The origins of the WTO Epitomize Un-Sustainable Business
Once again, after injecting political-economy into a movie that sought to bury matters political and economic out of sight, much to this humble correspondent's chagrin, not to mention to the detriment of more than a fluffy-feel-good film, THC is taking readers down another historical rabbit hole. Just recently, anyone who wanted had a bit of a media journey and an introduction to the World Trade Organization(WTO) in contemporary life.
This is the first of three installments, which will clarify and amplify citizen understanding about this redoubtable bastion of business, which those who favor call a paragon of efficiency and sustainability and those who deplore it call a nefarious enterprise of insidious corruption and inherent oppression. THC has a clear proclivity to lean toward the second characterization, but as ever a fair-minded fellow, he suggests that we look at the institutional, political economic, and social economic origins in order to establish the defensibility, or not, of such a case.
Inevitably, doing this entails, again, grappling with matters of political economics generally. Although this humble correspondent is quite capable of thinking about such matters too elliptically, more theoretically, today he intends to inject some historical, grounded expression of such matters, specifically in relation to the early growth of capitalism.
Henry Magdoff is a grand vizier of Marxist historical analysis. We can listen to him, as he propounds--dispositively so, perhaps--about how the growth of what so many dearly adore and so many others horrifically hate came to produce what we now know as the standard operation procedure of things. This interview, from the definitely pinkish Monthly Review, is worth reading in its entirety.
"(C)apitalism was born in a world economy. However, we need to distinguish between merchant capitalism and industrial capitalism. With the development by the fifteenth century of three-masted, heavily armed sailing ships, capable of carrying substantial crews and cargoes over transoceanic distances, both international commerce and naval warfare were propelled forward. The new European ships spread out to the seven seas in search of profits and plunder. In this way the age of discovery, which was also an age of conquest, began in the fifteenth century and marked the rise of merchant capitalism on a world-economic basis. The wealth of western Europe grew by leaps and bounds: gold and silver were taken from South America to feed the banks, and slaves were acquired to produce the consumer goods and raw materials for the workshops of western Europe. World trade was spurred by acquiring new colonies, expanding old ones, the spread of slavery, and outright robbery. These were the outstanding features of the world markets that evolved in the more than two centuries preceding industrial capitalism. A key feature of this merchant stage of capitalism is that it provided not only the markets but also the wealth that fed the industrial revolution that began in the mid-1700s."
There, careful reader, one can view dialectical development, historical analysis, and a close interrelating of multiple phenomena all at once. Magdoff goes on to note the ever present productive tension in capitalist development of stagnation, of glutted markets and motionless commodities. The results are noteworthy.
"(A)lthough not the only issue, the tendency of stagnation is a major factor leading to imperialism. As I said before, capital investment is the dynamo of growth in a capitalist economy. Since the need for new investment reaches limits, the further pace of capitalist growth depends on new products, new inventions, and large populations for one to conquer."
Thus, over time, finance assumes a larger and larger role in the intermediation of business under the political purview of the bourgeoisie. Moreover, following both internal economic and multiple class and power dialectics in addition, empire comes to predominate in the financial establishment's methodologies for achieving investment and production ways and means.
Speaking directly to this point, Lenin could famously articulate that "imperialism is the highest stage of capitalism," just as a conflict that surpassed even the wildest dreams of mass murdering fiends ripped apart empires and brought his own, quite communistic, party closer to power. One needn't subscribe to Lenin's assessments about political value in order to see the incisiveness of his reasoning.
To all of this background, this humble correspondent would also add the critical role of the state. In various of these essays, dear readers have seen that from the Civil War through the growth of the TVA and the New Deal, and on through time to this very 'Veteran's Day,' governmental instantiation has played an ever more critical socioeconomic role. In a sense, this ultimate intermingling of the social, economic, and political is a key underpinning factor of all such efforts as this--hence its brief statement here.
A Harvard Business School professor states this updated version of Vladimir Illyich as follows. "(F)or a capitalist system to evolve in an effective developmental sense through time, it must have two hands, not one: an invisible hand that is implicit in the pricing mechanism, and a visible hand that is explicitly managed by government through a legislature and a bureaucracy. Inevitably the actions of the visible hand imply a strategy, no matter how implicit, shortsighted, or incoherent that strategy may be."
Such dynamics and interactions, most readers will recollect, yielded disasters not just of the fiscal variety, which elicited 'duck-hunts' for Reserve Banking Bills, but also social and political cataclysms that consigned tens of millions of cousins to brutal graves in cold European mud and other unpleasant places to draw a few agonal gasps before exiting. Thus, this 11/11/10 posting recalls an eleventh hour armistice on the eleventh day of the eleventh month 92 years ago.
More to the point of this article, these interactive percolations of money and class and struggle also bring the narrative to the juncture when far-sighted thinkers who wanted their class perquisites to survive without such mayhem and carnage began to ponder a system. Such a system would manage finance and empire and avoid the messy brutality which, in this case, had yielded the Union of Soviet Socialist Republics, about which Churchill quipped as a consortium of former friends and foe from the 'Great War' invaded Russian and sought to decimate the 'Reds,' "we must throttle the Bolshevik infant in its cradle." Money was a part of this process.
