The inner life of the IMF

1. The inner life of the IMF Chwieroth

2. Mainstream views • Principal-agent analysis: focus on change from above, with donors (i.e. US Treasury) as the main agents of change (Wade’s own)

3. Constructivist IMF • We cling to the ideas we learned in school. IMF staff enrolled in graduate programs largely unaware of the programs’ ideological bents. Subsequent learning was minimal. • Economic crises were filtered through ideological lenses such that they either confirmed ideological priors or were dis- counted as anomalous (pp. 52-53, 203).

4. Method and finding • polled 263 economists from the top 150 economics departments on 20 questions concerning capital controls (p. 90). • “there is a robust link between the content of an economist’s professional training and the subsequent beliefs that economist develops about inter- national capital markets, capital controls, and their liberalization.”

5. Chwieroth • Cognitive shift among staff PLUS administrative appointments are essential for understanding policy shifts • Staff, acting as entrepreneurs of new ideas, not external actors are the main agents of change • Informal rules (norms) rather than formal rules alone

6. caveat • BUT • …permissive environment in the board as proxied by the weakening commitment of Key US actors (Treasury) enabled the idea entrepreneurship

7. Diffusion at the domestic level • Coercion/conditionality • Persuasion/soft power: sell the Fund’s particular economic theories or ideological conceptions that are critical for program adoption and implementation. Here the task is to train and help trainees acquire influence. • Focus on economists: given uncertainty, credibility concerns, or political interests, politicians appoint economists as policymakers

8. Diffusion at the domestic level • To implement their preference into policy, these economists must persuade and negotiate with other policymakers and politicians so the result will be hybrid of Fund’s ideas • But the more coherent the policymaking team, the more consistent the advice from policymakers and the greater their autonomy from interest groupsand therefore the greater the likelihood of minimal edits

9. Diffusion at the domestic level • Technopols are not passive; they speculate on external sentiment • JC: ‘As former IMF First Deputy Managing Director Stanley Fischer notes, neoliberal economists in emerging markets often use official sentiment to secure and to promote their position, using negotiations and discussions with the IMF to strengthen their views against their domestic opponents’

10. How do you track the neolibs? • Do a list of neoclassical economics departments that were likely promoters of neoliberal ideas • Use these departments are used as a proxy for the neoliberal ideas that individuals share as a result of their similar training; the assumptions that training at one of these departments probably leads individuals trained there to be socialized to adopt neoliberal ideas

11. Overlooked structural factors • It was the weakening of the Bretton Woods regime in the 1960s and its collapse in 1971 that set the stage for the capital bonanzas of the 1980s and 1990s. • The new flexible exchange rate regimes not only enabled new norms about capital freedom but also themselves reflected the new thinking inspired by Friedman and others about the best ways for states to manage their balances of payments.