Right now across the world, the lives of millions of people are in the hands of two of the most powerful financial institutions ever created - the International Monetary Fund (IMF) and the World Bank (WB). These banks hold the lion's share of the debt currently owed by the 'Third World'. This debt first accumulated in the '70s when poorer countries borrowed in order to develop their economies. But when the world recession hit in the '80s huge numbers of countries found they couldn't repay their loans &endash; this was when the IMF and WB first stepped in.
To understand why the so called 'debt crisis' has happened we need to look back at why the WB and IMF were set up. This relates to when the world economy collapsed for the first time 70 years ago &endash; an event often called The Great Depression. One of the major consequences of the Great Depression was a realisation by those in power that the world's economic system was unstable. This instability has given rise to massive poverty and social turmoil and one of the most worrying consequences of this was the trend towards revolution in Europe, Asia and South America.
When World War 2 neared conclusion, bankers and financiers from the Western countries met at Breton Woods to consider how best to minimise future economic instability and collapse. One of the key decisions taken was to set up IMF and the WB. These two institutions would be financed by the Western powers and their primary role would be to 'manage' the international financial markets - releasing money in times of shortage, withdrawing cash in times of surplus.
The WB and the IMF played a major role in avoiding a world depression when they took over responsibility for the 'bad debt' incurred by 'Third World' countries by the mid 1980s. Much of this debt was initially owed to private banks like Barclays, Credit Lyons, Chase Manhattan etc. In order to stave off a disaster (and the collapse of a number of major Western banks) the IMF and WB moved in and 'lent' money to a wide range of countries who were about to default on these loans. This saved the big 'private banks' from disaster and it also put the IMF and WB into an unassailable position of power - that they have never relinquished since.
Since the mid 1980s nearly 70 countries in the world have been 'forced' to adopt 'Structural Adjustment Programs' designed and developed by the WB and the IMF. Backed up by the massive economic power of the United States, Japan and the European Union these SAPs (as they are known) were supposed to 'revive' Third World economies. Instead they've led to disaster and massive poverty. Because of SAPs, local economies and wages have collapsed; basic services like sanitation, water, health and education have fallen apart. Meanwhile the burden of debt has been forced onto the poorest of the poor with the result that poverty has increased, life expectancy has deteriorated and infant mortality has soared.
While it's not difficult to see why the SAPs have failed (instead of promoting investment they sucked the money supply from local economies) it is important to remember that these programs were never intended to be anything other than harsh. More to the point the SAPs have a played an important role in the long term economic strategy of the West. This strategy is all about making Third World economies more dependent (the word they use is integrated!) on Western needs and in particular more open to exploitation by Western multinationals; SAPs also guarantee the West a massive supply of cheap labour.
The power that the IMF and WB now have is enormous. They are dictating to millions of people about how they should live and in what way. For many their policies mean an early death, or if that doesn't come then a life of harsh exploitation and low wages.
What do anarchists say about what should be done? There are a few points that need to be made. Firstly we have to ask why it is the world economy (and the lives of millions) is under the control of just a small number of Western bankers? Should this be happening and why do we have to accept it? Secondly, in the world right now, there is a massive surplus of wealth. The personal fortune of Bill Gates alone would sort out most of the major health and educational needs of billions of people (with change left over). So the problem in other words in not the generation of wealth but how it is distributed. And the problem of wealth distribution as we all know, is one of power and politics. Lastly we need ask ourselves why the 'Third World' is in such debt? If we look at the issue we will see that much of the problems of the Third World stem from the historic exploitation of the African, Asia and Latin Americas by the West - or to use a more accurate term, the problem stems from imperialism. This is a legacy that we shouldn't accept and a legacy that has to be fought against.
Anarchists want a democratic economy. We want every 'unit' of the world's economy (down to smallest workplace, office and farm) to be organised along egalitarian lines - election of managers, assemblies to organise work and work conditions; participation and active decision making by workers in all the aspects of the work that they do. This is the sort of 'macro-economics' that we are planning for in the long term. But first - and this cannot be forgotten for one moment - we must wrest real power and control from the hands of the WB, the IMF. This is why we will be participating in the solidarity work - known as S26 - around the current IMF meeting in Prague in the Czech Republic at the end of September. S26 is an important step in bringing world attention to bear on the crimes and injustices of the present 'debt crisis'. Be there and show your anger!
(S26 Cork - Personal cap.)