The Politics of Economic Policy Making in Britain: A Re-assessment of the 1976 IMF Crisis

Many accounts of the International Monetary Fund (IMF) crisis argue that British policy was determined by the exercise of structural power by markets, either through the creation of currency instability and the application of loan conditionality, or by acting as a catalyst for policy learning. This article reassesses economic policy making in Britain during the 1976 IMF crisis to show that policy change did not occur as a result of disciplinary market pressure or a process of social learning. It argues that state managers have to manage the contradictions between the imperatives of accumulation and legitimation, and can do so through the politics of depoliticization. It shows, via archival sources, how elements of the core-executive had established preferences for deflationary policies, which were implemented in 1976 using market rhetoric and Fund conditionality to shape perceptions about the issues within the government's discretionary control.