Abstract
More than any of his predecessors—or successors—Robert McNamara made the Bank into what it is today. In physical terms, he drove it to expand at a pace unprecedented for a large institution, at a rate that was clearly unsustainable for more than a few years: during his thirteen-year tenure from 1968 to 1981, lending increased from $953 million to $12.4 billion (sixfold, in real terms), and the Bank staff from 1,574 to 5,201.3 Even more important, he brought a sense of moral mission to the Bank that has not been seen before or since. His fervor and single-mindedness, reflected in the Bank’s astounding physical growth, was for the sake of development—”one of the biggest and the most important tasks confronting mankind in this century,” as he declared in 1969.4 Above all, he proclaimed, it was for the sake of the poorest of the poor.
The parable of the talents is a parable about power—about financial power—and it illuminates the great truth that all power is given us to be used, not to be wrapped in a napkin against risk.1
—Robert McNamara, September 30, 1968
A chain of marshes lines the hills, Befouling all the land retrievement; To drain this stagnant pool of ills Would be the crowning, last achievement. I’d open room to live for millions Not safely, but in free resilience. Lush fallow then to man and cattle yields Swift crops and comforts from the maiden fields.2
—Goethe, Faust
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Notes
- 1.
McNamara, in the words of his biographer Deborah Shapley, “stood for quantification and technology when American romance with both was at its height” (Shapley, Promise and Power [see endnote 7], x). McNamara was converted to this faith in the modern mission to control economic and social development through quantitative analysis and method at Harvard Business School in the 1930s; it was an approach developed in the first decades of the twentieth century by Alfred P. Sloan, Jr., at General Motors and by the Dupont Company. Called “financial control, management control, statistical control, or control accounting” (Shapley, 21) at different times for different applications, it dominated the management of American industry for decades to come, as well as the organization of other large-scale efforts, such as procurement and logistics for the U.S. government in World War II. (See Shapley, 20-57.)
- 2.
This was the author’s experience as a conservation consultant to Belize in 1982, where government officials complained about their inability to obtain a recently completed World Ban country economic memorandum for the newly independent nation. They would have found it interesting: Belize is the last relatively forested country in Central America, a region plagued by deforestation caused in large part by cattle ranching. Nevertheless, the Bank’s country economic memorandum recommended investments for expanding cattle raising.
- 3.
The literature on the McNamara years is not as extensive as one might expect. Several books reach the same conclusion, that the Bank by its very nature (top-down, technocratic, closed) and programs (lending to governments controlled by corrupt elites) not only did not improve the lot of the poor in the 1970s, but actually contributed to increasing inequality. See Aart Van de Laar, The World Bank and the Poor (The Hague: Martinus Nijhoff, 1980), written by a Dutch economist and former Bank staff member; Cheryl Payer, The World Bank: A Critical Analysis (New York: Monthly Review Press, 1982), a Marxian critique, but well-researched, with conclusions similar to those of other critical researchers; Tatjana Chahoud, Entwicklungsstrategie der Weltbank: Ein Beitrajj zur Ueberwindung von Unterentwicklung und Armut? (Saarbruecken and Fort Lauderdale: Verlag breitenback, 1982), a 500-page German study which concludes that the World Bank is not helping the poor; Rainer Tetzlaff, Die Weltbank, Machtinstrument der USA oder Hilfe fuer die Entwicklungslaender? (Muenchen: Weltforum Verlag, 1980), another lengthy German study with highly critical conclusions; Zaki Laidi, Enquête sur la Banque Mondiale (Paris: Fayard, 1989), a recent French study that concludes that McNamara lending did not reach the poor.
Robert L. Ayres’s, Banking on the Poor (Cambridge, Massachusetts and London, England: mit Press, 1984) contains a number of damning criticisms, but the author concludes that difficulties in reaching the poor should not be blamed on McNamara’s policies or on the Bank, but on the international and national constraints the Bank has to operate under. Though the constraints are real, they should not and cannot serve as a blanket alibi for the Bank (see Chapter 7).
