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- Herausgeber: John Wiley & Sons
- Kategorie: Geisteswissenschaft
- Serie: The Case for
- Sprache: Englisch
After the 2008-9 global financial crisis, reforms to promote stability, social inclusion, and sustainability were promised but not delivered. As a result, the global economic situation, marred by inequality, volatility, and climate breakdown, remains dysfunctional. Now, the economic fallout from the Covid-19 pandemic offers us a second chance. Kevin Gallagher and Richard Kozul-Wright argue that we must grasp it by implementing sweeping reforms to how we govern global money, finance, and trade. Without global leaders prepared to boldly rewrite the rules to promote a prosperous, just, and sustainable post-Covid world economic order - a Bretton Woods moment for the twenty-first century - we risk being engulfed by climate chaos and political dysfunction. This book provides a blueprint for change that no one interested in the future of our planet can afford to miss.
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Veröffentlichungsjahr: 2021
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CONTENTS
Cover
Series Page
Title Page
Copyright
1 The Fierce Urgency of Now: The Case for a New Bretton Woods Moment
The Takeaways from Bretton Woods 1.0
From Managing Capitalism to Enabling Capital
Rewriting the Rules of the International Economic Order
2 The Origins and Antinomies of the Multilateral System
The Inter-War Years: From Reglobalization to Building Back Worse
Internationalizing the New Deal
The Tempering of New Deal Multilateralism
The Strange Rebirth of the Liberal International Order
3 Building Back a Better International Monetary and Financial System
The Breakdown of the International Monetary System
Holes in the Safety Net
Reforming the International Monetary System
4 Re-aligning the Trade and Investment Regime
From Global Prosperity to Global Deregulation
From Small Gains to Big Risks
Aligning the Trade and Investment Regime
5 Catalyzing Development Finance
The Re-emergence of Development Finance
The Limits of the Global DFI Regime
A Reform Agenda
Scale Up Development Finance
Aligning DFIs with Shared Goals
Global Cooperation and Governance
6 Crises, Reform, and Countervailing Power
Bibliography
End User License Agreement
List of Illustrations
Chapter 1
Figure 1.1
The Elephant Curve: Global Income Distribution and Real Income Growth, 1980–2016
Figure 1.2
The Crocodile Graph: Top 2,000 Transnational Corporations’ Profit and Global Lab…
Figure 1.3
Economic Losses from Extreme Weather
Chapter 3
Figure 3.1
Runaway Finance vs Real Investment
Figure 3.2
Instability of Global Capital Flows
Figure 3.3
The Buildup of Global External Debt
Chapter 4
Figure 4.1
Payments and Receipts Related to the Use of Foreign Intellectual Property Rights…
Chapter 5
Figure 5.1
Number of newly established PDBs and DFIs
List of Tables
Chapter 1
Table 1.1
Policy Instruments for a New Bretton Woods
Chapter 3
Table 3.1
Multilateral and Regional Liquidity Facilities in the World Economy
Chapter 4
Table 4.1
ISDS v Public Welfare in the World Economy, Illustrative List
Table 4.2
ISDS Awards to “Carbon Majors”
Chapter 5
Table 5.1
25 Largest DFIs in the World Economy
Guide
Cover
Table of Contents
Series Page
Title Page
Copyright
Begin Reading
Bibliography
End User License Agreement
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The Case For series
Sam Pizzigati, The Case for a Maximum Wage
Louise Haagh, The Case for Universal Basic Income
James K. Boyce, The Case for Carbon Dividends
Frances Coppola, The Case for People’s Quantitative Easing
Joe Guinan & Martin O’Neill, The Case for Community Wealth Building
Anna Coote & Andrew Percy, The Case for Universal Basic Services
Gerald Friedman, The Case for Medicare for All
Pavlina R. Tcherneva, The Case for a Job Guarantee
Anna Coote, Aidan Harper & Alfie Stirling, The Case for a Four-Day Week
Richard Vague, The Case for a Debt Jubilee
Kevin P. Gallagher & Richard Kozul-Wright, The Case for a New Bretton Woods
The Case for a New Bretton Woods
Kevin P. GallagherRichard Kozul-Wright
polity
Copyright © Kevin P. Gallagher and Richard Kozul-Wright 2022
The right of Kevin P. Gallagher and Richard Kozul-Wright to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2022 by Polity Press
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ISBN-13: 978-1-5095-4655-8
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Library of Congress Control Number: 2021942106
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1The Fierce Urgency of Now: The Case for a New Bretton Woods Moment
We are now faced with the fact that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there “is” such a thing as being too late. This is no time for apathy or complacency. This is a time for vigorous and positive action.
