NAMES AND CONCEPTS
supported greater regulation of the economy, in direct contrast to laissez faire economics/market
theory states that general macro-level trends can overwhelm micro-level behavior of individuals.
Instead of the economic process being based on continuous improvements in potential output, as
most classical economists had believed from the late 1700’s on, Keynes asserted the importance of
aggregate demand for goods as the driving factor of the economy, especially in periods of
From this he argued that government policies could be used to promote demand at a
to fight high unemployment and deflation of the sort seen during the 1930’s .
President FDR adopted this vision, implementing the largest welfare state, including
unemployment and health insurance, which the U.S. had never seen.
FDR also implemented
industrial relation reforms, which took ideas from Keynes.
Keynes’ ideas also spread to Europe.
After WWII, most economies were coordinated economies,
which took ideas from Keynes.
One of three (other two are the WTO and the G-7 World Economic Forum)
organizations that make up the “Washington Consensus” which broke down during the late
1990s and especially after 9/11.
The IMF was founded in 1944.
The IMF manages
monetary stability, exchange rates, conditional loans, World Bank investment, loans, and aid
These are all considered “Bretton Woods” institutions.
Scott and Stiglitz argue that these institutions (United Nations included) no
longer work, they may have fifty years ago in Western economies, but the mission has since
changed and exists in a different world.
IMF’s changed role:
In 1971, Presiden Nixon detached the exchange rate from the dollar, he
said the dollar could no longer back up the price of gold.
Since then, currencies have
fluctuated much more, thus, the IMF’s role has changed to more actively intervening in
IMF offers SAP.
IMF usually helps developing countries but has also
helped England and Italy.
The policies are based on The Washington Consensus,
Neoliberalism, and Market Fundamentalism.
The policies assume that pushing open
markets and open markets’ requirements is the best way for countries to get out of currency
Nobel Peace Prize Winner
1977 Greenbelt Movement ---organized poor women to plant millions of trees in Kenya,
Social movement-empowered women to challenge totalitarian Kenyan government;
improved lives of women
Environmental Movement –replenished forest, fought pollution
Economic Movement -stimulated the economy, developed resources
Helped transition government from authoritarian to a democratic one