What’s Wrong Series

Paul Harris, What’s Wrong with Climate Politics and How to Fix It

Simon Hix, What’s Wrong with the European Union and How to Fix It

Bill Jordan, What’s Wrong with Social Policy and How to Fix It Thomas G. Weiss, What’s Wrong with the United Nations and How to Fix It, 3rd edition

Rorden Wilkinson, What’s Wrong with the WTO and How to Fix It

Debates over the failings of international organizations like the United Nations, the World Trade Organization, and of course the International Monetary Fund (IMF) are among the most pressing issues in global governance. Born out of the spirit of liberal multilateralism following World War II, these institutions and their beliefs are under direct attack by the new politics of reactionary nationalism across Europe and in the United States. In writing this book between 2015 and 2017, we thus find ourselves embedded in a critical historical moment in our analysis of the IMF. In the face of the rising tide of reactionary nationalism, the direction of the IMF’s future actions and degree of effectiveness will strengthen or help unravel the world’s commitment to liberal global governance.

While ultimately champions of the institution, we recognize the multiple areas of controversy tied to the IMF. For many in the developing world, the IMF has been appropriately criticized for its inaction, for its “one size fits all” policies which do not consider local context, and for the imbalance of power among its members, with the most powerful dominating it. The Fund’s current engagement in the troubled Eurozone also highlights the tension born out of deeply held norms that generally champion austerity. The IMF’s past response to the debt crisis of the 1980s and Asian crisis of the late 1990s also highlight pockets of institutional dysfunction that produced devastating effects on the lives of millions of people across the globe. However, the Fund has demonstrated it can learn from its mistakes. Particularly in the time period following the 2008 global financial crisis, the IMF has implemented effective policy reforms and has served as an important voice and advocate for many of the world’s poorest people. This is most salient currently in its commitment to “inclusive growth” and the United Nations’ Sustainable Development Goals.

This book looks ahead by diagnosing the failures and inconsistencies of the IMF and offering perspectives on the future role of the Fund. The book is part of a series of analyses of global institutions and issues, published by Polity Press. It draws on what we have previously written and presented through various publications and presentations; but also on the work of many other scholars looking at emerging mechanisms of financial governance at the global and regional levels. It seeks to push this literature forward by including in its analysis the democratization of decision-making within the IMF and the development of partnerships between the IMF and other regional and global financial institutions, but most of all by offering recommendations for closing the much-criticized “hypocrisy gap” of the IMF. In contrast to most literature on the IMF, we do not simply focus on the inefficiency of the institution but we consider how to “fix” it by highlighting informal processes of policy formation within the IMF, a critical issue that has not been sufficiently addressed in the literature. There is a possibility for substantial shift in the focus of the IMF through a more developed collaboration with international governance organizations and non-governmental organizations. This could lead to better performance by the IMF in its traditionally mandated areas and the inclusion of social outcomes in its policy formulation. This shift could create a synergy between the IMF and emerging countries. This is one of the possibilities following the institutional arrangements after the 2008 economic crisis. The other side of the coin would see an entrenchment of the influence of the most powerful states, and especially of the United States, the only member state enjoying single-handed veto power. Institutional memory would then participate in pushing the IMF further into what it has traditionally been: an insular community of macroeconomists far removed from local dynamics.

While writing this book, we have attempted through conferences and publications to increase the interest of scholars and students alike in global financial arrangements and the challenges ahead for the IMF. We have both published extensively on the IMF; on the drivers of change within the IMF, on its policies in specific countries, on emerging regional financial mechanisms, and on the possibility of reform of the Fund. This book is not our first collaboration but it is the most significant one. Bessma Momani’s interest in the IMF and global financial governance stemmed from her background in international political economy (IPE) and her analysis of IMF–Egyptian negotiations of the 1990s while a doctoral student at Western University. Bessma teaches courses on the IMF and on IPE at the University of Waterloo and the Balsillie School of International Affairs, and she has consulted for the IMF and its Independent Evaluation Office. She is also a non-resident senior fellow at Brookings Institution and the Centre for International Governance Innovation. Mark Hibben’s PhD thesis at Syracuse University addressed reform of the IMF in the “post-Washington Consensus.” His current research interests are in the politics of development in the “post-Washington Consensus,” with a consideration of the discourses on inequality and how Keynesianism shapes the policy choices of the IMF and the World Bank. The collaboration between the two Bretton Woods organizations and its impact on development outcomes is also one of his areas of interest. Mark teaches political science at St. Joseph’s College of Maine, Standish. Bessma was the external examiner at Mark’s PhD dissertation defense at Syracuse University and since then they have published and presented together on IMF reform.

What’s Wrong with the IMF and How to Fix It is the result of a close collaboration, with each author contributing to every chapter. Bessma Momani is the main author of chapters 2, 3, 6, 7, and 9 while Mark Hibben is the main author of chapters 1, 4, 5, 8, and 10. But this book, from its inception to publication, is the fruit of equal effort from both authors and teachers, interested in pushing forward the debate over IMF reform. It is targeted at students, scholars, IMF experts, and a general audience. With its two distinct parts, “Diagnosing the Ills” and “Finding a Cure,” What’s Wrong with the IMF is a must-have for all those interested in global financial regulation and the challenges ahead for the IMF.

As we reflect on the completion of this book, we are humbled by the “village” of colleagues, IMF staff and administration, institutional support, and family that ultimately made this project possible. Many thanks first to various colleagues who provided feedback on chapters in the book. Specifically, thanks to Anton Malkin, Skylar Brooks, Dustyn Lanz, and Eric Helleiner, who have previously co-authored work with Bessma Momani that has been featured in the book. Particularly invaluable to the project was the difficult editing and indexing work undertaken by doctoral candidate Ousmane Diallo.

IMF staff and administration also were extremely generous with time and access. Special thanks to IMF archivist Premela Isaac and staff in the IMF’s communication department, including Marjorie Henriquez and Jeremy Marks. Thank you also to staff from multiple departments who gave us time and were willing to provide frank assessment of the IMF’s strengths and weaknesses. Thanks to the Independent Evaluation Office’s Miguel de Las Casas for input on a number of chapters, although we may continue to have different takes on some issues. Financial and moral support also came from our home institutions, the University of Waterloo, Balsillie School of International Affairs, and Saint Joseph’s College of Maine. Bessma would like to acknowledge that research for this book was supported by the Social Science and Humanities Research Council of Canada. Finally, the patience of our families and partners was the final foundational piece that allowed us to focus our efforts and push through to completion.

The full meaning of abbreviations is explained when they are first mentioned in the book. After that, acronyms are exclusively used except for very common terms such as “United States” or “United Kingdom.”