Western countries, joined by the Republic of Korea and Japan, voted against economic development and poverty reduction resolutions considered by the UN General Assembly in December 2022. The stance of these countries and their partners reflects the power of finance capitalism and its longstanding support for neoliberal economic policy to the detriment of developing nations.

The Economic and Financial Committee of the UN General Assembly (Second Committee) recently adopted 38 of 41 resolutions. The West and partners voted against two resolutions of special importance. The first vote was 123 in favor to 51 against on the resolution Eradicating Rural Poverty to Implement the 2030 Agenda for Sustainable Development.

The second vote was 123 in favor to 50 against by the West and partners (Türkiye abstained) on the perennial resolution Towards a New International Economic Order.

Clearly, there is a stark division between the West and its partners and all of the "Rest." In other words, the votes reflect the increasingly sharp contradiction between the developed North and the developing Global South. Two major powers, China and Russia, align with the Global South.

System failure 

The Bretton Woods system, or the international financial architecture erected following the 1944 eponymous conference to serve the devastated post-World War II international community, did not live up to its promises. Instead, it became an apparatus to impose finance capitalism around the world and oppose alternate development models.

The two major accomplishments of the conference were the creation of the International Monetary Fund and the International Bank for Reconstruction and Development (IBRD). The former was supposed to help states balance their payment and address debt problems. The latter, later renamed the World Bank (WB), was supposed to focus long term on development following post-war reconstruction. Over the years, both institutions failed in their purpose owing to a variety of factors.

At the conference, delegations from China, India and Latin American countries voiced their concerns for development. But the IBRD/WB gave its primary attention to reconstruction rather than to development.

Developing countries also expressed a desire for an international financial system that would be friendly to them. This meant that states exporting commodities should be given attention and that alternate development models should be supported. Alternate development models included state-led industrialization.

The prospects for a development focus were dashed by the Cold War and the "East versus West" bloc confrontation. This confrontation was framed not only in political terms, but also in economic terms. Thus, the antipathy of the West to various socialist models of development sharpened.

State-led industrial development was rejected. Significantly, the issue of financing development over the long term led to sharp debate over the degree of public and private financing.

During the 1950s and 1960s, the process of decolonization brought many newly independent states into the international community. Naturally, economic development was at the forefront for them. To address the issue, 36 developing countries in 1962 came together to create the UN Conference on Trade and Development (UNCTAD).

The first meeting took place in 1964 in Cairo, Egypt. The key issues addressed were: terms of trade by primary commodity exporters, development financing and export-oriented strategies. At its conclusion, the UNCTAD was made a permanent body within the UN system.

Unfortunately, despite the UNCTAD's best efforts throughout the 1960s and 1970s, developing countries saw no major results. It is not surprising that the developing countries then banded together as the Group of 77 to call for a "new and just world economic order." As a result, in 1974, a special UN session convened to promote negotiations and new initiatives to promote economic development.

The negotiations were inspired by the UNCTAD's recommendations and aimed to promote cooperation between developing countries. The international context at the time included global economic and monetary instability owing to the disintegration of the Bretton Woods fixed exchange rate regime, as well as other factors such as the 1973 oil crisis.

In 1977, the Independent Commission for International Developmental Issues was established to research and make recommendations. Former German Chancellor Willy Brandt was nominated by Robert McNamara, then head of the WB, as chair. The report of the commission was released in 1980 and called the Brandt Report.

The Brandt Report focused on the North-South divide and called for measures to overcome it. Issues of poverty, health, housing and education were considered. Additional topics included women in development, hunger and food, disarmament, energy, monetary reform, industrialization and development finance. 

"A new century nears, and with it the prospects of a new civilization," Brandt said in 1983. "Could we not begin to lay the basis for that new community with reasonable relations among all people and nations, and to build a world in which sharing, justice, freedom and peace might prevail?"

North-South divide 

In the face of the progressive Brandt Report, international finance capital mounted a campaign against it. One result was what came to be called the Washington Consensus, so-called "free market" policy prescriptions proposed during the 1980s and 1990s. This consensus was associated with the imposition of neoliberal economic policies globally. Such policy prescriptions include: austerity, reduction of government spending, privatization, deregulation, free trade and monetarism.

The decline in the West of a Keynesian consensus in the 1970s coupled with the end of the Cold War in 1988-89 and the demise of the Soviet Union in 1991 gave triumphalist proponents of "market fundamentalism" major play.

Today, the Washington Consensus forms the basis of the international economic policy of the United States and the West, critics have said.

The recent votes in the UN General Assembly underscored the North-South divide. The West appears to insist on the Washington Consensus and opposes alternate development models.

The international community faces a severe recession beginning in 2023, according to some experts. A combination of factors is leading to such an international crisis. The economic slowdown in Europe began in 2018-19 and then was followed by the trade and tech wars initiated by former U.S. President Donald Trump and by the COVID-19 crisis. To these factors, an energy crisis, a supply chain crisis and a food crisis have all been added, compounding the problems facing the international community.

In the face of the present international situation, cooperation is essential to meet unprecedented challenges. Different mechanisms, platforms and processes have been created in recent years to address development. The Belt and Road Initiative, the Shanghai Cooperation Organization, the Eurasian Economic Union and BRICS are important frameworks.

Today, a new Bretton Woods moment with an emphasis on development as well as on the update and stabilization of the international monetary system is urgently needed to build a new trajectory toward sustainable, inclusive prosperity.

The author is president of the Washington Institute for Peace and Development and a former senior professional staff member of the U.S. Senate Committee on Foreign Relations. This article was first published on the China Focus website 

Copyedited by Elsbeth van Paridon 

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