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To cite this article: Paul Cammack (2004): What the World Bank means by poverty reduction, and
why it matters, New Political Economy, 9:2, 189-211
To link to this article: http://dx.doi.org/10.1080/1356346042000218069
PAUL CAMMACK
Paul Cammack
bundled activities to return to the tasks for which it was designed, namely
making public sector loans to promote economic development, with separate
institutions providing other functions so that the development success and the
impact of development efforts would no longer be tied to the operational agenda
of one powerful agency.3
Underlying these and other proposals for reform is the sense that the Bank
is either confused and in need of correction, or too timidly reformist and in
need of encouragement, or both. They raise the question, crucial for those who
wish for theoretical or practical reasons to situate themselves in relation to
the Bank, of what its project isin short, what it means by poverty reduction.
I will argue here that the hope that the regimes of global governance operated
by the IMF and the World Bank can become democratic and pluralistic is
unrealistic: it fails to identify the increasingly close coordination of the two
institutions, as well as the clear and very cold authoritarian and monolithic
logic which is central to the activity of the Banka logic that is heavily
disguised in its systematic representation of itself as a voice for women and
the poor, a Knowledge Bank seeking partnership with donors, other international organisations, non-governmental organisations (NGOs) and civil society, and an advocate of country ownership of anti-poverty and development
strategies.
My argument is that, while the Banks commitment to poverty reduction is
real, within limits, it is conditional upon, and secondary to, a broader goal. Its
principal objective is the systematic transformation of social relations and
institutions in the developing world, in order to generalise and facilitate proletarianisation and capitalist accumulation on a global scale, and build specifically
capitalist hegemony through the promotion of legitimating schemes of community participation and country ownership. I have set out elsewhere the
argument that since 1990 the Bank has been systematically engaged in promoting the proletarianisation of the worlds poor (their equipping for, incorporation
into and subjection to competitive labour markets) and the creation of an
institutional framework within which global capitalist accumulation can be
sustained, while simultaneously seeking to legitimate the project through policies
of controlled participation and pro-poor propaganda.4 After briefly recapitulating
these arguments in the following section, I detail what I shall call the WolfensohnStiglitz project, which took shape from 1995 onwards following Wolfensohns arrival at the Bank. I characterise this as a sustained attempt to take
forward the programme that had been developed over the early 1990s, but still
required to be operationalised, legitimised and voluntarily adopted by developing country governments. I draw particular attention to the relationship between
knowledge, country ownership and participation in official Bank discourse,
policy advice and mechanisms for securing its adoption in the developing world.
My intention is to demonstrate that the new orientation of the World Bank,
crystallised in the Comprehensive Development Framework (CDF) announced
by James Wolfensohn in January 1999, rests fundamentally on the claim of the
Bank to a monopoly of development knowledge, and that the related schemes
for country ownership and local participation are disciplinary rather than
empowering in intent.
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Paul Cammack
As the project took shape in the early 1990s, emphasis was placed on primary
education, health, the environment and infrastructural investment. Throughout,
the purpose was as defined in the 1991 Report: the provision of a stable
macroeconomic framework that would win the confidence of the private sector;
the creation of a competitive environment within which enterprise could flourish;
the integration of economies into the global economy; and investment in
people to supplement the market in the areas of education, health, nutrition and
family planning.8 From the very start, too, it was envisaged that the macroeconomic foundation would be supported by microeconomic discipline:
Paul Cammack
Our new world of open markets raises the stakes for developing
countries. Investment is linked to good policies and good governanceliberal trade regimes and high savings rates, combined
with sound legal and judicial systems. Simply put, capital goes to
those countries that get the fundamentals right. And we are
working with our clients on those fundamentals.14
From this flowed a commitment to financial sector reform, the efficient
management of public expenditure, accountability, transparency and the elimination of corruption: first of all, poor countries were to be made hospitable to
private capital. The broader, more integrated approach to development was to
be built on this foundation. At the same time, Wolfensohn identified social,
cultural and institutional factors as the key to the success of a broader approach
focused on poverty reduction, arguing in relation to East Asia that it was those
countries strong institutions and social cohesion that enabled them consistently
to choose sound macroeconomic policies, promote rural development and make
large investments in basic education and health. The moral drawn was that,
without the social underpinnings, it is difficult for economic development to
succeedand virtually impossible for it to be sustained:
