Reinterpreting Bretton Woods: International Development and the Neglected Origins of Embedded Liberalism

This article offers a reinterpretation of the origins of the 1944 Bretton Woods Agreements, one that is of particular significance to scholars of international development. Conventional wisdom holds that the Agreements were primarily a product of US–British negotiations between 1942 and 1944, in which little attention was paid to international development issues and the concerns of poorer countries. This article demonstrates that the innovative ‘embedded liberal’ vision of Bretton Woods was in fact first put forward in the context of US–Latin American financial relations in the 1938–42 period, and that this experience influenced the subsequent Bretton Woods negotiations. The analysis highlights that the architects of Bretton Woods did not ignore development issues but rather attempted to pioneer a new model for both North–North and North–South economic relations. If this has been subsequently overlooked by historians, it may be because this latter feature of Bretton Woods was quickly buried by US policy makers in the immediate post‐war years. This historical reinterpretation helps both to explain some important puzzles about the origins of the Bretton Woods Agreements and to shed new light on the place of international development issues in the evolution of the post‐war international economic order.     

Multilateral Development Finance in Non‐Western Thought: From Before Bretton Woods to Beyond

Recent initiatives of China and other emerging powers to create new multilateral development lending institutions (MDLIs) are often portrayed as efforts to build upon and/or reform an idea pioneered by Western officials during the Bretton Woods negotiations. However, recent literature has shown that support for MDLIs also had deeper non‐Western roots in the pre‐Bretton Woods era. What led thinkers outside the West to propose MDLIs in that earlier period? How might their ideas be relevant to current non‐Western initiatives to create new MDLIs? This article addresses these questions with a special focus on the ideas of China's Sun Yat‐sen (1866–1925) and Peru's Víctor Raúl Haya de la Torre (1895–1979). Although their intellectual journeys were quite distinct and their specific proposals differed, these two thinkers advocated the creation of MDLIs for similar reasons that stemmed from their anti‐imperialist sentiments. Their ideas find some echoes in current non‐Western initiatives.     

The Regulatory State and Turkish Banking Reforms in the Age of Post‐Washington Consensus

The new era of the Post‐Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post‐financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank‐based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation.     

Linking Up to Development? Global Value Chains and the Making of a Post‐Washington Consensus

Over the last decade, the global value chain (GVC) approach, with its associated notions of chain governance and firm upgrading, has proliferated as a mode of analysis and of intervention amongst development institutions. This article examines the adoption and adaptation of GVCs at four multilateral agencies in order to understand the purchase of value chain approaches within the development field. Mixing GVC perspectives with other theoretical influences and applied practices, these institutions deploy value chain frameworks to signal a new generation of policies that promise both to consolidate, and to advance beyond, the market fundamentalism of the Washington Consensus. To achieve this, value chain development frameworks craft interventions directed toward various constellations of firm and non‐firm actors as a ‘third way’ between state‐minimalist and state‐coordinated approaches. The authors identify key adaptations of the GVC framework including an emphasis on value chain governance as an instrument to correct market failure in partnership with state and development agencies, and upgrading as a de facto tool for poverty reduction. They find that efforts are ongoing to construct a ‘post’ to the Washington Consensus and that the global value chain is enabling this process by providing a new language and new object of development intervention: ‘the chain’ and the local–global linkages that comprise it.     

What consensus? Geopolitics and policy paradigms in China and the United States

The Washington Consensus is not what it was. A model of development associated with the Untied States, it has been diminished both by apparent failures, widespread criticism and by the recent economic crisis that had its origins in the US. Anglo‐American capitalism has lost a good deal of its influence and attractiveness. As a consequence, alternative models of development have become more prominent, especially the so‐called Beijing Consensus. The authors argue that at one level this evolving policy discourse and debate reflects a long‐term structural change in the relative positions of China and the United States. However, it is far from clear that this transformation has gone far enough to underpin a significant ideational or policy challenge on China's part. On the contrary, the debate in China demonstrates that there is little appetite for, or expectation of, a major paradigm change in the near future.     

