IMF today too weak to dictate to borrowers

by Vickramabahu Karunaratne

(July 11, Colombo, Sri Lanka Guardian) The government budget 2010 has created a disturbance that has travelled across political barriers. Some have condemned it as a copy of dictates given by the IMF and other global capitalist agencies. Many in the opposition treated it with ridicule while a few in the government leadership came out to make a serious defence. Those who defended dismissed the opposition claim that the budget proposals are nothing more than IMF dictates to the government. Most important argument of these government leaders, as I could see, is that the IMF today is too weak to dictate anything to borrowers; because the supremacy of American imperialism has been negated in the recent past. Particularly, the economic crisis has reduced powers of G8 countries and G20 has become the decisive international political forum. Is this correct?

In 1916 Lenin writing on imperialism, certainly emphasized the political conflict of various imperialist powers as the important reality, as opposed to economic agreements among them. At that stage, Lenin said it is too immature to think of super imperialism based on strong economic integration. He ridiculed the notion of super imperialism put forward by Karl Kautsky. Nevertheless, though Lenin emphasized the political break down and the imminence of war, he recognized the inherent movement for economic integration.

Ultra-imperialism

He said “ If the purely economic point of view is meant to be a “pure” abstraction, then all that can be said reduces itself to the following proposition: development is proceeding towards monopolies, hence, towards a single world monopoly, towards a single world trust. This is indisputable, but it is also as completely meaningless as is the statement that “development is proceeding” towards the manufacture of foodstuffs in laboratories. In this sense the “theory” of ultra-imperialism is no less absurd than a “theory of ultra-agriculture” would be.” Lenin proved correct when world war broke out leading to revolution in Russia. But capitalism continued. After war, revolution and counter revolution, in 1930 Trotsky emphasized further the integration of world economy in spite of claim of socialism in Russia. Trotsky said “Marxism takes its point of departure from world economy, not as a sum of national parts but as a mighty and independent reality which has been created by the international division of labour and the world market, and which in our epoch imperiously dominates the national markets. The productive forces of capitalist society have long ago outgrown the national boundaries. ..... It is false that world economy is simply a sum of national parts of one and the same type. It is false that the specific features are ‘merely supplementary to the general features,’ like warts on a face

Mass uprising

In reality, the national peculiarities represent an original combination of the basic features of the world process.” Here Trotsky went further to indicate that break down of political peace may not come as a contradiction among states but as a mass uprising. After the Second World War economic integration went further. This was facilitated by IMF/WB and the WTO. Collapse of so called socialism of China and Russia created the condition for global capitalism.

Thus the political reality today is that while states and military powers are in the back ground, the economic institutes of global capitalism make frontal attacks. These take the form of letters of advice, agreements and letters of warning.

Economic sanctions and deprivations are more powerful than gunboats, in the present scenario. The last economic crisis increased further the might of the IMF/WB and the WTO. Control of the crisis was undertaken with the advice of the multilateral institutes and they were responsible for avoiding a protectionist war. IMF magazine, F&D March issue said “The recent crisis in its severity could well have ignited a flurry of protectionist measures. There are several reasons it has not. Economists and policymakers highlighted very early how a resort to protectionism could deepen and prolong the crisis. In particular, the high-level attention by leaders of the Group of 20 advanced and emerging economies and extensive monitoring by the WTO have kept policymakers alert to these risks . Multilateral institutions such as the WTO and the IMF have provided transparency and ensured an awareness of the adverse effects of protectionist actions on others. Multilateral rules have established expectations of the types of policy responses considered responsible....”

Thus the so-called multilateral institutes that represent the interest of global capitalism, or the system of MNC s are in the centre of power and G20 is a political arm of this economic matrix. Only fools can expect the old fashion imperialism to be active every where to day with gunboat diplomacy. State power of US, UK, Russia or India has to respect the decisions of IMF/WB and WTO. Sure, if economic front fails direction might go back to the Pentagon and the military combines.

Then they will claim that they are only fighting terrorism in order to establish peace and democracy! Surely we know all about that. But as it is we are under the thumb of economic might. Those who do not see this are either fools or knaves or both.