Protagonist or Antagonist

Topics: Bretton Woods system, Keynesian economics, International Monetary Fund Pages: 6 (2072 words) Published: March 14, 2006
Perfection is an idea which is difficult to strive for, when the concept is applied to decision making. The perfection – or more precise, the suitability of the final decision, must be evaluated. Generally, it can be assumed that when more individuals are involved in the decision making process, their knowledge combined together will produce a better outcome. As an international organization, the International Monetary Fund has hundreds of individuals putting their heads together to contemplate actions that should be taken to ensure a better flow of the economy. With their ‘man-power' and abundant resources, their decisions should likely be correct for the majority of times. Nevertheless, human error may factor in the process and cause mistakes to be made – however, such mistakes should not be repeated as it may be detrimental to economies. Moreover, if certain ‘mistakes' tend to reappear, it may be questionable whether it was accidental or even consider whether it was caused deliberately by human intention. The IMF seems to be neglecting the true needs of impoverished countries continually making unsuitable decisions allowing these countries to take on huge debts which they cannot possibly repay. The outcome is that strong countries, such as the U.S., maybe able to control third-world economies. It all began on July 22nd, 1944 in the United States of America, at Bretton Woods, New Hampshire. A Conference was held between Fabian Society member, John Maynard Keynes and the Assistant Secretary of the United States Treasury, Harry Dexter White to discuss the reconstruction and worldwide economic development. The agreement of the Bretton Woods Conference, as it has come to be known, was officially called the United Nations Monetary and Financial Conference Keynes's suggestion of creating an International Clearing Union as part of a post World War II reconstruction plan and was contained in this agreement. Consequently, the IMF was founded in the aftermath of the Great Depression and World War II. The International Monetary Fund was set in motion on March 1st, 1947. Since then, the IMF had gone though two major economic time frame changes; the Keynesian Welfare State era and the era of neoliberal globalization, which lead to the shifting position of the IMF. The first stage that the IMF experienced occurred after the Bretton Woods Conference, and was based on the economic theory and ideas by John Maynard Keynes. These ideas were widely accepted by the most economists in the western countries, and this initial operated time period became known as the Keynesian Welfare State era. The second era was the neoliberal globalization. The era of neoliberal globalization was the time when fundamental questions about the state, government, politics, property and law were raised, and when their major implications on government politics were considered. The Keynesian economic theory was presented in John Maynard Keynes's book, The General Theory of Employment, Interest and Money, in 1936, and the key of the Keynesianism was the use of fiscal to measure produce high and stable levels of income and employment. It was concluded that by Keynes "demand creates its own supply" , up to the limit set by full employment. During the Keynesian Welfare State era, which last IMF until 1971, the IMF was running under the concepts of the Keynesianism. The initial role of the IMF was to provide short term loans to stabilize exchange rates. After the removal of the par-value exchange rate system in 1973, the original role of the IMF started to collapse. Further fueled by the widespread of neoliberalism ideology in the 1980s, which rejects positive government intervention in the economy, the role change of the IMF becomes more evident. In contrast to Keynesianism, neoliberalism is focused on social justice by encouraging free-market methods and less restricted operations of business and development. Another belief is that net gains...
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