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GloverWrightSecondPaper 3 - 19 Apr 2010 - Main.GloverWright
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| | | The Bretton Woods system worked pretty well for a couple of decades as Europe and Asia regained their economic health, the United States experienced a comfortable prosperity, and wealth and finance were tied to production. But the value of gold continued to rise on the open market, and the United States -- whose gold remained valued at $35 per ounce -- lost a significant portion of its reserves. In light of those losses, and rising global inflation followed by stagnation, the United States unilaterally went off the gold standard, thereby foreclosing the possibility of fixed exchange rates and introducing volatility into the foreign exchange market in which currencies were now floating. Along with that volatility came the need to create financial instruments with which investors could manage the risks to which they were exposed by currencies -- particularly the dollar, which remained the world's reserve currency -- whose present value was unstable and whose future values were uncertain. | |
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< | Thus did what David Harvey calls the "embedded liberalism" of the postwar period -- "characterized by ... a social safety net" ensured by state interventions in the international economy and domination of national economies via the regulation of fixed exchange rates -- give way to neoliberalism favoring a "free" market allowing for maximal individual (economic) autonomy and, by extension, exposure to risk. The logic of capital (I don't know that "capitalism," per se, still makes analytical sense) was no longer constrained by production -- currency markets obviate the need for buying and selling goods and services -- nor by a more or less fixed resource in accord with with which money was issued and valued. Rather, capital oriented itself towards circulation and began to flow globally in directions determined both by risk assessments (and not necessarily by efficiency concerns). And as capital divorced itself from production -- as wealth lost touch with its material basis, on account of the fact that a material basis was no longer necessary -- the accumulation of capital became, logically, an end in itself. | >
> | Thus did what David Harvey calls the "embedded liberalism" of the postwar period -- "characterized by ... a social safety net" ensured by state interventions in the international economy and domination of national economies via the regulation of fixed exchange rates -- give way to neoliberalism favoring a "free" market allowing for maximal individual (economic) autonomy and, by extension, exposure to risk. The logic of capital was no longer constrained by production -- currency markets obviate the need for buying and selling goods and services -- nor by a more or less fixed resource in accord with with which money was issued and valued. Rather, capital oriented itself towards circulation and began to flow globally in directions determined both by risk assessments (and not necessarily by efficiency concerns). And as capital divorced itself from production -- as wealth lost touch with its material basis, on account of the fact that a material basis was no longer necessary -- the accumulation of capital became, logically, an end in itself. | | | And So Now |
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