Abstract
The current crisis of neoliberalism is calling into question the relevance of key international institutions. We analyze the origins, nature, and possible impacts of the crisis through comparing two such institutions: the International Monetary Fund (IMF) and the World Trade Organization (WTO). Both originated in the post-World War II U.S.-led hegemonic order and were transformed as part of the transition to global neoliberalism. We show that while the IMF and the WTO have been part of the same hegemonic project, their distinct institutional features have put them on significantly different trajectories. Historical differences in the two institutions’ systems of rules have placed the IMF in a more vulnerable position than the WTO, which provides clues to the future contours of global economic governance.
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Notes
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For more on IMF impact, see Polillo and Guillén 2005; Henisz et al. 2005; Nooruddin and Simmons 2006; Barro and Lee 2002; Vreeland 2003; Ingram et al. 2005. Many proponents of IMF-imposed rules argue that they are not as effective as they should be (Collier 1997; Easterly 2001, 2006). Yet, the analyses that show that IMF rules fail in about half of the cases inevitably also suggest that they succeed in the other half (Dreher 2002, p. 33). Economic impact is also apparent at the WTO, as member-states have generally reduced tariffs and otherwise adhere to obligations they have taken upon themselves through the international trade agreements.
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Another indication that political compromises, more than inherent characteristics of trade and finance, determined the systems of rules of the two organizations is by the consideration and implementation of alternative systems. British unilateralism under Pax Britanica offers an example of an alternative means toward trade opening (Webb and Krasner 1989; Pigman 1997). Another alternative is to make trade liberalization a precondition for loans, as practiced by the World Bank and IMF after the 1980s. Moreover, we show below that the practice of “conditionality” was not part of the original charter or mission of the IMF, but was rather added later—largely because of political pressures from the United States.
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The WTO provided a formal organization to what was previously an informal institutional. The General Agreement (as amended over the years) is still valid.
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http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htm (accessed 8/11/2008).
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Chorev, N., Babb, S. The crisis of neoliberalism and the future of international institutions: A comparison of the IMF and the WTO. Theor Soc 38, 459–484 (2009). https://doi.org/10.1007/s11186-009-9093-5
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DOI: https://doi.org/10.1007/s11186-009-9093-5