Table Of ContentCONTENTS
LISTOFCONTRIBUTORS vii
PARTI:THEDISCIPLINARYROLEOFCAPITALUNDER
NEOLIBERALISM
RESPONDINGTONEOLIBERALISMINCRISIS:
DISCIPLINEANDEMPOWERMENTINTHEWORLD
BANK’SNEWDEVELOPMENTAGENDA
MarcusTaylor 3
AMERICANIMPERIALISMANDNEWFORMSOF
DISCIPLININGTHE“NON-INTEGRATINGGAP”
SusanneSoederberg 31
THELOGICOFNEOLIBERALFINANCEANDGLOBAL
FINANCIALFRAGILITY:TOWARDSANOTHERGREAT
DEPRESSION?
AnastasiaNesvetailova 61
DISCIPLININGLABOUR,PRODUCINGPOVERTY:
NEOLIBERALSTRUCTURALREFORMSANDTHE
POLITICALCONFLICTINARGENTINA
VivianaPatroni 91
GLOBALHIGHCULTUREINTHEERAOF
NEO-LIBERALISM:THECASEOFDOCUMENTA11
KarynBall 121
v
vi
PARTII:ACCUMULATIONANDFINANCE
MARXANDTHETHEORYOFTHEMONETARYCIRCUIT
AndrewB.Trigg 143
HILFERDING’STHEORYOFBANKINGINTHELIGHTOF
STEUARTANDSMITH
CostasLapavitsas 161
ECONOMICCRISISANDSOCIALISTREVOLUTION:
HENRYKGROSSMAN’SLAWOFACCUMULATION,ITS
FIRSTCRITICSANDHISRESPONSES
RickKuhn 181
SPURIOUSVALUE-PRICECORRELATIONS:SOME
ADDITIONALEVIDENCEANDARGUMENTS
AndrewJ.Kliman 223
PARTIII:ROSALUXEMBURG
THECOHERENCEOFLUXEMBURG’STHEORIES
ANDLIFE
EstrellaTrincadoAznar 241
“LIKEACANDLEBURNINGATBOTHENDS”:
ROSALUXEMBURGANDTHECRITIQUEOF
POLITICALECONOMY
RiccardoBellofiore 279
LIST OF CONTRIBUTORS
KayrnBall UniversityofAlberta,Edmonton,Canada
RiccardoBellofiore UniversityofBergamo,Bergamo,Italy
AndrewKliman PaceUniversity,Pleasantville,NY,USA
RickKuhn AustraliaNationalUniversity,Canberra,
Australia
CostasLapavitsas UniversityofLondon,London,UK
AnastasiaNesvetailova UniversityofLiverpool,Liverpool,UK
VivianaPatroni YorkUniversity,Toronto,Canada
SusanneSoederberg UniversityofAlberta,Edmonton,Canada
MarcusTaylor UniversityofWarwick,Coventry,UK
AndrewB.Trigg TheOpenUniversity,MiltonKeynes,UK
EstrellaTrincadoAznar ComplutenseUniversityofMadrid,Madrid,
Spain
vii
RESPONDING TO NEOLIBERALISM
IN CRISIS: DISCIPLINE AND
EMPOWERMENT IN THE WORLD
BANK’S NEW DEVELOPMENT
AGENDA
Marcus Taylor*
ABSTRACT
This paper examines the recent process of transformation within the World
Bankasaseriesofreactivemediationstothecrisis-ladencourseofcapitalist
development on a global scale over the last two decades. Two aspects of
the Bank’s attempt to construct a new development agenda as a response
to contradictions emergent within neoliberal-style social restructuring are
highlighted.First,ithasembracedthetheoreticaltrendsandpolicyimplica-
tionsofinstitutionaleconomics.Second,ithasrefashioneditsrelationswith
client countries and their civil societies under the rubrics of “ownership,”
“participation” and “empowerment.” The paper proceeds to indicate why
theBank’scurrentreformulationofdevelopmenttheorypresentsitselfwithin
mainstreamtheoreticalparadigmsasanappropriateprescriptiontocounter
thecrisisofneoliberal-stylesocialrestructuring.Concurrently,onthebasis
∗AsofJuly2004,MarcusTaylorwillbeanAssistantProfessorattheDepartmentofSociologyand
Anthropology,ConcordiaUniversity,Montreal.
