The Origins of the IMF and World Bank

The World Bank and International Monetary Fund (IMF) were created at the end of World War II by the U.S. and British governments. During the war the business classes of Europe were either supporting the Nazis, getting their banks and factories bombed into oblivion or they fled Europe with all the money they could carry. On the other hand, socialists, communists and anarchists had high credibility because they were the leaders of the Resistance to Nazi occupation. In order to prevent leftists from coming to power in western Europe, it was crucial to U.S. and British elites to get the business classes back into power. This required international institutions that would promote capitalist policies and strengthen the power of the corporate sector.

The World Bank focused on making loans to governments in order to rebuild railroads, highways, bridges, ports and other "infrastructure", i.e., the parts of the economy that are not profitable for private companies to build so they are left to the public sector (the taxpayers). After an initial focus on western Europe the World Bank shifted its lending toward the third world.

The IMF was established to smooth world commerce by reducing foreign exchange restrictions and using its reserve of funds to lend to countries experiencing temporary balance of payments problems so they could continue trading without interruption. This pump-priming of the world market would benefit all trading nations, especially the biggest traders, the U.S. and England.

The unwritten goal of the IMF and World Bank was to integrate the elites of all countries into the capitalist world system of rewards and punishments. The billions of dollars controlled by the IMF and World Bank have helped to create greater allegiance of national elites to the elites of other countries than they have to their own national majorities. When the World Bank and IMF lend money to debtor countries the money comes with strings attached. The policy prescriptions are usually referred to as "structural adjustment" and they require that debtor governments open their economies up to penetration by foreign corporations, allowing them access to the workers and natural resources of the country at bargain basement prices.. Other policies imposed under structural adjustment include: allowing foreign corporations to repatriate profits, balancing the government budget (often by cutting social spending), selling off publicly owned assets ("privatization") and devaluing the currency.

Many grassroots groups in the Third World talk about the recolonization of their countries as they steadily lose control over their own land, factories and services.

From the introduction to the book 50 Years Is Enough, edited by Kevin Danaher.