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Global Society
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The IMF, Neoliberalism and Hegemony
Julie L. Mueller
To cite this article: Julie L. Mueller (2011) The IMF, Neoliberalism and Hegemony, Global Society,
25:3, 377-402, DOI: 10.1080/13600826.2011.577032
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The IMF, Neoliberalism and Hegemony
JULIE L. MUELLER
This article examines the role of the International Monetary Fund (IMF) in supporting
the current hegemonic forces in the global economy. It challenges the current rational
choice approach to understanding the Fund in mainstream journals as being too
narrow in scope and unambitious in its critique of the Fund. I pose an alternative
means of critique that assesses the Fund from a historical materialist perspective and
examine the Fund’s function in promoting hegemonic norms and co-opting elites in
the developing world. This type of critique has been absent in recent scholarship and
must be the focus of creating meaningful change within the Fund.
The 2008 global financial crisis has brought to the fore both the limitations of neoliberal
economic policy and the role of the International Monetary Fund (IMF) in
the global economy. This article examines the role of the IMF in supporting the
hegemonic order based on neoliberalism. It examines how the dominant social
class has shifted its ideology over the life of the Fund, and how Fund policy has
similarly changed to accommodate its needs. In particular, globalisation has led
to the emergence of a new class of transnational economic actors whose interests
are served by neoliberal policy and by the opening of new economies to investment,
and international organisations like the IMF facilitate this. This article challenges
the current trends in political economic research on the Fund which are
positive in nature and instead proposes a historical economic analysis that provides
a context for understanding how and why the IMF operates the way it
does. Positivism assumes that empirical theory must be based on quantitative
data. However, data are not always accurate or unbiased.1
Critical approaches
posit that data are not the only form of knowledge, as not all phenomena in the
political world can be observed quantitatively. Neo-Gramscian analysis, based
on a close reading of history and an understanding of power relations, helps elucidate
how the patterns of production have shifted over time and how the state
and world system have reinforced hegemony. Such analysis can help illuminate
how these factors have shaped policy in the IMF.
Antonio Gramsci was intensely interested in the issue of power—who wielded
it and how—as he observed the hegemonic status of the bourgeoisie in Italy in the
1920s and sought to organise a socialist counter-hegemonic force. Gramsci knew
that it was not possible to understand the political economy of a state without
1. See Ricci’s classic critique of positivism in political science in David M. Ricci, The Tragedy of Political
Science: Politics, Scholarship, and Democracy (New Haven, CT: Yale University Press, 1984).
Global Society, Vol. 25, No. 3, July, 2011
ISSN 1360-0826 print/ISSN 1469-798X online/11/030377–26 # 2011 University of Kent
DOI: 10.1080/13600826.2011.577032
understanding both the political institutions of the state and the institutions of
civil society and putting them in their historical context. Gramsci viewed the
state in a more expansive way than his predecessors. He saw it as comprised of
both the administrative, executive and coercive structures normally associated
with the state and the structures of civil society.2
A social group must control
both to control the state. In terms of the current hegemonic system, this paper
explores how international organisations have played the role of a bridge
between the state and institutions of civil society in disseminating economic
beliefs that undergird the international economic system.
Today, one could argue that neoliberalism has taken on a key role in the promotion
of the transnational hegemonic class. It promotes norms like free trade
and the privatisation of assets, over competing ideas such as nationalism and collectivism.
However, there are moral, as well as economic, implications to this
trend. One cannot deny that certain social classes benefit from such policies
while others suffer. Neoliberalism deems inequality not only acceptable but also
necessary for the system to function, and this value is reinforced through the bilateral
policies of states and through international organisations (IOs), such as the
IMF.
The main purpose of the IMF, as noted on its website, is to “provide the global
public good of financial stability”. A stable international financial system is
defined as one that provides an environment conducive to trade, and trade is
viewed by proponents of neoliberalism as the engine of growth for all states.
However, stability is too often defined in terms of the interests of the advanced
industrial states, often to the detriment of developing states. While the IMF has
remained true to its stated mission in promoting policies that achieve these
goals, it is important to question the underlying assumptions of this approach
to global economic stability. Surprisingly, while much research has been done
questioning the effectiveness of IMF policies, little has been written in the field
of political economy addressing the Fund’s underlying assumptions and how
these came to dominate Fund policy making. Also, although many authors
have been critical of the Fund for its promotion of elite interests, there is little
analysis of the cleavages within this class and the role the Fund plays in supporting
one particular segment of the economic elite. As arguably the most powerful
international economic organisation, the Fund should be examined from a more
critical perspective.
While there has been a resurgence of interest in the Fund in the international
political economy (IPE) literature in the past decade, the nature of this work is
to question outcomes, rather than presuppositions and definitions. This is in
part due to the theoretical and operational approach these researchers take, in
the positivist vein. Robert Cox notes that theory often reflects the historic period
in which it is being crafted.3
Nowhere is this clearer than in the field of international
relations (IR). For example, the decade of the 1990s was a period of
radical change in political forms, state–society relations and economic relations
on a global scale. The academic work in IR reflected this sense of change as the
work in non-mainstream perspectives flourished. The prefix “post-” was added
2. Robert W. Cox, “Gramsci, Hegemony and International Relations: An Essay in Method”, Millennium,
Vol. 12, No. 2 (1983).
3. Ibid.
378 Julie L. Mueller
to traditional forms of theory, such as structuralism and modernism, to connote a
break from the mainstream, while the prefix “neo-” was added to designate new
and improved versions of traditional theories, such as realism and liberalism. The
more critical, post-positivist theories, however, failed to significantly impact the
main journals in IR. Breuning et al. note a shift toward more quantitative research
in the top three IR journals since 2000.4
Correspondingly, a shift also took place in
the realm of IR theory that reflected a methodology, rational choice, grounded in
neorealism. This shift is reflected in the IPE scholarship on the IMF.5
The first goal of this article is to critically reflect on current trends in IPE research
on the Fund from 2000 to 2009. I argue that most of this research falls into the category
that Robert W. Cox labelled as “problem-solving theory”. The second goal of
this article is to provide a critical assessment of the Fund’s role in the global
economy as supporter and transmitter of neoliberal norms that uphold US hegemony.
While it is not new to claim that the IMF is a tool of Western neoimperialism,
this study builds on the work of Richard Peet6
that examines how the IMF
reinforces liberal capitalism and also seeks to address the question of why the
rest of the world continues to play along. In addition, little of what has been
written “critiquing” the Fund over the past decade seeks to explore its underlying
ideology in a way that would provoke true transformation. In fact, recent calls for
“reform” of the IMF would actually strengthen its neoliberal character. In the field
of IPE, Western scholars have done a generally poor job of providing meaningful
research that questions the underlying assumptions guiding IMF policy. In conclusion,
I examine some of the recent proposals for reforming the Fund and
suggest which might best achieve a transformation in the Fund that will benefit
all its members.
The Current State of the Literature
To dissect current trends in research, one must be self-consciously aware of examining
both different epistemological approaches and, perhaps more importantly,
different ontological perspectives that inform this epistemology.7
Most research
today takes an ontological approach that views states as the most important
actors and sees state interests, based on power, as given; it sees the political and
4. Marijke Breuning, Joseph Bredehoft and Eugene Walton, “Promise and Performance: An Evaluation
of Journals in International Relations”, International Studies Perspectives, Vol. 6, No. 4 (2005), p. 455.
5. Robert J. Barro and Jong-Wha Lee, “IMF Programs: Who is Chosen and What are the Effects?”,
Journal of Monetary Economics, Vol. 52 (2005); Graham Bird and Dane Rowlands, “Do IMF Programmes
Have a Catalytic Effect on Other International Capital Flows?”, Oxford Development Studies, Vol. 30, No.
3 (2002); Axel Dreher, “IMF and Economic Growth: The Effects of Programs, Loans, and Compliance
with Conditionality”, World Development, Vol. 34, No. 5 (2006); Axel Dreher and Nathan M. Jensen,
“Independent Actor or Agent? An Empirical Analysis of the Impact of U.S. Interests on International
Monetary Fund Conditions”, Journal of Law and Economics, Vol. 50 (2007); Randall W. Stone, “The Political
Economy of IMF Lending in Africa”, American Political Science Review, Vol. 98, No. 4 (2004); James
Raymond Vreeland, The IMF and Economic Development (New York: Cambridge University Press, 2003).
6. Richard Peet, Unholy Trinity: The IMF, World Bank and WTO (New York: Zed Books, 2009).
7. Robert W. Cox, “Towards a Post-hegemonic Conceptualization of World Order: Reflections on the
Relevancy of Ibn Khaldun”, in James N. Rosenau and Ernst-Otto Czempiel (eds.), Governance without
Government: Order and Change in World Politics (Cambridge: Cambridge University Press, 1992);
Roger Tooze, “Review: The After-shock of the ‘Neo’: Agendas of IPE and IR”, Review of International
Political Economy, Vol. 3, No. 1 (1996).
The IMF, Neoliberalism and Hegemony 379
economic world as a place where universal, unchanging truths exist, waiting to be
elucidated through empirical research. However, an alternative approach sees a
world in a constant state of evolution, where social, political and economic
relations cannot be assumed to exist, unchanging, in perpetuity. This view leads
to an epistemology based on an examination of historical, dialectical processes,
seeking to determine the sources of change. These two ontological perspectives,
therefore, derive very different means of exploring the processes of global capitalism,
the former being more empirical and uncritical and the latter being more historical
and critical. This article seeks to take the latter approach to understanding
the role of the IMF in the global system and sees the former as incapable of truly
understanding the nature and structures of the global economy. It requires new
ways of thinking about accepted terms such as “development”, “progress” and
“success” and critically examining how people in both the developed and the
developing world have converged on particular definitions of these terms that
benefit the few at the expense of the many. But in attempting to do just this, one
can begin to discern formerly undetected patterns that explain what was
thought to be unexplainable about how the global economy functions.
