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Unholy Trinity: The IMF, World Bank and WTO…

Unholy Trinity: The IMF, World Bank and WTO

by Richard Peet

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Did they have to make it so boring?
I want to give this five stars, because this is all important stuff, and there aren’t enough books out there that critically examine the World Bank, the International Monetary Fund (IMF) or the World Trade Organization (WTO). On the other hand, some of this is written with a humorless, impersonal, bone-dry legalistic style which makes me want to curl up into a fetal ball and cry myself to sleep. There are better, or at least more engaging, books out there about the World Bank and IMF (see [book:Confessions of an Economic Hitman|514964], [book:World Bank|353678] and [book:None Dare Call it Conspiracy|811022]), so I’ll focus on the how this book addresses the WTO.

Who even thinks we need a WTO, anyhow?
The World Trade Organization was created in 1995, as an extension of the GATT (General Agreement on Tariffs and Trade) international treaty. The supporting documents contain a lot of beautiful images with lofty-sounding goals about abolishing slavery and exploitation, maintaining basic standards for labor, and guarding against unfair trade practices (e.g. copyright infringement). This gives casual observers the impression that the WTO was founded as a humanitarian organization tasked with undoing all the wrongs catalogued in Upton Sinclair's The Jungle. Don’t believe a word of it. The purpose of WTO is to set up what amounts to an international court (the DSB; the “Dispute Settlement Body”), whose authority supersedes national sovereignty, to adjudicate international trade disputes. Sounds great, huh? WTO’ers would have you believe so… after all, if such a body weren’t in place, we might risk TRADE WARS! That’s stuff like international boycotts, high tariffs, barriers to international investment, freezing of foreign assets, etc. These things disrupt commerce, and aren’t pleasant. They can put people out of work; maybe even starve a nation, if third parties don’t intervene. I'm trying to be clear here. Nobody wants a trade war. On the other hand, exactly because trade wars are disruptive to commerce, involved nations have incentive to resolve their differences before things go that far. Tit-for-tat trade scuffles aren’t as apocalyptic as WTO makes them out to be.

Again: not saying I like trade wars! I’m just pointing out what ought to be an obvious fact: there is such thing as going too far to avert them.

Who are you working for, really ?
So what is the deal here? If you want to avoid trade wars by setting up a DSB, what’s the cost? I mean, everything has a cost, right? In this case, the price is denominated in terms of national autonomy. The autonomy exercised by a national government on behalf of its citizens, and hopefully in their best interest. Critics like to characterize national sovereignty as an antiquated, pie-in-the-sky abstraction. A remnant of bygone days, with no place in today's fast-moving interlocking global economy. Well, I think national sovereignty is of enormous practical importance. Suppose you live in a wonderful democratic republic, but that nation is a signatory of the WTO. It doesn’t much matter what domestic trade rules your elected representatives pass (presumably in your best interest, heh). The WTO can decide they don’t like your laws, and revoke your “most favored nation status”, activating trade barriers worldwide among the other WTO member nations. This in itself shouldn’t necessarily prevent a nation from standing its ground against the WTO; except as a practical matter, it usually does. Our perpetually-consolidating global economy, with its ever more corporation-dominated politics, make it less and less likely that any nation would ever actually tell the WTO to fuck off and keep their goddamn “most favored nation” status. Look at how countries fall in line behind supranational bodies these days! Our national governments are inordinately steered by a few dominant international corporations. The leaders we supposedly elect to represent us don’t fall over themselves to please you (except a few months around election time); they’re much more interested in complying with the rulings of corporate agencies like the WTO. Multinationals are increasingly where the money comes from, both for many nations’ economies, as well as the election/discressionary funds of leaders. Naturally compliance with the WTO is always couched in terms of kumba-ya worldwide cooperation, our beautiful human family and partnerships for prosperity. Again I say: Don’t believe a word of it. What’s really happening is that WTO sets up an apparent democracy to decide how to conduct global trade. Around the table, each nation sits, supposedly casting votes in the interests of its own citizens and national economy. Thus, any given nation’s citizens get a vote. Meanwhile, international corporations who operate in multiple countries, and sometimes wield considerable local political power, influence votes from every nation they operate in! The end result is that multinational corporations are far better represented at the WTO than the citizens of any country! It is a democracy very much in the spirit of Benjamin Franklin’s admonition: "Democracy [without the checks and balances of a representative republic] is two wolves and sheep voting on what’s for dinner." In this case, it is a group of multinationals voting among themselves how trade should be conducted, worldwide. Looking at it from this perspective, it isn’t surprising to see what we currently have: a WTO whose functions include:

