The ‘let-them-eat-cake’ economy

Why did our leaders buy the dubious philosophy?

The IMF came recently to town, knives sharpened. For all his confident bluster, Mr Ishaq Dar had no new, practical solutions to our financial woes – just as previous finance ministers, working in lender’s interests, never did. But then, most economists are unfamiliar with the complex, mostly incomprehensible ways, in which the global banking system routinely parts countries from their money, and gets away with it. And if they do know but conceal, they can only be colluding. And so, the IMF walked away with their pound of flesh as always, leaving egg on Mr Dar’s face, while the newly-imposed taxes to pay off IMF doubled as a stab in the back and in the stomach – not Mr Dar’s though.

With similar recurring episodes over decades in scores of developing countries, one expected that by now our wiser political decision-makers, if any, would have investigated why we’re always stuck in this groove – although many countries have already successfully distanced themselves from the IMF.

Why is it that virtually every country that touched by the WB/IMF combine has been completely ruined, bringing about unprecedented hunger and impoverishment for the majority? Why is it that the WB/IMF are extraordinarily generous with military dictatorships and autocratic leaders, mostly the worst of human rights violators, but suddenly, along with the US government, hack down financial support or imposes crippling conditions when a democratically elected government comes to power? As has happened now!

There was no World Bank/IMF 70 years ago, yet countries developed and reached high levels of technology and prosperity for hundreds or thousands of years. Instead, another illusion falsely promoted is that foreign investment can solve problems in case foreign borrowing does not.

However, the most solid of buildings won’t last if the foundations are weak – and our economy has always been weak at the base, avoiding grassroots human development and primary physical infrastructure, deliberately kept that way to maintain the status quo of entrenched feudal, industrial and business interests. Bullet trains and highways that serve the already established are not going to solve the problems of the masses or overall economy – although they may divert the attention of the media for awhile.

Where did the World Bank and IMF go wrong? They didn’t. They have throughout acted according to plan, keeping their pockets bulging, and taking multiple dollars back for every dollar they hand out. Compound interest does the trick. How did they get our countries to obey whatever plan they floated? The objective of the Bank on behalf of former colonisers, particularly the USA, was to ensure the continued transfer of cheap raw materials from former colonies to the west. This was easily done by selling the ‘export-orientation’ idea to the South as a jumpstart for earnings necessary for ‘modernisation’. They of course did not let on that without the South’s endless flow of raw materials – and later, cheap textiles and consumer goods – the west’s ongoing Industrial Revolution would ground down to a halt.

An economy builds on the basic structure of millions of family or small enterprises, both agricultural and artisanal, that serve households, local communities and nearby villages and towns. The next level of processors comprising thousands of factories serving larger urban areas, draw their raw and semi-finished materials and simpler everyday goods from the first level of producers. The upper-most tier employing modern technologies and large-scale production serve the cities and beyond depending on products of choice and prices in various markets, and/or export markets.

It is an interlinked, mutually beneficial cycle that grows in incremental sophistication, or is supposed to. But it was not allowed to evolve naturally. The World Bank approach was hostile towards small-scale production, downgrading the fact that peasant agriculture and artisanal production was the mainstay of the entire domestic economy. It even falsely argued that using such traditional modes would mean loss in potential government revenue.

Why did our leaders buy their dubious philosophy? Because they were either ignorant or arrogant, putting down the lot of the masses to inborn inferiority, a mentality prevailing to this day and suiting international Shylocks well. The loans buy luxuries, foreign expertise like dams, large-scale chemical monoculture, and technologies profiting big industry, exports, the middle and upper classes, repaying borrowed moneys manifold. But small enterprise and smallholders are left to their own devices, not even being able to access credit from local banks, bringing our domestic economy to its present level of impoverishment.

If the government thinks it can eliminate hunger, create mass employment, boost production and achieve a worthwhile living standard without tackling economic, social and human rights, they are mistaken and will pay dearly. The country was created for our citizens, not the World Bank/IMF and its local supporters, and the handful of industrialised countries and global bankers constituting its main backers.