The rebranding of capital controls in an era of productive incoherence

The rebranding of capital controls during the global crisis has widened the policy space in the financial arena to a greater, more consistent degree than following the Asian crisis. How are we to account for this extraordinary ideational and policy evolution? The paper highlights five factors that contribute to the evolving rebranding of capital controls. These include: (1) the rise of increasingly autonomous developing states, largely as a consequence of their successful response to the Asian crisis; (2) the increasing assertiveness of their policymakers in part as a consequence of their relative success in responding to the current crisis; (3) a pragmatic adjustment by the IMF to an altered global economy in which the geography of its influence has been severely restricted, and in which it has become financially dependent on former clients; (4) the need for capital controls by countries at the extremes, i.e. those that faced implosion, and also and more importantly by those that have fared 'too well'; and (5) the evolution in the ideas of academic economists and IMF staff. The paper also explores tensions around the rebranding of capital controls as exemplified by efforts to 'domesticate' their use via a code of conduct.