The culture of investment‐led international development: the Chatham House circle (1939–45) and lessons for today

In 1939–45 an economic group for the discussion of postwar economic order was established at Chatham House, gathering a transnational community of economists and scholars at 10 St James Square in London. Papers were written and seminars were held before—and following—the conference held in Bretton Woods in 1944. Polish‐born economist Paul Rosenstein‐Rodan (1902–1985) coordinated the group, which invoked investment‐led growth and new international institutions for development. Chatham House played a role in making sense of, and disseminating, this new culture of international development. To be clear, this ‘new’ culture was not entirely new, and had its roots in the interwar years, including colonial development policy. Nor was Chatham House the only hub of this culture. This article aims at filling a gap in our understanding of the role of economic research done at Chatham House during the Second World War. In addition, by looking to the past, it may also help at broadening our views on how to globally reignite growth today. Policy‐makers seem to have learnt some of the monetary lessons of the 1930s, but not the development ones of the 1940s. This article is based on sources from the Chatham House archive and brings to special attention articles published in International Affairs.     

‘Social Development’ as Neoliberal Trojan Horse: The World Bank and the Kecamatan Development Program in Indonesia

This article seeks to reconceptualize the post‐Washington consensus (PWC) by focusing not simply upon the institutional structures and ideology promoted by it, but the manner in which these are promoted on the ground. The aim is to reveal a central distinction between the Washington consensus and the PWC that has been somewhat neglected: their diverging approaches to implementation. The author focuses on the World Bank‐funded Kecamatan Development Program (KDP) in Indonesia, a project that is viewed by some as being somewhat unorthodox. He argues that in addition to its promotion of the latest round of institutional reforms, what is really different about KDP, compared with older approaches to market‐led development typical of the Washington consensus, is the manner in which it delivers its mix of neoliberalism. What is radical about a programme like KDP is that it constitutes a new Trojan horse for embedding market‐centred norms and practices.¹ In general, this is demonstrative of a key difference between the Washington consensus and the PWC that has been undervalued in many analyses of the dominant development paradigm: the methods used to embed and sustain liberal markets.     

A Bretton Woods moment? The 2007–2008 crisis and the future of global finance

The 2007–2008 global financial crisis encouraged speculation about the prospects for a ‘Bretton Woods moment’ in which the global financial system would be radically redesigned. Many of those hoping for this outcome have since become disillusioned with the limited nature of the international financial reform agenda. But the success and innovation of the Bretton Woods conference was made possible by unique political conditions that are not present today, notably concentrated power in the state system; a transnational expert consensus; and wartime conditions. Moreover, a close reading of history reveals that the Bretton Woods system did not emerge from a single moment but rather from a much more extended historical process. If a new international financial system is being born today, it will be a slower and more incremental development process that can be divided into four phases: a legitimacy crisis; an interregnum; a constitutive phase; and an implementation phase. Viewed from this perspective, post‐crisis developments look more significant. The crisis of 2007–2008 has already intensified twin legitimacy crises relating to international financial policy and leadership. It has also generated an international reform initiative that has been unusual for its speed and internationally coordinated nature. Many of the details of this reform initiative remain unresolved and its content and breadth are hotly contested in various ways. We thus find ourselves in more of an interregnum than a constitutive phase. It remains unclear how quickly, if at all, the latter might emerge and in what form.     

Why development requires less nuance and more class: a response to Patrick Kilby

The authors review critically an article by Patrick Kilby in Vol. 61(1) of the AJIA on Australian development policy. They claim that the difference between the Government's program and the alternatives suggested by Kilby is one of degree as his objections retain the same neoliberal limitations as AusAID and the Washington Consensus. The authors argue that reducing poverty in a globalized world means going further than institutional changes and considering the key issue of class. They instead suggest a focus on the effect of domestic international politics and the globally constituted nature of poverty.     

