Basement mold and mildew can easily be avoided with better designed walls. Common building practices trap moisture in wall assemblies preventing them from drying.
The musty basement smell that we have come to accept as unavoidable, is actually quite avoidable. The solution is really quite simple - stop building below grade with walls that were designed for above grade and your basement won't smell like old gym socks.
A freshly poured concrete foundation will take 5 years to fully dry, and this is only if measures have been taken to ensure it is completely protected from ground moisture by waterproof membranes on every single surface. Concrete is like a sponge, and when left unchecked will continue to wick moisture from the ground and distribute it into your home for as long as your home stands.
Why are basements mouldy?
1) The National Building Code now insists on basement insulation (this is a good thing), and it needs to be done before delivery to homeowners, which will be years before concrete has fully dried.
2) Decisions on wall assemblies and the materials that will be used are most often made based on initial building costs, not future repair costs, energy performance or protecting the health of occupants. They most certainly are not based on the laws of physics,that is the one thing we know for sure.
3) The cheapest way to insulate a basement is on the inside, and using materials that are moisture sensitive. This is a big problem, given problems 1 and 2 above.
With wet soil on the exterior, concrete cannot dry to the outside. With the inclusion of a polyethylene vapour barrier on the inside, concrete is prevented from drying inwards as well. That leaves a sealed waterproof cavity containing untold thousands of litres of water along with moisture-sensitive and organic materials.
What Building Science Corporation has to say about this type of basement wall assembly -
"Continued use of these approaches by the home building industry will likely lead to a disaster of unprecedented proportions and may result in the construction of energy efficient homes being set back a generation."
Even if basement foundations were allowed to dry completely before interior finishing started and they included all the necessary waterproof membranes on the exterior, interior insulation means the temperature of the concrete will be determined by the temperature of the ground or air outside.
With some types of insulation this can allow warm, moist air to condense on the cold concrete. Having no insulation at all does not eliminate these issues; you are also at risk, just not to the same extent if you don't have moisture sensitive materials directly in harm's way.
For a basement to have any chance at doing what you want it to do, it should be finished with respect to the conclusions of building scientists regarding moisture movement, and we rarely see that.
We put vapour barriers in basement wall assemblies to keep moisture from getting into them, as if they didn't already contain thousands of litres of water. Polyethylene won't keep foundations dry, they are already soaking wet. All it will do is prevent the thousands of liters of water that are already in the wall from drying safely to the inside, where it could easily be handled by a dehumidifier.
The only way walls below grade can possibly dry is to the inside. We have to stop trying to prevent that. We also have to realize that building below grade is a different beast that building above grade, and start respecting the laws of physics when we design, build and choose materials.