I just received the following email from my friend and colleague Gavan Butler, in response to my piece on the euro crisis. I think it makes for interesting reading:
Dear Yanis. I enjoyed your contribution. It took me back to the debates in the period 2001 to 2003 about what differently might have been done to limit the East Asian financial crisis. This debate was about capital controls in the first place. One of the chief participants in the debate was Joe Stiglitz (who credits himself and his World Bank team with having converted Dr Mahathir’s controls in Malaysia into an exit tax that, as promised, was lifted after twelve months – see his Globalization and Its Discontents). The post-Asian-crisis debate was also about rescheduling sovereign debt and about whether statutory or contractual means were better in bringing this about. The point of the discussion at the time was precisely to bring together the ‘stakeholders’ (or the powerful players, anyway) in any country facing a threat of a crisis in the future to ensure that they would cooperate in preventing a collapse of production and trade. Among the chief discussants in this section of the debate were Barry Eichengreen, Robert Wade and Frank Veneroso, even Ann Krueger*, who was then at the IMF, and a reluctant Stanley Fischer. The question is where did this debate go? Stiglitz is adamant that the first aspect of the debate was killed off by the global financial community and the IMF, and I imagine the second was, too. That fraction of global capital overwhelmed the interest of industrial (and commercial) capital. I doubt that it was first and foremost a concern on the part of industrial capitalists to claw back wages and tighten the social control of workers. [*See Andre Broome, ‘The International Monetary Fund, crisis management and the credit crunch’, in the Australian Journal of International Affairs, Volume 64, February 2010]
