Essay/Term paper: The world bank

Essay, term paper, research paper:  Social Issues

The World Bank

Bureaucracy is one of the pillars of modern western society. Although this
statement is debatable from many aspects, most would agree that, at the very
least, our lives are greatly affected by bureaucracy. Bureaucracy is the 'pure
form of rational organization' (Newson, Jan 11). Not only is it a method for
achieving goals efficiently and effectively, but it is acclaimed as the most
able strategy to meet objectives. The World Bank is a classic example of a
bureaucratic organization. It embodies all the characteristics necessary to
qualify; from its complicated hierarchy and impersonal relations, to the
specialization and career orientation of its employees. However, not everyone
agrees on the competency of the bureaucratic organizational system. George and
Sabelli in their book Faith and Credit claim that is the very structure of the
World Bank which causes its failures, as well as explaining its continued
existence despite these mistakes. Using Faith and Credit, with a focus on
chapter six, it will be shown that it is the bureaucratic methods themselves
which twist the World Bank's goals, and that these methods undermine the tasks
which the Bank has set for itself.

The World Bank is one of the world's most powerful agencies. Although it
characterizes itself as a purely economic institution -- which controls the
lending of billions of dollars -- in practice its influence, wealth, and
policies all result in having immense political power (Faith 1). Although
originally created to serve as an institution to help rebuild the world (i.e.
Europe) after World War II, its task has since shifted to development work and
poverty reduction. Through its immense control of wealth, and its international
reputation, the Bank has managed to lend billions to 'under-developed' nations.
The loans take many forms, including financing of mega-projects and structural
adjustment. Beginning in the 1980's vast amounts of criticism on the Bank's
policies began to appear, finding faults in much of its work. Many of its
projects have been declared more harmful than helpful, often worse names have
been used. The Bank has managed to make enemies in many activist circles;
including environmentalists, feminists and even the people whose aim is to
please: poverty workers (Faith 6). Nevertheless the Bank still remains an
eminent institution. It is well respected by many intellectuals, consulted by
governments and continues to grown in wealth and power.

The very people working for the World Bank are cream of the crop. It is a
relatively small organization, and immensely respected, which allows it to chose
its staff from the best in the world. However, the Bank's rules and traditions
do not allow these top notch women and men to work at maximum efficiency. It is
an organization trapped in its own structure, stifling the staff which works for
it. Lower level employees are silenced by a hierarchy which provides few methods
for the expressing of opinions, and in fact discourages dissent. This commitment
to orthodoxy has caused the Bank to fall behind on its development strategies in
comparison to the rest of the world. Nevertheless it is not an organization
composed of stupid people and is aware -- of at least some -- of its faults.
Although attempts have been made to restructure the Bank, they have only ended
up further focusing the Bank on its orthodox path. Quantity, instead of quality,
has become its purpose and is causing further havoc in the countries to which it
loans (part II countries). Instead of dealing with these problems, it fools
itself and others into believing in a positive end result; ignoring the rule
'the ends do not justify the means' not to mention the fact that many do not
foresee a positive end. To deal with the image problem created by its own
disasters, the World Bank has attempted to make itself appear more effective.
Yet it seems to have forgotten that what is important is not the image but the
results. This is what has become of the humanitarian goals of the World Bank.

The Bank, despite its many critics, is considered by most to be "the world's
foremost, most prestigious official development institution" (Faith 112). Many
seeking a future in development, first attempt to enter the World Bank. Most of
the Bank's new recruits are Young Professionals (YP). This is an extremely
competitive program which thousands apply to, of which only 35 a year get in.
Although Young Professionals come from a variety of countries, this does not
necessarily reflect various cultural perspectives. Most of the YP are educated
in the North, and a large proportion come from the Ivy League or similar
academic institutions (Faith 113). For those who do manage to join the staff,
the training does not end there. Once accepted, they must complete one year on
probation; usually two six month field projects in which they must make
"significant contributions" (Faith 115). Members of the staff are thus the true
cream of the crop.

The obvious question that one must ask, is how can it be that these top notch
men and women can participate in such an ineffective organization. The answer
lies in the culture of the World Bank. From the very recruitment of its staff
the Bank ensures conformity and unswerving loyalty. "It tries to pick its people
young, and shapes them to what it believes to be its needs" (Faith 112). George
and Sabelli describe YP very highly, but point to their most lacking
characteristic -- apart from humility -- no bent for heresy or dissidence. In
other words YP, and all new recruits, do not question authority, do not ask why
something is done in a certain way or think for themselves in general. Although
the organization does not actively socialize its new staff, George and Sabelli
believe that it is the whole Bank's job to pass on its ideology (Faith 116). The
Bank has effectively managed to step around the cultural differences of its
employees, and has embedded in all of them a tenet: "go by the book" (Faith 120),
or in other words, 'just do what we've been doing all along, and everything will
be OK'. Yet this bring up the question of why would the staff not rebel against
this ideological training or simply quit. The Bank offers many perks. Bank
workers receive a very tidy salary, with no taxes, twenty six day working
vacation a year, paid home leaves, health and life insurance, language training,
private gyms, and the list goes on and on (Faith 114). Not only do staff members
receive indirect training to follow Bank orthodoxy, but they have incentive to
stay that way.

