The right of governments to employ capital controls has always been the official orthodoxy of the International Monetary Fund, and the organization's formal rules providing this right have not changed significantly since the IMF was founded in 1945. But informally, among the staff inside the IMF, these controls became heresy in the 1980s and 1990s, prompting critics to accuse the IMF of indiscriminately encouraging the liberalization of controls and precipitating a wave of financial crises in emerging markets in the late 1990s. In Capital Ideas, Jeffrey Chwieroth explores the inner workings of the IMF to understand how its staff's thinking about capital controls changed so radically. In doing so, he also provides an important case study of how international organizations work and evolve.Drawing on original survey and archival research, extensive interviews, and scholarship from economics, politics, and sociology, Chwieroth traces the evolution of the IMF's approach to capital controls from the 1940s through spring 2009 and the first stages of the subprime credit crisis. He shows that IMF staff vigorously debated the legitimacy of capital controls and that these internal debates eventually changed the organization's behavior--despite the lack of major rule changes. He also shows that the IMF exercised a significant amount of autonomy despite the influence of member states. Normative and behavioral changes in international organizations, Chwieroth concludes, are driven not just by new rules but also by the evolving makeup, beliefs, debates, and strategic agency of their staffs.

List of Figures and Tables ix Preface xi List of Abbreviations xvii CHAPTER ONE: Introduction 1 CHAPTER TWO: Normative Change from Within 23 CHAPTER THREE: Capital Ideas and Capital Controls 61 CHAPTER FOUR: Capital Controlled: The Early Postwar Era 105 CHAPTER FIVE: The Limits and Hollowness of Keynesianism in the 1960s 121 CHAPTER SIX: Formal Change and Informal Continuity: The Reform Negotiations of the 1970s 138 CHAPTER SEVEN: Capital Freed: Informal Change from the 1980s to the Mid-1990s 147 CHAPTER EIGHT: Capital in Crisis: Financial Turmoil in the Late 1990s 187 CHAPTER NINE: Norm Continuity and Organizational Legitimacy from the Asian Crisis to the Subprime Crisis 226 EPILOGUE: A Subprime "Crisis" for Capital Freedom? 255 Index 301