Z Magazine Publishes My Article On Lawrence Summers in February Issue

In February 2011, Z Magazine printed my article, Lawrence Summers, Goodbye and Good Riddance: Obama’s Winter of Neo-Liberal Discontent.

You can view it at the link above or download it via the Z-Mag PDF version here: lawrence-summers-goodbye-and-good-riddance-by-mitchel-cohen.

Check it out!

Here’s the full article (before Z Mag edited out the parts about Al Gore and the Clinton Administration’s ties to Lawrence Summers):

Lawrence Summers, Goodbye & Good Riddance: Obama’s Winter of Neo­Liberal Discontent


Now that Lawrence Summers is leaving the President’s cabinet and rebellions against neoliberalism and its austerity programs are washing over Europe, one might hope for a shift in President Obama’s corporate and bank-friendly policies. But such optimism is not warranted.

While the options for capitalist planners such as Summers may differ in accentuation from administration to administration, the competition for corporations to maximize profits and for the government to “protect them” is invariable; and in times of economic crisis such as the one in which the U.S. – and indeed, the world – is currently mired, the space for av­oiding the worst aspects of unemployment, ecological devastation, poverty, vast reductions in public services and expansion of imperialist wars are circumscribed by the urgency, for capitalism, to strip down to essentials to control natural resources and repress all forms of organizing and resistance.

The case of Lawrence Summers is instructive for examining the neoliberal framework, and for understanding the policies of the United States government on the brink of collapse.

I’ve intentionally omitted from this essay discussion of the numerous scandals in which Summers personally has been involved at Harvard and elsewhere unless they shine some light on Summers’ effect on U.S. government policy and the new forms of the capitalist market.

*   *   *   *   *

I’ve always thought that under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low [in pollutants] compared to Los Angeles or Mexico City.1

– Lawrence Summers, the Economist, Feb. 1992

Once Upon a Time, Al Gore claimed to have invented the internet. He also laid claim, along with the rest of the Clinton administration, to having “reinvented government.” Now he has re-invented himself as a modern-day Paul Revere galloping ac­ross the country on his white horse crying, “To arms, to arms, the Climate is Changing.” Yet back in the 1990s while the rest of the world, through the Kyoto Treaty negotiations, was agreeing to mandate reductions in the industrial emissions punching holes in the Ozone layer, it was none other than Al Gore, Vice President of the United States, who took those negotiations hos­tage and prevented a ban on targeted emissions.2

Gore commandeered the Kyoto movement. The U.S. government, he said, would not sign the Accord – as limited as it was – if it imposed emissions reductions on polluting countries. Instead he demanded that the rest of the world adopt his proposed mechanism that would allow industrial nations like the U.S. to continue polluting by establishing an international trade in carbon pollution credits. In other words, Gore proposed the buying and selling of “rights to pollute” as though they were any other commodity. The free-market trade in “emission rights” would simply shift around pollution and spread it out more evenly while hiding responsibility for it, without reducing the total amount of ozone layer-depleting greenhouse gases.

In proposing (and imposing) that mechanism, Gore and Clinton were enacting a policy – trade in pollution credits –that had first been put into effect in a more limited way by President George H.W. Bush, under the 1990 extension to the Nixon administration’s “Clean Air Act” and developed subsequently by the World Bank and International Monetary Fund.

The global trade in industrial waste emissions credits would require new regulations and agencies to administer them. And so, Clinton and Gore constructed an elaborate set of structures such as the World Trade Organization, and treaties such as NAFTA, GATT, and the FTAA to do just that. Under the new trade bureaucracy, countries would not be allowed to exempt themselves from trade – including trade in pollution credits – regardless of environmental or social justice considerations. The entire edifice institutionalizes the complex of mechanisms designed to save capitalism from the demands of the growing grassroots environmental and global justice movements.