If nothing else, a crisis in liquidity--centering around buying and selling sprees involving gold, and attendant national decisions to hoard the metal--in July, 1914, was a final straw on a heavily laden world financial beast. While a Marxist analysis inevitably notes such correspondences between fiscal and social conflagration, more and more establishment thinkers acknowledge these interrelationships as well.
Niall Ferguson, who teaches economics at Harvard, explicitly rejects Marxism, even as much of his thinking and analysis parallels a died-in-the-wool Leninist. He and his counterpart do diverge, of course, when the matter of meaning and direction come up, but the background of agreement is noteworthy.
Recently, Dr. Ferguson wrote that just as unexpected incapacity of currency to move commodities--freight and other trade indexes plummeted--sent armies wheeling into action, so too today, forces of illiquidity and reactions to it might sink current trends toward open markets and 'free-enterprise' that are well-loved among those who follow the economics trade.
"Then, between 1914 and 1918, a horrendous war stopped all of this, sinking globalization. Nearly 13 million tons of shipping were sent to the bottom of the ocean by German submarine attacks. International trade, investment, and migration all collapsed. Moreover, the attempt to resuscitate the world economy after the war's end failed. The global economy effectively disintegrated with the onset of the Great Depression and, after that, with an even bigger world war."
Similarly, William Silber, at NYU's Stern School of Business, explicates the background and responses to the war's four-month closing of the New York Stock Exchange. "What happened" is the point of Professor Silber's work, not why, but the relationships among trade and empire and war are nonetheless as starkly apparent, unstated, as they are in the explicit digest that Dr. Ferguson provides from across the Charles River in Cambridge.
Annalists make much of the supposed 'pro-German' sentiment among many workers and on the part of media owners. Often, such screeds are nothing more than anti-semitic ferocity, though facts are facts, if evidence is available.
More nuanced tellings suggest that propaganda efforts among both Germany and its allies and among England and its allies utilized sophisticated techniques to influence U.S. policy. The increasing potency of methods in such efforts meant that citizens might be in thrall to either side.
Though politically anglophilic, events and interests moved Woodrow Wilson both ways at the outset of WWI. After all, he had run on the duplicitous platform that "He kept us out of war," even though he had the specific intention of involving the U.S. on England's side.
For the most part, in any event, given the real financial and commercial relations among the most elevated representatives of business and money, no doubt ever existed that the U.S. would both aid Britain and France, and benefit from providing that assistance. The Nye Committee Hearings, which became equivalent with the phrase "merchants of death," clearly demonstrated the ties among empire and industry and war-making that impelled Wilson's choices, both prior to and after U.S. entry into the war.
Antoine Capet's collection, The Special Relationship, begins with a chapter about when things were "not so special," although the author primarily shows the close alignment of interests and opportunity right up to the financing of WWI, from which the U.S. emerged as the world's banker, to "a period of transition" between the wars before the U.S. consciously sat atop the world's high throne of capital.
Given that the multiple sources of this massive mutual annihilation all had close connections to matters such as the class and imperial divisions within Europe, and furthermore that these ties inherently connected finance and armaments with the proclivity to war, a student of this situation basically has no choice but to acknowledge the fiscal-political roots of the social mayhem of this particular form of mass murder.
Recent tussles among erstwhile 'liberals' and the followers of Glenn Beck, in which Beck shows much greater insight and intellectual openness than his critics, is instructive in this regard. Beck is talking about the causes of war with Japan and basically insists on putting front-and-center the U.S.'s isolation of Japan and cut-off of oil. His naysayers thereby impugn his patriotism: thus, love-of-country equates to willful ignorance and lies.
Of course, as both Lenin and Harvard professors testify, among others, no 'patriotic' view about the mechanized four-year annihilation that swept over Europe beginning in 1914 is tenable. But the war did end, and folks were certainly in a reflective mood.
As a result of all the death and destruction, and the actually revolutionary upheavals that were sweeping Europe at the time--from Moscow to Berlin, basically, a lot of powerful citizens began to think about figuring out how to preclude the rebellion that seemed ready to upend the rule of capital. In this context, of course, Woodrow Wilson delivered his ideas about "Fourteen Points" that would promise peace.
These testaments to both idealism and the long standing 'open-door' attitude of United States manufacturing interests toward trade, is an essential document to read and put into perspective. The insults of empire and the attacks on capital emanating from the Soviets 'leak through' again and again. Wilson closes with a call for a League of Nations, which represents a direct lineal descendant of what THC and his readers will soon be probing.
John Maynard Keynes(JMK) stated, in his still monumentally intelligent, The Economic Consequences of the Peace, the following summation of the 'realpolitick' behind the League of Nations(LoN), from the point of view of a Clemenceau or other imperial leader. Those who would gain a measure of savvy about international institutions today would do very well to listed to and study Master Keynes carefully.
"Prudence required some lip service to the 'ideals' of foolish Americans and hypocritical Englishmen; but it would be stupid to believe that there is much room in the world, as it really is, for affairs such as the LoN, or any sense in the principle of self-determination except as an ingenious formula for rearranging the balance of power in one's own interest."
