The 1944 Bretton Woods conference that established the regulatory institutions still governing the global economy was founded on still-remembered battles between the United States and United Kingdom over the principles and control of the International Monetary Fund and International Bank for Reconstruction and Development (forerunner to the World Bank). The victory of the United States on most key points of dispute both signaled and formalized the beginning of the American hegemonic project. Control of the world’s monetary system was the prize, and by 1956 the utility of monetary power was proven as the United States coerced reserve-poor Britain into abandoning its intervention in the Suez crisis by vetoing IMF disbursements of dollar liquidity. Monetary power’s importance remains clear today, as world leaders criticize American monetary policies and manipulation of the Bretton Woods institutions while simultaneously stockpiling dollar reserves in an attempt to self-insure against monetary instability. According to the view of these critics of the United States, the economic development of the world’s poorer countries was never a major consideration for U.S. policy.
Eric Helleiner’s chief ambition in this compelling volume is to question this narrative by demonstrating that development was a central issue before and during the Bretton Woods discussions. The “forgotten foundations” of the postwar economic system were a series of efforts, primarily involving the U.S. and Latin American governments, to institutionalize international economic relations following the 1930s depression. The financial arrangements agreed upon at the 1944 conference, at which a number of Southern governments participated, were intended to stabilize the world’s monetary system so that postwar development could occur. Moreover, as Helleiner shows, this development was never intended to be solely for the benefit of the advanced economies wounded by World War II, but also for independent states in Latin America and Asia (and imagined future states that would emerge from decolonization). These states were supportive of the development goals articulated in the Bretton Woods agreement, seeing them as a follow-on to U.S.-led efforts to construct regional analogues to the IMF and IBRD in the Western Hemisphere from the 1930s. Helleiner supports his claims with a sea of archival documents, many of which were unavailable to previous scholars conducting research in this area. Additionally, Helleiner’s grasp of the secondary literature is extensive; it is highly unlikely that he has neglected a source that would call his account into question.
Much of Helleiner’s account focuses on the relationship between the United States and Latin America during the 1930s and early 1940s. Roosevelt’s New Deal government saw economic well-being as a prerequisite for humans thriving alongside personal liberty and human security. They sought to internationalize these goals as a matter of national security and international cooperation. FDR’s “Good Neighbor” policy orientation was an early precursor to the multilateralism that would later characterize Bretton Woods. The proposed Inter-American Bank was one such effort, and provided a clear model for the IBRD. Other efforts focused on the creation of capable central banks in developing countries that could work with the U.S. Federal Reserve on monetary coordination, balance of payments management, and commodity price stabilization. Not all of these efforts were immediately successful, but they created a stable of technocrats in the United States and Latin America that had been working on these issues for years prior to the Bretton Woods meetings.
Of these, perhaps the most interesting—and least discussed until now—were Rául Prebisch and Robert Triffin. Triffin, a Belgian-American economist and representative of the U.S. government, consulted with Latin Americans on the creation of new monetary regimes in their countries. Prebisch, best known for his later work on dependency theory, admired these efforts, as well as Triffin personally. The feeling was mutual. The two agreed that developing economies needed to adopt economic policies according to their local needs, particularly in the case of capital account and exchange rate management. Triffin took this conviction with him to the IMF, which he joined as Director of Exchange Control Division in 1946. Thus, deviation from classical economic orthodoxy became embedded both in official U.S. policy and the Bretton Woods institutions from the beginning. Over time, the World Bank and IMF would develop a somewhat different reputation.
Other parts of the world were also interested in the internationalization and institutionalization of development. It has long been known that Friedrich List, drawing inspiration from Alexander Hamilton, was an inspiration for East Asian developmentalism. (List’s 1841 decline of the editorship of Rheinische Zeitung paved the way for Karl Marx to gain intellectual prominence as well as an interest in political economy.) Helleiner provides an additional history: that of Sun Yat-sen, a Kuomintang leader, first president of the (non-Peoples’) Republic of China, mentor to Chiang Kai-shek, and author of International Development of China. According to Helleiner, Sun argued in that book that China’s industrialization required foreign financial and technical intervention, and explicitly called for international institutions to provide these services. These suggestions were not taken up by the League of Nations, but they influenced the Chinese contingent at Bretton Woods. The Americans took this seriously, as Roosevelt believed that China—along with the United States, the United Kingdom, and the Soviet Union—was one of the four major powers that would manage the post-World War II system.
Helleiner suggests that most established research on Bretton Woods, including his own prior work, neglects this history of development because of what came after: the Cold War, decolonialization, the second wave of democratization, the New International Economic Order, and (eventually) a level of economic integration unseen since before the first World War. Depending on how one reads that history, the impact of the U.S.-led postwar order on the less-developed “South” was either relatively benign – at least compared to the winner-take-most imperial competitions of the previous centuries or the Soviet expansionism of the same era—or quite exploitative. In his final chapter Helleiner discusses how subsequent events neutered many developmental ambitions of the 1940s, just as they negatively impacted many of the founding goals of the United Nations. Nevertheless, Helleiner believes that this history of development is worth knowing, and I suspect the number of readers who would not learn quite a lot from this book is close to zero.
It is at this point that one curious aspect of Helleiner’s book must be noted: its disinterest in theorizing. Helleiner approaches his material more as an historian than as a political scientist. This was surely a conscious choice—an opportunity to present empirics without becoming weighted down by this or that theoretical debate. While admirable in some respects (and understandable in others), this ultimately leaves the inferential work to the reader. Much of Helleiner’s account is supportive of the arguments of institutionalists such as G. John Ikenberry and Anne-Marie Slaughter (née Burley) that the United States’ intention was to create a post-WWII system that was open, stable, legalized, multilateral, and non-imperial. Both are cited here. It also provides numerous examples of how epistemic communities, particularly technical experts working in bureaucracies, can powerfully impact outcomes when they are supported by significant material capabilities. Giving Rául Prebisch and Robert Triffin so much emphasis makes a recollection of dependency theory and other structuralisms unavoidable. There are smatterings of public choice and power politics throughout as well. Tying all of these threads together would not be a simple task, and so Helleiner avoids over-burdening his empirical work with an unwieldy theoretical apparatus that could be ill-suited for his purposes. Instead, he simply goes to the tape.
Much of what we learn from Helleiner resonates with more recent experiences, particularly concerning the relationship between core financial powers and peripheral developing economies. A revisiting of Triffin and Prebisch is long overdue. But an application of the lessons from Helleiner’s excellent history to the present day will require more theoretical work than he provides here.
