Geography Reference
In-Depth Information
the past 150 years, with late nineteenth century integration being followed
by inter-war disintegration, and a slow move towards reintegration in the
late twentieth century. As such, in contrast to the previous three centuries,
much of the twentieth century was actually characterized by long periods
of non-globalization, a feature which was really only reversed again rather
recently.
During this period, the British Empire and the other European colonial
systems were largely dismantled, and US industrial hegemony within the
Western capitalist world became unquestioned (Ferguson 2003, 2004).
Although there had been previous periods of unemployment, and most
notably in the post-Napoleonic era, the 1930s Depression had brought
with it the first widespread experience of unemployment, as understood in
the modern Keynesian sense. Despite the British origins of Keynesianism
(Keegan 1993) during the 1930s, the British government had actually been
much less proactive in implementing policies to counter the economics and
social effects of the Depression than the New Deal initiatives proposed by
their American counterparts (Galbraith 1987; Cameron 1993). US policy-
makers had concluded that excessive competition within the financial
markets had in part contributed to the crisis. Therefore, they encouraged
rigid segmentation within their domestic financial markets, in terms of
both market activity and market location, in order to promote security
over competition, while underpinning the whole system with a govern-
ment guaranteed deposit insurance program (Coleman 1996).
At the same time as restructuring its domestic financial markets, the
US also lead the way in the post-war restructuring of international trans-
actions. The Depression experience had led Western policymakers to a
growing belief that a liberal international financial system - such as was
the gold standard of the period 1870‒1914, where monetary policy was
subordinated to the goals of capital mobility and fixed exchange rates
(Taylor 2006) -
would undermine the new emerging role of the state in
influencing domestic economic conditions. As welfare expenditures grew,
governments required domestic households and firms to keep their funds
at home in order to provide a strong domestic tax base (Helleiner 1994).
Thus, policymaking was focussed on expanding world trade without
engendering financial instability: capital mobility was sacrificed to keep
currencies on 'adjustable' pegs to the dollar and yet preserve the autonomy
of monetary policy (Taylor 2006)
.
The Bretton-Woods negotiations of
1944, and the resulting 1946 Articles of Agreement, provided for the
setting up of the International Monetary Fund (IMF) and led to the crea-
tion of the General Agreement on Tariffs and Trade (GATT) as a negoti-
ating forum for tariff reductions and trade rules.
The key elements of the Bretton-Woods agreements were fixed exchange
