Sustained Neo-liberalism in Action: structurally adjusting your rights into austerity

In the early 1980’s, Structural Adjustment Programs (SAPs) emerged as the World Bank and International Monetary Fund’s (IMF’s) chief mechanism for improving the stability, efficiency, and growth of economies in developing countries.  SAPs are defined as the World Bank and IMF programs that provide monetary loans and debt relief to recipient countries based on conditionalities of macroeconomic and institutional reform. SAPs have largely failed to alleviate poverty, and have instead resulted in stagnant or weakened economies for the intended beneficiary nations.  This failure has resulted from one central weakness: the program’s disregard for the significance of the diverse social, economic, environmental, and cultural factors in recipient countries, as well as the vital importance of national commitment and ownership in determining the success of economic development and reform.

Though the program is targeted at solving the problems of developing countries, it is comprised of two economically powerful Western governments (USA and UK) and two global economic institutions that function under strong USA and UK influence. (Word Bank and the IMF).  This limited participation and tight control by ‘outsiders’ or ‘planners’ is central to the SAP program’s launch and remains a major factor throughout its implementation.

Structural Adjustment Policies (SAPs) achieve macroeconomic stability for First World countries at the expense of equity, human rights, capacity building, sovereignty and political justice in a debtor country (Rapley; Kroenick; Easterly; Sparr; Overseas Development Institute). SAPs, designed to reduce inflation, trade and budget deficits, thereby increasing a countries ability to attract development funds, connect the debtor country to the global marketplace, increasing its potential to import and export goods. Integrating a debtor country into the global marketplace using SAPs destabilizes the country’s economy by destroying local markets and forcing the country to use its economic resources to absolve itself of debt. SAP’s negative effects are worse felt in the poorest countries without emerging markets (Easterly; Rapley).

Entrenching market reforms based on “free market” principles, SAPs better protect the interests of First World donors than debtors by requiring: (a) debt repayment becomes a debtor country’s highest priority, often requiring new loans to pay old loans and (b) conformity and rapid conversion to an economic system dominated by First World countries (Kronick). The cost of improved import/export potential and participation in a market system friendly to export oriented industries is a reduction in government spending on social programs, ultimately “hindering human capital formation, [and] the development of the pool of skilled labor (Rapley, 82). Failure to empower a country’s poor “by giving them access to assets that will enable them to work their way out of poverty” jeopardizes equitable development gains for the population at large and dooms them to a culture of poverty (Williamson, 13).

Concurrent to superficial increases in GDP or stabilization of interest rates, and why SAPs fail to achieve intended results, are deepening of social injustices, decrease in the poor’s quality of life, destruction of pre-existing markets and worsening of the circumstances that contribute to a culture of poverty. (Kronick; Rapley; Easterly, ODI)

SAPs achievements are the lessons learned from their failure to create stability, efficiency, economic growth and lessen the culture of poverty’s burden:

• Low-income groups are put at risk and their access to education, health and other social assets are threatened by adjustment policies.
• A strong industrial base and the decision to enter the global marketplace must result from a country’s own social, cultural and economic decisions. First World nations dictating these conditions do not work.

SAPs in action: Case study – Ghana

• Playing Chicken: Ghana vs. the IMF
• Structural Adjustment has led to conflict in mining areas

SAPs in action: Case study – Jamaica

SAPs in Action: Case study – Chewa Ethnic Group

Chewa Rural Development

Alliance for Neo-liberalism: The foundation global resistence is built upon

Officially established in 1995 and part of the United Nations Secretariet, the idea for the WTO (then galled the GATT) originated in 1947 as part of the Bretton Woods Agreement that also established the World Bank and International Monetary Fund (IMF). Like the IMF and World Bank, the WTO exerts influence beyond its mandate of international trade, expanding into intellectual property rights, investment measures, services and domestic regualtions (Wall, 25).  The same criticisms characterize the WTO, IMF and World Bank:

• Their rules are written primarily for large corporations to benefit their business interests.

• Advisory committees are made up of corporate interests, while groups representing environment, health, consumer and other social areas tend not to be represented.
• Dispute panels and other meetings are held in secret and those overseeing them are not screened for conflicts of interest.
• During secret meetings, a handful of rich countries make all the key decisions. Poor countries are often excluded from such decisions, and lack the resources to adequately analyze the decisions being made  (Wall 26).

The United Kingdom and United States’ belief in the free-market – perceived by them as the only solution to global economic problems – influenced the policies of the IMF, World Bank, and later, the WTO. This alliance amongst nations promoting a neo-liberal, free-market agenda, the IMF, World Bank and WTO is commonly referred to as the “Washington Consensus.”

http://www.seattlepi.com/wto/

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