A Multilateral International Monetary System

By Paulo L. dos Santos and Devika Dutt

“One of the chief contributions to peace that the Bretton Woods program offers is that it will free the small and even the middle-sized nations from the danger of economic aggression by more powerful neighbours. The lesser nation will no longer be obliged to look to a single powerful country for monetary support or capital for development, and have to make dangerous political and economic concessions in the process. Political independence in the past has often proved to be sham when economic independence did not go with it.” —Henry Morgenthou Jr (1945)

The world economy has a Dollar problem. Reliance on the currency of a single country as the world’s chief way to organise trade, carry out financial settlements, and store value creates a series of inequitable economic imbalances and policy tensions—both within the US and across the global economy. It bestows disproportionate economic and political power on the US government and financial institutions; exposes world trade and finance to instability and disruptions originating in the Dollar zone; imposes huge costs on the world’s small and even middle-sized nations; and fuels disproportionate growth in the US financial sector, bolstering its influence in that country’s political economy.

A Historical Problem

This problem is not new. In fact, the inability to develop an equitable and genuinely multilateral international monetary system is one of capitalism’s most striking institutional failures, going back to the early days of the industrial revolution. The gold standard of that time and its successors have always privileged some economies at the expense of others, and created policy biases favouring the interests of creditors and capital, at the expense of debtors and wage earners. 

Only once in the history of capitalism did policy-makers from leading capitalist powers even consider the possibility of building a genuinely multilateral, equitable system: during the 1943-44 debates on the post-World-War-II economic order. But despite the aspirations and statements of participants like John M Keynes and then-US Treasury Secretary Henry Morgenthou Jr, the Bretton Woods conference led to the creation of a system centred on the US Dollar, under which foreign central banks could present dollars to the Federal Reserve for exchange into gold. 

That system effectively charged US authorities with the supply of the world’s ultimate international reserves. In this task they were constrained only by the willingness of central banks in other states to hold Dollars instead of gold. As French Finance Minister Giscard d’Estaing put it in the 1960s, this arrangement defined an exorbitant privilege for the US economy, which enjoyed a lot of space for effectively issuing Dollars to acquire goods and assets overseas.

By the late 1960s, it became clear that the US economy could no longer uphold its obligations under the Bretton Woods system. Its steady loss of competitiveness in international trade, fiscal pressures from its protracted, losing war in Vietnam, and increases in social spending in response to domestic political turmoil, led to growing trade deficits, mass outflows of Dollars, and concerns that US authorities would not be able to meet foreign demand for convertibility of greenbacks into gold. In response, the US unilaterally abandoned its commitment to convertibility in 1971.

Coming amidst a series of successful national liberation and anti-colonial struggles across the world, the US’s inability to sustain the Bretton Woods system fed hopes that a new, equitable international monetary order could be constructed. The 1974 call by the United Nations for a New International Economic Order explicitly pointed to the need for a new monetary system centered on the “promotion of the development of the developing countries and the adequate flow of real resources to them” as means to dismantle “the remaining vestiges of colonial domination” and removing the obstacles in the way of international convergence in measures of economic development and living standards.

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We Need to Talk about Economics

By Paulo L. dos Santos and Noé Wiener

What’s Wrong with Economics? The title of economic historian Robert Skidelsky’s latest book captures well a prevailing mood of popular disaffection with the dismal science. Many have come to associate the discipline with specific lines of political partisanship—including forms of market fundamentalism and the politics of austerity. Economics has also been widely criticised for its failure to grapple with actual, urgent economic problems. Within academic circles, the discipline has become widely regarded as insular and dismissive of the contributions other fields of social and historical inquiry make to the study of economic life. Among the public at large, the credibility of the discipline as a whole has faced considerable scrutiny, even while individual contributions by dissenting economists are widely debated and generally well received.

Recent political developments like the rise of the Movement for Black Lives and the #MeToo movement have helped broaden the sense of crisis in economics; encouraging examination of the discipline’s deeply problematic relationship with realties of race, gender, and other elements of people’s social identity. As a number of critics have noted, the problems are reflected most obviously in the profession’s basic institutional composition, which is grossly unrepresentative. In the United States women account for only 14 percent of full professors in PhD-granting departments. Of all doctorates conferred in the academic year 2015–2016, only 1.29 percent were conferred to Black or Latina women. This dismal performance was significantly worse than the 3 percent average across all STEM disciplines. That same year, only 3.6 percent of all full economics professors at PhD-granting institutions were Latino; a meagre 1.6 percent were Black.

