The Rule of Free Market Ideology: Interlinking Money, Power and Poverty

Introduction

In William Morris (1891) News from Nowhere, the protagonist, William Guest— after a rousing evening at the Socialist League, arguing, rather loudly, “what would happen on the Morrow of the Revolution”, and what would “the future of the fully-developed new society” will be like (p. 43)—wakes up to find himself, still in London, but in the year 2102, after the “Great Change” had occurred, the Revolution that changed the filthy environment of industrialization, and the growing inequality, poverty and discontent into a utopian society (p. 201). Guest marvels at the fresh air, the clear water of the Thames River (p.45), and the happiness of the people he encounters (p.49). Morris’ futuristic novel is not just a fantasy story without substance, or direction. Quite the opposite—Morris was a committed socialist, idealist yet practical thinker, a talented artist, writer and printer. His essay, How I became a Socialist (1894), depicts a man who knows the facts of his time well, and has given much thought to what will comprise a fair and healthy society:

Well, what I mean by Socialism is a condition of society in which there should be neither rich nor poor, neither master nor master’s man, neither idle nor overworked, neither brain-sick brain workers nor heart-sick hand workers, in a word, in which all men would be living in equality of condition, and would manage their affairs unwastefully [sic], and with the full consciousness that harm to one would mean harm to all – the realization at last of the meaning of the word COMMONWEATLH. (p. 379)

Morris’ desire for an equitable and happy society is this essay’s investigation into the seemingly impossible dream to achieve. In this exploratory composition I will delve into the complex phenomena of the global free trade and the elite organizations that are promoting the free market ideology—the World Bank/IMF, working together with transnational corporations and rulers of First and Third World countries, to accumulate more wealth, or in the words of the World Bank/IMF, to enact “productive investments” (McMichael, 2008, p.60)—and process through the issues of money, power and poverty. Creating a utopian society may be a dream hidden in the manipulative ocean of power and money, but, it is a very much alive process; fought for globally by millions of people, seeking to “roll back” globalization (Broad, 2002, p. 243), struggling to restore equilibrium and bring back the power of governance to the local states, and citizenry, and re-establish the ability to “make things for ourselves, growing our food, making our homes, creating our education and health system” (Shiva, 2009, p.13).

Modern Civilization

William Morris (1891) termed his utopian society “practical socialism” (p.380), and contended that the modern civilization of industry is what has brought the “misery of life”, with the majority of people “so poor”, and the “enemies of the commonwealth so rich” (p.381). Morris sought after, “by means of Social – Democracy to win a decent livelihood” for everyone, but also to enjoy life, not to only “endure” existence without any desire of beauty and art. Life is meant to be uplifting, not “reduc[ing] the workman to such a skinny and pitiful existence” (p.383). The utopian society in News from Nowhere (1891) enjoyed a rich and fulfilling life, banishing “the hurry of poverty [that] forbade[s] anything else” (p. 98), because of the importance of “life to which the perception and creation of beauty, the enjoyment of real pleasure that is, shall be felt to be as necessary to man as his daily bread” (Morris, 1894, p. 383). Morris felt deeply about a society that is not only never hungry, but enjoys fresh and healthy foods, a clean environment, the arts and the immense satisfaction that comes when labor is” for the pleasure of creation” (Morris, 1891, p. 122).

