I think an ICU would fit in perfectly with the idea of a New International Economic Order, as was called for 50 years ago by the Group of 77. If you haven’t already heard, many economists from around the world convened in Havana last month to commemorate it. I’d love to read your thoughts on that.
By the way, to quote from the summary of the proceedings (https://progressive.international/wire/2024-05-06-pi-briefing-no-18-southern-insurgency/en/), the topics discussed were a: “debtors club, cartels for critical minerals, coordination on commodity prices, BRICS financing for Southern state capacity, detailed programmes of regional integration including industrial strategy and collective public purchasing for medicines and components, reduction of material-technical dependency on the Global North, regaining national control over foreign exchange earnings, national and regional industrial policy, investment in food and renewable energy sovereignty, a global global, multilayered buffer stock system for essential commodities including food and critical minerals, coordinated exit from ICSID, denunciation of bilateral investment treaties, cross-border payment systems where international reserves are deposited, mobilisation of Special Drawing Rights for Southern development, establishing an association of raw material exporters, activate force majeure clauses so that all patents to combat climate change are ended, reparations for historical CO2 emissions from the Global North, and many more.”
Great article Ann! Yes it is time now for systems change! In the USA, #unifyUSA strives to co-create United States 2.0 by sparking a peaceful revolution aimed at constitutional renewal. We advocate for love-centered systems in government, society, and the economy. How can we spark global stakeholders to take urgent and bold action to start designing and implementing the new policies and institutions?
The bancor had no chance of being implemented, much as this proposed ICU has no chance of being implemented, for the very simple reason that no sovereign nation with an ounce of sense will subjugate its international exchange rates with foreign currencies to an unaccountable bureaucracy.
The lesson of the US dollar as a sovereign risk is not learned if said sovereign risk is merely relocated to aforementioned bureaucracy. The US won't accept it nor will China and so the idea of DOA.
What will happen, whether de jure or de facto, will be some replacement of the SDR where the US and UK and EU do not have outsized representation, but equally will not be subject to the foolishness of UN island states or Baltics swaying votes by sheer numbers that in turn are trivially bought out by Great Powers.
How do you reconcile that you appropriated a concept from the Torah, the Jubilee, and you also spend so much time denigrating Israel - the one and only country where people can actually fulfill the halachic precept?
We should have no problem accepting what any two parties agree to as compensation for the exchange of goods and services. And, if a membership organization is formed with staff and systems to perform the "clearing agency/union" functions, then this is just a step up from establishing a local currency network. That said, the involvement of governments as participants requires enforceable treaties rather than more straightforward contract law and the courts.
Problem with your thesis: How is the deployment of an international clearing system going to provide for justice and an end to the Zionist Genocide along with the Outlaw US Empire's complicity?
I fully understand the dedollarization movement and what needs to be done to make it work and have often written about the process and its current state. I have several other critiques, but will limit myself to the above.
The rise of nationalisms and authoritarianism is entirely down to the system financialised globalisation in my view - and the inequalitiy, imbalances and injustice that results from that system...Israel, Russia, Hungary etc...are all evidence of the anger of populations at the injustice of the globalised system...and invariably take their anger out on foreigners, neighbours, people of colour etc...As well as that, they demand protection from globalised market forces that strip them of jobs, income, housing, university education etc.....Hence the rise of 'walls' against Mexico, China etc...
I have a question about how exchange rates would be defined. Specifically, does the phrase "that the process of debiting and crediting payments against countries’ reserve accounts would provide the means for determining changes in exchange rates" mean that ICA/ICU itself would determine/adjust rates?
My reply to Edward J. Dodson outlines the approach which may facilitate routine of a Clearing Agency provided that countries’ economic agents have agreed on a common unit for evaluating their deals on credit.
Thinking and writing about the global financial system for over four decades frequently leaves me with a bad headache. Seldom (if ever) mentioned is that the one period in the last five centuries when there was a period of non-inflationary, relatively stable global economic growth occurred during the decades after a deposit bank was established in Amsterdam, taking in deposits of precious metals, minting coins of a standard metallic content and weight, crediting depositors' accounts and issuing receipts that were then used as a medium of exchange. The Bank of Amsterdam charged a fee for its services, which constituted the bank's capital.
