Not Your Grandfather’s IMF: Global Crisis, ‘Productive Incoherence’ and Developmental Policy Space (significantly revised)

This is substantially revised and updated version of a paper that was first published as a PERI Working Paper in August 2010.The response by the IMF (and developing country national governments) to the current global financial crisis represents a moment of what I term “productive incoherence” that has displaced the constraining “neoliberal coherence” of the past several decades. Productive incoherence refers to the proliferation of inconsistent and even contradictory strategies and statements by the IMF that to date have not congealed into any sort of new, organized regime. Those who see continuity at the IMF emphasize the reassertion of the IMF’s authority; the reiteration of pro-cyclical policy adjustment; and the maintenance of existing governance patterns within the institution. In contrast, evidence of discontinuity includes a world now populated by increasingly autonomous states in the South; the normalization of capital controls; and Fund conditionality programs that are inconsistent in key respects. In the face of this evidence, it is best to understand the current conjuncture as an “interregnum” that is pregnant with new development possibilities.