The current IPE literature on the IMF in mainstream IR journals and some recent
books examines the impact and effectiveness of this institution from a variety of
perspectives, but almost all the work published in the past 10 years in these journals
shares a methodological approach that is mainly empirical.8
One particularly
disturbing trend in the past decade is the shift increasingly toward quantitative
research in some of the most esteemed journals in the field of IR. While “data”
can elucidate relationships, especially if they are “robust”, the fact remains that
much of the body of data we collect as political scientists is suspect. It attempts
to attach numbers to information that is not easily quantifiable or that relies on
sporadically collected data. Researchers are also generally limited, by time and
resources, to using the data that are collected by the very institutions they seek
to critique. The recent research from 2000 to 2009 on the IMF in the leading IPE
8. I have excluded IMF Working Papers and Staff Papers from the review of the literature because of
their obvious bias in favour of the Fund. The majority of these works are intended to prove that Fund
programmes work and to refute the work of independent scholars who attempt to prove the detrimental
effects of Fund loans. For example, Timothy Lane and Steven Phillips, Does IMF Financing Result in
Moral Hazard? (Washington, DC: International Monetary Fund, 2000), seek to refute the view that IMF
programmes create moral hazard; George T. Abed and Hamid R. Davoodi, Corruption, Structural
Reforms, and Economic Performance in the Transition Economies (Washington, DC: International Monetary
Fund, 2000), seek to show that structural reforms decrease the incidence of corruption; and Ales Bulir
and Soojin Moon, Do IMF-supported Programs Help Make Fiscal Adjustment More Durable? (Washington,
DC: International Monetary Fund, 2003), attempt to show a correlation between Fund conditionality
and fiscal adjustment. All make initial assumptions about the validity of IMF programmes. Likewise,
in a survey of the literature on the effectiveness of Fund programmes, Nadeem Ul Haque and Mohsin
S. Khan, “Do IMF Supported Programs Work? A Survey of the Cross-country Empirical Evidence”, in
Mohsin S. Khan, Saleh M. Nsouli and Chorng-Huey Wong (eds.), Macroeconomic Management: Programs
and Policies (Washington, DC: International Monetary Fund, 2002), note that there is consensus that on
balance they do work; however, other scholars looking at the same literature have come to very different
conclusions, such as Martin C. Steinwand and Randall W. Stone, “The International Monetary
Fund: A Review of the Recent Evidence”, Review of International Organizations, Vol. 3 (2008). But
perhaps none are quite as blatant as Allan Drazen, “Conditionality and Ownership in IMF Lending:
A Political Economy Approach”, IMF Staff Papers, Vol. 49 (2002), who begins with the assumption
that structural reform is in a country’s best interest and then asks the question of why the Fund then
needs to insist on conditionality if this is the case. Instead, I have only included works by independent
scholars from the years 2000 to 2009.
380 Julie L. Mueller
journals is a case in point.9
Researchers writing in mainstream journals such as
International Organization, the Journal of Development Economics, International
Studies Quarterly and World Development are asking important and interesting
questions about this institution and are generating data to support hypotheses,
ostensibly from a “neutral” position. However, without putting these data into
some kind of context and looking at the Fund with a critical eye, these researchers
are telling only part of the story.
Recent scholarly works on the IMF in the field of IPE fall into several general
categories. One grouping in the literature simply seeks to determine whether or
not IMF programmes have been “successful”.10
These studies each define
success somewhat differently, but all seem to rely to some extent on the growth
of GNP as a measure of success. Overwhelmingly they find that IMF programmes
do not increase income in developing countries, especially in the long term or for
the poorest segments of society. However, this is contradicted by the Fund’s own
research, which shows that they do create growth.11
Another category of articles seeks to examine why IMF programmes do not
“succeed”.12
They take as a given the previous literature that has already determined
that they do not, and they focus on specific internal or external factors to
explain this lack of growth. Bird et al. conclude that countries are likely to get
multiple loans if they are in a worse financial position and have a weaker
structure, despite not adhering to required conditions.13
Stone concludes that
IMF conditions are not followed in African countries, and that there are no
consequences for this, because of interference by major donors, who continue
to support loans in countries that are in their own foreign policy interests.14
However, neither article questions the validity of IMF conditions in the
first place. On the whole, these studies put little responsibility on the Fund
or fail to question policy followed by the Fund. They conclude that countries
are too poor, began from too bad a position, or are too structurally
unsound to take advantage of better policies—factors that are beyond the
Fund’s control.
Some studies even seek to answer the question of why countries continue to
enter into agreements with the IMF, given the fact that their track record is
poor. Smith and Vreeland conclude that this is due mainly to the interests of
9. This paper is not meant to be an exhaustive review of the recent literature on the IMF. For an excellent
review of this type, please see Steinwand and Stone, op. cit. Rather, this review is meant to outline
the general trends in the literature and provide examples that are illustrative.
10. Barro and Lee, op. cit.; Bird and Rowlands, op. cit.; Louis Dicks-Mireaux, Mauro Mecagni and
Susan Schadler, “Evaluating the Effect of IMF Lending to Low-income Countries”, Journal of Development
Economics, Vol. 61 (2000); William Easterly, “What Did Structural Adjustment Adjust? The Association
of Policies and Growth with Repeated IMF and World Bank Adjustment Loans”, Journal of
Development Economics, Vol. 76 (2005); Gopal Garuda, “The Distributional Effects of IMF Programs: A
Cross-country Analysis”, World Development, Vol. 28, No. 6 (2000); Adam Przeworski and James
Raymond Vreeland, “The Effect of IMF Programs on Economic Growth”, Journal of Development Economics,
Vol. 62, No. 2 (2000); Vreeland, op. cit.
11. Ul Haque and Khan, op. cit.
12. Graham Bird, Mumtaz Hussain and Joseph P. Joyce, “Many Happy Returns? Recidivism and the
IMF”, Journal of International Money and Finance, Vol. 23, No. 2 (2004); Garuda, op. cit.; Randall W. Stone,
Lending Credibility: The International Monetary Fund and the Post-communist Transition (Princeton: Princeton
University Press, 2002); idem, “The Political Economy of IMF Lending in Africa”, op. cit.
13. ird et al., op. cit.
14. tone, “The Political Economy of IMF Lending in Africa”, op. cit.
The IMF, Neoliberalism and Hegemony 381
leaders in developing countries.15
Sometimes the IMF becomes a convenient
scapegoat for unpopular policy changes that these leaders feel are necessary.
The Fund deflects criticism from these leaders. Another reason Vreeland cites is
the unequal distribution effect of neoliberal economic policies.16
The segments
of society that have the most to gain from such policies are also those with the
political clout to institute them.
I question the real utility of this research, as many of the data gathered require
some interpretation or certain assumptions to even generate numbers, but I also
question the attempt of researchers to maintain the air of a detached, scientific
researcher toward the Fund. Few researchers attempt to untangle the web of
cross-border influences that lead to policy failure, as attempts to do this empirically
lead to a maze of overly complex formulas that often fail to capture what
seems to be apparent, even through casual observation. In addition, these scholars
are products of the culture they seek to critique. Their schooling has been steeped
in these liberal norms.
In addition, few IPE scholars have attempted to answer the question of why the
Fund continues to recommend neoliberal policies that have little record of succeeding
and producing growth. One notable exception to this is Jeffrey
M. Chwieroth. Chwieroth has attempted to quantify those aspects of the Fund
that led it to adopt the policy of capital account liberalisation and then how this
policy gained wide acceptance among Fund members.17
One drawback to these
extensive studies is the method Chwieroth uses to categorise economists as neoliberal.
Fund employees are labelled and scored based on the graduate programme
they attended. While this may be indicative of a particular mode of
thought, it is not conclusive. One could argue that simply by virtue of choosing
to work at the IMF, economists are displaying a particular bias. The author
himself acknowledges that the accuracy of such empiricism is limited, but he
does produce data to support what has been commonly understood about Fund
economists and their relationship to decision makers in developing countries.
However, it is not so much the use of data that makes this research problematic.
Gramsci himself used data to demonstrate the increase in worker deaths that
could be attributed to capitalism;18
rather, it is the positivist epistemology that
underlies the use of such data.
Most of this research could be described as what Robert Cox labels “problemsolving
theory”.19
For Cox, this type of research takes as a given the prevailing
power relations within a society and in institutions in that society. It considers a
particular problem, which is limited in scope. The strength of this approach is
15. lastair Smith and James Raymond Vreeland, “The Survival of Political Leaders and IMF Programs”,
in Gustav Ranis and James Raymond Vreeland (eds.), Globalization and the Nation State: The
Impact of the IMF and the World Bank (New York: Routledge, 2006).
16. reeland, op. cit.
17. Jeffrey M. Chwieroth, “Neoliberal Economists and Capital Account Liberalization in Emerging
Markets”, International Organization, Vol. 61, No. 2 (2007); idem, “Normative Change from Within:
The International Monetary Fund’s Approach to Capital Account Liberalization”, International
Studies Quarterly, Vol. 52 (2008); idem, “Testing and Measuring the Role of Ideas: The Case of Neoliberalism
in the International Monetary Fund”, International Studies Quarterly, Vol. 51, No. 1 (2007).
18. ntonio Gramsci, Selections from Political Writings 1910–1920 (New York: International Publishers,
1977), p. 21.
19. Robert W. Cox, “Social Forces, States and World Orders: Beyond International Relations Theory”,
in Robert O. Keohane (ed.), Neorealism and its Critics (New York: Columbia University Press, 1986).