In leading up to this clear expression of power politics on parade, Keynes is adamant. The imperial contradictions and economic crises characteristic of Europe half a decade before had been paramount causative factors in the utter evisceration of an entire generation of young workers.
Nikolai Bukarin, meanwhile, he of the anarcho-syndicalist and Bolshevik leanings, he who so powerfully contributed to and influenced The Call, states Keynes' case more graphically. Some readers might shift in discomfiture to read even more 'Red' propaganda, but this humble correspondent promises, 'It will do ya good, kiddo.' Comrade B. was breaking down the political-economic and structural dynamics underpinning the war.
"There were two coalitions. ... (which), by their organisation, âunity of command,â general economic conferences, political plans in common... may be likened to syndicates. One of the two coalitions was conquered in the struggle for supremacy. This has transformed international rivalry. New conflicts are approaching: England-America, Japan-America; France-Italy, etc. What will be the next grouping of the Powers? Compromises between opponents are generally concluded when there is relative equilibrium between their forces. When one combatant party has the upper hand there is no reason whatever to compromise, for it can take by force without granting any share to its adversaries. From such a point of view, it must seem that there can be no compromises. The colossal superiority of the United States, which is strengthened no less economically and financially than militarily does not admit of doubt. Nevertheless... .(i)t is clear that the favourable position of America will immediately create a bloc of all the Powers, including Japan, against America. ...it is just with Japan that its relations are most strained. Besides, the growth of war industry in America, which was the purveyor of arms to the whole world, has threatened the economic life of the United States."
This is the setting in which "14 Points" and LoN talk come to the fore. Folks in command want to continue in command. Bukharin continues, noting the propagandistic elements of the effort at hand.
"In the moment of an uprising of the mass, the like of which has never been seen before, it is impossible for Capitalism to restrain them with bayonets alone. It must also deceive them systematically, otherwise the domination of capitalism is broken. Therefore the creators of the League of Nations, from the very beginning, took care to prepare an agreeable sauce for their stew. The very name of League of Nations is a deceit. And the same fraud turns up in the other resounding names given to the League: 'Alliance of the Peoples,' 'League of Peace,' 'Universal League,'etc."
To see the potential veracity in such charges, the student may turn again to the outpouring of words from that master debater among America's President's, Sir Woodrow. In the book, The New Freedom, compiled by an aide from speeches and other sources in which Wilson presented his ideas persuasively, the President repeatedly indulges in social dissimulation, in the form of fantasy and an appeal to 'values' that have never been commonly shared.
"Why is it that we have a labor question at all? It is for the simple and very sufficient reason that the laboring man and the employer are not intimate associates now as they used to be in time past. Most of our laws were formed in the age when employer and employees knew each other, knew each other's characters, were associates with each other, dealt with each other as man with man." The nonsensical nature of such thinking, given such generations-past eventualities as the Draft Riots in NYC, the butchering of the Molly McGuires in the coal fields and elsewhere, the entire unheralded but clearly extant amping of class-conflict from the Civil War on, belies this sweetly disingenuous foolishness.
This humble correspondent goes into a mere smattering of detail here, yet for many readers it will still be too much, far too much. THC can only say that, short of assigning one's rights to some consortium of plutocrats or demagogues, coming to some sort of terms with such historical cases is the only way to have a semblance of sayso, let alone a stake, in such matters as trade policy, monetary affairs, and so on.
In any event, having laid the basis for asserting persuasively that the institutionalization of a scheme for capital to mange its conflicts was the primary basis for LoN's development, one cannot help but recognize analogous interconnections in such matters as the inauguration of the World Bank and its more recent spawning of the WTO. Before moving on to that period, however, three much briefer diversions are still essential, at least to mention briefly.
First comes what Bukharin and all stout-hearted Reds had, over and over and over, already said. 'This entire mess revolves around a popular desire, albeit inchoate and intermittent, for a measure of greater fairness, equity, and justice than has been the fate of working people under capitalism.' Much more than passionate words attest to this, and these attestations show clear connections to the formal arrangements of commercial interests in forms like LoN, etc.
The proof of such cases as these is ubiquitous, however, one might begin with the estimable Howard Zinn's Peoples History of the United States. There and elsewhere, one may view such brutal surges of civil unrest, revolving around class, as the following: the invasion of the nascent Soviet Union by a coalition of all the major antagonists from WWI; the cretinous and murderous Palmer Raids against 'radicals' and 'anarchists' and so forth; the attacks on the developing strength of the coal miners; and, folks may believe, THC could continue.
Another source for this interwar interregnum's evolution appears in all manner of Marxist and 'liberal' economic writing. The classic exemplification of such critique that dystopic and dysfunctional political-economic approaches are certain to wreck the ship of state and any hope of social succor once again taps J.M. Keynes.
Keynes' General Theory voluminously demonstrates the unavoidable contradictions of classical economics' Gold Standard nostrums, predicting their actual back-pedalling to protectionism and doom. He also lays out the case for deficit spending, which is now a national religion, which involves a very important and detailed understanding of money that will not be part of the discussion here, except to say that the general labor content of a money unit, times its capacity for circulation, forms the basis for an expansion of money through credit. For the most part, it works too.
