Bank of the South
An alternative to the IMF World Bank
Eric Toussaint
Published by VAK, Mumbai, India in 2007
Preface by Ajit Muricken
Contrary to the common beliefs and perceived notions, the IMF, World Bank Group does not set out to reduce poverty but rather it reproduces and enslaves the debtor nations. It is in fact the central force behind the neo-liberal offensive to integrate the economies of the South by profound changes in trade, export-oriented growth model, finance and technologies. The twin institutions IMF, World Bank are the key instruments designed to subordinated nations to the interest of the world's most industrialized hegemonic power.The ideological world view of the Banks holds that the development of the South has been delayed due to insufficient domestic capital. This formulation actually meant that countries wishing to accelerate economic growth must firt appeal to external aid, then attract foreign investments and thirdly, increase exports in order to procure the hard currencies necessary for the purchase of foreign goods that facilitate further growth.The ideological construct that underlies the argument is fairly logical within the neo-liberal paradigm and is based on the following prescriptions : - Micro-economic reform through structural adjustment of the economy by the removal of all barriers to investment and removal of any impediments. Free competition, deregulation of the market freedom leads to rapid economic growth that in turn contributes to the reduction of poverty;- Maximisation of 'Comparative Advantage' (This theory argues that a nation can maximise efficiency in resource-use by producing and exporting commodities in which it is relatively efficient and by importing commodities in which it is relatively not so); - State deregulation of the economy and maximising privatisation is the key to enhancing macro economic efficiency and consumer welfare;- Removal of all impediments leading to the free mobility of capital across the globe; and- Converting exports into the main source of economic growth.The consequences of such a policy have been traumatic for the people of the South with intensified poverty and inequality. The debt repayment sucks up part of the social surplus produced by the workers of the South (whether salary earners, small individuals or family producers, or workers in the informal sector) and directs this flow of wealth towards the holders of capital in the North, while the ruling classes of the South make their profit.Under the spell of neo-liberal growth model the whole range of natural resources is privately appropriated which opened up a natural resource bade for MNC's to