The Internationalization of Finance

This chapter takes a closer look at the main lending cycles of the 1820s and 1870s, as well as the creditors' responses to the subsequent waves of default. It suggests that key elements of the first and second enforcement mechanisms—market discipline and conditional lending—were already present in embryonic form at an early stage in capitalist development. Beside occasionally resorting to the instrumental power of gunboats, especially during the imperialist era, the partial effectiveness of these two mechanisms generally ensured compliance during the good times, thus laying the foundations for the internationalization of finance over the course of the nineteenth century, even as the relative weakness of the underlying enforcement mechanisms meant that periods of calm were regularly punctuated by unilateral payment suspensions in times of crisis.

Understanding the IMF and Its Borrowers

This book examines the International Monetary Fund's (IMF) conditional lending, and particularly why each of the three core elements of its lending arrangements—the amount of credit granted to borrowing governments, the number of conditions attached to the loans, and the rigor with which the conditions are enforced—vary significantly. Drawing on both theory and evidence, it shows that shared economic beliefs strongly influence the character of the IMF's relations with its borrowers. The book argues that economic policymakers at both the international and domestic levels rely on shared economic beliefs for guidance in the presence of uncertainty, and that the IMF decision makers' neoliberal ideas are deeply embedded in the organizational culture. It also discusses three testable mechanisms linking shared beliefs to variations in loan size, conditionality, and enforcement. Finally, it explains how the IMF, through its conditional lending programs, influences who governs the economy.

The Currency of Confidence

This book suggests that the International Monetary Fund (IMF) is a purposive actor in world politics, primarily driven by a set of homogenous economic ideas, with professional staff who emerged from an insular set of American-trained economists. The IMF treats countries differently depending on whether that staff trusts the country's top officials; that trust in turn depends on the educational credentials of the policy team that Fund officials face across the negotiating table. Intellectual differences thus lead to lasting economic effects for the citizens of countries seeking IMF support. Based on deep archival research in IMF archives and personnel files, the book argues that the IMF has been the Johnny Appleseed of neoliberalism: neoliberal policymakers sprout and take root in countries that have spent recent decades living under the Fund's conditional lending arrangements. The book's argument is supported through quantitative measures and illustrates the dynamics of relations between the Fund and client countries in a detailed examination of newly available archives of four periods in Argentina's long and often bitter relations with the IMF.

Staying Alive

This chapter examines how the design and enforcement of the International Monetary Fund's (IMF) lending arrangements affect the political survival of economic policymakers in borrowing governments. It first considers anecdotal evidence on the IMF's impact on the appointment and retention of economic officials in the borrowing country before discussing the variation in the types of officials that occupied the top policymaking posts in developing countries. The evidence suggests that the power of the IMF extends beyond influencing how the borrowing economies are governed. It argues that the IMF, through its conditional lending programs, also influences who governs the economy. It also discusses the association between participation in IMF lending arrangements and the presence of neoliberal policymakers in the borrowing government.

How Shared Economic Beliefs Shape Loan Size, Conditionality, and Enforcement Decisions

This chapter examines how the economic beliefs held by the International Monetary Fund's (IMF) decision makers and the beliefs of the officials at the helm of the borrowing governments shape loan size, conditionality, and enforcement decisions. It first considers two theoretically and empirically informed observations about the IMF-borrower relationship. First, key decisions in the conditional lending process are necessarily informed by the subjective judgments of the staff and management. Second, those judgments are often made in the presence of uncertainty. The chapter then introduces a set of mechanisms that link shared economic beliefs to the measurable outputs of the decisions about each element of the conditional lending process (access, conditionality, and enforcement). It also discusses the rise of neoliberal policymakers in developing countries and why such policymakers get less demanding (and more generous) programs from the IMF.