The World Bank and crimes of globalization: a case study.

• Date: 22 March 2002
• Author: Friedrichs, David O.,Friedrichs, Jessica
• Published date: 22 March 2002
• Author: Friedrichs, David O.

Introduction

THE BASIC ISSUE ADDRESSED IN THIS ARTICLE CAN BE CONCISELY STATED: ARE THE policies and practices of an international financial institution (the World Bank), arising in the context of an accelerated globalization, usefully characterized as a form of crime and a criminological phenomenon? What kinds of strategies and actions are available in response to the harm caused by these policies and practices? (1) International financial institutions such as the World Bank are key players in an increasingly globalized capitalist system. The claim that capitalism itself is a criminal enterprise is, of course, an enduring thesis of Marxist thought (e.g., Buchanan, 1983). (2) Moreover, some contemporary critics of globalization--as a transnational expansion of capitalist free markets--seem to suggest that globalization per se is a criminal enterprise that ought to be challenged on every level. We do not propose to pursue such sweeping claims here. Rather, we address the narrower claim that at least some of the policies an d practices of the World Bank can be validly characterized as criminal. To support our case, we provide a case history of a World Bank-financed dam in Thailand.

A Perspective on Globalization

The policies and practices of international financial institutions such as the World Bank, the World Trade Organization, and the International Monetary Fund can only be understood in the context of the notion of "globalization." The invocation of that term has become ubiquitous and the literature on globalization has expanded exponentially in the recent era, although its meaning is far from settled (Chase-Dunn et al., 2000; Dunne, 1999: 20; Hay and Marsh, 2000). (3) The term "globalization" has been in wide use since the 1960s (Busch, 2000: 22). In one sense, globalization is hardly a new phenomenon, if one means by it the emergence of international trade and a transnational economic order. (4) Yet globalization has become a buzzword of the transition into the era of the new century due to the widely perceived intensification of certain developments (Mazlish, 1999: 5). (5) It is not simply an economic phenomenon, although it is most readily thought of in such terms. (6) Globalization also has important politi cal and cultural dimensions (Chase-Dunn et al., 2000; Mazlish, 1999: 7). (7) The phenomenal growth in the importance and influence of transnational corporations, nongovernmental organizations, intergovernmental organizations, international financial institutions, and special interest groups is a conspicuous dimension of contemporary globalization (Mazlish, 1999; Shapiro and Brilmayer, 1999; Valaskakis, 1999). (8) Ordinary people lose control over their economic destiny (Greider, 1997). World markets increasingly overshadow national markets, barriers to trade are reduced, and instant tele- and cyber-transactions are becoming the norm (Blackett, 1998; Chase-Dunn et al., 2000; Jackson, 2000; Scheuerman, 1999). In the broadest possible terms, globalization today refers to the dramatic compression of time and space across the globe.

We accept here the view that globalization as a phenomenon is endlessly complex, is characterized by various contradictory tendencies and ambiguities, and is best seen as a dynamic process as opposed to a static state of affairs (McCorquodale with Fairbrother, 1999: 733). (9) The contemporary discourse on globalization is quite contentious, characterized by claims about the effects of globalization that are often directly at odds with each other (Busch, 2000). On the one hand, certain aspects of globalization--such as increasing global communication and interaction--are surely inevitable. On the other hand, the mission and policy choices of international financial institutions, in relation to the globalized economy, are hardly preordained and are very much open to challenge. Some commentators argue that globalization has basically increased living standards in much of the world, and that countries experiencing a rise in standards of living have done so by linking up with a globalized economy (Amsden, 2000; Ea sterlin, 2000; Zakaria, 1999). No one should dispute the claim that there are many "winners" in the move toward an increasingly globalized economy. However, we strongly agree with those who allege that the winners are disproportionately wealthy multinational corporations and the losers are disproportionately poor and disadvantaged peoples, especially indigenous peoples in developing countries (Frank, 2000). (10) Globalization contributes to an overall increase in economic inequality, fostering impoverishment and unemployment for many (Carrasco, 1996; George, 2000; Kahn, 2000b; McCorquodale with Fairbrother, 1999: 747; Shapiro and Brilmayer, 1999: 2). (11) It has been characterized as a new form of the ancient practice of colonization (Dunne, 1999: 22). (12) Richard Falk (1993) argues that the logic of globalization is dictated by the well-being of capital rather than of people. Altogether, globalization is affecting human society in many different ways. (13)

