Reflections On The IMF Conference

On October 27, I attended an international high level conference entitled “Iceland’s Recovery: Lessons and Challenges” at Harpa, Iceland’s new conference and concert hall in downtown Reykjavík. The gathering was co-sponsored by the government, the Central Bank of Iceland, and the International Monetary Fund (IMF).
I had registered in a private capacity as a social scientist with no affiliation, and though I am a non-Icelandic speaker, I have been a resident of Iceland for several years and have good knowledge of Kreppa—the financial economic crisis of 2008 that almost took the country into the abyss.
In thematic sessions, speakers included economist and Nobel laureate Paul Krugman, Financial Times columnist Martin Wolf, IMF representatives, Prime Minister Jóhanna Sigurðardóttir and the Minister of Economic Affaires Árni Páll Árnason, as well as academia, other macro-economists and a few for whom economics is not an occupation but a pre-occupation.
At times there were solid scholarly debates backed by statistical hindsight, of course, and the Icelandic academia and IMF experts spoke authentically with personal experience, as they had been direct actors in crisis resolution.
Still, I wondered why the female speakers and discussants were outnumbered by a ratio 4:19, especially bearing in mind that women played little part in the events leading up to Kreppa.
Furthermore, I wondered whether or not those politicians, the monetary and finance experts or economists were not the same ones who did not see Iceland’s crisis (or crises elsewhere) coming even though there are increasing numbers of people who claim they warned, but were not heard or understood.
Of course finance and economics are not precise sciences. One might think of the (absent) augurs of rating agencies or economic psychology. It is about statistics, balance sheets and experiments, with all their inbuilt uncertainties. No, they explain events only after the facts, and they cannot make guarantees about the future. If so, one shouldn’t have to repent, but self-critically shed light on one’s profession. However, those who drove an entire nation into disaster, ill willed and out of tawdry motives, should be held accountable.
And GDP is the golden standard for anything macroeconomic, and ultimately microeconomic as well, which “…measures everything, in short, except that which makes life worthwhile….” (R. Kennedy, 1968), but it is not about the happiness or wellbeing of peoples.
Such observations aside, it was a very useful recapitulation and recording of events, actions and developments surrounding financial crisis management but not least in so far as the debates opened space for critical reflections beyond the intentions and agenda of this conference.
Credit must be given where credit is due, not in a monetary sense, but in critical support of a wider response to the impact of the crisis by looking at all its facets:
This conference was, at least in crisis and crisis resolution context, a rather rare event of its kind in Iceland and laudable for that reason alone. It was a truly international conference not only in terms of the presence and number of active foreign participants but also because the conference language was English, which drew a large audience, an almost equal mix of Icelanders and expatriate diaspora, people from all sectors of society. Never mind the slightly unfair advantage that natural English speakers enjoy.
International transparency is as indispensible as domestic transparency. To this end open conferences (or quasi open as one had to register for this conference on Iceland’s recovery) and open debates are one albeit important modus operandi. After all, Kreppa was brought about not least by the “outvasion of banksters,” causing massive losses and damage abroad, and it would not have been resolved without foreign support and loans, including from the IMF. Creditors and investors are not forthcoming unless they have a clear understanding of opportunity and purpose.
Naturally, one has to understand the importance of the Icelandic language for the identity as a nation, the socio-cultural fabric of society and identity of every individual. And, it is of course, not only for Iceland or Icelanders, a choice of convenience and comfort, to seek protection behind the language barrier, fending off annoying outside interference or unwanted competition (such as might very well have come into play during the suspicious privatization of Icelandic banks).
But language does not stand as synonymous for identity. People’s identities, affiliations and aspirations nowadays transcend borders. They are, in the era of globalization, “united” through multiple interdependencies, such as, par example, for “Ísland” as an island especially, trade, import and export, and through diverse modes of interconnectivity, cultural exchange, travels, media or, as implied earlier, learning foreign languages at which Icelanders are quite advanced.