In his 1992 book, Earth in the Balance – much praised by many of the large environmental not-for-profit corporations vested in the current economic system – Al Gore laid out the ideological basis for his flawed pro-capitalist solution to environmental destruction and climate change: Rely on voluntary self-regulation by corporations and the governments they control. Forget that corporations have been the primary source of toxic pollution. The evidence is overwhel­ming that corporations, to remain competitive within the existing system and maximize profits, cannot voluntarily end pollution if it is cheaper for them to pollute. Gore disregarded that fundamental capitalist dynamic that propels corporations to basically use the earth as their ashtray in reckless disregard of the consequences to human health and the ecology of the planet. Instead, he built the rationale for his framework upon the fiction that corporations could and would play the necessary role in cleaning up the environment.i Despite the literally world-shaking consequences of global climate change that Gore documents in his film “An Inconvenient Truth,” he refuses to challenge the system that has driven the planet to the brink of destruction.

A number of key environmental organizations accepted Gore’s delusion that corporations, working with government and consumers, would or could save the environment while maintaining the same set of economic relationships and expansion of capitalist trade. And when seven of the largest Environmental groups – National Wildlife Federation, Natural Resources Defense Council, the Environmental Defense Fund, World Wildlife Fund, National Audubon Society, Nature Conservancy, and Defenders of Wildlife – came out in support of the North American Free Trade Agreement (NAFTA),ii trouncing opposition by smaller, more radical grassroots groups, they provided Gore and Clinton with carte blanche for proceeding wistfully down that yellow brick road.

Gore and the pro-NAFTA environmental groups asserted that establishing “free market” trade in pollution credits would propel corporations to deliver the world from the ravages that they themselves had caused. What little justification there was for such nonsense utilized the curious proposals for the disposal of toxic wastes being propagated at the same time as Gore’s book by a key analyst and policy-maker: the World Bank’s Lawrence Summers.

Hats Off to Larry!

In December, 1991, Lawrence Summers – following a stint as Ronald Reagan’s top economics advisor (where he’d lobbied successfully for cuts in both corporate and capital gains taxes, and opposed unemployment insurance), and then as economics advisor to presidential candidate Michael Dukakis – was the chief economist for the World Bank. In that capacity, Summers issued a memorandum to senior World Bank staff calling upon them to use economic muscle to pressure non-industrial areas of the world to accept (and pay for) more waste from the U.S. and elsewhere. He called this a “fairer redistribution” of the industrial world’s wastes and pollution. Summers’ plan would not actually reduce toxic wastes and pollution per se, but proposed using the “free market” to widen the choices for where wastes could be dumped, rectifying what he saw as “the current toxic imbalance.”iii

Summers, who edited the World Bank’s World Development Report for 1992, claimed to have worked out “the economic logic behind dumping a load of toxic waste in the lowest wage country.” He found that logic to be “impeccable, and we should face up to that.”

A firestorm erupted over Summers’ comments worldwide. (Strangely, the rage was fairly quiet here in the United States). Impoverished people – their health shattered by the dumping of toxins in their communities and waterways – viewed Summers as mocking their concerns. In his infamous memo, he argued that precisely because of their poverty, “the concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under five mortality is 200 per thousand.” In other words, the poor would never live long enough to contract the diseases that exposure to dumped or burned wastes would ordinarily cause. Instead of eliminating the imperialist conditions causing their poverty and helping people to live longer and less toxic lives, Summers (and Obama, like Bush and Clinton before him) inflicted the ecological and human rights nightmare that intensified their wretched conditions, as a matter of national security and of shoring up the empire of capital. His memo proposed a way for the wretched of the earth to provide an inestimable service and therein make their miserable, short lives meaningful . . . to capital.

Throughout the world people saw through Summers’ grand scheme to further exploit and to poison them in the name of the “free market.” They raised a ruckus. They understood that Summers’ outrageous analysis was no aberration in an otherwise sterling and positive career, and that for years Summers had blocked initiatives by environmental organizations to make the World Bank more ecologically and socially responsible. His 1992 “pollution” memo was simply one in a long train of exploitative schemes on behalf of the global capitalist class.

