The World Bank Part One

George Hewison       Political Economy Newsletter XIX   November, 2014


The World Bank and What It Means to the Rest of Us

“…our economic system and our planetary system are now at war. Or more accurately, our economy is now at war with many forms of life on earth, including human life. What the climate needs to avoid collapse is a contraction in humanity’s use of resources; what our economic model demands to avoid collapse is unfettered expansion. Only one set of these rules can be changed, and it’s not the laws of nature.” –Naomi Klein. “This Changes Everything: Capitalism vs. the Climate”, 2014.




Capitalism distinguishes itself from all previous societies in that commodity production and exchange is the dominant economic basis of society. Commodities have been around from before recorded history when human beings, with a surplus of the things they had produced, traded with others for products of their neighbour’s labour. Those exchanges were among the simplest in the division of labour between people (if we discount the earliest division of labour between men and women).


As trade in commodities expanded (or put another way, as the division of labour in society grew), certain commodities became accepted within society as an acceptable exchange medium readily exchangeable for all other commodities. In other words, “MONEY”! In Japan, rice was money, In Mayan communities, it was cacao beans. In some pastoral societies, it was cattle. Each had intrinsic value wrapped up in the labour of production. Eventually, as metallurgy developed, one commodity became dominant as a medium of exchange-GOLD. It was divisible, not easily combined with other elements and easily transportable. As the “money commodity”, it came to represent the value of all other commodities.


In early enterprise, gold was stored in warehouses (banks) and scrip was issued representing the gold on deposit. And thus the modern banking system had its beginnings.


In early capitalism, three to four centuries ago, pieces of paper could be used for many thousands of transactions in the circulation of commodities before the paper wore out. Meanwhile, the gold remained in storage. The banker was able to issue much more paper (at interest rates of course) than gold on deposit, and fortunes were made. Without regulation, many scandals, dodgy investment schemes and bank failures ensued. The capitalist state (largely representing the long-term interests of bankers) finally intervened and in most cases took over the printing of paper (representing the money commodity). The state generally left the amassing of fortunes in the hands of the bankers; and most central banks throughout the capitalist world are still in the hands of private banks, today (or, at very least, act in the interests of private banks).


According to best estimates, the amount of commodities in the world in 2014 exceeds a mind-boggling $263 trillion US[1]. That is 263 with 12 zeroes behind it; or put another way, if it were possible to place Canadian loonies ($1 coin) end to end, a chain over 50 BILLION miles long would be created. Clearly, there is not enough paper, let alone gold, on the planet to represent this kind of wealth. Now ledgers are kept electronically and transferred in nanoseconds.


Humanity, from humble beginnings, has become an exceedingly productive and rich species. There is a glaring problem, however, amidst all this wealth-one of commodity distribution.


The roots of the crisis of Ebola, climate

change, ISIS, economic stagnation/uncertainty, or

malnutrition/hunger/starvation (now approaching one

billion people) and every social crisis imaginable

have their genesis in the crisis of wealth distribution.


The crisis of climate change[2], Ebola, ISIS or economic stagnation/uncertainty, or malnutrition/hunger/starvation (now approaching one billion people)[3] and every social crisis imaginable have their genesis in the crisis of wealth distribution.


President Barack Obama has said that the United States is an “exceptional” nation among the nations of the earth. He has also said that it is the one “indispensible” nation. The United States has the strongest economy. It has the strongest military. But “indispensible” and “exceptional” are not words that many would use to describe what the US has become in little more than two centuries of its existence. In fact, a number of US-designed global instruments (to further its world hegemony) tend to refute any claim to being the most benevolent force in the world.


One of the most important instruments in the United States toolbox for global supremacy is the central bankers’ bank, the World Bank.


Virtually all the top officers of the IBRD (International Bank for Reconstruction and Development, better known as the World Bank) have two things in common: they all serve the interests of the largest banks in the world[4], and they all answer to presidents that are American citizens, nominated by the President of the United States of America. That hardly seems to be the definition of a “world” bank, but it shows the interrelationship of economics to politics and…to history.


So what about the claim that the World Bank is all about development and fighting the good global fight against poverty throughout the world? While it does publish reams of materials on poverty (also reports on climate change, etc.), Eric Toussaint points out, in his thoroughly researched book on the bank,[5] altruistic aims and objectives of, and results at, the World Bank are pure myth.


The World Bank, from its beginning to the present, has served the United States corporate elite and the geopolitical interests of the US. This reality has immense consequences for the peoples of the world and worthy of note for those advancing a progressive strategy and agenda on any issue.


As World War II was reaching its climax, The Roosevelt Administration was already laying the foundations for the post-War with two goals in mind: to prevent a recurrence of the Great Depression and to ensure US world leadership in the War’s aftermath.


 The military turning point in WWII had not yet occurred at Stalingrad as preparations for a new global fiscal arrangement were begun. The World Bank and the International Monetary Fund, along with a number of other historic fiscal measures, were conceived at a conference at Bretton Woods, New Hampshire.


