The World's Banker

1. Wolfensohn's Passion: A Force Against Global Poverty

“It’s all I think about,” he said, early in his tenure; “I wake up in the morning thinking about it and I go to bed thinking about it.”

Consuming passion. James Wolfensohn's tenure as World Bank president was defined by his consuming passion to alleviate global poverty. He viewed it as the greatest outrage of our times, a moral imperative that drove his every action. This passion was not merely a professional obligation but a deeply personal commitment.

Security and poverty. Wolfensohn understood the intricate link between global poverty and global security. He argued that poverty created failed states that served as havens for terrorists and incubated diseases, environmental damage, and migration pressures. Addressing poverty, therefore, was not just a humanitarian concern but a strategic necessity.

A noble task. Wolfensohn saw the World Bank's mission as a noble task, charged with relieving poverty, improving lives, and giving children a chance for peace and hope. This conviction fueled his determination to transform the institution and make it a more effective force for good in the world.

2. The World Bank's Evolving Mission: From Post-War Reconstruction to Global Security

The founders’ purpose was twofold: to relieve human suffering, certainly, but at the same time to control the economic chaos that threatened the rich world’s security.

Bretton Woods origins. Conceived in the aftermath of World War II, the World Bank's initial purpose was to rebuild war-torn economies and prevent the economic instability that had fueled the rise of fascism and communism. The Bank's mission was to develop broken-down economies.

Cold War strategy. During the Cold War, the World Bank's mission evolved to prevent developing countries from aligning with the Soviet Union. Economic development became a tool for containing communism.

Modern security. In the post-Cold War era, the World Bank has emerged as a key player in nation-building efforts and in preventing the proliferation of failed states that serve as havens for terror. Poverty reduction is now seen as a means of addressing global threats such as disease, drug trafficking, and environmental degradation.

3. Wolfensohn's Early Life: Ambition Forged in Australia

He lived in a state of financial worry, having rubbed shoulders with plenty.

Humble beginnings. James Wolfensohn's early life in Australia was marked by modest circumstances and a father's thwarted aspirations. This instilled in him a vast and raw ambition to succeed and overcome the limitations of his upbringing.

Paternal expectations. Wolfensohn's father, Hyman, placed extraordinary expectations on his son, pushing him to excel academically and professionally. This pressure, while sometimes overwhelming, ultimately fueled Wolfensohn's drive to achieve greatness.

Olympic spirit. Wolfensohn's participation in the 1956 Melbourne Olympics as a fencer taught him that he could compete on a grand stage. This experience, combined with his studies at Harvard Business School, propelled him to a successful career in finance and a desire to make a global impact.

4. The Bank's Structural Adjustment Programs: A Contentious Legacy

There is nothing that will serve to drive these countries into some kind of ism—communism or something else—faster than having inadequate capital.

Market rhetoric. The World Bank's structural adjustment programs, designed to promote free-market reforms in developing countries, became a source of controversy. While the reforms were often necessary, the Bank's evangelistic market rhetoric and overoptimistic promises fueled resentment.

Social costs. The budget austerity measures and currency devaluations associated with structural adjustment often imposed hardship on poor people, leading to riots and social unrest. The Bank was accused of prescribing toxic medicine for the poor.

Geopolitical lending. The Bank's credibility was further damaged by its practice of lending to America's Cold War allies, regardless of their commitment to economic reform. This mutually assured hypocrisy undermined the Bank's reputation and fueled skepticism about its motives.

5. The Rise of NGOs: Challenging the World Bank's Authority

Virtually everyone affiliated with a non-governmental organization,” they wrote, “says that adjustment is an unmitigated social and ecological disaster.

Feisty NGOs. The emergence of nongovernmental organizations (NGOs) as influential players on the international stage posed a new challenge to the World Bank. These entrepreneurial outfits often criticized the Bank's policies and projects, accusing it of harming the environment and indigenous peoples.

Environmental activism. Environmental NGOs homed in on specific World Bank projects, such as Polonoroeste in Brazil, which caused significant deforestation and harm to indigenous communities. These controversies damaged the Bank's reputation and forced it to create an environmental department.

Lilliputian menace. The constant NGO offensives tied up the World Bank, frequently disabling its efforts to fight poverty. Despite their diminutive stature, the Lilliputians were winning. Unless we wake up to this danger, we will lose the potential for good that big organizations offer.

6. Wolfensohn's Leadership Style: A Blend of Charm and Turbulence

You’ve got to have a passion for development, and I’ve got a passion which grows.

Magnetic personality. James Wolfensohn possessed a magnetic personality and a powerful charm that enabled him to build relationships with corporate chiefs, world leaders, and cultural figures. He was a master listener and a skilled negotiator.

Impatient and demanding. Wolfensohn's impatience and high expectations often led to friction with his senior colleagues. He was known for his explosive temper and his tendency to push too hard for change.

