bretton woods

A Little History Lesson -- Bretton Woods 1944

The Bretton Woods Conference took place in July 1944. Some of the core points, however, did not come into action until 1958 when European currencies became convertible. 

The main terms were:

  1. The formation of the IMP and the IBRD (now part of the World Bank)
  2. Fixing exchange rates, with the governments having the power to regular capital flows and revise the exchange rates by with to 10%
  3. Convertible currencies for trade 
  4. The subscription to the IMF’s capital by all member countries

The entire conference centered around Keynesian ideas, and John Maynard Keynes was the leader in economics at this time. It’s main focuses were to encourage open markets, and as seen above, to lower trade barriers and move capital in the world. 

When in 1942 ‘An American Proposal’ envisaged the replacement of 'a dead or dying imperialism’ with an American empire of a new kind, in order to establish 'universal free trade’ by reorganizing 'the economic resources of the world so as to make possible a return to the system of free enterprise in every country,’ it acknowledged that the primary barrier to this was the 'uprising of the international proletariat’ that had occurred over the previous twenty years.  Despite all the subsequent Cold War rhetoric, it was not the threat of external Soviet military expansion but the new political and economic strength of the working classes in so many societies, including within the advanced capitalist countries, which was the real barrier.  It was only overcome, as we have seen, once the postwar contradictions of strong working classes coexisting with increasingly strong capitalist classes had led to the crisis of the 1970s, and then to the defeats suffered by the working classes in its wake.  To the extent that, in the course of the postwar years, the working classes increasingly lost interest in the idea of socialism, this had much to do with the belief that the Bretton Woods agreement and Keynesian economics would usher in a crisis-free, socially just 'mixed economy.’  Yet not only the crisis of the 1970s, but also the economic instability and growing inequality of the neoliberal decades that followed, proved this to be an illusion.
Equally illusory is the belief that there is a way back to a supposed postwar 'real economy’ from the finance-led capitalism which greased the wheels of globalization.  Capitalist finance is in truth no less real than capitalist production- and not just because of the way it affects the rest of the economy during both boom and bust, but because it is integral to capitalist production and accumulation as well as to the extension and deepening of global capitalism.  There is in fact no possibility of going back to the largely mythical 'mixed economy’ of the New Deal and Keynesian welfare state are imagined to have represented.  In the US itself, as the last chapter showed, just as democracy appeared to trump race with the election of a black president, so did he reinforce once in office, even through his timid reforms, the neoliberal system of class power and inequality.  We have seen Southern and Eastern Europeans being sharply rebuked for even having aspirations to catch up with what Northern Europeans can still claim from their reduced welfare states after the neoliberal reforms of recent decades.  An already marked democratic deficit in Europe was further expanded, as the crisis in Greece and Italy ushered in 'national unity’ governments headed by central bank technocrats, whose mettle was supposed to be tested by whether they could calm German anxieties about 'moral hazard’- which would itself largely depend on whether they could 'get tough enough with the unions.
—  The Making of Global Capitalism: The Political Economy of American Empire by Leo Panitch and Sam Gindin
The Mysterious Disappearance of Maura Murray (Part 2/2)

There are many theories surrounding the Maura Murray case, however, I’m only going to talk about the one I believe to be the most interesting. 

Many believe Maura’s abductor was Alden Olson, the owner of the YouTube channel “Mr112Dirtbag.” I’d like to mention that people suspect the “112″ in his username refers to where Maura crashed, Route 112. And the “Dirtbag” part could refer to an interview investigators had with Maura’s father in which he said, “Dirtbags kidnapped her!”

There are 3 videos in particular that may suggest he was in fact Maura’s abductor. The first video, posted on February 7th, 2012, was a 16 second clip of a ticket to a mountain resort named Bretton Woods located in New Hampshire. The ticket was dated “7/11/04,” just 2 days after Maura’s disappearance. People speculate this is where her body was dumped. A few hours after posting the video, he deleted it. A true crime writer following Maura’s case was kind enough to reupload it. You can watch it here.

