Triumphs And Tragedies Of The International Monetary Fund & World Bank

1946 words - 8 pages

On July 1, 1944, World War II, perhaps the darkest age of the human race, was about to end. The allies have landed in Normandy, and the fall of the Axis powers was inevitably near. Already, the economic visionaries and idealists have gathered at Bretton Woods to discuss the future economy of the upcoming peaceful times. After twenty-two days of meeting, twenty-nine participating nations signed the articles of agreement and the International Monetary Fund was established, with its noble goals - to provide a world of economic cooperation, to maintain a fixed exchange rate, to safeguard against any nation's misfortunes and disequilibrium, and to achieve a world economy that would reduce the possibilities of isolationism and therefor, war. Yet, after fifty years of commitment to that noble goal, after providing more than $100 billion dollars to developing nations, the program is facing grave opposition and a possible end to its organization. Anti-IMF organizations have begun to wage a vicious campaign named '50 years is enough' against the IMF and the World Bank. Did the IMF's service to the world economy have a negative effect? Or is it because the environmental, political, and humanitarian concerns outweigh the positive economic gains of the organization? Or has the rapid advancement of the world economy made the once useful organization's services obsolete? A closer examination of the organization and its workings, its problems, and its opponents positions reveals the answers to these questions.The International Monetary Fund officially started operating on March 1, 1947. The philosophy behind the organization was mainly influenced by two men: Harry Dexter White and John Maynard Keynes. They were both heavily influenced by main economic and political events of the 1920's and 1930's: the economic depression connected with isolationist policies of the thirties and the rise of extremist political forces in Germany and the Soviet Union. Most of the experts thought that these events were more or less a consequence of the collapse of the international trade system in the interwar years. We share this view to this day: an isolated country is much more prone to be subject to destructive political forces of the left or of the right, as examples abound, than a country fully integrated in world economic cooperation1. But the two disagreed on the method of bringing about that world economy that will prevent such depressions and related political dangers. John Maynard Keynes, a brilliant British economist proposed a world reserve currency system, which would be governed by a central bank. However, the view which prevailed was that of U.S. delegates led by Harry Dexter White, who opted for a system based on the relatively free movement of goods with the dollar as the international currency2. In the end, the IMF was established 'to promote international monetary cooperation by maintaining fixed exchange rates among the currencies of different nations.'3 To...

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