Rejuvenating the Bank. Despite his flaws, Wolfensohn's energy and vision helped to rejuvenate the World Bank and lift it out of a dark time. He shook up the institution, recasting its structure and mission, and opened up the development agenda to new players and subjects.

7. The Power of Personal Connections: Building Alliances for Change

He’s one-third psychiatrist, one-third concierge, and one-third business adviser.

Networking prowess. Wolfensohn's success stemmed in part from his ability to build and leverage personal connections. He cultivated relationships with influential figures in finance, music, and politics, creating a vast network that he could call upon for support.

Charitable endeavors. Wolfensohn's involvement in charitable causes, such as his support for Jacqueline du Pre and his chairmanship of Carnegie Hall, provided him with opportunities to meet and connect with influential people. These relationships often translated into business opportunities.

Beyond the bottom line. Wolfensohn's firm, James D. Wolfensohn Inc., prioritized client loyalty and ethical conduct over short-term profits. This commitment to integrity earned him the trust of clients and set him apart from larger Wall Street firms.

8. The Tragedy of Lost Opportunities: The Case of Nigeria

The camera was tucked inside the lapel of his coat and was no bigger than a box of matches.

Early lessons. Wolfensohn's early experience in Nigeria, where he was briefly imprisoned for taking photographs, gave him a feel for the challenges confronting the World Bank in newly minted nations. It was all very well saying that developing countries would take off into self-sustaining growth if only they had sufficient investment capital.

Colonial mimicry. Wolfensohn found that the health minister wanted to see him. This seemed a little odd; he was not proposing to sell medicines. The minister explained that he was “in charge” of Wolfensohn’s project since it was “his turn”; he observed that, in order to build a factory, Wolfensohn would undoubtedly need land; he had the perfect land for him.

Conditions for investors. Development experts would have to take the argument to the next step: How do you create the conditions that allow investors to do business?

9. The Importance of Local Ownership: Lessons from Uganda

The plight of the developing peoples—of the two-thirds of humanity who are striving to cross the threshold of modernization—is the central drama of our times.

Shifting power. The Uganda experiment demonstrated the importance of local ownership in development. By empowering local communities and governments to take charge of their own development agendas, the World Bank could achieve more sustainable and effective results.

Community involvement. The success of Uganda's Poverty Eradication Action Plan, which involved broad participation from NGOs and civil society, highlighted the value of grassroots involvement in development planning.

Empowering the poor. The key to enriching a peasant may not be to move him to a steel mill, it was now realized; it may be to give him better seeds, advice on agricultural techniques, or land tenure.

10. The Perils of Overpromising: The Limits of Multilateral Institutions

We should strive to eradicate poverty by the end of this century.

McNamara's ambition. Robert McNamara's ambitious goal of eradicating poverty by the end of the century set a high bar for the World Bank. While his efforts led to significant progress, the failure to meet this ambitious target exposed the limits of the Bank's power.

Unrealistic targets. The world has committed itself, for example, to reaching a set of targets known as the Millennium Development Goals, which include universal primary school enrollment and a two-thirds cut in child mortality. When those goals are not met, the World Bank and other development agencies will be branded as failures.

The limits of power. The setbacks in Iraq had made the limits to American power obvious, and the contempt for international institutions had faded. In the meantime, however, multilateralists sometimes made the opposite mistake, insisting that the World Bank should tackle poverty as though by magic.

11. The Enduring Challenge of Corruption: A Cancer on Development

There is nothing that will serve to drive these countries into some kind of ism—communism or something else—faster than having inadequate capital.

The cancer of corruption. Wolfensohn recognized corruption as a major obstacle to development. He spoke out against it, breaking a long-standing taboo at the World Bank, and pushed for greater transparency and accountability in lending practices.

Undermining progress. Corruption undermines economic growth, scares away investment, and deprives the poor of essential services. It can also undermine the effectiveness of aid programs, as demonstrated by the experience of Indonesia.

Building institutions. The key to combating corruption lies in building strong institutions, promoting good governance, and empowering civil society. The World Bank can play a role in supporting these efforts, but ultimately, success depends on the commitment of borrowing countries.

12. The Enduring Power of Multilateralism: A Force for Good

There is no wall,” Wolfensohn declared. “We are linked by trade, investment, finance, by travel and communications, by disease, by crime, by migration, by environmental degradation, by drugs, by financial crises and by terror.

Global interdependence. Wolfensohn understood that in an increasingly interconnected world, global problems require global solutions. Multilateral institutions like the World Bank are essential for addressing challenges such as poverty, disease, and environmental degradation.

Limits to power. You cannot fight AIDS or migration or environmental challenges unilaterally.

Defending the Bank. I have recounted Wolfensohn’s struggles mostly for the joy of the story, but also to show why, if the World Bank is worth criticizing, that’s because it’s so well worth defending.

Last updated: April 12, 2025