Finally, as the devolution of money and society seemed to go spiraling beyond the control of capital's systems to control it, new political forms--particularly those that counterbalanced the increasingly active and appealing communists--began to have extensive cachet. Thus, Henry Ford and the King of England, and capital quite generally, as Smedley Butler warned contributed massive sums--by 1930's standards--to fascist impresarios such as Adolf Hitler, whose Mein Kampf is largely a reformulation of Ford's tome on 'international Jews.'
Furthermore, finance, having entered the first global conflagration unwittingly and chaotically, much more astutely and cold-bloodedly calculated the coming of conflict in the late 1930's. A general 'hedging of bets' went hand-in-glove with the most amazingly bizarre sorts of confabulations(some business 'royalty' shacking up with Hitler, while Armand Hammer was beating a path to 'Uncle Joe's' door, much to the mortification of GOP stalwarts everywhere.
A historian of investing summarizes one aspect of this greater consciousness. "Investors learned from the searing experiences of 1914-23, which saw a wide range of European currencies and securities drastically reduced in value as a result of inflation and outright default. They therefore sought to adjust their portfolios defensively as soon as they saw a renewed risk of world war. Indeed, to judge by securities price data, the City of London (like other markets, notably those in Scandinavia) began positioning itself for another major conflict some years before it actually began. If 1914 was a bolt from the blue, 1939 seemed long overdue."
Indeed, the political- economic and managerial components of war-making and peace policies repeatedly confront class-contradictions and systemic breakdowns among the bourgeoisie. But lessons-learned did not stop at investment strategies. As the inevitable leap in butchery drew nigh, many folks, from FDR and his advisers to plutocrats and bankers round the globe, came to the conclusion that new methodologies would have to come out of this mayhem, or capitalism--if not the human race itself, would surely come to pieces.
IMF & GATT: MAKING IMPERIAL WORLD BANK POLICY WITH CAPITAL'S ALPHABET SOUP
Catch 22 is a clever Keynsian, radical, Marxist, deconstructive characterization of WWII. Whether one likes confronting the conclusions that Heller makes so palpable, their tangible plausibility--Milo Minderbinder's insistence that making the world safe for money agreements was the only possible good result of the carnage--in light of the ongoing interlinks among finance and industry even as national combatants slaughtered each other, is simply irresistible.
More sinister summations of such perspectives are widely available. They are also indisputably accurate. Richard Higham has an impeccable pedigree with which to prognosticate on such matters, inasmuch as his papa was both one of the richest Englishmen in history and a practitioner of the darkest and shiniest arts of propaganda as the principal in one the world's largest advertising and public-relations conglomerates.
His book, Trading With the Enemy, has such vast sweep and pointed detail as to provide the fodder for thousands of conspiratorial films, books, fantasies, etc. Along with Michael Ruppert, however, Higham trades in conspiracy fact, not theory.
His bill-of-particulars against the corporate and fiscal establishment is wide ranging. For purposes of this article's focus on the post-war economic plan, he shows, especially in "A Bank for All Seasons," the first chapter's detailing of the connection between the Bank for International Settlements(BIS) and subsequent financial parameters, that during WWII, Chase Bank, First National City Bank, Dow Chemical, and all manner of governmental and legal experts maintained ongoing relationships with the Swiss BIS--the WWI 'reparations' monster that Keynes so dearly wanted to dismantle--at the same time that BIS was a primary clearinghouse for routine German administration, as well as a repository for looted gold held by Nazi generals and other entities.
In the mid-40's various trials for treason or lesser offenses indicted employees of multiple U.S. banks and other corporations. A few guilty pleas, a few convictions, and many acquittals were the result of such criminal processes. But the court record completely corroborates Higham's and others' more comprehensive demonstration of Milo-Minderbinder-style networks among erstwhile combatants.
Moreover, to this day, a substantial amount of incriminating and explanatory data continues under the protective rubric of 'top-secret' classificatory schemes at the FBI, CIA, and elsewhere. Why, after half a century or more, such a 'consecration' of material should seem apropos is open to interpretation. But common sense, and Occam's position that the simplest explanation that accounts for the facts is most likely correct, suggest that America's and Europe's financial moguls conjoined with representatives of Germany and Japan in arraying matters after the conflict to their mutual accord.
These synopses of such evidence can be hard to swallow. When this humble correspondent presented some of this data in his essay about Smedley Butler, he averred that it was 'the tip of a deep-diving iceberg.' At some point, however, the ties and procedures and agreements and commerce among the imperial powers that were nominally at war, all the while Soviet Russia underwent the worst military battering in the history of human existence, must come into view as the basis for a credible, systematic understanding of the underlying, and overarching, conceptualization of standard business practices.
Without a doubt, therefore, as combatant armies put to death as many as 100,000 soldiers and civilians from 'the other side' each day of military operations, all of the allied forces were joining together to observe and give imprimatur to fiscal and monetary arrangements that incorporated pre-war and intra-war activities and inputs from 'enemies' along with the forty-four nations of the 'allied cause.' Though this manifestation of money's sway did not directly invoke Germans and Japanese signatories, its development did emanate from pre-war critiques from the ruling elites of both nations, even as pow-wows among all parties were part and parcel of wartime actions.
