Constructing continuity in economic ideas in the IMF

In 2008 the neoliberal economic ideas steering the course of global economic governance seemingly collapsed as the world entered into the greatest financial and economic crash since the Great Depression. Initially a range of precipitating causes were offered including lax monetary policy and a miss-pricing of risk, common to which was an assumption that although severe, the downturn was limited to policy failures in a relatively stable economic framework, and therefore constituted a crisis for neoliberal global economic governance. As the downturn intensified however, there developed a consensus that the situation facing policymakers was not simply a crisis for neoliberal global economic governance, but more fundamentally a crisis of neoliberalism which was now interpreted as a major precipitating cause. Therefore just as the failure of Keynesianism presaged a shift to neoliberalism, so too was there an expectation that its failure would exert a similarly transformative dynamic. Against this backdrop this research investigates the extent to which the neoliberal economic ideas steering the course of global economic governance are characterised by change or continuity. This is explored through the examination of an institution commonly assumed a bastion of neoliberalism, the IMF, and with specific reference to two areas synonymous with neoliberal economic ideas, monetary and fiscal policy, and financial sector liberalization. The research points to two reasons to suggest the potential for change. Firstly, many of the neoliberal economic ideas advocated by the IMF were cognitively falsified by the severity of the economic downturn. Secondly, as the downturn unravelled, the IMF advocated a range of policy interventions that had been considered largely anathema only months previously. Nevertheless, the key finding of this research is that to suggest this was the beginnings of a major shift was to miss-read the intentions of those tasked with responding to the crisis who were more concerned with preserving, as opposed to altering, the status quo. As a result, it is demonstrated that the IMF remains committed to the neoliberal economic philosophy (assumptions made regarding the efficacy of the market as opposed to state intervention) which has vital implications for the way in which economic problems continue to be interpreted and responded to, and the kinds of policies considered appropriate.