Wednesday 25 March 2009

It's not just the World Bank's problem

Guest post by Tom Stratton

Peter Townsend’s contributions to Next Left, and his chapter in the pamphlet published to mark the centenary of the Minority Report, forcefully put the case that global poverty must also be considered alongside the plight of the most disadvantaged in Britain. This is a most important point, however the focus of his ire is, in my opinion, misdirected; his views should be part of a wider debate concerning how much is expected of supranational institutions, particularly those covering the entire globe, and what the most effective way of policing issues that stretch beyond borders is.

Fundamentally, I don’t disagree that some of the World Bank’s policies have been counterproductive, but it is misleading to claim that it is the World Bank’s policies, above all others, which determine the developmental prospects of poor nations. Moreover, it is also fanciful to believe that the World Bank can act with autonomy from the national interests of the richest and most powerful nations on earth, nations that finance the Bank’s activities. The Bretton Woods institutions are part of a victors’ settlement in the aftermath of the Second World War and are, as such, shaped to remain under the control of those victorious interests.

In reality, the governance of international affairs is the politics of consensus and alliances. Gordon Brown’s trip to the US in search of a new set of rules and regulations for the global banking system is a prime example of this. There are no commonly accepted global institutions of governance that can oversee the international finance system, and consequently his job is to find some common ground on regulation that can be cemented at the G20.

With this in mind a pragmatic approach to reducing poverty and improving lives is necessary if any tangible results are to be achieved. Infringing on sovereignty and bypassing governments in the provision of services has been proven on numerous occasions to have negative consequences. Furthermore, arbitrarily imposing minimum wage standards and other employment conditions on countries is a step that would seem very difficult to enforce in emerging powerhouse economies, such as China, not to mention hypocritical coming from industrially advanced nations that built their wealth on cheap wage labour and raw materials from today’s underdeveloped countries.

Professor Townsend does allude to a more reasonable role for the World Bank in highlighting the failure to report ‘predatory corporate forces’. This is where the Bank, along with the IMF and other global institutions like the WTO and UNDP, can have a real impact. International corporations and national governments both fear their name becoming synonymous with poor employment conditions and wage exploitation in developed markets. Consumers en masse have huge scope to influence the practice of seemingly unaccountable corporations through removal of their custom, thereby depriving these entities of their lifeblood. A new initiative currently gathering pace is the engagement of businesses to fight poverty, not through Corporate Social Responsibility or charity, but in the form of large-scale investment with significant returns in mind. One factor in business’s reticence to engage in the developing world is the potential harm to their brand an exploitation scandal could bring. Although it might appear counterproductive to have such an impediment to investment, it is testament to the power of a body of consumers. The trick is to make the investment opportunities attractive enough that adequate labour standards are happily abided by.

Every person deserves the same protection from the scourge of poverty and exploitation as we enjoy in this country; however, the process will have to be incremental to be sustainable and cannot be imposed from the top-down by the World Bank or any other multilateral institution. There is no one source which can improve the lives of the poor on its own. The World Bank must be held to account, but it is part of a myriad of forces that must be harnessed for the good of those less fortunate. Examining our own power as consumers to hold corporations to account is surely far more productive than the search for a single scapegoat.

1 comment:

Calix said...

Very interesting and well put - I don't feel able to comment in detail, but I am always a bit worried when people talk about 'our power as consumers'- language originating from the eighties but now so common it is unchallenged. Surely the lessons from the current crisis are that we need some kind of overarching body, however difficult that may be to achieve.

Bottom up solutions are very attractive, but they can be a deceptive cop-out in reality.