382 Julie L. Mueller
the fact that it has defined parameters and its empirical approach allows one to
derive from it generally applicable rules of behaviour.20
As Smith notes, it is technologically
very efficient.21
However, this approach is not value-free. Rather, it is
conservative in its unquestioning acceptance of the prevailing social order. The
benefit of the current literature on the IMF is its empirical support for common
assumptions and single-case observations about the utility of Fund programmes.
The main drawbacks to this type of approach are its attempt to be ahistorical
and its uncritical acceptance of prevailing norms. The reality is that all theoretical
perspectives arise within a certain context. Therefore nothing can be studied
absent an understanding of its historical context, which is in a constant state of
change and revision. While the results of problem-solving theory may give us a
snapshot of something at a particular point in time, one must understand that
this is of limited utility unless put in context and seen as part of a larger
picture. This approach also accords with an “economic” understanding of the
world, one which views political acts as objective exercises in value maximisation
and sees actors as “rational” in the sense that they make decisions based on a
cost–benefit analysis of the potential outcomes. These assumptions arose from a
particular historic, geographic, class and gender perspective, and therefore are
not value-free.22
Attempts to quantify that which is unquantifiable also open up these empirical
studies to criticism by Fund supporters. For example, Stone’s effort to measure the
influence of major donors (the United States, France and Britain) on IMF loan recipients
in Africa, as measured through US aid, membership in postcolonial international
institutions, and voting profiles in the United Nations, suffers from his
attempt to lump together 53 African states, with widely divergent political
issues and economic needs.23
Likewise, Chwieroth’s attempts to trace the influence
of neoliberalism through the Fund in a systematic, empirical way are also
open to question. The fact is that much of what influences the “success” or
“failure” of economic policy is unquantifiable. Another problem is that critics
are locked into IMF definitions, based in neoliberalism, of what constitutes
success.
Also, these studies of the IMF largely fail to consider the ethical implications of
IMF policies. While this may be implicit in what the researcher chooses to
examine, such as Garuda’s study on how IMF programmes affect the poor,24
still the plight of the poor is connected not to the IMF programmes themselves
but to the state of a country’s economy before entering into an IMF-sanctioned
programme. This approach is also a very static one. It makes certain assumptions
that must “hold” in order for their conclusions to be correct; therefore it is unable
to account for change in the system. Because it treats actors’ interests as given, it
does not enquire into how they came about.25
20. Ibid., p. 208.
21. Steve Smith, “Singing Our World into Existence: International Relations Theory and September
11”, International Studies Quarterly, Vol. 48, No. 4 (2004), p. 503.
22. For an excellent overall critique of rational choice theory, see Donald P. Green and Ian Shapiro,
Pathologies of Rational Choice Theory: A Critique of Applications in Political Science (New Haven, CT:
Yale University Press, 1996).
23. Stone, “The Political Economy of IMF Lending in Africa”, op. cit.
24. Garuda, op. cit.
25. Smith, op. cit., p. 503.
The IMF, Neoliberalism and Hegemony 383
Ngaire Woods is one exception to this general trend in the research. Her work
addresses governance and transparency within the Fund as well as globalisation
and inequality, and her methodology is qualitative, not quantitative.26
She notes
the coalition of larger donor countries, technocrats within the Fund, and technocrats
in charge of the economy of developing countries as the rationale for why
the Fund (and the World Bank) continue to propose policies with little evidence
of success. However, Woods’ work and her recommendations for reforming the
Fund are careful, based on basic issues of the structural operations of the Fund
rather than on a fundamental reassessment of the role of the Fund and its underlying
ideology.27
A “critical theory” approach, as Cox describes it, would take a very different
approach to understanding the IMF. A critical approach takes one step back in
examining the underlying assumptions that problem-solving theorists take as
given. This approach asks the question of how these policies came to be in the
first place and why the Fund continues to recommend policies with a questionable
record of “success”. Likewise, it examines even our agreed upon norms, such as
how the term “success” is defined. It also takes a more historical approach,
putting the actions of the Fund and state leaders in their proper context,
through examining issues of power, ethics and equality. While this approach
suffers from the ability to make concrete, parsimonious conclusions about Fund
policy, it does lead “toward the construction of a larger picture of the whole of
which the initially contemplated part is just one component, and seeks to understand
the process of change in which both parts and whole are involved”.28
While
such an approach may not produce “scientific” knowledge, it can guide us in an
alternative view of reality that will help put the conclusions of problem-solving
theorists into context and make them more useful. Cox also notes that critical
theory can point us toward an alternative system of norms, while problemsolving
theory can provide tactical advice for sustaining the existing order.29
Scholars must be aware of whether they seek merely to uphold the current
system or to reform it.
Therefore, in order to understand the role of the IMF in the global political
economy we must understand the historical development of the Fund, and we
must try to understand how the IMF relates to the various power factions
within this system. The work of Robert Cox is an excellent starting point;
however, it is also helpful to review other critical IPE scholars who are grounded
in what has been called a neo-Gramscian perspective. While the focus varies for
each, what they have in common is an interest in how power operates in the international
realm not only through coercion but also through consent. This theoretical
grounding grew out of a desire to critically examine political power relations
through the lens of economics. Scholars such as Robert Cox and Stephen Gill
rediscovered the work of Antonio Gramsci, which eschewed empirical Marxism
26. Ngaire Woods, “Accountability, Governance and the Reform of the IMF”, in David Vine and
Christopher L. Gilbert (eds.), The IMF and its Critics: Reform of Global Financial Architecture (Cambridge:
Cambridge University Press, 2004); idem, “The Challenge of Good Governance for the IMF and the
World Bank Themselves”, World Development, Vol. 28, No. 5 (2000); idem, The Globalizers: The IMF, the
World Bank and their Borrowers (Ithaca, NY: Cornell University Press, 2006).
27. Woods, The Globalizers, op. cit.
28. Cox, “Social Forces, States and World Orders, op. cit., p. 209.
29. Ibid., p. 210.
384 Julie L. Mueller
as overly deterministic, yet sought to explain how prevailing economic power
structures had come about and how they change over time.
Richard Peet has applied this approach to understanding the emergence of the
Bretton Woods institutions and their support of American hegemony.30
In his
authoritative study on the topic, Peet argues that the emergence of neoliberalism
served the interests of the privileged few, while creating humanitarian disasters in
the developing world. He argues persuasively that the bias among economists
and policy makers in favour of neoliberalism dictates the agenda for the Fund.
Contributing to this process that Peet describes is the convergence of thinking
among leaders in the developing world, also, where neoliberal policies continue
to be promoted by finance ministers and political leaders as the key to economic
prosperity, despite evidence to the contrary.
The Role of the IMF in the Global Economic System
While the stated goal of the Fund is to bring economic stability and growth, and
even peace, democracy and security, ironically, IMF programmes have brought
few of these benefits to the majority of the people in the countries they advise
today. This prompts us to question whose interests IMF policies serve. Surely
one interest is serving the economic and political priorities of the countries with
the greatest voting power within the Fund. However, the IMF also protects the
interests of a particular transnational class that benefits the most from a global
financial system free of restraints, a norm disseminated through Fund policy. In
this sense, it is more appropriate to view the system today as dominated by a hegemonic
class, rather than a particular state and reinforced by intellectuals from this
class. It is supported by the coercive power of a dominant state, but it is not dependent
on it. This hegemony does not yet have global reach. Many states on the periphery
are still largely excluded from it. However, a growing trend within
developing states is the emergence of such a class of elites who benefit from the
forces of globalisation, have financial connections to the West, and may have
even been educated in the West. In addition, the ruling class’s ideology extends
to include international organisations as players in the global civil society that
reinforces hegemonic norms, much the way domestic institutions reinforce it on
the state level. Like other institutions, IOs are tools used to support those in
power. Robert Cox notes that IOs not only reinforce hegemonic norms but also
are often products of that hegemony themselves.31
To understand how the IMF is a product of US hegemony, it is important first to
understand how the Gramscian concept of hegemony varies from the traditional
usage of this term in the IR literature. Most scholars today when using this term
mean “dominance”, which implies coercion. In the 1970s, economist Charles
Kindleberger appropriated the term to describe what he saw as the missing component
of the global economic system of the 1920s and 1930s. He was reacting to
an international system characterised by mercantilism and beggar-thy-neighbour
policies—a system in need of leadership. Kindleberger argued that the maintenance
of free trade required what he calls a “benevolent despot” to provide
certain public goods, such as openness and stability in the international economic
30. Peet, op. cit.
31. Cox, “Gramsci, Hegemony and International Relations”, op. cit., p. 172.
The IMF, Neoliberalism and Hegemony 385
system, because these goods were unlikely to be provided unless there was one
state with enough interest in the particular good to be willing to bear the cost of
providing it.32
For Kindleberger, being a hegemon required leadership, and he
defined leadership as “setting standards of conduct, seeking to get other states
to observe them, and, especially, assuming a disproportionate share of the
burden of defending the system itself in a crisis”.33
For example, first Britain
then the United States acted as the hegemon for the international trading
system, ensuring that the system worked smoothly. This theory rests on two conclusions:
first, the presence of a dominant actor will lead to the provision of a
collective good, such as a stable regime of international trade; and second,
although the dominant leader benefits from this situation, smaller states gain
even more.34
Kindleberger’s use of the term hegemon transferred easily to the field of IR,
where it was utilised in hegemonic stability theory (HST). HST claims that the
presence of a single, strongly dominant actor in international politics leads to collectively
desirable outcomes for all states in the international system.35
Conversely,
the absence of a hegemon is associated with disorder in the world system
and undesirable outcomes for individual states. Therefore, a system in imbalance
is more “stable” than that of a balance between two or more states, even if
goods are not distributed evenly. In this sense, the focus is on relations between
the larger powers in relation to one another. HST also makes certain questionable
assumptions about the need for a dominant power to enforce co-operation in the
international realm.36
In the 1980s, neorealists and neoliberals both used the term “hegemon” to
describe the role of the United States in the global economy since 1945.37
For
both, this term had positive connotations because of the relative peace that prevailed
among the major powers. Dependency theorists and world-systems theorists,
on the other hand, focused on the plight of the developing world and saw the
term hegemon in a more pejorative way.38
However, all used the term to connote
dominance on the part of the United States. It was not until this past decade that
the notion of a superpower that could lead by persuasion, as well as coercion, was
popularised by Joseph Nye as “soft power”, a term which has even made its way
32. Charles P. Kindleberger, The World in Depression 1929–1939 (Berkeley: University of California
Press, 1973).
