Canadian Commentary: Media and Culture

A Tale of Two World Banks

August 1997

Recently, the conservative Globe and Mail and the centre-left British Guardian both described the same report from the World Bank (The State in a Changing World: The World Development Report, 1997). However, you would never guess it from the contents of the articles. Each one appears to describe a completely different document.

The Globe described a report that supported the paper's pro-business conservative point of view. The report told poor countries to "get real about what their governments can and cannot do ... In a tough assessment of the capabilities of the modern state, the bank says reformers in the developing world and aid donors should work to sharply circumscribe the decision-making power of bureaucrats."

The Guardian, on the other hand, described a report that marked a conversion by the World Bank to the paper's centre-left viewpoint: "In an astonishing volte-face, the World Bank in Washington has abandoned its long-running support for minimal government in favour of a new model based on a strong and vigorous state".

Each article supports its interpretation with quotations from the document and from World Bank officials. However, these quotations, read by themselves, tend to point to a position that is more moderate than either paper suggests, specifically, that government is important, but it must be run in an efficient and targeted manner. Take for instance this section of the report quoted by the Guardian: "An 'effective state' is the cornerstone of successful economies; without it, economic and social development is impossible ... Good government is not a luxury [but] a vital necessity for development". This could be used to justify the role of government; but it could equally be used to argue for reforms to increase the efficiency of governmental institutions.

These completely contrasting interpretations of the same document - in articles that are supposedly "reports" rather than columns - point to the amount of influence a newspaper's ideological position can have on the news it reports [for another example, see The French are wrong]. This emphasizes once again the importance of having serious newspapers with different ideological positions within a nation if there is going to be any useful discussion of public policy - something that Canada desperately lacks [see Why Canadian Commentary].

But what about the World Bank itself? The mandate of the World Bank is to give loans to governments for economic development. And yet, for at least two decades, the World Bank has been espousing a neo-conservative ideology that proposes that government involvement in the economy is counter-productive. If the Bank truly believed this, the only viable option should have been for the Bank to shut itself down, as an organization which believed that its own mandate was useless - in fact, worse than useless because it left developing governments burdened with debt. And there may be some truth to this - as Bharat Jhunjhunwala points out in a commentary in the Toronto Star, states which have used the World Bank heavily have done no better on average than those which made little use of its services.

In fact, the World Bank has been both hypocritical and pernicious. It has been hypocritical because it has pursued policies contrary to the principles it supported. Despite espousing market-based policies, the World Bank was not constrained by the normal risks of market-based lending: that, if you make a bad loan, you lose the money (since it is almost impossible for states to go bankrupt in the present international financial system). As a result, it provided massive loans to corrupt governments to carry out projects not dictated by market forces. These projects cost vastly more than they should have, with the money largely going to a corrupt elite, and usually had nowhere near the economic impact that they were supposed to have (and sometimes resulted in negative by-products such as environmental degradation). Once the World Bank decided that this kind of government action was counter-productive, it did not acknowlege the error of its ways and forgive the massive debts it had encouraged developing states to incur. Rather, it has forced the states to try to repay these massive loans - in the process, forcing them to cut back on the kind of state expenditures which are necessary and vital to economic development: education, health and other social services. In other words, the World Bank made the people of developing nations - the people the Bank was supposed to help in the first place - pay for the World Bank's own mistakes.

August 10, 1997

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