Unfortunately, the vision of the utopian society has not materialized—even worse—life for many people in the Global South, as well as the Global North, but not to same extent (Danaher, 2001, p.65), has degraded further down (p. 9), and interestingly revealing, for the same reasons Morris was fighting back in England of 1891; the push of industrialization, country people losing their farms, and moving to live in city slums, working in unbearable conditions, and long hours, while their lands (and water) are used to extract natural resources from—without any thought or care for the suffering masses, or the cost to the environment. Modern civilization has been embodied by industrialization, since the nineteenth century, marching ahead, faster expanding from Europe to utilize and exploit Africa, The Caribbean, Latin America, and many other countries and territories, with colonial rule, which started during the life of Morris, escalating the extreme practices that kept both the colonized and the European poor in bondage. Modern civilization, therefore, grew out of the subjugation of millions of people by the elite rich in England (and Europe) in Morris’ day (Morris, 1891, pp. 123-125). As forms of subjugation changed throughout the decades, the international elite class in today’s global world of industrialization has learned not to be as visible as was the aristocratic society of the 19th century. It is the reason Anuradha Mittal’s question in Danaher’s 10 Reasons to Abolish the IMF & Word Bank (2001), reveals our dilemma in dealing with poverty and inequality “ So who is running this show?” (p. 10).

The World Bank/IMF Ideology

According to Kevin Danaher (2001), the “unholy trinity” of the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO) are the elements responsible for the “widening” inequality between the rich and poor, the debilitating poverty and hunger, and the massive (and still accumulating) debt of Third World countries (pp.10-12). Philip McMichael (2008) dubs the World Bank and IMF as the “twine sisters”, and describes the birth of these institutions, in July of 1944, as the way U.S. and Europe “restored [trade] by distributing credit to regions devastated by war or colonialism”, thereby, “reconstruct[ed] the world economy”, concentrating power in the hands of the “10 richest industrial states” (pp.58-59). The Bretton Woods Conference established these two organizations “to make large-scale loans to states for national infrastructural projects such as dams, highways, and power plants”, which according to the Eleventh Annual Report of the World Bank, these loans were for the “essential condition of the growth of private enterprise” (p.59). The conditions placed on Third World countries for World Bank/IMF loans had “certain criteria” that other international banking institutions adopted as well, establishing First World “institutional presence in Third World countries” (p.60).

Why would Third World Countries agree to such seemingly oppressive “conditions”? How did the World Bank/IMF propagandized financial programs that would bind the governments of these countries to institutions dictating political and economical conditions that do not bring prosperity or relief to the state, but impel further poverty? To answer these questions, it is important to understand the World Bank/IMF attractive and tempting projected image and mission statement—their position and programs—as it was portrayed by Henry Morgenthau, the president of the Bretton Woods Conference, who characterized the World Bank/IMF as the developers of “a dynamic world economy in which people of every nation will be able to realize their potentialities in peace… an enjoy, increasingly, the fruits of material progress on an earth infinitely blessed with natural riches…” (as cited in McMichael, 2008, p. 58). And still today, the World Bank insists that it is “working for a world free of poverty” with a mission that states:

The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the common sense. We are made up of two unique development institutions owned by 185 member countries—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Each institution plays a different but collaborative role to advance the vision of an inclusive and sustainable globalization. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together we provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management. (Worldbank.org/about, 2009)

The IMF mission statement is similar in nature: The International Monetary Fund (IMF) is an organization of 185 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world (www.imf.org/about

Sounds inspiring, and in fact, these organizations have stimulated “Third World states to adopt the capital-intensive methods of the West” (McMichael, 2008, p.59). The Bank freely “channeled loans into intensive agriculture, requiring fossil fuel… chemical fertilizers, pesticides…” (p.61). The Bank created the “Economic Development Institute in 1956” for the purpose of grooming the officials of the Third World to become “prime ministers or ministers of planning and finance” and educating them in the “theory and practice of development” (p.61), thereby interlinking First and Third Worlds ruling elites in the sharing of power and money.

The Global Industrialization

As the First World opened the Third World for development, country-by-country became less “food self-sufficient”, purchasing cheap “food surpluses” from the U.S. to supply their staple food, with millions of farming people migrating “to work in industrial cities” (McMichael, 2008, p.69). The loans that brought development and the burden of debt, also transformed the food supply system, internationalizing the food production in a globe-wide scope, industrializing agriculture, using fertile lands—for centuries tilled with traditional, indigenous methods—to grow mono crop for First World consumption. The machination of modern civilization included the displacement of millions of rural tenants into the slums of the cities (p.77), establishing “a growing, rather than diminishing, gap between First and Third World living standards” (p.88). A new “divergent force” of “Newly industrializing countries” (NICs) “took off”, creating a “substantial differentiations” between Third World countries in terms of industry and production; ushering in a new global trade across national borders, “a web of economic relations” (p.88). A global market has materialized.

