This is a fascinating book. It examines the attitude of the IMF to capital account liberalisation – not simply what that attitude was, and how it changed from time to time, but why the attitude developed and what factors led to its changing. Most economists see free capital mobility as desirable. They make no distinction therefore between free international movement of goods and free international movement of capital. Both contribute to individual wellbeing. There are, of course, well-known theoretical exceptions, special cases when, for example, trade restriction is beneficial, but most economists regard these as theoretical curiosa, or sometimes as interesting practical possibilities which risk opening policy to capture by narrow interest groups and therefore not to be used.

As Chwieroth clearly shows, a simple summary of the intellectual position of most economists actually conceals quite a lot. First, and well known, it conceals the difference between those who see capital account freedom as not only a long-run goal but as something to be achieved as soon as possible and those who want to achieve the same destination but want careful ‘sequencing’, a careful ordering of policy changes on the way to capital account freedom. (At this point it is worth remarking that Chwieroth is an engagingly dry-humoured writer. He refers to quotation marks such as those used immediately above as ‘scare quotes’ when he puts them around neoliberalism, a term which he uses to describe the free market views that emerged in the 1930s, and would be identified with, for example, Hayek.)

Most economists would be aware of the distinctions between these groups. What I suspect very few will have thought about – and here is where the book undoubtedly contributes to economics (as opposed to political science, where I am not sufficiently informed to comment) – is how the term ‘freedom of capital movement’ can be interpreted, how views towards it differed among IMF staff, and how and why that range of intra-IMF views itself changed over the years. Chwieroth summarises what the book does as follows:

The first half of that summary is a subject which will interest every economist interested in the evolution of international finance, and the second half will usefully instruct almost all economists, whether, like the late George Stigler, they simply wish to understand how the world works, or whether they wish to change it.

Chwieroth tells us that there have been three approaches to the study of IOs. One sees them as creatures of their member states; one treats them as autonomous, and applies principle–agent theory; and the third looks at their internal environment, exploring how internal culture affects what they do and how they evolve. These approaches all have shortcomings, he writes. The first ignores the extent of autonomy the institutions have, the second how staff decide what to do with their autonomy, and the third how staff interact with both other staff and with others in the same field outside the organisation – it treats, that is to say, the internal culture as ‘inert . . . impervious to demands for change’. What his book particularly contributes is its study of the importance of diversity of beliefs within organisations, and how these affect the ‘interpretation and application’ of policy objectives.

The book is divided into nine chapters and an epilogue. The first is an introduction which overviews, very clearly and systematically, the book. It is sufficiently detailed that a reader interested in only one issue could quickly find the chapter or chapters that dealt with it. But reading in that way would be a pity, for economists would in general learn from the very accessible political science discussions, and political scientists would get a quick tour of the economics of the area. I have already remarked that I am not able to comment on the political science sections, except that they are clear and easy to follow for a beginner, so I focus my discussion on the economics. Chapter 3 is really the only purely economics chapter, and even there one finds material outside the normal domain of economics. The first part of the chapter traces the evolution of views on capital account freedom and identifies the range of views with various schools of thought; this is well done. The second part of the chapter investigates the role of ‘professional training’ as what Chwieroth describes as a ‘mechanism of socialization’. I interpret that phrase as meaning how it affects economists' subsequent views, particularly their views on policy. We then move on to events from just after the end of World War II to the early 1960s, when capital controls were the accepted norm. This norm started to be undermined by events – controls seemed not to work in preventing attacks on currency pegs – and by gradually changing views, first in the US then elsewhere, on the role of government. Although IMF staff were, Chwieroth maintains, generally still intellectually in favour of controls, events undermined that belief; abandoning or easing controls rarely proved harmful. We then examine the international monetary reforms of the 1960s and 1970s, the freedom of the 1980s and 1990s, and the turmoil of the late 1990s before looking in the penultimate chapter at ‘norm continuity’ – how views and institutions interpreted events so as to survive unchanged. The epilogue then reviews reactions to the dramatic events at the end of the first decade of the twenty-first century. These are, regrettably, at the moment showing a tendency to be based on blaming the messenger, but that may pass.

Every economist with an interest in international finance would learn from reading this book, and would enjoy doing so.