Every functional private economy has, and needs, a core of state, regional and municipal enterprises and distribution channels to assure food and basic necessities to low-income populations. Such systems stabilize the market institutions, which work better for people with higher incomes. They help prevent criminal monopolization of critical distribution networks by setting up an accountable alternative. International assistance should seek to strengthen these public networks where they exist, and to build them where they do not. Efforts to do just this in Russia today, under the present government, should be supported and not opposed.
Investors like to be repaid in the short run.
But given that conflict, it is a fool's bargain to place investor confidence above the pursuit of development. A Tobin Tax on foreign exchange hould be enacted here, not only to slow speculation in the United States, but also to signal our acceptance of this principle for other countries, for whom different mechanisms of capital control may be more suitable in different cases. Beyond this, a major reconstruction of world financial practices, aimed at restoring stability and strengthening the regulatory and planning capacities of national governments, is in order. The IMF needs new leadership, not tied to recent dogmas. But the IMF is also too small, and too thinly spread, to be useful in helping countries with the design and implementation of effective national development schemes.