The Multiple Contexts of Bretton Woods

October 2012
Oxford Review of Economics Policy, Vol. 28, Issue 3

This paper examines why so much debate about the structure of the international economy revolves around a conference held at Bretton Woods in July 1944 which was not immediately conspicuously successful. There was a unique confluence of contemporary contexts—in terms of trade policy, stabilization policy, and policies with regard to capital movements—that meant that prevailing ideas (especially the ideas of John Maynard Keynes) and the interests of the United States coincided. It was fundamentally a victory of the United States, but dressed up as benign multilateralism. A similarly unique combination of circumstances surrounded European efforts in the 1970s and was later to create, through the European Monetary System, a scaled-down version of Bretton Woods. The myth of Bretton Woods was created by a powerful retrospective interpretation or retrospective context that lent a golden halo to the whole exercise. In that sense our interpretation of a very specific historical event is inseparably intertwined with views of what happened after as well as before that event.