Imf: a Descriptive Study

II
The IMF and the Transition from Central Planning

6
The Death of Central Planning and the Birth of Markets

B

efore the period covered by this History, the IMF was often described as a “capitalist club.” Few socialist or centrally planned countries were members, and the absence of the Soviet bloc and (until 1980) the People’s Republic of China was a glaring feature of the membership. It was not designed to be that way. As described in Chapter 2, the U.S. government under President Franklin D. Roosevelt tried hard in 1944 to pave the way for the Soviet Union to become an original member of the IMF. That effort almost succeeded, but when relations between the United States and the Soviet Union hardened into the Cold War, financial cooperation through the IMF was a collateral casualty. In fact, the IMF never really was a capitalist club. Its membership during the Cold War always included nonaligned countries with socialist or semisocialist economies, such as Egypt, India, and Yugoslavia. It also included at least a few Soviet allies. Relations with socialist countries, however, often became strained. Poland withdrew in 1950 under pressure from the Soviet Union, and Czechoslovakia was expelled in 1954 for failing to provide required data. Cuba withdrew from membership in 1964, five years after Fidel Castro took power and began restructuring the economy along socialist lines. All three countries had been original members from 1945. Romania joined the IMF in 1972, but relations deteriorated badly in the 1980s until the overthrow of Nicolae Ceausescu in November 1989.1 ¸ In some respects, matters improved in the 1980s. Deng Xiaoping’s liberalization initiative in 1979 opened the way for the People’s Republic of China to assume control of China’s membership at the IMF. The weakening finances of the Soviet Union, combined with the international debt crisis, made it both possible and necessary for Hungary to join in 1981 and for Poland to rejoin in 1986....