Internal order vs. external disorder. IMF at the crossroads

Prior to Bretton Woods, international economic exchanges did not take place under an institutional vacuum. For at least one century, international arbitrations have remarkably settled conflicts between private enterprises with costly but not insurmountable endeavors. The creation of formal international institutions became inevitable only when governments laid a claim to settle those conflicts. The consequence was that conflict resolution evolved into a potential war between states. Drawing upon Public Choice analysis, the paper scrutinizes and contrasts the Kantian and the Hobbesian logic and focuses on the following questions: • Is the Kantian/Hobbesian scheme a suitable key insight to start from? • Have international monetary institutions been created to solve governments’ failures? If so. Can they be viewed as supra-governmental institutions? • Is the International Monetary Fund (IMF) with its conditionality policy an institution operating as if it were a supra-governmental institution? If so, how should it be changed in a globalized world? The paper concludes that IMF’s monopoly power is doomed to decrease as a consequence of the institution of supranational organizations like the European Union.