Nicolas Guilhot
For 50 years the World Bank has been the arbiter of development. Its annually published World Development Report defines the priorities, the jargon and the issues that shape and express the concept of development. From the reduction of poverty so close to the heart of Robert McNamara (bank president from 1968 to 1981), to good governance by “structural adjustment and sustainable development”, the bank’s agendas have directed debate and research, and created knowledge.
The bank was formed in March 1946 as a compromise between public officials of the founding governments, who wanted to control the terms of trade and rates of exchange, and Wall Street bankers, who were keen to limit Washington’s influence. The bank was initially concerned more with reconstruction than development, and with guaranteeing investments rather than making loans; its operations defined prudent management. Its restraint was all the greater because investors equated its financial credibility with the amount of capital subscribed by its principal guarantor, the United States.
The bank’s location in the orbit of the USpublic sector was for a long time an obstacle to securing its own finance on the markets. Not until the 1950s did it inspire enough confidence among USinvestors for its bonds to be considered safe investments, with a triple-A rating. Then healthy profits, financial autonomy and less budget constraint helped it to be more flexible and diversify its lending, developing an identity that set it apart from its parent states.
Until then it had been the preserve of bankers and administrators: engineers and a few economists were at the bottom of its professional ladder. But to reinvest its surpluses the bank had to explore new forms of lending and relax its criteria, while retaining the confidence of institutional investors. This was the reason for recruiting economists: they were to prepare the way for the bank’s expansion by calculating the rates of return on new projects very different from “estimating needs” as it had done before, and a task for which the bankers had little enthusiasm.
By the 1960s improving the bank’s economic know-how was also part of university academics’ greater investment in Washington political circles. During John F Kennedy’s administration, political advisers were recruited from the prestigious faculties of America’s East Coast. Economists benefited most from this new link between the universities and a political domain with fluid, permeable borders.
The 1960s bank economists came from the same background and shared the reformist ethos of the Kennedy and Lyndon Johnson administrations; not only because development economics were an offshoot of Keynesian economics, but also because Keynesianism was a ready-made ideology for bureaucrat-economists keen on government intervention in the economy. It is not surprising that the bank’s main development themes, of poverty relief, growth and redistribution, echoed the domestic policies of the US government (Kennedy’s “war on poverty”, Johnson’s “greater society”).
This alliance ended with the debt crisis and the Reagan presidency. In the 1970s McNamara’s bank had been a haven of Keynesianism and state-directed modernisation. The arrival of a neo-conservative team in the White House in 1981 put the bank at odds with Washington ideologically just as Third World debt challenged the bank’s expansionist practices. It was seen as a spendthrift bureaucracy that wanted to supplant the private sector, so much so that the new assistant secretary of state to the Treasury, Beryl Sprinkel, commissioned a report to establish whether the bank had socialist tendencies.
There was also a radical change in the bank’s scientific skills and clientele. Economics remained the leading development science, but a new generation of economists close to the Chicago school took over. There was a shake-up at the bank, with only eight of 37 senior people keeping their jobs, and a monitoring system was installed to label economists on the basis of their ideology. The new team thought that the existing staff lacked appropriate economic and technical skills, and that they were attached to past statist practices.
Ultra-liberal concepts became the official line, with the public sector seen as parasitical on the privileges of the markets and a hindrance to their harmonious operation. This ideological counter-revolution at the top was the outcome of a broader and older trend. Unlike their Keynesian predecessors, who used their skills through links with the administration, the representatives of the Chicago school compensated for their remoteness from the centres of power with greater professionalism. There was now a mathematical basis to standards of competence in economics, and it excluded development experts, who were seen as generalists or even as non-scientists.
The new economists allied themselves with finance and with neo-conservative forces that listened to them attentively, and for which they provided an avant-garde ideology. The new economists occupied many research institutes and think-tanks that provided the intellectual backing for Ronald Reagan’s election. Their expertise gradually became a product, supplied to a client in a transaction meeting the client’s needs. Their marketing and public relations skills enabled them to polish their media image, easily finding outlets for their popularising message.
The experts of the Kennedy age had shared an avowedly apolitical technocratic ethos that rationalised the administration of the bank: the new network of consultants brought back a militancy that shaped the bank’s development policy. The bank was based in the US capital, where gifted economics were much in demand: so the bank could not remain immune to changes affecting the political environment as much as its professional component. Neo-classical economics penetrated the bank; project appraisal and the need to qualify performance led its economists to use neo-classical approaches and models because of their “methodological rigour”.
The “Washington consensus” reflected the convergence of the strategies adopted by the new economists, the neo-conservatives and the world of finance. It resulted in an alliance that was relatively stable throughout the 1980s and made it easier for Wall Street and the bank to move closer together over the debt crisis: the bank helped to save a number of banking institutions that had been over exposed to the market in commercial loans. The expression of the consensus in development terms led to the ideology and policies of “structural adjustment”. And policies of competitive exporting, privatisation and deregulation were easier to impose when, after 1982, the bank was again in a position of strength and able to dictate terms as the lender of last resort after commercial bank loans to the developing countries had dried up.
