The IMF and European Sovereign Debt: New Crisis, New Clients

Abstract

Chapter 7 argued that despite perceptions of legitimacy dilemmas within the Fund that appeared to have undermined its role in the international monetary system in the realms of surveillance, tutelage, and lending, it continues to have a role to play. Firstly, doubts about the sustainability of the Chinese model in terms of producing welfare enhancing GDP growth suggest that, contingent on reform of the Fund’s view of its client states, it can be an important source of economic ideas within the international monetary system. This represents its greatest opportunity to play a positive (active) role in the global economy. Secondly, the chapter argued that tendencies towards modern mercantilism on the part of emerging market economies mean that the Fund is likely to have an important role to play in the creation, surveillance, and management of a multipolar monetary system. Given the extent to which the appreciation of the yuan would both increase the cost of consumer goods in the advanced economies, and contribute to social hardships within China as its competitive edge was eroded, the chapter suggested that the Fund’s role in the creation and management of this system would once again be beneficial in helping governments to offset the negative consequences of economic policy reform suffered by labour. These roles represent a significant contribution to managing the ongoing contradictions of the capitalist global economy, and specifically the ways in which accumulation and legitimation dilemmas can be managed without escalating into a moment of acute economic or political difficulty.