The second video was posted on February 9th, 2012, the day Maura went missing. The video was titled, “Happy Anniversary” and just shows him creepily laughing for a minute before showing the words, “happy anniversary!” at the end. You can watch it here.

Lastly, the third video titled, “No Hope for Mental Wannabe” may contain more information on where Maura’s body is located. The last few seconds of the video flashes a poorly drawn face with a random object next to it, then the right eye of the drawing blinks. James Renner, a true crime writer obsessed with this case, may have figured out what the picture means. It vaguely resembles a map of the Bretton Woods Mountain Resort, the same place the ticket in the first video was bought.

The red abstract shape represents the building, when tilted a certain way the points on the shape correlate to the numbers on the map. The face resembles the golf course and people believe the right eye blinking corresponds to the specific area in which she was buried.

112Dirtbag was questioned by police but nothing has come of it. His YouTube channel has since been deleted, however, James Renner reuploaded all 5 of his videos and assembled a playlist that you can watch here.

It is striking to see how every element of the neo-liberal package is specifically designed to undercut democracy. It’s rarely discussed and people talk about its economic effects but just think it through. Lets take, say, financial liberalization, core. For Keynes the greatest achievement for the Bretton Woods System - post war system - was to institute financial regulation, and there’s a reason. That provides space for governments to undertake programs that are supported by the population. If you have no constraints on capital flow, then you can attack currencies freely.
That creates what international economists sometimes call a virtual parliament of investors and lenders who can - I’m quoting from technical literature - “carry out a moment by moment referrendum on government policies”. And if they think the policies are irrational, they can vote against them by capital flight or by attacks on the currencies, and so on. Policies that are irrational are, by definition, those that benefit people, but don’t improve profit and market access and so on. And therefore, governments face what’s called a dual constituency - their own population, and the virtual parliament.
And the virtual parliament usually wins, especially in poorer countries. The rich countries, it was modulated, they didn’t accept the neo-liberal package as completely as say, Latin America, but to the extent that they did, the effects are predictable. And the same is true of other elements of neo-liberal programs. Take say, privitization, which became a mantra. Well, by definition, privitization undercuts democracy. It takes something out of the public arena and puts it into the hands of unaccountable private tyrannies that are created and appointed by the state, which is what corporations are.
—  Noam Chomsky

anonymous asked:

"Low skill manufacturing can never come back without threatening the outflow of American dollars that underpin Super-Imperialism’s triangle trade of petrodollar recycling/East Asian purchases of American debt. " could you explain more about this? what's the petrodollar? and how does that relate to Asian holding of American debt? why do these help American imperialism?

Do you know what’s the weirdest thing? the IMF’s own website has a little chart that shows how the system i’m about to describe works. You’d think, from hearing about it, that they’d want to keep its functioning in the background, but no, the organization itself proudly trumpets what it’s done, it’s just that media figures don’t see any point in explaining it.

so basically, for pretty much all of the recent history of capitalism, a loan between states was pretty well understood as a way of modifying the other state’s behavior. Spain was the last big state that could really get away with defaulting on its loans, and that’s because they were loans from dutch banks rather than the dutch state itself, but it eventually made itself a pariah in the early capitalist world and prevented itself from getting credit. Countries that wanted to help certain sides in wars because they gained from their victories offered subsidies rather than loans, like france in the american revolutionary war, or the uk in the napoleonic wars with austria and russia. America changed this in ww1. It demanded its money back as loans, overtly because there was little political willpower to increase taxes in order to finance spending by other nations, but covertly to transfer financial power to american investors.

