Unholy Trinity: The IMF, World Bank and WTO

by Richard Peet

Our lives are all affected by three hugely powerful and well financed, but undemocratic, the International Monetary Fund, the World Bank and the World Trade Organization. These institutions share, with minor differences, a common ideology. They aggressively promote a very particular kind of 'corporate' capitalism, neoliberalism, giving free rein across the world to the interests of a small number of huge, undemocratic and largely unregulated 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. Instead of their original clearly defined, circumscribed and even benign responsibilities, they have now become the financial policemen of a global economy characterized by mounting extremes of rich and poor and recurrent instability.

The story of the mounting opposition to these 'Bretton Woods' institutions is told. And the book concludes with a trenchant review of the various ideas now being canvassed not simply for their radical reform, but for alternative principles that might guide a very different form of globalization.

Genres: Economics, Nonfiction, Politics, History, International Relations

272 pages, Paperback

First published January 1, 2003

Reviews

[Muhammad al-Khwarizmi · Rating 1 out of 5]

I pooped out around page 38 after, and this is verbatim, paragraphs like this:

With my present concern about policy, however, I am interested in a particularly formalized system of producing good economic sense. This is an area of cultural-political production inhabited by highly trained, experienced individuals – ‘experts’ – and well-established, abundantly financed institutions – government departments, think tanks, banking associations, and the like. The entire social process of high-level institutionalized thinking, and the cultural process of producing insightful (but limited) ideas, employs a certain kind of symbolic representation for which even the Gramscian term ‘common’sense is insufficient. While thinking may begin at the common-sense level, and return to it when policies are explained by ‘spokes­persons’ to the ‘general public,’ the intermediate stage of theorization and policy formation takes place at a different, theoretical order of symbolization – theories being experientially based, but highly rationalized, dense statements. On to a Marxian–Gramscian base we might therefore graft Michel Foucault’s notion of ‘discourse.’ Foucault (1972, 1973) was particularly interested in the careful, rationalized, organized statements made by experts – what he called ‘discourses.’ In The Archaeology of Knowledge (1972) Foucault saw the human sciences as autonomous, rule-governed systems of discourse. Within these discourses, Foucault claimed to discover a previously unnoticed type of linguistic function, the ‘serious speech act,’ or statements with validation procedures made within communities of experts (Dreyfus and Rabinow 1983: 45–7). At the other end of the scale serious speech acts exhibited regularities in what Foucault called ‘discursive formations.’ Discursive formations had internal systems of rules determining what was said, about which things. Discourses had systematic structures that could be analyzed archaeologically (identifying their main elements and the relations that formed statements into wholes) and genealogically (how discourses were formed by institutions of power). We take from this the notion that discourses are carefully rationalized, organized systems of statements, backed by recognized validation procedures, bound into formations by communities of experts. Discourses assume, as one, particularly significant propositional form, the shape of economic policies suggested by experts to governing bodies. In other words, hegemony in the policy arena is theoretically backed, political and economic good sense produced by experts in the symbolic form of discourses.

There is no way I am wading through pages of dense and, I think, probably superfluous critical theory / Continental philosophy blather to get to the heart of how and why the IMF, World Bank and WTO screwed the Third World. Now if you'll excuse me, I'm going to go looking for a more readable approach to this subject.

[Karlo Mikhail · Rating 4 out of 5]

Could have been perfect if it was not marred by a reformist perspective that peddles the illusion that the unholy trinity can be reformed to serve the people's needs. Nevertheless, it still offers a comprehensive overview of the workings of the IMF, WOrld Bank, and WTO and how the three serve the Washington-Wall Street alliance.

[Nick · Rating 4 out of 5]

Review of 2nd ed: Richard Peet is a longtime critical development scholar working within economic geography. In Unholy Trinity (2nd ed.) he works to deconstruct the discursive systems that are the IMF, the World Bank, and the WTO. This book probably requires training in neoclassical economics and some familiarity (I'm not sure I would say "comfort") with discourse analysis, and as a result of Peet's objectives (deconstruction of neoliberal discourse) has been rather tedious to get through. However, the book as a whole is useful for understanding and critiquing these dominant organizations. There are also some gems, like his critique of Jeffrey Sachs and the MDG initiative (pp. 167-170). While not a definitive critique (how could that be done in three pages, after all), he points out some important gaps in the rhetoric that deserve detailed examination.

