Richard Peet’s new book entitled: Unholy Trinity: The IMF, World Bank and WTO (Wits University Press, 2003) is a fitting contrast, a very impressive and right way of describing the unholy values and policies guiding the Internatioanl Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO).

Peet begins his book by making a distinction between globalization as a humanitarian potential and neoliberal globalization as a dominating reality in our world today.  For Peet, globalization understood as a neutral spatial process should be welcomed as the last act of enlightenment.  He goes on to say that globalization understood as a way of organizing social life across existing state borders “offers beautiful opportunities for disparate peoples to know and, perhaps, appreciate each other by living ‘closer’ together.”

On the other hand, Peet argues that neoliberal globalization is produced by neoliberal ideas, policies and institutions - the IMF, the World Bank and the WTO.  He argues that “globalization has been accompanied by the growth in power of a few prodigious institutions operating under principles that are decided upon undemocratically, and that drastically affect the lives and livelihoods of a world of peoples” 

The focus of Peet’s book is precisely to critique neoliberal globalization by giving an account of the economic history of neoliberalism and showing how “The global governance institution”, IMF, World Bank and the WTO share this same ideology.

Peet’s distinction between humanitarian globalization and neoliberal globalization is very interesting and important.  This is because both in academic language and ordinary life when you talk of globalization what comes to mind is neoliberal globalization.  Globalization has been misunderstood and its humanitarian potential under-appreciated and ruined.  But instead, Peet observes that neoliberal globalization has been accompanied by concentration of power by these global institutions.  It has also been accompanied by increasing oppositions from social movements and fundamentalist groups like al-Qaida terrorists.

Peet then gives a systematic account of the history of economic ideology of neoliberalism and shows how the neoliberal ideas are captured by the IMF, World Bank and WTO.  After that he highlights how the Bretton Woods institutions, IMF and World Bank came into existence in 1945.  He says that the Bretton Woods institutions were basically formed to help in reconstructing the economies of war-damaged countries after the Second World War.

THE IMF

The purpose of the IMF was to foster international monetary cooperation, promotion of exchange rate stability, promotion of multilateral system of payments, mitigation of balance of payments problems.  However, as it turned out the IMF shifted from its original vision and mandate.  The IMF subsequently involved itself in stabilization programs like controlling inflation and imposition of the Structural Adjustment Programmes (SAP) to which loans were given under conditions of greater austerity to the Third World countries.

WORLD BANK

The World Bank’s original role was to be an international bank concentrating on development.  It was mandated to finance individual projects as a help in restructuring countries after the war.  Since the World Bank’s original mandate was limited to project lending, conditionality was limited to the project.  However, the area of conditionality was broadened to include an assessment of the overall competence of the recipient government and also the overall expenditure pattern, and indeed the overall development policy of the recipient country.

Thus, Peet rightly argues that the IMF and World Bank diverted from the original vision of the Bretton Woods conference.  They have become USA-dominated institutions and are a platform for the USA to exercise its international economic policy, which turns out to be an effective imperialism.

WTO

Before WTO was established in 1995, GATT was in existence but was ineffective and uncontroversial.  Since WTO was formed as a formal system that would regulate international trade in goods and services, Peet contend that it is at the centre of controversy as a leading proponent of neoliberal ideas.  WTO has supported trade liberalization across national boundaries as a good thing, that is, to remove governmental restrictions on the free movement of goods and services.

Peet remarks: “In this neoliberal model, ‘good’ is represented by optimistic phrases such as: openness, liberalization, competitiveness, macro-economic soundness, stability, flexibility, simplification, prudence and best of all, ‘rationalization’ -– that is, determination of the direction taken by an economy by purely market processes including random chance and competitive upheaval!  ‘Bad’ is represented by pessimistic phrases such as protection, closed, controlled, restriction, subsidy, tariff, inward looking, import substitution and, most of all, direction of the economy through state regulation.”

Peet criticizes the WTO’s propagation of free trade “within an overall neoliberal conception of economic growth, justified through the universalistic belief that everyone benefits (mainly as consumers) from trade and growth”.  This has not in fact produced economic growth and higher incomes for poor countries and people.

HEGEMON

Peet notes that the IMF, WB and WTO are all agents of a dominating centre of hegemonic power.  The hegemony formed by the alliance of these institutions is founded on the speculation of the market.  According to Peet, in the absence of an overriding ideology, these institutions would not have the homogeneity and self-confidence necessary for imposition and influencing international economic policy.  What is particularly fascinating about the hegemony of these institutions is that apart from the influence of politics and economics by governments of the leading capitalist countries dominated by the USA, there is also an academic connection common to all these institutions.

For Peet, the academic connection from elite universities like Harvard University, especially their economics departments, business and law schools all put a scientific stamp on the theoretical knowledge that underlies economic policies.  The IMF, World Bank and WTO, argues Peet, are an “unholy trinity” because they “impose a virtually synonymous set of neoliberal economic policies on countries the world over.  The policies are imposed as conditions for loans in terms of crisis, as qualifications for debt relief, as part of development assistance for countries much in need, and as requirements for membership in vital international trade agreements."

In order to counter the hegemony of the “unholy trinity” of these institutions, Peet argues for a radical response not only in terms of “a critique of the rightist politics of neoliberalism, but a critique of the certainty that derives from a belief in the scientific validity of neoclassical economics.”  In other words, Peet is calling for re-evaluation of globalization as humanitarian progress.  We think that an objective economics likened to physics should be deconstructed and replaced by one grounded in subjective judgments and likened to theories of culture where its theories and policies can practically demonstrate its worthiness.

What does the “unholy trinity mean to Zambia?”  Zambia is suffering under the policies of these institutions.  One example of the unholy acts of the Bretton woods institution which we still see today in Zambia has been summarized by the critique of the JCTR staff and Catholic Centre (CCJDP) for Justice Development and Peace when they were analyzing the government’s 2004 budget.  They argued, “The budget is not pro-poor but prop-HIPC!”  That is, it ignores the needs of the people of Zambia in order to satisfy the demands of the IMF and World Bank (WTO included.” 

CONCLUSION