It’s not easy to make the International Monetary Fund look like a beacon of progressive enlightenment. But the Bush administration managed to do just that by letting ideology blind them to lessons from the Asian financial crisis that even doctrinaire IMF economists couldn’t ignore.
The G-20’s “Summit on Financial Markets and the World Economy,” held in Washington on November 15, gave world powers a chance to coordinate their responses to the burgeoning international financial crisis and accompanying ills in real economies around the globe but produced a long, vague, and telling declaration, devoid of meaningful commitments to change business as usual.
The outgoing president appears unable to give up his belief in the “market fundamentalism” that has dominated the U.S. policy agenda for the past 30 years. With strong U.S. backing, institutions such as the World Bank, International Monetary Fund and the World Trade Organization have pushed governments to lift regulations on trade, finance and investment and sell off state enterprises throughout most of the developing world.
Rumors of the International Monetary Fund’s demise appear to have been greatly exaggerated. While the IMF has spent most of the last three years looking for clients and “relevance,” the end of the U.S. housing bubble and the resulting global credit crunch seem to have given the institution a new lease on life.
Following several weeks of widespread global financial turmoil, leaders of several of the world’s most powerful countries are planning a summit and a series of meetings to address this burgeoning crisis. The November 15 summit and an accompanying series of smaller meetings will weigh the potential for reforms of the international financial system. Some are calling these meetings “Bretton Woods II,” in reference to the New Hampshire conference held in 1944 that created today’s main global financial institutions, the World Bank and the International Monetary Fund.
Just as many books have been written as there are individual viewpoints on the crises related to globalization. Mark Engler’s new title How to Rule the World: the Coming Battle Over the Global Economy has some unique offerings. It offers insight about the different currents at play in globalization, along with some new analysis about the rise of a distinct globalization that promotes social and economic democracy. This new movement is people-powered, and its future is promising.
For those following economic trends, the past 18 months are notable primarily for two reasons. First, the U.S. housing market, long seen as overvalued by alternative economists and even powerful economic institutions including the International Monetary Fund (IMF), finally went from boom to bust. Over the span of a few months, housing in some markets depreciated by as much as 30%, and some economists estimate that losses may ultimately reduce value by as much as 50% in some cities.
While the mainstream media doesn’t always ignore the pressing issue of hunger in Africa, it rarely explores the root causes of this problem. Behind most news on the issue, there’s an assumption that casts hunger as a natural result of unfortunate weather conditions, coupled with bureaucratic inefficiency and bad economic planning.
Biofuel production is certainly one of the culprits in the current global food crisis. But while the diversion of corn from food to biofuel feedstock has been a factor in food prices shooting up, the more primordial problem has been the conversion of economies that are largely food-self-sufficient into chronic food importers. Here the World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO) figure as much more important villains.
Noam Chomsky is a noted linguist, author, and foreign policy expert. On January 15, Michael Shank interviewed him on the latest developments in U.S. policy toward regional challenges to U.S. power. In the second part of this two-part interview, Chomsky also discussed the Bank of the South, nationalization of resources, and the Shanghai Cooperation Organization.
Michael Shank: In December 2007, seven South American countries officially launched the Bank of the South in response to growing opposition to the World Bank, the International Monetary Fund and other International Financial Institutions. How important is this shift and will it spur other responses in the developing world? Will it at some point completely undermine the reach of the World Bank and the IMF?