1) Eliminate small domestic producers who compete with foreign multinationals.
The United States grew to economic greatness in the second half of the 19th century, under conditions of relatively little governmental regulation, but considerable trade protections. Fledgling industries don’t always start off cost-competitive. It isn’t reasonable to expect startups in industries with a high cost of market entry to be competitive right out of the gate. American railroad, oil, and textile industries were all nurtured under the abetment of protective trade barriers. They became competitive eventually. (…and ultimately predatory, but that's another story) If the WTO remotely gave a flying fuck about helping third world nations develop, it would allow -even encourage- such sheltering policies. Instead, it is commonly an instrument for destruction of protectionist bulwarks. Now getting back to that idea of national sovereignty for a second: looking at the Cambodian WTO agreement I linked to, do you think national soveriegnty is a pie-in-the-sky abstraction to your average Cambodian? No; it’s the difference between growing domestic engines of wealth or purposefully holding the population down as hired help on the lowest rung of the production chain, precluded from ever participating in the profits.

Meanwhile, in this same environment, the multinationals, flush with capital from abroad, do very well without local competition. All the while, these carpetbaggers claim they are doing the locals a favor, providing them with jobs, when their employment prospects would almost certainly have been better working for locally-owned manufacturers with a stake in the community, under a system of protective tariffs. “Partnership for prosperity” my ass. This moving of factories from the developed world to a Third World devoid of maternal instincts serves dual functions:

2) Lowering production costs for the multinationals who can afford to move there.
This helps them undercut domestic competition back home (i.e. in the developed world) from mid-size and micro-sized producers, who don’t quite have the capital, technical or human resources to move their operation half-way around the globe.

while simultaneously

3) Suppressing wages in the developed world.
When the multinationals churning out widgets from their factory in Cambodia suddenly flood the domestic markets back home, what do you think happens? Widget producers in the developed world need to cut costs to stay competitive. Automation and other efficiencies help, because they reduce the necessary workforce- the big cost center in most industries being workforce wages, insurance, and benefits. If employees want to hold on to their widget factory jobs in the developed world, they need to come to the bargaining table, accepting lower wages, or loss of their jobs all together, as domestic factories decide between bankruptcy, buyout, or a complete move to Cambodia (or wherever). The multinationals win all around, while workers in both developed and undeveloped nations get fucked in the ass. How did this happen? The Third Worlders aren’t really to blame. They generally have membership in the WTO forced on them as a condition of IMF rescue, when they go into receivership. (This is most frequently engineered by the World Bank, in a diabolical mechanism which is explained very well by John Perkins in [book:Confessions of an Economic Hitman|514964]). We in the developed world, however, have only ourselves to blame. We didn’t recognize the yolk when it was being fastened around our necks, having been either too politically unengaged or economically ignorant to figure out what the WTO represented when it was first presented to us. We believed all flowery promises, a’la NAFTA and CAFTA, of the free-market wonderland that was supposed to follow removal of “trade barriers”. What a bunch of suckers. The big lie is that the WTO is not free-market at all. For all its Ayn Randian, Freidrick August Hyekian, and Ludwig von Mises-ian sounding ideals, the WTO represents big-government fucking around with free-choice economics on the largest possible scale! It is an unelected and unaccountable world government run by corporations, altering the normal forces local communities use to shape local market conditions. It creates an environment of crushing capital austerity (market entry/ early market survival barriers) in the name of averting minor consumer-burdens (tariffs). You want to know what else the WTO forbids? boycotts! Yeah, that’s right… WTO bars free-acting consumers from self-organizing into a cohesive market force to bear influence upon producers. What manner of "free trade" advocacy is that?!? A boycott is not, and has never been an expression of governmental interference, so why does the WTO intrude? A boycott is a grass-roots populist consumer tool; a purely democratic and broad-based free market force antithetical to State-driven command economies. The WTO ought to love boycotts! They are consumer-empowering! Isn't concern for the consumer the basis of WTO's crusade against tariffs?? As a practical matter, the WTO position on boycotts not only prevents consumers from declining undesired product characteristics like genetically modified foods; it prevents member nations from prohibiting goods produced with prison-labor! So in present day, by joining the WTO, we have American workers trying to maintain a living wage against Cambodian workers whom the WTO is prohibiting from developing, AND with Chinese political prisoners. This is done in the name of fostering free and fair trade practices worldwide. Very sensible, don't you think? Understandably, multinational corporations love it; wages are low, productivity is high. Consumers think they like it, because all the cheap shit at WalMart is, well, cheap. Nevermind the fact that consumers could afford to pay more, if they earned higher wages. Unfortunately, that's not likely to happen soon, since political prisoners are a renewable resource in China. That’s what the 1998 anti-WTO riot in Seattle was about. In a big “fuck you” to free-market capitalism everywhere, China was admitted to the WTO in December 2001. Of course the WTO hasn’t prevented China from dumping dangerous, prison-labor goods into American markets. In fact, by prohibiting boycotts, the WTO are accessories to the crime. Naturally, presenting itself as a champion of trade liberalization and laziez faire capitalism, while concurrently forbidding boycotts and tinkering intrusively with local market conditions, is the height of hypocrisy -but then, the dishonest underpinnings of the Organization should have been obvious from the coercive way member-nations are recruited. No educated and genuinely self-interested free agent would willingly enter such a restrictive agreement.

