The rules of post-war Western economic development were premised on Washington’s domination and hierarchy, writes Anthony Pahnke. This is the history the U.S. president’s industrial policies repeat.
U.S. President Joe Biden at the groundbreaking site of the new Intel semiconductor manufacturing facility in New Albany, Ohio, September 2022. (White House/Adam Schultz)
By Anthony Pahnke
Common Dreams
Pundits are struggling to comprehend President Joe Biden’s industrial policy.
Whether it’s the extensive subsidies for American firms to engage in renewable energy production in the Inflation Reduction Act, or the combination of export controls and support for companies in the U.S. and Europe to make semiconductors, fears abound that the rule-based, multilateral global world order is in its death throes as the U.S. has made excluding China principal among its economic policy objectives.
Yet looking at history, we see that the rules of this order often featured America forging alliances to exclude some and privilege others.
In fact, the idea that a liberal, rule-based world order has been inclusive and fair is more fantasy than reality. Recognizing this is key if we really want to create economic institutions that are equitable and truly global, instead of exploitative and hierarchical.
Creating the IMF & World Bank
The institutional pillars of what we consider central to the liberal world order — the International Monetary Fund and World Bank — were created in 1944 at Bretton Woods, New Hampshire, where delegates from 44 countries met to discuss what the world economy should look like after World War II.
Participants created the IMF with the purpose that the institution would finance countries with debt problems to avoid the pitfalls of inflation, while the World Bank would invest in particular development projects such as building dams or expanding literacy. For even more stability, it was also determined that one ounce of gold would equal $35, making the U.S. dollar the default currency of world commerce.
Meanwhile, the initial moves concerning economic development in the immediate post-war period came with the Marshall Plan, which ran from 1948 to 1951 and took its name from the U.S. Secretary of State George Marshall.
But here’s the catch—these post-war developments excluded the Soviet Union as they sought to grow U.S. power.
Concerning Bretton Woods institutions, while the Soviets attended the conference in 1944, Joseph Stalin ultimately decided against joining the IMF and World Bank. As the Cold War heated up, they were excluded for the next 40 years.
“Attention! Leaving West Berlin,” August 1961. (Bundesarchiv, Helmut J. Wolf, Wikimedia Commons, CC-BY-SA 3.0, CC BY-SA 3.0 de)
The Soviets were not given any chance with the Marshall Plan, as the investment was explicitly crafted to halt the spread of communism and challenge Soviet influence. While ostensibly the Marshall Plan intended to get war-torn Europe back on its feet through distributing grants and loans, this U.S.-led initiative came with a series of strings attached, including creating markets for U.S. products and ideologically pressuring European labor leaders to reject communism.
Then, with the Marshall Plan winding down, the IMF and World Bank went to work—but with the U.S. and its allies. International development policy took on an explicit anti-communist approach, concretized by the economist and advisor to multiple U.S. presidents, W.W. Rostow, whose perspective was crystallized in his book, The Stages of Economic Growth: A Non-Communist Manifesto.
You don’t need to be a geographer to see how for most of the 20th century, significant sections of the world were systematically excluded from the liberal world order. Just as apparent is how the economic system championed was what the U.S. promoted.
Liberal Democracy & ‘Shock Therapy’
“Reshaping development” session during World Bank spring meetings in Washington, D.C., April 12, 2023. (World Bank, Flickr, CC-BY-NC-ND 2.0)
The IMF and World Bank expanded in the ’80s and ’90s as countries with Soviet-style political and economic institutions embraced liberal democracy, apparently bringing the entire world together.
The World Trade Organization (WTO) was created in 1994 with the intention to have countries meet periodically to discuss how to lower tariffs and facilitate trade. China’s inclusion in 2001 was heralded for the hope that every country would finally participate in the same system.
Yet this expansion came at a tremendous cost, particularly in terms of national sovereignty and public welfare.
Such costs were found in the application around the world of economic “shock therapy” programs where, in a short period of time, governments had to slash public spending and promote privatization. Countries made such changes, otherwise known as structural adjustment programs, which the IMF and World Bank teamed up to impose on impoverished, often debt-ridden countries.
Throughout, the U.S. has enjoyed more decision-making power than any other country in both the IMF and the World Bank. This is seen in the financial contributions that countries make to these institutions, which are set according to the size of a state’s respective economy.
The WTO, on paper, is meant to make decisions by consensus. Yet, even here, the U.S. has wielded disproportionate power with its ability to call for negotiations and also end them.
It is true that the WTO has been stalled since 2003 due to opposition from developing economies such as Brazil and India. It is also the case that, despite negotiations stopped, the WTO’s dispute settlement mechanism continued to promote American-style free trade and hogtie different states from making economic decisions on their own.
A fairer, more inclusive economic world order would recognize the harm that colonialism has inflicted on countries in Africa and Latin America.
Structural adjustment would not mean force feeding free markets to desperate governments, but negotiating ways for countries such as France to pay reparations to formerly dominated, subjected states like Haiti.