All went well until the Bank began to issue bank notes and make loans in excess of its own assets, doing so because the system of receipt money was working so well that hardly any depositor ever came asking for its gold coins. This was the beginning of fractional reserve banking, a fraud that was quickly embraced by the chartering by government of central banks. Some level of gold reserve requirements kept up the illusion that the system was a reasoned adaptation to the expanded demand for currency in the global economy.
And, finally, any pretense that paper currency issued is anything but "a promise to pay nothing in particular" ended with the collapse of the Bretton Woods system in the 1970s.
Might it be possible, I wonder, to establish a parallel system of money creation on the model of the Bank of Amsterdam? Could a treaty be negotiated under which countries agreed to take whatever gold (and, possibly silver) bullion they hold in their vaults and mint coins of a standard content and weight, held on deposit, with paper or digital legal tender balances used for inter-governmental transactions. I end here asking others to comment on the virtues or problems this might create.
I disagree wholly with this analysis...Throughout history we have changed, improved and then degraded the system and the means for upholding 'the promise to pay' ..in other words we have 'deregulated' the monetary system and believed (sic) in the mythical powers of 'the market'. That is the failure - and its ideological. It has nothing to do with 'paper currency.'
The lesson I take from history is that we humans have proven very good at production despite socio-political arrangements and institutions the design of which result in a redistribution of wealth from producers to non-producing (i.e., rent-taking) interests. How to solve that part of the problem was intellectually solved by Turgot back in the mid-eighteenth century: require all who control land (i.e, nature) to pay to society an annual fee equal to the full potential annual rental value of whatever land and natural assets are held. Turgot went as far as Henry George did later by calling this the "impot unique" or the only tax necessary to pay for public goods and services.
The money question remains to be intellectually solved. The monetary system has not been deregulated; we still have central banks authorized to create whatever money is deemed necessary to meet the demands of government and the economy, but in the process also overseeing an explosion in the issuance of government securities that must be serviced (by taxation) even if the principal is never likely to be repaid, on refunded, until there is systemic failure. What is the solution or solutions? There are many options under consideration, each with academic and political advocacy and opposition: (1) public banks; (2) money issuance directly by the treasury; (3) local currency networks; (4) commodity-backed money (e.g., precious metals to construction bricks); (5) decentralized crypto-currency systems.
And, in the meantime, while we endlessly debate over the causes and cures for economic instability the the accelerating concentration of income and wealth, there is the growing support for a universal basic income sufficiently high to allow every person to enjoy what the philosopher Mortimer J. Adler called "the goods for a decent human existence." I am all in for the UBI, but with a warning: adding nominal income to everyone without the public capture of rents will result in the increased demand being capitalized into higher land (and, therefore, higher property) prices. The existing owners of land and real estate will be the primary beneficiaries. Therefore, UBI must be accompanied by a public commitment to the construction of millions of units of permanently affordable housing (i.e., housing constructed in deed-restricted community land trusts or subject to resale restrictions, so that housing is shelter and not a speculative investment).
I’d like to mention a class of parallel money satisfying some conditions (outlined at https://t.co/QlwPt624f2) as an auxiliary tool in existing monetary system. Every such kind of money may be denominated in a unit acceptable by large amount of economic agents. Some units, if being agreed among businesses of different countries, may be used to evaluate cross-border deals. (Technical details and hypothetical units are described at armoland.org.) In this scenario International/Regional Clearing Agency/Union could utilize information system (implemented and needs to be tested) which enables automatic [partial] clearing of circular obligations. Outstanding payables may be either transferred to the next business day (hence potentially reduced) or paid by debtor via Clearing Agency and Central Banks of countries involved so that debtor’s/creditor’s accounts get debited/credited in their national currencies. Exchange rates of aforementioned common unit to countries’ currencies may be defined in cooperation among participating countries and Agency what may reduce risk of potential corruption and trade wars.
Equality of currencies is only possible if the currency is a coin with the same metallic weight and content of gold and/or silver; or, the paper/digital currency is a receipt for coins held on deposit by a deposit bank.
