Venezuela in bid to 'reinstate' the State

Venezuela's ideological rivalry with the West is poised to enter a new, stormy phase with its withdrawal from the World Bank and the IMF - two principal supports of the current global economic order.

With this seemingly dramatic decision, Venezuela has taken the momentous step of making a break with the World Bank - IMF sanctioned world capitalist system, which has, of course, proved a major shaping influence of the world since the end of the Second World War.

Announcing the withdrawal, Venezuelan President Hugo Chavez described the WB - IMF combine, also known as the "Bretton Woods Twins", after the Canadian town which hosted the Western conference which saw their birth after World War II, "tools of US imperialism" which exploited less powerful states. "We are going to withdraw before they go and rob us", Chavez was quoted saying.

For a state claiming to follow the socialist path to development this is a logical move to make because "market reforms" have been a principal policy recommendation of the WB - IMF twins, particularly over the past 30 years to the Third World which has depended heavily on the global financial institutions for its survival.

We need hardly say that the economic liberalization wave unleashed in South Asia too owes its origins to the WB - IMF policy recommendations and their shaping influence over the world economy. Sri Lanka was the first country in South Asia to make economic liberalization and market-led growth a principal policy platform in efforts to develop its economy.

Market reforms - good or bad? No clear-cut answer could be provided to this all-important poser because the debate surrounding it is continuing with both sides to the debate claiming equal validity for their viewpoints.

However, more than 30 years into market-led growth, it could be said with a degree of certainty that, economic liberalization or the Laissez Faire system is no great equalizer.

This position could be taken on the basis of Sri Lanka's own "development" experience over the past three decades. Sri Lanka boasts of fairly robust economic growth but regional economic imbalances have emerged as a major obstacle to economic equity.

Without equity there could be no development in the real sense of the word.

It is this lack of equity which the new Left administrations and their constituencies in Central and South America, such as Venezuela, Nicaragua and Bolivia, are protesting. It is also at the heart of the anti-economic globalization protest movement erupting in even some parts of the West.

So, the WB - IMF prescriptions for development cannot be unreservedly accepted and Venezuela has good reason to pull out of these global financial bodies but it would need to guard against the danger of ushering in instead economic stagnation presided over by an all-powerful State.

Besides it would need to avoid the stultifying path of bringing into being a parasitic and repressive state class which would fatten itself at the expense of the people. A corrupt State would blight Venezuela's development prospects and perhaps make the condition of its poor even more pitiable than before.

Therefore, if Venezuela could assure its people accountable, participatory governance, the new path taken by it could be considered well worth traversing. For, through this break with the world economy Venezuela would be bringing back into the debate on development, the role of the State.

For, if there is one institution which has suffered severe devaluation over the past 30 years of the market economy, it is the State.

In many parts of the Third World, prior to the onset of market reforms, State control of the economy was seen as a recipe for economic stagnation. The policy prescriptions made by the WB - IMF duo for Third World economic growth had the effect of diminishing the control States exercised over national economies.

The duo's "structural adjustment" programmes, for instance, advocated the ending of government subsidy schemes and other welfare measures which were seen as interfering with the free operation of market forces. Likewise, the privatization of State institutions which dispensed important services among the people, was steadily promoted, thus impacting negatively on public welfare. The privatization of nationalized State ventures too came to be seen as acceptable under this WB - IMF policy regime.

For these reasons and more, the "Bretton Woods Twins" came to be seen as anti-people in policy orientation, but the Venezuelan pull out could have the effect of re-elevating the State to the position of prime mover in development, provided it does not degenerate to the condition of an instrument which serves the self-interest of the ruling class.

If it avoids the latter blight, Venezuela could be instrumental in restoring to the State its principal role of the people's preserver and sustainer.

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