33. John S. Odell, U.S. International Monetary Policy: Markets, Power, and Ideas as Sources of Change (Princeton,
NJ: Princeton University Press, 1982), p. 35.
34. Joanne Gowa, “Hegemons, IOs, and Markets: The Case of the Substitution Account”, International
Organization, Vol. 38, No. 4 (1984); Robert O. Keohane, “The Theory of Hegemonic Stability and
Changes in International Economic Regimes, 1967–1977”, in Ole R. Holsti, Randolph M. Siverson
and Alexander L. George (eds.), Change in the International System (Boulder, CO: Westview Press,
1980); Duncan Snidal, “The Limits of Hegemonic Stability Theory”, International Organization, Vol.
39, No. 4 (1985).
35. Keohane, “The Theory of Hegemonic Stability”, op. cit.
36. Snidal, op. cit.
37. Robert Gilpin, The Political Economy of International Relations (Princeton, NJ: Princeton University
Press, 1987); Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy
(Princeton, NJ: Princeton University Press, 1984).
38. Fernando Henrique Cardoso and Enzo Faletto, Dependency and Development in Latin America (Los
Angeles: University of California Press, 1979); Immanuel Wallerstein, “The Three Instances of Hegemony
in the History of the Capitalist World-economy”, in Gerhard Linski (ed.), Current Issues and
Research in Macrosociology (Leiden: E.J. Brill, 1984).
386 Julie L. Mueller
into policy-making circles in the US State Department. Soft power, which Nye
defines as wielding power through attraction rather than compulsion, is actually
very similar to Gramsci’s notion of hegemony.39
Gramsci observed that hegemony contains elements of both coercion and
consent. It is characterised by control over the private sphere, which reinforces
control in the public sphere, and authority based on “intellectual and moral leadership”
rather than pure domination.40
It refers to the prominence of a particular
social group, or class, in all aspects of civil society as well as state institutions.
Gramsci believed civil society was comprised of those institutions that reinforce
and create the values and beliefs that ensure the political and cultural hegemony
of the ruling class.41
These include the Church, the education system, the press
and “all the institutions which helped to create in people certain modes of behavior
and expectations consistent with the hegemonic social order”.42
Translating
this to a global civil society, one can see how institutions such as the IMF, which
provide governance in the international realm, also serve to create and maintain
particular norms.
International organisations are an important cog in the process of creating and
sustaining hegemony because they embody the universal norms of a world
hegemon. Like the institutions of civil society, they are often created and controlled
by the very class that seeks to maintain its power and prevent challenges
to their position. Based on Gramsci’s understanding of hegemony, Cox notes
five features of IOs that enable them to serve this role:
(1) they embody the rules which facilitate the expansion of hegemonic
world orders; (2) they are themselves the product of the hegemonic
world order; (3) they ideologically legitimate the norms of the world
order; (4) they co-opt the elites from peripheral countries and (5) they
absorb counter-hegemonic ideas.43
In the following sections I detail how each of these functions that Cox outlines is
derived from the work of Gramsci and how the IMF reflects this function.
The IMF as the Product of a Hegemonic World Order
Gramsci spoke of strategies for leaders to acquire power, and he saw the “new
prince” as a collective entity, such as a political party. Parties, he noted, represented
a particular social group with consent and assistance of allied
groups.44
In the same way, the Bretton Woods institutions represented the collective
interests of their founding states.
As the Second World War was drawing to a close, the victors were negotiating
what the post-war monetary system would look like. The goal at Bretton Woods
was to establish a system that would balance freedom and control; freedom for
39. Joseph S. Nye, Soft Power: The Means to Success in World Politics (New York: Public Affairs, 2004).
40. Antonio Gramsci, Selections from the Prison Notebooks (New York: International Publishers, 1971),
p. 57.
41. Ibid.
42. Cox, “Gramsci, Hegemony and International Relations”, op. cit., p. 164.
43. Ibid., p. 172.
44. Gramsci, Selections from the Prison Notebooks, op. cit., p. 148.
The IMF, Neoliberalism and Hegemony 387
states to operate within the international economy and control over the system in
order to create predictability in dealing with trading partners. The trend in economic
analysis, both in the policy-making and academic worlds, at the end of the
Second World War was in favour of a managed system based on multilateralism
and international financial co-operation. Fixed exchange rates based on a gold
standard were seen as too rigid, while freely floating rates were associated with
the nationalism and isolationism that were so disastrous between the wars.45
The lessons of the interwar period demonstrated that a lack of co-operation on
monetary and trade issues hurt all states. Likewise, national societies were
increasingly sensitive to the political repercussions of international economic
crises. Stability, it was believed, could be achieved only through the intervention
of some governance institution and maintained through the leadership of a dominant
power. The international community, under the leadership of the United
States, set up international institutions to support a complex global economy.
Part of this new global structure was the monetary regime embodied in the IMF.
The principles upon which the monetary regime was based were derived from
the beliefs of its chief architects, the United States, which favoured a liberal
approach, and Great Britain, which favoured Keynesianism. One underlying
fact agreed to by its creators was that unregulated exchange rates in the 1920s
and 1930s led to disastrous beggar-thy-neighbour policies. Another strong conviction
was that unlimited access to financing would not promote long-term policies
of stability. These principles led to the dual roles of the IMF as the overseer of
exchange rates and close observer of balance of payments. The norms of the
IMF regime were clearly spelled out in the Fund’s Articles of Agreement. They
included stability, growth, multilateralism, and non-interference in domestic
policy. The rules of the regime regarding exchange rates specified that members
could move their rates only within certain prescribed limits from the peg and
any changes were subject to IMF approval:
The most important aspect of the Bretton Woods Agreements was the
decision of the major countries to follow a basic course of multilateralism,
liberal economic policies and international cooperation (albeit with many
exceptions), rather than the alternative of heavy emphasis on bilateralism,
trade restrictions, and go-it-along nationalism.46
In addition, there was a strong belief that the proper focus of the IMF should be
on maintaining the economic health of the industrialised countries, with the
assumption that this would benefit all states in the long run. There was very
little concern or interest on the part of policy makers for the needs of the developing
world.
To a large extent the shape of the regime reflected the individual concerns and
theoretical persuasions of the US policy makers.47
In fact, the formation of the
World Bank and IMF were important in “locking countries into a U.S.-centered
45. Thomas D. Willett, Floating Exchange Rates and International Monetary Reform (Washington, DC:
American Enterprise Institute, 1977), pp. 7–11.
46. Ibid., p. 11.
47. Benjamin J. Cohen, “Balance-of-payments Financing: Evolution of a Regime”, International Organization,
Vol. 36, No. 2 (1982), p. 475; Kenneth W. Dam, The Rules of the Game: Reform and Evolution in the
International Monetary System (Chicago: University of Chicago Press, 1982), p. 72.
388 Julie L. Mueller
economic order”.48
Therefore, the presence of a hegemon may or may not have
been a necessary condition for regime formation, but it is important to understanding
why it looks the way it does.49
Or, in the words of J.G. Ruggie, “it was
less the fact of American hegemony that accounts for the explosion of multilateral
arrangements [at the end of the Second World War] than of American
hegemony”.50
The main point of controversy between the United States and British negotiators
was on the number of controls that would be established. “A conflict in ideologies
[liberalism and Keynesianism] concerning the functions of economic policy and
the role of the government in economic life complicated agreement on the
details of postwar international monetary organization.”51
Keynes wanted more
radical restructuring in the form of available credit than the United States did
because the United States was concerned about having to provide unlimited financing
to the rest of the world.52
However, because US economic power was so much
greater than Britain’s, it was American policy that won out in the end. For
example, Keynes chose to abandon his push for an international clearing union,
which was a major sticking point between the two countries, paving the way
for negotiations to proceed. “As Keynes’s associate Lionel Robbins later recalled,
‘Once we had recognized the political unacceptability of the unlimited liability
of the creditor, the rest was a compromise between essentially friendly
negotiators.’”53
This process reflects Gramsci’s definition of hegemony because it was a system
based on the intellectual and moral leadership of the United States and rooted in
consent, with occasional arm-twisting taking place. The rules of the Fund at first
benefited the United States by linking all currencies to the dollar and by enabling a
predictable trading environment which the United States was in the best position
to exploit. In 1971, when the system of a fixed dollar value began to disadvantage
the United States, President Nixon made the unilateral, and shocking, decision to
abandon it.
