The Long Distance from Bretton Woods to Canary Wharf

More than half a century after emerging from the ashes and dishonor of World War 2, it is expected that the great powers would sit at the table with a group of countries that rose from this model, with all its faults, limitations and injustices. Otherwise known as Bretton Woods, as one would prefer to clarify, including its last phase of economic globalization in the last two decades. At this table will be the known actors from the Western world beside emerging nations that have gained regional and international recognition. They meet with the goal of searching for coordinated solutions to the most serious crisis of the capitalist system in its current phase. It has been said insistently that its magnitude and depth are much more severe than the crisis of ’29.

On the upcoming second of April, those called the 20 largest economies of the planet will meet for the second time in England in order to continue brainstorming ways out of this global crisis and the most immediate responses. We have already suggested in this space that at the heart of the crisis lies the grave problem of restoring confidence, fundamental for the adequate operation of the system in its broadest political, economical and social conceptualization. This involves the construction of new agreements that would obtain broad support for the principal international and national actors, but also decided action to provide the system with regulated conduct, emphasizing an ethic that would avoid and prevent corruption and plunder. This is worth as much to the principal private agents (bankers and speculative investors) as to the public, whose authority was facilitated by action or collusion with the economic and social plundering through the privatization of profits and the socialization of the losses.

In long ago 1944, the leaders of the powers that were already beginning to look like the triumphant of the great war conflagration, particularly the United States (Franklin Delano Roosevelt) and the United Kingdom (Winston Churchill), met as the head of a reduced number of nations. In a spa (resort, under the new designations of leisure) called Bretton Woods, in New Hampshire, the name of which was symbolically adopted to refer to the agreements of the time that paved the way for the International Monetary Fund (IMF), or as it is now known, the World Bank (WB). Those arrangements permitted, not exempt of contradictions and ceremonies, the progressive development of the system as we know it today. In this busy summary, one should mention that the leadership of those two countries, with the United States at the forefront, encouraged the harangue over the benefits of growth from the U.S. model and its example as a paradigm of development.

The magnitude of today’s international crisis questions the interconnectedness by the same methods that at simple glance would not seem to factor in with the necessary legitimacy. It also questions the leadership of the United States or the United Kingdom. In this scenario, it doesn’t seem logical to maintain the same model as an example to follow when the epicenter of the crisis is essentially rooted in the United States. Certainly the charisma of the new United States president will gravitate more towards the continuing world leadership of his country in this process of his country to resolve the problem, but at the moment it is not much more than this element.

The expectations that have been generated by this mini-summit of 20 countries, surely as a result of the problems that international society confronts, have lead to the exaggeration of its achievements and results. For example, there are suggestions that this group of nations may revitalize the political, economic and social agreements on which rest the world system, in order to intercept all the contemporary crises, economic and financial, energy and food, climate change, immigration or armed conflicts.

The agendas of international peace and security, economic growth and development, care of the environment or eradication of poverty, to name a few, despite its implication should not necessarily be dealt with it in a unipolar manner. We already know that economic growth does not equal development, and that development isn’t sustainable if the environment and the well-being of all individuals aren’t taken into account. On the other hand, raising the expectations of that meeting of important nations whose leaders will most likely state their good intentions so much through time constraints because decision making in this sense requires various stages to put all the actors in the same frame of mind. It doesn’t seem feasible to hope that the charisma of President Obama or British activism is enough for the Chinese, Russian, Indians or Brazilians to simply accept the shift in the United States and British leadership, and that the world economic and financial systems would function over these bases.

Outside of the fundamental political problem of leadership, it is possible to suggest that the leaders will have as essential work to resolve the terms of a message that would reinforce the willingness of collective action and the search for consensus at the highest level. This with the purpose of contributing to set directives for a future restructuring of international organisms including economic and financial institutions, especially the IMF and World Bank, in order to give them the representation which they lack now, and give capacity, likewise, in decision making, to the great emerging economies of the developing world. These are not the only works, neither the most ambitious, but they should make clear their willingness of renewal if they want the meeting to serve as something substantive. There are voices that have suggested as to the urgency of the crisis, as in Iceland, The Czech Republic, Latvia or Romania, to cite some examples. Perhaps more important yet, in the practical level of politics, is to seek to resolve the conceptual dilemma that has prevailed from Bretton Woods to Canary Wharf, of the paradigm of the free market and the role of the State in the economy.