The lesson is clear: for economic advance, you need social
advanceand without social development, economic development cannot take root. For the Bank, this means that we need to
make sure that the programs and projects we support have
adequate foundations by designing more participatory country
strategies and programsreflecting discussions not only with
governments, but also with community groups, NGOs and private
businesses; by putting more emphasis on social, cultural, and
institutional issues and their interplay with economic issues in our
project and analytical work; and by learning more about how the
changing dynamics between public institutions, markets, and civil
society affect social and economic development.15
This perspective led directly to the proposal for a New Knowledge Partnership, in a passage whose logic remains central to Bank activity and requires
verbatim quotation at some length:
The third item on the strategic agenda is partnership. We have
made good headway over the past year. But today, I want to focus
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Paul Cammack
makers ignored other important ingredients, most notably competition, that are
required to make an effective market economy and which may be at least as
important as the standard economic prescriptions in determining long term
economic success. Stiglitz went on to argue that well-functioning financial
systems do a very good job of selecting the most productive recipients for
resources and ensuring that those resources continue to be used productively;
they require transparency, a sound legal system and oversight, which can be
achieved only by medium- and long-term strategy, not by short-term fixes; in
addition, the state must complement the market: trying to get government
better focused on the fundamentalseconomic policies, basic education, health,
roads, law and order, environmental protectionis a vital step.18 For this to
happen, effective institutions are required. These should use markets and
market-like mechanisms and respond to the needs and interests of their citizens,
while at the same time giving them a sense of ownership and stake in the
policies:
At the microeconomic level, governments, aid agencies and
non-governmental organizations have been experimenting with
ways of providing decentralized support and encouraging community participation in the selection, design, and implementation
of projects. It is not just that localized information is brought
to bear in a more effective way; but the commitment to the
project leads to the long-term support (or ownership in the
popular vernacular) which is required for sustainability.19
While covering some of the same ground again, the Prebisch lecture went on
to present development as the transformation of society and to assert that
approaching development from the perspective of transforming society has
profound implications not only for what governments and aid agencies do, but
how they proceedhow they engage, for instance, in participation and partnership. Criticising the adjustment policies of the 1980s for failing to reach deep
down into society, Stiglitz charged the government with the ambitious goal of
encouraging society-wide transformation.20 Change imposed from the outside
will not work, as ownership and participation are essential:
Outside agents, including donors, can encourage ownership
through persuasionthat is, through presenting evidence, both
theoretical and empirical, that particular strategies and policies are
more likely to bring success than other approaches. But the
degree of ownership is likely to be even greater when the
strategies and policies are developed by those within the country
itself, when the country itself is in the drivers seat.21
However, being in the drivers seat does not mean choosing the map or
plotting the route: if the desired transformation of society is to be achieved,
country ownership and popular participation must be embedded in and shaped by
effective institutions and incentives:
198
Indeed, one of the reasons for participation is so that policymakers can have a better understanding of what incentives are
necessary. Institutions, incentives, participation, and ownership
can be viewed as complementary; none on its own is sufficient.
Participation and ownership are crucial and it is clear that the
involvement of outsiders cannot take the place of this local
leadership. Nevertheless outsiders do have a role in facilitating
the process, and assisting in the provision of knowledge.22
The success of the strategy proposed by the Bank depends, then, upon the
adoption by countries and endorsement by their populations of the map providedspecifically, and to depart from the metaphor, the institutionalisation of
the micro-level incentive structures that shape behaviour in ways conducive to
the promotion of competition and capitalist accumulation. The components of
a new development strategy laid out in the Prebisch lecture, a preliminary
statement of the Comprehensive Development Strategy introduced three months
later in January 1999, are infused with this logic. First, a key objective is the
creation of a strong, competitive, stable and efficient private sector, to be
achieved through the provision of a legal infrastructure, a regulatory framework,
the government provision of infrastructure, and a stable macroeconomic framework, a stable and effective financial system, and a strategy for the elimination
of those distortions in the economy that interfere with the efficient deployment
of resources. Second, if the private sector is to flourish, the environment must
be conducive to private sector development. A key part of that environment is
the quality of the labor forcean educated, healthy workforce is essential.
