Rajan Against the Machine
Hidebound, arrogant, doctrinaire: These are just a few of the adjectives used to describe the International Monetary Fund (IMF). However, the IMF recently threw its critics a curveball by naming the University of Chicago’s Raghuram Rajan as its new chief economist, replacing Kenneth S. Rogoff, who returned to Harvard this fall after two years at ...
Hidebound, arrogant, doctrinaire: These are just a few of the adjectives used to describe the International Monetary Fund (IMF). However, the IMF recently threw its critics a curveball by naming the University of Chicago's Raghuram Rajan as its new chief economist, replacing Kenneth S. Rogoff, who returned to Harvard this fall after two years at the fund.
Hidebound, arrogant, doctrinaire: These are just a few of the adjectives used to describe the International Monetary Fund (IMF). However, the IMF recently threw its critics a curveball by naming the University of Chicago’s Raghuram Rajan as its new chief economist, replacing Kenneth S. Rogoff, who returned to Harvard this fall after two years at the fund.
The 40-year-old Rajan, who has a doctorate from the Massachusetts Institute of Technology, is a noteworthy choice on several counts. A native of India, he is the first non-Westerner to fill this influential post. The experience he brings to the fund is similarly pathbreaking: Rajan specializes in banking and finance, an unusual pedigree for an imf chief economist (a macroeconomic background is the norm).
But what makes his appointment especially interesting is his coauthorship (with economist Luigi Zingales) of Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity (New York: Crown Publishing, 2003), which argues that big business and other elites are subverting capitalism by rigging the rules to enrich themselves.
This critique echoes the most serious charge leveled against the IMF — that it is a puppet of Washington and Wall Street — and raises an intriguing possibility: In Rajan, might the fund have unwittingly hired its own Joseph Stiglitz, the former World Bank chief economist who became a fierce critic of the free-market orthodoxy of both his institution and the IMF?
The view inside the fund is that Rajan will be outspoken but that burning down the house is neither his style nor his inclination. He is a Chicago economist: His beef isn’t that the free market is too free but that it is not free enough. As such, he will probably aim his harshest volleys at rich nations, which have stalled on trade liberalization for fear of undermining their own industries. Washington in particular might squirm. Rajan has criticized the administration over its wealth-begets-wealth tax policies, and with a slight whiff of crony capitalism in the city’s air these days, the Bush White House might find itself under fire from an unexpected quarter.
More from Foreign Policy
Can Russia Get Used to Being China’s Little Brother?
The power dynamic between Beijing and Moscow has switched dramatically.
Xi and Putin Have the Most Consequential Undeclared Alliance in the World
It’s become more important than Washington’s official alliances today.
It’s a New Great Game. Again.
Across Central Asia, Russia’s brand is tainted by Ukraine, China’s got challenges, and Washington senses another opening.
Iraqi Kurdistan’s House of Cards Is Collapsing
The region once seemed a bright spot in the disorder unleashed by U.S. regime change. Today, things look bleak.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