Greenpeace and numerous defenders of the planet demanded that the World Bank terminate Summers. Brazil’s Secretary of the Environment, Jose Lutzenberger, wrote to Summers directly:

Your reasoning is perfectly logical but totally insane. … Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in. … If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said … the best thing that could happen would be for the Bank to disappear.iv


Instead of being shocked by the horror of the environmental devastation they were causing, the big corporations and governments of the U.S. and several other industrialized countries looked favorably upon Summers’ spin. Through Summers’ neoliberal economic strategy, the dumping of toxic wastes (and later, genetically engineered grains) became not some isolated happenstance of industrial production that can be apologized for and dismissed, but a planned component of George Bush’s, Bill Clinton’s, Dick Cheney’s, and now Barack Obama’s New World Order strategy – a weapon in the imposition of structural adjustment programs upon the “third world.”

Summers wrote, “So much pollution is generated by non-tradable industries (transport, electrical generation) [which makes] the unit transport costs of solid waste … so high. [These non-tradable industries unfortunately] prevent world welfare-enhancing trade in air pollution and waste,” as stipulated for domestic polluters in the 1990 Clean Air Act extension. Instead of outlawing dangerous pollutants and carcinogens, the Act granted “pollution credits” – ecology- destroying quotas – to corporations and municipalities in the U.S. Those who “under-pollute” may then sell their “excess” pollution credits – their “right” to ravage the environment – to companies that refused to cut back toxic waste or were unable to do so and still maintain their profit rates – the “free market” at its most crass and savage.

Caught with his foot in his mouth, Summers claimed he was half-joking, and found someone else to take the heat for writing the memo he’d signed. But claims to irony aside, the memo accurately expressed the trajectory of an expansive capitalism as evident in the views of the first Bush and soon-to-be Clinton Administrations, who were maneuvering to establish new markets for toxic wastes, air pollution rights, water rights, and the like.

Summers’ memo certainly took neoliberalism to new extremes. But that framework had long informed the policies of most U.S. government officials since the days of President Jimmy Carter. It was the Georgia Democrat Andrew Young – Carter’s ambassador to the United Nations, and a man who earlier in his life stood at the side of Dr. Martin Luther King, Jr. – who put it most clearly: “My approach to Africa is in some ways like the Japanese approach to Asia, and my approach is not necessarily humanitarian. It is in the long-range interests of access to resources and the creation of markets for American goods and services.”v

Summers took Andrew Young’s imperialist worldview a few notches further. In his infamous memo, Summers argued that poor countries should exploit their ‘comparative advantage’ of low wages, access to natural resources, and lower environmental standards.vi

Virtually every other country in the world broke with Summers’ Harvard-trained ‘economic logic’ ruminations ab­out dumping rich countries’ poisons on their poorer neighbors. They “agreed to ban the export of hazardous wastes from OECD to non OECD countriesvii under the Basel Convention. [Sixteen] years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention’s Ban Amendment on the export of hazardous wastes from OECD to non OECD countries.”viii

While few poor countries have ‘developed’ by following Summers’ advice to beg the world to dump their wastes in their countries (“comparative advantage,” indeed!), it has proved very effective for companies like Nike, “which has taken advantage of low wages throughout Asia, or even G.M., which produces cars and trucks in Mexico with the same technology as in Michigan but with lower wage workers. Makers of polluting technologies such as incinerators that are being phased out in industrialized countries have also benefited, because they are able to stay in business by selling to third world countries. U.S. manufacturers that wanted to escape environmental regulations (like furniture makers who use toxic glues, solvents, and paints) have capitalized by shifting from places like Los Angeles to Mexico.”ix

