In 1972, Manley led the PNP to victory and two years later declared himself a democratic socialist, and proposed a radical agenda of nationalizations, social reforms, and close ties with Cuba. He introduced legislation on union and women's rights, started a land reform, and spent heavily on health, education, and housing. He established a minimum wage for all workers, including domestic workers. He proposed free education from primary school to university; this program also subsidized meals, transportation and uniforms for schoolchildren from underprivileged backgrounds. The minimum voting age was lowered to 18 years, while equal pay for women was introduced as well as Maternity leave. The National Housing Trust was established, providing "the means for most employed people to own their own homes," greatly stimulated housing construction, with more than 40,000 houses built between 1974 and 1980. A worker's participation program was introduced, together with a new mental health law, and the family court. Free health care for all Jamaicans was introduced, while health clinics and a paramedical system in rural areas were established. Various clinics were also set up to facilitate access to medical drugs. Manley's Jamaica, with its progressive politics that had elements of Marxism and black power, featuring a vibrant new music, Reggae, challenged imperialism and racism.
Manley's democratic socialist program, however, turned out to be a dismal failure and by the end of his administration in 1980, the Jamaican economy had lost 17.5 per cent of its GDP; the national debt increased tenfold from J$300 million to J$3,000 million; inflation ballooned by 250 per cent; revenues remained constant while expenditure galloped by 66 per cent; the budget deficit sprinted from 3.9 per cent to 17.5 per cent of GDP, probably the highest for any country not at war; investment buckled by 40 per cent of GDP; foreign-exchange reserves were eviscerated, collapsing from US$239 million to -US$549 million and unemployment increased by more than 43 per cent. What happened? Why did Manley fail?
After World War II, the U.S., U.K., and Canada all provided economic assistance to Jamaica through international organizations, private investments, and encouragement of the idea of West Indian federation. By the 1950s, the U.S. and Canada had replaced the once-dominant U.K. trade role. On August 7, 1962, the day after independence, Prime Minister Bustamante described Jamaica as pro-Western, Christian, and anticommunist, and he announced "the irrevocable decision that Jamaica stands with the West and the United States." As you can see Manley vision for Jamaica was the counter to Bustamante's, a distant cousin. The problem was Jamaica's economy was already to dependent of the U.S. and Canada. And Manley recognized this. It was under Manley that Jamaica's foreign policy orientation shifted, and attempted to break out of their traditional reliance on the U.S. and the Commonwealth of Nations. However, this is the primary reason Manley would fail: Jamaica's economic resources and outlets were too narrowly prescribe and its dependent on the United States too great. There was no oil money to fund Manley's programs like in the case of Venezuela. Though Manley like Chavez had the will to carry out his program he did not have the financial resources or reserves. Unlike Cuba, Jamaica was unable to develop other trade partners that could support its economy, like the Soviet bloc nations: thus she was doomed to continue to rely on trade with the U.S., Canada, and the U.K, the three nations most opposed to Manley's democratic socialist goals.
The Jamaican economy was dependent on services, which accounts for 70% of GDP. It derived most of its foreign exchange from tourism and bauxite/alumina exports (and more recently remittances). Both of these revenue sources dried up as Manley challenged the economic and political status quo. In an effort to increase Jamaica's revenues in 1974, the Manley’s government announced its plan to increase the taxation on Jamaican-based U.S. and Canadian bauxite companies. This greatly angered the U.S., particularly the military industrial complex as these companies mined aluminum for the war industry. The PNP annulled previous agreements and imposed a production levy on all-bauxite mined or processed in Jamaica. This ruling was claimed to be illegal and contested by the bauxite companies, which filed actions with the World Bank’s international center for the settlement of investment disputes. As the multinational companies relocated to other nations, lay-offs increased, inflation spiral out of control wiping out previous wage increases. And foreign capital inflow plummeted. This created a backlash from local businesses, which had supported Manley's nationalization of foreign businesses. Manley stayed the course initially, but as economic and political tensions rose, he tried to buttress Jamaica's economy by turning to the International Monetary Fund (IMF), a U.S. control entity, for financial assistance. This decision was both ironic and unfortunate, but Jamaica's economy was hemorrhaging. Not simply because of the situation with the bauxite companies, but because in 1974 the world was still in the midst of an oil crisis. And Jamaica, with all its newly created social program, saw its economy crippled as it is a nation totally dependent on the importation of oil--it produces no oil. This provided the U.S. through the IMF the perfect rouse to destabilize Jamaica. And Manley played right into their hands when he turned to "alternate" funding via the IMF.