Martin Luther King, 1967
At the height of the Vietnam War, Martin Luther King called for vigorous action, on both the domestic and international fronts, to fight injustice and prevent the world heading toward “violent coannihilation.” Today, such action is just as urgent to tackle polarizing inequality, growing economic insecurity, and a breakdown of the climate system. While the policy responses must be linked to local needs and experiences and will require dedicated and determined actions by national governments, the increasingly intertwined nature of these challenges can only be effectively tackled with the support of ambitious global action and coordination.
Promoting international cooperation is, to a large extent, the job of the multilateral system that emerged after World War Two. The question is whether that system is up to the scale and urgency of these challenges.
Multilateral institutions have no doubt contributed to the unprecedented levels of aggregate income enjoyed in some parts of the world and to the documented falls in extreme poverty in others. But over the last three decades they have drifted a long way from the intentions of the 1944 United Nations Monetary and Financial Conference to strengthen the ability of nation states to meet progressive social and economic goals through a balanced system of international rules and actions that would mitigate the risk of mutually destructive economic behavior, foster cooperation for shared purposes, and guarantee sufficient space for governments to tailor policies to local circumstances (Ikenberry 2020). That conference, held at Bretton Woods, New Hampshire, was not some cozy diplomatic conclave content to agree a set of goals and targets that promised a better world. Rather, its ambition and outcomes reflected profound shifts in political thinking and hard-fought power struggles, in particular between what Harry Dexter White, head of the United States delegation, dubbed the “coming” (the United States) and “going” (the United Kingdom) nations (Kuttner, 2018).
But international power struggles are not just contested among national governments. As we note in the next chapter, after World War One financial interests and central bankers were quick to recover the reins of economic policy-making and advance their interests in the incipient multilateral arena. The result was an international economic regime tuned to the demands and wishes of footloose capital, ready and willing to employ austerity measures to fulfill them, and far too relaxed about the sharp rise in inequality, insecurity, and indebtedness this implied. These economic forces not only played a role in subverting the League of Nations’ fledgling efforts at international coordination as economic tensions began to mount toward the end of the 1920s, they also helped fuel the rise of right-wing populism, authoritarianism, depression, and, ultimately, war.
The international economic order imagined at Bretton Woods was designed to preclude a return to the chaos and despair of the 1930s. Its shape and practice would depend, critically, on how the United States employed its recently cemented hegemonic status. New political coalitions had brought Franklin D. Roosevelt to power in the 1932 election and put employment, economic security, and social justice at the center of the polis (Schlesinger 1958). Even as World War Two was still raging, the Roosevelt administration was intent on doing the same at the international level. The key to success, according to Henry Morgenthau, Roosevelt’s Secretary of the Treasury, and host of the Bretton Woods conference, was to drive “the usurious money lenders from the temple of international finance” and make capital serve “the general welfare” (Morgenthau 1944, 121). Morgenthau was unduly optimistic. Financial interests would soon push back against Roosevelt’s New Deal, opening up economic and legislative cracks and crevices both at home and in the international system. From the 1980s onwards they would assert ever greater influence over governments (and people) across the world.
Almost eighty years since Bretton Woods, the world we live in bears an uncomfortable resemblance to the one its delegates hoped would be gone forever. This has not been caused by right-wing populists such as Donald Trump, but by powerful interests who have rigged the rules of the economic game to maintain a winner-takes-all world of privileged individuals and corporations, in which the institutions of multilateral governance designed to foster responsible sovereignty and underpin social stability have instead curtailed the policy space available to governments and preached economic austerity (Mazower 2013: 421).
The operation (and breakdown) of that same system has, moreover, accelerated the climate crisis by undercutting the possibility of large-scale public investment, spreading feelings of political neglect, and deepening the sense of anxiety on which right-wing populists, who see climate change as a hoax, have fed. The global financial crisis of 2008–9 and the Covid-19 health and economic crises have exposed the fragilities of this system. The international community has, on both occasions, failed to respond appropriately.
