The World Bank and the State
Dramatic U-Turn or Clever Repositioning?

Summary

The package of economic reforms that the World Bank has promoted in recent years -- from privatisation of state or public services and assets to deregulation of labour and environmental laws -- has, in theory, been intended to remove the state from all but a minimal role in the national economy. Market competition, it is argued, best defines and serves the “public interest”, because it is through the market that individuals are best able to express their choices. The state, the theory continues, has neither the management capability to run the economy nor any legitimate authority to do so. In sum, the best government is considered to be the least government. Yet the practical outcome of free-market policies has not in fact been to diminish the state’s power -- but to redirect it in favour of transnational interests. Thus the power of many Northern states to intervene in the economic and social affairs of other countries has increased. Resistance to the “free market state” is growing, as is the demand that the state’s powers be used to protect the interests and rights of citizens, not corporations.

This report was written for the Bretton Woods Project, London.