The reader, in this regard, can note and file the subtitle of Higham's book, mentioned above: "An Expose of the Nazi-American Money Plot, 1933-1949." As the butchery's certain end--the military defeat of Germany and Japan--drew nigh, all manner of strategists of empire began to formulate principles and procedures, always congruent with and sometimes flowing directly from 'tainted' sources, for monitoring and otherwise riding herd on multinational money-issues in war's aftermath. Prominent among these were establishing protocols for the International Monetary Fund(IMF) and the World Bank(WB)
Even before the the months and months and months of work in the shadow of Mt. Washington, and in the shadowy halls of Washington and London, the Americans and the British had been discussing the terms of the postwar order. Much of the framework for operationalizing matters occurred even prior to U.S. direct entry into the conflict.
"The Atlantic Charter, drafted during President Roosevelt's August 1941 meeting with British Prime Minister Winston Churchill on a ship in the North Atlantic was the most notable precursor to the Bretton Woods Conference. Like Woodrow Wilson before him, whose 'Fourteen Points' had outlined U.S. aims in the aftermath of the First World War, Roosevelt set forth a range of ambitious goals for the postwar world even before the U.S. had entered the Second World War. The Atlantic Charter affirmed the right of all nations to equal access to trade and raw materials. Moreover, the charter called for freedom of the seas (a principal U.S. foreign policy aim since France and Britain had first threatened U.S. shipping in the 1790s), the disarmament of aggressors, and the 'establishment of a wider and permanent system of general security.'"
Here then, not only can discerning observers see both the United Nations in utero and the concomitant monetary arrangements that the war yielded, but they can also detect, at least in broad strokes, the entire economic interrelationship that has characterized the sixty-five years since 1945. One needn't create a Milo Minderbinder to recognize that ministrations and planning of tremendous savvy and strategic scope were in play.
"Throughout the war, the United States envisaged a postwar economic order in which the U.S. could penetrate markets that had been previously closed to other currency trading blocs, as well as to open up opportunities for foreign investments for U.S. corporations by removing restrictions on the international flow of capital."
For nearly two years, much of the ongoing energy of this work centered on the little resort in New Hampshire's White Mountains. Part of the purpose of such get-togethers was to muse about the 'division of the spoils,' as Keynes named the process at Versailles a quarter century before. As well, and more crucially, the meetings outlined the parameters of what structures and processes might manage capital's conflicts more beneficently than fire-bombing and mass-immolation were doing while negotiators gathered.
Principals assembled together for a final signing ceremony in the Summer of 1944, where the U.S. plan propounded by H.D. White won out over the more 'Keynsian' proposals advanced by the master Keynsian himself.
Keynes, though suffering from the final stages of congestive heart disease, was among those attending the conference throughout, as the leader of the British delegation. Even as he was 'not long for this world,' acceding to his White-Russian wife's advice not to insist on his opposition to gold, Keynes vision again seems prescient, inasmuch as the world has operated, according to standards such as he advanced, since the original BW accords fell apart in the early 1970's.
FDR, though not present for most of the work personally, arguably encouraged an inclusion of his "Economic Bill of Rights" into the negotiations; perhaps his ruling class bona fides, given all he had seen, no longer allowed him to strut the necessary pirate's edge that more 'pragmatic' rulers wanted writ large in New Hampshire, or perhaps some more obvious public-relations purpose accompanied this little-known but progressive expression of American social democratic possibility.
In any event, literally nothing from this innovative articulation of human economic justice made its way into the actual output of the efforts in New Hampshire. Contrary to what reactionary and arch-conservative critics of the BW process like to maintain, Harry Dexter White's U.S. position, a completely craven kowtowing to established financial interests, carried the day in contravention to the vision of Keynes, at least until such juncture as the Nixon-era removal of the Gold Standard as the underlying protocol of international trade, exchange-rates, etc., an assessment of which is forthcoming
Canada's July 7, 1944 Ottawa Citizen candidly dissects the purposes of and forces in play around the meeting in New Hampshire, mentioning the differing agendas of various stakeholders not in attendance as well as the hopes of Keynes and Canadian ministers to address the economic vacillations of gold and currency that had so tangibly contributed to earlier impulsion to conflict. Such sources ought to become habitual points of perusal for citizens who want to comprehend the current context.
This semi-official organ of Canada's elites warned pointedly about 'free-market' opposition to the new fiscal arrangements--which is again now 'all the rage,' simultaneously as radical and social democratic critics also take shots at the system--in stark terms, as the death toll from WWII passed the hundred million mark. In passing, the annalist may note that Keynes shuttled back and forth between Ottawa and New Hampshire for much of this period.
"Conflict at BW is dangerous because a breakdown in these discussions would presage a trade and exchange battle in the post-war years that would do much to nullify the efforts to establish an international political order. Fortunately, some, at least, of the United States representatives...are as concerned as are the British and Canadians that the prejudiced opposition within the U.S. would, if successful, damage the interests of their own country as well as start the nations again on the economic war path."
