The World Bank can be an effective tool in the fight against poverty with fundamental changes in its power structure.
When Jim Yong Kim took the helm of the World Bank in July, progressives in the development community hailed it as a turning point in the fight against poverty. For once the Bank is headed not by a US military boss or a Wall Street executive, but by an actual expert in the field of development. Jeffrey Sachs called Kim's appointment a "tremendous step" toward making the World Bank a place "where the world convenes to address the dire, yet solvable, problems of sustainable development".
I have deep respect for Kim and his past accomplishments, but I do not share the optimism that has overcome the development community. I find it astounding that we continue to place our hope for the end of poverty in an international financial institution that is fundamentally beholden to the interests of Wall Street and the US government. And we do so against all the available evidence. History shows that most of the countries that have come under the sway of the World Bank - and its sister institution, the IMF - have experienced declining development outcomes over the past 30 years or so.
This is either an unfortunate mistake that can be fixed with a little dose of better leadership, as Sachs and the rest seem to believe, or an indication that the Bank doesn’t actually care much about development and poverty reduction, and that it's after something else entirely.
Structural adjustment
To explain the Bank's dismal record on development we have to understand its core economic strategy, namely, "structural adjustment", which has been in place since about 1980. When the Bank gives out loans to poor countries, they come with strict conditions attached that require debtors to restructure their economies in line with neoliberal policyby cutting subsidies and price controls; privatising public utilities; curbing regulations on labour and pollution; removing trade tariffs; and allowing foreign corporations to buy up public assets, bid on government contracts and repatriate profits at will.
