We have arrived at the point in a crisis when ambitious leaders call for a “new Bretton Woods”. It is easy to mock such language. Yet it is easy to see why this crisis should make people think in such heroic terms.

First, the world economy has come full circle, with a massive financial crisis emanating from the US, then and still the world’s dominant financial power. The Great Depression of the 1930s was accompanied – and aggravated – by failures of economic co-operation, disintegration of the global economy and resurgent nationalism. But it also led to a revolution in economic thinking. “Never again” was the aim of the negotiators in Bretton Woods, New Hampshire. Mired in the worst financial crisis since the 1930s, we have good cause to say the same.

Second, it is unnecessary to wait for calmer times before thinking afresh. The Bretton Woods conference culminated in July 1944, while the second world war was far from over. If they could fight a war and redesign the global economy at the same time, so can we fight a crisis and redesign global institutions simultaneously.

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November 5, 2008 1:17am in Uncategorized | Comment