Masters of Illusion: The World Bank and the Poverty of Nations.

• Author: Wolf, Jr., Charles

By Catherine Caufield New York: Henry Holt, 1996. Pp. xii, 432. $27.50.

If an organization such as the World Bank could be put on trial for doing more harm than good while professing to do the opposite, and if investigative journalist Catherine Caulfield were responsible for the prosecution, her book Masters of Illusion would appear to establish the organization's guilt beyond a reasonable doubt. Her book is not an easy read, but its contents amply warrant the effort and provide a convincing case fix the verdict.

In Caufield's account, the "World Bank" includes the International Bank for Reconstruction and Development (IBRD), established in 1944, the International Development Association (IDA), established in 1958 to provide funds to poor countries on easy terms, and the International Finance Corporation (IFC), established in 1956 to further economic development by lending to and investing in private companies in developing countries.

Caufield presents a convincing case, and she is not alone in her conclusion. Other knowledgeable observers, including George Schultz, Allan Meltzer, Peter Drucker, and several former senior Bank officials and advisers, such as Alan Walters, Jaanik Lindbaek, and William Ryrie, also have called for the Bank's "retirement." Yet Caufield does not make it easy for the reader to absorb and retain the mountain of details she has assembled. Masters of Illusion is crammed with facts, numbers, and anecdotes; citations and quotations on macro- and microeconomic policies; observations on ecological externalities; project descriptions ex ante and ex post in a wide range of countries, regions, and subregions; and individual personality sketches of myriad senior Bank executives, including Bank presidents from Eugene Meyer to Eugene Black, Robert McNamara, Lewis Preston, and the Bank's current head, James Wolfensohn, as well as three other Bank presidents in between. As a result of this extreme diversity of material and packaging, the book is more useful for reference than for continuous reading.

Caufield's reach is extensive, her grasp thorough. In her description of the Bank's enormous investments in and promotion of multipurpose dams throughout the developing world, she combines the standard statistics on costs (often overrun), scale, and time to completion (usually underestimated at the project's Inception) with personal interviews she has had with individual villagers displaced and sometimes devastated by the inexorable...