Chris Andrews (Dublin Bay South, Sinn Fein) | Oireachtas source

The Bill before us here today is essentially a fait accompli. As the Minister signed us up to this two years ago, it is something of a rubber-stamping exercise. Before I deal with the contents of this Bill, I feel I should mention the Bretton Woods system itself, from which it derives its name, because the IMF, alongside the World Bank, have been with us since the Bretton Woods system was first launched. Indeed, it is fair to say they have now outlived the very system they were born of.

The Bretton Woods system was the approach to global financial management established after the Second World War. Its architects wanted to ensure the interests of capital did not ride roughshod over those of labour and that big business could not smother wider social concerns in post-war democracies. This system rested upon several things: capital controls, fixed exchange rates and the US dollar, backed by a gold standard as its anchor. There were high rates of taxation on capital which were recycled back through high levels of public investment. The policy target was full employment. It was a time when trade unions were strong and finance was weak. Inequality was low and labour’s share of GDP was at an historic high. In the English-speaking world, it was known as the “golden age of capitalism”, the Japanese called it the “economic miracle” and, following its establishment in 1957, it lasted for almost three decades.

What followed then was the onset of neoliberalism and a very different system of global financial management. Capital accounts were liberalised and exchange rates floated with fiat currencies, backed by nothing more than the promise to pay. Low rates of taxation on capital prevailed, with the consequence of low levels of public investment with creaking public infrastructure. Now, the policy target was price stability. Inequality moved back towards the levels of the gilded age, trade unions were weakened and finance was strong and highly mobile. Today, capital’s share of GDP is at historic highs. This era has been given various names from across the political spectrum: secular stagnation, financialisation, late-stage capitalism and so on. Regardless of the term that is used, it is pointing to a system that is not serving the needs or the interests of people. If we want an explanation for populism, that is where we start.

We support this Bill but we also have concerns. We have concerns about whether the IMF has finally woken up to that reality. The IMF, to its credit, has been on something of a journey of self-reflection in recent times. Its research department has led out on this and it has produced important research papers which question ideas that it once held to be conventional wisdom.

Its path-breaking article, "Neoliberalism: Oversold?", concluded that "Instead of delivering growth, some neoliberal policies have increased inequality". It has produced important research supporting the introduction of wealth taxes to help recover from the pandemic and even has produced research demonstrating how taxing the rich is good for growth. This is a far cry from the disastrous trickle-down economics we once got. My only concern is whether the IMF's board of governors have joined the research department on the road to reform.

The Bill will mean our participation in the NAB facility. As part of this, we will contribute to IMF loans to eligible countries in difficulty. We have no problem supporting those in need. However, those loans will come with conditions. In the past, such conditions have included increased labour market flexibility, which has been code for lowering wages, loosening employment rights and weakening trade unions. It meant undertaking pro-cyclical measures like reducing government borrowing and raising interest rates in a time of recession. Conditions have included signing up to structural adjustment programmes, which has meant the privatisation of public goods, the fire sale of state assets and the deregulation of markets. This Bill will rename the enhanced structural adjustment facility trust as the poverty reduction and growth trust. I hope that symbolises something more than just changing the name on the label of the loan product. I hope the IMF board of governors has learned from the mistakes of the past, just as its research department has. I hope the IMF recognises that we need to get back to a system of global financial management more akin to the Bretton Woods system than what we have today. There is a major realignment taking place in the world and the unipolar moment is coming to an end.

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