if I make you a loan on something productive, i’m essentially giving you money so that you can give me back a part of the profits from it. Wars aren’t productive. They never amortize themselves, they only destroy. A war can be profitable if one side is insulated from the destruction of warfare and can simultaneously become the supplier of arms for other nations, as america was in ww1 and ww2, but the destruction of war has outweighed any kind of profit for the geographical actors for about 200 years. When you make a loan to a country to commit to warfare, you’re basically giving them two outs (in the case of america, you’re also saying “buy all your guns from us since we just gave you dollars”, but that’s a side effect). One is to default and become a pariah in the financial world. That’s an impossibility for a big state in the modern era. Even the soviets never defaulted on an international loan (if kenneth and rogoff are to be believed, the soviets defaulted on domestic debt on april 10, 1957, but that seems absurd. Why the hell wouldn’t they just print the money?). The other is to have them take what productive capacity, infrastructure, colonies, whatever valuable shit they have, and auction it off on the international markets to the highest bidder.

that’s effectively what america was telling europe after ww1. At the time, european empires were run to the benefit of their namesakes, where the colonies would sell raw material and buy finished goods, and the european country would process raw materials into finished goods and sell some of them back for a far higher price, the rest going to the workers in the european nations. America wanted to use the loans to negotiate a way into this, to get the chance to sell to the europeans and their colonies. They didn’t want to have any of the responsibilities that came with policing these nations, because that kind of military spending would force an increase in taxes, so they wanted the europeans to keep their colonial empires intact. Instead of giving up or defaulting, the europeans found an out. Instead of striping their own nations through austerity, as the uk tried in 1926 causing the 1926 general strike, they could simply strip germany of its industries instead. In turn, germany was forced into a 14 year period of extreme austerity, running high interest rates in order to please american banks enough for them to give dollar loans so they could repay reparations. Eventually, this absurd system collapsed, causing the great depression and an increase in trade barriers. The americans knew their first attempt had failed.

to correct this, they set out to build a new world order. American planners were very busy during ww2, with all their work culminating in the 1944 bretton woods conference at the mount washington hotel in bretton woods, new hampshire. The two primary negotiators there were harry dexter white on the american side and john maynard keynes on the british side. They had a few goals in mind. First was the maintenance of full employment conditions in america. A quick slide out of a war economy would push things back into great depression territory and possibly cause a socialist revolution. Instead, americans had to be kept employed. Another was to reconstruct the european economy after it had been torn to shreds by the war. These two goals could be solved in the same way, by having the americans sell lots of stuff to europe. America would take care of food production, pushing european agriculture into vegetables and dairy and european nations into food dependence on america, a good way to ensure loyalty (similar thing with japan, they protect their rice with tariffs of 777%, but they import a third of their food, especially meat). The issue was how to give europe (and japan) the means to pay for it. Since the gold standard had been abandoned so that governments could provide liquidity in the face of the great depression and warfare, worried planners and businessmen were agitating for a return. A quick jump back would hamstring recovery efforts though, so a new solution was found. The american dollar would be pegged to gold at $35 an ounce, and other nation’s currencies would then be pegged to the dollar, fully convertible, and allowed to adjust a few percentage points, more if a formal request was made. This would establish the us dollar as the world’s “reserve currency”, the preferred unit of trade for country to country transactions. A trinity of institutions would be developed, the world bank, the imf, and the gatt/wto. The latter would codify a set of rules for foreign investment, so that the europeans and the japanese could sell their infrastructure and factories to foreign (american) buyers. The former two would ensure a dollar outflow even in years where america ran a balance of payments surplus, as characterized the period between ww2 and the korean war. Their structure would help avoid domestic opposition to increased taxes paying for foreign aid, and it would also ensure other country’s had a vested interest in forcing their neighbors to pay back their loans. Since the world bank’s money was made up of an initial payment into its coffers by nations, and then loans were made by taking chunks of this money from every other nation, then every world bank loan featured every other nation as a creditor.

