From Monetary Manager to Crisis Manager: Systemic Change and the International Monetary Fund

Abstract

Twenty years ago, Susan Strange contributed a path breaking chapter to The Anatomy of Influence, a classic volume in the field of international organisation (Strange, 1973). The chapter presented the first objective analysis of the politics of policy making in the International Monetary Fund. Not only did it succeed in de-mystifying its arcane subject matter for outside observers, it also earned the respect of normally sceptical insiders, who still cite it with admiration. Despite the collapse of the Bretton Woods exchange rate system in the very year the chapter was published — the system that provided the reason for the Fund’s existence — the chapter remains relevant and strikingly insightful. Indeed, considering how turbulent international monetary history has been since 1973, it is uncanny how much the chapter anticipated. What explains the Fund’s continued existence in the post-Bretton Woods era? This brief essay will suggest that a significant part of the answer was foreshadowed in Strange’s work and lies in the emergence of the Fund as a systemic crisis manager. It will also suggest, however, that both the political and institutional forces behind that emergence have left the Fund, and the great experiment in multilateralism of which the Fund is a part, extremely vulnerable.

Research for this essay was supported by a grant (# 410-91-1308) from the social sciences and humanities research council of Canada. The author alone is responsible for the views expressed.