I agree largely. And your point is even stronger in relation to central bank governors - some of whom are overtly political - and chosen because of their political preferences. And those thgat use the CB to serve financial interests, and not domestic economic interests, are the most poliitical and culpable. But there are able technocrats with skills and knowledge...and both they, and their knowledge cannot be discounted.
But I would critique two points. One is related to this: "That transfer from public (democratic) authority to private authority over the world economy", the critique is that the version that likely would have emerged would have been extremely centralized and technocratic, making far from anything that's meaningfully "democratic" and likely making its something that would perform far worse (than something that was meaningfully democratic) in the best case and something that would be very prone to corruption.
That sorta leads to the second critique, the Bancor envisioned by Keynes was to have a national account crediting and debiting function that would have sought to manage global trade, this would have been very, very corrupting and the potential source of a new Empire.
In the same vein, the European Payments Union of 1950 also warrants critique. While it aimed to facilitate post-war European economic cooperation, it inadvertently reinforced a centralized, technocratic framework that placed significant power in the hands of a few financial institutions. This structure, far removed from meaningful democratic oversight, risked perpetuating inefficiencies and corruption. Furthermore, its mechanisms for managing intra-European trade could have fostered imbalances and dependencies, potentially becoming a source of economic imperialism akin to Keynes's envisioned Bancor system.
The European Payments Union (EPU) of 1950, established as a part of the broader strategy of the post war econ set up for Europe, and it was part of a system of extractive and cruel imperialism. This arg can be backed up by examining the underlying mechanisms and the broader geopolitical intentions of the economic programs of the era, such as the Marshall Plan.
The Marshall Plan was not an altruistic endeavor aimed at the economic revival of Europe in way that benefitted the most people, enabled democracy/true political expression, and facilitated human flourishing. It was a strategic initiative that aimed to resurrect and harness Germany's industrial capacities for international business interests and US strategic interests. The plan guaranteed Germany's reconstruction and contrived it a position as the central workshop for Europe. This plan was fundamentally exploitative. It forced almost all of the 14 (or around 14, I may have the num off) of the nations to purchase from Germany, the broader program also enforced austerity on them while not doing so to Germany, it meddled in their internal investments to prevent investing to boost their domestic manufacturing, it prevented protectionism, all to contrive perpetual trade deficits with Germany. And then it forgave all German debts in 1953 while not forgiving the other countries! All these individual programs and initiatives, including the EPU, were part and parcel of the same system,
the Marshall Plan and other institutions of the era, including the EPU, were designed in part to guarantee Germany's economic resurgence while protecting it from its moral and physical debts. U.S. policies deliberately shielded West Germany from reparations and retaliations, ensuring that Germany's recovery would proceed. This protective stance was not motivated by a concern for justice or reparations for wartime atrocities, but rather by int. business interests and a US strategic interest in establishing Germany as the industrial powerhouse of the European economy.
The creation of the EPU was a key component of this strategy. Given the dollar gap and Germany's lack of credit and reserves, the EPU facilitated a system of cashless trade within Europe, which was essential for Germany's centrally contrived place within the European economy. This system, underpinned by U.S. influence, effectively transformed Germany into a net exporter against the interests of most of the people of most other european nations, supplying capital goods for Europe's reconstruction. It imposed a centralized, technocratic framework on Europe, concentrating economic power in the hands of a few financial institutions, screwing over most all of the people in most of the countries that were a part of it permanently hobbling democracy and human flourishing in most European countries.
The EPU reinforced a centralized and extractive economic structure that mirrored the imperialistic ways of old. By first unfairly re-creating Germany's industrial capacity on the backs of others (many of whom had just a few ears prior been severely victimized by Germany!) for the benefit of global business interests and US foreign policy goals. It deliberately created economic dependencies and imbalances, akin to a form of economic imperialism.
The EPU, as a mechanism of the post war economic set up, played a significant role in reinforcing an extractive and centralized economic system that prioritized international business interests and strategic interests over democratic and equitable practices. This system was a form of modern economic imperialism.
