Abstract
The collapses of the interwar and Bretton Woods monetary regimes have been understood as evidence that international monetary regimes fail when sudden economic shocks destabilize the political coalitions or shared ideas underpinning them. But while these histories are important, other monetary regimes, such as the Sterling Area and Latin Union, disintegrated over long periods of time. If exogenous shocks do not account for varied patterns of destabilization, what does? Using the tools of comparative-historical analysis, I argue that these patterns are the result of strategic choices made by hegemonic powers, choices that are in turn governed by the historical-structural foundations of regimes. From these foundations emerge alternative leadership strategies and membership behaviors responsible for endogenous macro-institutional effects that drive the observed regime trajectories. Regime leaders may establish visibly unequal collective arrangements that maintain their positions but leave a system vulnerable to overt internal resistance and sudden breakdown. Or leaders may reject collective arrangements in order to secretly discriminate among members, slowly building dysfunction into a system, driving its gradual abandonment by members and institutional decline. The analysis both suggests that more equal state power may improve long-run regime performance, and also locates structural vulnerabilities in contemporary regimes.
Highlights
I agree: the Bank of England committed ardently to gold at prewar prices, imposing a decade of stagnation on British workers. This does not entirely exonerate Britain of blame for the regime’s collapse, since it was the policies of cooptation, by means of which Bank and Treasury officials advanced the gold-exchange standard abroad, that incited policy maladaptation and political backlash beneath the façade of international financial stabilization
Writing decades after President Richard Nixon closed the gold window, Paul Volcker, who had been the leading U.S Treasury official in the 1960s, was still baffled: “With the world enjoying the sort of economic expansion that it had never before experienced, why was there so little sense of commitment to an international monetary system
Attending to records of actual policy deliberations, we find alternative paths not chosen, and that U.S efforts to remain at the top of the financial hierarchy through cooptation contributed to the sudden destabilization of the Bretton Woods system
Summary
The collapses of the interwar and Bretton Woods monetary regimes have been understood as evidence that international monetary regimes fail when sudden economic shocks destabilize the political coalitions or shared ideas underpinning them. Recent efforts in HI to supplement stability orientated path-dependency analyses with dynamic models of endogenous institutional change prove valuable (Fioretos 2017; Rixen, Viola, and Zürn 2016) These studies lead us to inquire into dynamic processes governed by particular historical logics, including the—often symbiotic—relations between positive (self-reinforcing) and negative (self-undermining) institutional feedback effects that follow from structured patterns of strategic interaction; building a bridge to MR theory’s examination of how international regimes “change over time endogenously and systemically” (Blyth and Matthijs 2017, 210). The aforementioned general propositions provide the analytical tools necessary for specifying the conditions under which international monetary regime failure is likely to occur and what form it will take To build such an understanding, we must develop a model of international monetary relations that can explain how different regime types tend to structure different patterns of balanceof-payment conflict resolution, and connect these dynamic patterns of strategic interaction to different pathways of institutional stability and change. The first step is to isolate dimensions of international regime structure that can explain pertinent differences in strategy among states seeking to resolve international monetary cooperation problems
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