Nevertheless numerous surveys have shown the staff to have a low morale (Faith
119). The World Bank is plagued with communication problems, favoritism, power
struggles, and immense tension between members. Dissent is not permitted at any
level of the organization. The Bank is hierarchically structured, which staff
members perceive as management ordering lower levels, no questions asked. Staff
members receive rebukes for disagreeing with policy and orders from superiors
(Faith 120). In a survey conducted in 1980, it was found that the staff had a
high commitment to development and regarded one another's professional skills
with respect. However they appeared to be demoralized over the "burdensome
paperwork, the emphasis of quantity over quality [more on this later] and the
fear of reprisals from senior management if they disagree" (Faith 120) . It is
not the incompetence of the staff but rather the structure of the Bank and its
unwillingness to use the full potential of its highly trained people, which
prevents change. The researcher believed that this frustration with the Bank was
leading to greater tension within the staff (Faith 120).

As the Bank grew in size and staff number, it was forced to create a staff
association. In 1972, during one of its periods of largest growth, the bank
hired full time administrative personnel, created thirty committees, and formed
the democratically elected staff association. One of the primary goals of this
association was to create an atmosphere of greater trust and allow for
recommendations (AKA dissent). Upper level staff were not unaware of the
communications problem within the Bank and had said as much: "Mr. McNamara
[president of the Bank at the time] has recently called communication his most
difficult problem at the Bank" (Faith 120). Nevertheless no great changes took
place in the Bank, as is shown by the research carried out by the Berkeley Ph.D.
candidate (see above).

One of the greatest upheavals experienced by the World Bank is termed the
Reorganization. Allegedly the intention was to streamline and efficientize the
Bank, but the reality was that the changes were politically motivated, primarily
by the US. (Faith 124). In terms of staff, the Reorganization resulted in a
massive upheaval of the hierarchy, and the purpose the Bank workers. This
restructuring occurred in 1987, a time when the credibility of the Bank was at
a low. The steering committee claimed that the staff needed to regain its
'intellectual leadership' (Faith 127). Management had been accused of not
dealing "effectively with a mix of staff skills and capacities ... producing
critical shortages of some skills, e.g. in sector economies, adjustment lending
and finance." (Faith 128), in practice this meant that the Bank needed more
structural adjustment specialists (more on this later). To accomplish these
feats, all but the highest levels of the Bank were forcibly asked to resign.
Following this the toplevels, still employed, chose their subordinates, who in
turn chose theirs, and so on. The resulting new hierarchy was considerably
different from the old, and since no clear criteria for choosing staff had been
given, staff were picked on the basis of favoritism (Faith 129). The staff
association was understandably outraged, and attempted to file a complaint. It
goes without saying that the message went unheeded. Following this, the staff
association was handed a new draft of the Staff Rule. 'Never before had the
morale of the Bank staff sunk so low' (Faith 130). What little ability the staff
had had in following their own initiatives, and acting on original thought, were
now more effectively prevented than ever before. The Bank's staff had become
fully focused along the same lines as 'the new' World Bank's task.

The primary purpose of the Reorganization was not streamlining and efficiency,
but to meet the interests of the US. Lending for projects, no matter how massive
they were, was no longer enough for the Bank. The US was especially critical of
the Bank's policy of lending money to countries with protectionist economies,
which is clearly not in the US' interests. As such, the Reorganization was
geared at transforming the Bank from a lending organization to a structural
adjustment agency (Faith 124). Structural adjustments loans are the Bank's
euphemism for altering entire societies. Only those countries which are willing
to change their economic structure to meet the criteria of the Bank are given
these loans, which in turn is the deciding factor on regular Bank loans (Faith
56). Following the Reorganization the Bank was no longer an agency for
development -- if it ever had been-- but an organization dedicated to converting
the world to US economic ideology (Faith 125). Bank employees now had no choice
but to implement these policies in all part II countries. Whether or not
protectionist policies, and other economic changes which occurred during
structural readjustment, were good for the countries or not, a country had to
first comply with the Bank's demands before money was lent. This gave the Bank
tremendous political power, and has effectively raised the debt of part II
countries to insuperable levels (Faith 56).

In combination with the Bank's readjustment policies, there is also a large
focus on quantity. The primary prerequisite for a worker's promotion is the
ability to pass large loans, not the outcome of a loan or its environmental
impact. This quantity over quality philosophy results in a form of competition
by the staff to get bigger projects past the board (Faith 120). Human, financial
or ecological concerns become lost in a race for job security and advancement.
Not only does the bureaucracy of the Bank compel the staff to create massive,
poorly thought out projects but it almost forces them to replicate their
mistakes. The fastest, easiest way of getting a new project, is simply to dip
into the file drawers and pull out an old project. However, since, no concern is
placed on a project's outcome, errors are typically duplicated (Faith 121).