The (Ineffective) Financial Statecraft of China's Bilateral Swap Agreements

Since 2008, the People's Bank of China has signed bilateral swap agreements (BSAs) with 35 foreign central banks. Collectively, these deals amount to nearly US$ 500 billion in Chinese renminbi (RMB) available to Beijing's foreign partners. What has led China to be so aggressive in its efforts to sign so many swap agreements? What are the political economic implications of the swap programme for the US‐centric global economic order? China's BSAs can be understood as a form of financial statecraft: the use of national financial and monetary capabilities to achieve foreign policy ends. China has deployed BSAs for both defensive and offensive reasons. Defensively, Beijing has sought to use BSAs to promote trade settlement in RMB thereby reducing China's vulnerability to the dollar's structural dominance in trade. Yet, as explained in this article, they have been ineffective in this regard. Offensively, Beijing has used BSAs as a short‐term liquidity backstop outside of the Bretton Woods institutions for partner countries in need. Here, there is greater potential for BSAs to impact the status quo economic order by enhancing Chinese economic influence. However, their potential is dependent on Beijing's willingness to act as a unilateral crisis lender and its ability to further internationalize the RMB.     

The New Development Bank and the Asian Infrastructure Investment Bank: China's Ambiguous Approach to Global Financial Governance

The creation of the New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) has generated a great deal of attention and controversy in the development community and beyond. Do these banks indicate that China is promoting a new model of multilateral development finance that undermines the existing system dating back to Bretton Woods? What are the forces shaping China's policy choices in this area? In contrast to the prevailing tendency to view these banks as part and parcel of the same challenge or opportunity for multilateral development financing, this article highlights major distinctions between the NDB and the AIIB. The fact that China is playing a prominent role in both the NDB and the AIIB suggests that China is not promoting a coherent new model of multilateral development financing, but is instead straddling different traditions in this realm of global financial governance. The ambiguity in China's approach to multilateral development finance is shaped by its multiple identities and complex economic and political interests.     

Continuity,Discontinuity and Incoherence in the Bretton Woods Order: A Hirschmanian Reading

This article examines the effects of the Asian crisis and especially the global financial crisis on developmental finance (that is, long‐term project finance and counter‐cyclical liquidity support) and the global financial architecture. In this connection three claims are advanced. The first is positive: that the crises occasioned meaningful although ad hoc, uneven discontinuities. The conjunction of discontinuities and continuities is imparting incoherence to the developmental and global financial architecture. The second claim is normative and controversial. Contrary to the common narrative, emergent incoherence is (on balance) productive of development and stability rather than debilitating. Actors in parts of the global South and East enjoy greater opportunities for institutional experimentation today in comparison with the limited space available in the coherent neoliberal era when the Bretton Woods institutions were monolithic. All of the experiments underway are not equally likely to survive, but even failures can provide lessons and networks that contribute to future successes. Emergent redundancy and new networks of institutional cooperation increase financial resilience. The article also explores the risks of incoherence and redundancy. The third claim is that productive incoherence can be understood within a ‘Hirschmanian mindset’ — an understanding of change and development informed by Albert Hirschman's theoretical and epistemic commitments.     

Shifts in the Global Capitalist Economy and the National Economic Domain

The greater part of regional development theory and thinking focuses most attention either upon spatial structure within nation states or upon inherent tendencies/free market forces within capitalist social formations/domestic economies. The great significance that is attached to the nation state is entirely understandable in terms of the historical specificity of the re-emergence of regional development studies in the post-war era. It is, however, no longer a sufficiently adequate basis for analysis Rather, it is necessary to commence analyses with a consideration of shifts in the global capitalist economy. Whilst the significance of the impacts of the growth in the internationalisation of production have been noted, more attention needs to be devoted to shifts from public to private economic power and from order to disorder in international finance markets. These shifts are not accidental They can be traced to internal weaknesses and inconsistencies in the Bretton Woods arrangements which eroded their ultimate foundation, that of monetary stability. As one consequence, the unregulated growth of private economic power, endemic instability and extreme volatility in international finance markets have all directly and indirectly undermined and eroded the extent of control over domestic economic policy on the part of the nation state     