The newly emerging “export-oriented industrialization” (EOI) were organized by the transnational corporations (TNC), taking advantage of cheap labor in poverty stricken countries, “relocating the manufacturing of consumer goods, and then machinery and computers, to the Third World”, while the West was enjoying easy credit and increased consumption; thereby uniting “the global consumer and the global labor force” (p. 89) in a vicious fusion of cheap production with extreme consumption. The ideology of free global market was perpetuated to accumulate wealth and power among the elite global players (Danaher, 2001, pp. 45-47). The “free trade zones” (FTZs); the manufacturing zones within countries, offer “minimal customs controls… exempt from labor regulations and domestic taxes”, and serve both transnational corporations, seeking lower wages, and governments pursuing foreign investments, enabling “export processing zones” (EPZs) to proliferate (McMichael, 2008, p.93). But the EPZs give rise to a new level of enforced working conditions: “Often physically separated from the rest of the country, walled with barbed wire, locked gates and special security guards, EPZs are built to receive imported raw materials or components and to export the output directly by sea or air… Inside the EPZ, whatever civil rights and working conditions that hold in the society at large are usually denied the workforce” (p. 93). The new profitable free global market can exist only via the new form of enslavement of millions of people as “Free trade zones… mean more freedom for business and less freedom for people” (p.93). How does the reality of abolishing human rights within the EPZs, correspond with the World Bank’s mission “to advance the vision of an inclusive and sustainable globalization” (Worldbank.org/about, 2009)?

Although the World Bank purports to focus on the “call for the elimination of poverty and sustained development” (Worldbank.org/challenge, 2009), differing facts have been accumulating from many sources that indicate that just the opposite has been accomplished (Broad, 2002, pp. 243-244)—and moreover, the practices of the World Bank/IMF, WTO, transnational corporations, and the ruling elites are destroying the Third World countries’ abilities to feed their hungry populace (Danaher, 2001, p. 17). The differing facts can been found in statistical researched accounts, but are even more powerful when voiced and narrated by the people who are directly affected by the elite rule of the free market, as a Guatemalan peasant woman observed in her interview with Danaher about the reason her husband was killed by the Guatemalan military: In the name of “progress”, the World Bank gives money to “The big landowners [who] make a lot of money.” And the poor? “ They [the landowners and transnational corporations] make big profits because they have people like us, peasants from the highlands, who are desperately poor that we are forced by our poverty to go down to those plantations and endure that horrible work in the fields and get pesticides sprayed on us—all for just a dollar a day—because we have no alternatives” And why was her husband killed? “He was teaching other peasants how to raise rabbits”. The lesson taught by the Guatemalan woman about the global free market was that working “for just a dollar a day” while being sprayed with noxious pesticides does not feed families, and the small act of learning to raise rabbits “so we can feed ourselves” can be deadly. Danaher learned that “it is the rich, not the poor, who create poverty” (pp.17-18).

The Rule of Free Market

The invisibility of the terror caused by the global free market practices of the First World was brought to light in the 1999 WTO conference in Seattle, Washington, with fifty thousands protesters from all over the world, united against the WTO goal to “further push a global free trade and investment agenda” (Broad, 2002, p. 123). By then, the restructuring of Third World loans, while abetting the conditions of “eliminating all obstacles to global trade” (p.51), resulted in the “current rules not [helping] our countries overcome, nor even reduce, our economic problems” (p.52). Third World debt totaled $1 trillion by 1986”, and was expanding as countries were taking “new loans entirely to servicing previous loans” (McMichael, 2008, p. 129). The IMF structural adjustment policies were intertwined with “prescriptions for political-economic reforms… slashing social expenditure to reduce debt”, hence, in words that summarize the rule of the free market—UNICEF’s chief director, James P. Grant lamented in 1989:

