Capital Controls: The Emergency Brakes

Abstract

Chapter 10 relates the fall and rise and fall of international capital mobility, a centerpiece of neoliberal policy. Immediately after World War II, the Bretton Woods System established fixed exchange rates and regulated the international movement of capital to facilitate trade and preserve domestic policy capacity. Owners of capital mobilized institutions, such as the International Monetary Fund (IMF) in a decades-long struggle for international capital mobility. Their moment came with a crisis in the Bretton Woods System in the early 1970s, and the era of floating exchange rates and international capital mobility was born. Since its ascension, international capital mobility has been a flashpoint for crisis. Facing criticism for the frequency of financial crises, especially after the deep European crisis beginning in 2010, some parts of the IMF have broken with institutional orthodoxy. The rupture suggests potential for a broader break with the principles of neoliberal governance.