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Using Marx as a pejorative to defend the ease of doing business: analysing the World Bank’s attack on CGD

Originally published: Developing Economics on November 17, 2019 (more by Developing Economics)  |

The recent attack by a Senior World Bank Official, against the Centre for Global Development (CGD) has been rightly publicised on social media, for failing to engage with critique and misconstruing it as ideology. The encounter was based on a discussion with a CGD economist, where an excerpt of a critique of World Bank’s much debated Ease of Doing Business Index was presented. The well researched and evidence-based critique prompted an unwarranted response by the World Bank employee, where the CGD economists were labelled as ‘reformed Marxists’ and the critique labelled as originating from Das-Capital.

This stance by an employee of the world’s leading International Financial Institution (IFI) is indicative of many things: First that the Bank itself accepts an ideology which is unwilling to accept any other views beyond its own agenda. Second that it is somehow now acceptable for a World Bank employee speaking in a public setting to use Marx as a pejorative when the World Bank’s own research is being critiqued. That the Doing Business Indicator has recently been challenged for bolstering the political agenda of governments under India’s Modi and Piñera’s Chile, with severe methodological limitations, is a key concern.  Third, that the response to criticism is not limited to labelling the critics as ‘Marxists’ but also came with the advice of ‘go make your own index!’. This recommendation by the World Bank official was based on the critique’s emphasis on the broader aspects of the Ease of Doing Business Index. Reinforcing the assertion that the index measures only business and that it has nothing to do with the broader socio-economic aspects of growth, the official infact echoed the underlying basis of this ideological stance: the social and economic are two different spheres.

Moreover, something not discussed as widely on social media was the claim by the World Bank official that raising taxes in countries like Mozambique and Pakistan is not guaranteed to lead to reinvestment, since  the room for corruption in these countries is high. In fact, according to the World Bank official, corruption is so high in those countries that he believes “they’re going to steal this money” (see quote).

.. Mozambique, in Pakistan, in the vast variety of countries around the world, is it true that if they manage to raise more taxes, they would actually without any corruption and with great efficiency invest? No! They’re going to steal this money.

While the possibility of corruption is indeed high in developing countries, it begs the question of  how the nature of corruption differentiates “them” from “us”. Presumably, the latter does not steal money but reinvests it in business with varying degrees of efficiency. It is telling that the narrative of stolen money is still lop-sided towards developing countries, even though we  continue to see different facets of corruption in developed countries. Leaving aside the unaddressed critiques of the methodological presumptions of the Ease of Doing Business Index, this particular exchange also highlights the some World Bank officials’ lack of comprehension of the rapidly changing world and volatile political climate. The era of ‘embedded liberalism’ which informed and centralised the leading IFIs position in the past is over. Using Marx as a pejorative, in a world which is increasingly decimated by neoliberalism is not simply obsolete; it is veering on ignorance. For it is one thing to argue against Marxist scholarship based on evidence and research but quite another to dismiss any critique as Marxist. Such a stance is unfortunately reminiscent of the McCarthy drive of the past.

To those working on development economics, the irony is not lost. The current stance of this World Bank official undermines the CGD–a non-profit think tank, based on broad spectrum of fairly liberal tradition, with one of its founders actually being an ex-employee of World Bank.

This dangerous introversion which continues to give precedence to free market ideology seems to be a major challenge to the legitimacy of the World Bank. As the engaged audience on social media has pointed out, Marx was an avid reader of Adam Smith and built theoretical and empirical models to extend and transcend Smith’s work. However, the World Bank official does not appear to be willing to give Marx or the CGD-the level of respect and engagement that Marx granted Smith.

UPDATE : Since the publication of this post, it was brought to the author’s attention that it is particularly strange that the World Bank official could only think of developing country examples of corrupt practices, given that he himself was under investigation by the Bulgarian Anti-Corruption Commission earlier this year.

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