initially, recovery in the post-war period was slow. Civilian populations agitated strongly against governments that had in many cases co-operated with the nazis. Communist and socialist parties won blowouts in elections, in most cases, their highest counts even up till today. Something had to be done to keep capitalism in place. American chicanery was widely used, for instance in the italian election, where a development loan was officially tied to election of the christian democrats, but it could only go so far. The answer was to initiate the cold war. The soviets and americans had already agreed that each would separate europe into respective spheres of influence where each would have complete control, and the soviets had been abiding, telling the greek communist party to stand down against the former nazi collaborators that were massacring them. The americans knew that their population wouldn’t know about the deal, and undertook propaganda efforts to convince them of links between the western european communist parties and the soviets, as well as implying that an event like the czechoslovakian coup would soon be aimed at western europe if something wasn’t done. This was enough to get over opposition in congress to the marshall plan. Right wingers didn’t want to limit american consumption, feeling that an american empire wasn’t worth it, while a smaller contingent of left wingers opposed the marshall plan because it would create two competing currency/security blocs in europe and decelerate the growth of eastern european trade with western europe and america. The initiation of the cold war stymied both parties, and support was found, just as long as marshall plan conditionality held. This was the terms of the deal under which the europeans would get aid, the laying of american style corporate practices and labour relations, the opening of currencies and the ability to convert foreign profits to american dollars, the end of trade restrictions and the treatment of american companies on the same grounds as domestic ones, and most important to congress, the spending of aid on american goods, with the origin specified for european consumers so that none would mistake on whose beneficence they were surviving. Finally, the marshall plan served the purpose of preventing communist victories in a number of areas of the european empires. Expenditures for the british, the netherlands and france on their wars in indonesia and southeast asia were about the same as marshall plan aid given to them.

the final push for european economies into self-sufficience and the big push for the japanese economy came with the korean war and the associated multiplication of american bases internationally, setting the cold war irreversibly into motion and driving america’s balance of payments into the negative. This would undermine the very system america had tried to set up, yet it was a well known problem with the system, as keynes had pointed out in negotiations. America would need to put enough of its currency into circulation to supply the world with enough dollars to trade and to buy america’s overproduced goods at full employment with, since it was the reserve currency, so a negative balance of payments was needed. However, as in the so-called “triffin’s dilemma”, the domestic issues america was facing often came before its international responsibilities. It needed to keep the dollar pegged to gold to keep investors satisfied. That meant it had to hold enough gold for investors to convert at any time they wanted. If it tried to change the gold peg of the us dollar, foreign currencies would simply shift accordingly, because they were pegged to the dollar, not gold. Because the dollar was the reserve currency and because there was so much of it around, it became easier to get us dollars. Those us dollars could be converted to gold that would then be sold on the open market in other countries, where gold fetched a higher price. This became more of an issue in 1959, when the amount of dollars exceeded the amount of gold backing them, leading to a coordinated effort to buy back gold when it was cheaper, called the “london gold pool”. Keynes had proposed that the us dollar not be the international reserve currency, in favour of one set up by the imf, called a “bancor”. America had objected because they wanted loans to be denominated in us dollars, as that would give it greater control over the loans that it was mostly making at the time. A loan can be used to create austerity or to affect development in a certain direction by forcing a focus on exports that will attract payments in the foreign currency the loan is in, i.e. Third world nations with outstanding loans have to make things americans want to buy, mostly raw materials since america didn’t want competitors in manufacturing other than europe. By the 1960s, things had reversed, and america became a major debtor rather than a major creditor to the world, leading to the creation of so-called “special drawing rights” at the imf, mostly fulfilling that role.

