Table Of ContentRobert McNamara’s Other War
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POLITICS AND CULTURE IN MODERN AMER I CA
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Robert McNamara’s
Other War
The World Bank
and International Development
Patrick Allan Sharma
UNIVERSITY OF PENNSYLVANIA PRESS
PHILADELPHIA
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Copyright © 2017 University of Pennsylvania Press
All rights reserved. Except for brief quotations used
for purposes of review or scholarly citation, none of this
book may be reproduced in any form by any means without written
permission from the publisher.
Published by
University of Pennsylvania Press
Philadelphia, Pennsylvania 19104-4112
www . upenn . edu / pennpress
Printed in the United States of Amer i ca
on acid- free paper
1 3 5 7 9 10 8 6 4 2
Library of Congress Cataloging- in- Publication Data
ISBN 978-0-8122-4906-4
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CONTENTS
Introduction 1
Chapter 1. An Unlikely World Banker 7
Chapter 2. Modernizing the Bank 26
Chapter 3. Developing Development 54
Chapter 4. Global Shocks 75
Chapter 5. Navigating Turbulence 96
Chapter 6. Fighting Poverty 115
Chapter 7. Th e Birth of Structural Adjustment 138
Conclusion 158
Notes 171
Index 221
Acknowl edgments 227
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Introduction
On February 28, 1968, in a ceremony in the East Room of the White House,
Lyndon Baines Johnson awarded Robert Strange McNamara the Presidential
Medal of Freedom. It was a bittersweet moment for the outg oing secretary of
defense. On one hand, the president spoke glowingly of McNamara’s seven
years of public ser vice, especially his transformation of the nation’s military
establishment. On the other hand, even though nobody mentioned it, the
Vietnam War was on every one’s mind, and the honoree, who had played a key
role in guiding U.S. strategy, looked like a broken man. When it came time for
McNamara to address the audience, tears welled in his eyes. A few years earlier,
he had been considered one of the most capable offi cials in Washington. Now,
battered by criticism and gnawed by doubt, he stood silent, failure personifi ed.
Nevertheless, Johnson sounded a positive note for the future. Although
Medal of Freedom recipients were usually at the end of their careers, the
president announced that McNamara’s most import ant work lay ahead. John-
son had recently appointed his outg oing defense secretary to the presidency of
the World Bank, a Washington-b ased intergovernmental organi zation dedi-
cated to promoting global development. In this role, Johnson told the White
House audience, McNamara would be able to “attack the root causes of vio-
lence and turmoil: poverty, disease, ignorance, and hopelessness” and thereby
“win the most import ant war of all . . . p romot[ing] freedom throughout the
world.” Th en, as if to convince t hose who doubted that one of the architects of
the Vietnam War could succeed in his new fi ght, Johnson made a bold predic-
tion. Many years hence, he declared, p eople would look back and say that a
“revolution of achievement in the developing nations began with the appoint-
ment of Robert S. McNamara to the World Bank.”
Despite this claim, Robert McNamara soon faded into obscurity. A ft er
the ceremony, the man who came to prominence as one of the “Whiz Kids”
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2 Introduction
who saved the Ford Motor Com pany from bankruptcy in the 1950s departed
the U.S. government for good. McNamara did not reemerge on the Ameri-
can public scene u ntil three dec ades l ater, when he acknowledged that he and
others in the Kennedy and Johnson administrations had been “terribly
wrong” about the Vietnam War.
But McNamara never went away. For thirteen years following that day in
the White House—n early twice the time he spent at the U.S. Department of
Defense—he continued to put his stamp on history while presiding over the
World Bank. Across the Potomac from the Pentagon, the former defense sec-
retary went from prosecuting a war in Vietnam to fi ghting poverty around
the globe. In the proc ess, he transformed the World Bank and the fi eld of
international development in impor tant and lasting ways.
Th is book tells this story. Drawing on a wide range of materials, including
previously untapped World Bank documents, it details a largely unexplored
chapter in the history of one of the world’s most impor tant international
organi zations and in the life of one of the twentieth century’s most enigmatic
fi gures. In so d oing, it off ers a wind ow onto the international politics of
the 1970s, the roots of globalization, and the origins of t oday’s development
landscape.
* * *
Robert McNamara assumed the presidency of the World Bank on April 1,
1968, a l ittle over one month a ft er he tearfully departed the Johnson adminis-
tration. Th e Vietnam War had taken an im mense toll on him. As a result, few
expected much of his time at the Bank. McNamara had other plans. Instead
of fading away, the man whose fondness for quantitative analys is once led
Senator Barry Goldwater to refer to him an “IBM machine with legs” imme-
diately set out to reprogram the institution.
Governments led by the United States had created the World Bank along-
side the International Monetary Fund (IMF) in the waning days of World
War II to ensure that the world economy would not break down and cause
World War III. Th e Bank’s role was to promote economic expansion by mak-
ing low-i nterest loans to governments. Th e idea was s imple. Th e Bank would
fi nance development proje cts in cash-s trapped countries. Th is would propel
growth, stimulate private investment, and improve living standards.
Despite these ambitious goals, the Bank was a conservative fi nancial insti-
tution at heart. It raised most of its money by selling its bonds to private inves-
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