At 65, the IMF is changing – for the better

From Al Jazeera English
By Kevin P. Gallagher
Video from YouTube
March 12, 2012

The International Monetary Fund (IMF) started operations 65 years ago this month. The global financial crisis has triggered some constructive new thinking and policy at the IMF – though the institution has continued some of its more concerning policies as well.

The IMF is definitely changing, but the question is whether or not it can truly become the “New Deal in international economics” that US Treasury Secretary Henry Morgenthau and the institution’s founders envisioned. It is easy to forget that the institution was created as a global “new deal” institution, because it abandoned those roots after a few decades. We need to remind ourselves that the IMF was created by John Maynard Keynes himself and Harry Dexter White, a Keynesian economist working in Morgenthau’s US Treasury during the administration of President Franklin Roosevelt. Political economist Eric Helleiner writes:

Both Keynes and his American counterpart, Harry Dexter White, saw the goal of bringing international finance under greater public control as a central objective of their blueprints. As Morgenthau put it rather dramatically at the Bretton Woods conference, the goal was to ‘drive the usurious money lenders from the temple of international finance’.

In this spirit, the IMF’s articles of agreement charged the institution with acting like a credit union to help nations solve their balance-of-payments problems and to provide “surveillance” to monitor the financial health of the global economy. The IMF articles also officially sanctioned capital controls – counter-cyclical regulations on speculative capital inflows and outflows to prevent and mitigate financial crises. For more than 30 years, the IMF presided over the “golden age of capitalism” – during which Western nations saw unprecedented economic stability, expansion, employment growth and rising standards of living.

Read the full article here.