Part 25 (1/2)

Additionally, a regime of stable exchange rates won't go far towards facilitating the second result: to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. If a country runs a gigantic balance of payments deficit but is not permitted by the IMF to devalue its currency, in the name of exchange rate stability - its balance of payments is only likely to worsen. Take Macedonia: with a 14% of GDP deficit in its BOP - it MUST devalue and URGENTLY. Its currency is HEAVILY overvalued and the whole economy is deflating. Yet, the IMF is about to repeat there the same grave error it committed in Russia: to protect the currency, the whole system is drained of liquidity (demonetised), interest rates are kept insanely high and the balance of payments deficit skyrockets, until the inevitable collapse. If the IMF is interested in self-perpetuating crisis situations in order to preserve its clout - it is doing a fine job indeed.

The IMF was never authorized to rate the creditworthiness of its shareholders (=the countries). It is acting ultra vires in providing clean or soiled bills of financial health. Its ability to strangle a country financially if it does not comply with its programmes - no matter what the social or economic costs are - is very worrying.

LANGUAGE

Tom:

The language in the IMF doc.u.ment can be roughly divided into two sections.

A Phrases concerning the-history-role/activities-nature of the IMF B Phrases concerning - subjective economic and political concepts - local policy - international policy.

Here's my summary of the kind of language used:

1.Quasi-intellectual terms (”big words for a dismal science”), e.g. disequilibrium, comprehensive a.n.a.lysis, policy strategy;

2.Spin-doctoring euphemisms, e.g. promote, facilitate, balance, co-operation, safeguards, monitoring, responsibilities, precautionary arrangements, endors.e.m.e.nt, benchmarks. This also includes intimidating terms such as ”surveillance”;

3.Distancing terms, e.g. members, general economic situation, policy strategy.

(1) Is simply pretension. The average ”comprehensive a.n.a.lysis”

undertaken by the IMF is often curiously selective and self-serving.

Sam:

Not to mention cursory ”kangaroo-court” economic judgements replete with clear contempt and disregard for the ”natives”. The latter are held to be cheats who are merely trying to extort as much money as they can and probably stash it in Swiss bank accounts (private ones, needless to say).

Tom:

(2) Is the most obnoxious section. These phrases mislead. They paint a picture of the stability and democracy that supposedly is Western capitalism. They paint an image of the IMF as a fair, unbiased, caring, and democratic organisation. These phrases also confuse in that they connect ”nice terms” (like balance, co-operation and safeguards) with complicated and subjective economic terms. Thus the language often functions as a ”pacifier”, or perhaps as a ”chaser”, softening the blow of the ”hard stuff”.

(3) Indicates the insular att.i.tude of the IMF. Their ”grand scheme” is apparently removed from localised activities and concerns.

Sam:

There is one place, which absolutely complies with the IMF utopia.

There is no inflation there. People do not particularly care if the exchange rate never changes or what is the outlandish level of interest rates needed to ensure this eerie stability. It is the cemetery.

The IMF's deadly sin, yet to yield its grapes of wrath, is not to understand that economics is a branch of psychology and should be at the service of humans and society. When setting economic goals one must always act with pragmatism and compa.s.sion. In the realm of humans, to be compa.s.sionate IS to be pragmatic. Otherwise, reality is bound to frustrate the most rigorous planning. If social costs are not accounted for - unemployment will bring about crime and a black market, which will render the official market and its statistics meaningless, for instance. If exchange rate stability supported by inanely high interest rates prevails over the goals of industrial reconstruction and export-enhancement, the result is erosion of the very fabric of society. Lack of liquidity translates into a lack of trust in fellow citizens and in inst.i.tutions. If public expenditures are harnessed too strenuously - corruption will flourish. The IMF's propensity to provide a ”catchall” one-measure-fits-all panacea is nothing short of shortsighted and disastrous. It cannot be that the same financial recipe will apply to Pakistan, Macedonia, Estonia and Russia. Yet, a close scrutiny of the four IMF programmes imposed upon these countries (Estonia wriggled out) - demonstrates striking similarities. It is a fact that there are conflicting CAPITALIST economic models. Not because human nature is so diverse - and it is - but because different people have different preferences. Americans prefer profits and self-reliance to social justice. Not so the French. Paradoxically, this is exactly why markets exist: to trade in disparate preferences. The IMF is a central planning agency but as opposed to previous models it believes that it is omniscient - and knows that it is omnipotent.

Tom:

The IMF's desire to paint a kind of stasis on the world economy is, as you have said, a kind of religious-ideological defence mechanism. The language employed by the IMF is an attempt to give form to the haphazard and contradictory nature of international trade and development. This language functions in a similar way to their policies, in that both seek to describe and promote a uniform concept/practice of international economics.

The reference to economics as a branch of psychology is spot-on. It is ignorant, unethical and unworkable to attempt to impose or promote any kind of exclusive and conformist concept of ”the economy”. Indeed, the IMF's bizarre language and policies reveal a mistaken view (commonly held) that there is such a single practice or ent.i.ty called ”The Economy”, or ”International Trade”. Absolutist and limiting concepts of economy (communism, now capitalism) are increasingly being shown to be unworkable. The language used by the IMF is evidence of the impractical, restrictive and unethical nature of an elitist concept/practice of economics.

FINAL STATEMENT