[stop-imf] Wallerstein: Camdessus is worried (fwd)

[Robert Weissman]

Comment No. 34, Feb. 15, 2000
"The Head of the IMF: A Secret Radical?"

Sometimes, when important persons take leave of their public life, 
they feel the need to make a bow to historical truth and seek to be 
remembered for more virtuous analysis than they normally had made 
earlier. This was the case when the last military man to be a 
president of the United States, Dwight Eisenhower, gave his farewell 
address in 1961. In that speech, he warned against the dangers that a 
"military-industrial complex" was coming to control the decisions of 
the U.S. government. This has been a theme ever since of the U.S. 
left but it has not been a theme frequently repeated by subsequent 
Republican politicians.

The story may turn out to be similar with the "farewell speech" of 
Michel Camdessus, Managing Director of the International Monetary 
Fund (IMF). On Feb. 13, 2000, the day before he was to leave office 
after 13 years (the longest term of any Managing Director), Camdessus 
addressed the Tenth United Nations Conference on Trade and 
Development in Bangkok. He said some very radical things.

He started by noting what he called the paradox of the present world 
economic situation: "promise - unprecedented prospects in certain 
fields - but financial instability and 'exclusion,' the so cruel 
situation of the poorest and the anxieties of so many in the world." 
He said we must recognize that "there are serious reasons for this 
anxiety." He called on everyone to "recognize that poverty is the 
'ultimate threat' to stability in a globalizing world."

After all the speeches we have had from the IMF and its ideological 
consorts about the primacy of growth as an economic objective, 
Camdessus now tells us: "It is recognized that the market can have 
major failures, that growth alone is not enough, or can even be 
destructive of the natural environment or precious social goods and 
cultural values. Only the pursuit of high-quality growth is worth the 
effort."

Camdessus italicized "high-quality." And he proceeded to define this 
term in language one usually hears from the critics of the IMF: 
"growth that can be sustained over time without causing...imbalance; 
growth that has the human person at its center...; growth...based on 
a continuous effort for more equity, poverty alleviation, and 
empowerment of poor people; and growth that promotes protection of 
the environment, and respect for national cultural values."

And from this point, Camdessus moves on to virtual populism: "Popular 
support for stabilization and reform cannot be counted upon, unless 
the whole population. including the poorest - and by the poorest I 
mean those that not only are out of the loop, but even more are 
unable to contribute their experience - is able to participate in the 
formulation of the policies and, of course, in the benefits from 
those policies." Camdessus attributes the anxiety that is widespread 
to the fact that globalization "has not yet demonstrated that it is 
concerned enough, or capable of overcoming the great concern of our 
times." And that concern, he says, is poverty.

As recently as the latest Davos conference, we were being assured 
that a rising tide raises all ships, and that globalization would 
prove of benefit to everyone. But no, says our secret radical, the 
Managing Director of the IMF, "the widening gaps between rich and 
poor within nations, and the gulf between the most affluent and most 
impoverished nations, are morally outrageous, economically wasteful, 
and potentially socially explosive." Widening gaps? There are those 
of us who have argued this for a long time, but only now have we had 
the assent of the IMF, at least the rhetorical assent. Perhaps the 
gaps have grown to be so wide and so obvious they can no longer be 
hidden from the blindest.

Furthermore, says Camdessus, "poverty is no longer inevitable, if it 
ever has been..."

What then should we do? Camdessus recommends a five-point program for 
the poor countries. Points two to four are standard gospel: sound 
macroeconomic policies, promotion of the free market, and a web of 
laws that support the functioning of markets. But see point number 
one: "country-driven strategies that make poverty alleviation the 
centerpiece of economic policy...." And point five: "well-targeted 
and cost-effective social safety nets, a shift in public spending 
towards basic social services in education and health care, and 
efforts to provide income-earning opportunities for the poor."

And what does he recommend for the "development partners" of the poor 
countries? First of all, "unrestricted market access for all exports 
from the poorest countries, including the HIPCs [heavily-indebted 
poor countries]." And "backing up all the pledges to reduce poverty 
with financial support." The excuse of "aid fatigue," Camdessus says, 
"is not credible." And one more surprising suggestion: "restraining 
the sales of military equipment to sensitive regions; abolishing the 
provision of export credit for military purposes."

To reassure us that he hasn't yet joined the ranks of the 
demonstrators in Seattle, Camdessus does end with a fairly standard 
list of four broad areas in which multilateralism should be enhanced: 
liberalization of trade, liberalization of payments, liberalization 
of capital movements, and (to guarantee the first three) the 
strengthening of the international financial architecture. However, 
even there, as an example of new architecture, he proposes replacing 
the G7-G8 Summit with a meeting of about 30 countries, all those "who 
have Executive Directors on the Boards of either the IMF or the World 
Bank," because this would be "a representative grouping of world 
leaders with unquestionable legitimacy." So obviously he feels that 
the G7-G8 does not have "unquestionable legitimacy."

What are we to make of this speech, which will not pass unnoticed? I 
think we should not persuade ourselves that it means that the leaders 
of world capitalism have suddenly become egalitarians. Rather, we 
should view it as meaning that the intelligent among them are 
genuinely worried. But worried about what? About two things 
essentially: The first is a financial crash. In an interview 
following the speech, Camdessus said: "I am ringing the alarm bell to 
our member countries to tell them that we run the risk of a new 
financial crisis." He particularly pointed to the U.S. economy, whose 
"low rate of savings, rapidly growing current-account deficit and 
high stock prices were cause for concern." And there are "also 
worrying vulnerabilities in other parts of the world." And worst of 
all, all this, he says, is "combined with complacency."

The second cause for worry is the widespread popular rejection of 
so-called globalization. It is this worry that is most fundamental. 
Camdessus furthermore is not alone. During the so-called Asian 
financial crisis of just a few years ago, the policies of the IMF 
itself were strongly criticized by senior world conservative figures 
like Henry Kissinger and Jeffrey Sachs precisely because the latter 
felt that IMF policies were neglecting the social consequences of its 
economic policies and would lead to populist disturbances, as they 
said it had already in Indonesia. Perhaps Camdessus was listening.

The point is that when those in power are worried, there is usually 
something to worry about, for them. Camdessus is worried.
Immanuel Wallerstein