This book makes the case for a fundamental resetting of the Bretton Woods institutions. By that we do not mean convening a three-week summit to tinker with the rules and treaties that govern international finance, trade, investment, and intellectual property. Nor, however, do we mean a wholesale abandoning of those institutions. Rather, building back better will require a renewal of public institutions and collective goals at the national level, along with new principles of international cooperation and global leadership, that together can rebalance the relationship between capital, labor, and the natural environment in a way that turns “prosperity for all” from prime-time sloganeering into the senso comune (common sense) of international economic cooperation.
The Takeaways from Bretton Woods 1.0
Efforts to reconcile the requirements of national governments with their international entanglements have a long history (Mazower 2013). What made Bretton Woods distinct from previous multilateral initiatives was a recognition that combining national economic goals with international peace and stability would require dedicated public institutions to ensure “the fullest and most effective use of the world’s resources.” The architects of these new institutions had to contend with three abiding and closely related challenges of global governance. First, how many resources and policy responsibilities could they procure from sovereign states to manage a supportive international environment (the sovereignty challenge)? Second, how would international policy priorities be set and responsibilities established across a diverse membership (the leadership challenge)? Third, how, if at all, would those who benefited the most from international cooperation compensate those who benefited the least (the distribution challenge)?
As will be further elaborated in the following chapters, there are four main takeaways from Bretton Woods that, we believe, remain relevant when thinking about governance in relation to contemporary global challenges:
Face up to failure
. Austerity does not work; the gold standard and the outsized influence of financial interests had triggered widespread depression, insecurity, and conflict. A new order would require an ideological break with laissezfaire and adjustment through austerity.
Treat markets as means not ends
. Economic security, personal safety, social justice, energy choices, and political representation should not be left to the dictates of markets. Prices and property rights can help to achieve more inclusive growth and development but require complementary institutions, effective regulation, and shared values that the market doesn’t itself provide.
Forge a set of shared national goals and common global interests
. The international order was constructed to support the national goals of full employment and social welfare by providing five key global public goods: a stable monetary and exchange rate system; a global lender of last resort to provide liquidity to distressed nations; counter-cyclical and long-term lending; open markets’ including under recession; and a coordinated international economic policy.
Nurture cooperation
. Rather than ad hoc summitry and bilateral policy negotiations, a set of permanent institutions is needed to monitor, coordinate, and guide the interdependent economic system into the future.
These ideas underpinned the creation of the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and their subsequent extensions and offspring. While far from perfect, this was a powerful attempt to globalize economic relations while maintaining sufficient policy autonomy for nation states to pursue a broad set of economic and social goals.
In this book we make the case that a spirit similar to that of Bretton Woods needs to be evoked if the twenty-first-century global economy is to become more stable, more equitable, and environmentally sustainable. At the same time, the practice of multilateralism must change profoundly to meet these objectives, and with respect not only to its recent neoliberal deviation, but also to the original post-war multilateral model which relied unduly on American hegemony and was never able to properly accommodate development goals.
From Managing Capitalism to Enabling Capital
Financial interests were noticeable by their absence from the Bretton Woods conference. That was no accident. Disciplining the behavior of finance capital was seen, by the architects of the conference, as key to the stability of the post-war system. But those interests resented the constraints on their activities and were quick to push back and sow seeds of discontent in the years immediately following the conference. New coalitions were established to finance political parties, candidates, and an apparatus of experts that pushed for a revival of classical liberalism, first in national capitals and then at the international institutions themselves (Blyth 2002; Gallagher 2015). The overarching philosophy is now referred to as “neoliberalism,” which pushes for unregulated markets and individual freedoms as primary ends, arguing that “free trade,” “free enterprise,” and the unbridled movement of capital are the only guarantees of a healthy economy and widespread prosperity.
These efforts achieved some early success, but not enough to reverse the ideological tide in support of social solidarity and interventionism that had emerged from the wartime experience and continued to animate policy discussions over the following three decades. They began to yield more bountiful returns from the early 1980s with the abandonment in advanced countries of full employment, the privatization of state-owned assets, and the deregulation of financial markets, with further gains as these measures were adopted and spread by the Bretton Woods institutions.
The resulting “liberal international order,” often lauded as “rules-based,” now serves gargantuan and increasingly footloose firms in their endless pursuit of higher rents in heavily concentrated markets across the globe. The result is a polarized world economy in which instability and insecurity have become the norm for more and more households in rich and poor countries alike.
There are three pictures of what the neoliberal economic order now looks like that we think will help illuminate the scale of the problem and the urgent action that is needed. The first is what has become known as the “Elephant Curve,” designed by the former World Bank economist Branko Milanovic. Figure 1.1
