It’s entirely true that the IMF now thinks that capital controls can be useful:
The International Monetary Fund has rethought its doctrine on capital controls. The IMF, which previously favored unfettered flows of money across borders, now accepts that controls are sometimes necessary.
When they’re useful is when there’s a flow of portfolio investment in or out of an economy or currency. At which time it might be a good idea to limit such flows to reduce the damage the gyrations might cause.
Humpf, well, OK then.
However, I can see the usual suspects lining up for something entirely different. And this is my prediction for the next (or one of the next) great lefty campaigns of our time. I’ve seen the Murphmeister and NEF for example, using this IMF argument about surges, to argue for complete capital controls.
That is, not that we might want to dampen surges. But that we want to prevent the movement of capital altogether. You know, go back to only being allowed to take £25 out of the country. Having to ask a petty bureaucrat whether you can replace the boiler in your Portuguese hideaway (no, really, this did used to happen. If you had a house overseas and money in the UK you needed permission to get the cash to where you could even maintain, let alone repair or buy, the house). We’d all have to go on package holidays again so that we could pay in sterling at home.
And the reason they want this is that as soon as capital becomes immobile then they can tax it. Which makes this very much an important freedom and liberty thing. They want capital controls so you can’t fuck off and take your stuff with you. Given that it is the ability to fuck off and leave them to it which restricts, to some degree, their actions, then we really can’t let them win in imposing capital controls again.
And mark my words: they’ll be proposing it soon enough.
Should governments have control over what sort of money comes into their country? Up until fairly recently there were strict restrictions on the movement of money around the globe – can we ever go back?
As I say, The Murph:
I warmly welcome this move. It is vital. It gives countries back control of their economies and currency. It reasserts democratic control. It ensures the rights of capital are constrained vis a vis labour. It ensures that real attempts to reduce inequality can be undertaken. It means sanctions can be imposed on tax havens.
I do not suggest the IMF is solving all problems overnight: it is not. But this is a welcome step in the right direction. The ideology of neoliberalism has brought us to our knees. Tackling it is vital if we are to create a new and sustainable prosperity. Permitting capital controls is one small step on the way.
See how they’re twisting things?