Yet, while the activities of the Fund changed radically in the 1970s, the underlying
commitment to multilateralism and liberalism did not change, and in fact
became stronger. Changes in the Fund’s mission in the 1970s resulted from
several converging forces. The first was the pressure on the dollar and the shift
from managed exchange rates to floating rates. The second was the oil shocks
that resulted in massive debts for developing countries. And the third was the
ideological shift in academia away from Keynesianism toward neoliberalism,
which had by this time come to influence policy decisions as well. Neoliberalism
embraced the ideas of classical liberal economics that emphasise market
48. Mark T. Berger and Mark Beeson, “Lineages of Liberalism and Miracles of Modernisation: The
World Bank, the East Asian Trajectory and the International Development Debate”, Third World Quarterly,
Vol. 19, No. 3 (1998), p. 488.
49. Oran R. Young, “Political Leadership and Regime Formation: On the Development of Institutions
in International Society”, International Organization, Vol. 45, No. 3 (1991), pp. 286–287.
50. John Gerard Ruggie (ed.), Multilateralism Matters: The Theory and Praxis of an Institutional Form
(New York: Columbia University Press, 1993), p. 8.
51. Dam, op. cit., p. 76.
52. Robert Solomon, The International Monetary System, 1945–1976: An Insider’s View (New York:
Harper & Row, 1977), p. 11.
53. Alfred E. Eckes Jr, A Search for Solvency: Bretton Woods and the International Monetary System, 1941–
1971 (Austin: University of Texas Press, 1975), p. 97.
The IMF, Neoliberalism and Hegemony 389
capitalism and free trade, but added a social and moral aspect, which included the
reification of the market, a focus on private property, and decreasing government
regulation with zeal. Neoliberalism also has a political component, which emphasises
the promotion of democracy as the best form of government for ensuring a
particular economic order. The result for industrialised countries was more
freedom from government and Fund restraints on their economies. The result
for developing countries, increasingly in need of loans, was expanded lending
by the Fund, but under strict, neoliberal conditions that mandated removing
government control over their economies.
This shift to neoliberalism was completed in the 1980s under US leadership.
Shortly after President Reagan took office in the United States, the staff of the
IMF produced a background paper on structural reforms that echoed Reagan’s
preference for economic liberalisation and supply-side economics. Although
this proposal was met with hostility from the developing countries, the Fund
staff encouraged countries to adopt liberal structural reforms throughout the
1980s.54
This is an excellent example of how the IMF, once its legitimacy was
established, was used by the hegemonic powers to create norms that upheld
and reinforced the system.
The increasing role of the IMF in suggesting policy to promote economic development
in low-income countries throughout the 1980s has been described as a
classic case of “mission creep”.55
This was largely a result of the increasing
number of low- and middle-income countries that were borrowing funds and a
corresponding decrease in developed-country borrowers. It also led to the problematic
overlap of the missions of the Fund and the Bank, as the Fund became
increasingly involved in dictating fiscal policy.56
Legitimating Global Norms
In Gramsci’s understanding of hegemony, intellectuals play a significant role in
creating homogeneity and self-awareness within the social group.57
Augelli and
Murphy note that in order for a social class to achieve and maintain supremacy,
it must also capture the ideological realm:
The intellectuals of the hegemonic class must produce a philosophy,
political theory, and economics which together constitute a coherent
world-view, the principles of which can be translated from one
discipline to another . . . [I]ntellectuals of the dominant class must
prevail over the intellectuals of other classes by developing more convincing
and sophisticated theories, inculcating other intellectuals with
the dominant world-view, and assimilating them to the hegemon’s
cause.58
54. James M. Boughton, Silent Revolution: The International Monetary Fund 1979–1989 (Washington,
DC: International Monetary Fund, 2001), pp. 588–589.
55. Woods, The Globalizers, op. cit.
56. Joseph E. Stiglitz, Globalization and its Discontents (New York: W.W. Norton, 2003), p. 14.
57. Gramsci, Selections from the Prison Notebooks, op. cit., p. 5.
58. Enrico Augelli and Craig N. Murphy, “Gramsci and International Relations: A General Perspective
with Examples from Recent US Policy toward the Third World”, in Stephen Gill (ed.), Gramsci, Historical
Materialism and International Relations (New York: Cambridge University Press, 1993), p. 131.
390 Julie L. Mueller
One way the Fund helps legitimate these hegemonic norms is through its role as a
producer of authoritative scholarship upon which its own policy is based. The
IMF supports a particular research agenda that is dominated by neoliberalism.
Neoliberalism began to emerge as early as the mid-1970s, but gained political
traction in the 1980s and became firmly entrenched after the fall of the Soviet
Union in the 1990s. This ideology was supported through organisations such as
the G7, the World Bank, the World Economic Forum, the Bank for International
Settlements, the General Agreement on Tariffs and Trade (GATT), which later
became the World Trade Organization (WTO), and the IMF. It was a movement
that embraced the notion of “free trade” as the main engine of economic growth
for all states. Although this idea was largely institutionalised at the end of the
Second World War, it was not until the 1980s that it became the single dominant
focus of international economic policy, and the East Asian financial crisis of
1997 was seen as the nail in the coffin of state intervention. In addition, by the
decade of the 1990s, the members of the G7 had achieved an unprecedented
ability to influence, both economically and politically, the affairs of the developing
world, and institutions such as the IMF were the chief tool for accomplishing
this.59
Michel Camdessus, Fund Managing Director from 1987 to 2000, referred to the
spread of liberal norms as a “silent revolution”. In the developing world, there
was a shift away from nationalistic trade policy and government management
of the economy and toward privatisation, free trade, and multilateralism.
To a great extent, the silent revolution of the 1980s resulted from a shift in
economic philosophy toward a new classical synthesis in which government
has an indirect role in, but not a direct responsibility for, ensuring
national economic prosperity; in which private economic activity is promoted
through good governance and the development of physical and
social infrastructure.60
The norms of this system include: the predominance of the market over the state;
pursuing development through privatisation and trade; assuming personal
responsibility for failure; and measuring development by national statistics, like
export growth and growth of GDP. This system reflects a moral value system
that places a high value on individualism, the need to prevent moral hazard, a
belief that capitalism is the “best” economic system, and seeing freedom as
more important than equality. The IMF legitimates these norms through research,
surveillance, and advising states, and by being a key player in a transnational civil
society.
Gramsci notes at length the important role that such intellectuals play in legitimating
the governing norms of their social group: “The intellectuals are the dominant
group’s ‘deputies’ exercising the subaltern functions of social hegemony and
political government.”61
They are the main organisers of consent in civil society
59. Stephen Gill, “Gramsci and Global Politics: Towards a Post-Hegemonic Research Agenda”, in
Stephen Gill (ed.), Gramsci, Historical Materialism and International Relations (New York: Cambridge University
Press, 1993), p. 8.
60. Boughton, op. cit., p. 3.
61. Gramsci, Selections from the Prison Notebooks, op. cit.
The IMF, Neoliberalism and Hegemony 391
yet also carry out the administrative functions of the state.62
Gramsci believed
intellectuals played a key role in creating and upholding this hegemony. He
saw them as “agents” of the dominant group in exercising both social hegemony
and political governance. As specialists they had a dual ethical and political
function.63
Intellectuals play an important role as economists within the Fund, state governments,
private enterprise and in academia. Examples abound of influential
people who spent their careers moving seamlessly between the private sector, academia,
national policy making, and the IMF. One such example is Paul Volcker.
His career began in the Federal Reserve Bank of New York, in the 1970s he presided
over the major reform of the Fund as the US Under Secretary for International
Monetary Affairs, in 1979 was appointed Chairman of the US Federal
Reserve, in the 1980s he worked at a private investment bank, more recently he
was appointed by the United Nations to investigate the Iraq Oil for Food
scandal, and is currently heading the President’s Economic Recovery Advisory
Board. Another less-well-known example is Thomas D. Willett, an economist
who was tapped from the academic world in 1972 to serve as Deputy Assistant
Secretary of the Treasury for International Affairs and later served as Director of
Research and Senior Advisor for International Economic Affairs for the US Treasury.
Willett later went on to work at the American Enterprise Institute, a conservative
think tank, and then returned to academia. A more recent example is the
current US Treasury Secretary, Timothy Geithner, who served as the Under Secretary
of the Treasury for International Affairs in the 1990s, followed by a stint
at the Council on Foreign Relations. In 2003 he became President of the Federal
Reserve Bank of New York. During his tenure there he helped engineer the
bailout of Bear Stearns and AIG. In 2009 he became the US Treasury Secretary.64
Another excellent example is Robert Rubin, former US Treasury Secretary. Prior
to holding this position Rubin was employed at Goldman Sachs and subsequent
to leaving the Treasury Department he went to work for Citigroup.
Intellectuals are present as economists at the IMF, where their power to determine
the content and define the terms of the debate is extremely important. For
example, because IMF and World Bank economists use income as a measure of
development, elites in developing countries can justify harsh economic policies
by pointing to rising GDP figures. However, the reality is that in many cases
income distribution, as measured by the Gini coefficient, and human welfare, as
measured by the Human Development Index (HDI), rarely change or improve
only slightly relative to the rising GDP. In Ghana, the Gini coefficient worsened
from 0.352 in 1988 to 0.428 in 2009, although its HDI did improve somewhat. In
states such as Jordan, there is a large discrepancy between urban and rural
areas in terms of social indicators, such as advanced education, which may not
be apparent from aggregate state data. Citizens with college degrees are concentrated
in the larger cities, while rural towns, such as Ma’an and Karak, sites of
two “IMF riots”, have no college degrees.65
Likewise, in terms of HDI, the
62. James Martin, Gramsci’s Political Analysis: A Critical Introduction (New York: St. Martin’s Press,
1998), p. 47.
63. Ibid., p. 54.
64. For more examples see Peet, op. cit., pp. 17–22.
65. Nasim Barham, “Sectoral Actors in the Jordanian Economy”, in George Joffe´ (ed.), Jordan in Transition
(New York: Palgrave, 2002).
