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A paper which studies the goals, successes and conradictions of the World Bank.

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 top levels, 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 has led 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.

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