during this time, there was a sort of triangular trade in place. The world bank, finding itself no longer needed in europe, set about loaning to third world nations, which were desperate for funds but couldn’t get them from banks because of their bad habits of defaulting and expropriating foreign-owned businesses. To pay back these loans, the third world nations were obligated to change their paths of development. Rather than spend on industrialization, money had to instead be spent to export whatever raw resources america wanted to spend dollars on, so that those dollars could be earned to pay back the loans. This led to a raw resources glut, further depressing the price and delivering profits to america. America spent those profits on rebuilding europe, ensuring the europeans could produce the goods that america didn’t have a surplus production in, and even sell those goods to america at a lower price since european wages were lower, keeping american price levels and hopefully american wages down. Finally, europe would use those dollars to buy goods from the third world, allowing them to pay off their loans. By the mid-1960s, this was breaking down due to the aforementioned problems. In 1965, france decided to ditch the whole thing and said openly it was going to convert as many dollars as it could into gold. Germany did the same in 1968, forcing america to abandon the vietnam war. The US had acted as a guarantor of stability for its own benefit, believing its gold reserves would last it through difficult times. Now, because it was profitable, nations were directly challenging that role. At home, america’s manufacturing economy, designed to prevent socialist revolution, was directly edging on it, with work stoppage rates reaching increasing heights. In the third world, nations were increasingly antagonistic to foreign investment rather than opening up to it, and expropriations were on the rise. The key to these troubles was the american role as military defender of capitalism. This kept dollars moving outwards, but also distorted the triangular trade. Normally, even if europe or japan imported from a third world nation, they still paid in us dollars, which would then be spent either paying back a loan or buying an american good. With us production increasingly going to war purposes, nations were instead using those dollars to exchange into gold. However, there was a light in the tunnel. Us planners increasingly looked at the strange path being taken in japan.

japanese gold reserves had never been overly large, and when the nation began to receive large US dollar surpluses in the 60s, it mostly spent those on treasury bills instead. Japanese goods were also incredibly cheap, produced even cheaper than the europeans could, because the japanese “toyota production system/just in time manufacturing” was so efficient. American planners realized, if the link to gold was severed, but america could still guarantee financial and political stability through its military power and its control of the imf, world bank, and gatt, then countries would begin to see treasury bills as the new gold, meaning that balance of payments deficits wouldn’t matter because that money would go right back into america. The costs of the vietnam war would instantly be transferred across the atlantic. America could run balance of payments deficits forever, giving the world its secure asset to use in international trade, and taking as payment the production capacity of other nations, which would have to develop in such a fashion that they produced things that sold for american dollars. American manufacturing wouldn’t be needed, because it wouldn’t compete with the low prices of foreign industry, but the resulting loss in wages for workers could be alleviated by those low prices. Only manufacturing on the cutting edge, that was necessary for national security, like the most cutting edge of computer products or the very best tempered steel possible, would be kept, with new techniques being used to replace workers in a vast orgy of investment that lasted till the mid 1980s. Instead, new workers would either be funnelled to financial services, where american banks would shape the world economic order, becoming a sort of global gosplan, or to services for these financial workers, or to agriculture, which would still be needed to maintain other nation’s food dependence on america. Banks would be unrestricted from all constraints and encouraged to lend to third world nations, and the bills of any failures would be kept by the government. The state would also expand vastly to meet these needs, as well as the imf-world bank-gatt global bureaucracy. At the same time, the third world was battered by american imperial power to force nations to accede to the principle that expropriation of foreign investments were never okay. Oil producers would be angry, but america could not only satiate them with a rise in the price of oil, but even use it to discipline europe back into line, as that region received most of its oil from the OPEC nations. In turn, these countries would have nothing to do with their new dollar holdings, known as “petrodollars”, other than to recycle it into the american system in some way, rebalancing america’s current account. If they try to sell the dollars, after all, then a glut on the global markets reduces the price of us dollars, making us manufactures less costly compared to those of the country selling the dollars and ultimately hurting their industries. Some of the petrodollars would go into treasury holdings, but much of it would go into america’s banks, helping to allay the risk those banks took in investing back into the third world. This is what’s called super-imperialism. Price deflation through outsourcing of manufacturing combined with an abundance of credit from third world manufacturers having nothing to spend dollars on except putting them back in american banks helps inoculate first world workers against social revolution even as they get poorer and poorer. Third world nations can’t get off the american development track. Chances are they already import loads of their food from america, and to produce their own food, they’d probably have to undertake a battle against their well-moneyed domestic landowning class for land redistribution. They’d also lose access to international markets if they defaulted on world bank loans, meaning they couldn’t import or export most goods. Meanwhile, if america wants something, it simply has to print more dollars. It has what’s known as the “exorbitant privilege”, because all trade is carried out in its currency. Of course, that means it also has to stoke demand without fucking up its system of property relations, but it does that through easy credit. In turn, that means the state has to have a regulatory system that’s simply out of reach for virtually any other state, which means even if a state doesn’t like being within the system, it still can’t get out because it doesn’t have such capacity developed yet. And third world states do get something out of it. Any threats to their security are neutralized by america’s vast military power, projected the world over. They also get to pass harsh domestic reforms and then blame them on the imf, making them somewhat more palatable than previous, although this can have serious consequences (indonesia 1998 as one example). It’s a system where each aspect has a carrot and a whip that drives adherence to global capitalism, all managed under america’s impressive aegis.

