Meandering thoughts on Bretton Woods


After a lengthy enough time, especially over the last six months i've found myself thinking about politics again, one of the issues currently on my mind being the forthcoming G-20 meeting. The only real reason that the G-20 is on my mind is because over the weekend, I saw three people I knew who are involved at least partially in the forthcoming anti G-20 campaign.

I have yet to make my mind up completely about the G-20 but it seems to me from an initial reading of the work programme that its objectives are reasonable: http://www.g20.org/Public/Publications/Pdf/2006_work_programme_australia.pdf.

For example, I cant find too much fault with Reforming the Bretton-Woods institutions even if the G-20 statement as found in http://www.g20.org/Public/Publications/Pdf/2005_statement_on_reforming_bwis.pdf is a little short on detail. But then, that is the nature of these statements when issued at such a high level.

At this time, I likewise have little to quibble about on the next four points and found the mention of “resource curse” under the heading of Energy and Resource Commodities to be very interesting. Addressing demographic change and its impact on migration patterns and the follow-on impact on national economies seems prudent. Reviewing how economic policies for sustaining growth the G-20 were implemented (or failed to be implemented) since the last summit seems logical. And of course there’s the final heading of Aid Effectiveness which I also have no problem supporting.

All lofty ideals of course and as usual the devil is in the detail but the principle of 20 nations getting together to work together as best as they can given different sovereign interests is something that I do support. More dialogue, more cooperation, more engagement and perhaps even a little bit more trust is generally preferable to trade wars, espionage and other nastier measures.

Anyway, this entry isn’t only about the G-20 – I do need to read a bit more about it and maybe delve into some of the policy statements it made from the last time, it’s also about the Bretton-Woods Institutions (WTO, the IMF and the World Bank). In conversation with my friends, I was surprised to discover that Bretton-Woods was now a pejorative term. I suppose I shouldn’t have been but it made me wonder why my worldview was so different to many of the people I know and socialise with.

A minor epiphany resulted and it boils down to this:

I actually believe that in general, most of the people in those institutions are sincerely attempting to achieve the charters of those institutions which is to as best as possible: safeguard the stability of the international financial system (IMF), provide development funding to countries that cannot attract commercial funding (World Bank), provide a forum in which trade agreements can be made by consensus and disputes settled with reasonable amicability (WTO).

I believe that those institutions were designed with the best of motivations to deal with the problems of unequal development, poverty, financial and political instability that contributed so greatly to causing the first two world wars.

Of course, those institutions have a mixed record of actually achieving their aims and in fact in many cases end up doing the opposite, but in general, this is because the problems are very complex, the skill levels of those involved insufficient (or frankly verging on incompetent) and hence solutions are inappropriate (or frankly wrong).

Finally and this may be the true reason for my critical and qualified support of the Bretton-Woods three, I cant really see how else their charter and objectives are to be fulfilled if they are abolished. What will replace them? This is the same question I ask myself every time I think about democracy in general.

Reform rather than abolishment seems to be the only way forward and to their credit, assuming that the websites provide accurate information, the IMF and the World Bank have been listening and are reforming (and indeed have been reforming for a long time).

But what about the environment?

This cry is a valid one that I hear quite often and one to which I do not have an answer. My instinct has always been that it’s well and good to protect the environment when the people are prosperous (as they are in the west) and not so easy to do when the people are not. This does not make it right and the choice between the environment and development is often a false one. But again, I cannot see how improvements can be made except through such bodies as the G-20 and such institutions as the Bretton-Woods institutions and by influencing their objectives.

Finally, I came across the term “alter-globalisation” today. I quite liked this part of the definition on wikipedia which I paraphase:

"Alter-globalisation is the name of an anti-capitalist social movement supports the international integration of globalization but advocates that values of democracy, economic justice, environmental protection, and human rights be put ahead of purely economic concerns”

I would prefer to replace economic justice with the alleviation of poverty and environmental sustainability ahead of environmental protection.

But unfortunately, the first part of “alter-globalisation” is not something I can agree with, the portion that emphasises anti-capitalism.

In my opinion and one that has taken me a long time to formulate, to be anti-capitalist is to abandon a tool that can create as much as it can destroy, that can be harnessed and has been shown to be able to be harnessed effectively.

I guess, at the end of day, this is the main reason why I do not agree with my friends.