392 Julie L. Mueller
urban areas of Amman and Aqaba rank significantly higher than the more rural
areas of Ma’an and Karak. Amman and Aqaba were about 0.77, while Ma’an
and Karak were about 0.72 and 0.74 respectively, according to US Department
of State data in 2003.
Evidence of the coalescing of a true global civil society that supports the hegemonic
transnational elite class can be seen in many governmental and non-governmental
organisations. The annual meeting of the World Economic Forum,
which brings together leaders in government, economic IOs, and business, puts
forth an agenda that serves the interests of these individuals and their constituents.
Also, the Group of Thirty, a sort of alumni association for former IMF and
World Bank executives as well as finance ministers from leading states, meets regularly
and publishes influential opinion pieces that also promote this agenda.
Carroll and Sapinski demonstrate the consolidation of elites within what they
call transnational policy-planning bodies, where there is an overlap in membership
of CEOs and such bodies.66
Rules that Facilitate the Hegemonic World Order
As Gramsci notes, hegemony relies on the intellectual and moral leadership of the
dominant social group. The power of this group is constituted of two sources:
social hegemony, which is derived from the spontaneous consent given by the
general population to the “general direction imposed on social life by the
dominant fundamental group”; and state coercive power, which is the legal authority
given to those who run the state to enforce discipline.67
By establishing and
enforcing norms of behaviour, a successful hegemonic class does not need to use
force and, in fact, can allow democracy and a multitude of civic organisations to
flourish because its beliefs and values have become so ingrained in society that
their hegemonic status is not threatened by a counter-hegemonic movement.
“Hegemony is enough to ensure conformity of behavior in most people most of
the time.”68
In addition, this power is enhanced through the ability to create rules and laws.
For example, in the 1920s Gramsci noted that the ruling class in Italy used its
power to impose laws to maintain their position of dominance. The bourgeoisie
owned the printing presses and meeting halls, which they used for their own propaganda,
while they used ostensibly legal justifications to destroy the few presses
and halls the workers had. Likewise, violence against protestors was sanctioned
by the government. Thus, while Italy claimed to have a liberal democracy, there
was no real freedom, no free elections.69
The rules that support the hegemonic power of the dominant social group that
the IMF supports are those of neoliberal economic policy. These rules are
expressed in the Fund’s Articles of Agreement and through a variety of policies
that the IMF upholds, including floating exchange rates, reducing capital controls,
and economic development policy that stresses exports and free trade.
66. William K. Carroll and Jean Philippe Sapinski, “The Global Corporate Elite and the Transnational
Policy-planning Network, 1996–2006: A Structural Analysis”, International Sociology, Vol. 25 (2010).
67. Gramsci, Selections from the Prison Notebooks, op. cit., p. 12.
68. Cox, “Gramsci, Hegemony and International Relations”, op. cit., p. 164.
69. Antonio Gramsci, Selections from Political Writings 1921–1926 (New York: International Publishers,
1977), pp. 35–37.
The IMF, Neoliberalism and Hegemony 393
Historically, the policy focus of the Fund has changed only when the current policies
began to disadvantage the United States, while new policy has been crafted to
enhance the global power of the United States.
This can be seen even more clearly through the policies imposed on developing
countries via conditions imposed on concessional loans through the Poverty
Reduction and Growth Facility (PRGF), which was replaced by the Extended
Credit Facility (ECF) in 2009. The ECF provides loans to low-income heavily
indebted poor countries (HIPC) that stack the deck against the average citizens
of these countries in favour of a cross-national capitalist class. The main components
of such conditions include: reducing government spending through privatisation
of state enterprises, reduction of the civil service and cutting spending
for social services; devaluing currency to make exports cheaper and raising interest
rates to encourage foreign investment; and removing trade barriers by ending
price controls and establishing tax-free zones for foreign corporations. The result
has been “success” for many of the IMF borrowers, if this success is defined as
increasing trade and a rising GDP. However, the result has been more devastating
for people who relied on jobs created by state enterprises and on state-sponsored
social services, and where subsistence farms have been replaced by large, corporate
farms producing for export. There are also often devastating social costs to
such policies, the result of decreased state spending on programmes like health
care and education. In addition, higher interest rates make it difficult for small,
local businesses to obtain loans. Therefore, capital tends to flow to large,
wealthy corporations with international ties instead. Trade liberalisation has generally
benefited the developed countries, especially the United States and
countries of the European Union (EU), more than the developing countries.70
Also, there is no incentive for the Fund to support industrialisation in these
states, so exports continue to consist mainly of primary goods.
The IMF policy of promoting liberalised capital markets also works to the
benefit of Western banks. For example, liberalised capital markets in East Asia
exacerbated the situation there in 1997 and perhaps allowed the economic collapse
that occurred to take place. However, it also allowed Western banks to pull capital
out of these states before the situation became too precarious for them.71
IMF structural adjustment programmes can also threaten political stability and
lead to declines in democracy in developing countries, despite the efforts of such
programmes to promote political liberalisation. IMF riots are largely a response to
this inequitable distribution of the benefits of an IMF loan. The result in many
countries, especially in the Middle East and Africa, has been increasing authoritarianism,
rather than political liberalisation. For example, austerity programmes
instituted at the insistence of the IMF were responsible for riots in Argentina in
1976, in Egypt in 1977, in Morocco in 1981 and 1984, in Tunisia in 1983/84, in
the Dominican Republic in 1984, in Sudan in 1985, in Indonesia in 1988, and in
Jordan in 1989 and 1996.72
Both the governments of developing states and
70. Riad al Khouri, “National Security Aspects of Western–Middle East Free Trade Agreements”,
Aussenwirtschaft, Vol. 62, No. 2 (2007), pp. 179–180.
71. Stiglitz, op. cit., p. 64.
72. Abbas Abdelkarim, Abdallah el-Hassan and David Seddon, “The Generals Step In”, MERIP
Reports, No. 135 (1985); Jim Paul, “Riots in Morocco”, MERIP Reports, No. 99 (1981); idem, “States of
Emergency: The Riots in Tunisia and Morocco”, MERIP Reports, No. 127 (1984); Peet, op. cit.,
pp. 100–101; Joe Stork, “Bailing out Sadat”, MERIP Reports, No. 56 (1977).
394 Julie L. Mueller
radical social groups within these states have used such riots to their advantage.
For example, although most of these riots seemed to be spontaneous in nature,
often groups advocating for political change, such as the Muslim Brotherhood,
student organisations, and trade unions, used them as a way to advocate their
own causes. On the other hand, governments have also seized this opportunity
to arrest their critics in the name of “national security”. Typically, the immediate
crisis ends when the government accedes to some of the demands of the citizens,
usually in a nominal way that does not resolve the long-term economic problems
that precipitated the crisis in the first place. But at times these riots create antidemocratic
policies.
In addition, Western states often use Fund loans to advance their own foreign
policy goals. A case in point is that of Jordan in the 1990s. Given its strategic geographic
and political position, Jordan was an important state for Western powers
at this time. The role of the Western developed countries in the case of Jordan was
twofold. First, they sought to secure a new market for their own goods in the
developing world. Second, and more importantly, they sought to bring Jordan
onto their side in the Arab–Israeli conflict. Jordan was encouraged, through the
Fund’s urging, to open its markets to Israel and the West. Jordan stood to gain
through increased aid and investment, while, for their part, the United States
and European Union stood to gain both in terms of security and by boosting
their own economies through forging economic ties with Jordan. As a result,
Jordan joined the Barcelona process, a Euro-Mediterranean regional summit
group established in 1995 to promote economic and security co-operation.73,74
Jordan also established a Qualifying Industrial Zone (QIZ) in 1997. All products
produced in the Jordanian QIZ were required to have 8% of their input from
Israel, but were then given duty-free access to US markets. The purpose of this
was both to reward Jordan for its role in the Middle East peace process in 1994
and to promote greater regional co-operation. However, benefits from the QIZ
accrued mainly to foreign firms, which set up operations in Jordan and hired
cheap foreign labour, and to the new Jordanian business class elites.75
In general, the West benefits more than the developing world from such “trade
openness”. For example, when Jordan established a free trade agreement (FTA)
with the European Union in 1999, greater benefits accrued to the European
Union than to Jordan. Subsequent to this agreement, Jordan’s trade deficit with
the European Union grew from JOD 986 million to JOD 1629 million between
2002 and 2006, contributing to a record balance-of-payments current account
deficit of 15% of GDP in 2005.76
Jordan fared better with a 2001 FTA with the
United States; however, exporters in Jordan stood to gain only somewhat from
this agreement, while those in Jordan’s domestic agricultural sector stood to
lose more through increased trade with the European Union and United
73. Jordan Ministry of Planning and International Cooperation, Barcelona Process of the Euro-Mediterranean
Partnership (2008), available: ,http://www.mop.gov.jo/pages.php?menu_id=237&local_type=
0&local_id=0&local_details=0&local_details1=0. (accessed 18 August 2009).
74. Other members include Morocco, Algeria, Tunisia, Egypt, Israel, Jordan, the Palestinian Authority,
Lebanon, Syria, Turkey and the 25 members of the European Union (Libya has had observer
status since 1999).
75. Markus E. Bouillon, “Gramsci, Political Economy, and the Decline of the Peace Process”, Critique:
Critical Middle Eastern Studies, Vol. 13, No. 3 (2004), pp. 249–250.
76. Al Khouri, op. cit., pp. 179–180.
The IMF, Neoliberalism and Hegemony 395
States.77
The result was increased wealth and power for only those groups within
Jordan that aligned themselves with the West; however, the states of the West
achieved both their security and economic goals in the region. The IMF aided
the policy implementation of the Jordanian government by legitimising their
policy choices and proclaiming their success, ensuring hegemony for both the
Western powers in the form of neoliberalism and the ruling regime in Jordan.78
The rules promoted by the IMF certainly facilitate a particular global system,
one that revolves around free trade and open markets.
