The Gnomes of Washington: Four Myths of the 1976 IMF Crisis

Ludlam, Steve

doi:10.1111/j.1467-9248.1992.tb01794.x

Cited by 19 publications

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“…This episode is regularly cited as an example of how the markets constrain the choices of democratically elected governments, but the truth is rather different. Initial analysis by Steve Ludlam (Ludlam, 1992) has now been confirmed by work in recently available archives by Chris Rogers, showing that much of the IMF package was suggested to the IMF by the British Treasury and Treasury Ministers. The IMF was used as a convenient cloak for policies which a significant part of the British Government wished to pursue independently.…”

Section: The Coalition Government's Deficit Reduction Planmentioning

confidence: 69%

The Consequences of the Global Financial Crisis

2012

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The Global Financial Crisis (GFC) is the most serious economic crisis since the Great Depression. Many books have explored its causes, but this book systematically explores its consequences. The focus is primarily on the policy and political consequences of the GFC. This book asks how governments responded to the challenge and what the political consequences of the combination of the GFC itself and policy responses to it have been. Based on workshops held in the United States and the United Kingdom, it brings together leading academics to consider the divergent ways in which particular countries have responded in different ways to the crisis, including China, France, the United Kingdom, and the United States. Part of what is happening is a structural shift in economic power from east to west, but China has its fragilities while Germany offers an example of a largely successful Western model. The book also assesses attempts to develop global economic governance and to reform financial regulation and looks critically at the role of credit rating agencies. Unlike earlier crises, no new paradigm has emerged to challenge existing ways of thinking, meaning that neoliberalism has emerged relatively unscathed. The crisis has lacked a coherent and innovative intellectual response and has been characterized by remarkable policy stability.

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Section: The Coalition Government's Deficit Reduction Planmentioning

confidence: 69%

The Consequences of the Global Financial Crisis

2012

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“…However, the most important contribution to demystifying commonly understood perceptions of the IMF crisis is that of Ludlam. He identifies “four myths” of the crisis, noting that Healey had introduced substantial cuts in the April 1975 Budget and February 1976 Public Expenditure white paper, that cash limits were in place on three‐quarters of voted government expenditure by April 1975, that monetary targets had been set in July 1976 as significant but not critical targets, and that the commitment to full employment had effectively been abandoned as a primary aim of policy at the time of the government's mildly deflationary first budget (Ludlam 1992, 716‐24). He therefore concludes that “the IMF deal merely codified a change of political course already well underway and proceeding under the stewardship of British social democracy” (727).…”

Section: Decisive Influence and Social Learningmentioning

confidence: 99%

“…By presenting an accurate timeline of events, these accounts have played a significant role in showing the depoliticization thesis to be plausible, however neither account acknowledges the strategic element to economic policy making in this period. Indeed, Wass (2008, 345) argues that the fact “that there was no specific contingency plan for the events of 1976 is clear from the documents.”Ludlam (1992, 723) offers the closest suggestion that the government aimed to depoliticize policy with his assertion that the adoption of broadly monetarist policies was geared principally at forming public opinion. He nevertheless stops short of suggesting that this was part of a fully formed governing strategy, and the absence of the explicit recognition of a strategic element to policy is significant because it does nothing to rebuff characterizations of this period as one of uncertainty and indecision in policy making.…”

Section: Decisive Influence and Social Learningmentioning

confidence: 99%

The Politics of Economic Policy Making in Britain: A Re‐assessment of the 1976 IMF Crisis

Rogers

2009

Politics & Policy

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Many existing accounts of the IMF crisis have argued that British policy was determined either by the exercise of structural power by markets through the creation of currency instability and the application of loan conditionality, or by demonstrating that only policies of a broadly monetarist persuasion would be sufficient to sustain confidence, a recognition which was reached through a process of policy learning. This paper offers a re-assessment of economic policy-making in Britain during the 1976 IMF crisis to show that policy change did not occur as a result of disciplinary market pressure or a process of social learning. It argues that state managers have to manage the contradictions between the imperatives of accumulation and legitimation, and can do so through the politics of depoliticisation. It then uses archival sources to show how significant elements of the core-executive had established preferences for deflationary policies, which were implemented in 1976 by using market rhetoric and Fund conditionality to shape perceptions about the range of issues within the government"s scope for discretionary control.Key Words: Depoliticisation; IMF Crisis; Labour Government; economic policy-making; social democracy 9200 IntroductionThe economic policy autonomy of states is a salient issue in light of discourses on globalisation, capital mobility and the embedded nature of agreed principles in international economic regimes, which all suggest to varying degrees, that power has shifted away from the national state. Reflecting these positions, many existing accounts of the 1976 IMF crisis emphasise the role it played in determining policy British outputs, either through the disciplinary potential of markets, or the potential for crisis to act as a catalyst for policy learning. This paper begins by outlining an alternative framework for understanding the politics of economic policy-making. It suggests that the general imperatives of accumulation and legitimation are constraints faced by state managers that play a role in determining the broad objectives of governments, but cannot determine specific policy outcomes at times of 2 crisis. It also argues that these imperatives are contradictory, and that these contradictions often make it beneficial for governments to invoke market rules and market rhetoric as part of a strategy of depoliticisation in order to create the necessary political space to achieve both its accumulation and legitimation imperatives simultaneously. The paper then critically reviews existing accounts of the crisis. It shows how the majority of the literature has emphasised the role of crisis in determining policy outputs, and that whilst some empirical accounts have shown that policy changes began to take place before the IMF crisis, thereby "plausibilising" the depoliticisation thesis, they fail to recognise the strategic element to policy-making and therefore contribute to the impression that this was a period characterised by uncertainty and indecision in policy-making.The article the...

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“…In the 1970s the critique of Keynesianism helped propel the party leftwards (Hatfield, 1978). In government after 1974 we get probably the most important ‘Keynesian’ episode in Labour (and British) history so far, as Healey as Chancellor tried to offset the deflationary impact of the Organisation of Petroleum Exporting Countries (OPEC) crisis, but as early as the budget of 1975 (and, incidentally, well before the visit of the International Monetary Fund [IMF] in 1976), priority was being given to reducing inflation, not unemployment, and demand management tightened (Ludlam, 1992). It is difficult therefore to see any sustained period when Old Labour was straightforwardly committed to ‘Keynesian demand management’.…”

Section: Manufacturing Labour Productivity In Britain and West Germanmentioning

confidence: 99%

History as Political Rhetoric

Tomlinson

2008

Political Studies Review

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In this book as in previous ones,Anthony Giddens underpins a political argument by the use of history.Three central tropes of this history are apparent. First is that globalisation is a new phenomenon, and therefore requires new policy responses. Second is that the Old Left/Old Labour had ideas wholly inadequate to deal with this new situation, and thus New Labour was required.Third, a declinist account of post-war Britain is given, in which Thatcher's policies reversed aspects of economic decline, but did damage in other directions, and therefore needed correction. In this schema, Old Labour represented the first way, Thatcherism the second way and New Labour the Third Way. In this new book, advocacy of the Third Way is essentially continued but, it is argued, it needs 'tweaking' to face the challenges after ten years of New Labour.My contention in this essay is that each of these three 'histories' is at best problematic, at worst wholly misleading.

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The Gnomes of Washington: Four Myths of the 1976 IMF Crisis

Cited by 19 publications

References 0 publications

The Consequences of the Global Financial Crisis

The Consequences of the Global Financial Crisis

The Politics of Economic Policy Making in Britain: A Re‐assessment of the 1976 IMF Crisis

History as Political Rhetoric

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