2 The Economy
There is no such thing as “the economy” as conceived separately from politics (ie: the state).
2.1 Institutions
2.1.1 Bretton Woods
Coppola
The Bretton Woods system enshrined the dominance of Western countries, and, in particular, the US. To this day, the two Bretton Woods institutions, the International Monetary Fund (IMF) and the World Bank, are always run by, respectively, a European and an American, and their funding predominantly comes from the US. The US has regarded it as its prerogative to decide which countries these institutions should support, and what form that support should take. Too often, “support” has meant imposing Western ideals of economic management, to the detriment of local people and customs.
After the Bretton Woods system collapsed in 1971, there was a period of economic and political chaos, out of which eventually emerged the international dollar standard backed by the financial reserves of powerful oil-producing nations. Under the “petrodollar” standard, developing countries that paid for imports with borrowed dollars suffered repeated debt crises. The IMF – originally created to prevent destabilisation of the Bretton Woods currency system by trade imbalances – became the vehicle for enforcing the transfer of resources from developing countries to their Western creditors.
The collapse of the Bretton Woods currency system is arguably attributable to the US’s burgeoning fiscal deficit during the Vietnam war, which made it impossible for the dollar to hold its peg to gold.
2.1.2 Post Bretton Woods
The elimination of capital and exchange controls after the collapse of Bretton Woods has enabled the rich to place their wealth out of reach of tax authorities and caused damaging flows of hot money that have particularly, though not exclusively, destabilised developing countries. Monetary policy and “growth-friendly” fiscal policies have widened inequality, creating exorbitant wealth for a few at the expense of social safety nets and public investment.