Britain, Bretton Woods and the Crisis of the World Economy, 1945–1951

Abstract

For most scholars working in the field of international political economy (IPE), the 1950s is a forgotten decade. Sandwiched between the well-trawled period of postwar reconstruction (1945–51) and the so-called ‘golden age’ of the 1960s, the decade is seen almost exclusively through the lens of the Suez crisis, the Treaty of Rome and the consolidation of bipolar Cold War politics. There has been relatively little academic interest in charting the development of international economic relations in the 1950s, and this is particularly true with respect to international monetary policy. As a result, most IPE studies tend to assume that during this period the world economy was governed by the rules and institutions established in accordance with the Bretton Woods Agreement of 1944. Although it is often pointed out that the practice of the ‘system’ diverged from the theory of its founders, it is nevertheless a cardinal assumption of the discipline (and of political science and international relations more generally) that Bretton Woods operated quietly and effectively in the 1950s to usher in a period of unrivalled growth and prosperity in the world economy.¹ This study shows, however, that there is little evidence to support this assumption.