Jeffrey M Chwieroth, Capital Ideas: The IMF and the Rise of Financial Liberalization, Princeton University Press, 2010.
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RATING: 40
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Chwieroth was perhaps unlucky in his timing, as there seemed to be a palpable move under way against capital controls for most of the time of writing, and the analytical framework reflects this - both in the elaborate analysis of an attitudinal/belief shift from the 1980s as long-serving Keynesians at the fund were replaced by new neoclassicals and other variant forms of anti-Keynesian or neoliberal-trained economists, and in the related insistence on the autonomy of IMF staff and their increasing informal application of a norm of capital freedom from the 1980s, well in advance of moves to promote it either by principals or by the leaders of the organization. But at the end of the period, as at the start, the IMF's formal rules allowed for capital controls, and an attempt to change this in 1998 not only failed, but was opposed by both US (under pressure from Congress) and UK (following the New Labour victory in 1997) officers. As regards the constructivist slant of the argument, the underlying idea that staff 'informally' shape advice in accordance with the beliefs they carry in with them from their professional training (extensively analysed in Chapter Three) disappears from view in the closing chapters, as first the Asia crisis then the 'global financial crisis' lead to a pragmatic re-evaluation of the need for capital controls (on inflows and outflows, though the former is insufficiently discussed). Logically, Chwieroth should be able to show that cycles of greater or lesser enthusiasm for capital controls between the mid-1990s and the present correspond to changes in the professional training of economists and the recruitment practices of the IMF, but of course he can't and he doesn't even try. Never once, either, is the particular training or theoretical orientation of a specific individual staff member or team invoked to explain a perspective adopted, so the approach is impressionistic and broad brush in the extreme. This turns out not to hamper the narrative, as the analytical framework is in fact entirely permissive, and can cater for any possible development - it has five components, offering five different options to explain whatever needs explaining: professionalisation (nature of training received, though measured indirectly by university attended); recruitment (institutional practice of IMF, broadly seen as reinforcing shifts in economic theory towards the neoliberal end); adaptation (so that, helpfully, 'Real world events also matter, and organisational staff members can develop and refine their beliefs through experience' 13, leading to a different view on how to achieve an existing goal); learning (a further step, in which a shift takes place in underlying goals); and (norm) entrepreneurship (in which someone offers a new perspective and wins support for a new norm). In turn this set of concepts rubs uneasily against the bureaucratic politics approach favoured by such as Barnett and Finnemore, and the upshot is that nothing is ruled out. The overall framework is untestable - so only professionalisation and recruitment are empirically tested, and learning, adaptation and entrepreneurship are deployed strategically to explain why professionalisation and recruitment do not have their predicted effects. On the one hand, Chwieroth wants to argue that there is a move towards a negative evaluation of capital controls - broadly true, over the years from 1965 no doubt, and hardly a novelty; on the other, he wants to argue just as strongly that the IMF is not monolithic, and that a diversity of views always exists on this point as on others. He does show that IMF staff do not follow the bidding of powerful principals. But beyond that, he shows that apart from a few fanatics - all of whom appear to have backed off in the face of events after 2007 - commitment to capital freedom was measured, and only very exceptionally advanced as a 'big bang' strategy prior to getting fundamentals right. There is very little deviation, as far as one can tell, from the view that capital controls were not ideal, but were often acceptable as temporary responses to perturbations in the wider system, or as short-term accompaniments to fundamental reform. So at the end of the book Chwieroth abandons his initial framework, and opts instead for a conclusion (followed by an epilogue on the global financial crisis) which replaces the constructivist analytical framework with a plea for a more democratic IMF, reflecting a greater diversity of views, as a means to ensuring 'ownership' by its members, and thereby greater legitimacy. Paradoxically, therefore, he begins by extolling the autonomy of IMF staff, and ends by suggesting that they should show greater respect for the preferences of their members. Just what would be the point of having a diverse and democratic IMF, rather than none at all, and just why he thinks that such an organization would reject the idea of regulatory frameworks that would allow the pursuit and secure the greater stability of 'capital freedom', rather than, say, insist that universal principles should be universally respected, are mysteries into which he does not delve. It transpires that the 'norm' of capital freedom was always contested, and always flexible in terms of what it implied in practice. This in turn undermines another of his publications in which the opposite starting point - capital freedom as a fixed norm with a strong consensus around it - is taken for a point of departure: here the invented and entirely unsupported notion that a stigma was attached to the application of controls by Brazil and Korea, of a kind shown in this monograph to be entirely accepted as legitimate, becomes the basis for a perverse and pointless exercise in 'theory building' ('Managing and transforming policy stigmas in international finance: Emerging markets and controlling capital inflows after the crisis', Review of International Political Economy, 22, 1, 2015, pp. 44-76). The fundamental problem is that Chwieroth has never thought about the significance of complete freedom of movement of capital in relation to the uneven and incomplete development of the global capitalist system, the character of capital as a social relation, and the over-riding commitment of the IMF among other international organizations to the development of capital on a global scale.