[[link removed]]

THE DOWNFALL OF LARRY SUMMERS WAS LONG OVERDUE  
[[link removed]]


 

Andy Storey
December 16, 2025
Jacobin
[[link removed]]


*
[[link removed]]
*
*
[[link removed]]

_ Larry Summers has been forced to step back from public life after
revelations about his ties to Jeffrey Epstein. His moment of disgrace
comes after decades of work promoting economic policies that have had
a devastating impact on countless people. _

Larry Summers’s fall from grace could serve as a metaphor for our
changing times., Stefan Wermuth / Bloomberg via Getty Images

 

Larry Summers, long-time stalwart of Democratic Party economics and
academic governance, has been disgraced
[[link removed]]
by the release of emails between himself and Jeffrey Epstein — a
correspondence that continued long after Epstein’s conviction for
sexual offences with children.

 
The emails are sleazy and cringe-inducing, with Summers seeking
Epstein’s advice on the pursuit of women (one of whom was a
student). Summers has been expelled from some roles (including
membership
[[link removed]] of
the American Economic Association) and has stepped back
[[link removed]]
from others, including his position as economic
[[link removed]]
advisor at the Center for American Progress, a think tank crafting an
agenda for what they hope will be the next Democratic presidency.

The fact that Summers was involved in the center’s work to begin
with says a lot. As Jeff Hauser, head of the watchdog Revolving Door
Project, puts it
[[link removed]]:
“Larry Summers has an argument for being on the Mt. Rushmore of
people responsible for destroying America. Only insane people would
seek out the counsel of a man who relies on Jeffrey Epstein for dating
advice and Milton Friedman for economic inspiration.”

As Treasury secretary under Bill Clinton, Summers pushed Wall Street
deregulation
[[link removed]],
especially liberalization of trade in derivatives, laying the basis
for the crash of 2008. To add injury to injury, as a key economic
advisor to Barack Obama, Summers deepened and prolonged
[[link removed]]
the ensuing recession (including a mass foreclosure epidemic
[[link removed]])
by arguing against the kind of stimulus package that was required, all
the while blocking the breakup of the banks responsible for the mess
and the holding of their management teams to account.

Thought Experiments

This record
[[link removed]]
makes Summers rightly toxic to the American left. But his toxicity
extends well beyond US shores, and his record says much about the
links between American power and global governance. Those links are
now being challenged by both domestic and overseas forces.

In 1991, Summers was chief economist of the World Bank, where he
accepted responsibility for a memorandum
[[link removed]] issued
in his name — he may not have originally written
[[link removed]] it — that
made the case for moving polluting industries to developing countries:
“I think the economic logic behind dumping a load of toxic waste in
the lowest wage country is impeccable and we should face up to
that,” the memo read. “I’ve always thought that underpopulated
countries in Africa are vastly underpolluted.”

While Summers would later describe the memo as an ironic “thought
experiment,” his commitment to extreme liberalization was real
enough. This was very much in keeping with the mood of the times as
championed by the World Bank and related institutions.

The World Bank was founded
[[link removed]],
along with the International Monetary Fund (IMF), at the Bretton Woods
conference of 1944. This was where the soon to be victorious Western
allies constructed the economic governance architecture of the postwar
world.

The IMF developed into a backstop lender of last resort for member
countries, to which they could turn — at a price of course — when
other borrowing options were foreclosed to them. The World Bank became
the world’s largest (so-called) development organization, dispensing
loans, grants, and policy advice to the Global South.

Both organizations have long been controversial, but the criticism
intensified from the early 1980s onward as a debt crisis engulfed much
of the Global South. In order to qualify for limited debt relief as
well as access to new lending and aid, countries were obliged, under
IMF and World Bank conditionality, to adopt so-called “structural
adjustment” policies.

 

Those policies included higher interest rates and cutbacks in
government expenditure as well as the removal of trade barriers that
protected domestic industries from foreign competition. Governments
also had to lift capital controls, adopt an open-door approach to
foreign investment, and carry out privatizations of state enterprises.

Fire Sales

Not surprisingly, the results
[[link removed]] usually involved
austerity for the majority, rising inequality, and deindustrialization
as the Global South was incorporated into an increasingly neoliberal
and globalized world economy. Summers championed these policies, even
though the countries (China [[link removed]]
especially) that have experienced the most significant economic growth
and poverty reduction rates over recent decades have not followed the
recommended course. Nor, for that matter, did Western and other
economically successful economies stick with the neoliberal template
in earlier periods
[[link removed]].

Similar policies were imposed
[[link removed]] upon the countries of the
former Soviet bloc at the end of the Cold War, on East Asian states
[[link removed]]
in the wake of a financial crisis in the late 1990s, and on peripheral
European countries after the crash of 2008. Summers, who was embedded
in the US Treasury during the 1990s, was one of the figures “pushing
a fire sale of Russian state assets ultimately bought cheap by corrupt
oligarchs,” as Robert Kuttner observes
[[link removed]].

He went on to make a decisive intervention
[[link removed]]
in relation to the World Bank during the Asian crisis of 1997–98.
While the IMF, urged on by the US Treasury, pushed for deep austerity
and the rapid opening up of the East Asian economies to international
capital, the World Bank’s chief economist, Joseph Stiglitz, argued
for a more cautious and gradual approach. A furious Summers demanded
Stiglitz’s resignation. The United States has always had de facto
veto power
[[link removed]]
over key World Bank decisions, so he got his way.