The view that Keynes' ideas predominated, given both how the specifics of the conference left marks on paper, and even more so how the interpretation of the accord garnered practical exposition, seems strange. Clearly he was a participant of extensive influence. But, equally obvious is that the entire record and institutionalization alike were at the behest and with the final say of the USA.
A New School for Social Research economist gives a balanced articulation to this point. "In 1943, Keynes forged his... a proposal for an international clearing union. In consultation with the Americans, Keynes eventually relented on his idea and accepted the American 'White Plan' for an international equalization "fund" held in the currencies of the participating nations. However, several essential aspects of Keynes's clearing union idea were incorporated. In 1944, Keynes led the British delegation to the international conference in Bretton Woods where the details of the system were hammered out. The American 'White Plan' was accepted, countries would retain fixed exchange rates against the dollar, while the dollar itself would be matched to gold. Two institutions, the International Monetary Fund (IMF) and the World Bank (IBRD), were created to oversee the new international monetary system."
Neil Cohen, a renowned California economist, sums up what transpired at Bretton Woods. "Finally, negotiators agreed that there was a need for an institutional forum for international cooperation on monetary matters. Currency troubles in the interwar years, it was felt, had been greatly exacerbated by the absence of any established procedure or machinery for inter-governmental consultation. In the postwar era, the Fund itself would provide such a forum - in fact, an achievement of truly historic proportions. Never before had international monetary cooperation been attempted on a permanent institutional basis. Even more pathbreaking was the decision to allocate voting rights among governments not on a one-state, one-vote basis but rather in proportion to quotas."
Not to be Pollyannish in this assessment, Cohen did note, "With one-third of all IMF quotas at the outset, the United States assured itself an effective veto over future decision-making." He proffers, for those who want, a detailed breakdown of how the system would supposedly work, although he termed "utterly Panglossian" the optimism of its proponents that its utilization would be smoothly automatic, and conflict-free. He does go on to capsulize the structure in an intelligible way.
"Together these four points defined the Bretton Woods system - a monetary regime joining an essentially unchanged gold exchange standard, supplemented only by a centralized pool of gold and national currencies, with an entirely new exchange rate system of adjustable pegs. At the center of the regime was to be the IMF, which was expected to perform three important functions: regulatory (administering the rules governing currency values and convertibility), financial (supplying supplementary liquidity), and consultative (providing a forum for cooperation among governments).
Structurally, the regime combined a respect for the traditional principle of national *sovereignty - especially, of course, that of the United States - with a new commitment to collective responsibility for management of monetary relations, expressed both in mutually agreed rules and in the powers of the Fund."
The World Bank, meanwhile, was to finance the reconstituting of a world destroyed, albeit many commentators confused IMF with WB functions "If you have difficulty distinguishing the World Bank from the International Monetary Fund, you are not alone. Most people have only the vaguest idea of what these institutions do, and very few people indeed could, if pressed on the point, say why and how they differ. Even John Maynard Keynes, a founding father of the two institutions and considered by many the most brilliant economist of the twentieth century, admitted at the inaugural meeting of the International Monetary Fund that he was confused by the names: he thought the Fund should be called a bank, and the Bank should be called a fund. Confusion has reigned ever since."
Ultimately, the division of responsibilities between the IMF and the WB today is much easier to delineate than once it was. Basically, the IMF provides the U.S. and--increasingly so, its capitalist cohorts of roughly equivalent stature, ways to manage money and finance among the principal trading nations.
The WB, meanwhile, is available as a 'last resort' of struggling polities, which must agree to bank-imposed 'discipline in order to receive assistance. It also inaugurates and accepts proposals for 'development,' albeit overwhelmingly these prospects remains of the sort that fit into the master plan of the Fortune 500 and the banks that remain ensconced at the helm of all such systemic expressions of transnational finance and industry.
In the aftermath of WWII, in any case, while IMF's role evolved quickly to be the guarantor of exchange and transnational monetary processes, at first, the WB, originally the International Bank for Reconstruction and Development, extended its financial largesse almost exclusively to England, France, and Belgium. This evolved as the Marshall Plan came into being in 1948, for all manner of policy and strategic reasons revolving around 'communist threats' and the 'containment' of Soviet expansion.
WB's focus for the next decade or so continued to focus on other parts of Europe and provided funds, through colonial center, for projects in the colonies that served the needs of the imperialists for raw materials and basic commodities. As one commentator noted, "the World Bank did not fund its first 'Third World' school until 1962."
WB money was also available in order to diffuse conflicts among former imperial powers in areas opened up to capital by the 'free-trade' schemes of the 'White Plan'. Moreover, such funds were often accessible when fear of 'communist incursions' were prevalent, particularly in the Middle East.
Conflicts clearly bounded the operation of IMF, just as Professor Cohen indicated many contemporaries of Keynes and White--close 'allies' who fought like cats--were predicting. Moreover, even as the work of IMF evolved out of equal parts theory and maximization of trade, earlier forms such as the BIS continued to influence both IMF and WB operations and approaches.
Trade agreements, meanwhile, as reflected in the commitment to a world free of 'restrictive tariffs,' which in practice meant any taxes that impeded financiers' hegemony, led early on to an attempt to form an International Trade Organization, in Havana in 1948. This so sundered opinion that for the next fifty years, in other words until the actual induction of the WTO itself, a General Agreement on Tariffs and Trade(GATT) held sway.
