Walter Wriston.

• Position: Proposal to privatize the World Bank - Response to article by Nicholas Eberstadt and Clifford M. Lewis in this issue, p. 14

When an organization's mission has been completed and its presence no longer required, there are almost no instances of simply liquidating it, turning out fights and going home. Instead a new mission is invented, since the real objective of bureaucracies -- public or private -- is survival. The IMF, designed to function in a world of fixed exchange rates, now faces a world of floating currencies. Former Secretary George Shultz has suggested that the IMF be liquidated and its capital spun into the World Bank; another alternative would be to return its capital to the taxpayers from whence it came. The suggestion in this paper on the World Bank takes the middle ground of privatization, combined with a shift away from its new-found mission of international lender of the last resort and returning it to its roots of sound banking and supplying value-added services, like global export guarantees.

New circumstances require new actions. The international capital market has grown so huge and so liquid as to bear little or no resemblance to that which existed at the time of Bretton Woods. There will always be a shortage of capital for poor projects, but good projects get financing in the private market. Propping up nations which pursue untenable and bad economic polices is a far cry from the original mission of trying to help rebuild a war-torn world. The dream of universal development from President Truman's Point Four in 1950 through President Kennedy's Alliance for Progress rested on increasing the investment of money capital in the developing world, and the World Bank was very much a part of that scene. As the money flowed out around the world, however, we learned that capital alone is unproductive -- one must...