Co-opting the Periphery
Gramsci’s Italy of the early 20th century, which had recently emerged from a
process of consolidation in the Risorgimento, makes an apt analogy to the
global system today. Gramsci identified a clear distinction between the north
and the south in terms of both the capitalist class and the workers. The more
industrialised north consisted of the oligarchical capitalists, while the south was
dominated by the agrarian capitalists. Therefore, although they were unified in
terms of their desire to protect private property, they had many differences. In
addition, the new class of the petty-bourgeoisie was emerging, which linked its
fortunes to the capitalists in the fascist party. For the working class, the northern
proletariat struggled to find union with the agrarian peasants in the south. The
problems they faced were of different sorts, although they, too, were unified in
their opposition to the bourgeoisie. The parallels to the global system are
clear, and demonstrate the difficulty in creating unified class movements,
which makes these disparate groups more susceptible to co-optation by the
ruling class.
The IMF also has greater leverage than other IOs in making its case for a
particular economic approach. The resources it has to collect data and produce
reports outstrips its critics, and there is a certain level of legitimacy gained by
the amount of data it collects.79
Gramsci seems to imply that the governed are
almost tricked into providing their consent for the ruling class, not because they
are unintelligent but because the ruling class is able to convince them that it is in
their interests. Intellectuals play a key role in supporting ruling-class ideology by
publishing academic works that are later cited by political elites to justify their
policy choices. One such example can be seen in a note from Thomas Leddy,
Deputy Director of the Office of International Monetary Affairs, to Deputy
Under Secretary for International Monetary Affairs Jack F. Bennett on using
the work of well-respected economist Fritz Machlup to justify a policy position
on gold:
The attached [Fritz] Machlup essay on “The Book Value of Monetary
Gold” is a good, short, clear presentation on the role of gold in exchange
rate determination and valuation questions associated with exchange rate
and gold price changes. It has a few judgments we may disagree with, but
77. Ibid.
78. Julie L. Mueller, “Drinking the Kool-Aid: The IMF and Global Hegemony”, Middle East Critique,
Vol. 19, No. 2 (2010); Stone, “The Political Economy of IMF Lending in Africa”, op. cit.
79. Michael Barnett and Martha Finnemore, Rules for the World: International Organizations in Global
Politics (Ithaca, NY: Cornell University Press, 2004).
396 Julie L. Mueller
it might help our case, if and when we submit legislation on the gold
price, to try to see that it gets wide public distribution.80
In the case of Jordan cited above, the most important role of the IMF was the cooptation
of elites. Given that the level of democratic participation is low in Jordan,
it is not the general population who need to be sold on IMF policies, but the political
leadership. The IMF officials and the policies they have enforced in the case
of Jordan reflect the views of policy makers in Western states like the United States
and the European Union. The IMF recommended economic policies that focused
on expanding and liberalising Jordan’s trade and provided positive reinforcement
in the form of continued loans for political policies that favoured Western allies
like Israel, at the expense of Western enemies like Iraq. The beneficiaries in
Jordan were mainly a new class of export-oriented entrepreneurs with close ties
to the monarchy.81
King Abdullah II, who ascended to the throne in 1999, favoured
globalisation and surrounded himself with like-minded elites.82
This view was
likely developed during his education at Oxford University and Georgetown
University.
The Fund’s leadership role on new issues, such as global warming and terrorism,
greatly enhances its ability to influence states on the periphery.83
As the
Fund’s mission grows to encompass an increasingly expanded range of issues
affecting developing states, so, too, does its ability to influence state policy
making on a broader range of issues and steer them toward neoliberal solutions
for such problems.
Absorbing Counter-hegemonic Ideas
Another crucial aspect in the spread of Western imperialism has been the ability to
co-opt opponents of neoliberalism. The Gramscian literature helps explain the
process whereby elites in developing states and even the lower classes come to
see liberal norms as in their interest through what Gramsci calls transformismo.
This is the “gradual but continuous absorption of allied groups and even antagonistic
and seemingly irreconcilably hostile groups” into the sphere of hegemony.84
While Gramsci used this term to refer to the gradual convergence of political
parties in Italy on the left and right after the Risorgimento, it can also be seen as
“a strategy of assimilating and domesticating potentially dangerous ideas by
adjusting them to the policies of the dominant coalition”, thereby frustrating
potential opponents.85
As Robert Cox notes, “transformismo worked to co-opt
potential leaders of subaltern social groups”, such as the co-optation of opponents
80. “Mr. Leddy Chron. File, October–December, 1971”, File NND 36259, Entry 106, Box 1. (National
Archives, Files of the Office of the Assistant Secretary for International Affairs, Chronological Files of
Thomas Leddy, Deputy Director of International Monetary Affairs 1970–1979, RG 56).
81. Mueller, op. cit.
82. Curtis R. Ryan, Jordan in Transition: From Hussein to Abdullah (Boulder: Lynne Rienner, 2002).
83. Hugh Bredenkamp and Catherine Pattillo, Financing the Response to Climate Change (Washington,
DC: International Monetary Fund, 2010); International Monetary Fund, The IMF and the Fight against
Money Laundering and the Financing of Terrorism (Washington, DC: International Monetary Fund,
2010), available: ,http://www.imf.org/external/np/exr/facts/aml.htm. (accessed 15 May 2010).
84. Gramsci, Selections from the Prison Notebooks, op. cit., p. 59.
85. Cox, “Gramsci, Hegemony and International Relations”, op. cit., pp. 166–167.
The IMF, Neoliberalism and Hegemony 397
of economic liberalisation through incentives or concessions.86
By ensuring that
critics of liberalisation buy into liberal ideals—the definition of development,
the need to expand exports, the benefits of globalisation, etc.—leaders protect
their hegemonic position both domestically and globally.
There are several ways that the Fund has attempted to address critics that charge
it with ignoring the needs of the poor and not being responsive to calls for reform
and critical self-evaluation. One method was to implement the Poverty Reduction
Strategy Programs (PRSPs). Initiated in 1999 by the World Bank and IMF, PRSPs are
meant to be comprehensive plans to address the issue of poverty in developing
countries. Governments are encouraged to develop plans that include “domestic
stakeholders”, which remains undefined, and “external development partners”,
namely the World Bank and the Fund. Ostensibly, the main purpose of the
PRSPs is to give a greater voice to grassroots participants, and, therefore, greater
buy-in on their part. PRSPs also encourage greater participation by NGOs and a
greater focus on results in terms of poverty reduction.
However, one could argue that the PRSPs are merely a tool of transformismo.
Little has changed regarding IMF conditionality since their institution, and
much criticism exists in the literature regarding their effectiveness.87
In particular,
many critics of the Fund view the PRSPs, because they are required to consult
grassroots constituencies for their input, as a way of placating the Fund’s harshest
critics without making substantive changes.88
The main criticisms charge that civil
society groups without strong representation in the government already tend to be
excluded from the process and that the policies suggested for poverty reduction
still follow the (failing) neoliberal model.89
Even the Independent Evaluation
Office of the Fund found that the PRSPs, while an improvement over previous
practices, “had limited impact in generating meaningful discussions, outside
the narrow official circle, of alternative policy options with respect to the macroeconomic
framework and macro-relevant structural reforms”.90
Another recent “reform” at the Fund has been the creation of the Independent
Evaluation Office (IEO). The IEO was created in 2000 in response to Fund critics
who claimed the Fund was not transparent enough or accountable for its policy
recommendations. The idea behind it was to create an independent watchdog
to monitor the effectiveness of the Fund. As noted on its website:
86. Ibid., p. 166.
87. Andrea Cornwall and Karen Brock, “What Do Buzzwords Do for Development Policy? A Critical
Look at ‘Participation’, ‘Empowerment’ and ‘Poverty Reduction’”, Third World Quarterly, Vol. 26, No. 7
(2005); Alastair Fraser, “Poverty Reduction Strategy Papers: Now Who Calls the Shots?”, Review of
African Political Economy, Vol. 32, No. 104/105 (2005); Graham Harrison, “HIPC & the Architecture of
Governance”, Review of African Political Economy, Vol. 31, No. 99 (2004); Heloise Weber, “Reconstituting
the ‘Third World’? Poverty Reduction and Territoriality in the Global Politics of Development”, Third
World Quarterly, Vol. 25, No. 1 (2004); Tunde Zack-Williams and Giles Mohan, “Editorial: Africa from
SAPs to PRSP: Plus ca Change Plus c’est la Meˆme Chose”, Review of African Political Economy, Vol.
32, No. 106 (2005).
88. Arne Ru¨ckert, “Producing Neoliberal Hegemony? A Neo-Gramscian Analysis of the Poverty
Reduction Strategy Paper (PRSP) in Nicaragua”, Studies in Political Economy, Vol. 79 (2007); ZackWilliams
and Mohan, op. cit.
89. Peet, op. cit., pp. 111–113.
90. IMF-IEO, Evaluation of the IMF’s Role in Poverty Reduction Strategy Papers and the Poverty Reduction
and Growth Facility (Washington, DC: International Monetary Fund, 2004), p. 3.
398 Julie L. Mueller
The IEO is fully independent from IMF management and operates at
arm’s length from the Executive Board, although the Board appoints its
director. The IEO’s mission is to enhance the learning culture within the
IMF, strengthen its external credibility, promote greater understanding
of the work of the Fund, and support institutional governance and
oversight.
However, the term “independent” is a relative one. The current head of the IEO,
Moises Schwartz, served as an Executive Director of the Fund from 2004 to 2006.
