Normative Change from Within: The International Monetary Fund’s Approach to Capital Account Liberalization

Abstract

Beginning in the mid‐1980s, in the absence of active encouragement from the IMF’s management or member states, the staff began to encourage the liberalization of capital controls as a norm. This behavior constitutes a puzzle for the conventional wisdom, which sees the “Wall Street‐Treasury Complex” as responsible for the IMF’s approach, as well as a blind spot for rationalist approaches, which offer little insight into processes that shape preference formation “from within” international organizations (IOs). In a context where the Fund’s member states permitted the staff considerable discretion and autonomy, I argue the staff’s initial adoption of the norm of capital freedom was largely shaped by three internal processes: administrative recruitment, adaptation, and learning. But norm adoption did not mean the end of internal discussion, and a vigorous debate emerged between “gradualists” and supporters of the “big bang” over how the norm should be interpreted and applied. In this “battle of ideas,” I emphasize the critical role of internal entrepreneurship.

The devil lies in the definition: competing approaches to fossil fuel subsidies at the IMF and the OECD

“…The OECD has a track record in dealing with environmental issues going back to the 1970s (see below) and has been crucial in promoting the paradigm of 'liberal environmentalism', stressing economic instruments and compatibility between economic growth and environmental protection (Bernstein 2001). The IMF has little experience regarding environmental issues and is more strongly influenced by neoclassical economics than the OECD (Chwieroth 2008;Howarth and Sadeh 2011). Thus, we should expect the OECD to frame fossil fuel subsidies in terms of environmental consequences to a larger degree than the IMF.…”

“…The considerable autonomy and power of the IMF is-according to Barnett and Finnemore (2004)-based on its independence from state funding and its authority on economic matters. The economic training of the IMF officials is fundamental to its bureaucratic culture and how the institution perceives and acts upon the world (Chwieroth 2008).…”

“…Policy entrepreneurs (understood as actors investing resources in order to change policy; Kingdon 2003, 122-124) operating within the organizations may promote and frame issues in ways that fit with existing ideas and lead to particular policy responses (Chwieroth 2008), in this case how the organization addresses fossil fuel subsidies.…”

The Joint Vienna Institute

“…Moreover, through providing an intermediate avenue to further facilitate the diffusion of global policy norms to national policy communities, this process also contributes to the constant production and reproduction of neoliberal economic governance frameworks as a universallyvalid technology of political and bureaucratic authority (Fourcade 2006: 156). In particular, professional training exerts a powerful influence on how policy actors make sense of the environment in which they seek to act, and how they identify and diagnose the nature of the problems they seek to act upon (Chwieroth 2008(Chwieroth : 134, 2007. Because the JVI acts as a conduit for the naturalization of neoliberal economic ideas and global policy norms among postcommunist officials, its training activities are significant because they provide alumni with a ready-made policy toolkit that is compatible with the policy trajectories that the IMF, the World Bank, and other global governance institutions promote through their own policy dialogue, economic surveillance, and lending programmes.…”

The European Rescue of the Washington Consensus? EU and IMF Lending to Central and Eastern European Countries

“…The staff's edge of technical knowledge is underpinned by internal governance practices. For example, pragmatic procedures, sometimes rightly labeled intransparent (Woods 2003: 72), expand, rather than constrain, IMF staff discretion and flexibility in applying general institutional objectives to specific tasks and developing new norms (Chwieroth 2007b(Chwieroth , 2008. In turn, the degree to which staff and management can wield influence not only internally but also externally is contingent on leadership.…”