Created 2/21/1997
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The State, Who Is It?: Robert Wade's Bizarre View of the Relative Autonomy of the World Bank

I just read what strikes me as a--bizarre, there is no other word for it--article in the May/June 1996 New Left Review, by Robert Wade, called "Japan, the World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective." The article's main thesis is that the World Bank is (indirectly) under the thumb of the U.S. "state." Yet if the word "state" means anything, the article's narrative so completely deconstructs its thesis as to leave the reader very puzzled as to what Robert Wade could possibly mean.

The article purports to tell the story of the writing of the World Bank study, The East Asian Miracle, of how the attempt by the Japanese government to make the World Bank face up to the inadequacy of the laissez-faire-market-economy-is-always-optimal paradigm was contained and diffused, and of how even the--limited--support for the efficacy of East Asian "developmental states" in boosting growth provided by the staff-written study was then eviscerated by the East Asian branch of the World Bank bureaucracy.

The moral that New Left Review editor Robin Blackburn draws from Wade's article is that it is "...a classic instance of reality being tailored to fit dogma and vested interests." The moral that Wade draws from it is that people who claim that "the World Bank [is]... an 'autonomous variable' in the international system" are wrong: focusing only on morphological variables like "professionalism"... it misses other variables like "correspondence of organizational actions with the interests of the U.S. state". If the Bank is propelled by its budgetary, staffing, and incentive structures to act in line with those interests, the U.S. state need not intervene in ways that would provide evidence of "lack of autonomy"; yet the Bank's autonomy is clearly questionable...

And here is where things get very strange indeed.

As Wade recounts the story of the writing of The East Asian Miracle, the names of two economists pop up frequently. One is Lawrence Summers:

A second is Joseph Stiglitz:

They play an important part in Wade's narrative. They are powerful intellectual actors seeking a more open-minded view of the East Asian experience, and waging bureaucratic war against he opposition of the closed-minded East Asia vice-presidency within the Bank.

I read the conclusion to Wade's narrative where he says:

The story of The East Asian Miracle shows the determining influence of essentially American values and interests.... The influence comes partly through the Bank's dependence on world financial markets, and the self-reinforcing congruence between the values of the owners and managers of financial capital and those of the U.S. state. It also comes through the Bank's staffing and professional norms.... The Bank forms part of the external infrastructural power of the U.S. state...

And I shook my head. I looked back at the date on the cover of the issue: May/June 1996. And I thought: Hasn't Robert Wade figured out--hasn't anyone told Robert Wade--that today, as far as development policy is concerned, Joseph Stiglitz and Lawrence Summers are the "U.S. state"?

Joseph Stiglitz was then Chairman of the President's Council of Economic Advisers (he is now Vice President and Chief Economist at the World Bank). Lawrence Summers was then and is now Deputy Secretary of the U.S. Treasury. They are the only principal-level members of President Clinton's National Economic Council who have views on issues of economic development. Subject to the constraints placed on U.S. government actions by the broader issue of fiscal stability, and subject to past foreign aid commitments (chiefly to Israel and Egypt), they make U.S. development policy.

If the phrase "U.S. state" means anything--if the "U.S. state" has opinions, makes judgments, has preferences--then they can only be the opinions, judgments, and preferences of the high officials (elected, appointed, and career) who have the freedom of action and the power to "make policy": in the sense of using the executive branch's implementation powers to shift the money the U.S. government spends, the attention it pays, and the incentives it offers to developing countries, and using the executive branch's lobbying authority to direct the congressional budget process on issues (like development policy) that are far from the central political core concerns of the median member of congress. If the phrase "U.S. state" meant anything in the spring of 1996, when Wade's article was published, it meant Summers and Stiglitz.

Yet Wade's entire narrative sees Summers and Stiglitz being the good guys, fighting for truth, justice, and a better world--and fighting against dogmas, entrenched interests, and the power of the "U.S. state."

The only coherent interpretation I can place on all this is that when Wade says that the World Bank is not "autonomous," but forms "part of the external infrastructural power of the U.S. state" he does not know what he is talking about.

Thus when Wade writes of the destructive "power of the U.S. state" he really means something else: perhaps he means that he thinks the economics profession has drawn the wrong lessons from the cratering of state-led development everywhere but East Asia; perhaps that Anne Krueger's and Ian Little's arguments have been too persuasive for Wade's liking; perhaps that international financial markets and their assessments of the likely private profitability of investments in countries following different development strategies do not serve the global social interest.

And he would have written a better article if he understood what he did mean.


Created 2/21/1997
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Brad DeLong's Home Page

Associate Professor of Economics Brad DeLong, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
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