Thank you for the explanation of the ICU, I only knew of it as quick references in larger texts so far. I wonder, though: if there's a single entity that's in charge of clearing all this, this also sounds like a chokepoint that, once captured, can employ immense leverage, for example by refusing to clear a particular countries payments. And I cannot think of a way of making it capture-proof.
Perfection is unattainable...and human error and weakness is universal. But the EPA is evidence of the system working...and doing so successfully and in a way that US so-called largesse in the form of Marshall Aid did not work. It was destroyed by those that preferred for decisions to be made independent of democratic and human action - 'the invisible hand' of the market.
Keynes' proposal envisioned the entity debiting and crediting countries country's Bancors (the name of the entities associated international trade currency) with the intention of effectively managing exchange rates between countries in order to manage international trade. I think it would have been a giant source of corruption or at best a giant source of honest screw ups. Either way, at least by the mid 1960s or early 1970s, the US had become very power centralized and its political economy at the top wanted to run persistent trade deficits and would not have allowed the Bancor clearing house to stope them.
But, in my personal opinion, neither one, nor any other single system that is universal and totalizing and completely removed from the ability of more than 99.99% of the human species to influence—and thus locks off large swaths of some of the most important areas of public policy from more than 99.99% of the human species—is necessary. It would result in just as few people having any ability to influence it as the current one; the change would at most just make it be a different infinitesimal share of the population who can influence it than the current one has.
Interesting take, I appreciate it.
I think an ICU would fit in perfectly with the idea of a New International Economic Order, as was called for 50 years ago by the Group of 77. If you haven’t already heard, many economists from around the world convened in Havana last month to commemorate it. I’d love to read your thoughts on that.
Thank you for your comment...No, I missed the Havana conference, sadly...Will search for more detail.
By the way, to quote from the summary of the proceedings (https://progressive.international/wire/2024-05-06-pi-briefing-no-18-southern-insurgency/en/), the topics discussed were a: “debtors club, cartels for critical minerals, coordination on commodity prices, BRICS financing for Southern state capacity, detailed programmes of regional integration including industrial strategy and collective public purchasing for medicines and components, reduction of material-technical dependency on the Global North, regaining national control over foreign exchange earnings, national and regional industrial policy, investment in food and renewable energy sovereignty, a global global, multilayered buffer stock system for essential commodities including food and critical minerals, coordinated exit from ICSID, denunciation of bilateral investment treaties, cross-border payment systems where international reserves are deposited, mobilisation of Special Drawing Rights for Southern development, establishing an association of raw material exporters, activate force majeure clauses so that all patents to combat climate change are ended, reparations for historical CO2 emissions from the Global North, and many more.”
Great article Ann! Yes it is time now for systems change! In the USA, #unifyUSA strives to co-create United States 2.0 by sparking a peaceful revolution aimed at constitutional renewal. We advocate for love-centered systems in government, society, and the economy. How can we spark global stakeholders to take urgent and bold action to start designing and implementing the new policies and institutions?
Many thanks Ann from a fellow World Economics writer (although not for some time...)
I don’t doubt this is technically possible, but I see precisely zero evidence that it is geopolitically so.
I agree....but times may change. And quickly. Always handy to have a Plan B in the back pocket...
The bancor had no chance of being implemented, much as this proposed ICU has no chance of being implemented, for the very simple reason that no sovereign nation with an ounce of sense will subjugate its international exchange rates with foreign currencies to an unaccountable bureaucracy.
The lesson of the US dollar as a sovereign risk is not learned if said sovereign risk is merely relocated to aforementioned bureaucracy. The US won't accept it nor will China and so the idea of DOA.
What will happen, whether de jure or de facto, will be some replacement of the SDR where the US and UK and EU do not have outsized representation, but equally will not be subject to the foolishness of UN island states or Baltics swaying votes by sheer numbers that in turn are trivially bought out by Great Powers.
How do you reconcile that you appropriated a concept from the Torah, the Jubilee, and you also spend so much time denigrating Israel - the one and only country where people can actually fulfill the halachic precept?
We should have no problem accepting what any two parties agree to as compensation for the exchange of goods and services. And, if a membership organization is formed with staff and systems to perform the "clearing agency/union" functions, then this is just a step up from establishing a local currency network. That said, the involvement of governments as participants requires enforceable treaties rather than more straightforward contract law and the courts.
why not sovereign equality of currencies?