The combination of a desire for quantity, a lack of respect for quality and
replication of the resulting mistakes accounts for many of the disasters caused
by the World Bank in the past. Nevertheless the Bank has done little to improve
since then. Reform attempts such as the Reorganization have only led to making
more errors faster. The reason for the Bank's lack of progress lies in its
culture, which is based upon orthodoxy. Bank employees have a large degree of
job security. With the exception of the Reorganization, "the Bank's turnover
rate is extraordinarily low -- about three percent a year" (Faith 117). Upper
level staff probably has an even lower rate (Faith 117). The Bank is thus prone
to accumulating staff who will work there their whole lives, but are not
necessarily effective any longer. Even for those staff members which are still
capable, they may not have enough time on their hands to keep up with new
development techniques. "We're consistently about 10 years behind the times,"
(Faith 190). This quote -- as said by a high ranking Bank official --
represents not only the topics which are 'hot' in the World Bank, but the
techniques in which they try to remedy these dire world problems Finally, new
staff members are not able to implement their modern techniques. Instead they
are encouraged to conform to standard Bank practice, as they has been passed
down for years (Faith 117). Bank practices sometimes even go against the beliefs
of new employees, being the opposite of what they were taught or their own best
judgment. As such the Bank remains an immensely powerful organization, promoting
out-of-date ideologies and methodologies, which because of its own structure and
culture is unable to meet the demands of the time.

Between the way the staff are treated, and how little they are listened to; its
structure, dedicated to conformity and carelessness; the emphasis on quantity
and not quality; and its inability to adapt and keep up with the times, we can
begin to see how it is the very bureaucracy of the Bank which undermines its
tasks -- and this is only scratching the surface. Nevertheless these Bank
practices and policies could all still be said to be in done with the interests
of development in mind. Undoubtedly there are officials who believe that
structural adjustment loans are effective; that Bank projects are effective and
as such quantity is a good thing; and so on.

Not all people, however, are as faithful as these hypothetical Bank workers.
Criticism has plagued the Bank for many years, coming from all different types
of groups. Although environmentalists are the greatest opposition to the Bank,
women's groups, and anti-poverty organizations are only a few of the World
Bank's enemies. Widespread criticism is a great threat to an international
organization such as the World Bank. Much of its power lies in its credibility.
Not only must the countries from which it borrows from believe in its policies,
but the banks of the world must believe its policies. World Bank loans carry
immense weight among banks; a loan from the World Bank, will almost ensure an
equal amount of money from other lending organizations. The environmental
movement poses the biggest of these threats to the Bank (Faith 162). The are
numerous examples of Bank loans causing massive environmental destruction,
inconsiderate relocation of people and a general disrespect for the future (i.e.
long term planning). Nevertheless the 'environmental dilemma' remains a problem
of image for the Bank. "Environmental issues are the most important image
problem the Bank has to deal with," (Faith 163: Quoted from vice-president for
external relations), yet George and Sabelli remind us that these are not image
problems but in fact real problems affecting real people (Faith 163). The Bank
has dealt with the 'environment problem' as an image problem. It has made token
loans ($10 million Vs $400 million) for environmental projects, and has created
a form of rating system based on the level of environmental destruction
predicted (Faith 171). George and Sabelli criticize these programs as image
enhancers and too small to make a difference (Faith 182-3). Instead of dealing
with the environmental destruction the Bank has already caused, and the impact
of the projects it will implement in the future, the Bank has instead attempted
to gloss over their programs. As such the noble goal of development has been
subverted to a protectionist strategy. To the Bank it no longer matters what
happens to those people in 'underdeveloped' nations, only that its own security
and power remains stable.

Bureaucracy is exalted as the epitome of efficiency and effectiveness. It is
meant to organize social relations so that they can be collectively defined, and
accomplished. The World Bank represents a typical bureaucracy, yet it is also
highly criticized as an institution which repeatedly fails to attain its goals,
and in fact has forgotten them. Although the Bank has the world's cream of the
crop development workers, its own structure has stifled, and silenced these
individuals to the point of falling behind in development strategies and not
adapting to real world situations of the poor. Its own structure has encouraged
a quantity not quality philosophy, any attempts to change this philosophy have
only exasperate the problem. Finally the poor reputation of the World Bank, due
to its own follies, has led to the Bank to shift its focus from development to
self preservation, not through correction of errors, but through falsely
presenting itself. It is the very bureaucratic nature of the World Bank which
hasled to its failure. Although clearly this paper does not discredit
bureaucracy as a world system, it does present the idea that perhaps bureaucracy
is not the most efficient and effective method of achieving goals, in all
situations.

Bibliography

George, Susan and Sabelli, Fabrizio. Faith and Credit: The World Banks Secular
Empire. Penguin, Toronto: 1994.

Newson, Janice. In class lectures. January 18th and 25th, 1996.