Just as they did a decade-and-a-half later in their high hopes for Barack Obama, many environmental activists foolishly thought that with the Clinton administration taking over in Washington in 1993 the environment would be saved, things would improve, peace would reign and Summers, then of the World Bank, would go away. Instead, Clinton and Gore brought Summers and his mentor, former member of the board of the Carnegie Corporation of NY Robert Rubin, into their administration.x Together they pushed through legislation in Congress that institutionalized NAFTA, GATT and the World Trade Organization, shameful “welfare reform,” new laws that further eroded civil liberties and the Bill of Rights (under the guise of “anti-terrorism”), vastly increased military spending, decimated the last remaining old-growth and redwoods forests in the United States, defeated Haiti’s progressive movements and continued U.S. military occupation of that country, promoted genetically engineered foods and the biotech industry, bombed Iraq on a daily basis for a decade and imposed sanctions against Iraq and Yugoslavia, attempted to dismember organic standards, legalized irradiation of foods, and managed the collapse of a once-powerful movement for free universal health care – all accomplished by Clinton and Gore’s neoliberal policies drawn with the help of Summers and others. Even before taking office, President Clinton sought to appoint Summers to a national policy position: Chairman of the President’s Council of Economic Advisors, the position Summers held in the Obama administration.

Environmental and other radical groups were outraged and fought against his appointment. For a time, they were successful. But Summers’ work on behalf of global capitalism would not go unrewarded for long. The day following Clinton’s inauguration as the 42nd President of the United States, he appointed Lawrence Summers to the post of Undersecretary for International Affairs at the U.S. Treasury, a position traditionally responsible for “the formulation of U.S. economic policy in the Third World, including U.S. policy related to the IMF, the World Bank and the regional development banks.”xi

Summers became the leading voice within the Clinton Administration against the U.S.’s participation in greenhouse gas reductions via the Kyoto Treaty negotiations,xii and no doubt influenced Al Gore in that regard. He convinced himself that while industrialized countries needed to rid themselves of toxic wastes, that did not have to become a serious barrier to an expansive global capitalism; he could “re-invent” it as a marketing opportunity. And so he blustered his way forward:

There are no… limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn’t a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.xiii

And foster that expansion he did with all its consequent social costs. Summers – “the scheming architect of an end-run around Congress that resulted in the $12 billion Mexican bailout” in 1995xiv – became a leading proponent of bailing out the rich, and soaking the working class to pay for it. A key official characterized the Mexico bailout this way:

Early in 1995, the size of the collapsing emerging market bubble so terrified official Washington that Treasury Secretary Robert Rubin … embraced a public bailout for private investors in Mexico. It is some measure of the ethical laxity of Washington that this rescue for friends and former clients of a sitting Treasury Secretary went almost completely unchallenged. Rubin, lest we all forget, is the chief fiscal officer of the United States. When a Treasury Secretary condones a public bailout for private foreign debts, he commits an act of fraud.xv

Green Party Presidential Candidate Ralph Nader also expressed opposition to the Mexican bailout, which was really a gift of billions of dollars to U.S. banks to whom Mexico owed its debt:

The Mexican political economy is basically a lawless, criminal operation run by a dicatorial regime in cahoots with oligarchs who keep getting richer through privatization and through other transfers of public wealth. Private privilege becomes public policy through secret government that is unaccountable and is affected by the institutional conflicts of interest perpetrated by Government officials on leave from their financial posts in New York.

For the first time in our history, we have bailouts directed at protecting investors who gam­bled and lost. … Has Mexico joined the list of big banks deemed too big to fail?…To put it symbolically, if Wall Street expects to be able to stampede Washington any time the Street’s risks materialize in a foreign country, these risks will be taken every few years. … Insiders who counsel prudence will be waved aside in the rush to speculate in excess, and the Washington corporate welfare system will continue to mush­room…xvi

Summers, the advocate of de-regulation, was now demanding that government bail out de-regulated countries and financial corporations – good practice for the hypocrisy to come.

