Capitalism, Macroeconomics and Reality
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Capitalism, Macroeconomics and Reality

Understanding Globalization, Financialization, Competition and Crisis

James Crotty

The essays comprising this collection analyze the deep flaws in the methodological foundation of mainstream economic theory, and explain how these flaws make mainstream economics more ideology than sound social science. James Crotty develops alternative theories built on realistic assumptions that can explain most of the disastrous economic and financial developments of the past four decades. His work contributes to the collective creation of a solid theoretical foundation on which to build an understanding of the ‘laws of motion’ of capitalism in the post WWII era.
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Chapter 15: Was IMF-Imposed Economic Regime Change in South Korea Justified: The Political Economy of the IMF

James Crotty

Extract

As late as October 1997 the IMF declared that the Korean economy was experiencing a temporary liquidity squeeze, not a solvency crisis. Yet in December 1997 Deputy Managing Director Stanley Fischer declared that Korea suffered from a systemic “breakdown of economic relations” so complete that only radical economic restructuring could restore prosperity. The IMF attached what it called “extreme structural conditionality” to its loan agreements with Korea, demanding a complete and rapid transition from Korea’s traditional East Asian economic model to a globally integrated neoliberal model. The central question addressed in this chapter is: was the IMF’s assertion that the Korean economy had become so structurally dysfunctional by 1997 that it needed immediate radical restructuring true? Or, did IMF and senior U.S. officials use a false claim of structural breakdown to rationalize seizure of control of Korea’s economy and the implementation of policies that served the interests of their own constituents and not those of the Korean people?

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