- By David BoscoDavid Bosco is an associate professor at Indiana University's School of Global and International Studies. He is the author of books on the U.N. Security Council and the International Criminal Court, and is at work on a new book about governance of the oceans.
As the spring meetings of the International Monetary Fund and World Bank approach, there’s a growing body of evidence that the "Washington Consensus"–the set of neoliberal policies often pursued by both institutions– is fraying. This week, the International Monetary Fund endorsed the selective use of capital controls, something seen as anathema not long ago. As AFP reports:
The IMF report "Recent Experiences in Managing Capital Inflows — Cross-Cutting Themes and Possible Policy Framework" for the first time officially recognizes that in certain cases measures to limit excessive capital inflows from abroad are justified.
The report marks a milestone for the 187-nation institution, which for decades has steadfastly pushed governments to remove capital controls.
The framework comes in response to a call by France, which holds the presidency of the Group of 20 major economies this year, for capital flow guidelines.
Meanwhile, as the Bretton Woods Project notes, the World Bank’s chief economist, a Chinese national, has been making positive sounds about interventionist industrial policies:
World Bank chief economist Justin Lin continues to stir the waters by pushing for increased global investment to boost growth and by suggesting that developing country governments need more interventionist industrial policies.
Lin, a Chinese national, speaking to the G24 group of developing countries in mid-March, called for "a global push for investment along the line of Keynesian stimulus [which] is the key for a sustained global recovery." He argued that current policies of richer countries risked locking in a period of low growth, but "a push for investment will increase the demand for capital goods and reduce manufacturing sectors’ underutilisation of capacity in high-income countries, which in turn will increase … employment, consumption, demand for housing, opportunity for private investment, and growth." This runs contrary to the austerity measures being pursued by many countries at the behest of the IMF.
If this keeps up, the Bretton Woods institutions–which have been largely immune from the attacks the United Nations regularly receives from Congressional conservatives–may start to attract some critical looks.