Growth in the International Reserves of Russia,China, and India: A Comparison of Underlying Mechanisms

A noted international specialist on the Russian economy compares the different mechanisms by which the emerging powerful economies of Russia, China, and India accumulated substantial foreign reserves during the 2000s in the lead-up to the global financial crisis. He also investigates the costs incurred by these countries of intervention into exchange markets to maintain exchange rate regimes supporting such accumulation, as well as measures undertaken after the crisis to address sudden and massive outflows of foreign private capital and considerable decreases in demand for imports in developed countries. The author argues that each of the three countries can be viewed as a prototype for a particular means of reserve accumulation among emerging market countries that has led to the revival of the Bretton Woods international monetary system.     

Limits to the Washington Consensus: Boundary struggles and China's transition economy

This paper explores the interconnected normative and geopolitical-economic tensions between the Washington Consensus and the Chinese state through an analysis of reform discourses and practices at the World Bank. Frequently framed as opposing visions and templates of development, the World Bank and the Chinese state have engaged in a protracted relationship of mutually-informing exchanges of economic expertise, technical assistance, and policy formulation, evolving significantly since China's ‘opening up’ in 1978. I trace these shifting relations through an interpretive strategy inspired by Nancy Fraser's concept of boundary struggles, focusing on how the World Bank has challenged, affirmed, and affected China's institutionalized division between polity and economy. Through a new periodization of the World Bank/China nexus, this paper shows how transformations in geopolitical-economic relations condition the normative construction, representation, and reception of ‘economic models’. It also challenges antipodean conceptions of the ‘free-market’ Washington Consensus and ‘state-capitalist’ China through demonstrating the qualitative character of their state/market articulations.     

Institutions,Markets and Economic Co‐ordination: Linking Development Policy to Theory and Praxis

This article explores policy applications of ‘new institutional economics’ theory in relation to markets and economic development. It argues for application of an analytical framework which instead of looking at institutions primarily in terms of their contributions to making competitive markets work better, sees such markets as one form of institution fulfilling exchange and co‐ordination functions in an economy. A key element in this is recognition of the importance of processes of change in non‐standard market arrangements in economic development, and there are strong theoretical, practical and historical grounds for more consistent policy in this area.     

二战期间美国筹建战后世界多边自由贸易体系的历程

第二次世界大战期间,美国在谋求建立战后世界“广泛而持久的”集体普遍安全政治体系的同时,亦致力于构建战后世界金融有序合作、贸易自由开放的全球经济体系。这项全球战略的经济目标,最初体现于1941年8月14日颁布的《大西洋宪章》,正式实施于1944年7月1—22日召开的布雷顿森林会议。     

New Perspectives for Modernization in Central America

ABSTRACT Ostensibly, the Central American Left has been defeated both politically, in the Nicaraguan elections, and economically, with the triumph of orthodox economic adjustment policy. In reality, the end of the Cold War promises to alter the economic and political climate in a way that will encourage the region's long-delayed modernization. Although the political arena remains turbulent, moderate forces are emerging which Washington will find easier to support. Equally promising is the region's favourable record of economic adjustment in the second half of the 1980s. A more favourable world climate for world trade in the 1990s would ease the region's foreign exchange constraint and enable a further round of industrialization to take place, while further eroding the economic basis of ‘oligarchic despotism’.     

Economic and Social Thinking at the UN in Historical Perspective

This article begins to examine the history of economic and social ideas launched or nurtured by the United Nations (UN). In 1999, the United Nations Intellectual History Project was initiated, to analyse the UN as an intellectual actor, and to shed light on the role of the UN system in creating knowledge and in influencing international policy‐making: this article is based on the first five books and the oral histories from that Project. The starting point is that ideas may be the most important legacy of the UN for human rights, economic and social development, as well as for peace and security. For the authors, this ‘intellectual history’ provides a way to explore the origins of particular ideas; trace their course within institutions, scholarship, and discourse; and in some cases evaluate the impact of ideas on policy and action.