NeoliberalisminCrisis,Accumulation,andRosaLuxemburg’sLegacy
ResearchinPoliticalEconomy,Volume21,3–30
Copyright©2004byElsevierLtd.
Allrightsofreproductioninanyformreserved
ISSN:0161-7230/doi:10.1016/S0161-7230(04)21001-X
3
4 MARCUSTAYLOR
of a materialist critique of capitalist development, the paper proceeds to
indicate the substantive limits to these present reforms by indicating their
theoreticalweaknessesandtheirpracticalcontradictions.
At the turn of the millennium, the leading international organisation of global
capitalistdevelopment–theWorldBank–wasundergoingaperiodofupheaval
and transition. Whilst its sister organisation, the International Monetary Fund
(IMF), remained relatively resolute in its defence of the structural reforms that
it had propagated globally since the debt crisis of the early 1980s, the World
Bank embraced comparatively substantial changes to its policy prescriptions
and modes of interaction with client countries. These changes in the Bank’s
discourseareconsideredtobepartofwhatJosephStiglitz(2000)haschristeneda
“post-Washingtonconsensus,”orwhatWorldBankPresidentJamesWolfensohn
(1999)labels“ComprehensiveDevelopment.”1ContrarytowhatStiglitzcriticised
asthe“simplistic”natureoftheoriginalWashingtonConsensus,theWorldBank’s
new framework is presented as a dual sided approach that combines sound
economic policy with social and institutional reform and, in so doing, professes
thatthereismoretofosteringsustainabledevelopmentandreducingpovertythan
assertingtheunbridledplayofmarketforces.
The ongoing changes have not been limited to the content of World Bank
development prescription alone. Fundamentally, the Bank now stipulates that
profound changes to the way development practices are conducted are essential
forsuccess.Theseincludeclientcountryownershipofdevelopmentprogrammes
andtheinvolvementofallrelevantstakeholders–includingcivilsocietygroups
– in design and implementation. In this vein, the World Bank claims a mandate
to empower poor people in order that they are able to achieve development
and lift themselves out of poverty (World Bank, 2001a). In the words of James
Wolfensohn: “Poor people are not liabilities, but assets. We have to invest in
them,andempowerthem.Developmentmustnotbedonetothem,butbythem”
(Wolfensohn,2001,p.4).Empowermentisnowpresentedasacentralaxisinthe
WorldBank’sdevelopmentpracticesandhasbeenintegratedintotheprescription
forarangeofinstitutionalreforms.
This paper offers a critical examination of the origins and character of this
transition in the World Bank. It is argued that the transformations in theory and
practicewithintheWorldBankatthecloseofthemillenniumrepresentaseries
of reactive mediations to the unanticipated results of capitalist development
within the context of neoliberal-style structural adjustment. Such contradictions
are manifest in the increasingly uneven character of capitalist development on a
globalscale,recurrentcrisesacrosstheglobalSouth,andtheexpansionoflocal
and global struggles that target the social limits of development in its capitalist
RespondingtoNeoliberalisminCrisis 5
form. The paper indicates why the current reformulation of development theory
within the Bank presents itself within mainstream theory as an appropriate
prescription to counter the crisis of neoliberal-style societal restructuring.
Concurrently, on the basis of a materialist critique of capitalist development,
the paper proceeds to indicate the substantive limits to these present reforms by
indicatingtheirtheoreticalweaknessesandcontradictionsinpractice.
CAPITALISTDEVELOPMENTAND
MODERNECONOMICS
The World Bank’s principal function, as laid out in its founding articles of
agreement,istheglobalpromotionofcapitalistdevelopment.Tounderstandthe
characteroftheWorldBankattheturnofthemillennium,therefore,itispertinentto
surveybrieflythematerialandsocialbasesofcapitalistdevelopment,thewaythis
processrepresentsitselftothesocialagentsinvolved,andhowithasbeensubse-
quentlycomprehendedwithintheparadigmofmoderneconomics.GiventheWorld
Bank’srelianceonthepresuppositionsofneoclassicaleconomicsforitsattempts
torationalisethetrajectoryofglobalcapitalistdevelopmentandtoprescribeappro-
priatepolicyresponses,thissectionformsanimportantpreludetothesubsequent
critiquesofneoliberalstructuraladjustmentandtheBank’scurrentreformulation
ofthelatter.
