Iceland, the IMF and Austerity Protest

The story sounds familiar: neoliberal economic policies lead to a period of rapid economic growth followed by a debt crisis, imposition of IMF austerity policies and a surge of protests. But, this isn't Latin America in the 1990's, it's Iceland in 2008-2009. A Reykjavik radio station predicts that a quarter of Iceland's population could take part in a two-week, loan-repayment strike. The IMF's response to the financial crisis was a reported $10 billion dollar bailout plan conditional on huge cuts in public spending. The cuts are set to take place next year when "serious unrest is expected".

What's different about this story from Latin America in the 1990's is that Iceland's population appears to have widely participated in the bubble economy ("In just five years, the average Icelandic family saw its wealth increase by 45 per cent"). In Latin America, the growth spurt of the 1990's was accompanied by deteriorating social conditions.

The IMF might argue that it is not responsible for the policies of member countries and is doing the best that it can in a difficult situation. Hyman Minsky took a little broader view of our unstable, boom-bust-bailout financial system. The IMF is part of the system and the system needs to change.