The birth of global economic meddling

Since gaining independence in 1821, Greece regularly required large bailouts to solve their budgetary crises. In the fallout of the 2008 Great Recession, foreign experts from the International Monetary Fund (IMF) and the European Central Bank (ECB) pushed the hard pill of austerity on the country. In this way, bankers disenfranchised the Greek people through fear of a precipitating humanitarian crisis if they did not bend to their creditors’ conditions. Across the globe it has become commonplace for countries to cede their most fundamental powers in exchange for financial support. Creditors have used this leverage – often called conditionality – for centuries, but only recently have international organizations come to play this role. We usually mark this change beginning in July 1944, with Bretton Woods and later the establishment of the IMF. But that is where Jamie Martin’s new book The Meddlers ends. He shows instead that countries began giving up sovereignty to international institutions during the First World War. 

The Meddlers tells the story of how bankers and economic experts repackaged imperial practices within international institutions, and how they invented new methods to solve a novel set of global problems. Beyond conditionality – control over the state coffers as security on a loan – Martin terms the many kinds of economic influence that required a reduction in sovereignty meddling. This included “diverse realms of economic policy-making—including trade, central banking, development, and financial regulation” (p. 247). Martin implies that meddling is a ubiquitous part of our present, but that its origins are misunderstood. The chapters take us through the many “firsts” in international cooperation and intrusion, leading us toward the system we have today. The “world’s first international bank” (p. 3), the Bank for International Settlements (BIS) set off the road to the IMF. We also learn about the uneven commercial relationships that led to the General Agreement on Tariffs and Trade (GATT), the “intergovernmental commodity governance” (p. 13) that led to Organization of the Petroleum Exporting Countries (OPEC), the “advice without control” to China that opened the door for the foundation of the Organization for Economic Cooperation and Development (OECD), and development loans in China and Greece that brought us the World Bank. Martin identifies a network of institutions that make up “global economic governance” and provides the intertwined and overlapping origin story for each.

From the outset of the narrative, Martin illustrates how the crisis of the First World War transformed trade issues into existential ones. The Allies were badly in need of nitrate for weapons manufacturing, but had to deal with a sovereign nation, Chile, in order to buy it. In essence, this highlights how industrialization and mechanization brought about an interconnected global economy. This has clear echoes in the present. As we face the prospect of climate catastrophe, the need for rare earth minerals – lithium and cobalt especially – controlled by a few countries has created a dire situation for our futures.

Another form of meddling covered may sound familiar, as the IMF has provided loans to many countries in the recent past – Zimbabwe, Brazil, or Bangladesh, for example – to stem the tide of inflation or arrest hyperinflation. Even so, it was not in these former “colonial” spaces that an international consortium first provided such a loan, but in the middle of Europe. In 1922, the League of Nations brokered a loan for Austria as it was plagued with hyperinflation and a lack of creditworthiness. In exchange for this cash stimulus, parliament accepted the presence of a League manager, who promptly slashed budgets and put thousands of civil servants out of work. Austria received financial help based on fears that it would succumb to Bolshevism if left to its own devices, or that society would collapse and become a threat to its neighbors. 

While not every country in the 1920s went through periods of inflation, almost all were in dire need of capital investment. Martin dedicates a chapter to development financing for Greece and China that highlights the tools that arose – the provision of expert advice as well as the facilitation of foreign investment, funneled through League of Nations institutions. In Greece, the mission was to turn landless and unemployed people into productive homesteaders, and also funding for industrialization projects. The Chinese case was more complex, partially because of the cultural barrier between the League experts and Chinese government officials. While the main protagonists of Martin’s narrative – mostly American and British bankers and economists – condescended toward the Chinese, they had to keep in mind the insistence of the Chiang Kai-shek nationalist government to continue to rule. As in all these cases, the Chinese still wanted to be able to “translate their countries’ political sovereignty into real economic autonomy” (p. 176). The gap between how the Chinese viewed themselves and how Europeans viewed them led to the butting of heads, to put it lightly. 

And this brings us to a fundamental question of the book: where can meddling take place? The answer reveals a hierarchy of states that persists today. On the lower rungs, are the “colonial” spaces in South America, southeast Asia, and Africa, as well as the former Ottoman lands (such as, Albania, Greece, Turkey). Europeans have been meddling (and much worse) in those regions for centuries. After the First World War, western elites added the defeated Central Powers to the list. With the Austrian loan, “semi-colonial practices were internationalized and brought to the center of Europe” (p. 68). However, the meddlers were operating a new world.  In each context, “The challenge was to legitimate old tools of financial imperialism in a new world of self-determination and mass politics” (p. 161). 

One conclusion I drew from the book, similarly to Quinn Slobodian’s argument in his book, Globalists, is that the experts leading the charge toward international economic control were at heart anti-democratic. The bankers considered “politics” antithetical to “sound money” (p. 107), so their efforts were intended to change that calculus, and in most cases remove the political element, which in practice meant disenfranchising the governed. In the interwar period, when military leaders removed parliamentary powers, Portugal and Poland suddenly became much safer places to invest. “What Salazar demonstrated [in Portugal] was that national dictatorship could be used to enforce austerity in a politically and financially unstable country without the need for external controls” (p. 95). Authoritarianism paradoxically preserved national sovereignty in some cases. 

For all of its contributions and new discoveries, the book does not deliver on the high reaching promises laid out in the introduction. Sovereignty, empire, and racial bias loom large over the conceptual frame, but get short shrift in the body of the book. Through its main sources, Martin builds a narrative as seen from Wall Street, the City, the League of Nations and great power foreign ministries. Thus, we learn about Malaysia, nationalist China, Greece, and Chile without hearing from those places. This is not a criticism per se, but it begs the question: Can we undo imperial narratives using only sources drawn from inside the imperial loggia? This approach is not unusual, and it joins a subset of books on the League’s institutions sourced from the League archives in Switzerland. But in Martin’s case he is laser-focused on the justifications and political consequences of meddling, so then why is there so little from the side of the receiving countries or the “colonized” spaces? 

I found myself yearning for a discussion of the broader implications of meddling for the meaning of modern sovereignty. When a people or political group declare their independence from an empire, they do so in order to gain sovereignty, the right to determine their futures for themselves. But with the meddlers in the way, the most important elements of that right to self-determine may be reduced or eliminated, such as the right to tax and spend. What does The Meddlers have to say about the era of self-determination or decolonization period after the Second World War in light of ubiquitous meddling? This leaves the door open for future scholars to work from the archives in the “meddled” spaces, rather than seeing this story just through the eyes of the meddlers.