In 1942, when working to establish the International Monetary Fund, John Maynard Keynes said the “control of capital movements, both inward and outward, should be a permanent feature of the post-war system.”
In his new book Capital Ideas: The IMF and the Rise of Financial Liberalization, Jeffrey Chwieroth argues that despite the fact that the economics profession largely maintained their support of Keynes’s position, by the late 1990s the IMF motioned to change its articles of agreement in order to outlaw capital controls across the world.
The about-face in IMF thinking, according to Chwieroth, was due to a change of position among IMF staff. In yet another about-face, the IMF staff just released a position paper where they retract their rejection of Keynes ideas. Now it’s time to practise what they preach.
Yes, yes, yes!