Comrade Pravin Gordhan’s opinion piece, “IMF should be more representative” (Mail & Guardian, May 20), is an ideological point of view, although it is presented as a neutral intellectual contribution by the minister of finance to the discourse of political economy and development.
I start from a simple Marxist analysis that every phenomenon in society has a class character. As a former leader of the South African Communist Party I presume that Gordhan is well aware of and appreciates this principle.
The same principle applies to the International Monetary Fund (IMF) and the entire Bretton Woods imperialist empire, including the World Bank and the World Trade Organisation. Gordhan’s failure to see that the Bretton Woods institutions are there to serve specific class interests is surprising.
In his introductory paragraph, Gordhan asserts that “the recent financial crisis has highlighted the need for legitimate and credible institutions of global governance. Such institutions are central to sustainable global economic prosperity and the management of risks arising from an increasingly globalised world”. This characterisation is neoliberal in its entirety. It belongs to what has been called the “post-Washington Consensus”. It is common knowledge that, in addition to a crisis of accumulation, capitalism is faced with a crisis of socio-economic legitimacy. This crisis of legitimacy has been aggravated by the imposition of structural adjustment measures on the Third World, or global South, towards the end of the 20th century. These measures included economic and political prescriptions that brought nothing but misery to the people of the Third World.
Reforms included austerity measures such as severely cutting the budget deficit, inflation targeting (keeping it at 3% to 6% of gross domestic product), trade liberalisation, deregulation, privatisation and the state being an economic observer rather than a player. In essence, it was a new era of colonisation for the South. It became known as the Washington Consensus.
These austerity measures were sweet poison. They were purportedly designed to help Third World countries turn around their economies and ultimately join “the imperialist triad” (the United States, Western Europe and Japan) in the illusionary paradise of prosperity. It proved to be a myth. The measures brought misery of unimaginable proportions to the peoples of the South.
As a result, the neoliberals reformed their strategy to gain legitimacy in the South.
This post-Washington Consensus or set of second-generation reforms includes positioning the Bretton Woods institutions as credible contributors to the pursuit of global economic prosperity. The minister should know that during the Cold War era these institutions were used as economic vehicles to justify capitalism over socialism in the South.
In pursuit of this ideological mandate, these institutions gave assistance or aid to the South. But with the political setbacks the working class endured between 1989 and 1991 in what was now a unipolar world, the strategy changed from aid to loans.
It is beyond comprehension that the minister fails to appreciate that the Bretton Woods institutions have always been used as economic vehicles to pursue the Western imperialist political ideology that is neoliberalism.
The principle that has always guided the leadership of both the IMF and the five entities loosely known as the World Bank is that Europe will lead the former and the US the latter.
Gordhan’s argument that the new leader of the IMF should come from the South is irrelevant, because these institutions are ideological instruments to ensure the continuity of imperialism. Whether the new appointee comes from the South or not is inconsequential. Still, it is important to address this issue, given that Gordhan seems to be preparing the ground for Trevor Manuel, his predecessor at the treasury, to take the leadership of the IMF. I am not persuaded that Manuel is an ideal candidate to help bring about prosperity, either in South Africa or in the South generally. There are three major considerations here.
First, Manuel was central to the failure of South Africa’s democratic government to implement the “Castro option”, namely Fidel Castro’s idea that Third World countries should dishonour IMF debts. This happened when there were strong political and moral arguments in favour of the “Castro option”.
Second, I cannot understand how Manuel allowed Barclay’s Bank to operate in South Africa. It is known that Barclay’s was started by the two Barclay brothers with profits from slavery.
Third, Gordhan’s preferred candidate has been an unwavering ideological franchisee of the Washington Consensus, for instance, the prescribed inflation target of 3% to 6%.
There is empirical evidence, based on research by leading development economists such as John Marangos and Robert Barro, to indicate that only very high inflation — above 40% — is harmful to a country’s economy. It is strange that Manuel continues to feed us the myth that inflation above 6% will lead to economic meltdown. Based on this record, I don’t believe Manuel should lead a development-oriented institution.
Given the ideological outlook of the Bretton Woods institutions, I am of the view that, instead of an attempt to reform them by deploying a Third-World-based henchman of imperialism, South Africa should initiate a process of setting up alternative development institutions that will drive socioeconomic development in the South.
Bongane Ndamase, formerly a senior manager of community banking at Standard Bank, is an active member of the ANC and the South African Communist Party