Latin American debt, the IMF, and Adam Smith: A proposal for ethical reform

Abstract

We examine the role of the IMF orthodox paradigm, and the value system upon which it rests, in the Latin American debt crisis. We conclude that the IMF orthodoxy is an inappropriate basis for international transactions because of the a priori utilitarian value assumptions on which it is based. Furthermore, those value premises have hardened into a narrow and inflexible ideology—similar in nature, if not in content, to Marxist ideology—which has been imposed on indebted Latin American countries. We recommend a value system based on the writings of Adam Smith to replace the value system inherent in the IMF orthodoxy. This value system stresses the inestimable value of all individuals, and we argue that governments and economic institutions must never diminish the happiness of innocent people. We conclude the article with some specific recommendations for reform at the IMF to bring its policies more in line with the moral ideals of Adam Smith.