- 4.
Chahoud examines as a case study the Bank’s Brazil Rio Grande do Norte Rural Development Project, approved in 1975. Its principal goal was to double income from cotton cultivation in Brazil’s impoverished northeast; it included a public health component, as well as agricultural credit and extension services. According to Chahoud, most of the benefits of the project were from its very inception targeted toward richer farmers and large landowners, and largely excluded the majority of the poor, sharecroppers and the landless. (Chahoud, Entwicklungsstrategie der Weltbank [see endnote 23], 298–320.)
- 5.
Moore apportions the blame equally between Indian officials and the World Bank, observing that the Bank is “as much victim as aggressor. Its ability to support institutional change has been severely circumscribed by its own internal imperatives to be seen to be running a successful and fast-expanding programme and by its dependence on Indian allies who have material interests of their own” (Moore, “Institutional Development” [see endnote 32], 31)
- 6.
In the words of a classic study on the Green Revolution by Keith Griffin, “The changes which are at present occurring tend to increase relative inequality” (Keith Griffin, The Political Economy of Agrarian Change: An Essay on the Green Revolution [Cambridge, Massachusetts: Harvard University Press, 1974], 73).
- 7.
Cynthia Hewitt de Alcantara’s Modernizing Mexican Agriculture 1940–1970: Socialeconomic Implications of Technological Change (New York: United Nations Research Institute for Social Development, 1976) is a classic study of this process. She concluded that the Green Revolution in Mexico (which received considerable financial and policy support from the World Bank) worsened the absolute living standards of most of Mexico’s poor rural population, reduced domestic production of food crops, and raised the price of food, resulting in increased hunger and greater concentration of poverty in the countryside. Most benefits were deflected to the cities. Traditional Indian communities such as the Yaqui in northwest Mexico were “undeveloped” by the whole process: local traditions of economic and social democracy in the formerly self-governing communities were destroyed as they were reduced to greater dependency on the outside and suffered increasing poverty and marginalization. Ironically, as their nonmonetized material and cultural wealth was destroyed, their per capita income increased somewhat due to their fuller integration into a money economy.
Her conclusion is an epitaph not only on the World Bank, but on distorted goals of the global economy: “There would thus seem to be no necessary correlation in the Mexican countryside between monetary income and basic wellbeing, as there has unfortunately been no necessary correlation between modernization and development” (Hewitt de Alcantara, op. cit., 319–20).
- 8.
The distortion, indeed suppression of information generated by Bank consultants is a recurring theme in projects in the 1970s and 1980s. Claude Reboul, an agricultural specialist affiliated with the French National Institute for Agronomical Research (inra), was hired by the World Bank in 1974 to prepare a study on agriculture in the West African country of Senegal. Reboul’s conclusions confirmed those of other researchers: the Bank’s poverty strategy was making the already better-off farmers richer and marginalizing still further the poor. Reboul xeroxed fifty copies of his report to distribute to his colleagues at inra. World Bank officials not only rejected his analysis, but wrote Reboul that “we oppose any dissemination of this report and demand that all existing copies be destroyed” (René Dumont, Pour l’Afrique, j’accuse, Annexe IX, “L’lnquisition Ressuscitee: La Banque Mondiale Ordonne La Destruction d’un Rapport de Claude Reboul” [Paris: Plon, 1986], 367–72). See also the discussion concerning David Price in my Chapter 5, and the section on the Morse Commission report in Chapter 9
- 9.
- 10.
Once again, it is illuminating to read the post-project audit report, prepared in 1982, knowing that the Bank had just approved hundreds of millions in loans for Polonoroeste: “The audit mission noted, while driving on the BR·316 and project area roads, the nearly continuous area of secondary shrubs and bushes; only a few blackened remnants of tall tropical trees remained. In the knowledge that this area was only recently covered by tropical forests, the visual impression forcefully underscores the environmental impact of this and similar projects” (IBRD, OED, PPAR, Brazil Alto Turi Land Settlement [see endnote 59], 18).