The problem is also evident in prevalent attitudes and values among economists. Casual racism and misogyny among leading economists appears to have few or no repercussions. A 2019 survey of academic economists by the American Economic Association found that nearly half of Black economists reported being targets of discrimination in the profession. It also found that “only 45 percent of all . . . respondents (regardless of race) believed economists who are not White are respected in the field.” When the work on the economics of racial stratification by scholars like William Darity and Darrick Hamilton was finally included in the alphanumeric classification system for research topics in economics, it was placed in the last, residual category, “Z – Other Special Topics.” Recent work by Alice Wu uncovered evidence that these attitudes are prevalent among economics students, while work by Valentina Paredes, Daniele Paserman, and Francisco Pino found evidence suggesting that economics programs both attract and cultivate bigotry.

What has so far received comparatively less attention are the ways these attitudes are embodied in the basic concepts and analytical tools that most contemporary economists use to understand the world. Yet it is over this terrain that the discipline’s problems with issues of social identity prove most harmful to society at large.

The frameworks at the heart of contemporary economic thinking reflect analytical choices that ultimately betray the social position and outlook of those developing economic theory. In all of these choices, contemporary economic thinking has created a stilted conceptual terrain where it is easy to ignore or downplay the economic expressions of systemic inequities by social identity and class. This is evident in some of the discipline’s core analytical stances, like what is and what is not considered as economic activity, and in its rejection of social categories like gender, race, and class as useful in the analysis of markets and economies. It is also evident in the ways most economists think about the nature of discrimination, its relationship to market competition, and the statistical measurements of its effects on economic outcomes.

Given the outsized influence economics exerts across all fields of social inquiry and policy, these biases exert an insidious, conservative influence over public thinking and over the very framing of debates about those iniquities. Countering this influence requires understanding these biases, which in turn requires engagement with a few foundational methodological and technical issues in economic analysis. In what follows we draw on contributions by many critically minded economists and political economists, and on some of our own recent work, to contribute to a conversation among social scientists and political actors about these biases and about how they may be overcome.

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Time for a Rethink on the Worth of Work


Most economists are greatly underestimating the economic challenges posed by the Covid19 pandemic. Without a correct understanding of those challenges, the aggressive monetary and fiscal measures many government are now pursuing will fall well short of their goals. They will go down in history as economic Marginot Linesscaled up versions of tools designed to fight past crises.

The pandemic poses new and unique economic challenges. It compromises our ability to engage in productive and commercial activities requiring close contact between groups of peoplethat includes most of the things sustaining a modern economy. Epidemiologists tell us this is needed for several months. Responding in a way that minimises the loss of life and safeguards our long-term productive capacities requires two things: Temporarily shutting down large swaths of the economy, and focusing societys productive resources on the kinds of work needed to fight the pandemic.

Most economists have not yet understood this partly because the scale and scope of what is needed pushes beyond the boundaries conventional economic thinking, and beyond what they generally consider to be legitimate economic questions.

The pandemic requires an unprecedented mobilisation of what feminist economists call care labour: work to care for ourselves, our families, and our communities. Over the next few weeks or months most people need to be focused on a vital job: caring for our collective health and helping save thousands or even millions of lives by staying at home. Many families will have to do this while simultaneously caring for millions of children now out of school, for other loved ones who cannot fully care for themselves, and for those who fall ill but do not require hospitalisation.

We need to allocate resources to enable people to perform this work.Read More »

Caveat emptor: the Graduation Approach, electronic payments and the potential pitfalls of financial inclusion


By Paulo L dos Santos and Ingrid Harvold Kvangraven

The Graduation Approach to poverty reduction is inextricably bound up with programmes promoting financial inclusion. Proponents for the approach see it guiding a series of interventions that encourage poor households to ‘graduate’ into ‘mainstream development programmes’ which are centred on the provision of credit and other financial services (BRAC 2014). Indeed, the approach has been presented as a way to address the needs of those “too poor for microfinance services” (UNHCR 2014). The presumption is that the development and poverty reduction needs of ‘graduates’ will be well served by financial inclusion initiatives.Read More »