Peet's work should be read as one part of a broader engagement with neoclassical economics and corporate exploitation, one reason being that discourse analysis leaves out many aspects of such exploitation. For example, Peet only devotes a very small amount of space to corporate influence on these organizations. See especially his reference on 212 and 222 to Palast's exposure of secret memos showing how corporate representatives were invited to the WTO document preparations in the late 1990s and early 2000s. Broader examination of corporate strategies and associated social movement resistance is absolutely necessary.

[Matt · Rating 3 out of 5]

This book covers the three international financial institutions: the IMF, the World Bank, and the WTO. It offers a deconstructive critique of the whole Bretton Woods system.
The first chapter sets the tone and introduces concepts such as Marx's "ideology" or Gramsci's "hegemonic discourse". It quickly goes over globalization, neoliberalism, the Washington Consensus, and the birth of the three financial institutions. Each subsequent chapter is dedicated to each one of those institutions.

From the introduction chapter about globalization:

What is this thing called 'globalization'? Definition of the term is still being contested. But there are several, similar uses, with fairly wide acceptance. The sociologist Roland Robertson understands globalization to be the 'compression of the world and the intensification of consciousness of the world as a whole.' Anthony Giddens, another sociologist, speaks of 'the intensification of world-wide social relations which link distinct localities in such a way that local happenings are shaped by events occurring many miles away.' And the geographer DAvid Harvey says that late-twentieth-century people 'have to learn to cope with an overwhelming sense of compression of our spatial and temporal worlds'. p. 1

Still from the introduction chapter, summarizing the main tenents of the neoliberal ideology:

In a landmark study that brings the work of Karl Polanyi up to date, Mark Blyth argues that what we, in this study, call neoliberalism was actually made up of four intersecting ideas: at base, a monetarist analysis of inflation developed by Friedman, which culminated in the position that markets were self-equilibriating in the long run and that intervention by the state was deleterious, if not perverse; the theory of rational expectations, which says that rational optimizing economic agents discount interventionist strategies pursued by governments, making state intervention 'at best a waste of time and money ... [and] more likely downright dangerous ... [indeed] governments cause recessions and depressions by their very actions'; supply-side economic theory, a resuscitation of Say's law (supply creates its own demand) in the extreme form, proposed by Arthur Laffer, that tax cuts, especially for the rich, were self-financing (through an increase in production and, consequently, tax revenues); and public choice theory, in which politicians are analogs of market actors, maximizing votes by providing goods to constituents and therefore making democratic governments prone to generating inflation. The four theories combined in concluding that inflation, due to intervention by the state in an otherwise naturally self-equilibriating economy, was an all-encompassing social crisis treatable not by Keynesian policies (for these were the cause) but by neoliberal, market-oriented means. p.12

The author advocates against the IMF in its current form:

Indonesia, recently the second largest debtor to the Fund, with nearly $8 billion outstanding, repaid its debt early [...]. Macedonia, Bulgaria, and the Philippines also tried to repay loans earlier than necessary. The Fund's $10 billion loan agreement with Turkey, often termed 'the IMF's last major customer,' expired in 2008. This left the Fund with less than $20 billion in outstanding credits, its lowest in twenty years, and down rfom $100 billion three years previously. Richard Webb and Devesh Kapur find: 'The de facto exit of its clientele, driven by the combination of high political costs associated with Fund borrowing and growing availability of alternatives, now poses an unprecedented challenge for the Fund, in particular on its income.' p. 124 (the outstanding credits went back up to $70 billion since the book went to press [see http://www.imf.org/external/np/fin/ta... and http://www.nationmaster.com/red/pie/e...])

According to the author, the IMF should go back to its original purpose and only serve as a fund where countries can deposit their surpluses to withdraw in times of crisis.

