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The World Bank and the politics of productivity: the debate on economic growth, poverty, and living standards in the 1950s*

Published online by Cambridge University Press:  23 February 2011

Michele Alacevich
Michele Alacevich
Affiliation:
Harvard University, The Minda de Gunzburg Center for European Studies, 27 Kirkland Street at Cabot Way, Cambridge, MA 02138, USA E-mail: [email protected]
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Abstract

According to most reconstructions of development debates, poverty and social issues were not part of the development agenda until the late 1960s. In contrast, this article shows that development practitioners and institutions were already addressing poverty and social issues in the late 1940s and early 1950s. However, economic multilateral organizations soon marginalized those inclusive views and focused exclusively on economic growth. This article discusses those early policy options and why they were marginalized. It argues that this happened for ideological reasons, specifically because of the ideological anti-New Deal post-war backlash and the adhesion of Western countries and multilateral organizations to what Charles Maier defined as the politics of productivity. This ideological backlash explains the rise and early demise of Keynesian ideas in international organizations, and, conversely, their stronger influence in developing countries, where the direct influence of the US and Bretton Woods organizations was somewhat mitigated.

Keywords

anti-poverty policiesdeveloping countriespolitics of productivitypost-war KeynesianismWorld Bank
Type
Articles
Information
Journal of Global History , Volume 6 , Issue 1 , March 2011 , pp. 53 - 74
Copyright
Copyright © Cambridge University Press 2011

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References

1 Statement of Robert B. Zoellick, Washington, 25 June 2007, http://go.worldbank.org/X8YC80MRQ0 (consulted 22 December 2010).

2 Alden W. Clausen, statement at the 1982 World Bank/IMF Annual Meetings, http://go.worldbank.org/DG1E29A900 (consulted 22 December 2010).

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6 John McCloy to the Board of the Executive Directors, 5 November 1947, quoted in Kapur, Lewis, and Webb, World Bank, p. 83.

7 Robert W. Oliver, ‘Early plans for a World Bank’, Princeton Studies in International Finance, 29, 1971, pp. 38–9.

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11 IBRD, Fourth annual report to the board of governors, 1948–1949, Washington, DC: IBRD, 1949, p. 10.

12 ‘The former vice-president of the International Bank for Reconstruction and Development’: Duke University, Durham, NC, Rare Book, Manuscript, and Special Collections Library, Lauchlin B. Currie Papers (henceforth LBCP), ‘He venido a estudiar los problemas del pais: Currie’, El Tiempo, Bogotá, 28 August 1950.

13 IBRD, Turkey, p. 195.

14 Ibid., pp. 195–205.

15 IBRD, Iraq, p. 77.

16 01 Columbia University project, WB IBRD/IDA 44 Oral Histories, interview with Sir William Iliff, 12 August 1961, pp. 23–5.

17 IBRD, Colombia, pp. 262–5.

18 Ibid., pp. 551–6, quotation from p. 555.

19 IBRD, Nigeria, p. 97.

20 IBRD, Nicaragua, pp. 4 and 8.

21 IBRD, Nigeria, p. 69.

22 Ibid., p. 76.

23 IBRD, Nicaragua, p. 22.

24 IBRD, Syria, pp. 163–4.

25 Joseph J. Spengler, ‘IBRD mission economic growth theory’, American Economic Review, 44, 2 (‘Papers and proceedings of the sixty-sixth annual meeting of the American Economic Association’), 1954, p. 589.

26 This list is based on ibid., p. 596.

27 IBRD, Syria, pp. 27–8.

28 Paul Rosenstein-Rodan, ‘Notes on the theory of the big push’, MIT, Center for International Studies, Economic Development Program, Italy Project, C/57–25, March 1957, p. 6.

29 Hirschman, Albert O., The strategy of economic development, New Haven, CT: Yale University Press, 1958, p. 83Google Scholar.

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31 IBRD, Nicaragua, p. 8.

32 Kapur, Lewis, and Webb, World Bank, Table 3.1, p. 86, and p. 109. The group of countries considered by Kapur, Lewis, and Webb comprises: Brazil, Burma (Myanmar), Ceylon (Sri Lanka), Chile, Colombia, Costa Rica, Ecuador, El Salvador, Ethiopia, Guatemala, Haiti, Honduras, India, Iran, Iraq, Lebanon, Malaya (Malaysia), Mexico, Nicaragua, Pakistan, Panama, Paraguay, Peru, Philippines, Sudan (after independence in 1956), Thailand, Turkey, United Arab Republic (Egypt), Uruguay, and Yugoslavia.

33 Mason and Asher, The World Bank since Bretton Woods, p. 53.

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36 Quoted in Benjamin, Bret, Invested interests: capital, culture, and the World Bank, Minneapolis, MN: University of Minnesota Press, 2007, p. 27Google Scholar.

37 On the Bank’s presidents, see a series of biographical essays by Jochen Kraske, William H. Becker, William Diamond, and Louis Galambos in Jochen Kraske et al., Bankers with a mission, New York: Oxford University Press, 1996. On McCloy, see the biography by Kai Bird, The chairman: John J. McCloy, the making of the American establishment, New York: Simon & Schuster, 1992. Garner published a pretty indigestible memoir: Robert L. Garner, This is the way it was with Robert L. Garner, Chevy Chase, MD: Chevy Chase Printing, 1972.