Problem with your thesis: How is the deployment of an international clearing system going to provide for justice and an end to the Zionist Genocide along with the Outlaw US Empire's complicity?
I fully understand the dedollarization movement and what needs to be done to make it work and have often written about the process and its current state. I have several other critiques, but will limit myself to the above.
The rise of nationalisms and authoritarianism is entirely down to the system financialised globalisation in my view - and the inequalitiy, imbalances and injustice that results from that system...Israel, Russia, Hungary etc...are all evidence of the anger of populations at the injustice of the globalised system...and invariably take their anger out on foreigners, neighbours, people of colour etc...As well as that, they demand protection from globalised market forces that strip them of jobs, income, housing, university education etc.....Hence the rise of 'walls' against Mexico, China etc...
I have a question about how exchange rates would be defined. Specifically, does the phrase "that the process of debiting and crediting payments against countries’ reserve accounts would provide the means for determining changes in exchange rates" mean that ICA/ICU itself would determine/adjust rates?
Yes...go to Jane D'Arista for more, but also Amato and Fantacci...referenced above.
Thank you Ann.
My reply to Edward J. Dodson outlines the approach which may facilitate routine of a Clearing Agency provided that countries’ economic agents have agreed on a common unit for evaluating their deals on credit.
Thinking and writing about the global financial system for over four decades frequently leaves me with a bad headache. Seldom (if ever) mentioned is that the one period in the last five centuries when there was a period of non-inflationary, relatively stable global economic growth occurred during the decades after a deposit bank was established in Amsterdam, taking in deposits of precious metals, minting coins of a standard metallic content and weight, crediting depositors' accounts and issuing receipts that were then used as a medium of exchange. The Bank of Amsterdam charged a fee for its services, which constituted the bank's capital.
All went well until the Bank began to issue bank notes and make loans in excess of its own assets, doing so because the system of receipt money was working so well that hardly any depositor ever came asking for its gold coins. This was the beginning of fractional reserve banking, a fraud that was quickly embraced by the chartering by government of central banks. Some level of gold reserve requirements kept up the illusion that the system was a reasoned adaptation to the expanded demand for currency in the global economy.
And, finally, any pretense that paper currency issued is anything but "a promise to pay nothing in particular" ended with the collapse of the Bretton Woods system in the 1970s.
Might it be possible, I wonder, to establish a parallel system of money creation on the model of the Bank of Amsterdam? Could a treaty be negotiated under which countries agreed to take whatever gold (and, possibly silver) bullion they hold in their vaults and mint coins of a standard content and weight, held on deposit, with paper or digital legal tender balances used for inter-governmental transactions. I end here asking others to comment on the virtues or problems this might create.
I disagree wholly with this analysis...Throughout history we have changed, improved and then degraded the system and the means for upholding 'the promise to pay' ..in other words we have 'deregulated' the monetary system and believed (sic) in the mythical powers of 'the market'. That is the failure - and its ideological. It has nothing to do with 'paper currency.'
The lesson I take from history is that we humans have proven very good at production despite socio-political arrangements and institutions the design of which result in a redistribution of wealth from producers to non-producing (i.e., rent-taking) interests. How to solve that part of the problem was intellectually solved by Turgot back in the mid-eighteenth century: require all who control land (i.e, nature) to pay to society an annual fee equal to the full potential annual rental value of whatever land and natural assets are held. Turgot went as far as Henry George did later by calling this the "impot unique" or the only tax necessary to pay for public goods and services.
The money question remains to be intellectually solved. The monetary system has not been deregulated; we still have central banks authorized to create whatever money is deemed necessary to meet the demands of government and the economy, but in the process also overseeing an explosion in the issuance of government securities that must be serviced (by taxation) even if the principal is never likely to be repaid, on refunded, until there is systemic failure. What is the solution or solutions? There are many options under consideration, each with academic and political advocacy and opposition: (1) public banks; (2) money issuance directly by the treasury; (3) local currency networks; (4) commodity-backed money (e.g., precious metals to construction bricks); (5) decentralized crypto-currency systems.
