Intellectualcapital 4/20/00
Bretton Woods Revisited
by Susan Aaronson
Thursday, April 20, 2000
Washington’s weather this week matched my own ambivalence about the protests that were taking place on the streets. Warm sunny days alternated with bone-chilling rainy days, as demonstrators mounted a teach-in against the World Bank and International Monetary Fund (IMF). The protesters wanted to use the occasion of the meetings to condemn these institutions for their negative impact upon the global common and the world’s voiceless. Many of the protesters alleged that these institutions were simply tools of global capitalism, rather than tools to facilitate development and economic stability. While I admired the willingness of the demonstrators to take to the streets to demand social justice, I also wanted to rain a little on their parade. Their idealism and enthusiasm is admirable; their tactics and strategy are abhorrent.
Underlying both is a question of purpose: If we “spank the bank,” will global poverty be ameliorated?
The real challenge
As individuals took to the streets to protest -- first NAFTA, then the Uruguay Round of the World Trade Organization (WTO) and finally the Seattle WTO talks -- I have tried to come to terms with my own ambivalence and sadness about these demonstrations. As a historian of the International Trade Organization (the ITO was designed to find international common ground on trade and employment policies) and as a person concerned about global equity, I have concluded that these tactics can have both a positive and negative impact.
On the positive side, they have forced policy-makers and the public to be more honest about the costs and benefits of globalization, as well as the need for new priorities and greater transparency at the international economic institutions. But the demonstrators have also demagoged these same economic institutions and the rationale behind their creation. As example, the International Forum on Globalization has written, “[E]conomic globalization was deliberately designed by economists, bankers and corporate leaders to institute a form of economic activity and control that they said would be beneficial.”
As a person who spent years in the British and U.S. archives researching the post-war plans, I know this is simply untrue. It is also illogical. The only way to achieve a more humane and just world is to develop and constantly fine tune international institutions to mediate between different nations and cultures. This does not mean "gutting the GATT," "spanking the bank" or "eradicating the IMF," as protesters demand. If you want to alleviate global poverty, achieve sustainable development or promote basic human rights around the world, such institutions are more, not less, necessary. The challenge lies in making them accountable and transparent, as well as responsive to a world where information and ideas move across borders in nanoseconds.
A generational gap
In this process of coming to terms with my own ambivalence and sadness, I was reminded of my first introduction to this evolving critique of economic institutions. In October 1994, Mark Ritchie, the head of the Institute for Agriculture and Trade Policy, organized an amazing conference, called Bretton Woods Revisited. Ritchie is the Paul Revere of globalization -- he was one of the first individuals to point out the costs and the benefits of globalization to national norms. He raised a significant sum from the Ford and Rockefeller foundations to hold the first and only intergenerational conference on the past and future of the GATT (now WTO), IMF and World Bank.
The conference attracted most of the surviving postwar planners in the United States. Raymond Vernon, William Diebold Jr., Raymond Mikesell, and Edward Bernstein traveled to the Mount Washington Hotel. There they met up with other planners from Uruguay, Canada, Belgium, Brazil, the Netherlands and Great Britain -- at the same hotel where John Maynard Keynes, Henry Morgenthau, and many others had drafted and negotiated the plans for the Bretton Woods institutions.
History pervaded the hotel. Many of the rooms were marked with descriptions as to who had stayed in that room and what role they planned in the postwar planning process. This history also was an important theme of the conference: to educate this next generation of internationalists why these individuals -- almost to a one, persons of the left -- had worked so hard to develop the Bretton Woods institutions, as well as the ITO and the GATT.
The conference planners devised a balanced and thoughtful assessment of these institutions. The agenda began with a focus on the problems the institutions were designed to address, an overview of how the institutions were developed and negotiated, and an assessment of how the system could be adapted to meet 20th-century problems, such as environmental degradation and human-rights enhancement.
Soon the sparks began to fly among the conference attendees. Many of the younger participants condemned the postwar planners for not anticipating such problems. But these problems were not the central problems of the word in 1945-1948, a time of massive famines in Europe and Asia, a time when democracy, recently threatened by fascism, seemed to be threatened by communism in China and throughout Europe. In the United States, policy-makers did not know how to deal with high inflation, labor upheaval, the need for jobs for returning veterans and a lack of affordable housing.
As the conference proceeded, the condemnation by the younger attendees grew louder. Those attendees came from development, human rights, environmental organizations, academia and foundations. Many openly asked why the postwar planners did not emphasize the environment, human rights, labor rights, social equity and preservation of national sovereignty. Why had they not anticipated “corporate-led globalization”? Many of the older planners, in their late 70s and 80s, grew defensive. Some became withdrawn. Although most of them agreed that the World Bank, GATT and IMF were not adequately addressing these problems, they rigorously defended their design. They tried to assert that these institutions had always adapted to changing international economic conditions; they would adapt as well to these demands.
But this argument understandably did not sway many of the younger individuals who attended the conference. By Saturday evening at the conference’s final dinner, the critique became relentless. As a historian, as well as a conference speaker, I thought I should try to bridge these different views. I wanted to remind the participants that one of the essential legs of Bretton Woods -- the one institution that linked trade and employment and national and international norms -- had never come into existence. I maintained that these institutions could evolve to meet these new and very legitimate concerns. I convinced almost no one.
Missing perspective
To this day -- six years later -- the drumbeat of anti-economic internationalism has continued among the left. While many critics say they are not opposed to trade or international economic governance, they continue to condemn the institutions designed to regulate it. But what can provide funds for education and public health in nations that can barely organize their tax system, if not the World Bank? How can trade disputes be resolved if not by some mediating authority such as the WTO? How can international labor rights be enforced if some credible and democratically accountable institution does not monitor such rights?
The memories of the Bretton Woods Revisited conference flooded my head as I attended the International Forum on Globalization’s teach-in last Friday. The sense of history, the rationale for these institutions and the continuing need for them had been lost. The protesters are right to criticize some failings of the international institutions. But they should not demagogue about them. Nor should they abandon improving them. The international economic institutions need extensive remodeling, but to do so effectively does not require us to tear them down.
Susan Ariel Aaronson, a historian, is senior fellow at the National Policy Association and a columnist for IntellectualCapital.com. She is the author of Trade and the American Dream--a history of the ITO, GATT and WTO and the forthcoming Redefining the Terms of Trade , a history of how nongovernmental organizations became involved in the globalization debate.
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