Poisoned Chalice - Wherever it is Prescribed, a Dose of IMF Medicine Only Compounds Economic Crisis
by George Monbiot

One-and-a-half million people (almost 30% of the workforce) lost their jobs. The incomes of those who stayed in work declined by 24%; pensions fell by 31%. By 1996, most people were living on or around subsistence levels. Public services shrivelled. Between 1989 and 1998, the crime rate rose by 166%. This, we must remember, was the result of a process almost universally described as "the triumph of capitalism".

Then, in 1996, suddenly, without announcement or explanation, the policy changed. The banks were permitted to start issuing credit again and the recession, as a result, came to an immediate end. Over the next four years, industrial production climbed by 45% and gross domestic product by 21%. Wages and pensions began to rise again.

The experiment, in other words, could not have had a clearer outcome. You apply the IMF's medicine and the economy collapses. You stop, and the economy recovers. It has been repeated often enough for us to trust the results. In Thailand, South Korea, Indonesia, Russia and Argentina, the IMF's financial liberalisation and forced restrictions led to economic crisis, which was relieved only as those restrictions were lifted. Those nations which refused to take the medicine, even though they were confronting almost identical conditions (Malaysia, China, Poland) prospered while their neighbours collapsed.

So why, knowing what the results will be, does the IMF keep applying the same formula for disaster? It can hardly be through lack of expertise. The truth is that the results happen to suit its sponsors very well. While the IMF works mainly in poor nations, it is controlled, through its one-dollar, one-vote system, entirely by the rich. As a result, as Stiglitz says, its programmes reflect "the interests and ideology of the western financial community".
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