Ikenberry on the creation of the Bretton Woods System

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In Creating Yesterday’s New World Order: Keynesian “New Thinking” and the Anglo-American Postwar Settlement John Ikenberry argues that policy ideas explain the outcome of the Anglo-American negotiations on the postwar international trade and monetary system.

While the distribution of power in the international system (the existence of a hegemon) and domestic interests matter, these factors alone fail to explain the character of the new arrangement.

The United States, as the hegemon, had an important role in shaping the postwar international trade and monetary system, but it did not create the system using coercive force. Besides, British policymakers and experts had a huge role in the negotiations, it was not a project of the hegemon only.

The domestic interests of the US clearly favored openness in the international economic system. The economies of all other major powers were destroyed during the war, the US could benefit from exporting goods to these countries without major barriers and develop new markets in regions traditionally tied to European empires like Latin America. British policymakers, on the other hand, were concerned about the emerging monetary system, and wanted to keep the imperial preference trade system.

The initial negotiations about the postwar international trade and monetary system did not reach an agreement. According to Ikenberry, later an agreement on a certain type of economic order was reached thanks to a group of Anglo-American experts, led by White and Keynes, who managed to influence policymakers by proposing a middle ground between laissez-faire and interventionalism. They proposed a multilateral system, but a system that allows each country to protect its domestic interests. These new policy ideas were accepted by policymakers, because after World War II there was a moment of historical possibility, “everybody believed that the reorganization [of the word order] was inevitable” (83).

Ikenberry, G. John. “Creating Yesterday’s New World Order: Keynesian “New Thinking” and the Anglo-American Postwar Settlement.” In Ideas & Foreign Policy