Today, the heaviest of burden of a decade of frenzied borrowing is falling not on the military or on those with foreign bank accounts or on those who conceived the years of waste, but on the poor who are having to do without necessities, on the unemployed who are seeing the erosion of all that they have worked for, on the women who do not have enough food to maintain their health…. It is hardly too brutal an oversimplification to say that the rich got the loans and the poor got the debt. (McMichael, 2008, pp. 130-131)

The Seattle protest was a powerful backlash that fractured the secrecy of the WTO and showed the world the significance of the movement; the substantial unity among people from both the First and Third Worlds, and the vision for an equitable social conditions. The “Global Backlash” (2002) depicts the voices of the movements, the future that many leaders envision for a just society, and although disagreements about policies and tactics exist, the movement’s solidarity will not divide (pp. 125-127). With this new information in full view—how does the mainstream media still think of the global free market?

The New York Times article written by Nelson Schwartz “Rising Interest on Nations’ Debts May Sap World Growth” cites how “Under President Obama’s 2010 budget, total interest payments by the federal government could rise to $806 billion in 2019, from $170 billion this year… [The] projected increase is a result of higher government borrowing” (2009, para. 13). Olivier J. Blanchard, chief economist of the International Monetary Fund in Washington was quoted in the article saying “It will be more expensive for everybody…. As government borrowing in the world increases, interest rates will go up. We’re already starting to see it” (para. 5). The heavy borrowing has a hefty price but who is the “everybody” that will be paying these high interest rates? Even more vague are the words of Ben S. Bernanke, the Federal Reserve chairman, whom Schwartz describes as having a “Concern over the long-term effect of greater debt prompted”, as he testifies before Congress: “Even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance” (para. 7). But what is the plan? Europe and England were indicated to sell trillions in “new debt” (para. 22), while South America and Eastern Europe “ will be affected by rising rates as they refinance their existing debt” (para. 30). The question is with what conditions? And who will pay the bill?

The New York Times is also buoyantly, yet contradictorily journaling the “global recovery” with writers Vikas Bajaj’s and Keith Bradsher’s report “Investors in Developing Markets See Optimism” (2009). As debt accumulates, and various world leaders are concerned about the hiking interest rates, investors in India and China “are again viewing their chances of growth as better than those of the United States or Europe” (para. 3). Further from the reality of poverty and hunger, the writers claim, “It is not just China that is generating optimism. A lot of improving economic data is bolstering developing countries. While industrial production has rebounded in China, so have car sales in India and retail sales in Brazil” (para. 5). Although their growth rate of economy is calculated as increasing—the city slum dwellers, hunger and environmental disasters are hidden in the blueprint of India and China’s allegedly positive rebound. What is the explanation for this omission? Danaher (2001) equates “the most important function of the elite, market oriented institutions such as the World Bank and the IMF” is to maintain a political hold and create a “stronger allegiance and accountability between third world elites and first world elite” (p. 45). The “web of collaboration” is enhanced since Third World leaders benefit financially as they keep their “economy open to foreign capital, allowing liberal repatriation of profits; keeping wages, trade unions and environmental restrictions at minimum… cutting social services…focusing economic strategy on exporting raw and semi-processed goods” (pp. 45-46). With these agreements, it is not a surprise that the mainstream, controlled by First and Third World elites, will continue the rhetoric about “positive” investments and growth.

