politalX Politics Store - The World's Banker: A Story of Failed States, Financial Crises and the Wealth and Poverty of Nations

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As a biography of Jim Wolfensohn, the book is a success and a good read. It's full of personal stories, gossip and astute observations. Based on extensive interviews with Wolfensohn, other World Bankers and many friends and observers, the author reveals traits of the man that few would know outside the inner circle of friends and some of his business partners. He is ambitious and driven by his search for accomplishments and adoration, yet his visions are not necessarily backed up by clear strategies and implementation methods. He is a banker, not a development professional. He is also a philanthropist and a musician. Mallaby vividly paints the personality with all his strengths and weaknesses: the duality of a kind of Dr. Jekyll and Mr. Hyde of development banking. His term at the Bank has resulted in many new ideas, some false starts, and some long-term successes, Mallaby contends. But the route to achieve those was difficult and often confrontational. It was frustrating him and draining on his management team and staff, not to speak of his board. In real terms, Wolfensohn shook up the World Bank system - with reason - and overall the Bank is a better place for it: it is more focused on poverty alleviation, works more closely with the borrowing countries and has managed to keep the rich lending governments, more or less, on side.

Biographers often take the side of their subject. Events and people are seen through a close-up lens and objectivity is of lesser importance. This is very much the case here. Mallaby's lens is not only focused on Wolfensohn and the World Bank, he uses a fish-eye lens where anything beyond the focus tends to get distorted or blurred. His bias shows strongly in his repeated, yet generalized, criticism of NGOs, his belittling of the UN Millennium Development Goals and of the UN agencies' capacity to deliver development programs. While it is understandable that details are omitted and development policies and case studies cannot be discussed in depth and breadth, judgemental statements that are not substantiated create uneasiness in the reader. For example, NGOs are criticized for not embracing the World Bank's new Water Strategy in 2002 without the author giving any indication of its substance or the reasons why NGOs did not want to buy into it. He laments that NGOs, or "No-Gos", don't have an "off-switch". "Participatory" consultations appear to be described as successful only when the groups consulted agree with the World Bank policy in the end. He almost feels sorry for Wolfensohn in his efforts to reach out to such groups. Finally, Mallaby's condescending comments on Joe Stiglitz reflect more than journalistic arrogance.

The question arises about the intended audience(s) for this book. People interested in fascinating, colourful personalities will find the person at the centre of this story worth their while. The development professionals, such as myself, will read with interest about the internal World Bank struggles during Wolfensohn's reign. They can easily balance the biases and fill in the source gaps from their own knowledge base. However, the general reader might be well advised to consult additional material on development strategies and country programs and accept this journalist/biographer's views with a pinch of salt. [Friederike Knabe]

The portrayal of Wolfensohn is likewise two-sided. Mallaby credits his "instincts as being ahead of his peers" on the need for providing debt relief in the mid-1990s and on tackling corruption. Wolfensohn is also recognized as being instrumental in pushing for greater country ownership of reforms and for the decentralization of the Bank through the relocation of most country directors to the field. At the same time, the book has candid descriptions of what Mallaby considers to be Wolfensohn's failures, for instance his tendency to share "credit with no one."

North-based NGOs come across in Mallaby's portrayal as the villain of the piece, Lilliputians who tie down the Bank and keep it from doing good. The NGOs, says Mallaby, have killed worthy projects by overstating the likely labor and environmental impacts and insisting on standards that developing countries can ill-afford. For example, in Laos "the environmental standards that the Bank proposed for a megadam project matched those of a country like Sweden; this was like telling the Laotians that they must not travel in motorized vehicles unless they purchased brand-new Volvos with passenger air bags."

Not all Bank failures are the fault of NGOs; sometimes, says Mallaby, the Bank cannot succeed because of lack of cooperation by the client. In 1998, the Bank wanted to execute an project to combat AIDS in Russia, but the country's health ministry did not want to acknowledge the problem. When the ministry came around, Russian pharmaceutical makers blocked the Bank, fearing that it would open the drug market to foreign competitors. Russia's medical establishment was also opposed as "hospitals had a large and antiquated infrastructure for treating TB, which would be rendered redundant by the Bank's modernizations."

Mallaby's sympathetic portrayal of the Bank contrasts with some of the harsh characterizations of other observers. In his recent book Why Globalization Works, Martin Wolf calls the Bank a "fatally flawed institution," whose source of "failures was its commitment to lending." Describing the situation when he worked at the Bank in the 1970s, Wolf writes: "every division also found itself under great pressure to lend money, virtually regardless of the quality of the projects on offer or of the development programmes of the countries. This undermined the professional integrity of the staff and encouraged borrowers to pile up debt, no matter what the likely returns." The Meltzer Commission, appointed by the U.S. Congress in 1998, made a similar charge in its report. Mallaby alludes on occasion to this pressure to lend, particularly to middle-income countries, but does give it the importance ascribed by others.

Mallaby presents shifts in the types of lending favored by the Bank as an example of its learning from experience. He notes that the Bank started with the notion that "infrastructure was the route to human betterment." Then it moved from building physical capital into building human capital by funding education projects, then from human capital into social capital by funding projects to improve the quality of institutions. And, very recently, as Mallaby notes, the Bank has partially reverted to its early emphasis on physical capital. Others put a less positive spin on the Bank's intellectual journey. For example, in his book The Elusive Quest for Growth, William Easterly-a former Bank staffer-treats the same evolution as a chase after fads that failed to deliver: "We thought that certain objects associated with prosperity in the industrialized world - dams, roads, schools - could bring success to the developing world. Later, fads changed to include institutional magical objects. Thus we urged governments to embrace democracy, constitutions, independent judiciaries, decentralization to local governments and other magic bullets. None of them worked."

While the book may not satisfy critics of the Bank, its accessibility and broad scope make it required reading not just for experts on development but for anyone with curiosity about global development, the Bank, and James Wolfensohn.