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Developing Just Monetary Arrangements

  • Sanjay G. Reddy


International monetary arrangements–the practices and rules governing the creation, distribution, and management of money and credit in the world economy–have received little attention from philosophers concerned with international distributive justice. A convincing account of international distributive justice requires a description of how these arrangements should function. International monetary arrangements currently appear to have consequences that are incompatible with a global egalitarian conception of distributive justice.

There are at least three categories of questions– relating respectively to money supply, exchange rates, and debt–that can be raised in the international context. First, who should have control over key monetary decisions, such as how much, and on what terms, money and credit are being supplied within each monetary zone? Should this control belong to the citizens of a given monetary zone and their representatives alone? How should the benefits arising from the ability to create money be distributed internationally? Second, should the stability of exchange rates be a goal and, if so, how should the responsibility for maintaining stability be apportioned? When adjustment of exchange rates is required, who should bear the burdens associated with such adjustment? Third, what arrangements should govern the accumulation and discharge of debt in the international setting? In what respects should debt contracted by states be governed by different rules than debt contracted by private agents? What forms of conditionality may be imposed by creditors, such as international institutions, governments, or private lenders, as part of a just framework of international borrowing and repayment? These questions exemplify rather than exhaust the dilemmas that arise with regard to international monetary arrangements. Global egalitarians should imagine the alternative forms that such arrangements can take as elements of a realistic utopia.



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1 See, e.g., Dworkin, Ronald, “What is Equality? Part 2: Equality of Resources,” Philosophy & Public Affairs (1981), pp. 185243; and Sen, Amartya, Inequality Re-Examined (Oxford: Oxford University Press, 1992).

2 I refer to just institutions without wishing to suggest that institutions can be identified that are wholly just, but rather that can be more wholly supported from the standpoint of justice.

3 See, e.g., James, Harold, International Monetary Cooperation since Bretton Woods (Washington, D.C.: International Monetary Fund, 1996).

4 See, famously, Cornia, Giovanni Andrea, Jolly, Richard, and Stewart, Frances, Adjustment with a Human Face (Oxford: Clarendon Press, 1987).

5 James, International Monetary Cooperation since Bretton Woods.

6 On these and related proposals, see, e.g., James, International Monetary Cooperation since Bretton Woods; Ezekiel, Hannan, “The Role of Special Drawing Rights in the International Monetary System,” in International Monetary and Financial Issues for the 1990s (Geneva: UNCTAD, 1998), vol. 9, pp. 7180; and Soros, George, On Globalization (New York: Public Affairs, 2002).

7 Gulati, Iqbal, International Monetary Development and the Third World: A Proposal to Redress the Balance (New Delhi: Orient Longman, 1980), p. 15.

8 See, e.g., Commission on Global Governance, Our Global Neighborhood (New York: Oxford University Press, 1995).

9 Gulati, , International Monetary Development and the Third World, p. 15.

10 For these figures, see “72nd Annual Report of the Bank for International Settlements” (Basel, July 2002), p. 82. Gulati, in International Monetary Development and the Third World, showed that the amounts involved in the 1970s were also very substantial.

11 Michael Bordo, Barry Eichengreen, and Douglas Irwin, “Is Globalization Today Really Different than Globalization a Hundred Years Ago?” National Bureau of Economic Reaserch Working Paper no. 7195 (June 1999).

12 Furman, Jason and Stiglitz, Joseph, “Economic Crises: Evidence and Insights from East Asia,” Brookings Papers on Economic Activity 2 (1999), pp. 1114, 128–35; and Joseph Stiglitz, “Must Financial Crises Be This Frequent and This Painful?” (McKay Lecture, World Bank, Pittsburgh, Pa., September 23, 1998); available at

13 See, e.g., Stiglitz, Joseph, Globalization and Its Discontents (New York: W. W. Norton, 2002).

14 For instance, Mitali Das and Sanket Mohapatra, in “Income Inequality: The Aftermath of Stock Market Liberalization in Emerging Markets” (Columbia University Dept. of Economics Discussion Paper #0102–42, 2002), report evidence that stock market liberalization in developing countries typically resulted in income share growth for the top quintile of the income distribution at the expense of the middle three quintiles; available at

15 See, e.g., Wade, Robert and Veneroso, Frank, “The Gathering World Slump and the Battle Over Capital Controls,” New Left Review (1998), pp. 1342; and Jagdish Bhagwati “The Capital Myth: The Difference Between Trade in Widgets and Dollars,”Foreign Affairs (May/June 1998), pp. 7–12.

16 Cornia, Jolly, and Stewart, Adjustment with a Human Face.

17 On the distinction between being free to choose and choosing freely, see Cohen, Gerald A., ed., History, Labour, and Freedom: Themes from Marx (New York: Clarendon Press, 1988).

18 Ibid.

19 On the relationship between the IMF and creditors' interests, see Stiglitz, Globalization and Its Discontents, ch. 8.

20 See in this regard the recent proposal to eliminate this monopoly in Unger, Roberto M., “The Really New Bretton Woods,” in Uzan, Marc, ed., The Financial System under Stress: An Architecture for the New World Economy (New York: Rutledge, 1996).

* I would like to thank Christian Barry, Andre Burgstaller, Joseph Carens, Julia Harrington, Jacob Kramer, Andrew Kuper, Thomas Pogge, and Lydia Tomitova for their helpful suggestions and comments.

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Developing Just Monetary Arrangements

  • Sanjay G. Reddy


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