Towards a New Bretton Woods: Alternatives for the Global Economy

In the long decade of the 1980s any proposal for a New Bretton Woods conference was implausible granted the economic and social philosophy of the Reagan administration in the US and the Thatcher government in the UK.Since the election of the Clinton administration in the US this has changed. In July 1994 the G7 Summit at Naples endorsed President Clinton's call to undertake a multilateral review of the functioning of the IMF and the World Bank. The background to the plan to review the IMF and World Bank was reported to be disappointment of the administration with their performance in reforming the Russian economy and their failure to help Africa.Castigating the IMF and the World Bank for their structural adjustment policies, Stuart Holland also criticizes the limits of the GATT paradigm of international trade in an era in which both investment and trade are determined by multinational companies. He argues that the evidence shows that trade liberalisation of itself does not maximise global welfare or employment, and claims that the unemployment trend for main regions of the world economy is potentially catastrophic.Claiming that the multilateral review of the functioning of the IMF and World Bank also should include the new World Trade Organisation, he argues that these Bretton Woods institutions must adopt alternative strategies for the global economy into the next century.The alternatives are coordinated public policies for recovery of investment and expenditure, restructuring of debt, production and trade and redistribution through social expenditures in favour of the poorest people in the poorer countries. New development expenditures rising to $100 billions a year would have major expansion effects on the world economy as a whole, as would mainly environmental programmes and long-term development assistance for the reforming economies. Scenarios from the Alphametrics-ARCA global model show that such expenditures will register a major increase in employment, trade and welfare for the global economy as a whole.