Why We Need a Structured Market

The 1980s saw a victory of the market over planning. The intellectual battle was initiated earlier — for developed countries by von Hayek and then Milton Friedman, for developing countries by Little, Scott and Scitovsky in the early 1970s. At first, strong laissez-faire market views were regarded as an intellectual curiosum, but gradually they achieved dominance among governments of major industrialized countries, especially under Reagan and Thatcher, and in the World Bank in the Barber/Krueger/Stern era. (No change was recorded in the IMF, where such views had always held sway.) The intellectual change was translated into policy change in developing countries during the 1980s as the industrialized countries, largely operating through the IMF and the World Bank, gained unprecedented (for the post-colonial era) power over decision-making, following the debt-crunch and the subsequent prevalence of policy conditionality. A laissez-faire approach with an enhanced role for the market and a diminished role for the state lay at the heart of the policy conditionality of both Fund and Bank.