Theater of Cruelty

Bloodless blood transfer

What's Wrong With The IMF And How To Fix It.
Forfatter: Bessma Momani og Mark R. Hibben
Forlag: Polity (Storbritannia)
When it comes to helping countries financially, thinking and idealism is not enough. You have to know the culture of the individual countries and know where the corruption is.


The IMF is the International Monetary Fund. The IMF was established in 1944 together with the World Bank, and both had the main purpose of building Europe economically after the Second World War, and to create economic balance between countries in a build-up phase. The so-called Bretton Woods system was a set of rules and institutions initiated during a conference in Bretton Woods in the US in July 1944. The Bretton Woods system established rules for commercial and financial consent and collaboration between the world's leading industrialized countries. The most important thing about the Bretton Woods system was the complete long-term or temporary non-compliance with the balance of payments between countries. But when the United States suspended the fixed exchange rate between dollars and gold, the system collapsed. The gold standard no longer applied. The gold standard was the dominant monetary system in the world until the First World War.

The crises of our time. For the past fifteen years, the world has undergone a series of economic crises, many of which have been followed by severe recessions, ie the injection of capital to save the banks.

Many have probably asked themselves or others the following questions: Why have there been so many financial crises in our time? And why especially during the last fifteen years? IN The capital of the 21. century Thomas Piketty pointed out that the main cause of the economic crisis in the world today is economic inequality.

If a fund that lends money to countries with financial problems causes more problems than it solves, then it is of course a serious matter.

The IMF has undoubtedly been important, not only by virtue of being a lender, but also by being an economic advisor at the macroeconomic level. For example, the fund was active in Latin American countries during the economic crisis of the 1980s, and also in Russia in the 1990s.

Mexico. If a fund that lends money to countries with financial problems causes more problems than it solves, then it is of course a serious matter. One problem with the IMF and the World Bank is that they have claimed to have had success where success has failed. For example, the IMF claimed to have succeeded in Mexico, which has been struggling with financial problems for decades after decades, and which, in the opinion of ordinary people and government, has not fared better after borrowing millions of dollars from the fund. How, then, can the Fund claim that the country has improved? Does the fund have something to hide? It is obvious to think this way.

For example, economic journalist Alan H. Meltzer, who wrote the article "What's Wrong with the IMF?" What Would Be Better? » (written in The Independent Review), that GDP losses were much greater than Mexico income in the 1973s, and that the IMF has nevertheless claimed to have had complete success in the process of cooperation with the country, despite Mexico's GDP not being much higher now than in XNUMX.

Now, it is not right to claim that the International Monetary Fund and the World Bank have been responsible for all of Mexico's financial problems. Bad government policies and oil crises must also be blamed. But the IMF failed to prevent the economic crisis. This may be because the IMF has poor sources and all the money is transferred to corrupt systems.

Over the past twenty years, the IMF has developed two independent lending institutions: ESAF (Extended Structural Adjustment Facility) and STF (Structural Transformation Facility). Both lending institutions were created to support former communist countries. The last ten years have also included cooperation with Russia.

Lack of knowledge. "The IMF too often spits money into a system that does not change," the authors of this book believe. The main thing is to understand how to lend money to communist countries in such a way that you get the most painless transition to a capitalist system. And as Allan H. Meltzer recalls in his article: "Capitalism is more than negotiating with market prices."

Another problem is how a fund that lends money should deal with corruption. (In 1998, Russia received $ 150 million to build aircraft to be sold to India. None of the money went where they were supposed to. They disappeared into a corrupt system and disappeared.)

According to the two authors of this book, the IMF's mistake was that the IMF lacked staff who knew how to relate to the Russian economy. Despite this, the authors emphasize: “There is no doubt that the staff of the IMF are highly educated economists with great insight into economics at the macro level, and that high knowledge of society and economics is required (for example, a PhD degree is an obvious requirements) to work there. " Most of the permanent staff work full time. But when the IMF has received so much criticism, is there perhaps something wrong with the recruitment procedures?

Do they hire skilled people? And what does the organization emphasize? "The organization seeks people with high technocratic knowledge," the authors write. But unfortunately, the staff of the IMF often have little practical experience, and little knowledge of those with whom they enter into cooperation. The authors write: "Fund advice fails to take into account existing political constraints (…) Indeed, the applicability of the IMF staff policy advice to domestic political circumstances is in many cases weak."

This book may be a pretty good book to begin with for anyone who wants to get into the IMF's relationship with the economic situation in the world today, but it misses out on a more thorough use of historical sources, which may have had been required. It's also pretty dull – actually a pretty bloodless blood transfusion. Regardless, it requires knowledge that many do not have in the field, so it may be best suited for business students and others interested in economics.

Henning Næs
Henning Næss
Literary critic in MODERN TIMES.

You may also like