And, in the meantime, while we endlessly debate over the causes and cures for economic instability the the accelerating concentration of income and wealth, there is the growing support for a universal basic income sufficiently high to allow every person to enjoy what the philosopher Mortimer J. Adler called "the goods for a decent human existence." I am all in for the UBI, but with a warning: adding nominal income to everyone without the public capture of rents will result in the increased demand being capitalized into higher land (and, therefore, higher property) prices. The existing owners of land and real estate will be the primary beneficiaries. Therefore, UBI must be accompanied by a public commitment to the construction of millions of units of permanently affordable housing (i.e., housing constructed in deed-restricted community land trusts or subject to resale restrictions, so that housing is shelter and not a speculative investment).
I’d like to mention a class of parallel money satisfying some conditions (outlined at https://t.co/QlwPt624f2) as an auxiliary tool in existing monetary system. Every such kind of money may be denominated in a unit acceptable by large amount of economic agents. Some units, if being agreed among businesses of different countries, may be used to evaluate cross-border deals. (Technical details and hypothetical units are described at armoland.org.) In this scenario International/Regional Clearing Agency/Union could utilize information system (implemented and needs to be tested) which enables automatic [partial] clearing of circular obligations. Outstanding payables may be either transferred to the next business day (hence potentially reduced) or paid by debtor via Clearing Agency and Central Banks of countries involved so that debtor’s/creditor’s accounts get debited/credited in their national currencies. Exchange rates of aforementioned common unit to countries’ currencies may be defined in cooperation among participating countries and Agency what may reduce risk of potential corruption and trade wars.
what about equality of currencies ?
Equality of currencies is only possible if the currency is a coin with the same metallic weight and content of gold and/or silver; or, the paper/digital currency is a receipt for coins held on deposit by a deposit bank.
Ann, BIS is not a serious
administrator. It's a trade
association, and like its central bank counterparts, it has zero
enforcement record. There is little effective "transparency" at BIS.
Large political donors understand the bargain: administrative willfull
blindness in exchange for robust employment across 'branchland' in
every riding in the country.
Administrators allowed to do their jobs and imbalances in capital
flows are resolved,
Finance is all politics.
I agree largely. And your point is even stronger in relation to central bank governors - some of whom are overtly political - and chosen because of their political preferences. And those thgat use the CB to serve financial interests, and not domestic economic interests, are the most poliitical and culpable. But there are able technocrats with skills and knowledge...and both they, and their knowledge cannot be discounted.
Administration without enforcement is marketing There is no record of serious enforcement in monetary administration anywhere.
Be nice if these 'able tevhnocrats' would tell Treasury or MoF (as case may be) to pound sand and respect their 'independence'.
Appreciate the feedback.
Very well written and infromative!
But I would critique two points. One is related to this: "That transfer from public (democratic) authority to private authority over the world economy", the critique is that the version that likely would have emerged would have been extremely centralized and technocratic, making far from anything that's meaningfully "democratic" and likely making its something that would perform far worse (than something that was meaningfully democratic) in the best case and something that would be very prone to corruption.
That sorta leads to the second critique, the Bancor envisioned by Keynes was to have a national account crediting and debiting function that would have sought to manage global trade, this would have been very, very corrupting and the potential source of a new Empire.
In the same vein, the European Payments Union of 1950 also warrants critique. While it aimed to facilitate post-war European economic cooperation, it inadvertently reinforced a centralized, technocratic framework that placed significant power in the hands of a few financial institutions. This structure, far removed from meaningful democratic oversight, risked perpetuating inefficiencies and corruption. Furthermore, its mechanisms for managing intra-European trade could have fostered imbalances and dependencies, potentially becoming a source of economic imperialism akin to Keynes's envisioned Bancor system.
Let's agree to disagree. But please read Massimo Amato and Luca Fantacci's End of Finance...
HI, thanks for the comment!
The European Payments Union (EPU) of 1950, established as a part of the broader strategy of the post war econ set up for Europe, and it was part of a system of extractive and cruel imperialism. This arg can be backed up by examining the underlying mechanisms and the broader geopolitical intentions of the economic programs of the era, such as the Marshall Plan.
