One major fact is that the bourgeoisie in
the Third World, particularly in Africa, have a vested interest in reproducing
the status quo to maintain their positions of power, and are therefore
concerned about political legitimation. A case in point is the practice of socialising
debt, or, and this amounts to the same thing, the transformation of private to public
debt.
Bailing out capitals—whether indigenous or
foreign—means that the burden of repayment gets shifted to society at large
(socialisation of debt). Interest payments must take place through increased
forms of economic exploitation (lower real wages and longer hours), higher
taxes usually in the form of value-added tax, an increase in the price of basic
foodstuffs, higher interest rates and, indirectly, cuts in government spending
in terms of education, health and welfare. New forms of political domination— usually
more economically and physically coercive in nature—are required to support the
ever-growing intensification of economic exploitation.
Paradoxically, the largest part of the various
loans obtained by the Third World, particularly by the African states, is
looted and carted away back to the foreign accounts in various banks of the
First World. No wonder, developments in most African states did not
correspondent to the huge debts.
In the same manner, the First World
countries that have orchestrated, accentuated and continued to maintain the
indebtedness of the Third World countries are doing absolutely nothing to
reverse this situation. In fact, the current international economic system is
designed to perpetuate this status quo. Response of the First World to attempts
at debt relief, debt cancellation, debt reduction, debt refinancing or rescheduling
has been highly characterised with ambivalence and apathy. Reportedly, there
has been reduction in the grants given to the Third World countries by the
First World countries. Also, the amount paid to the First World countries and
multilateral institutions (such as the IMF and the World Bank) by the Third
World countries on accumulated interests on loans and in servicing some of
these loans out-weighed the paltry grants being.
