Hollowing out Keynesian norms: how the search for a technical fix undermined the Bretton Woods regime

Abstract

After a decade of financial crises, international economic leaders have begun to talk about the need for reform. Yet, while they speak in dramatic terms of a ‘new financial architecture’, in practice, they seem more interested in more limited renovations to the international monetary system. Arguing that ‘A lack of reliable data . . . was critical to [recent] crises’, the International Monetary Fund has, for example, emphasised the importance of better data-gathering systems and greater surveillance. By defining the cause of the crises as informational rather than systemic, Fund leaders thus justify a limited solution: in Michel Camdessus' words, what is needed is ‘no new machinery, no new heavy public intervention’, but rather a series of limited technical fixes. This is not the first time that international financial leaders have succumbed to the seduction of technique. Four decades ago, as the Bretton Woods system struggled through an escalating series of monetary crises, state and global policymakers chose a similar path of technical expediency, opting for limited reforms. As we now know, those strategies ultimately proved to be inadequate to the task of rescuing the postwar monetary order. In this article, I revisit that regime and its collapse, examining the roots of the contemporary search for technical fixes.