Complementary strategies for the government, communities, families and individuals follow. Comprehensive development strategies require not only resources, but also economic management able to identify the most important
distortions in the economy, and how they are to be addressed. Third,
A development strategy needs to outline a strategy of knowledge
management. The World Bank increasingly thinks along these
lines, conceiving of itself as a knowledge bank, with one of its
central tasks being to help countries to close the knowledge gap.
It can provide the cross-country experience that, when melded
with local knowledge, makes possible effective choices of development policies, programs, and projects.23
Finally, in all of this the long-term goal is for countries to build institutions of
a particular kind (social and organizational capital), and, for outsiders, to exert
leverage in initiatives that can have multiplying effects. As a comment in
Stiglitzs more recent Globalisation and its Discontents confirms, the institutions
required must be underpinned by a specific logic, centred on the willingness to
accept the risks that are necessary for entrepreneurship.24
In the WIDER and Prebisch lectures, then, Stiglitz spelled out the World
Banks new approach to embedding its desired model of development in its
client countries. Less than a fortnight before the Prebisch lecture, Wolfensohn
had used the occasion of his annual address to the Board of Governors of the
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World Bank to advocate the new development framework it describes. Close
examination of the text reveals immediately the consonance of purpose between
the Director of the Bank and his Chief Economist. Beginning with the now
familiar argument that, while the establishment of appropriate macroeconomic
plans with effective fiscal and monetary policies is essential in every respect,
financial plans alone are not sufficient, Wolfensohn argued that the Bank should
consider the financial, the institutional, and the social, together. This entailed
a new division of labour between the IMF and the Bank:
Paul Cammack
that commit to this process, the researchers conclude28 (emphasis
mine).
Third,
It is precisely because history matters that interventions can be
effective in the long run. A perturbation to the system at one date
can have permanent effects. A particular set of circumstances
in which history can matter is when there are multiple equilibria
and an historical shock selects the equilibrium. A large enough
disturbance can move an economy in a direction that converges to
a steady state equilibrium.29
Incorporating this logic, the WolfensohnStiglitz approach essentially proposed
to abandon economic shock therapy in favour of institutional shock therapy.
With this in mind, this final section of the article examines the extent to which
its logic is embedded at national, local and individual levels.
Institutional shock therapy in practice: locking countries, communities and the
poor in
As the above discussion makes clear, the Comprehensive Development Framework announced by the World Bank in January 1999 was the focal point of the
WolfensohnStiglitz project.30 It informed the Poverty Reduction Strategy Paper
(PRSP) process introduced at the time, and brought the HIPC Initiative,31 dating
from 1996, into the same framework. In so doing it gave the new strategy an
institutional form. The logic of the HIPC/PRSP/CDF framework was to lock
countries, communities and the poor into the project by imposing from macroto micro-level the structure of disciplines and incentives that would shape
national, local and individual behaviour in the manner the project required.
