that the Bank lent came from National Treasuries and Government institutions of various countries. It was run like an orthodox, risk averse bank, lending only to countries which had a positive chance of repaying the money, like France and Japan. However, when certain political changes made World Bank aid in Europe irrelevant, it had to look at other sources to lend money as well as raise capital, since it was still dependent on US Treasury handouts for capital inflows.

Therefore, the Bank looked towards Wall Street to raise money for its ventures. However, since investors are squeamish about how secure their investment is, the World Bank had to gain credibility by showing that their bonds (floated on Wall Street) were indeed secure and gave attractive returns. Now, one cannot give money to a recalcitrant dictator and expect him to repay in full running the State as he likes. Therefore, the Bank had to make sure that its money was being spent in the ‘right way’, which simply implies that it would go into money making big dams, power and other infrastructure projects rather than schooling, healthcare and so on. This is not to say that no Bank money went to such social sectors, but it was never it major thrust. In fact, there have been instances where public spending in social sectors was cut due to Bank pressure.

Next, the book looks at how the Bank innovates in the face of crisis. In the early 90’s, large scale protests against the Bank sponsored Narmada Valley project and Arun 3 in Nepal forced the Bank to back out of both. Faced with a crisis of legitimacy (which is crucial for its working, since it is a bank, after all), the Bank began it new environmental sensitivity phase. The author investigates how the processes by which the World Bank’s stand on environmentally conscious projects, which involves valuation of forests, rivers as economic goods which need to be partly conserved (to keep the environmentalists happy), and opened up for commercial use (to keep the logging industry happy), has become the dominant mode of thought in every forum where development has been discussed.

This dominance, the author argues, is due to the incredible network built by the Bank, which involves training locals in its ideologies so that they can legitimize Bank policy in their native countries, generating large amounts of (not very scholarly) research which all sing consensual policy tunes, and the good old carrot-and-stick approach which forces highly indebted countries to accept and internalize Bank policies or else.

The example of the State of Laos is taken and the major structural changes the Bank intervention caused, especially in the Government ministries (which are dominated by experts from elite organisations of the North), policies (which promote indiscriminate privatization without having a competitive domestic industry, which results in killing of the domestic players), and environmental outlooks (which promote eco-tourism over rights of indigenous people, and throws natives out of their homelands to ‘resettle’ and become ‘productive’ citizens of the nation). The solutions proposed are typically capital intensive and require large amounts of equipment and expertise from Northern contractors and consultants. It has been calculated that for every dollar of loan, around seven dollars goes back to corporates in the form of contracts and profits from running previously public sector services bought at cheap prices.

The book finally looks at the case of water supply privatisation and how the Bank, within a span of few years managed to convert this issue from a laughable non-starter to something that is a precondition to most Bank loans(yes, even the ones India takes), and how it is presented as the solution to supply quality water to the poorest but ends up becoming too expensive for them to afford, defeating the whole logic of privatisation in the first place. In highly indebted countries, privatisation of social services is said to be good as the public sector is highly ‘inefficient’ and privatization can only improve matters. The author argues against such a simplistic logic and shows how delivery of services can depend on so many factors ( The Bank forced cutting down of social expenditure one among them) and privatization usually ends up being control of a public good by Western corporates, with an indigenous face.

Though it is unlikely that the Bank will ever close down (too many people have built careers around it), such arguments against Bank policies and high-handedness may help to bring more transparency into the murky world of the development industry (yes, it is probably one of the most profitable industries!).