Secretary of the US Treasury, Harry White, and Roosevelt had hoped to set up a global regime to regulate the private banking industry and prevent another global fiscal and economic collapse that has come to be known as the Dirty Thirties. By 1931, Germany had stopped paying its World War I reparations to Britain, France, Italy and Belgium. Britain and France in turn, had stopped paying their external debts to the US, who refused payment in goods. As the legendary economist, John Maynard Keynes, said of the US at the time:

“The rest of the world owes them money. They will not take payment in goods; they will not take it in bonds; (and) they have already all the gold there is.”[6]


The stage was set as the machinery of the capitalist world slowly strangled and the fight for market share between the capitalist powers struggling with Depression became increasingly intense. Often overlooked by WWII historians are the economic factors leading to the War. One such contributing factor in the start of WWII, if not the main one, was the intense rivalry between allies France and Great Britain, on the one hand, and the Axis Powers, Nazi Germany and Fascist Italy, on the other; while in the Pacific Theatre, Japan and the US had been heading for an economic showdown since the end of the Great War (1914-18) where they had been tentative allies. The fight for hegemony in the Pacific broke into open military conflict at Pearl Harbour on December 7, 1941 and the entire world was now engulfed in the bloodiest war in history.[7]


When Bretton Woods (the official conference title was the “United Nations Monetary and Financial Conference”) was held in July, 1944, the beginning of the end for the Axis Powers was in sight. The Soviets had delivered a knock-out blow to Nazi invincibility at Stalingrad, and the Red Army had liberated much of its territory and was advancing towards Berlin. The Three Power Summit of Roosevelt, Stalin and Churchill had met in Tehran months before (1943) to frame the outlines of the post-War world. The Second Front against the Nazis in Europe had started with D-Day a month earlier (June 6, 1944). But the bright collegial future, promised the people of the world amidst wartime collaboration and punctuated by Teheran, was about to be dashed when peace eventually came.


Even with the War still raging and the scars of war uppermost in delegates’ minds as they gathered in New Hampshire, there was jockeying for position in the War’s aftermath. The largest US banks and the Republican Party were hostile to any notion of regulating financial institutions; and they were especially opposed to any suggestion that a world bank should come under the democratic aegis of any permanent world body being proposed by the allied United Nations.


With Europe ravaged by war (the Soviets alone suffering the loss of over 20 million men, women and children and sixty thousand villages, towns and cities destroyed and much of their pre-War industrial capacity in ruins), there was little doubt the US would emerge as the strongest economic, if not military, power in the world, and that the US voice would carry the most weight.


As we know, the US Greenback became the world’s de facto currency. It was “as good as gold.” But it was in the structuring of the World Bank, that the US economic influence was most keenly felt. Bending to the pressure from banks and his Republican Right flank, Roosevelt capitulated and proposed a system of weighted voting for the new global bank. The US would have over thirty per cent of the votes; Britain would have the second most, followed by the Soviet Union. Effectively, the US would be in control, especially after the Soviets pulled out as the Cold War revved up and it became clear that the “World Bank” was to be an instrument of US economic and foreign policy.  


…TO BE CONTINUED….the World Bank… fast forward to the 21st Century


George Hewison is a lifelong union organizer and former officer of his union, the United Fishermen and Allied Workers Union, on Canada’s west coast. He embraces political and social activism in the interests of social justice and fundamental social change.


Hewison believes in the power of the people, who, if given the proper tools, can change the world. One of those tools is a deepening understanding of how our society is put together. He has been the recipient of many important lessons, both positive and negative, from veterans of Labour’s struggles stretching back decades. He has spent most of his adult life sharing those lessons with others.


For a number of years, he has also embraced a study of the political economy of capitalism, including its current iteration, and conducts discussion groups with interested folks who share his desire to understand and explain the complexities of the social, economic and political world around us.


He continues a tradition of combining working class activism with the power of song and continues to tour and perform extensively.


He may be reached at .




[1] The Credit Suisse, 2014 Report shows an increase of global wealth of $30 trillion US dollars from 2013.

[2] Naomi Klein’s latest best-seller “This Changes Everything…” deals with the problem of climate change and the contradictions with the neoliberal economic model.

[3] United Nations Food and Agricultural Organization, 2014.

[4] The current Chair, neo-conservative Paul Wolfowitz, was Deputy Secretary of Defence under George W. Bush and nominated by him to head the World Bank. He was a leading proponent along with Vice President, Dick Cheney, of launching the invasion of Iraq. Ironically, Robert McNamara, once the CEO of Ford Motors, was Secretary of Defence under Lyndon Johnson during the Vietnam War and later nominated to head the World Bank. Usually World Bank presidents, since inception had some connections to the largest U.S. banks.

[5] “The World Bank-A Critical Primer”, Toussaint, Eric, Pluto Press, London, 2008

[6] Keynes, John Maynard, Collected Writings, quoted by Cheryl Payer, Lent and Lost. Foreign Credit and Third World Development, London, Zed Books, 1991, p.20.


[7] The Nazis had invaded the Soviet Union earlier in 1941.