As highlighted by the first theorists of capitalist development – the classical
political economists – the rise of capitalism was correlated with a tendency
towards dramatic increases in the productivity of human labour (e.g. Smith,
1991). The importance of this trend cannot be understated, as it constitutes
the material basis of the notion of development as a social process. Through
productive revolution, growing numbers of socially useful items (use-values)
could be produced and, in so doing, capitalist development offered a potential
solution to material scarcity. Furthermore, the process of removing humankind
fromanunendingtoilforsubsistencetheoreticallyofferedthebasisforpersonal
and social development by increasing the amount of time available to augment
human potentials. Material advancement could therefore be seen as paving the
way for social, cultural and political progress, a formulation that remains the
basisformoderntheoriesofdevelopment(Weisband,1989,p.16).
However,thenewlyemergentrelationshipbetweencapitalistlabourandwealth
creation was a complex one. Although labour was widely recognised as the
sourceofsocialwealth–asexploredinthelabourtheoriesofvaluedevelopedby
Smith,Ricardoandothers–thelatterassumedapeculiarlydualformthatgreatly
challenged the conceptual apparatus of classical political economy. On the one
6 MARCUSTAYLOR
hand, the wealth creating properties of labour were represented in the material
formofanexpandedquantityofuse-values.Ontheother,however,socialwealth
wasrepresentedintheabstractformofaquantitativevalueascribedtothesecom-
moditiesandmadetangibleintheformofmoney.Thetendenciesassociatedwith
fluctuationsinvalue,moreover,appearedascomplexlawsdivorcedfromthedirect
controlofhumankindandwhichledrepeatedlytosociallyirrationaloutcomes.
With the development of modern economics in the late of the nineteenth
century, however, the original questions that had underlain classical political
economy’s interrogation of capitalist development – the revolution in the form
of labour, the complex appearance and determinations of value, and the causes
of the conflictual relationship between classes – were entombed within the
petrified categories of bourgeois economics that saw no need to go beyond
surface appearances to examine the relations constitutive of social phenomena.
Thisso-called“marginalistrevolution”representsthetheoreticalmovementthat
“freedpoliticaleconomyfromextraneouspoliticalconsiderations,andsofounded
modern‘scientific’economics”(Clarke,1991,p.182).
The marginalist revolution provided the basis on which material production
could be constrained within its own asocial discipline of economics without
concernforthespecificsocialformsofcapitalistsocialrelations.Thefundamental
theoreticalpostulateofmoderneconomicsisthatmarketrelationsaretheexpres-
sionofinherentlyrationalindividualswho,inconditionsofscarcity,maximisethe
utilityofthecommoditiestheypossessbymakingmutuallybeneficialexchanges.
Inthismanner,themarketisrepresentedasa“device”or“mechanism”forcoor-
dinatingtheplansofmanyindividuals(Hayek,1978)andproductionissimplya
naturalextensionoftheseprinciplestothecreationofmorecomplexgoods.
Onthisbasis,developmentiscomprehendedasauniversal,timelessandasocial
process of overcoming scarcity and associated human deprivations through the
realisation of the rationality of individuals. Material development is maximised
when the innate rationality of individuals is liberated allowing them to make
mutually beneficial exchanges resulting in the optimal distribution of resources
within a society, including within the productive realm. Intrinsic to this process
is the free circulation of the factors of production and, as such, the creation of
the commodity of labour-power through the separation of the labourer from the
means of production (primitive accumulation) is merely a further step towards
thedevelopmentofoptimalrationality.