In Manley's 1976 victory he took the IMF to task. He announced to a cheering crowd of 35,000 at the National Stadium in the capital Kingston, “We are not for sale!” And Manley's statement clearly showed that the country backed his refusal to adhere to the repressive terms demanded by the IMF. With Castro's Cuba, already a thorn in American capitalism's side, and now Cuba's neighbor and ideological ally, Jamaica possibly tag-teaming against U.S. interest in the region, the U.S. wanted Manley out. Once Manley’s refused to adhere to the terms of the IMF, the U.S. imposed economic sanctions that strangled the Jamaican economy further.
This was accompanied by a media campaign directed as undermining tourism industry. Jamaica was now projected as a bastion of crime, creating fear among potential tourists, which further destroyed an economy that relied so heavily on tourism. Last but not least was the political violence that marked the Jamaican elections from 1976-1980. Although violence has characterized Jamaican politics from the beginning, as almost every general or municipal election since independence has been preceded and followed by gang warfare, street outbreaks, and occasional assassinations. But this was nothing like the scale it would take between 1976 and 1980. Supposedly the first use of guns in Jamaican politics took place in Seaga's West Kingston constituency in the months before the 1967 election between Seaga and PNP politician Dudley Thompson. The question that must be asked is, "Why did the level of political violence escalated dramatically in the 1976 election campaign, which saw 162 people killed. Some observers blamed the JLP for the sharply increased political violence in the late 1970s, but others attributed it to PNP militants linked to Cuba. However, not enough observers are citing U.S.-CIA complicity. While Jamaican's three parties--PNP, JLP, and WPJ--all bore some responsibility for the increase, where did all these guns come from? Why all of a sudden did Jamaica became a dumping gun for cheap American-made guns? The death toll for the nine-month 1980 election campaign was 745 people. All these factors, plus the hundreds of thousands of middle-class Jamaicans that migrated to the United States, doomed Manley's attempt at democratic socialism. The rest is history. Or is it? Is history repeating itself as Jamaica is going to bed with the IMF once again?
In the 1970s, commercial banks were eager to make large loans to developing and newly independent countries. The interest rates on these loans were initially low, but variable. But when interest rates were raised sharply in the early 1980s, caught in the trap of having to repay massive debts, most developing country governments felt they have had little choice but to agree to implement these reforms in exchange for IMF assistance. This was exact what we saw happen in Jamaica. And the results of IMF policies have brought ruin to national economies, cutbacks in schools and hospitals, increased poverty and hunger, and environmental harm.
Has the IMF really changed in more recent years? John Cavanagh, director of the Institute for Policy Studies in Washington DC., has recently published a report on the effects of the IMF's and World Bank's ultimate impact on developing nations. Although the IMF (and World Bank) have promoted SAPs as a panacea for nearly a score, he reports that they cannot claim that they have achieved even their own narrow objectives. IMF internal studies reveal that many SAPs have failed to enhance economic growth, reduce fiscal and balance of payment deficits, lower inflation and reduce external debt. In fact, between 1980 and 1997, the debt of low-income countries grew by 544 percent and that of middle income countries by 481 percent. Poor countries have thus gone through all the pain of structural adjustment only to continue to engage in a net transfer of wealth to the industrialized world.
The International Monetary Fund (IMF) and the World Bank announced at their 1999 annual meeting that poverty reduction would henceforth be their overarching goal. This new object provoked justifiable skepticism since the history of the IMF shows that it has consistently elevated the need for financial and monetary stability above any other concern, and through its structural adjustment programs (SAPs) has imposed harsh economic reforms in over 100 developing countries, resulting in hundreds of millions of people going deeper into poverty.
The Nigerian Pan Afrikanist scholar and Garveyite Chinweizu had this to say:
“. . .the IMF, the UN, the WHO, the World Bank and WTO are enemy institutions. So you are at war on every front and you don’t even know it. They [imperialists] use these agencies to dictate your government policies, down to the last detail. None of your budgets is devised without abiding by the framework that the World Bank and the IMF impose, before it is allowed to be written up and announced and you are allowed to implement it . . . . I call it the Imperialist Ministry of Finance. That’s what the IMF actually is.
Taking this article in its entirety, it begs us to ask, "Why is Jamaica going to bed with the IMF again? The answer is Jamaica is still caught in a vicious cycle; a cycle that actually existed long before Manley got involved with the IMF, but a condition established by the history of slavery and colonialism in Jamaica.
So who is really happy with the new IMF agreement? The IMF or Jamaica?