The existence of the IMF was predicated on the consensus reached at Bretton Wood. That consensus broke down during the 1960's and was finally ended when the US president unilaterally abandoned the foundation of the system of setting exchange rates, by suspending the convertability of the dollar to gold.
That may have been a good decision or it may not: I am not really equipped to say. What I will say is that at this point the whole rationale for the IMF was undermined. It necessarily became a different kind of beastie. I think that should have been acknowledged and a new agreements should have been openly and transparently negotiated. It was not. Instead the body continued under the same name and with the same ostensible purposes. Howeve the decision of the USA was not based on Keynesian analysis: Nixon was by now under the influence of the neoclassical economists: and full employment is very far from their agenda.
After the Nixon decision in 1971 the parity of exchange rates was abandoned and quite quickly the currencies of major economies were "floating". That has advantages and disadvantages: but what it certainly means is that the fundamental purposes of the Agreement have been fatally undermined. iii and iv are no longer possible and so it follows that the nature of the IMF enterprise was radically altered.
In support of this view compare the 1944 agreement
http://freetheplanet.net/articles/135/arti...nd-22-july-1944with the current agreement as amended
www.imf.org/external/pubs/ft/aa/index.htm#art4In particular it is instructive to read Article IV in both version, as well as Article 1. As you see, the purposes have not been altered: Article 1 is identical in both versions. But Article 1V could hardly be more different and in the current version there is an explicit change of purpose introduced
QUOTE
Recognizing that the essential purpose of the international monetary system is to provide a framework that facilitates the exchange of goods, services, and capital among countries, and that sustains sound economic growth, and that a principal objective is the continuing development of the orderly underlying conditions that are necessary for financial and economic stability, each member undertakes to collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates.
There is no focus there on the effects on working people: no emphasis on full employment nor any suggestion that these arrangements are to be informed by the effect on those things. Economic growth is now central, and while stability is still important it is an end in itself: that was not true before. The capture of the IMF by the neoliberals seems to me to be complete. It is this change which has turned a good institution into an arm of plutocracy, or so I think
Edited by FionaK - 29/5/2012, 13:26