While more details about this will await the second of three parts here, that will cover the period from the mid 1950's to the founding of the WTO in 1994, forty six years following the ITO's failure to take hold, a general statement of historical context can assist the thinker in linking such matters as the LoN, BW, the IMF, the WB, and on and on and on, including the BIS's Nazi and 'free-world' collusion in the mix.
Patrick Hearden's Architects of Globalism: Building a New World Order during World War II, lays out the free-trade and "open-door" polices that Cordell Hull and others maintained assiduously for the benefit of U.S. industry and capital generally.
A more Marxist perspective on this phenomenon of 'free-trade' promulgation as a combination of opportunism and ideology, occurs in "The New Age of Imperialism," by John Bellamy foster.
A review essay of historical inputs such as William Appleman William's The Tragedy of American Diplomacy depicted the broad range and deep applicability of 'free trade' to U.S. policy and process.
This literature review maintains that an "odd assortment of people has nevertheless shared, however obliquely, the conviction that the Open Door policy is the keystone of twentieth-century American diplomacy. Elected policymakers, for example, as well as the bureaucrats they ushered into positions of influence, have used it as the intellectual vantage point from which to view and deal with the world."
Readers, at least those with the stubbornness to stick with this humble correspondent in his perambulations, now have a credibly coherent basis for comprehending the World Bank, the International Monetary Fund, the General Agreement on Tariffs and Trade, and how they grew out of the Bretton Woods process that was itself the culmination of decades of wrangling over how the ruling financial establishment was going to manage the earth's affairs. This understanding remains applicable until the end of the 1950's, which is where the next installment picks up, with a final section to look at the World Trade Organization itself, and its purview into the present moment.
Complicated and intricately interwoven skeins of dialectical conflict and development underlie what transpires on the social, political, and economic surfaces of the world. While this humble correspondent would never seek to imply that his views and assessments provide comprehensive knowledge or 'the truth, the whole truth, and nothing but the truth,' he persists in suggesting that both the ways that he organizes the approach to understanding, and the specific facts and relationships that he unveils, are useful--perhaps even essential--to anything akin to even the most basic recognition of how the workings of past worlds have yielded our collective present.
Several points seem apt in considering this complex and yet still maddeningly partial presentation of today's events. First is that an observer simply must look for the class conflicts that occur behind and beneath the main stages, on which a Lord Churchill contends with the bank-robbing 'man-of-steel' from an Eastern European version of Georgia.
J.M. Keynes was merely in the middle, ideologically and practically, of those who recognize this critically important piece of any intelligible attempt at intelligence regarding economic policy and and behavior. In an essay addressing an earlier version of stagnating employment opportunities,' for example, he said, "The true socialism of the future will emerge, I think, from an endless variety of experiments directed to discovering the respective appropriate spheres of the individual and of the social, and the terms of fruitful alliance between these sister instincts."
Unfortunately, despite all manner of brilliant insistence on this point, politicians all too frequently, and technical experts almost universally, ignore or overlook this point. In yet another incisive piece of writing acknowledging his 'liberalism, Keynes pointed out the consequences of such avoidance, decidedly antithetical to 'business better.' "The transition from economic anarchy to a rÃ©gime which deliberately aims at controlling and directing economic forces in the interest of social justice and social stability, will present enormous difficulties both technical and political. I suggest, nevertheless, that the true destiny of New Liberalism is to seek their solution."
Second is that an awareness of political economy simply must inform any attempt to suggest what policies, protocols, problems, or prospects are important or necessary. THC has repeatedly made this point. Perhaps a plea from Harvard might emphasize this contention in a firm enough fashion.
"When the history of the current financial crisis comes to be written, the battle of the index entries will surely be won by central bankers not politicians. The name Bernanke will appear on many more pages than Bush, King more often than Brown, and Trichet will trump even Sarkozy. Most of the time, central banks strive to be dull places; the people who run them relish their obscurity. But when crisis strikes, the limelight shines."
If this is not stringent enough, then the potency of Mr. Higham's 'I-was-there' incision ought to sway even the most blindly anti-idelogical ideologist. He shows that, when one has access to data, that every seeming technocratic economic output results from complex measures of class interest, financial greed, and political pirateering. He is speaking of Hjalmar Schact, whose supposed centrism made him ideal as Germany's central banker, at least until he threw himself wholeheartedly behind the little mustachioed Austrian corporal with a bug up his behind about Jewish folks.
"Sensing Adolf Hitler's lust for war and conquest, Schacht, even before Hitler rose to power in the Reichstag, pushed for an institution that would retain channels of communication and collusion between the world's financial leaders even in the event of an international conflict. It was written into the Bank's charter, concurred in by the respective governments, that the BIS should be immune from seizure, closure, or censure, whether or not its owners were at war. These owners included the Morgan-affiliated First National Bank of New York (among whose directors were Harold S. Vanderbilt and Wendell Willkie), the Bank of England, the Reichsbank, the Bank of Italy, the Bank of France, and other central banks."
