The IMF and the Politics of Austerity
THIS EVENT IS ARCHIVED
Dr. Ben Clift (University of Warwick)
Date: 23 January 2019Time: 3:00 PM
Finishes: 23 January 2019Time: 5:00 PM
Venue: Russell Square: College Buildings Room: 4429
Type of Event: Seminar
This paper explores the evolution of economic ideas within the IMF since the crash and the Great Recession, drawing on research contained in my new book, The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis (Oxford University Press, 2018). It opens the ‘black box’ of internal Fund debates and practices, and situates these within internal power relations to develop a novel theory of ideational change in international organisations. Focusing specifically on policy advice to, and surveillance of, advanced economies, this research analyses how the Fund uses its authoritative voice to fix meanings attached to appropriate post-crash fiscal policy economic policy. The analysis reveals the malleability of conventional wisdoms about economic policy, and the processes of their social construction.
The IMF has long been in the business of developing and corroborating a prescriptive discourse regarding appropriate (and more importantly inappropriate) economic policy. This paper pulls back the veil on the politics of economic ideas within the IMF. Drawing on extensive interviews with large numbers of Fund economists and management, it delineates how the IMF’s internal culture shapes the ways the Fund can use its knowledge bank, expertise and mandate for surveillance and coordination to act as an arbiter of legitimate policy. Which economic ideas are drawn on, and how, to inform and underpin economic policy have important implications for macroeconomic policy space. The extraordinary turbulence within the world economy during and after the crash led to unprecedented macroeconomic policy responses, and the Fund played an important role on coordinating and legitimising these novel policy initiatives. It then went on to advocate more policy activism as the Great Recession drew on. This reveals a crucial but under-explored connection between Fund economic ideas and room to manoeuvre for advanced economy governments. The Fund urged advanced economy governments to target spending, transfers and automatic stabilisers on lower earners with a higher propensity to spend, and those with fiscal space should ‘backload’ fiscal consolidation. Furthermore, governments should adjust macroeconomic policy settings to further boost demand if growth continues to disappoint. Aggregated together, these policy stances entail an endorsement of activist, redistributive counter-cyclical fiscal policy which contrasts starkly with the IMF’s reputation for austerity.
Another aim of the ‘politics of economic ideas’ approach taken in the paper is to explore how economic ideas, even when espoused by technocratic and self-avowedly ‘scientific’ institutions like the IMF, are always rooted in understandings of the principles of political economy – normatively-informed views of how the economy and policy work. It comes down to taking a position on a spectrum of views about how far the market, left to its own devices, will likely deliver the most efficient outcomes, and to what extent (and under what conditions) public power should intervene to improve the growth and economic stability. It is, broadly speaking, the same ideological debate which pitched Keynes against neo-classical orthodoxy in the 1930s. All of which is uncomfortable territory for a Fund keen to retain a non-political character removed from such ideological considerations, and to assert its intellectual authority as a source of scientific, technocratic economic policy wisdom.
Ben Clift is Professor of Political Economy in the Department of Politics and International Studies at the University of Warwick. He currently holds a Leverhulme Major Research Fellowship for a project entitled ‘The OBR and the Politics of UK Growth amidst Brexit, Uncertainty and Austerity’. His research interests lie at the interface of comparative and international political economy. He is author of The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis (Oxford University Press, 2018), Comparative Political Economy: States, Markets and Global Capitalism (Palgrave 2014), and French Socialism in a Global Era (Continuum 2003). He has published widely on political economy, French and comparative capitalisms, the IMF, the politics of economic ideas, economic patriotism, capital mobility and economic policy autonomy, the political economy of social democracy, and French and British politics in journals including The British Journal of Political Science, Journal of Common Market Studies, The Journal of European Public Policy, The Review of International Political Economy, New Political Economy, Party Politics, Political Studies, Parliamentary Affairs, Government and Opposition and British Journal of Politics and International Relations.
Chair: Dr. Matthew Eagleton-Pierce
Organiser: Dr. Matthew Eagleton-Pierce
Contact email: email@example.com