Since the 1980s, neoliberal policies have been diffused around the world by international institutions established to support a very different world order. This article examines the repurposing of the International Monetary Fund (IMF) to become the world’s leading promoter of free markets. Social scientists commonly point to two modes of global-level institutional change: formal and fundamental transformations, like renegotiated treaties, or informal and incremental changes of a modest nature. The case of the IMF fits neither of these molds: it underwent a major transformation but without change in its formal foundations. Relying on archival material and interviews, the authors show that fundamental-yet-informal change was effected through a process of norm substitution—the alteration of everyday assumptions about the appropriateness of a set of activities. This transformation was led by the United States and rested on three pillars: mobilization of resources and allies, normalization of new practices, and symbolic work to stabilize the new modus operandi. This account denaturalizes neoliberal globalization and illuminates the clandestine politics behind its rise.
This article is written by Alexander E. Kentikelenis (Bocconi University) and Sarah Babb (Boston College) and was published in the University of Chicago Press Journals. The conclusions represented in the article is of importance for this project as well. The article clarifies the setup for the circumstances of the multilateral system of today.
In the other article above "Private Sector Influence in the Multilateral System: A Changing Structure of World Governance?" it is stated that the influence of the private sector significantly increased during the 1980s when politicians such as Ronald Reagan and Margaret Thatcher introduced the ideology of neoliberalism, an ideology that emphasizes privatisation and private sector involvement.
The current article further explores this issue and argues, for instance, that the Baker-plan presented by the Reagan-administration in the 1980s had a big impact on the shift towards more neoliberal policies in the multilateral system. The Baker-plan was launched by the United States secretery of the Treasury, James Baker, at the International Monetary Fund (IMF) in 1985. The plan aimed at helping the debt problems among third-world countries by proposing and demanding fiscal conservatism and more market-oriented ideas than before. This had an impact on the future role on the IMF, which subsequently adopted a more neoliberal approach to its operations. At the end of the 20th century this development was adopted by the GATT and WTO as well.