Third is that hidden agendas, concerning empire and profit and market-predominance at the very least, simply must be something that those who would understand these matters seek to bring to light. Every single honest accounting of such matters as these importunes that onlookers cut through camouflage to find such always-extant concrete expressions of bias and greed and 'lust' for power.
Even so stalwart a sycophant for capital as Liaquat Ahamed, the broker who penned Lords of Finance: 1929, the Great Depression, and the Bankers Who Broke The World, intersperses every section of his addictively readable tome with the guidelines that hid away behind the surface pronouncements, often referencing the sacred anonymity of such weird monied men as Montagu Norman, head of the Bank of England, to further exemplify the hidden agenda.
Even so viscerally bourgeois a publication as the London Times, in its adulatory review of Ahamed's volume, cannot stay away from the behind-the-scenes plotting that rules the surface. Such is so much the case that denial is an awful sort of folly.
Fourth is that the past continues in the present: as Faulkner stated this idea, "It's not even past." This humble correspondent's grandparents suffered through WWI; his children may attempt to avoid the debilitation, or have no choice but to embrace the opportunity, of WWIII(or perhaps it's World War Five) by this juncture.
The social aspects of this delving of the annals of history is precisely that citizens can, through the capacity of noticing the development of past into present, gain ammunition for acting in a self-interested, a class-interested, and a human-supportive sort of way. As Howard Zinn persisted in pointing out, "History is a weapon."
Much more might be useful to consider in a fuller explication of such a tale as this, in which the flowing blood of human production follows pathways conceived and elaborated in advance, even as extemporaneous and even spontaneous development seems always to be present. However, for the purposes of the here and now, these finishing flourishes will have to do.
Many are the litanies of imperial pretension(INTERLINK, SB) that THC has developed(INTERLINK, Coal), both that have examined a very particular case(INTERLINK, Sioux) and those that have sought to view the field of contest with a wider lens, as is the case in this article.
Clearly, today's story pertains to a much broader conceptualization of the congruence of finance and empire, for example, than what was apparent in a dissection of the development of Depleted Uranium(DU#1). Given this breadth of perspective, even the most cursory application of the evidence and analysis that are here present to peruse might bring various tangible recent developments into clearer perspective.
Iran's potential for acquiring nuclear weapons, for instance, becomes at least plausibly an abrogation of the financial establishment's control of the most capital intensive technologies of the modern era, whether the purpose of those technologies is electricity or explosive force. This is not to state such a notion as factual, nor even, yet, to advance it as hypothesis, but merely to aver that some connections with the financial world herein developed is explicable in this conflict, in the land that British Petroleum, the CIA, and the World Bank helped to secure for the Butcher of Tehran, Shah Reza Pahlevi.
Similarly, the ongoing imbroglio over Israel and Palestine must reveal such treasures, if students will only look for them. Jimmy Carter's with the Trilateral Commission is merely one potential portal to this type of relational thinking and assessment.
The multiple martial expressions of America's might in the world of late--in which the imperial domains of Southwest Asia suddenly become hideous threats to American people--which is bogus idiocy at best, instead of showing up as they really are, plums that financiers and industrialists and other plutocrats have for at least a century or two desired to pluck for their own purposes. And again, an understanding of the world's financial edifices inherently contributes to a richer comprehension of these matters, as Walter Ratterman ought to have recognized when he installed WB-backed solar panels in Afghanistan rather than minding his own garden near Seattle.
In these, and many other obvious manifestations of money, markets, and empire--which lurk behind the surface rationale for such conflicts and contrariety as surely as beams lie behind the lace-like facade of a 'delicate' skyscraper--citizens can hearken back to Wilson, Bukharin, and many other past interlocutors of the workings of the world . If the pupil gets nothing else from such investigations, he or she ought to gain a critical wariness against ploys to divide and conquer.
Berch Berberoglu is merely one of the more recent, and one of the most intelligent and impassioned chroniclers of this latter day expression of imperial venality. In his Turmoil in the Middle East, he interweaves class factors, the exigencies of empire, and the fiscal and resource impetuses at work behind a facade of free trade and free markets and free enterprise that, to this day, remain the superficial foundation on which Bretton Woods institutions continue to seek hegemony hither and yon.
"(S)ort(ing) out the class forces that underlie political conflicts that have led to civil strife... .this book seeks to map out the dynamics of social change and social transformation." Sustainable business and renewable energy are impossible without this sort of analytical practice. Professor Berberoglu then suggests what this humble correspondent is saying today, that the citizen must work to carry out such an examination "within the framework of a class analysis approach that takes into account the central role of imperialism and neo-colonial reaction as the twin pillars of the contemporary world political economy."
Franklin Delano Roosevelt summed up the underpinning social wisdom that necessitates and accurate comprehension of money and its multifarious methods of dominion. "We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. 'Necessitous men are not free men.' People who are hungry and out of a job are the stuff of which dictatorships are made."
As is his occasional wont, THC will close by way of referencing a favorite bit of verse.
"I met a traveller from an antique land,
Who said--'Two vast and trunkless legs of stone
Stand in the desart....Near them, on the sand,
Half sunk a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal, these words appear:
My name is Ozymandias, King of Kings,
Look on my Works, ye Mighty, and despair!
Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.'"