Learning from the IMF?
By Allen Myers
The International Monetary Fund's assessment of the Australian economy, announced on November 17, gave treasurer Peter Costello an opportunity to pat himself on the back in public for what the IMF called the Australian economy's "impressive record".
This is typical. When the economy is doing well, governments claim the credit. When the inevitable slump hits, they declare that economies are outside governmental control.
More serious is the use that will be made of the IMF's "advice" to the government. For a start, the faceless boffins of the IMF "strongly endorsed" the Howard government's planned tax "reform". Count on this being used by the government to try to overcome opposition to its regressive goods and services tax.
The IMF went on to call for further labour market deregulation — more enterprise bargaining and individual contracts — and for attacks on the poor: a time limit on unemployment benefits and a reduction in "social welfare benefits that discourage labour force participation".
This was not publicly endorsed by the Howard government, but it is certain to be trotted out as soon as the government thinks it can get away with something like that, and sooner rather than later.
But how reliable are the prescriptions of the IMF? Writing in the November 21 Sydney Morning Herald, Adele Horin provided a good summary:
"Slavishly orthodox in its economic prescriptions, the IMF has got it wrong more often than not. The medicine it dishes out to developing nations in crisis is entirely predictable — high interest rates, budget cuts, and a credit squeeze. And the results are predictable, too: impoverishment, starvation and hardship."
The IMF was notoriously caught be surprise by the outbreak of the economic crisis in south-east Asia, a crisis it was certain its prescriptions made impossible. When the crisis broke out anyway, it recommended more of the same.
But there is more than incompetence involved here. The IMF's recipes are so predictable because of what the IMF is. It is not at all an independent body of experts, or even an independent body of incompetents. "The chain of command runs clearly from the governments of member countries to the IMF ...", as the IMF itself puts it. There is no question of independence or objectivity.
However, member governments are not all equal. The IMF is very much a committee of the imperialist governments, which seeks to regulate international trade and monetary arrangements to the advantage of imperialist capital. Non-imperialist members have only the most token representation in its executive bodies.
This is why the IMF goes on recommending economic measures that produce impoverishment, starvation and hardship in the Third World (and which would have the same type of impact, on a smaller scale, if adopted in an imperialist country like Australia). It's not that the IMF's economists are stupid, but that policies which cause hardship and starvation for the poor are good for big business.
The IMF thus represents the very opposite of international cooperation; it is rather one more mechanism by which the strong bully and exploit the weak. And that is what capitalism is all about.