The interpenetration of high-finance, ecological destruction and war has always been a hallmark of capitalism. Larry Summers understood this only too well. He became the principal economist shaping U.S. financial aid to the government of Indonesia. As massive fires gutted Indonesia’s forests and produced unbreathable clouds of smoke that hung for a thousand miles over the region for many months; and as Indonesia’s military was preparing to again invade and massacre civilians in East Timor; and as anti-imperialists and enviro-activists throughout the world protested the U.S.’s economic and military assistance to the murderous Indonesian junta, Clinton’s chief financial advisor said:

We welcome the announcement in Jakarta today that the International Monetary Fund and the Government of Indonesia have reached agreement on a revised economic program designed to stabilize the Indonesian economy. The United States has a strong economic and national security interest in seeing Indonesia succeed in these efforts, which will depend on its ability to sustain both economic and political reforms. . . . We look forward to the timely board approval and disbursement of these funds, as well as those from the World Bank.

We also welcome the Asian Development Bank’s announcement that it has approved a substantial loan to improve financial sector governance in Indonesia. This loan will support efforts to strengthen Indonesia’s banking system and is critical to restoring financial stability and growth.xvii

The words just melt in your mouth.

Nearing the end of his second term, President Clinton upgraded Lawrence Summers (first, Undersecretary for International Affairs; next, Deputy Secretary of the Treasury) as his new Secretary of the Treasury, replacing the retiring Robert Rubin. At his 1999 confirmation hearings, not a single U.S. senator bothered to ask Summers whether he still found “the economic logic behind dumping a load of toxic waste in the lowest wage country” to be “impeccable.”

Summers provided the ideological rationalizations for the new mechanisms of neoliberalism, the primary strategy of global capitalism and its Brave New World Order:

– promoting cutbacks in all public services while “enclosing” (privatizing) lands, resources and social services that had been in the public domain and previously used in common (water, forests, air, transportation, medical care, etc.), sometimes using the legal pretext of “Eminent Dom­ain” at home and economic and military might abroad;

– patenting what would become known as “intellectual property rights” (corporate ownership of genetic sequences in people and other living organisms);

– establishing a new market and “stock exchange” for trade in “pollution credits”; and,

– proletarianizing peasants and villagers, driving both labor and nature under the domination of new forms of exploitation and expropriation.

In the name of neoliberalism, the Clinton/Gore administration annihilated and then rebuilt (somewhat) under private ownership Yugoslavia’s water and electric systems, schools, hospitals and sanitation facilities, bridges, dams, refineries and factories. The Clinton/Gore bombardment of that country displayed the U.S. Empire’s vast modern arsenal of death and ecological devastation.xviii Depleted uranium weapons, cluster bombs, graphite bombs, supposedly invisible “Stealth” fighter jets, and so-called “Apache” and “Black Hawk” helicopter gunships ravaged the recalcitrant populace. “Don’t Fuck With Us” was the message scrawled on U.S. bomb fragments found near Pristina, in the Yugoslav province of Kosovo.xix

As the U.S. bombed such beautiful cities as Belgrade, Nis and Pristina into the stone age, a “second wave” of attacks was launched – the economic bombs of the IMF’s “structural adjustment policy.”

Back in the 1990s, opponents of U.S. policies focused on the horrors of the massive bombardment of Kuwait/Iraq, and then Yugoslavia. But in general they failed to fully observe the underlying long-term economic goals that the bombardments and de-structuralizations were designed to accomplish. In a similar way, Bush’s and Obama’s “War on Terror” is used today as a cover for repressing resistance to the expansion of empire. The Somali pirates, for example, have become one of the more visible forms of resistance to the dumping of hazardous wastes off the north-east coast of Africa – a consequence of the neoliberal project that had been codified and refined by Summers.xx There is a growing understanding that “neither government regulations nor the capitalist market is capable of providing adequate protection for natural ecosystems or communities affected by environmental pollution,”xxi and so some of the victims of neoliberalism are taking matters into their own hands against the corporations poisoning them.