Whilst restrictions upon individual utility maximisation can be imposed by
specific institutional arrangements (slavery, feudalism, communism, etc.), the
latter are conceived as artificial and illegitimate impediments upon a natural
state in which individual rationality and freedom – and therein production – is
maximisedtothebenefitofthecommongood.Fromthisperspective,development
RespondingtoNeoliberalisminCrisis 7
is to be achieved through the formal liberation of the individual from society, a
statusachievedbystrippingawaytheinstitutionalaberrationsthathaveimpeded
individual rationality and utility maximisation. Capitalism therefore represents
theperfectionofthishistoricalmovement.
Thefundamentalweaknessofliberaleconomictheory,however,isthatmodern
societyisnotasocialgroupingofprivateindividualsbutiscomposedofsocially
constituted individuals within the context of an historically specific form of
social relations. Whereas the genesis of capitalist social relations does indeed
disintegrate the overtly social coordination of production that characterised
pre-capitalist relations, this does not entail the creation of a society of freely
interacting individuals liberated from social mediations. On the contrary, within
capitalismsocialmediationisreconstitutedasanabstractsocialrelationor,more
precisely, as impersonal forms of social domination that create and structure
everydaysocialpractice(Postone,1993).
Atheartliesthequestionofthecontradictorydualityofcapitalistdevelopment,
one that neoclassical economics does not formally acknowledge. Capitalist
development is predicated on the expanded reproduction of the material basis
of society through the development of the forces of production and the creation
of ever increasing quantities of useful things (use-values). This appears as the
formal and rational provision for human needs and is based on a simple circuit
startingwithproductionaccordingtoneeds,distributionofrevenuesallocatedto
factors of production, exchange to circulate goods to match human desires, and
consumption(Marx,1973,pp.83–87).
However,whilstthenotionofdevelopmentrestsontheconcretematerialization
ofanever-growingnumberofuse-values,itscapitalistsocialformistheexpansion
of value (the abstract form of social wealth) through the drive to accumulate
capital. The formal independence of freely contracting individuals, therefore,
maskstheobjectiveinterdependenceofsocietymanifestedthroughtheimpersonal
movementofvaluethatimposesitselfuponactorsasanobjectiveandalienated
socialforce.Abstractdominationofthisnatureisthesocialfabricofcapitalistso-
cietyuponwhichisinscribedincreasinglycomplexformsofsocialrelations.Itis
theabstractbasisuponwhichthemoreconcreteandimmanentformsofexploita-
tion and domination rest and its necessary development is towards a particular
relationship between classes predicated on the extraction of surplus value in the
productionprocess.2
At a more concrete level, the subordination of use-value production and
distributiontothecontradictorydynamicsofvalueistheessenceofthemanifest
substantiveirrationalitiesofcapitalism–asmanifestedinclassstruggle,uneven
development, un- and under-employment, poverty and recurrent crises. Owing
to its theoretical presupposition of the essential rationality of production and
8 MARCUSTAYLOR
exchange, however, liberal theory has no adequate manner by which to account
forthelatterexceptbylabellingthemascontingentirrationalitiesthatarisefrom
eitherthefailureofcapitalistsocialrelationstobeadequatelyestablishedorfrom
theinadequaciesofexternallyimposedinstitutionalforms.
In this respect, neoclassical theory remains theoretically shielded from the
contradictoryessenceofcapitalistdevelopment.Guidedbyitsconceptualisation
of money as a technical tool to facilitate mutually beneficial market exchanges
it is unable to recognise the exploitative essence of market relations sanctified
by the impersonal power of money as a fetishised form of value. It therefore
disregards the substantive and conflict-inducing irrationalities of capitalist
developmentconcretelymanifestedinthesubordinationofsocialneedtoprofit,
the pervasiveness of human resistance to processes of commodification and
exploitation,andthecontinualcrisistendenciesofsocialrelationsthatstubbornly
refusetoconformtogeneralequilibriummodels.
THEWORLDBANK,RESTRUCTURINGANDTHE
ESSENCEOFNEOLIBERALISM
Inshort,developmentincapitalistformconstitutestheextensionoftheproductive
forcesthroughtheincessantyetprofoundlycontradictorymovementofvalue.It
isonthisbasis,moreover,thattheinstitutionalformandthesubstantiveagencyof
theWorldBankmustbeunderstood.TheBankisanorganisationsuffusedwithin
the contradictory dynamics of capitalist development on a global scale, which
impact upon it through various mediated forms including its position within the
interstate system, its relationship with client countries, and its prominence as a
target for global social movements. On the one hand, it is driven continuously
to consolidate the conditions for the accumulation of capital at a global level as
this drives the process of material development in capitalist form. On the other,
ithasbecomeincreasinglyinvolvedinmediatingtheunseemlydynamicsofthis
process in the global South, including escalating inequality, trenchant poverty,
recurrentcrisesandnewformsofsocialstruggle.
