The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis

Abstract

The book provides a path-breaking comprehensive analysis of how the IMF approach to fiscal policy has evolved since 2008, the Fund’s role within the politics of austerity, and how it worked to shape advanced economy policy responses to the global financial crisis (GFC) and the Eurozone crisis. The book aligns with and advances cutting-edge ideational scholarship in international political economy (IPE) and comparative political economy (CPE) to build an innovative theorizing of how ideational change operates in international organizations (IOs). The construction of economic policy knowledge is understood here as a social process, wherein the IMF works to impress its interpretation of sound policy upon member countries through surveillance and other interactions. It updates and refines our understanding of how the IMF seeks to wield ideational power by analysing the Fund’s post-crash ability to influence what constitutes legitimate knowledge, and their ability to fix meanings attached to economic policies. This book is interested in the politics of economic ideas, focused on the assumptive foundations of different approaches to economic policy, and how the interpretive framework through which authoritative voices evaluate economic policy is an important site of power in world politics. After establishing the internal conditions of possibility for new fiscal policy thinking to emerge and prevail, detailed case studies of IMF interactions with the UK and French governments during the Great Recession drill down into how the Fund seeks to shape the policy possibilities of advanced economy policymakers and account for the scope and limits of Fund influence.

The professional politics of the austerity debate: A comparative field analysis of the European Central Bank and the International Monetary Fund

“…However, regarding international financial institutions, one should distinguish between experts with long careers, who have a historical proclivity for defending orthodox views of fiscal consolidation (Ban ; Clift ), and more junior experts as well as experts based in IOs without a mandate to deal with fiscal policy, such as the World Bank and whose views should therefore be less likely to be supportive of austerity in both its soft (‘revisionist’) or hard (‘orthodox’) forms. It can therefore be hypothesized that being a new IMF hire or an economist based in an international financial institution other than the IMF should be associated with either revisionism or radical challenges to austerity.…”

“…The article builds on the state of the art on the sociology of professions and international organizations when it conceives of the corps of economists shaping the policy doctrines of the ECB and the IMF as transnational ‘issue professionals’ who assert scientific authority and enrol the ideas and professional prestige of sympathetic interlocutors in order to gain legitimacy, establish cognitive dominance over certain policy niches (‘issue control’) and, consequently, smooth the acts of transnational administration (Henriksen and Seabrooke ; Seabrooke and Henriksen ). While the existing scholarship on this linkage shows that such activities of issue professionals create incentives for them to exploit both the intellectual shifts and the intellectual status quo in elite niches of academic economics (Chwieroth ; Ban , ; Ban et al ; Clift ; Grabel ), the professional terrain where scientific authority originates (Fourcade ), this article advances the state of the art by looking beyond academic economics and into other fields of economic expertise ranging from the private sector to think‐tanks.…”

“…This article focuses on the 2009–14 period as a critical juncture during which macroeconomic policy pieties were extensively questioned (Armingeon and Bacarro ; Moschella , ; Grabel ) even as the power and unity of the creditor class remained largely unchallenged (Hager ; Nesvetailova ; Young and Pagliari ). Indeed, by 2009, it was no longer possible for policy‐makers to claim that most economists agreed with the counterproductive nature of expansionary fiscal policies whenever interest rates are close to zero and/or financial frictions in the economy were significant (Ban ; Clift ).…”

“…Indeed, by 2009, it was no longer possible for policy-makers to claim that most economists agreed with the counterproductive nature of expansionary fiscal policies whenever interest rates are close to zero and/or financial frictions in the economy were significant (Ban 2016;Clift 2018).…”

The IMF failure that wasn’t: risk ignorance during the European debt crisis

“…Conditional lending is a social activity, which implies choice and agency. At the IMF, conditionality‐setting is typically understood as an epistemic activity, shaped by internal experts and their belief systems and ideational filters (Clift ; Nelson ; Stiglitz ). But this reading is problematic because it assumes that IMF experts enjoy relative autonomy in their daily work.…”