Nor are we immune from such policies here at home. While the world’s environment is in worse shape than ever, also underway has been a gigantic transfer of wealth from the working class to banks, private corporations and their owners, leading to record levels of profit-taking on Wall Street. Just as he’d argued for deregulating trade in toxic wastes, Summers testified before Congress that the banks and financial institutions were capable of regulating themselves. He was a main opponent of the Glass-Steagall Act of 1933 that restricted what banks were allowed to do. Congress overturned the Glass-Steagall Act with Clinton and Gore’s approval, leading to the economic crisis the world has been enmeshed in for the past 4 years. Former President Clinton himself has had second thoughts about Summers’ role here, saying that Summers was wrong in the advice he gave him against regulating derivatives. Yet, President Obama seems to have had no second thoughts over appointing Summers as director of the White House’s National Economic Council, enabling Summers to again ascend to the pinnacle of global power, with the military might of the United States enforcing the administration’s economic policies.

In the Autumn of 2006, Summers became a part-time managing director of the investment and technology development firm D.E. Shaw & Co. He was paid $5.2 million in his second of two years working there, while working just one day a week,xxii and at the same time also collected $2.7 million in speaking fees from the same corporations to which Summers would later allot government bailout money.xxiii

When Summers’ hero – right-wing economist Milton Friedman – died in 2006, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator.” In it, he argued that “any honest Democrat will admit that we are now all Friedmanites” and that Friedman had made real contributions to monetary policy. But his real contribution, Summers opined, was “in convincing people of the importance of allowing free markets to operate.”xxiv

Under Summers and other officials from the World Bank, International Monetary Fund and World Trade Organization, “world trade . . . burgeoned with imbalanced cargoes: banned pesticides, leaded gasoline, CFCs, asbestos, and other products restricted in the North [but which] are sold to the South,” according to Jim Vallette, formerly of Greenpeace. “Tropical timber, oil, coal, and other natural resources flow from South to North with little or no benefit to the host communities; and while regulations tighten around dirty coal and dangerous nuclear power plants in the North, they are proliferating in Asia, Africa, Eastern Europe and Latin America, where they are owned and operated by Northern corporations.

“This trade has been facilitated through tens of billions of dollars of financing by the World Bank, the U.S. Overseas Private Investment Corporation, and the U.S. Export Import Bank, [quasi-]government institutions in which Mr. Summers has wielded his economic logic. His 1991 memo can be considered a working thesis behind this decade’s dominant global economic policies.”xxv

Summers’ recent actions as director of President Obama’s National Economics Council serve to continue his contempt for those on the receiving end of global capitalism’s largesse. One of his last battles as part of the Obama administration was to remove caps on executive pay at firms receiving stimulus money,xxvi including Citigroup, from which he is under fire for accepting free rides in its corporate jets.xxvii


Lawrence Summers embodies the class he represents and the policies most fruitful to ripping trillions of dollars from the working class in the United States and natural resources from around the world in order to expand the Empire of capital. Thus, when U.S. President Barack Obama announced his appointment of Lawrence Summers – a fellow Harvard Al­umnus – as Director of his National Economic Council, Obama completely disregarded Summers’ responsibility in causing or exacerbating the international financial crises and the great suffering they have caused. Instead, Obama revoltingly heaped praise on Summers, oblivious to the impact (or maybe in support) of the devastation Summers’ policies wrought on behalf of capital:

As Under Secretary, Deputy Secretary, and then Secretary of the Treasury, Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. … I am glad he will be by my side, playing the critical role of coordinating my Administration’s economic policy in the White House – and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis.

So much for Obama’s slogan of “change”. The die was cast before he stepped foot in the White House. Environmental activists might do well to ask President Obama, for starters, what are his views on grassroots activists’ demands – ridiculed by Summers – for U.S. ratification of the ban on the export of hazardous wastes.


