art-e-conomy _ reader - marko stamenkovic

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assistance from them. However, it is not that the two institutions know what is best
for the world or the countries asking them for help. In the last 40 years, the World
Bank has repeatedly changed its understanding of what kind of development is best
for the developing world.
During the late Sixties when the Vietnam War was at its height, the World Bank
was concentrating on poverty removal. The understanding was that to check the
spread of communism, poverty of the extreme kind had to be eliminated. It was
feared that there would be a domino effect in Asia with one country after another
going along the communist path. After the end of the Vietnam War in 1972, the line
changed. The Brazilian model of free trade became the development model preached
by the World Bank to the developing world. But then the debt crisis hit the Latin
American economies pursuing this path so that this model had to be jettisoned in
the mid Eighties. By then it was clear that the newly industrializing economies (NIC)
of South East Asia had been doing well. But the model of free trade did not quite fit
them so the new model was “market friendly state intervention“. After 1997, these
countries faced a severe crisis and this model also has had to be modified so now
it is “free economy“.
The World Bank and the IMF represent the interest of the powerful nations and
their capital, namely, how to dominate the global economy. Thus, the suggestions
of IMF and World Bank to India in 1991 and subsequently has been to globalize the
Indian economy, that is, to allow it to integrate with the global economy through flow
of goods, services, capital and technology. GATT earlier and WTO now have added
to the pressures for the globalization of the Indian economy.
How would you describe this process of “Economic Liberalization” taking place in
India since 1991?
I don’t like to call the programme being implemented either as “Liberalization”
or “Reform” since it is neither. The programme is philosophically conservative and
not liberal. It is not pro-poor and therefore should not be called reform. No doubt,
there is change in policy but every change cannot be called “reform“. Under the new
policies, the poor are themselves to blame for their poverty and the state need not
play a role in poverty removal. The programme goes back to the pre-1947 era when
equity and poverty removal were not a concern of the British rulers. In India, officially
26% of the population is below the poverty line (people who do not have enough
income to get adequate nutrition). However, those who earn a little bit above this
income level do not become non-poor. By international standards, 79% of Indians
are poor. There is a very tiny section of the population (about 3%) who have the kind
of purchasing power that the middle class Europeans enjoy.
The policies being implemented since 1991 are favoring this tiny minority which
has been wanting to build an alliance with the global elite - for it, progress has
meant joining the global elite. Its emotional attachment with the common Indian
has weakened to an extent that it identifies less and less with the idea of India. So
it has been open to the suggestions of the multilateral institutions, like, the World
Bank for the globalization of the Indian economy irrespective of whether or not it is
in the interest of the people of India.