A Review of the Book “Unholy Trinity: IMF, World Bank and WTO” by Richard Peet

Richard Peet’s Unholy Trinity uses the historical approach to critically examine the three powerful “global governance institutions” which are the International Monetary Fund (IMF) which is specialized in currency and international stabilization; the World Bank (WB) which is focused on structural adjustment; and the World Trade Organization (WTO) which is advocating trade liberalization – all of which regulates the financial, economic and trade facets of member nations.

We should first consider that we are reading in the context of radical activists – those who are involved in NGOs and social movements. Peet is a radical activist and so are his fellow researchers. Socialists are foremost concerned in the distribution of national wealth. Therefore, any means of capitalistic behavior applied on social policies is met with great opposition.

In Chapter 1, Peet coursed through the ideological thoughts that led to focal ideological trail that the three institutions share – that is global neoliberalism. He identified that the main objective for the conception of the three global institutions is the global hegemony or international supremacy of the industrially dominant nations or the capitalist nations – that is, the United States of America and United Kingdom. To prove this notion, the book traces back to a detailed narration of the Bretton Woods Conference and the conspiracies behind it in Chapter 2. The two nations used theoretically-backed, politically and economically good discourses (p. 16) to encourage participating nations to sign the Bretton Woods Agreement – an agreement that formalized the US and UK dominance through the establishment of the IMF and WB.

Chapter 3 characterized the IMF as an imposing institution whose basic duties has been extended from merely regulating the currency exchange rates and providing loans to countries in times of crisis (p. 56) – to enforcing economic changes to nations by the conditionality that the IMF does not grant loans to countries who won’t apply their imposed policies (p. 61 & p. 73). They also depicted the IMF as meddlesome which is shown by the explanation of its “surveillance” function (p. 63). The chapter also explained that there has been no relative growth with respect to the member countries’ economies as a result of the economic policies imposed by the IMF (p. 102). Instead, they only created a long-term indebtedness that seemingly never got paid off. This chapter, however failed to quantitatively prove that the structural changes that the IMF imposed unto countries are solely to be blamed for the economic shortfalls of the nations’ economies. Instead, the author based his assessments in the number of rallies and demonstrations that occurred in member nations. Their assessment would have been more convincing if they clearly showed the correlation that points to the IMF’s policies as the cause of the economic failures. In Mohsin Khan’s study (p. 102), it “shows that IMF conditionality may have a positive effect on balances of payments and current accounts, its immediate targets, but tends to have negative effects on inflation and growth… On the basis of existing studies, one certainly cannot say whether the adoption of programs supported by the Fund led to improvement of inflation and growth performance.” From this statement, it must be noted that neither can we also say that the IMF led to the worsening of inflation and growth. Thus, Peet failed to prove in quantifiable terms that the IMF’s conditionalities are solely to be blamed. Of course, there are lots of factors for one’s economy’s growth; not only does it rely on IMF’s policies but also in the execution of the policies.

In Chapter 4, Peet tries to discredit the World Bank by (1) its inception was only for the purpose of financing post-war reconstruction in Europe (p. 111) (2) when it was established, there was little mentioning of the poor countries as beneficiaries of this institution (p. 111) (3) its function has evolved as a development agency focused on the reconstruction and development of members and on the promotion of private and international investments because it was an investment in peace (p. 115). They pointed out that the big turn in the Bank’s functions only came about because of the Cold War between US and USSR. If so, why then is it taken up negatively? The motive may be true but who doesn’t want peace? Another point in the criticism of the Bank is that the projects it undertakes collided head on with environmentalists and socialists. Thus emerged the failed attempt of the socialists to influence WB policies through the Structural Adjustment Participatory Review Initiative (SAPRI) where the NGO networks suggested on placing the Bank’s funds in social needs rather than in infrastructures that facilitate private investments or economic activity. Though it is true that a country’s resources may be depleted in the event that they pursue economic reforms and agenda, we should still consider the long-term benefits that we can acquire from infrastructure financing. Financing social needs is just a short-term agenda; what is more important is how a country can create jobs so people can work to satisfy their own needs in the future. The problem with the socialists is that their emotions are often aroused in the present clamor of the poor. What they fail to see is the long-term sustainability of development. This may be the reason why the SAPRI failed. Again, in this context, the socialists were defeated.

