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14 - “Unusual, Unstable, Complicated, Unreliable and Temporary”: Reinterpreting the Ebb and Flow of Globalization

Published online by Cambridge University Press:  14 December 2023

By
Michael D. Bordo  and
Catherine R. Schenk
Edited by
Patricia Clavin ,
Giancarlo Corsetti ,
Maurice Obstfeld  and
Adam Tooze
Patricia Clavin
Affiliation:
University of Oxford
Giancarlo Corsetti
Affiliation:
University of Cambridge
Maurice Obstfeld
Affiliation:
Peterson Institute for International Economics, Washington DC
Adam Tooze
Affiliation:
Columbia University, New York
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Summary

This chapter revisits the turning points in the evolution of the global economic system in the century since 1919, emphasizing the evolution of the international monetary system and policy cooperation/coordination. We identify four disruptions and examine how each prompted changes in the underlying ideology about how the international monetary system should be organized. First, the eruption of the First World War confirmed the end of the First Globalization. Second, the Second World War prompted the creation of a new managed system at Bretton Woods. Thirdly, in the 1970s the Bretton Woods consensus finally gave way to a new non-system dominated by floating exchange rates for the major world currencies and heralded the acceleration of financial integration of global markets. The final turning point is the 2007–8 global financial crisis, which has provoked an echo of the threats that Keynes identified for the global economy in 1919. Each turning point was characterized by different forms and motivation of cooperation, how rules (either implicit or explicit) were designed and implemented, and the crucial importance of the historical context. Finally, the chapter explores how the dominant interpretations of the past shaped policy reactions in the present and concludes with some lessons for today.

Keywords

“UnusualUnstableComplicatedUnreliable and Temporary” Reinterpreting the Ebb and Flow of Globalization
Type
Chapter
Information
Keynes's Economic Consequences of the Peace after 100 Years
Polemics and Policy
 , pp. 364 - 387
Publisher: Cambridge University Press
Print publication year: 2024

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