Stiglitz would later ask
[[link removed]]:
“Did America — and the IMF — push policies because we, or they,
believed the policies would help East Asia, or because we believed
they would benefit financial interests in the United States and the
advanced industrialist world?” The question goes to the heart of the
relationship between US imperial power and institutions like the World
Bank.

These institutions were designed to serve the interests of empire and
capital (US capital above all others). Such interests were arguably
better served by a multilateral, rules-based approach — although the
United States always retained the right to exempt itself from the
rules — than by a framework where states and corporations could
operate in a purely unilateral manner.

As Robert Wade observed
[[link removed]],
if the United States can persuade elites in other countries to embrace
goals like the free movement of capital or openness to foreign
investment, “it can achieve its foreign economic policy objectives
far more cheaply and effectively than through either [bilateral]
negotiations or coercion.” The Bretton Woods institutions have long
been successful at persuading national elites to play ball in this
way, though coercion has never been entirely absent from the mix.

Trump’s Strategy

This system is now under threat from within, as the Trump
administration restores trade barriers and reverts to bilateral
negotiations (based on unilateral US demands) and overt coercion.
Trump’s team wants to browbeat rival national elites (and even
erstwhile allies) into compliance instead of seeking to persuade or
co-opt them into multilateral arrangements.

 
In fact, the recommendations of the Heritage Foundation’s Project
2025 blueprint for a Trump presidency included
[[link removed]]
leaving the IMF and the World Bank altogether. This is in line with a
general MAGA preference for unilateral US action and a distaste for
multilateral institutions. A review
[[link removed]]
of US membership of the Bretton Woods organizations is ongoing.

For defenders of the Bretton Woods framework, Trump’s threats to the
World Bank and IMF smack of self-harm
[[link removed]],
considering how closely those institutions have aligned themselves
with US interests. With good reason, such commentators cite the
willingness of the bank to pump money into post-invasion Iraq and
Afghanistan as proof of its usefulness to the US imperial project.

Backing up this position, but from a critical perspective, Filipino
anti-imperialist Walden Bello documents
[[link removed]]
the World Bank’s long-term support for the US client dictatorship of
Ferdinand Marcos in his home country. Michela Wrong has similarly
shown
[[link removed]]
how the World Bank helped keep Zaire’s pro-Western tyrant Mobutu in
power for decades. There are many other examples
[[link removed]] of
the same pattern.

In response to the threat from Trump, the bank has opted not merely to
stand on its record of support for US imperialism but also to engage
in further appeasement
[[link removed]].
The Bretton Woods Project, a critical NGO, sums up
[[link removed]]
the World Bank and IMF management meetings in October 2025 as follows:
“Loyalty to Washington and private capital was on full display.”
US Treasury secretary Scott Bessent backed
[[link removed].]
this emphasis on policies “that enable the private sector to
flourish” and railed against “overregulation.”

Will this appeasement be enough? The Trump administration doesn’t
seem interested in creating a stable framework within which US capital
in general can thrive. It wants a regime in which Trump family
businesses and other designated beneficiaries (not necessarily
American ones) can carve out super-profits and sees coercive
individual deals as a better means to that end than rules-based
multilateralism.

The World Bank could still remain a xxxxxx of US power projection, as
evidenced by its proposed role in financially underwriting
[[link removed]] Trump’s plan
[[link removed]]
for the occupation of Gaza. Influential actors, many of whom
contribute to the insider journal _Foreign Affairs_
[[link removed]], have continued to draw up schemes
for the restoration or reinvention of a US-dominated multilateral
order on a broader basis, with allies once again treated as allies
while US power operates through rather than against global governance.

But the challenges to that old vision come from outside the United
States as well as within. China and other so-called BRICs nations do
not pose
[[link removed]]
any fundamental anti-capitalist challenge
[[link removed]]
to the Bretton Woods bodies. However, they do want a bigger say in how
they operate, and China in particular is prepared to offer
alternatives.

One example is its establishment of the Asian Infrastructure
Investment Bank (AIIB) as a source of development finance in 2016. One
study
[[link removed]]
concludes that the AIIB “could unsettle the political influence the
United States has enjoyed over developing countries through its
leadership of the World Bank. An important set of countries may be
parting ways with the World Bank and looking to a Chinese institution
for leadership in the world of development.”

Summers bestrode the interlocking worlds of US and global governance
like a colossus for decades, at a time when the United States became
the world’s only superpower and its dominance seemed
unchallengeable. His own tawdry fall from grace could serve as a
metaphor for our changing times.

US imperialism is facing fundamental challenges
[[link removed]],
not just from the economic rise of China but also from worldwide
popular revulsion at the genocide in Gaza in particular. Its ruling
class is divided against itself, with the multilateralist wing
represented by Summers on the defensive, and new financial
[[link removed]]
storms
[[link removed]]
are brewing. All of this comes against a backdrop of severe global
indebtedness [[link removed]], both
public and private, and an intensifying climate emergency.

Trump and Summers have much in common, with propensities for
arrogance, bullying, sexism, and self-aggrandizement, not to mention a
shared friendship with a notorious pedophile. But until recently, they
represented different ideas of how best to advance US elite power and
wealth. It is probable that neither of their approaches will prove
sustainable (in Trump’s case) nor recoverable (in that of Summers)
in the context of a crisis-ridden, increasingly multipolar world.

===

Andy Storey is a former lecturer in political economy at University
College Dublin.

 

 

 

 

* Larry Summers; Jeffrey Epstein; 2008 Financial Crisis; World Bank;
[[link removed]]

*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]
Manage subscription
[[link removed]]
Visit xxxxxx.org
[[link removed]]

Bluesky [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]