Monbiot: Keynes alternative to the IMF/WB

Chris Burford cburford at
Mon Sep 25 17:07:02 PDT 2000

From George Monbiot's spirited article in Thursday's Guardian.

Do those knowledgeable in Keynes, accept this characterisation that Keynes's model proposed an international financial insitutution that would have placed interest charges on *both* creditors and debtors?

Would that be qualitatively different in its workings?

And would this idealist reform, actually represent a major step towards socialism - presumably not Keynes's intention?

Chris Burford


>To me, the abiding mystery surrounding the World Bank and the IMF is why
>anyone still believes that they are capable of reform. The New Economics
>Foundation concludes its devastating critique of the two bodies by
>suggesting only that they should "undergo democratic overhauls". Even the
>Guardian's usually far-sighted economics editor, Larry Elliott, has argued
>that those who believe the World Bank and IMF are inherently corrupt "are
>not only wrong, but are giving succour to extremists on the right who
>oppose all but minimalist government and despise internationalism". There
>is, most commentators agree, no alternative to the existing global
>financial system.
>This is not a consensus that John Maynard Keynes would have joined. In
>1944, he warned that a
>financial system which imposed penalties and strictures on debtor nations
>but not creditor nations would ensure that the rich became richer and the
>poor became poorer. He proposed a global financial institution which would
>charge interest on both debt and credit. Creditor nations would thus be
>encouraged to spend their surpluses in debtor nations, automatically
>correcting imbalances in trade.
>The US proposed an alternative system. Help for debtor nations would be
>confined to a fund and a bank which lent them money when they got into
>trouble. These would both be based in Washington and effectively
>controlled by the creditors. As Keynes foresaw, the US proposal would
>ensure both that debtor nations fell further into debt and that creditors
>- the US in particular - could exercise ever-greater economic and
>political power over them. But the US told Britain that if we didn't
>accept its proposal, we wouldn't get our war loan.
>The World Bank and the IMF, in other words, were conceived as the
>policemen for a coercive and grossly unbalanced world order. The idea that
>they could deliver anything but disaster for the world's poor is
>laughable. If, as they will claim in Prague, they want to help build a
>fairer world, then they must start by closing themselves down.

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