Reforms made to the World Bank and the IMF, or entirely other institutions with global reach, would ensure that developing countries would have more decision-making in development projects that affect them instead of being dictated to on what to do by the U.S. and its allies.
The rules of the post-war economic order were premised on U.S. domination and hierarchy. This is the history that Biden is working with and that his new industrial policies repeat. Let’s remember this, for if we want a more just and inclusive world economic order, we need to make significant changes that will run up against decades of hierarchy and exclusion.
Anthony Pahnke is vice president of the Family Farm Defenders and an associate professor of international relations at San Francisco State University; [email protected].
This article is from Common Dreams.
Views expressed in this article and may or may not reflect those of Consortium News.
Very informative article that also ignites some hilarious yet truthful comments. CN is a great website with knowledgeable readers. Thanks to all.
Anthony Pahnke has written a stellar article here. The significance seems to reveal itself in the number of comments that seem pretty much in agreement. Save, in my opinion, giving recognition to the fact the the Bretten Woods Conference was in effect a hornswoggle pulled by expert bankers many of whom represented what we , or I describe as the deep state. An agreement that resulted in a world wide banking organization that makes up it’s rules as it sees fit and applies the agreement to it’s benefactors or victims as it sees fit.
The consternation is D.C. is created by the knowledge the U.S. is rapidly losing it’s voice in many of these matters. So much for, in my opinion, the CIA’s managing of U.S. foreign policy with any degree of effectiveness.
Thanks CN
I believe the west has kept the rest of the world in “relative poverty”, in debt on purpose. Such strategy is the trademark of western culture.
We see it now with China how they are trying everything to destabilize Chinese economy and political system, to prevent China to further develop. If China become successful then we know that democracy is not better than any other political system, so we no longer have anything to brag about or an excuse to sanction anyone or go to war.
We know it is wealth the key to stability and success, in spite of the political system in place.
Once a country increase its wealth, to some degree it automatically spread to the population, people become more educated, more productive and more wealth is produced, thereby there is less desire to change that system as long as it provide stability and prosperity. Stability and wealth then allow creativity and innovation to take place and tech development increases… etc.
It is like earth that at some point found itself in perfect harmony, and when forces are balanced, life can take place and develop.
We are not the brightest and more intelligent, more creative, more educated, etc. than… we are just richer that is all… and I wonder now what world would we live in if China had all the wealth the US and Europe had…
Very good article! This reminded me of a video with Jeffrey Sachs hosted by The Duran (Rumble , odysee.com or YouTube) in which Sachs recalls how he wanted the United States to help Russia as we had helped Poland after communism fell. Sachs did not want to implement shock therapy in Russia because he feared that it would lead to a currency crisis, economic devastation and hyperinflation. Sachs was told in no uncertain terms by the National Security adviser that we would not be helping Russia. This ultimately led to an economic meltdown and a Weimar type of situation that the oligarchs and gangsters, and ultimately Putin, were able to take advantage of. In fact, Putin was probably the least bad choice for Russia as he took control away from the oligarchs and gangsters.
hxxps://odysee.com/@theduran:e/security-guarantees-w-jeffrey-sachs:4
The debt-peonage and usury imposed by the IMF and World Bank on countries all over the world has been going on for decades, and that there are still so many that haven’t a clue what these institutions do, or worse, that they even exist, is a testament to the sheer ignorance of the citizenry in the west. How else to explain that in 2023 we have for “leaders” to be con-men, grifters, corporate stooges, liars, and war-mongers?
The executive dick is tin pot dictator that nobody calls out for impeachment. If you or I did tax fraud or ran money games we’d be imprisoned
No doubt. Naturally plutocrats and their political puppets are exempt from most of the laws the rest of us have to abide by.
Biden is pushing the same globally consolidated cabal of western (US dominant) corporate that Clinton and Obama perused. Any country that dares to claim its own resources or which pursues membership in a different bloc is seen as competitive and therefore an “enemy” and thus fodder for the endless war that feeds the economic foundation of the US which remains the military industries.
This agenda and the reality of it in practice is a deadly cancer on the planet threatening war and refugee creation in the short term and mass extinction in the nearing future. What is needed, a mass movement aside, is a global boycott and divestment against the U.S and its lackey states until the US ends weapons exports and international meddling, reduces its military and its global presence, legally separates private money influence from all levels of governance and enacts human rights guarantees for its citizens including healthcare and housing.
I think that it’s already happening, with Russia, and her allies. The BRICS alliance.
Most of these fools in Washington and Europe – the ‘West’, don’t seem to understand that their world is shrinking rapidly. It represents only about 20% of the global population. Meanwhile, the ‘Global South’ is rapidly gaining strength and the confidence to push back and re-organise themselves.
They will be an unstoppable force within a few years, and the West will have little choice but to accept that its hegemony is over.