In their ideological offensive, neo-liberal thinkers and their economists adopted a strategy in which intellectual ability was inseparable from partisanship. This strategy was a break with the technocratic profile of the previous generation of experts, for whom rationality went with neutrality. But by introducing what was to prove a winning formula these new consultants set a precedent, exploited by others who had been excluded from the dominant development institutions: NGOs and academics in disciplines other than economics. These two groups gradually came together through the 1980s and mirrored the alliance of activism in values and scientific ability that had created their ultra-liberal enemies getting their abilities recognised by the bank and the main development aid agencies.
Viewed by professionals as militants and dilettantes, the NGOs had long been disregarded or opposed when championing the casualties of structural adjustment. With the emergence of humanitarian NGOs focusing activities on extreme situations and capable of declaring an emergency, mobilising public opinion and funding campaigns, those NGOs concerned with development either went into decline or became more professional. They bent to an enterprise discipline to survive in a fiercely competitive market.
Trained in fund-raising techniques and public relations, the new representatives of the main British and US NGOs are pros, activists who have become managers, with formal qualifications in law, commerce or management, and experience in politics and business; they are humanitarian entrepreneurs quite different from the militant idealists who were imagined to be doing the job. Their greater professionalism has meant that NGOs have engaged staff who are increasingly like the employees of the institutions that the NGOs were opposing. This has tempered the critical discourse and facilitated a depoliticisation already well under way.
The NGOs’ professional compatibility with the bank explained their new influence on it, rather than any grassroots mobilisation the riots against the International Monetary Fund in the developing countries had almost no affect in Washington. The bank, instead of seeing the NGOs as potential trouble-makers to be fobbed off by paying a tribute of words to their concerns, understood that their professionalism could be made to serve its own interests. They could get along together. So the bank increased the funding managed by NGOs, and they were given generous commission on it.
The number of bank projects with NGO participation increased from 5% in 1988 to 47% in 1997. This has brought the NGOs’ professional standards close to those of the bank, and increased the permeability of the sectors. For many young graduates NGOs have become the professional springboard to employment with inter-state organisations. The political options open to these new official players in development are gradually being reduced to a single policy of reformism made acceptable to the bank by professional practices of the NGOs and their occasional status as subcontractors. Development projects are being administratively relabelled, with few added references to ecology, gender or civil society, but nothing to alter their substance or question their neo-liberal orientation.
“The topic of good governance” established by the bank as a template for development policy in the 1990s reflected the new coalition. By stressing citizen participation, institutional transparency, respect for the rule of law and support for civil society, the bank adopted a pro-democratic language in which the NGOs delightedly recognised their contribution. The language contrasted sharply with the preference the institution had formerly shown for quasi- authoritarian regimes, which were deemed more capable of applying structural adjustment policies because of their ability to withstand social pressures.
Good governance represented above all the extension of structural adjustment to the developing countries’ political systems. The bank authorities have explained the disastrous results of the policies pursued in the 1980s as a mistake: they had wanted to restructure the developing countries’ macro-economic policies without taking into account all the institutional factors involved in their implementation. Bankruptcy was ascribed to internal political blockages, private interests or trading of favours. And the neo- liberals saw the policies’ failure as proof of the correctness of the anti-state assumptions of their structural adjustment policies.
The recommended solution was to reform the political structure by opening it to social groups that would act as channels for the bank’s policies a concept that passed as democratisation. Most international NGOs and their local protgs readily went along with this shift towards civil society, believing that ground taken away from the state and public services was conquered territory. The NGOs also had to acquire skills to become service providers. To this end they called in sociologists and political scientists, whose authority in development matters had not been much recognised in the era when structural adjustment gave priority to macro-economics, and economists had a near-absolute intellectual monopoly. Non-economists, who once lacked authority because of the nature of their knowledge, worked with NGOs who needed experts in participation or civil society, and used the NGOs as effective brokers for their research, disseminating its content and popularising it.
If, as Susan George and Fabrizio Sabelli write, “the academics and NGO representatives who devoted their skills and energy to studying the effects of structural adjustment have not wasted their time”, this was because their knowledge was a resource that could be turned into money in an expanding skills market. This conversion benefited the political scientists especially, because changing development themes at the bank needed their expertise.
The motto of structural adjustment was “get the prices right”: the motto of good governance, the new order of the day, is “get the politics right before structural adjustment can succeed”. But conventional economic analysis is inadequate for assessing the new projects that want to increase institutional transparency, strengthen the legal dimension of social relations, or measure the degree of development of civil society or the level of transparency of government structures. So political scientists are called in. The policy of good governance means that they are at last getting professional revenge on their economist colleagues who had spent the 1980s making expenses-paid trips between their university offices and multilateral institutions where, having the monopoly in development matters, they collected emoluments.
As far back as 1991 an internal memorandum proposed a more important role for non-economists in project preparation. Some, who were expected to use their knowledge only to legitimise policies devised by economists, found being part of a fiefdom of neo-liberal thought frustrating. Others made the best of such promiscuity. Abandoning all critical discourse, they adopted softly reformist positions, working on social aspects of structural adjustment, while being careful not to question its principles.
This article appeared in the English-language edition of Le Monde Diplomatique