Finance ‘Re-Embedded’? The Establishment of the World Bank.

Sam Appleton // International Relations // 27th March // 1-2pm // Arts C 133


‘The Bretton Woods regime’, spanning the period from the close of hostilities in 1945 until the US treasury suspended the dollar’s convertibility into gold in 1971, is depicted in IR and IPE literatures as the international adjunct of the rise of social democratic politics following the Great Depression, and the framework in which a ‘Fordist’ compromise between organised labour and industrial capital was extended throughout and beyond the North Atlantic-European industrial core of the global political economy. In the Bretton Woods Accords, state agents, in response to social demands, were empowered to subordinate the financial economy to the real economy of production and trade. As such, it is counter-posed to the neo-liberal era, and the inter-war gold-standard era as a period of ‘embedded liberalism’, after J.G Ruggie. The key identifier of the social ‘embeddedness’ of the post-war order in this account is the restriction on movements of capital – finance was reined in by the new settlement, the better to protect the societies of national capitalist states from the previously superordinate imperatives of the global marketplace. According to Helleiner, the negotiations between the allied and associated powers at Bretton Woods represented the “culmination of a long Polanyian ‘countermovement’ against the liberal financial practices of the nineteenth century.”[1]

Rather than conceiving of the Bretton Woods institutions as part of an order which sought to repress finance by re-embedding it in national-state economic structures, I will present the Bretton Woods order as the institutionalisation of the infrastructural power of American finance at the global level. Conventionally, the relationship which is taken to define the character and strategy of the Bank is that between its management, directors, and the formal states of its largest subscribers – with particular emphasis on the US Congress. The influence of the American polity has been an enduring issue for the Bank, and in its foundational years, the ability to call on the US Treasury was the only meaningful commitment made by a major member. This undeniably constituted the parameters of the Bank’s activity – but it is surpassed in this regard by the relationship between the Bank and the American financial community. Almost from the outset, the new International Bank for Reconstruction and Development was heavily reliant upon the institutions of Wall Street.

[1]Helleiner, E ‘Great Transformations: a Polanyian Perspective on the Contemporary Global Financial Order’, Studies in Political Economy, 48, Autumn 1995. Pg. 151


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