The Comprehensive Development Framework, then, is precisely what it says
it isa blueprint for a complete set of social and governmental relations and
institutions, founded on macroeconomic discipline and extending across a range
of economic and social policies without parallel in the depth and intensity of
intervention they implied in the affairs of supposedly sovereign states. Presented
as a vehicle for incorporating social and structural policies into an agenda
previously dominated by macroeconomic policy alone, it is intended as a means
of shaping and monitoring social and structural policies so that they reinforce
and extend macroeconomic discipline, and subordinating them to imperatives of
capitalist accumulation.32 The Bank demands country ownership both because
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it recognises that it lacks the means to enforce the strategy itself, and because
the legitimation of its project vis-a`-vis citizens around the world depends upon
its adoption by national governments, which remain indispensable intermediaries
in the project. But at the same time it proposes that governments should maintain
a policy matrix for external inspection at any time, described by Wolfensohn as
a summary management tool which will allow us to see quickly what is going
on in a country from the point of view of structural and social development, and
will also show us what is not going on.33 Not surprisingly, a review in 2000 of
the first initiatives carried out within the CDF framework drew attention to the
tension between country ownership, on the one hand, and the need for
proposed policies to pass IMF/World Bank assessment, on the other. With NGOs
allegedly as keen as the international financial institutions to propose priorities
for action, and countries often lacking the expertise to draw up policy proposals
of the type required, the Bank settled for guidance that does not breach the
principle of ownership in the context of joint missions to discuss strategy
formulation with governments, and undertook to develop a PRSP Sourcebook
offering guidance on best practice and to organise outreach and learning
events. PRSP countries might eventually own their policies, but they would not
be their authors in practice, nor was it ever intended that they should be.34
The strategy for locking countries into the WolfensohnStiglitz project
through the CDF was matched by a parallel strategy to lock communities in,
through carefully controlled opportunities for participation. The underlying
logic was outlined in the 1997 World Development Report, which cautioned
readers against the view that participation was a good in itself. The starting point
was the vision of the state as a partner, catalyst, and facilitator rather than a
direct provider, so the first step was to redefine the state and re-educate the
people: Getting societies to accept a redefinition of the states responsibilities
will be one part of the solution. This will include strategic selection of the
collective actions that states will try to promote, coupled with greater efforts to
take the burden off the state, by involving citizens and communities in the
delivery of collective goods. The crucial second step, evidence of the Banks
intention to secure accumulation and legitimation in a single operation, was to
present the new dispensation as making the state more responsive to peoples
needs, bringing government closer to the people through broader participation
and decentralization.35 As spelled out later in the same volume, the message,
here as elsewhere is that bringing government closer to the people will only be
effective if it is part of a larger strategy for improving the institutional capability
of the state. Participation, the Bank warned, might either improve or undermine
the capacity of the state, and good forms of local participation that reinforce the
efficiency and authority of the state must be carefully distinguished from bad
ones that weaken them.36 Within the WolfensohnStiglitz project, the purpose of
policies of decentralisation and participation was threefold: to exert pressure on
the state to deliver essential services efficiently, to place the cost of delivery on
the beneficiaries themselves, and to induce them to experience tightly controlled and carefully delimited forms of market-supporting activity as empowerment. For the Bank, localisation is generally problematic, tending as it does to
breed demands that the state may be hard pressed to meet. Luckily, though, as
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programmes, social funds, microfinance programmes and cash transfersis to
lock the poor into a permanent exposure to the risk of market dependence by so
calibrating those institutions that they propel the poor smartly back into the risk
environment when they happen to fall out. In sum, the poor themselves are to
act as vigilantes to enforce the disciplines which perfect and maintain their
subordination to capital.
Conclusion
The purpose of this article is at once modest and ambitious. It does not address
the question of whether the policies of the Bank are actually reducing poverty,
or are capable of doing so (as Wade shows, the picture is complex and the jury
is still out). Nor is it concerned with the broader question of whether capitalist
development and poverty reduction are compatible (though they obviously are,
at some times and places and to some degree). Rather, it seeks first to establish
that when the Bank says poverty reduction it means something serious, and
considerably more than what most of its critics think it means; and second to
show that over more than a decade it has consistently sought to feed its
understanding of poverty reduction as the transformation of society to embed the
disciplines of capitalist competition not only into its official discourse, but also
into mechanisms to bring about the institutional and social transformation of
developing countries. It is scarcely an exaggeration to say that what the Bank
means by poverty reduction is proletarianisation, and global competition between workers, as part of a larger transformation of social relations around the
world. This matters, not least because it has implications for the choices to be
made by critics, NGOs and civil society in relation to modes of engagement with
or opposition to poverty reduction and the broader strategy behind it.
