Smash the IMF and World Bank!
The bitter pill that poisons
The IMF and World Bank claim that neo-liberal reforms, while a bitter pill to swallow, in the end lay the basis for major economic growth and therefore higher living standards. But the evidence proves the opposite. In the past 15 years, per capita income has declined in more than 100 countries and individual consumption has dropped about one percent annually in more than 60.
A debt trap
The IMF and World Bank loans have created a huge debt trap. This overwhelming debt has led to the poorest countries in the world allocating enormous portions of their national incomes towards paying interest. The sick logic of capitalism means that money is actually flowing from the world's poorest countries to the richest. Debt is one of the most important weapons with which the big capitalist powers dominate poor countries. It is used as a means of blackmailing the poorest countries and tightening the screw on the vast majority of the people in Africa, Asia and Latin America
The IMF and World Bank use the debt as leverage to pry open new markets and gain access to cheap labour and raw materials. In order to get new credit (to be able to keep up debt repayments) and not default on their loans, former colonial countries must accept the dictates of the IMF and World Ban
Today the underdeveloped world owes a total of US$ 2.5 trillion in international debt to big banks and the IMF and World Bank. "Developing" nations pay the West nine times more in debt repayment than they receive in "aid" from Western countries. For example, after the recent devastating floods in Mozambique - destroying the homes of more than a million people - Western countries coughed up a tiny US$ 40 million in "aid." But Mozambique pays more than US$ 70 million dollars a year in debt repayments to Western banks! While diseases like cholera and malaria are spreading rapidly after the floods, only 1.1% of the GDP is spent on health care, down 75% after nearly a decade of IMF imposed austerity program
Mozambique is far from the only country in this destructive situation: Tanzania, for example, has been spending nine times more for debt servicing than for basic health and four times more than on primary education. In Africa as whole, where only one child in two goes to school, governments transfer four times more to banks and the lenders in the West than they spend on health and education. Even the United Nations (UN) has to admit that: "If government invest in human developments rather than debt repayment, an estimated three million more children would live beyond their fifth birthday and a million cases of malnutrition would be avoided
According to the World Bank, poverty in Africa increased by 50% between 1994 and 2000. Why? One reason is that virtually every nation in sub-Saharan Africa entered into a structural adjustment program in the 1980s. Yet for the entire decade, GNP in the region fell by 2.2% per year, and per-capita income declined to pre-independence levels. Former World Bank official, Morris Miller summed this up when he said "Not since the conquistadors plundered Latin America has the world experienced a (financial) flow in the direction we see today."
To the money lenders
Latin America owes more than one-third of its total economic output in a year to other countries and banks. In Haiti the IMF and World Bank blocked the government from raising the minimum wage and then demanded the privatisation of profitable public companies which generated revenue for desperately needed services. The IMF insisted that Haiti should cut government services by half, in spite of a national shortage of teachers and health care workers, a life expectancy of 49 years for men and 53 years for women, 45% literacy and infant mortality running at nearly 10%.
"Shock therapy"
Similarly catastrophic results from an IMF and World Bank engineered programme of "shock therapy" can be seen in the former Soviet Union (USSR) and Eastern Europe. The "shock therapy" has paved the way for gangster capitalism and a catastrophic increase in inequality. The economy of Eastern Europe and the former USSR have shrunk by a quarter over the last ten years. A UN report produced in 1999 estimated that the number of people living in poverty (using a poverty line of US$ 4 a day, in 1990 purchasing power parity dollars), in Eastern Europe and the CIS countries increased from 13.6 million in 1989 to 147 million.
The Soviet Union and the countries of Eastern Europe were not "socialist states". They were Stalinist states ruled by a totalitarian bureaucratic elite, not by working people. There cannot be a development towards socialism without genuine democracy (elected bodies, the right to organise and a real possibility for people to take active part in the day to day running of society through a drastic cut in working hour, etc.). A planned economy needs democracy as the body needs oxygen.
The bureaucratic elite, who acted as parasites on the nationalised economy in the USSR and Eastern Europe, were the first to join the capitalist camp when Stalinism went into crisis and then collapsed in 1989-90. State assets were transferred to gangster capitalists (ex-bureaucrats), with the full backing of the IMF. Yeltsin's undemocratic regime of robber barons was given billions of dollars by the IMF in order to stay in power. The collapse of Stalinism and the horrifying conditions created by the restoration of capitalism in the ex-USSR and Eastern Europe shows that the only way forward is the struggle for genuine socialism based on democracy and workers' control.
Neo-liberalism
Globalising trends have led to a grotesque increase in inequality, both internationally and within national states. The gap between rich and poor is greater today than in any other time in history. Three men have as much wealth as the poorest nations in the semi-developed world with a combined population of 600 million people. The 225 biggest fortunes in the world, mostly concentrated in the US, total more than US $1 trillion, the equivalent of the annual income of 47% of the poorest of the world's population, or 2.5 billion people. These are obscene inequalities and they are becoming worse every day. In the words of the British newspaper The Guardian: "What is the difference between Tanzania and Goldman Sachs? One is an African country that makes US$ 2.2 billion a year and share it amongst 25 million people. The other is an investment bank that makes US$ 2.6 billion a year and share it between 161 people".
The multinationals
The world's biggest companies now control 70 percent of world trade. Global capitalism is led by a few hundred giant multinationals, which are often richer than nations. Financial speculation and instability is endemic in global capitalism. Less than ten percent of all transactions in the world has some relation to financing trade or investment. More than 90 percent of all transactions are speculative. This shows the parasitic nature of modern capitalism - of globalisation.
On the basis of globalisation, it is true, a tiny elite in the poorer countries has become much richer. The majority of people, however, have become poorer, and much more threatened by calamities such as floods, famines, and especially war. There have been with over 60 separate armed conflicts during the 1990s, claiming hundreds of thousands dead and creating more than 17 million refugees.