It has been illustrated that the IMF was a tool or technology to spread liberalism and that the Washington Consensus formed the theoretical framework the IMF would aspire to work within. However another variable needs to be examined to understand this mode of power, that is the incentive for developing nations to succumb to this mode of power. One particular incentive implemented by the IMF was that of credit.
As Hoogvelt article discusses that credit as a means to acquire capital flows were added by the strategic implantation of nationalizing private debt. The nationalization of debt was legitimized through concepts of economic develop and national sovereignty (Hoogvelt 125). A further tactic used in debt control of the states that had been promoted by the IMF was the devaluation of the currency which effectively was a tax on the public that to alleviate a government domestic debt (Hoogvelt 125). Further compounding the problems of the developing nation were the neoliberal pressure as exerted through the IMF for states to sell off at barging prices their state owned enterprises (Hoogvelt 126). Thus we see the developing state’s role being reduced to that of legitimizing debt devaluing public assets.
Drawing off of Hoogvelt’s writings we can see some existing critiques of the IMF’s agenda of liberalization. He mentions how even IMF and World Banks economic standards, the policies prescribed and structural adjustment contracts have led to a decline in growth rates, and some states have experienced hyper inflation. Hoogvelt illustrates the risks of deregulation of financial markets by giving examples of corporate credit schemes that require have no regulation on reserve capital and how essential corporate bonds and repackaging of debt and loans allows for anonymity (Hoogvelt 123) in the trading of financial assets presenting a risk for developing nation of reintegration of illegitimate capital (Hoogvelt 124). However new tactics of addressing development are still being examined by the IMF.
One of the newer tactics the IMF has implemented in its strategy both to liberalize economies and to deal with development issues is Micro-credit and Micro-finance. Weber suggest that the Micro-credit is a way of gaining some cultural capital in that entrepreneurs are frequently in positions of influence geared towards a neo-liberal agenda whether through education media or methodologies (Weber 195) micro-credit has been strategically designed and employed through the Exchange Stability Fund to poverty intervention for the purpose of preventing social struggles turning into acute political conflicts in situations such as the Bolivian experiment (Weber 196).
Eventualization, Growing Pains of a New Global Financial Apparatus
Why the 2007 Credit Crisis important to Development? It may seem unobvious and worth questioning why it is important to study the credit crises of the 2000’s. One might ask if the crisis was primarily based on the US sub prime...