As hinted, there has been little quasi-public international conferencing in Iceland, not least in context of Kreppa. This conference on Iceland’s recovery was rather an exception but is has had the potential to (hopefully) set a precedence, and lead to more events promoting a formal public discourse, as an indebt dialogue as opposed to a superficial informal discussion, daily hearsay talk. There are several, but one might argue two main reasons:
One, the solutions to Kreppa, to govern the long-term recovery, cannot be reduced to aspects of macroeconomics; this crisis was massive (in terms of financial loss, estimated at 100 billion USD, probably the largest in history of economics), and has put into question all credentials of the state, including the constitution, now under review.
This crisis has shaken the states foundations and put into question all values, responsibilities and functions of state and non-state institutions alike, in particular also – needless to say – the financial and corporate sector. There won’t be an economic recovery or political-social reconciliation unless the wider impact will have been subjected to scrutiny and intense public discourse. The issues are plentiful: historical, ideological, political, sociologically and culturally. The symptoms of crises are omnipresent, and let’s not forget, its effects are here to be felt for many years to come.
Again, this is important, even imperative domestically but there are important lessons to be learnt for the rest of the world.
Two, already today, one might claim, if not the absence then the neglect of an intended, informed and guided public discourse is detrimental to societal cohesion, and policy makers in Iceland, and the world over are being outpaced by social media with networks that have not only an international, but a global reach.
In a locally and globally tightly connected world society, it is outright dangerous for the state and politicians to allow any disconnect. Politicians no longer have the privilege of knowledge or information–it is the privilege of the Internet and therefore the public domain.
It is no longer the prerogative of politicians, or leaders in the public and private sector, to formulate and implement policies or strategies at once. People have learnt to very clearly distinguish between democracy and free market ideology, between democracy and plutocratic cleptocracies. There is a general understanding that economies are largely and very essentially driven by taxpayer money, be it for their own consumption, state budgets or to bail out “their” economies; they lay claim on their rights as shareholders.
It is then important to point out or remind of a renewed public awareness that the commonality of points one and two above is the fact that the authorities, governments, indeed the state and its institutions, are legitimized or de-legitimized through public discourse as a process. It is no longer the democratic principle of old: one wo/man-one vote-one election.
And, the public will not accept events, though a step in the right direction, such as referendums or a general constitutional assembly (as were held in Iceland recently) as substitutes for a continuous discourse process, the very kind of process that was set into motion, energized and constantly re-energized by the networking of social media.
Discourse is about communication and communication is a process, not an event. In that sense conferencing, multiple public fora, are, as said, only one modus operandi besides many, that could be part of a much, much larger process without disconnect.
It was stated that there were lessons to be learned for the world. That is not meant in the sense of sharing the IMF’s or Government’s established toolkit for crisis management. The instrumentalism is known.
What sharing then means is, for example, to disseminate widely the positive experiences of Government-IMF cooperation in context of the Icelandic crisis as it has the potential to change the way future financial economic crises are resolved:
While initially not a cooperation of choice but for want of alternatives, pragmatism and compromise turned things around. The government compromised on IMF loan conditionality, and the IMF accepted not only to spare budgetary austerity cuts for social welfare but also even tolerated the imposition of currency restrictions. After all, who believes truly in the free market? Isn’t the  “invisible hand” (John Adams, 1776) that supposedly self-regulates free markets simply invisible because it doesn’t exist?
At first glance such deviation from dogma might read banal, but it was unprecedented given that the IMF has had a reputation of being ring fenced by dogmas of free market ideologues, at times to the extent that the IMF became an entity non-grata in a number of countries.
These changes set a precedence of not small historical proportions and let’s remember: “Those who do not learn from history are doomed to repeat it” (George Santayana, 1905/6). This exception must become the rule. That’s why it is owed to all countries that are or will become clients of the IMF, which remains one of very few inter-governmental rescuers when disaster spills.
As sketched above, this connects the public and the social discourse. Don’t be mistaken, any disconnect will further the groundswell of legitimate indignation and anger. It is equality that legitimizes a state, not inequality, more than ever in these times, a realization of crisis here and crises elsewhere.
Upon leaving the venue of this conference one could not help but note that Harpa has scheduled performances of Mozart’s Magic Flute. Isn’t this an opera dating back 200 years in Enlightenment? Isn’t it about the happiness of Tamina and Tamino as well as Papageno and Papagena?