- 11.
The entire report reviewed seventy· two projects, of which twenty-one were in the agriculture sector (of which in turn only nine were explicitly targeted to help poor farmers).
- 12.
It is worth noting that among the agricultural successes cited by the 1989 OED report were projects heavily criticized by 0lGOS and community groups in developing countries for their adverse environmental and social consequences. The Thailand Second Tree Crop Project, for example, overfulfilled most of its quantitative targets, but was part of the Bank-financed rubber tree replanting program condemned at the Bangkok People’s forum in 1991 (see Chapter 1). (Evaluation Results 1989 [see endnote 64], 3-2.) The same report lauded the success of Bank social forestry projects in India that in fact were the subject of widespread protests by poor tanners and tribal people throughout the 1980s. (Op. cit., 2-8.)
- 13.
For example, the Rio Grande do Norte Rural Development Project (1975), the Ceara Rural Development Project (1977), the Paraiba Rural Development Project (1978), the Bahia Rural Development Project (1978), the Seripe Rural Development Project (1979), the Pernambuco Rural Development Project (1979), the Second Ceara Rural Development Project ( 1980).
- 14.
There are striking similarities here with the criticisms of Bank-financed irrigated agriculture in Thailand voiced by Thai ngos and community groups at the Bank/Fund 1991 annual meeting in Bangkok (see Chapter 1).
- 15.
The standard Bank riposte to these charges was that first (recalling the dispute with the United Nations in the mid·1960s over lending to South Africa and Portugal), its charter for· bade it from taking into account the human rights violations of potential borrowers, since this was a “political” rather than an economic concern. Second, the Bank claimed that its loans, particularly in the McNamara years, were aimed at poverty alleviation, and that arguably the poor under a repressive regime needed such assistance even more urgently.
- 16.
Doing away with Allende was an obsession of the Nixon administration, and the United States and NATO were anxious to lure the independent-minded Ceaucescu regime farther away from the Warsaw Pact. Securing Indonesia—the fifth most populous nation on earth—in the Western camp became a greater priority in the 1970s as the United States withdrew from Vietnam. But the Bank’s continued financial courting of the developing world’s major human rights violators during the Carter years seemed to contradict at least part of the Carter foreign policy agenda.
- 17.
While writing the last two acts of Faust, Goethe confided to his friend and biographer Eckermann his visionary enthusiasm about new proposals for gigantic development works; his source for many of these ideas was the Saint-Simonian journal Le Globe. ‘One of the standard features of Le Globe, as of all Saint-Simonian writings, was a constant stream of proposals for long-range development projects on an enormous scale’ (Berman, All That Is Solid Melts into Air [see endnote 88], 72). See the discussion of the Saint-Simonians in Chapter 8.
- 18.
“Critics have often neglected the absolute ironic contrast between Faust’s vision and the agents of perverse and inhuman power which now [in the end] control his city. Mephistopheles has summoned forth the Lemures, who sing grotesque ditties as they dig Faust’s grave. Nor is there any reason to doubt that they shall inherit the entire realm which Faust leaves behind.… The worldly city built by Mephistopheles and his henchmen at the instigation of Faust, which is surely meant to represent the city in which mankind shall have to live in future time—and all readers of Faust must also locate themselves there—is abandoned to the control of demonic and inhuman powers” (Cyrus Hamlin, “Interpretive Notes,” in Faust, Arndt translation [see endnote 2], 343).
- 19.
The wager is that Mephistopheles—an embodiment of the devil—will be Faust’s servant on earth, but will take Faust’s soul upon his death. Faust agrees to perish if he ever finds a moment of life so beautiful or fulfilling that he wishes it not to pass.
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Rich, B. (2013). The Faustian Paradox of Robert McNamara. In: Mortgaging the Earth. Island Press, Washington, DC. https://doi.org/10.5822/978-1-61091-515-1_4
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