Book Review: The Bretton Woods Agreements

Source details

Reviewer: Lord Skidelsky of Warwick University.
Work reviewed: The Bretton Woods Agreements, Naomi Lamoreaux and Ian Shapiro, eds.
Publication: F&D Magazine — A New Global System, June 2019.
Book details cited: Yale University Press, New Haven and London, 2019, 504 pp., $29.50.
Historical anchor: marks the 75th anniversary of the Bretton Woods Agreement of July 20, 1944.
Institutional context: Bretton Woods system identified with the monetary agreement establishing the IMF; part of an interlocking set of institutions including the International Bank for Reconstruction and Development (IBRD) and, three years later, the General Agreement on Tariffs and Trade.

Core claim addressed: Bretton Woods chiefly identified with the IMF and fixed exchange rates.
Debates and positions highlighted:
- Editors Naomi Lamoreaux and Ian Shapiro, and Jeffrey Frieden: pre-1914 gold standard worked because of wage and price flexibility.
- Counterpoint noted: Charles Kindleberger’s thesis that the gold standard’s success was due to being a British-managed standard.
- Barry Eichengreen’s contribution praised as accomplished; question raised whether the 1944 fixed-but-adjustable peg system was brought down in 1971 by the US dollar’s link to gold.
- Alternative framing: modern inflation targeting is as much a commitment to sound money as gold convertibility.
- Michael Bordo’s view favored: it was US inflation from the late 1960s, not the gold link per se, that broke the system.
- Harold James’s essay: Bretton Woods possible because it insulated the monetary settlement from interminable trade disputes, which held off trade wars for 70 years.

Strength of the volume: attention to the idea of the Global South.
Contributions summarized:
- Selwyn Cornish and Kurt Schuler: Australia’s unsuccessful attempt to make full employment a central concern of the IMF.
- Eric Helleiner: pressure from countries like China, some in Latin America, and India—beginning with a Sun Yat-sen paper in 1920 proposing an “International Development Organization”—led to the setting up of the IBRD as a “new kind of multilateral framework for development.”

Section “Paths Taken and Not Taken” coverage:
- Includes Keynes’s International Clearing Union plan (noted as hardly discussed).
- Includes various proposals for flexible exchange rates (Douglas Irwin).
Missing or underdeveloped points highlighted by reviewer:
- Would have been worth mentioning that opponents of flexible rates, including Keynes, argued that exchange rate depreciation could lead away from balance of payments equilibrium, depending on the price elasticities of exports and imports.
- Disappointment that little thought is given to how the world might escape the looming confrontation between market-led globalization and economic and political nationalism.

75th anniversary of the Bretton Woods Agreement of July 20, 1944.
Book length and price: 504 pp., $29.50.
Historical periods referenced: the Great Depression of 1929–32; the Bretton Woods Agreement of 1944; the IBRD created three years later; the US dollar–gold link ended in 1971; trade peace sustained for 70 years; Sun Yat-sen paper in 1920.

Review by Lord Skidelsky; F&D Magazine, June 2019.

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