The Bretton Woods architecture consists of four key institutions that were created in the 1940s: The World Bank, the International Monetary Fund, the United Nations and the General Agreement on Tariffs and Trade that subsequently became the World Trade Organization.
The Bretton Woods summit was the successful beginning of a phenomenal creation process that designed from scratch the International Bank for Reconstruction and Development (that would later become the World Bank) and the International Monetary Fund (IMF), reformed the League of Nations and created the United Nations (San Francisco, 1946), and started the General Agreement on Tariffs and Trade (GATT, 1947) that would later become the World Trade Organization. The Bretton Woods summit also fostered an environment in the United States in which the Economic Recovery Program for European Reconstruction (Marshall Plan) could be widely agreed upon by the political elite and explained to the American electorate.
The World Bank and the International Monetary Fund awarded a majority vote to the economic powers of the time. The voting power has not shifted ever since. Belgium has today more representative power than India in the World Bank. The United States has veto power in the International Monetary Fund. Both institutions are based in Washington and subject to political bias and interference of the United States administration.
Do we need a new architecture? Should the current architecture be reformed? Have the Bretton Woods institutions served the purpose for which they were created? What are the roots of poverty? Poverty is originated and perpetuated because we are reluctant to reform in six key areas that represent the axis of feeble of today’s capitalism: agriculture and climate change, trade and labour rights, small arms trade and military spending, the extractive and mining industries, the international financial architecture and the brain drain.
We, as a global society, are driving a vintage car that was designed and built in the 1940s and 1950s. There are two possibilities if we would like to travel faster and more comfortably. Either take the car to a garage or get a new one. We are in desperate need of a new architecture. I have decided to dream of a new world of no poverty, a world of cornucopia and global public goods, where we live the World dream, where education and healthcare and globally provided. The new world begins on 1 January 2050, when the beginning of history takes off, when the first man is born in a world of no war and infinite possibilities.
I decided to look at the future and propose ideas that will allow us to write the History of Tomorrow. The theory of international relations is based on times that once were and shall never be, are based on World Wars and Cold Wars, on foreign policy agendas where unilateralism is predominant.
The 1940s and 1950s were times of phenomenal changes because the devastation brought about by World War II. The architecture designed in the 1940s and 1950s seeked the economic reconstruction of war-torn Europe and the building of a system of collective security where peace-loving states would be able to avoid the pitfalls of another World War. We need a new architecture whose priority is to look ahead and dare as we never dared before. It is time to think big again, it is time to feel the urgency of our time and fight the great evils of our time with creativity and passion.
There will be a beginning of history where the first man will be born once we reach a society of global justice and global opportunity. There will be a beginning of history once we align the incentives of the poor with those of the rich, once we incorporate the long-term vision to the investment strategies of our money managers, once we incorporate the long-term horizon to the corporate strategies of our corporations.
It is up to us as a global society to set the pace at which we would like to drive the car that drives us along the path of sustainability. It is up to us as a global society to drive a vintage care or to design a new car that will become a catalyst able to accelerate trends. The Bretton Woods institutions are instruments of foreign policy of our parents and grandparents, they represent the ideals of the baby boomers. The Bretton Woods institutions are politicized instruments of foreign policy of the United States and Europe. They forsake their ultimate goal because they prioritize the interest of the rich and the powerful.
The shortest way to eutopia is the proposition and implementation of an alternative architecture that is designed to work for the poor, where the developing world has a majority of the representative power. The shortest way to eutopia is the creation of global public goods through global redistribution.
There are two strategies when it comes to influence the powerful. One can play the role of George Kennan or Jean Monnet and become intermediaries between the citizenry and the elites. Kennan and Monnet influenced the political elites of their time and brought about shifts in policy making that helped secure peace and economic stability in war-torn Europe.
This is a warning to the elites that rule today’s capitalism. Hear the winds of change that come from our generation. Hear the winds of change that come from the Southern Hemisphere. It is time to become men and women of political stature. It is time to embrace the urgency of our time. It is time to wake up to the reality of an unequal world that perpetuates the great evils of our time. It is time to identify the axis of feeble and defeat it in an intellectual war that uses the weapons of mass persuasion.
We owe the current state of affairs to the great men and women of the 1940s and 1950s. It is time to follow their steps and learn the lessons of time and history.
Jaime Pozuelo-Monfort is the multidisciplinary European and author of The Monfort Plan