Dani Rodrik on Simon Johnson

Of Johnson's widely cited and highly regarded Atlantic piece, Rodrik writes:

Simon's account is based on a very simple, and I believe misguided, theory of politics and economics.  It is an odd marriage of populist and technocratic visions.  Countries fail because political elites always end up in bed with economic elites.  The solution, apparently, is to let the technocrats (read the IMF) run your affairs.

On the whole, I think I side more strongly with Rodrik than Johnson. (I find it hard to have a firm opinion in these matters.) That said, perhaps it's “populist” to think political elites always end up in bed with economic elites, but it seems, as a matter of fact, they often do. My opinion is that a certain “populist” enthusiasm for democracy, in the absence of strong legal and cultural constraints on government action, almost inevitably delivers a great deal of regulatory capture–that is, tucks political elites snugly in bed with corporate elites. Isn't that a cynical vision? Moreover, when the incentives of insufficiently-limited democracies lead to this kind of result, supra-national technocratic institutions can in fact act as a salutary check on governments precisely because they are undemocratic.

Free Exchange's Washington blogger seems to have something like this in mind:

Of course, the IMF can't hold America's feet to the fire in the way that the WTO can. But the WTO achieved that power, in part, because American leaders wanted an outside force to be able to tie their hands, so they could shrug at angry voters and say, “Sorry, them's the rules”. I wouldn't be surprised to see national leaders constrained in crisis response by domestic politics seeking to empower the IMF in the near term.

That's a really interesting thought. Now, I am not, and have never been, the biggest fan of the IMF and Rodrik is right that it's weird for Johnson to talk about the Fund as if everyone knows all about its totally awesome track record. That's just a little too convenient for Johnson, an old IMF hand. Nevertheless, it's not crazy to look for a disciplining force external to national democratic politics when the interest group dynamics of national democratic politics has helped create the problem and persist in blocking the solution.