Prior to this, Schwartz was employed by the Central Bank of Mexico, the
Mexican Ministry of Finance and most recently by the National Commission
for Retirement Savings in Mexico. Schwartz also holds a PhD in economics
from the University of California, Los Angeles. This is another example of
how intellectuals move from academia, to government services, to IOs like the
Fund. The IEO is an excellent example of transformismo. Rather than provide
tough, critical assessments of the work of the Fund, it has become more of a
rubber stamp for Fund programmes. However, its very existence will help
mollify some critics.
Reforming the IMF
Understanding the role of the Fund in creating and upholding a hegemonic neoliberal
system is the first step toward meaningful reform. However, the proposals
for reforms that have received the most attention, both within the Fund and in
policy-making circles in the major industrialised countries, have generally come
from the same academics who have been weighing in on Fund issues since at
least the 1960s, including Allan Meltzer, Fred Bergsten, Tom Willett and Edwin
Truman, with think tanks like the American Enterprise Institute, Peterson Institute
for International Economics and the Council on Foreign Relations all making recommendations.
While the reforms that have been recommended are a step in the
right direction of making the Fund more democratic and accountable, there is little
“outside the box” thinking, and the fact remains that the dominance of neoliberal
ideology among decision makers, combined with the structural hegemony of the
United States, means little meaningful reform is likely for the developing world.
More critical reflection on the Fund tends to come from outside the field of
political economy, from such areas as public health, geography, education, and
public policy.91
A frequent refrain regarding IMF reforms is the notion that the IMF should get
out of the business of development lending altogether. The International Financial
Institution Advisory Commission, chaired by Allan Meltzer, proposed in 2000 that
the IMF cease all long-term loans for poverty reduction.92
In 2004, the Bush administration
proposed a clearer division of labour between the IMF and World Bank,
91. Global Campaign for Education, Education on the Brink: Will the IMF’s New Lease on Life Ease of Block
Progress towards Education Goals? (Johannesburg: Global Campaign for Education, 2009); Peet, op. cit.;
Rick Rowden, The Deadly Ideas of Neoliberalism: How the IMF has Undermined Public Health and the
Fight against AIDS (New York: Zed Books, 2009).
92. Allan H. Meltzer, Report of the International Financial Institution Advisory Commission, Report prepared
for the Joint Economic Committee of the House and Senate, 106th Cong., 2nd sess., 2000.
The IMF, Neoliberalism and Hegemony 399
with the IMF focusing specifically on monetary policy, fiscal policy, financial
markets, and exchange rates, while leaving economic development and social
issues to the World Bank.93
In his 2005 testimony before the US Senate, C. Fred
Bergsten, although a dissenting vote on the Meltzer Commission, also argued
that the IMF should encourage debt forgiveness for the HIPC members, financed
through the sale of the Fund’s gold reserves, and should transfer the PRGF loans
to the World Bank and get out of the development business.94
However, given that
the World Bank is largely run on the same principles as the IMF, requiring many of
the same conditions for borrowers, this shift will have little impact on those receiving
the loans. A better alternative might be utilising more of the regional development
banks, where borrowers can have more significant input.
Another area of proposed reform relates to IMF governance. Several economists,
as well as the governments of larger economies like China and South
Korea, have suggested that EU representation needs to be reduced, while representation
for the larger, emerging markets in the developing work must be
increased.95
Now that this change seems imminent, the question is how much
this will actually change the Fund. The United States will still retain veto
power, and giving greater representation to the governments of developing
states seems unlikely to change the policy direction of the Fund, since many of
their leaders were also products of the Western education system, and, therefore,
also steeped in the ideology of neoliberalism. Likewise, the influence of private
banks, also supportive of a market-centred approach to financial reform, should
not be underestimated.96
The 2008 global financial crisis gave the IMF a new lease on life, but has had
little impact on the role of developing states in the IMF, although it may force a
re-examination of neoliberalism and the sacredness of “the market”. Reforms
suggested by the Fund in the wake of the crisis generally relate to strengthening
its role in monitoring financial markets, such as increased lending to help lessen
the impact of financial crises; surveillance in terms of providing targeted
advice; drawing lessons from the crisis and urging states to make reforms based
on these lessons. The Group of Thirty also suggests similar reforms to strengthen
the role of the Fund in oversight of members’ economic situations, including
strengthening its surveillance capabilities and members’ adherence to Fund
advice; surveillance that includes specific policy advice; and monitoring and
giving early warnings of systemic weaknesses.97
As Truman notes in a prescient
review of proposed IMF reforms published before the 2008 crisis, a major drawback
to this system where the IMF provides surveillance of members’ financial
sectors is evidenced by the fact that the United States did not submit to Financial
Sector Assessment Program (FSAP) reviews, used by the IMF and World Bank to
determine a country’s vulnerability to financial shocks, which made it difficult to
93. John B. Taylor, Under Secretary of Treasury for International Affairs, “The Bush Administration’s
Reform Agenda at the Bretton Woods Institutions: A Progress Report and Next Steps”, Testimony
before the Committee on Banking, Housing, and Urban Affairs, 19 May 2004.
94. C. Fred Bergsten, Testimony before the Senate Subcommittee on International Trade and Finance
Committee on Banking, Housing, and Urban Affairs, 7 June 2005.
95. Edwin M. Truman (ed.), Reforming the IMF for the 21st Century (Washington, DC: Institute for International
Economics, 2006), p. 76.
96. Peet, op. cit.
97. Group of Thirty, Reform of the International Monetary Fund (Washington, DC: Group of Thirty,
2009).
400 Julie L. Mueller
predict weaknesses in the US financial sector.98
While the IMF reforms noted
above seek to address this problem, Fund staff are unable to require the United
States to submit to a FSAP review.
In Gramscian terms, a social group must mount a successful counter-hegemonic
campaign to weaken, and eventually overtake, a hegemonic social group. One
might ask whether new social movements have the power to succeed in reforming
the Fund to make it more responsive to the needs of the poor. At the moment, this
seems unlikely. Part of the problem is the lack of organisation and a consistent
message. There are many movements, including labour, fair trade, women’s
rights, peasants’ rights, and environmental protection, that oppose the policies
of the Fund. However, because each seeks to promote their particular interests,
they do not always speak with a coherent voice in favour of specific policy alternatives
to neoliberalism. As Katz notes, a clear counter-hegemonic civil society on a
global scale has yet to emerge.99
I am also pessimistic about the Fund’s potential to change, in part because the
governance issues are so intractable. For example, the most recent changes
announced by the IMF regarding a reallocation of shares within the Fund has
been promoted as an effort to give middle-income countries more say in how
the organisation is run. In reality, it supports the recent efforts by the US Treasury
Department to decrease the power of the EU members, viewed by the United
States as having a disproportionately large share of voting power under the
current system.100
While it is often difficult to get EU countries to act in concert
with one another, the fact remains that they are the most likely voting bloc
within the Fund to be able to co-ordinate their efforts to oppose US policy.
Under the proposed changes, their voting power vis-a`-vis the United States is
greatly reduced. Another obstacle to real change is the wholesale acceptance of
the neoliberal paradigm that has come to dominate the thinking of Fund economists
as well as the academic community of economists.101
The inertia of this trend
will be difficult to overcome.
The IMF continues to promote neoliberal policy because it truly believes it will
work; and developing states continue to implement it because they, too, have been
convinced of its superiority in creating long-term growth. How, then, do we overcome
the situation where neoliberalism takes on the status of a religion? First, it is
not necessary to completely replace positive research methods with post-positive
ones. Positive research provides valuable snapshots of the effects of Fund policy.
However, this research will be more useful if it is more self-consciously aware of
its biases and limitations. We need less “explaining” and more “understand-
ing”.102
This is the only way in which meaningful reform will ever take place.
Second, we need to understand how power operates in the international system
and where the IMF fits into this—how it reinforces hegemonic norms. We must
acknowledge the hegemony of the Western powers and their ideology and learn
98. Truman, op. cit., p. 61.
99. Hagai Katz, “Gramsci, Hegemony, and Global Civil Society Networks”, Voluntas: International
Journal of Voluntary & Nonprofit Organizations, Vol. 17, No. 4 (2006).
100. Edwin M. Truman, interview by the author, digital recording, 4 August 2010, Peterson Institute
for International Economics, Washington, DC.
101. Chwieroth, “Normative Change from Within”, op. cit.
102. Martin Hollis and Steve Smith, Explaining and Understanding International Relations (New York:
Oxford University Press, 1991).
The IMF, Neoliberalism and Hegemony 401
the lessons of the past. In addition, it is helpful to understand the fissures that exist
within classes that make cohesive opposition to this hegemony impossible. But
while we acknowledge the existing power structures, we must not let them
stand unchallenged. Careful attention should be paid to existing international
organisations and how they are utilised to uphold this power structure. A critical
assessment of the norms that guide their behaviour is necessary.
Lastly, we need to restore a new ethical approach to creating economic growth.
Blind faith in economic models is “morally barren”, and has produced a system
where the gap between the wealthy and the poor has been growing, not shrinking.
Even if the IMF eliminates all of its concessional loans, leaving this to the World
Bank, it must acknowledge that any loan given to a developing state affects its
economic growth. A new ethical approach would replace the values of neoliberalism
with a new set of values, centred on individual welfare, an emphasis on
human development over economic development, economic growth from the
bottom up, and transparency and equality within governance institutions. Intellectuals
have an important role to play in either supporting or challenging the
status quo. IPE scholars need to be more self-aware in examining the role of intellectuals,
because self-awareness will promote a true counter-hegemonic movement
not susceptible to transformismo.
402 Julie L. Mueller