TheaugmentedinvolvementoftheWorldBankinthesocialrelationsofglobal
capitalistdevelopmenttookagiantstepforwardinthecrisis-ladendecadeofthe
1970sunderthetutelageofBankpresidentRobertMcNamara.UnderMcNamara’s
expansionofBankactivities,theBankshiftedfromanemphasisonpromulgating
the infrastructure for capitalist industrialisation, and became integrally involved
in a project to mediate the social dynamics of capitalist development in the
South. As Colin Leys (1996, p. 12) elaborates, this period of transition was
promptedby:
RespondingtoNeoliberalisminCrisis 9
thegrowingrealizationthatthehopesofrapidandwidespreaddevelopmentweregoingto
bedisappointed...[leadingto]sympathyforthemassesintheex-coloniesandfearoftheir
reactions.
The Bank’s interventions in global capitalist relations, moreover, underwent a
furtherdramaticshiftinthe1980swhenthepervasivecrisisofglobalaccumulation
reachedthecataclysmicproportionsofthe1982DebtCrisis.Indirectresponse,
drivennotleastbythepredicamentoftheWesternbanksthreatenedwithfinancial
collapse owing to mass default, the IMF and World Bank began to pipeline
billionsofdollarstodebtstrickencountriesinordertofacilitatecontinuedinterest
payments on their old debt but in return for a commitment to neoliberal-style
structuraladjustmentpolicies(cf.George&Sabelli,1994).
Alongside the IMF, the Bank therefore began to assume an extended role as
a global accumulation caretaker and a purveyor of drastic social engineering in
theSouth.Theimmediatephaseofadjustment,commonlymanagedbytheIMF,
focusedontheimpositionofsevereausteritymeasurestorestoremacroeconomic
balances,particularlythesuppressionofinflation.Byundergoingashocktherapy
programme of rapid liberalisation of prices, currency devaluation, and fiscal
discipline, a deflationary period could be engineered through which “excessive
demand” was curtailed and inefficient producers sacrificed, along with their
workforces,uponthealterofsoundmoney.
Anemphasisonliquidity,moreover,wasexpectedtoenablecapitaltoovercome
the barriers to valorisation by escaping unprofitable engagements and concen-
trating in those sectors that offered more lucrative returns. Capital in mobile
money-formwouldundergoasubstantialrecomposition:itcouldrenounceinef-
ficientengagementsand,freedfromestablishedspatialandpoliticalconstraints,
seek a new and profitable relationship with labour. Societal “rationalisation” in
thismanneralmostinvariablyentailedasubstantialdestructionofexistingcapital
and was commonly reflected in high levels of unemployment, with significant
portions of the labour force relegated to the reserve army (cf. Weeks, 1999).
The decomposition of labour would subsequently provide the conditions under
whichanewandmoredisciplinarymodeofcapitalistworkwithhigherlevelsof
absolute surplus value extraction could be imposed, sometimes labelled “labour
flexibilisation”(cf.Taylor,forthcoming).
Alongsidethe“creativedestruction”ofshocktherapymeasures,theBankbegan
toadvocateanincreasinglyrigoroussetofreformsthatentailedmajortransforma-
tionsintherelationshipbetweenstatesandsocietiesintheSouthandthemodeof
integration of Southern economies into the world market. The wider parameters
of these reforms represented an attempt to transcend the immediate question of
economic stabilisation by laying down a longer-term development strategy that
disavowedtheformeremphasisonstate-lednationaldevelopmentalism.
Description:This paper examines the recent process of transformation within the World Bank as a series of reactive mediations to the crisis-laden course of capitalist development on a global scale over the last two decades. Two aspects of the Bank’s attempt to construct a new development agenda as a response