Peet is off the mark, then, with his assertions that the Banks commitment to
participation is half-hearted and that it sentimentalises the poor. On the contrary,
its commitment to participation is selective but single-minded, and it targets the
poor quite unsentimentally for systematic proletarianisation. In addition, he and
other advocates of greater pluralism have missed the point that maintenance of
the authority and the monopoly of knowledge by the Bank is an absolute
requirement of the Comprehensive Development Framework. The Wolfensohn
Stiglitz project reflects not the paradoxical conjunction proposed by Bas and
McNeill of a bastion of neoliberalism and a quite progressive development
institution concerned with local participation and needs, but rather the reality of
a bastion of neoliberalism that is aware that it must present itself as a quite
progressive development institution concerned with local participation and
needs. Control down to micro-level is central to its commitment to the systematic transformation of social relations and institutions in the developing world,
in order to generalise and facilitate capitalist accumulation on a global scale, and
build specifically capitalist hegemony through the promotion of participation and
ownership. Its all-encompassing project of global social and institutional reform
may be over-ambitious, but it is real. It is essential to it that participation
should be channelled exclusively into forms supportive of the project, that the
operational agenda of the Bank should prevail across all its activities, and that
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FIGURE 1.
classrooms, health centres, water supplies, rural roads and so on. The Government will encourage more of this by sharing the costs of some of these schemes
and by encouraging other donors to do the same) and the provision of training
for workthree essential components of the Banks strategy for instilling
competitiveness in local markets.48 The encapsulation of these three central
elements of the World Bank strategy in this context provides strong evidence of
the penetration of the message in the least expected channels. More strikingly
still, one of the cartoons (by Masoud), which reinforce the message of the
booklet, explicitly conveys the subordination of local participation to national
strategy, showing the clear limits to which local participation is subject (Figure
1). This might be thought an isolated example perhaps, but it is in fact a perfect
exemplification of hegemonic discourse in action.
I conclude, then, that, far from stumbling down a dysfunctional path, as
Pincus and Winters suggest, the Bank is striding ahead, though on a trail not
everyone would wish to follow. As to how its project should be characterised,
I make two final points. First, I argue that the project emphatically represents a
new approach on the part of the Bank. What is new is precisely the systematic
effort to establish the Bank as a monopoly source of knowledge and to develop
specific institutional mechanisms on that basis for the establishment and legiti208
Notes
I would like to thank Daniela Cammack, Graham Harrison and an anonymous referee for their very helpful
comments.
1. Richard Peet, Unholy Trinity: The IMF, World Bank and WTO (Zed, 2003), pp. 200, 2223. Peet wrote
the book with seventeen of his graduate and undergraduate students, but identifies himself as the author
of the chapter (Ch. 6) in which these comments appear.
2. Morten Bas & Desmond McNeill, Multilateral Institutions: A Critical Introduction (Pluto, 2003), pp. 47
and 712.
3. Jonathan R. Pincus & Jeffrey A. Winters (eds), Reinventing the World Bank (Ithaca University Press,
2002), pp. 3, 222 and 226. For similar calls for reform, see Ngaire Woods, The challenges of
multilateralism and governance, in: Christopher Gilbert & David Vines (eds), The World Bank: Structures
and Policies (Cambridge University Press, 2000), pp. 1434; and David Craig & Doug Porter, Poverty
Reduction Strategy Papers: A New Convergence, World Development, Vol. 31, No. 1 (2003), p. 67.
4. Paul Cammack, Making poverty work, in: Colin Leys & Leo Panitch (eds), A World of Contradictions:
Socialist Register 2002 (Merlin Press, 2001), pp. 193211; Attacking the Poor, New Left Review, 2nd
ser., No. 13 (2002), pp. 125 and 34; and The Governance of Global Capitalism: A New Materialist
Perspective, Historical Materialism, Vol. 11, No. 2 (2003), pp. 3761.
5. World Bank, World Development Report 1990: Poverty (Oxford University Press, 1990), p. 3.
6. Ibid., pp. 137 and 4.
7. World Bank, World Development Report 1991: The Challenge of Development (Oxford University Press
1991), p. 1.
8. Paul Cammack, Neoliberalism, the World Bank, and the new politics of development, in: Uma Kothari
& Martin Minogue (eds), Development Theory and Practice: Critical Perspectives (Palgrave, 2002),
pp. 1667.
9. World Bank, World Development Report 1991, p. 9.
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Paul Cammack
10. World Bank, World Development Report 1994: Infrastructure for Development (Oxford University Press,
1994), p. iii.