Social Equity

The compilation of essays in “Global Backlash” (2002) demonstrates the emergence and development of a different globalization—“dynamic social movement… a mass movement that links many diverse interests” and can bring about a “revolution on a global scale” (Danaher, 2001, p.82). In an interview by David Barsamian (2009), Vandana Shiva, “an internationally-renowned voice for sustainable development and social justice” speaks how “Gandhi’s three pillars of freedom are now the key to our survival” (p.12). Shiva believes that change “does not happen at a system level; it happens by enough people making change that they want to see” (p.15). The Gandhian way of satyagraha, fighting for the truth, translates into “civil disobedient”, and is the “highest moral duty for justice to have the courage to say no to unjust law” (p. 14). It is Shiva’s way of facing the reality of the global industrial machination—its “warfare against the poor” in India, and the consequences of 200,000 farmers committing suicide “in the last decade of neoliberal agriculture policies… producing cheap commodities for exports” rather than feeding the hungry (p.15). As Shiva works with farmers to preserve food traditions, she considers Gandhi “pulling out the spinning wheel at a time that spinning wheels weren’t being used anymore because the British textile industry had absolutely wiped out Indian spinning and weaving. And I thought, what is today’s spinning wheel?” The answer is saving organic seeds; the unadulterated, bio-diverse seed, while fighting against Monsanto’s “controlling all life on earth” and “spinning our freedom for today” (p. 14).

The way of satyagrah a in the world of industrialization and free market means the unveiling of the global policies and economic practices of the ruling elite in both First and Third Worlds. It means changing the way consumers go about their lives in First World, realizing that the support of transnational corporations’ conduct in Third World countries—is to propagate poverty, as “cheap labor” further abuses poverty stricken workers.50 years is enough is a “U.S. Network for Global Economic Justice” working with “a coalition of over 200 U.S. grassroots… dedicated to the profound transformation of the World Bank and the International Monetary Fund” (50years.org/about). Organizations such as 50 years are enough are working all over the globe, and are making a difference. But the debated question among these organizations is whether the elite ruling class can change a system that keeps them wealthy and in power. Danaher (2001) thinks they will only implement a few changes and continue “their grip on power” (p.89) because the structures of power “isolate and insulate the controllers of our institutions from feeling the impact of their policies” and therefore to fix what is wrong we need to change the whole global system of governance (pp. 95-97). His solution is to base “the new economic institutions” on the “1948 Universal Declaration of Human Rights. The right to eat, the right to a job, the right to adequate housing, the right to health care” and passing a law that ensures “every human being’s right to a dignified existence” (p. 97). Sounds exactly like the utopian society William Morris envisioned in 1891, where labor is “for the pleasure of creation” (p. 122), and when the love of creation and “the freedom for every man to do what he can do best” is combined with the “production of labour” that is truly needed (p. 123): equity interlinks with happiness; and freedom with justice. Utopian society is not a complicated rule, so what will it take of humanity to actualize the dream?

References

Bajaj, V., Bradsher, K. (2009, June 4). Investors in Developing Markets See Optimism.

The New York Times. Retrieved June 4^th, from http://www.nytimes.com/

Barsamian, D. (2009). Vandana Shiva: Gandhi’s three pillars of freedom are now the key to our survival [electronic version]. Yes! Magazine, summer, 12-15.

Broad. R. (2002).Global Backlash. Lanham: Rowman & Littlefield Publishers, Inc.

Danaher, K. (2001). 10 Reasons to Abolish the IMF & World Bank. New York :Seven

Stories Press

50 years is enough org. Frequently Asked Questions About IMF/World Bank. Retrieved

June 11, 2009, from http://www.50years.org/factsheets/

International Monetary Fund. Org. About the IMF. Retrieved June 13, 2009 from

http://www.imf.org/external/about.htm

McMichael, P. (2008). Development and Social Change. Thousands Oaks: Pine Forge

Morris, W. (1993). News from Nowhere. London: Penguin Group Press.

Schwartz, N. (2009, June 4). Rising Interest on Nations’ Debts May Sap World Growth.

The New York Times. Retrieved June 4^th, fromhttp://www.nytimes.com/

World Bank. Org. About World Bank. Retrieved June 13, 2009 from www.worldbank.org