The Marshall Plan was not an altruistic endeavor aimed at the economic revival of Europe in way that benefitted the most people, enabled democracy/true political expression, and facilitated human flourishing. It was a strategic initiative that aimed to resurrect and harness Germany's industrial capacities for international business interests and US strategic interests. The plan guaranteed Germany's reconstruction and contrived it a position as the central workshop for Europe. This plan was fundamentally exploitative. It forced almost all of the 14 (or around 14, I may have the num off) of the nations to purchase from Germany, the broader program also enforced austerity on them while not doing so to Germany, it meddled in their internal investments to prevent investing to boost their domestic manufacturing, it prevented protectionism, all to contrive perpetual trade deficits with Germany. And then it forgave all German debts in 1953 while not forgiving the other countries! All these individual programs and initiatives, including the EPU, were part and parcel of the same system,
the Marshall Plan and other institutions of the era, including the EPU, were designed in part to guarantee Germany's economic resurgence while protecting it from its moral and physical debts. U.S. policies deliberately shielded West Germany from reparations and retaliations, ensuring that Germany's recovery would proceed. This protective stance was not motivated by a concern for justice or reparations for wartime atrocities, but rather by int. business interests and a US strategic interest in establishing Germany as the industrial powerhouse of the European economy.
The creation of the EPU was a key component of this strategy. Given the dollar gap and Germany's lack of credit and reserves, the EPU facilitated a system of cashless trade within Europe, which was essential for Germany's centrally contrived place within the European economy. This system, underpinned by U.S. influence, effectively transformed Germany into a net exporter against the interests of most of the people of most other european nations, supplying capital goods for Europe's reconstruction. It imposed a centralized, technocratic framework on Europe, concentrating economic power in the hands of a few financial institutions, screwing over most all of the people in most of the countries that were a part of it permanently hobbling democracy and human flourishing in most European countries.
The EPU reinforced a centralized and extractive economic structure that mirrored the imperialistic ways of old. By first unfairly re-creating Germany's industrial capacity on the backs of others (many of whom had just a few ears prior been severely victimized by Germany!) for the benefit of global business interests and US foreign policy goals. It deliberately created economic dependencies and imbalances, akin to a form of economic imperialism.
The EPU, as a mechanism of the post war economic set up, played a significant role in reinforcing an extractive and centralized economic system that prioritized international business interests and strategic interests over democratic and equitable practices. This system was a form of modern economic imperialism.
I hope your having a great end of the week!
---Mike
Rubbish.
What are you claiming is incorrect?
Thank you for the explanation of the ICU, I only knew of it as quick references in larger texts so far. I wonder, though: if there's a single entity that's in charge of clearing all this, this also sounds like a chokepoint that, once captured, can employ immense leverage, for example by refusing to clear a particular countries payments. And I cannot think of a way of making it capture-proof.
Perfection is unattainable...and human error and weakness is universal. But the EPA is evidence of the system working...and doing so successfully and in a way that US so-called largesse in the form of Marshall Aid did not work. It was destroyed by those that preferred for decisions to be made independent of democratic and human action - 'the invisible hand' of the market.
This sounds like what Keynes proposed, am I right?
Keynes' proposal envisioned the entity debiting and crediting countries country's Bancors (the name of the entities associated international trade currency) with the intention of effectively managing exchange rates between countries in order to manage international trade. I think it would have been a giant source of corruption or at best a giant source of honest screw ups. Either way, at least by the mid 1960s or early 1970s, the US had become very power centralized and its political economy at the top wanted to run persistent trade deficits and would not have allowed the Bancor clearing house to stope them.
If it could achieve the 'giant levels of corruption' that exists under the current system - devoid of human, political oversight - is unlikely.
Hi, thanks for the reply!
But, in my personal opinion, neither one, nor any other single system that is universal and totalizing and completely removed from the ability of more than 99.99% of the human species to influence—and thus locks off large swaths of some of the most important areas of public policy from more than 99.99% of the human species—is necessary. It would result in just as few people having any ability to influence it as the current one; the change would at most just make it be a different infinitesimal share of the population who can influence it than the current one has.
I hope you're having a good morning.