Globalization has many dimensions, but the following are most pertinent to the thesis of this article:

1. The growing global dominance and reach of neoliberalism and a free-market capitalist system that disproportionately benefits wealthy and powerful organizations and individuals;

2. The increasing vulnerability of indigenous people with a traditional way of life to the forces of globalized capitalism;

3. The growing influence and impact of international financial institutions (such as the World Bank), and the related relative decline of power of local or state-based institutions; and

4. The nondemocratic operation of international financial institutions, taking the form of globalization from above instead of globalization from below.

The Role of the World Bank in a Global Economy

The international financial institutions that play such a central role in contemporary globalization have become prime targets for criticism for their policies and practices in the global economy. These international financial institutions include the World Trade Organization, the International Monetary Fund, and the World Bank. Each entity has a different key mission, with the World Trade Organization primarily focused on fostering trade, the International Monetary Fund on maximizing financial stability, and the World Bank on promoting development (Stiglitz, 2001). Of course, these institutions have many ties with each other, and the lines of demarcation between their activities can become quite blurred. Collectively, much evidence suggests that they have acted principally in response to the interests of developed countries and their privileged institutions, rather than in the interests of the poor (Phillips, 2000; Sjoberg et al., 2001; Smith and Moran, 2000; Stiglitz, 2001). In this article, we focus princi pally on the activities of one of these institutions, the World Bank, because it played a key role in the particular case addressed here.

The World Bank (formally, the International Bank for Reconstruction and Development, or IBRD) was established at the Bretton Woods Conference in 1944 to help stabilize and rebuild economies ravaged by World War II. Eventually it shifted its focus to an emphasis on aiding developing nations (Johnson, 2000). The Bank makes loans to governments of its member nations and to private development projects backed by the government. Projects are supposed to benefit the citizens of the country receiving Bank loans, which are made at a favorable rate of interest. The World Bank (2000) generally claims to contribute to the reduction of poverty and improved living standards in developing countries. Today the Bank is a large, international operation, with over 10,000 employees, 180 member states, and annual loans of some 30 billion dollars (Finnegan, 2000: 44). Historically, the World Bank itself has been the principal source of information about its operations and programs; inevitably, such internally generated informatio n can be strongly suspected of being self-serving (Rich, 1994).

The World Bank was established (along with the International Monetary Fund) at the behest of the dominant Western nations, with little if any real input from the developing countries (Kapstein, 1998/1999: 28). It is disproportionately influenced or manipulated by elite economic institutions and has been characterized as an agent of global capital (Greider, 2000b: 15). In the developing countries, it deals primarily with the political and economic elites of those countries, with little direct attention to the perspectives and needs of indigenous peoples, a practice for which it has been criticized by U.S. senators (Caulfield, 1996: 227; Rich, 1994: 145). It has had a record of lending money to ruthless military dictatorships (engaged in murder and torture), after having denied loans to democratic governments overthrown by the military (Rich, 1994: 99). It favors strong dictatorships over struggling democracies because it believes that the former are more able to introduce and see through the unpopular reforms its loans require (Caufield, 1996: 209). Borrowers of money from the World Bank typically are political elites of developing countries, and their cronies, although the repayment of the debt becomes the responsibility of people in these countries, most of whom do not benefit from the loans. (14) In this reading, then, the privileged benefit disproportionately from dealings with the World Bank, relative to the poor. (15)

Criminology and Crimes of Globalization

Most criminologists have paid little if any attention to the phenomenon of globalization and international financial institutions such as the World Bank, although some prominent criminologists have called for more attention to globalization as a new context within which crime must be understood. (16) Progressive or critical criminologists -- writing in...