While introducing the WTO:

The 153 members of the WTO, as of 2008, account for almost 100 percent of world trade. Two thirds of the members of the WTO are 'developing nations', although the descriptions 'developed' and 'developing' are self-designations. Develpoing countries are granted longer time periods for implementing agreements and commitments. Legally the WTO votes differently than the IMF or World Bank -- one country, one vote. But such a vote has never been taken. Instead decisions are made by consensus. WTO agreements have to be subsequently ratified by members states. Thus, when the USA agreed to WTO membership, Congress tacked on a special stipulation stating that if three or more issues were decided against the USA in the DSB [Dispute Settlement Body] in one year, the USA must opt out of the organization. p.190

Critiquing the WTO's policies:

Yet global organizations, even when unelected, must seek mass approval. What aspect of the person (as worker, consumer, citizen, and so on) does the WTO side with? [...] the WTO says that 'we are all consumers' and theat 'we' benefit from free trade through higher personal incomes, lower prices, more choice, lower costs of living, and so on. This is a vision of societies as consumer, rather than worker, democracies, with consumption rather than labor as source of freedom -- a nice, populist-consumerist addition to the ovreall neoliberal discourse. The general point is this: the WTO does not practice organizational, bureaucratic neutrality. As an organization it has a total commitment to a single, well-defined and elaborated, carefully defended, ideological position: free trade 'fairly adjudicated' that benefits people as consumers. p.194

The book is interesting and a nice counter balance to the ideas spread by the mainstream media. Some of the points made in the book are strong and rest on solid ground but sometimes the author will allow himself a cheap jab at his enemy, sometimes even mocking a person or the language of a publication -- any sentence beginning by 'in other words,' could be safely removed from the book. Other than that the book was a good read.

[Suraj Alva · Rating 1 out of 5]

He is a godforsaken terrible writer, and I mean terrible. This book, the most recent edition, is unfocused, and more importantly disjointed,and heavily biased. It got to the point where, even when he was citing fact, I had tremendous difficulty in believing it. The reason: he wrote it. From his thesis in the first chapter, and his continuous persistence on proclaiming it throughout the book through examples with in your face commentary, on what it really means, without letting you interpret it yourself, one can simply say that only a fool who wants to be brainwashed will give this 'book' a good rating. Please do yourself a favor and don't waste your time reading this book.

[Jeremy · Rating 5 out of 5]

A great telling of the story of the 3 headed dragon. This book talks about the reason for the development of the IMF and World Bank, their initial roles within the global capitalist system, and how they eventually were morphed into a regime that undemocratically imposes forced liberalization and privatization into all economies it comes in contact to, starting with Britain in ‘76. It does have a quite naive thinking about reform within these systems, but one can look over that because it gives the reader an informed view on the history of these institutions and their reign over the third world by imposing structural adjustment agreements.

[raymie · Rating 4 out of 5]

A thorough investigation

If, like me, you have an interest in the world economic system or more accurately, a suspicion, then this is a very detailed review of how these organisations affect the world.
Although a little challenging in terms of it's difficulty to read (for those of us who didn't get that A in English) , it is still wonderfully informative.

[Josie Shagwert · Rating 5 out of 5]

I helped write this book!

[Parrot333 · Rating 2 out of 5]

+ The ambition and idea of the book make sense, and it partly delivers on the promise of showing the connections between the IMF, WTO and World Bank.
+ The history of the IMF is well explained.

- The writing style is often obscure / chaotic and would have needed professional editing prior to publication
- Some rather bold & interesting statements are simply referenced to other papers instead of being supplied with arguments
- sometimes difficult to separate ideology from facts

[Randy · Rating 4 out of 5]

The title could trick you into thinking this is a very emotional book, actually it's academic. But it indeed provides quite detailed history of IMF, WB and WTO. I didn't pay much attention to WHO before, so I learned a lot from the book. Given the new developments since the book was published, I don't know if WTO is still functional and how its future holds. US has had a very heavy hand in all three, is this going to continue?

[Robin · Rating 5 out of 5]

Excellent ... excellent read.
Unfortunately the "masters of the universe" will either be the last ones to read it or just not care. After all the hegemonic hold of neo liberal ideology is totalizing globally from the 'best' to the worst of universities.
The gaps in that garbage ideology is ably filled in by direct or indirect references to social Darwinism as and when needed.

[John R]

The guy who says he wants to poop has diahrea. This book is densely written but understandable to people of middling intellect. It does not support the IMF etc. It calls for world socialism. Be critical when you read these reviews. Some of these people,

[Eduardo Irujo · Rating 4 out of 5]

Un gran ensayo.

[Sreeja · Rating 3 out of 5]

doesnt say anything new which hasn't been pointed out by the likes of Stiglitz already. Though it makes a good enough introduction to the controversies and complaints surrounding the working for these global economic intsituitons , it reads like school textbook and sometimes like a never ending literature review.

[Bethany · Rating 4 out of 5]

I will eventually finish this book.