The Common Good
March 2007

Big is Beautiful?

by Marie Dennis | March 2007

The World Bank's top-down approach.

The Annual Review of Development Effectiveness, a major report by the World Bank's Independent Evaluation Group released in early December, criticized World Bank policies and project design as leaving tens of millions of people, especially the rural poor, "suffering stagnating or declining living conditions." The group's conclusions were no surprise to the poor or to those who accompany them in their daily struggle for survival.

For 25 years critics of the macroeconomic model unwaveringly promoted by the World Bank and its sister organization, the International Monetary Fund (IMF), have called for a fundamental shift away from top-down policies and mega-projects to allow space for more appropriate approaches to economic life that respect the local social and ecological context and the socio-economic and cultural human rights of the poor. The work of 2006 Nobel laureate Muhammad Yunus and the Grameen Bank has been one example of an alternative approach.

Beginning in the early 1980s, the World Bank's "structural adjustment policies" had initiated the shift to "neoliberal" economies in poor country after poor country. Although structural adjustment aimed at laudable goals such as controlling inflation and stabilizing out-of-control economies, its policies left the poor even more vulnerable as social safety nets disappeared and health care, education, transportation, and utility costs rose dramatically.

The 1990s saw an increased pace of neoliberal reform and the globalization it was helping to shape. Production shifted from food staples and basic goods for domestic use to commodities for export.Whole sectors of economies in which the poor were able to participate—especially subsistence farming and small businesses—were destroyed as cheap imports flooded local markets.

In every case, the rules of the global economy were set by powerful institutions such as the World Bank in which the wealthy countries, especially the United States, had a controlling interest. Growth was considered paramount. Deregulation of the private sector, removal of barriers to trade, weakened environmental protections, and a pliant, unorganized labor force were necessary to attract foreign investment.

The experience at the margins of the global economy has not been pretty. Wealth is concentrating in the hands of a small percentage of the population even in extremely poor countries, and little attention is given to very real ecological limits. Major civil society efforts to demonstrate the failure of World Bank policies and projects— including the the Jubilee campaigns for debt cancellation and Fifty Years Is Enough, plus countless dialogues with World Bank officials and major demonstrations—have been ignored within the institution.

Seven years ago, in the United Nations' Millennium Declaration, every nation of the world affirmed that as a global community, "we will spare no effort to free our fellow men, women, and children from the abject and dehumanizing conditions of extreme poverty, to which more than a billion of them are currently subjected." They pledged to meet eight Millennium Development Goals by the year 2015, including reducing by half the number of people living in extreme poverty.

More than one-third of the time has passed between 2000 and 2015, and there is widespread acknowledgement that many countries, especially on the African continent, have almost no chance of achieving these goals.

This global reality has not just happened—like a bad storm or fire or random illness. Rather, it has its own roots and its own motor. World Bank policies are not just failing to reduce poverty, they are in fact perpetuating poverty and making access to a life of dignity more remote for millions of people around the world.

Ten years ago, the ecumenical Religious Working Group on the World Bank and IMF, in its statement about the same policy prescriptions still being promoted by the World Bank and other international institutions, wrote:

[I]t is morally unacceptable that people who struggle barely to survive are carrying the burden of these policies on the assumption that the benefits may eventually "trickle down." Means as well as ends must be just ... some evidence suggests that the long-term results of current adjustment policies may be the consignment of millions of people to permanent deprivation. We urge international financial institutions and governments to seek new approaches, which involve greater openness and flexibility, foster broader civil society participation, protect the environment, and encourage more equitable distribution of economic power and resources within and among nations.

Marie Dennis is director of the Maryknoll Office for Global Concerns.

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