Forest of Dean & Wye Valley

THE IMF: the biggest loan shark business in the world?

In A.Graham on September 2, 2015 at 4:13 pm

Most of us must surely know by now of the dubious activities of the International Monetary Fund (the IMF) and its twin body, the World Bank.  But fewer will  have heard of the Bretton Woods agreement, reached towards the end of the war, back in 1944. It was then that the IMF came into being.

Those leading economists who met at Bretton Woods did so to plan a new world economic order. Their aim was to try to bring order from the chaos created by the war – and also to try to ensure that the world economic collapse of 1929 through the 1930s would not happen again.

No doubt they had the best intentions – particularly the British delegate, John Maynard Keynes. He wanted to ensure a level of economic stability, in which the weaker nations would not be penalised or end up going to the wall.  Keynes was arguably the most influential economist of his day – at least in the UK and Europe – and his influence continued to hold right up until the the virus of “monetarism” arrived on the scene in the 1970s and ‘80s.

But back in 1944, the IMF set out its main objectives as the promotion of international economic co-operation, ensuring full employment (sic), and exchange rate stability. Keynes himself saw it as a kind of co-operative fund that member states could draw on, particularly during times of crisis, in order to maintain their economic activity.  He also argued that to focus merely on those countries with economic problems would only create more hardship and more problems for those involved.

But the view from the USA was slightly different – and of course the Americans had far more clout at Bretton Woods. Thus the views of Keynes were largely over-ruled.

Sadly, Keynes died soon after the Bretton Woods conference – though it wasn’t until the 1970s that the role of the IMF began to shift significantly towards direct interference in the governance of client countries.

It started to play an active role in managing the economic policies of those seeking financial aid. There were (and are) to be strings attached to any aid given. For example, the removal of price controls as well as state subsidies, the privatisation of state-owned enterprises – and “enhancing the rights of foreign investors.”

From then on the IMF would unashamedly promote market capitalism, which all too often meant blatant interference in the domestic policies of national governments.  Today, we may look at the example of Greece, and the valiant attempt by a left-wing government to oppose a strict austerity imposed by the IMF – with the German government  acting as cheerleader. No doubt in the eyes of Chancellor Angela Merkel, the upstart campaigners in Greece have now been taught a lesson.

But there have been previous examples of how countries have suffered as a consequence of asking for IMF support. One example was that of Argentina, in 2001 which suffered economic collapse following the IMF’s intervention. There has been a continuing impact on public health and on the environment as a result.

Of course it’s never those with money who suffer. They can shift their capital elsewhere. It’s the ordinary people who feel the impact in a country driven close to bankruptcy as the IMF lays down its conditions for  further bail outs.

John Maynard Keynes must be turning in his grave.


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