The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis
Oxford University Press 2018
New Books in EconomicsNew Books in European StudiesNew Books in FinanceNew Books in Peoples & PlacesNew Books in Politics & SocietyNew Books in Public PolicyNew Books in World AffairsNew Books Network June 15, 2018 Andrea Bernardi
I was joined in Oxford by Ben Clift, Professor of Political Economy, Deputy Head of Department and Director of Research at the Department of Politics and International Studies of the University of Warwick. Ben has just published a very important, timely and interesting book on the IMF: The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis by Ben Clift (Oxford University Press, 2018). The book provides the first comprehensive analysis of major shifts in IMF fiscal policy thinking as a consequence of the great financial crisis and the Eurozone debt crisis. It widely presents the IMF’s role in the politics of austerity. The book also offers an innovative theory specifying four mechanisms of IMF ideational change – reconciliation, operationalization, corroboration, and authoritative recognition. It combines in-depth content analysis of the Fund’s vast intellectual production with extensive interviews with IMF economists and management.
The book is structured in seven chapters plus conclusions:
1: The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis
2: Ideational Change at the IMF after the Crash
3: IMF, Economic Schools of Thought, and Their Normative Underpinnings
4: Analysing the IMF Surveillance of Advanced Economies: The Social Construction of Fiscal Space
5: The Fund’s Fiscal Policy Views and the Politics of Austerity
6: The IMF, the UK Policy Debate, and Debt & Deficit Discourse
7: The IMF and the French Fiscal Rectitude amidst the Eurozone Crisis
Conclusion – IMF Intellectual Authority and the Politics of Economic Ideas After the Crash
IMF has been strongly criticised by economists, politicians, intellectuals and activists of the protest movements. This book might surprise many of them because it presents a much more pluralist if not heterodox set of economic ideas present and followed by the IMF’s economists and managers. The readers would discover that during the Greek crisis the IMF suggested a more flexible approach. In the case of Britain the IMF criticised the austerity policy of the Coalition Government. And in general the IMF has recently signalled that fiscal rectitude is not enough without support to aggregate demand and that inequality has to be monitored as well.
Professor Clift argues that the Fund’s crisis-defining economic ideas, and crisis legacy defining ideas, were important in constructing particular interpretations of the crisis. ‘Fund leadership articulated a Keynesian market failure understanding of the crisis, focussing on deficiencies of aggregate demand, and on the destabilising properties of financial markets. The Fund’s re-emphasising of Keynesian insights into liquidity traps, demand deficiency, higher fiscal multipliers, and the folly of all countries consolidating at once sat outside orthodox economic policy-making ideas at the time. These were not the lessons policy-makers had typically drawn from academic economics before the crisis.’
This book is for those interested in the politics of economic ideas and in the interaction between economics and politics. IMF is presented as an arena where new economic ideas and the dominance of different schools of economic thought emerge. Despite internal politics, institutional rules and member states’ influence, the IMF has shown autonomy and intellectual authority. Our conversation ended talking about the future of the institution particularly looking at the European Union financial integration.
This is a great new book: indispensable for economists and accessible also to students and non-experts.
Andrea Bernardi is Senior Lecturer in Employment and Organization Studies at Oxford Brookes University in the UK. He holds a doctorate in Organization Theory from the University of Milan, Bicocca. He has held teaching and research positions in Italy, China and the UK. Among his research interests are the use of history in management studies, the co-operative sector, and Chinese co-operatives. His latest project is looking at health care in rural China. He is the co-convener of the EAEPE’s permanent track on Critical Management Studies.