ATS2624 Lecture Notes - Lecture 6: Global Governance, Hegemony, Pound Sterling
25 May 2018
School
Department
Course
Professor
Global Governance – Lecture – Week 6 – Bretton Woods
- recap - history of global governance
• global world first emerges in 19th century
• need for global governance to manage globalising economy
•
o smooth functioning
o resolve crises and problems
• not obvious to first planners, learning lessons of failure - construction has
been a learning process
• league of nations system
•
o four functions
o
▪ upholding non-intervention
▪ promote international law
▪ promote self determination
▪ champion free trade
o problems
o
▪ persistence of self-interest
▪ lack of superpower support
▪ lack of economic dimension to deal with crises
• lessons of the inter-war period
•
o dangers of short term selfish interests
o importance of a global governance system to not only smooth
functioning but resolve crises of global capitalism
o need for power to underpin such systems - US leadership
lecture - bretton woods
- polar opposite of interwar system
- created conditions for stability and prosperity - conditions for golden age of
capitalism
- the world in 1944
• US main power - undisputed hegemon - vulnerable hegemon - threat of
communism
• issues facing the world
•
o threat of communism - drove changes
o reconstruction of war ravaged europe
o reviving global trade
o
▪ preventing further protectionism
▪ liberalisation to remove restrictions from great depression
and WWII
o need for international monetary system
o
▪ lack of global currency to facilitate trade and investment
▪
▪ resolved by britain adopting the gold standard
find more resources at oneclass.com
find more resources at oneclass.com
▪ value of british pound tied to specific amount of gold
- stable
▪ world currency by default
▪ allowed for massive expansion of world trade
▪ collapsed before WWI
▪ britain no longer world superpower
▪ balance of payment crises lead to unsustainable debt or
devaluation of currency
▪
▪ issues when countries import more than they export
▪ solutions
▪
▪ borrow money
▪ devalue your currency
▪
▪ has the effect of undermining other
currencies
- the bretton woods system
• world bank
•
o intermediary between european nations and banks
o created to facilitate reconstruction of europe
o scale too large and reluctance to take on loans
o central bank for international community
o development funds to reconstruct europe
o loan funds to improve gap in infrastructure
• marshall plan to fund european recovery
• world bank takes on development focus
• IMF
•
o institution that controls and regulates the international monetary
system
o balance repayments - problems with repaying loans - purpose of
funding
o created to manage monetary system
o resources to draw on in balance of payment crisis
o fight over conditionality
o
▪ US wanted conditions/policies to access it
▪ Europe didn’t have conditions
▪
▪ could access money - didn’t have to have to austerity
or devaluation in time of balance of payment crisis
▪
▪ didn’t have a knock on effect to other
countries
o new gold standard
o
▪ 1 ounce = $US 35
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Global governance lecture week 6 bretton woods. Created conditions for stability and prosperity - conditions for golden age of capitalism. Ito: set up to facilitate trade and investment, allow - us to spread soft power to states vulnerable to the influence of capitalism - making the us more powerful in the international community. Success - the golden age of capitalism: global governance system - that helps revolve the crises of global economy, massive expansion of trade - due to stability of currencies. Marginalisation: global south marginalised at bretton woods, denied benefits of embedded liberalism, developing nations suffered conditionality"s - had to implement austerity if they wanted money further benefits investors rather than developing countries themselves, wb loans with conditions. The defeat of the south resistance from the developed world rejection of nieo from the north south"s own problems: unsustainable debts, volcker shock, doubling of interest rates in us, would hurt developing countries, 1982 debt crisis.
