Global Vision

IMF critics also argue that the kind of global deregulation that the fund advocates is hardly the answer for market excess and failure. Capitalism is a manic-depressive system: Just as it is prone to euphorias, seeing boundless profit in Asian sweatshops and high-rise buildings, it also overreacts to trouble with panics. This is not always "creative destruction," as the great economist Joseph Schumpeter argued. Sometimes it is just needless destruction.

The idea of an IMF is a sound one: There is a need for a lender of last resort that can stabilize a shaky system. There is also a need, especially in the Asian economies, for better accounting, closer supervision of banks, and an end to the corrupt cronyism of big business and politicians. But the solution need not be a stiffer dose of free-market castor oil. There is an alternative solution of greater democracy, especially in countries like Indonesia; more public accountability; and a larger role for citizen groups and unions. Bailouts should aim to sustain, not depress, the incomes of most peasants and workers, and they should be used to protect and enhance human rights, including core labor rights (a requirement of U.S. law routinely ignored in the bailouts).

Rather than having to expose themselves to wild global financial markets, the Asian economies need more "speed bumps" that slow the movement of capital in and out of their economies. As economist David Hale of Zurich Research has noted, the Asian countries suffering the least in the current crisis "are the ones which have proceeded most slowly in opening their financial systems, especially China." One helpful step would be to subject global financial transactions to a tax that could both dampen volatility and finance a fund to resolve future financial crises.

The world needs an international monetary fund - but not the actual existing International Monetary Fund, which makes matters worse more often than not. The coming vote on IMF funding should open an overdue debate on what kinds of controls on global finance and what new international economic institutions are needed to avoid an even bigger crisis that engulfs us all.