Our listeners know that Steve is a perpetual student -- his YouTube show is called The Rogue Scholar. He makes no apologies for past incomplete or erroneous thinking; he just soldiers on, deepening his understanding of the issues and course-correcting his analysis. He is a voracious reader and we can identify at least three books that led to this week’s episode: The Divide, by Jason Hickel, Blackshirts and Reds, by Michael Parenti, and Imperialism, the Highest Stage of Capitalism, by Vladimir Lenin.* They have all fed into his obsession with neocolonialism and the unholy trinity of the IMF, World Bank, and WTO. The problem predates the modern neoliberal era:
“Lenin talks extensively about taking out these loans. Now, mind you, the IMF wasn't around ... But this whole concept of global finance capital was already being talked about at the turn of the century. And what he showed was that these countries that took on these big loans, they would be fine for a year. And then by the next year, they were already losing money, deeply in debt, and by the third year, they had to take out another loan.”
Steve summoned our old friend Fadhel Kaboub to take us through the history of the unholy trinity, connect it to monetary sovereignty, and untangle the cat’s cradle of international power and oppression. Who better than Fadhel, whose superpower is his ability to explain complicated systems in words anyone can understand?
Fadhel begins with the currency wars in the period between the first and second World Wars. After WWII the allies gathered to establish a means of preventing currency wars in the future. You’ve heard of Bretton Woods? Well, did you know two competing plans were presented? Keynesian and... not Keynesian. Keynes’s plan was designed to promote full employment globally. The universe ended up with the non-Keynesian International Monetary Fund, or IMF, and the World Bank.
“The World Bank was initially designed to be the bank for the reconstruction of Europe, essentially. And eventually after Europe was rebuilt, it was reinvented as an economic development bank for the global south, because in 1945, when the World Bank was designed, there were no developing countries, there were just colonies. So by the mid 1960s, all of those colonies are now developing countries, and the world needed a World Bank for economic development ... it's designed for long-term infrastructure, major projects, as opposed to the IMF, which was designed as the emergency room for financial crises.”
The third leg of the unholy trinity is the World Trade Organization. Fadhel guides us through its origins and evolution. It turns out the entity committed to free trade limits itself to “free trade in everything but arms and farms.” Once the former colonies became independent, the former colonizers looked around and said, “Uh-oh, where are we getting our food?" With food now an issue of national security, powerful nations are subsidizing agricultural staples; farmers in the developing world cannot compete.
Throughout the episode, Fadhel illustrates how these three institutions are able to ham-string the global south. He talks about the three main structural traps – food, energy, and low-tech manufacturing. The further the developing world is pushed into desperation, the greater the benefits to the global elite.
Can the post-colonial nations cast off the chains of economic oppression and poverty? Fadhel provides answers, showing how the MMT analysis not only brings the problems into focus, but provides solutions. The final twenty minutes of this episode are perhaps the most important.
*When you purchase these books through RP Bookshelf on our website, we make a small percentage on the sale. We are an affiliate of bookshop.org, not that online megamonster whose name shall not be spoken.
Dr. Fadhel Kaboub is an Associate Professor of Economics at Denison University and President of the Global Institute for Sustainable Prosperity.
@FadhelKaboub on Twitter