Much like “spheres of influence” are actually still a thing for all existing and aspirant great powers despite any US/Western statements or Helsinki Final Act-like agreements to the contrary (hence the Beltway hand-wringing over China building a surveillance station in Cuba, or even Iranian-flagged vessels transiting through international waters in the Atlantic Ocean), the “rules-based order” was never an even or equitable playing field in anything but rhetoric, much less something that only the Ruskies and the ChiComs subvert…
• In 1990 the German magazine Der Speigel revealed that the NSA had intercepted messages about an impending $200 million deal between Indonesia and the Japanese satellite manufacturer NEC Corp. After President Bush intervened in the negotiations on behalf of American manufacturers, the contract was split between NEC and AT&T.
• In 1994, the CIA and NSA intercepted phone calls between Brazilian officials and the French firm Thomson-CSF about a radar system that the Brazilians wanted to purchase. A US firm, Raytheon, was a competitor as well, and reports prepared from intercepts were forwarded to Raytheon [additional note: the French DGSE are no strangers to industrial espionage of intermittent allies either – see Imre Karacs, “France Spied on Commercial Rivals,” The Independent (UK), January 11, 1996].
• In September 1993, President Clinton asked the CIA to spy on Japanese auto manufacturers that were designing zero-emission cars and to forward that information to the Big Three US car manufacturers: Ford, General Motors and Chrysler. In 1995, the New York Times reported that the NSA and the CIA’s Tokyo station were involved in providing detailed information to US Trade Representative Mickey Kantor’s team of negotiators in Geneva facing Japanese car companies in a trade dispute. Recently, a Japanese newspaper, Mainichi, accused the NSA of continuing to monitor the communications of Japanese companies on behalf of American companies.
• Insight Magazine reported in a series of articles in 1997 that President Clinton ordered the NSA and FBI to mount a massive surveillance operation at the 1993 Asian/Pacific Economic Conference (APEC) hosted in Seattle. One intelligence source for the story related that over 300 hotel rooms had been bugged for the event, which was designed to obtain information regarding oil and hydro-electric deals pending in Vietnam that were passed on to high level Democratic Party contributors competing for the contracts. But foreign companies were not the only losers: when Vietnam expressed interest in purchasing two used 737 freighter aircraft from an American businessman, the deal was scuttled after Commerce Secretary Ron Brown arranged favorable financing for two new 737s from Boeing.
Source:
Patrick S. Poole, “ECHELON: America’s Secret Global Surveillance Network,” 1999 / 2000
Largely yes. But the conditions that existed post WWII no longer exist and other institutions like the AIIB are coming about. One of the critical differences is that the US is no longer a creditor nation and it hasn’t been for decades. Between that and the rapid de-dollarization that’s happening thanx to the US using our currency as a weapon there’s no way in hell that the US is going to come out on top like a post WWII redux.
This article is not reporting news. What this article describes has been known to socialists forever. The fact that the U.S. economy is taking a nosedive, that the U.S. no longer manufactures anything, and that it is jealous of China because China does make things, better things, is not a secret. The United States cannot even maintain its own infrastructure and hasn’t had an original idea for the betterment of society since the 1960s with the Great Society under Lyndon Johnson. And all of those programs (however limited) have been pretty much eviscerated or destroyed since the end of that decade. This is not Hogwarts. One cannot wave a wand and make everything all right by magical thinking. The real world is going to come crashing down on us like a tsunami while liberals keep supporting the Democratic Party and neocons keep supporting the fascists in the Republican Party. Anyone who supports EITHER of those parties is not serious about saving humanity.
Neoclowns, neoliberals- same thing. They both mindlessly support the war in the Ukraine and ignore working Americans. Right wing and left wing means nothing anymore. Now it’s literally good v evil. Oh, and Lyndon Baines Johnson was a fascist pig and an imperialist who escalated the Vietnam war. The great society (so called) was to keep the folks at home quiet. Bread and circuses
Biden is a pro-war, pro-banker, pro-corporation, pro-police, pro-spies, pro-prisons, pro-military, pro-bosses tool who is leading the nation into World War III while making the rich even richer.
‘Liberals’ were the people who fought for equality, fought to end poverty, believed skin color was irrelevant compared to one’s character, wanted a revolution of values, and stopped the Vietnam War.
The Powers That Be have coopted the term Liberal to now mean conservative, while still pretending to be something else. When the media say “liberal” they mean people like Joe Biden, an ultra-conservative war hawk. There is no word left in the modern English language for what liberal used to mean. I suppose the best you could ever find in the newly modified dictionary is “Far-Left”, which is intended to sound extreme or fringe. I call it “Overton Compression” whereby all of the acceptable political discourse is squashed all the way to the right side of the political spectrum, leaving us with conundrums whereby “moving to the center” often means moving further to the political right. Until the public wises up about the capture and repurposing of words like “liberal”, it is going to be very hard to have a meaningful discussion on policies in the US.
Hello John R Moffett:
sigh, Yes —-it is a very confusing Congress as much of it seems not to work. Perhaps renaming the 2 groups would make voters realize that words are not enough if there are no actions.
Liberals could become FIBerals, and the Conservatives are shortened to CONS.