Short Summary
So at the risk of straying into the realm of hyperbole or demagoguery , I think it is at least fair to say that the WTO is blatant instrument of subjugation, wielded quite intentionally by a constellation of multinational corporations whose business model is unabashedly the impoverishment and enslavement of all mankind forever. With this in mind, it is also reasonable to say (literally or figuratively- you decide) that the Organization is a monstrosity conceived by demons in the blackest pit of Hades. I hope that doesn't convey emotional overtones, because I generally like to keep my analyses dispassionate. In this case, however, I think it is important to stress that the WTO really is like Satan walking on the Earth, and we need to abolish it and send that motherfucker back to hell. Please write to your Senator about this today.

Good Luck! ( )
  BirdBrian | Apr 6, 2013 |
'Invaluable to students and activists alike, this is the essential introduction to the unelected government of the world economy.' - Mike Davis, author of Planet of Slums

'This new edition of the Unholy Trinity offers a timely and razor-sharp analysis of the predicament the world economy is in today and how we got there. With characteristic panache, Peet shows why neoliberal orthodoxy got it so totally wrong and details its disastrous social and economic consequences. A must read for those who wish to understand who is responsible, and what needs to be done to turn the world into a more genuinely humanising place for all.' - Erik Swyngedouw, University of Manchester

Praise for the first edition:

'This is a terrific book...It is politically committed, theoretically sophisticated, analytically incisive, empirically rich, thoroughly engaged, and full of devastating one-liners that greatly enliven its reading.' - Roger Lee, Economic Geography

'This is a great book' - David Harvey, CUNY

'Unholy Trinity provides an important history lesson of how the IMF, World Bank, and WTO were twisted from their original mandates to serve the interests of corporate globalization.' - John Cavanagh, Director, Institute for Policy Studies
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Amazon.com Product Description (ISBN 184277073X, Paperback)

Our lives are all affected by three hugely powerful and well financed, but undemocratic, organizations: the International Monetary Fund, the World Bank and the World Trade Organization. These institutions share a common ideology. They aggressively promote "corporate" capitalism, neoliberalism, giving free rein to the interests of a small number of transnational corporations. This book presents the history and fundamental ideas of this economic ideology. Describing each member of the "unholy trinity," it shows how neoliberalism hijacked the IMF, World Bank and WTO in relation to their global financial, development and trade management roles.

(retrieved from Amazon Thu, 12 Mar 2015 18:25:04 -0400)

"Who really runs the global economy? Who benefits most from it? The answer is a triad of 'governance institutions' - The IMF, the World Bank and the WTO. Globalization massively increased the power of these institutions and they drastically affected the livelihoods of peoples across the world. Yet they operate undemocratically and aggressively promote a particular kind of neoliberal capitalism. Under the 'Washington Consensus' they proposed, poverty was to be ended by increasing inequality. This new edition of "Unholy Trinity", completely updated and revised, argues that neoliberal global capitalism has now entered a period of crisis so severe that governance will become impossible. Huge incomes for a small number of super-rich people produced an unstable global economy, rife with speculation and structurally prone to crises. The IMF is in disgrace, the WTO can hardly meet anymore and the World Bank survives as a global philanthropist. Is this the end for the Unholy Trinity?" -- BACK COVER.… (more)

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Zed Books

4 editions of this book were published by Zed Books.

Editions: 184277073X, 1842770721, 1848132514, 1848132522

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