38 01 Columbia University project, WB IBRD/IDA 44 Oral Histories, interview with Robert L. Garner, 19 July 1961, p. 8.

39 Charles S. Maier, ‘The politics of productivity: foundations of American international economic policy after World War II’, International Organization, 31, 4 (‘Between power and plenty: foreign economic policies of advanced industrial states’), 1977, p. 608.

40 Ibid., p. 611.

41 Ibid.

42 Ibid., p. 613.

43 Ibid.; see also Barber, William J., Designs within disorder: Franklin D. Roosevelt, the economists, and the shaping of American economic policy, 1933–1945, Cambridge: Cambridge University Press, 1996CrossRefGoogle Scholar.

44 IBRD, Articles of agreement, http://siteresources.worldbank.org/EXTABOUTUS/Resources/ibrd-articlesofagreement.pdf (consulted 22 December 2010), Article I, (i) and (ii).

45 Ibid., Article III, section 4 (vii).

46 Ibid., Article III, section 5 (b).

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51 Ibid., p. 347. De Grazia offers also a very useful ‘Bibliographic essay’ on the literature on the advent of mass consumption and its relations with other categories such as empire, hegemony, Americanization and cultural imperialism: ibid., pp. 547–56.

52 Rostow, Walt W., The stages of economic growth: a non-communist manifesto, Cambridge: Cambridge University Press, 1960 (3rd edition 1990), p. 11Google Scholar.

53 W. Arthur Lewis, ‘Economic development with unlimited supplies of labour’, Manchester School, May 1954, reprinted in A. N. Agarwala and S. P. Singh, The economics of underdevelopment, New York: Oxford University Press, 1963, p. 416.

54 Burke J. Knapp, 1960, quoted in Kapur, Lewis, and Webb, World Bank, p. 167.

55 LBCP, Robert L. Garner to Emilio Toro, 21 April 21 1953.

56 World Bank Group Archives, Fonds 2, Central Files, Housing and Urban Development vol. 1, Svend Andersen, Economic Department, General Studies, 26 August 1949, ‘An international institute for building loans’.

57 IBRD, Colombia, p. 3.

58 Ibid., p. 356.

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63 Lauchlin Currie, ‘Discussion’, American Economic Review, 62, 1–2, 1972, p. 141.

64 Walter S. Salant, ‘The spread of Keynesian doctrines and practices in the United States’, in Peter A. Hall, ed., The political power of economic ideas: Keynesianism across nations, Princeton, NJ: Princeton University Press, 1989, p. 30.

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67 Garner, This is the way, pp. 163–4.

68 Sweezy, ‘The Keynesians’, p. 116; Franklin D. Roosevelt Presidential Library, Hyde Park, New York, Lauchlin B. Currie to Franklin D. Roosevelt, 18 March 1940, ‘Memorandum on full employment’, quoted in Barber, Designs, p. 130.

69 World Bank Group Archives, Fonds 1, Country Operational Files, Currie Mission – Colombia, General Survey Mission (CURRIE) 1949–1952, Lauchlin Currie to Professor Alvin Hansen, 3 June 1949, and Hansen to Currie, 4 June 1949.

70 Lauchlin Currie, ‘Some prerequisites for success of the Point Four Program’, address before the American Academy of Political and Social Sciences, Bellevue Stratford Hotel, Philadelphia, PA, 15 April 1950, republished in Annals of the American Academy of Political and Social Sciences, 270, 1950, pp. 102–9.

71 ‘In the fifth floor of the Banco de la República sits a soft spoken, prematurely grey-haired man, who is seeking quietly yet persistently to bring about a New Deal in Colombia.’ LBCP, draft of article on Currie for El Sabado, May 1951 (author’s name illegible).

72 As reported in Barend A. de Vries, ‘The World Bank as an international player in economic analysis’, in A. W. Coats, ed., The post-1945 internationalization of economics, Durham, NC: Duke University Press, 1996, p. 229.

73 Kapur, Lewis, and Webb, World Bank, p. 112.

74 Mutual Security Act of 1951, Hearings before the Senate Committee on Foreign Relations and Committee on Armed Services, 82nd Congress, 1st session, Washington, DC: Government Printing Office, 1951, p. 605, reported in David A. Baldwin, Foreign aid and American foreign policy: a documentary analysis, New York: Frederick A. Praeger, 1966, p. 70.

75 The difference in shares is due to the possible different allocation of a part of the aid labelled ‘general and miscellaneous’. Military aid is excluded. The data are from Charles Wolf Jr, Foreign aid: theory and practice in Southern Asia, Princeton, NJ: Princeton University Press, 1960, as reported in Kapur, Lewis, and Webb, World Bank, p. 112.

76 US foreign aid: its purposes, scope, administration, and related information, prepared by Legislative Reference Service, Library of Congress, Washington, DC: US Government Printing Office, 1959, reprinted in 1968 by Greenwood Press, p. 84.

77 Ibid., p. 86.

78 Ibid., p. 85.

79 Walter M. Kotschnig, ‘Social action to improve levels of living’, in Robert E. Asher, Walter M. Kotschnig, William Adams Brown Jr, James Frederick Green, Emil J. Sady, and Associates, The United Nations and promotion of the general welfare, Washington, DC: The Brookings Institution, 1957, p. 458.