Structural adjustment policies are=20 interventionist and destructive, warns an=20 economist. Gwen Ansell reports
AMID the soft-mouthed apologists for=20 structural adjustment policies – who=20 concede that its conditionalities may be=20 “too harsh” or its social safety nets “too=20 loose” – economist Michel Chossudowski is=20 refreshingly blunt.=20
The failures of structural adjustment, he=20 contends, have been masked by “the=20 systematic falsification of the database”.=20 And if such policies are not contested and=20 defeated, “the alternative is Bosnia”.
Chossudowski was in Johannesburg this week=20 to address a meeting of the Campaign=20 against Neoliberalism in South Africa=20 (Cansa). He is professor of economics at=20 Ottawa University, and is best-known as the=20 author of a number of studies into the=20 negative impact of adjustment policies.
His latest book – a collection of a dozen=20 case-studies including Rwanda and Eastern=20 Europe, called The Globalisation of Poverty=20 – is hot off the press. And while he was=20 speaking, World Bank president James=20 Wolfensohn was preparing to jet into South=20 Africa to preach the benefits of adjustment=20 and the global economy.
A mathematical economist by training,=20 Chossudowski has visited more than 100=20 countries and conducted data-led adjustment=20 studies in 20 places over the past two=20 decades. His case against adjustment is=20 that rather than recovery, it triggers “the=20 destruction of whole economies”.
By devaluing currencies to the=20 International Monetary Fund (IMF) recipe,=20 governments spark increases in prices and=20 real interest rates. As inflation mounts,=20 wages are de-indexed and real wage rates=20 compressed. The value of the state budget=20 falls and social services are slashed. A=20 country’s manufacturers face rising fuel=20 prices and freight costs, which exclude=20 them from their own markets at the same=20 time as trade barriers are lifted to allow=20 in a flood of dumped goods.
Fiscal systems collapse, comparative=20 advantage is destroyed and national=20 sovereignty abandoned as creditors take=20 over policy formation.
“It’s essentially not a liberal but a=20 highly interventionist policy framework,”=20 he says, “creating neo-colonial government=20 of a new type.”
Chossudowski’s analysis, with its emphasis=20 on economic recovery through investment=20 rather than deficit control, challenges=20 much of the basis of South Africa’s growth,=20 employment and redistribution (Gear)=20 strategy.
“You have to ask whether Gear and=20 reconstruction are compatible. When one=20 emphasises minimising costs and the other=20 requires expansion to create jobs, it would=20 appear they are not … However, change=20 would require redefining the role of=20 private creditors and democratising=20 decision-making in the central bank.”
That, as several members of the Cansa=20 audience pointed out, is a political, as=20 well as an economic project. But=20 Chossudowski believes that resistance to=20 the global rockfall of adjustment is=20 possible.
“Governments can say no. India managed to=20 stay free of World Bank intrusion until=20 1991. One crucial factor is the relation=20 between the state and civil society. Are=20 governments more concerned to serve their=20 creditors than to serve the people? Another=20 factor is how self-reliant your domestic=20 economy is.”
Unlike many at the meeting, Chossudowski=20 sees the World Bank and the IMF not as=20 demons but as mere apparatchiks of the=20 world financial system.=20
“The commercial and merchant banks, the=20 trading companies, are the beneficiaries of=20 adjustment policies. They are expanding=20 their scope by displacing existing=20 productive systems.”
Many things about South Africa surprise=20 him, including – given the country’s=20 history of struggle – that the struggle=20 against the international financial=20 institutions is comparatively new. And some=20 things shock, like public acquiescence in=20 the creation of what he terms “new=20 homelands” in Mozambique for white, right- wing business interests.=20
“If it was designed to buy off right-wing=20 resistance, it seems a very short-term=20 strategy. What you have allowed them to do=20 is establish their own bases on your=20 borders.”
But what shocks Chossudowski most is the=20 government’s emphasis on debt repayment.=20 “Apartheid debt was borrowed to oppress and=20 kill people. Now those same people are=20 being asked to sacrifice to pay it back.”