11. World Bank, Priorities and Strategies for Education: A World Bank Review (World Bank, 1995).
12. World Bank, Poverty Reduction Strategy Sourcebook, ch. 19, Education, available at http://poverty.
worldbank.org/files/5798 chap19.pdf.
13. James D. Wolfensohn, People and Development, Annual Meetings Address, World Bank, 1 October
1996, in: IMF, Summary Proceedings of the Fifty-First Annual Meeting of the Board of Governors (IMF,
1996), p. 26.
14. Ibid.
15. Ibid., p. 28.
16. Ibid., p. 29.
17. Joseph Stiglitz, Globalisation and Its Discontents (Penguin, 2002), chs 4 and 5; and The Roaring Nineties:
Seeds of Destruction (Allen Lane, 2003), ch. 9.
18. Joseph Stiglitz, More Instruments and Broader Goals: Moving toward the Post Washington Consensus,
WIDER Annual Lecture, Helsinki, 7 January 1998, pp. 1, 5, 12, and 24.
19. Ibid., pp. 289.
20. Joseph Stiglitz, Towards a New Paradigm for Development Strategies, Policies and Processes, Prebisch
Lecture, UNCTAD, Geneva, 19 October 1998, pp. 34, 7, 18.
21. Ibid., p. 21.
22. Ibid., p. 22.
23. Ibid., pp. 248.
24. Stiglitz, Globalisation and its Discontents, p. 242: Successful countries also emphasized competition and
enterprise creation over privatisation and the restructuring of existing enterprises; and note 18, p. 267.
25. James D. Wolfensohn, The Other Crisis, Address to the Board of Governors, World Bank Group, 6
October 1998, pp. 5, 8, and 1112.
26. Ibid., pp. 1315.
27. Christopher Gilbert & David Vines, The World Bank: an overview of some major issues, in: Gilbert &
Vines, The World Bank, p. 10.
28. The Economic Journal, An effective knowledge bank: new priorities for the World Bank, Media
Briefing, November 1999, available at http://www.res.org.uk/society/mediabriefings/pdfs/1999/November/
vines.pdf.
29. Karla Hoff & Joseph Stiglitz, Modern economic theory and development, in: Gerald Meier & Joseph
Stiglitz (eds), Frontiers of Development Economics: The Future in Perspective (OUP/World Bank, 2001),
pp. 41920.
30. James D. Wolfensohn, A proposal for a comprehensive development framework, memo to the Board,
Management and Staff of the World Bank Group, 21 January 1999.
31. The Poverty Reduction Strategy Plan (PRSP) is a global policy document, ostensibly produced by a debtor
government in order to qualify for full HIPC status. This status then leads the World Bank and other
creditors to write off debt to a sustainable 150% of annual export revenue. The Country Development
Framework is the Banks detailed lending schedule, integrated into the PRSP and HIPC.
32. For a fuller analysis, see Paul Cammack, The mother of all governments: the World Banks matrix for
global governance, in: Steve Hughes & Rorden Wilkinson (eds), Global Governance: Critical Perspectives (Routledge, 2002), pp. 3653.
33. Wolfensohn, Proposal for a comprehensive development framework, p. 28.
34. Cammack, The mother of all governments, pp. 479. Stiglitz (Globalisation and Its Discontents, p. 234)
notes that [t]here is mounting unhappiness in developing countries with new programs involving
participatory poverty assessments, as those participating are told that important matters, such as the
macroeconomic framework, are off limits, but fails to acknowledge his stake in the logic in question.
35. World Bank, World Development Report 1997: The State in a Changing World (Oxford University Press,
1997), pp. 1 and 3.
36. Ibid., pp. 11129.
37. Shahid Yusuf & Joseph E. Stiglitz, Development issues: settled and open, in: Meier & Stiglitz, Frontiers
of Development Economics, p. 238.
38. I draw here on Cammack, Making poverty work, pp. 198201.
39. World Bank, World Development Report 2000/2001: Attacking Poverty (Oxford University Press, 2001),
pp. 389.
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