Capital controls and financial liberalization: removing the ideological bias

André De Melo Modenesi, Rui Lyrio Modenesi
2008 Journal of post Keynesian economics  
To label the defense of capital controls (CC) as a left-wing proposal is a misconstruction. Such labeling uses the Borsa economicist criterion, which reduces the dichotomy between Right and Left to a distinction between liberalism and interventionism. Yet, under this criterion, the use of CC cannot be labeled as a leftist proposal. The interventionism underlying the defense of CC, as pioneered by Keynes and developed by Tobin, Davidson (and other Post Keynesians), Stiglitz, and Rodrik, is not
more » ... nd Rodrik, is not the fruit of an ideological conviction favoring widespread and indiscriminate state intervention. For them, CC are instruments to be used under specifi c economic circumstances. To call CC a practice typical of left-wing governments is also a misinterpretation. Among the countries using strict forms of CC since the 1990s-Chile, China, India, Malaysia, and Thailand-only China's government may be called leftist. The other countries' political panorama is more complex than may suppose those who believe in a simple and direct relationship between CC and political ideology. The discussion should be stripped of the prevalent ideological bias: CC are not inherent to the political leanings of the governments that adopt them but are an expedient used under a pragmatic justifi cation. Recognizing this is an important step toward a more objective analysis of the incidental opportunity of
doi:10.2753/pke0160-3477300404 fatcat:zjszr6objffuvo2tejamsobxxi