The Multinational Monitor



Development Debacle: The World Bank in the Philippines
by Walden Bello, David Kinley, and others
San Francisco, Institute for Food and Development Policy
1982, Paperback, 252 pages, $6.95

The World Bank - A Critical Analysis
by Cheryl Payer
NewYork: Monthly Review
1982, Hardback, 414 pages, $22

by Guy Gran

Independent analysis of the World Bank is not so underdeveloped as it was even three short years ago. There have since been enough books, articles and especially unpublished dissertations on the Bank to clear away many of the misconceptions about its role in the development of the Third World.

The Institute for Food and Development Policy has been one of the principal forces seeking to show that international aid from major aid agencies is part of the problem, not part of the solution. The latest efforts of the Institute, in collaboration with Philippine specialists, has produced Development Debacle - their finest book to date.

It won't outsell Food First, because many will think of it as just an effort in Asian studies. It is however, much more. As Zaire has become the Vietnam of the International Monetary Fund, the Philippines has become a

similar disaster for the World Bank's export-led growth model.

Cheryl Payer, author of the pathbreaking critical book on the IMF in 1974, has chosen not a country focus, but a global and sectoral study. The result is a broad introductory treatment of Bank policies and programs over the last generation. Like Development Debacle, The World Bank is written for the nonspecialist. In many ways it is a satisfactory first book on how the Bank has gained financial and intellectual hegemony over global growth efforts.

Beyond surface impressions, however, it is Development Debacle which merits more serious attention. Its depth of documentation is unparalleled in studies of the World Bank. Thanks to active helpers inside the Bank, the authors got not only most of the internal country and project reports on the Philippines from 1972 to 1981 from the Bank and Fund, they also obtained the recent country program papers and at least some samples of project supervision reports. Interviews and some field research add to this mine of documentation.

Walden Bello and his colleagues argue that the Philippines in the 1970's was Bank president (and former U.S. Defense Secretary) Robert McNamara's second Vietnam. The Bank worked successfully

to weaken domestic Philippine capital and facilitate its incorporation into the world system. Rural development projects would pacify the countryside. Export processing zones would allow multinationals to soak up cheap, docile urban labor. The Philippines would prosper by exporting.

The strategy did not work. A martial law dictatorship and a highly stratified, non-democratic society were scarcely suitable. The bureaucracy was so incompetent that by 1979 the Bank had designated 63 % of the projects as problems. Rural projects created " growth with immiseration;" angry peasants reacted. Urban up-grading projects and Dickensian factory conditions enraged urban workers; strikes resulted. So much for docile labor.

The export zones did not hook up with the rest of the economy effectively. The multinationals brought in less and less new money . . . and while the Bank led the attack on Philippine protectionism, rich countries put up dozens of barriers to Philippine exports in the late 70's. Balance of trade deficits led to a financial crunch.

The Bank's response was not to change the model, but to blame vestigial protectionism, martial law, and the cronies of President Marcos. The Bank then organized a structural adjustment loan, which gave it even more control. In mid-1981, the World Bank succeeded in landing its own technocrats in cabinet positions, most notably with Cesar Virata as finance minister and prime minister.

Under the structural adjustment loan program, the Philippines attempted to break up some of the economic monopolies of Marcos' allies;' they were competing too successfully with multinationals. Currently the Philippines has higher debts, a corporatist growth strategy that ignores mass needs, and a government of technocrats with no political base. It is not a stable situation.

Development Debacle does a good job of demonstrating the growth of Bank control over all aspects of Philippine politics and economics, relying primarily on the Bank's own documentation. Counterinsurgency efforts in the city through slum-upgrading are particularly well-dissected.

This is a very satisfying treatment of the evolving contradictions in the triple alliance - state, local business, and multinational - and how the Bank assists multinational capital against the state and local capital. Connections at each stage in the 70's are clearly and persuasively drawn.

Third World governments would be very wise to study this case in detail, for it is not so very different from most other Third World experiences with export-led growth.

Cheryl Payer seeks to make similar arguments on a global scale. In many ways she succeeds, but the general reader needs to be aware of some limitations. The book is based largely on published material; curiously she ignores the available 500 working papers. A number of the good independent works are cited, but many, many others are ignored.

Reading so much public Bank material makes it hard to avoid the Bank's intellectual traps entirely. Some severe confusions creep into Payer's work. The book's first sentence terms the Bank "the foremost international development agency." As the book soon shows, however, the bank is not a development agency but a facilitator of corporatist growth and the expansion of international capital.

Bank reports may indeed be "widely regarded as the most comprehensive and sophisticated compilations of information available." But this common perception is wrong and needs to be refuted. Payer is aware of the Banks' general myopia about history and politics but hasn't gone deeply enough into the study of any one country to be able to show how stunningly anti-professional and incompetent most Bank analyses really are.

The bulk of The World Bank is devoted to eight chapters on Bank policy in different sectors. Particularly effective are the study on forestry and the chapter on agriculture. Some other sectors, unfortunately, were treated in a more cursory fashion.

The beginning student will find some basic aspects of Bank behavior quite well explained but will miss some other important elements. Payer makes no attempt, for instance, to quantify Bank lending by country, region, sectoral distribution or time period. Nor does she explore whether shifts in policy rhetoric in the mid 70's had much impact on project realities.

Most important, Payer shows little inkling that the Bank is an organization as well as an agent of international capitalism. What does it mean for growth or development that the Bank is a hierarchical authoritarian organization? It means that at each stage, Bank procedures are designed for organizational control, not for the human liberation essential for authentic development. Payer's brief foray into these themes, one good case study of the deprofessionalization of a consultant anthropologist, only scratches the surface.

Questions of organization and culture are far more central than most students of political economy will yet admit. A more interdisciplinary analysis of large organizations - states and corporations - is the first step toward constructing the effective alternative of participatory development.

Payer's notions of a better way to mass development are at best ill-formed. Pleading for an as yet undefined socialism is not helpful when there is no operational consensus on the meaning of the word. And Payer's belief that popular participation and local control are impossible without war or revolution is challenged by a growing body of alternative, participatory development activities.

But in sum, both of these books deepen and broaden the critique of conventional growth and aid efforts. Both books are written in useful, readable fashion. For the specialist and for the beginner, the works make for a fine introduction to the real functionings of the World Bank. 11

Guy Gran is the author of Development by People: Citizen Construction of a Just World (Praeger, Spring `83, hb and pb).

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