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World Bank on Relation Between Politics and Development

The concept of politics associated with the World Bank’s view of development is the techno-managerial view of democracy resulted from the modifications to liberalism in 1970s. From this period, the World Bank emerged as a chief proponent of ‘development’ and ‘state’. The World Bank’s views in relation to development and politics can be traced from its two documents on world economic conditions. These are the World Development Report 1991, subtitled as ‘The Challenge of Development’ and World Development Report 1997, subtitled as ‘The State in a Changing World’.

World Development Report: 1991 argued that markets cannot operate in a vacuum, they require a legal and regulatory framework that only governments can provide. This view reflected the state as a ‘facilitator’ to the market needs. Keeping in view the South East Asian growth economies, and the collapse of East European socialist countries, the World Bank expressed its intention that these changes are necessitated to reconsider the role of the state in the Third World in relation to development. It was evident when it says that these world-wide changes are indicators for “ integration of countries with the global economy and reflected it as the consensus, gradually forming in favour of a market-friendly approach”. This market-friendly approach exists at two levels in relation to the association between state and market.

One view is that “the state and market each have a large and irreplaceable role”, which implies that state should not intervene in markets until the later fails to invest in infrastructure and provide essential services to the poor. These roles of market and state are inextricable. The state was expected to act as a trustee of a budding capitalism. The second view “stresses the complementary ways markets and governments can pull together”. This implies that state has to play subordinate role to the market, if markets fail, governments intervene cautiously and judiciously and in response, there is a further gain.

World Development Report 1997 expressed more concern over the role of state in a globalising world, particularly in relation to the Third World. The first task of the state in the Bank’s assessment is to achieve minimal fit between its ‘role’ and ‘capability’. The Bank opined that “the present welfare programmes in the Third World are a mismatch to the role of the state and exceeding its capability”. It further argued that the present crisis of the state, as reflected in the fiscal problems is the outcome of this mismatch. Instead of this, it opined that “distortions such as bloated and obstructive bureaucracy, markets subject to serious price distortions, and an economic policy regime undermined by corruption are also the results of this mismatch between role and capability of the state”.

In this context, the observations made by Adrian Leftwich, in relation to neo-liberal understating of development and politics, are much relevant. According to him, the new orthodoxy in the World Bank and IMF came to reflect the emerging neo-liberal ascendancy in economic theory and public policy from the late 1970s in developed countries. Leftwitch traced the political implications of the World Bank and neo-liberal interpretations of the crisis of the state and economy in the Third World countries.

In normative terms, neo-liberals argued that “state intervention in the economy or official discrimination on the grounds of race, gender and caste imposes constraints on the inalienable rights and liberties of individuals, interferes with freedom of choice, distorts the free play of markets and thus harms economic development”. In functional terms, neo-liberal politics asserts that “democratic politics and a slive, efficient and accountable bureaucracy are not simply desirable but also necessary for a thriving free market economy, and vice versa, for the two are inextricably implicated with each other”.

Leftwich criticised the apolitical nature of the neo-liberal view of development and concluded that “the idea, government should have a role in promoting development has always been profoundly political in origin and explicitly statist in focus”. Werner Bonefeld extended this view. He opined that the crisis in the West or Third World focused on the crisis of state authority explicitly or implicitly. He traced these implications from the two kinds of solutions offered by neo-liberals to the crisis. These are, as said earlier, “the economy was to be freed from political interference and that economic relations should be de-politicised to allow the market to self- regulate itself. The other solution focused more directly on the state and recommended that it should recover its ‘autonomy’ from society so as to regain its capacity to decision making”.

This view, as noted earlier, also poses a danger to the Keynsian welfare state model. For economic liberals, Keynesian state politicised economic relations and undermined market self-regulation and therewith relations of liberty. They saw welfare state model as one that can place a growing burden of demands and expectations on the state, leading to conditions of ‘ungovernability’. This advocacy clearly reflects the subordination of social relations to monetary exchange relations, and to the market.

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