The WTO, in chapter 5, is depicted as an institution that thrives with economic biases. Instead of providing a neutral forum for countries to solve international disputes, they insist on deciding issues based on trade liberalization (pp. 160-161). The “sound economic policy” therefore is attributed to liberalized trade. The issues against WTO lies in the formation of the trade agreements and resolution of trade disputes; which, according to Wachtel, has no written bylaws, makes decisions by consensus, has never taken a vote on any issue and holds no public hearings (p. 158). How can one institution show that there is fairness in its adjudications when there is no transparency? In addition to the democratic absence in the institution, the WTO was also opposed by labor organizations. We should understand that when a nation engages in a globalized market, the labor market suffers first because it opens itself up to labor cost competition. Therefore, it is understandable that socialist movements are in great opposition to the WTO agreements since they are basically fair labor advocates. The chapter ended with  the author contending that the WTO has to be abolished because trade should be democratic and that social movements should be present in forging the agreements. Again, this is another desperate statement by a socialist battling to enter into a system created by capitalists.

In his conclusion, the author still recognized the three institutions as possible agents of global economic balance but they insist that the poor and advocates of the development of the poor which are the NGO’s and socialist organizations, should be involved in policy-making (p. 223). They insist on the three institutions to listen to the economic propositions of the NGOs. This book clearly demonstrates the grapple between the capitalists and the socialists contending which of them owns the best economic policies to achieve global economic balance. As of today, the elite minority is holding the reigns of global power and they seem unwilling to pass them over to the socialists. The socialists on the other hand, do all means to create distrust to the current system.

If the author of this book aims on creating suspicion in the motives of the three institutions, so the public and governments consider a review of the economic impositions of institutions, it has succeeded in its task. The book provided facts and narratives on the economic and political factors that brought the emergence of the three institutions. They have provided tons of empirical evidence to contend their findings. However, the book lacked quantitative evidence such as macroeconomic figures that might even prove their contentions.

Nevertheless, the book proved that the concepts in which the very existence of the three institutions are founded on are contradicting. The liberalistic belief that in achieving economic growth, there should be less state intervention proves ironic since the three institutions seem to be the global governments that keeps on intervening in member countries’ economic and development plans. The IMF, WB and WTO all seem to work in the context that they believe they have the supreme knowledge on how to develop national economies. They have used the de facto influence that they have earned by providing monetary aid to desperate economies as a means to manipulate national economies and enforce neo-liberal policies.

Indeed, the IMF, WB and WTO leads the way of global hegemony of the industrially advanced countries. The conspirators of the Bretton Woods agreement, which are US and UK know that their competitive advantage lies on their industrial efficiency but the resources are found in the Third World countries. Realizing that the government protectionist measures of Third World countries intervene with their economic agenda, they have used the IMF, WB and WTO to remove state intervention and coining it as “free trade”. They used the three global institutions to integrate the different resource-generating nations in their “globalized market”. They made other nations believe that the only way to economic development is through trade liberalization. But some nations have not yet improved their production efficiencies resulting to internationally incompetent products which eventually lead to giving a competitive advantage to imported goods and thus, damaging local infant industries. If local industries are booted out from the market, more locals will be unemployed. In the end, the poor countries will become poorer. Thus, widening the gap between First World and Third World countries.

It is true that the three institutions are imposing and undemocratic in nature. But what option do we have? They are the ones who created the institution so expectedly, they will keep the reigns for so long as they benefit from it.

Therefore, nations should first and foremost assess their industrial competency if not, their competitive advantages before entering into agreements with other nations. Although trade agreements really provide mutual benefits to both parties, somehow, along the way, there will still be an inequality. It now depends on the participating countries on which aspects of inequality are they willing to subject their countries into so as to acquire the foreseeable benefits of the trade agreements.

Surely, the three institutions will be there to stay as long as the dominating forces are present. The institutions were created by capitalists so there will be no way for the socialists to penetrate the institution. Our advice, therefore is for the socialists to create their own global developmental institutions that will equal the impact of the IMF, WB and WTO; in which they can freely institute their reforms.

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