for more information, read michael hudson’s “Super-imperialism” and sam gindin and leo panitch’s “The Making of Global Capitalism”, both of which i repeatedly referenced while writing this because even i can’t memorize this shit in enough depth. hudson’s book in particular, which was written and published in 1972 and then partially rewritten in 2002, was one of the studies that america actually based its switch off the gold standard on. he had just finished his phd and got an $80,000 grant from the treasury in 1968, equivalent to about half a million today, to study moving off the gold standard and the potential balance of payments trends. he turned that into the book.

edit: and the key fucking point of me putting that whole stuff at the start in, is that america manages to be a debtor nation, and yet to have all of its creditors never able to influence its actions, in stark contrast to previous eras where it’s been creditors controlling debtors, and that’s the really fucked up thing about super-imperialism. but now i forgot to put that in the body. that’s what i get for coming back to this post over and over again for 4 days. i don’t even remember what i’ve written.

caythis  asked:

Just wondering why you think the EU is so important to peace in Europe?

I think economic and political interdependence are crucial to removing the incentives for states to go to war with one another. It’s insanity for the US to go to war with Canada today for this reason. And that’s what the European Union- for all its flaws, for all the bits I think it needs reform- does. Tying your fates together by intertwining your economies- and in other more subtle ways, the experiences people gather when they are able to move freely between EU countries thanks to EU Free Movement- I personally feel it helps build a sort of cultural awareness and tolerance that erodes nationalist tensions and rivalries. Not that there isn’t still infighting or disagreement, but it’s being done with pens instead of bullets. It’s done a great deal to cool down the Franco-German rivalry (that otherwise threatens European peace) and morphed it into a relationship of cooperation. And I think a high level of integration is necessary because Europe has otherwise been pretty conflict-ridden throughout history. 

The EU, in its very first incarnation, was the European Coal and Steel Community- and it was founded expressly to “make war not only unthinkable but materially impossible”. The ECSC would take the control of coal and steel industries- so crucial to armament and warfare- away from individual European governments and at the same time serve as an apparatus for increased cooperation and stronger ties between ECSC members. This is also a thinking US policymakers applied to the global economy is a whole after WW2- that it was worth using US gold reserves to finance the Bretton-Woods fixed exchange rate system to create a stable regime for trade. The logic being that it would not only aid economic recovery after the war and create new markets for American goods, but also foster economic interdependence that would make war much less attractive (at least between those capitalist economies that were part of that order). 

It’s possible I suppose, to have that without the EU, but I feel it’s much weaker. Especially when I contrast post-war East & SEAsia to Europe. A lot of nationalist rivalries there imo still have potential to cause open conflict in the future.