Structural Adjustment 01

Structural Adjustment, which was criticised and mostly belived to result in failure, could be considered successful in terms of realisation of managed money market by controllers of money and smaller groups of people who have access to money.

According to the commentator, money is controlled by small number of previliged elites.
Personally, I do not want to belive such an extreme explanation about our world. However, considering the overwhelming impacts exerted by money, the article I read seems to explain some of the reasons why money is so influential in the contemporary world.

Money is a medium of exchange.
Money is a measure of value.
Money is a commodity in the market.
What I got interested in is the fact that those who holds money try to maintain its value with limiting money supply, and those who utilise money try to increase the quantity of money with finding out as many acceptable substitutes which can be converted into money as possible.
Put it much closer to our daily lives, most of us are trying to earn money with providing our labour forces as acceptable substitutes for money.
To answer the questions, such as, who holds money, and how those holders have come to hold money, we have to look back on history.
If we refer back to the history, it might be felt that certain divisions between classes, or power relations exist almost inherently even in the contemporary democratic liberal world.

Another interesting issue is that economic thinking of equilibrium between demand and supply, which seems closely to be related with money, contradicts with the nature of money, which is never in such a stable position as equilibrium.
It is sometimes questioned if market economy can indeed equitably distribute resources.
Even existence of neutral, value-free market is sometimes questioned.
In order to analyse certain aspects of human behaviour, economics might be useful.
But, it is important for us to always see it critically. Otherwise, the useful tools of economics would soon turn to dominate our thinking as if they were really governing the world.

One of the most dangerous features of economic thinking is said to be its 'ahistorical' nature, which could easily make us foget historical discourses.
Until the 1970s, when continuous growth was still considered possible, theorists admit deficit in current account (relatively short-term liability) in order to realise economic growth.
However, as the introduction of structural adjustment shows, external debt of developing countries has suddenly been problematised. According to the article, this was caused by political decisions made by money controllers, that is, the international finance institutions (IFIs), such as the World Bank and the IMF. Further, it implied that those IFIs had reached certain agreements with large scale corporations, so called multi national corporations (MNCs) on comitting themselves to be controllers of world money, mainly foreign exchange.
The justifications of the structural adjustment are well-known neo-classical economic theory, which tries to enhance free open market economy, which is believed to birng optimal resource distribution.

The outcomes of the structural adjustment are far from what is expected by that theory. But, advocates of the structural adjustment have attributed the failure to debtor governments' inefficiency or incapability in implementing agreed policy programmes.

From the historical perspective, the reason why those debtors have come to suffer from unsustainable debts is i) shift of US$ to inconvertibility with gold in 1971, and ii) loss of credibility in debtor governments' ability to service repayment.
The former has made it possible for money holders to move ever more quickly money across soverign state boundaries. Thus, money in developing countries was swiftly withdrawn to other secure places, where the money could be easily convertible to internationally traded currencies.
The latter is highly political, not rational judgement because assessment of country risk regarding debt sustainability has never been done on any scientific basis. The debt crisis in 1982 affected MNCs behaviour and perception, and this has led to sudden withdrawal of money flow from 'suspected' debtor countries.