The IMF needs rethinking

The head of the International Monetary Fund (IMF) Dominique Strauss-Kahn has dismissed proposals for taxing purely speculative capital flows, in the wake of Brazil's decision to impose a two-percent tax on such flows to prevent a speculation bubble. Harvard professor Dani Rodrik criticises Strauss-Kahn's approach in the business paper Világgazdaság: "Unfortunately, this makes the new IMF sound too much like the old one. ... The IMF's reaction to Brazil's financial taxes reflects how ingrained finance fetishism has become. ... The problem is not just right-wing market fundamentalists. The failure of imagination extends across the entire political spectrum. Referring to capital controls, John Maynard Keynes famously said: 'What used to be heresy [restrictions on capital flows] is now endorsed as orthodoxy.' That was at the dawn of the Bretton Woods era in 1945. What an irony that more than 60 years later we need to undergo the same shift in mindset."

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