World Bank officials have always helped to shape and to administer U.S. government policy. Prior to his tenure as president of the World Bank from 1968 to 1981, Robert McNamara had, you will recall, been the Secretary of Defense of the United States and, in that capacity, the main architect of the “automated battlefield” which the U.S. government applied in Vietnam, slaughtering more than two million Vietnamese people and poisoning their crops, farmlands and water supply for generations to come. It was McNamara who approved the use of Agent Orange and other defoliants that poisoned the land throughout the region, and along with it American GIs. Moving to the World Bank, McNamara maintained his interest in the region, helping to open up Thailand to the sex trade industry and presiding over the privatization of publicly used lands and infrastructure there, resulting in ecological and social catastrophe.

The revolving door between high-level government appointments and international banking, insurance and multinational corporate boards has been spinning as freely as ever regardless of who holds the Presidency. After appointing Summers to his post Clinton selected Ron Brown, former lawyer and public relations flak for Haitian dictator Jean Claude Duvalier, as Secretary of Commerce. From that post Brown participated in setting up the IMF’s devastating Structural Adjustment Program for Haiti. Another of Brown’s roles was to oversee the transport of toxic wastes abroad.

Brown, Summers and the others pushed the World Bank/ IMF line, which imposed “Structural Adjustment Programs” for countries unable to make regular payments to western banks on the interest of monies loaned to them, owing them large amounts. Should they not accept that “debt restructuring” they get bombed and sanctioned until they do. While individual banks of course want to recoup their loans, global finance capital as a whole fosters indebtedness as leverage to accomplish a number of things critical to the continued expansion of capital:

(1) hammer the working classes in debt ridden countries into line;

(2) obliterate (“enclose”) longstanding communal ways of living and colonize it with the “free market”;

(3) establish networks of Non-Governmental Organizations – capital’s new global managers – to intercede in and thus “manage” any resistance. Organizations such as NRDC, traveling to Ecuador, inserted itself on behalf of indigenous, workers and community movements, supplanting them from speaking in their own voice and around their own demands. NRDC, in this instance, negotiated away the movement’s victories against Occidental Petroleum in exchange for minor and temporary improvements in their material situations;xxviii

(4) drive down gains made during decades of struggle;

(5) present a pretext for “balancing the budget” at home, and thus provide an excuse for attacking gains made in workers’ living standards and the environment here; and,

(6) develop small indigenous capitalist classes dependent upon global capital, and maintain them in power by any means necessary, including military force.

This is largely what the US/NATO bombardment of Yugoslavia was about, along with the wars against Iraq and Afghanistan – the reassertion of capitalist hegemony over the region. The U.S. and NATO forced Yugoslavia, under a newly reluctant Milosevic, back into the arms of its masters.xxix In his last act as Commerce Secretary, Ron Brown led a coterie of corporate executives, military personnel and defense contractors whose companies had contributed generously to the Democratic Party and the Clinton campaign, to Yugoslavia, in search of corporate gain and expansion of their markets that the break up of that beleaguered country made possible.

When Brown’s plane went down over Yugoslavia fourteen years ago with dozens of corporate moguls aboard, it exposed the “intervention” as an attempt “to bring the region firmly into the American sphere of military and commercial interest.”xxx

At stake, at the time, in addition to cheap labor, military parts, future oil rights and a vast assortment of natural resources in already-developed mines, was $5.1 billion in reconstruction funds (that figure tripled, and by now has doubled again, to more than an estimated $32 billion), with the World Bank set to dispense $1.8 billion for the region in corporate giveaways each year. As Alexander Cockburn rightly put it, “[Brown’s] was the tour to cash in the investment and bring home the trophies.”


DATE: December 12, 1991

TO: Distribution

FR: Lawrence H. Summers

Subject: GEP

‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.


1Lawrence Summers, Memo to senior World Bank staff, December, 1991. Published in The Economist, February 1992.

2Mitchel Cohen, Listen Gore: Some Inconvenient Truths About the Poltics of Environmental Crisis, Red Balloon pamphlets, 2007.


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