Planet of Slums

Davis blames international institutions like the IMF and the World Bank for the proliferation of slum conditions, describing how these entities’ policies prevented state governments from expanding social safety nets, improving infrastructure, and spending money on any social welfare in favor of repaying sovereign debts to developed world lenders. Under the guise of modernizing developing world economies, the IMF’s profit-seeking measures led to a dramatic increase in the number of urban poor while also worsening the living conditions within slums.

To give readers historical context, Davis explains postcolonial era neoliberalism, a movement of political economics largely driven by free-market capitalist principles. As cities modernized after countries attained independence from colonial rule, most of the same zoning boundaries enforced by imperial powers across racial and socioeconomic lines continued. This meant that cities free of imperial rule did not experience an increase in equality or egalitarianism. At the same time, many developing countries incurred exorbitant sovereign debts, sometimes as a condition of independence and sometimes as new governments struggled to get on their feet. As a result, imperial powers became financial puppet masters because they were lenders, in effect controlling former empires through the IMF, which, Davis argues, worked mostly on the behalf of elites who wanted to "defend their own class privileges and spatial exclusivity" (96).

The IMF was ostensibly created to help developing nations manage sovereign debt; in practice, its Structural Adjustment Programs forced governments to severely cut social welfare programs and internal spending to focus on debt repayment. For example, after Congo achieved independence, the western powers-backed dictator Mobuto borrowed money using the nation’s mineral industries as collateral. The IMF then implemented a SAP in 1977, making the Congolese aggressively pay off the incurred debts, effectively destroying the civil service industry as one of its conditions of debt restructuring. The results were hyperinflation, a ruined monetary system, and eventually violence.

Facing the rigid and unfair strategies imposed by the IMF, many countries turned to the World Bank, whose stated purpose is to reduce poverty by lending nations money for their poorest inhabitants. In reality, however, the World Bank was founded on the neoliberal idea that poor people should help themselves through innate ingenuity. This meant that the World Bank did little to improve slums; also, funds intended as self-help loans were priced too high for people in extreme poverty.