Defining Development and its Relationship with the Bretton Woods System: a Critical Analysis

Type 6 Bungalow: built during early 1900’s. Lucknow, India. Photograph by the Author.

The Bretton Woods System and the United Nations

The Bretton Woods conference of 1944, in New Hampshire was led by the United States in alliance with the United Nations. The World Bank (WB) and the International Monetary Fund (IMF) were created during this time to combat instability, agree on monetary exchange rates and provide an international monetary alliance in advancing development across the world. Together, these institutions came to be known as the Bretton Woods System. Although the Bretton Woods system became a part of the United Nations system in 1945, it has always remained entirely independent from making its decisions either from the UN General Assembly, or ECOSOC (Economic and Social Council of the UN). The system’s ability to shape agenda, generate revenue to fund its own operations and the specialized knowledge held by its experts has helped considerably in shaping its approach. This approach, critics have argued, has geared it towards creating the intellectual differences between the Global South and the Global North.

Globalization and the Bretton Woods System

Prof. Richard Peet, a critic of neo-liberal development theory argues that globalization has created power for a few prodigious institutions that operate under undemocratic principles which in turn drastically affect the livelihoods of many peoples. With the collapse of the fixed exchange rate system in the 1970’s, the IMF’s role has changed from financial assistance to requiring states to perform structural changes in their economies. Changes include implementing market reforms, privatizing government owned industries and propelling conditions on loans. Critics have argued that these structural loans instead of alleviating poverty, increase poverty and “decrease the ability of individuals and societies to decide their own destinies.” They also claim that the Bretton Woods institutions have become involved in members’ economies in ways that were specifically rejected by their founders, that they have involved themselves and intervene in their member’s income, labor, industrial and environmental policies.

Globalization and Development Systems

Different schools of international development systems have focused on emphasizing different solutions for various problems. Most of these theories, institutions and policies, specifically channeled through the Bretton Woods system have risen from the Global North and have been criticized over the years by several analysts from the Global South for favoring neo-colonialist attitudes. Besides the Bretton Woods system the main systems which have largely defined global economies are:

  • Liberalism: the ideology is based on notions of the free movement of goods, free trade, capital and labor. Individuals and households are given priority instead of the state. Liberalism also advocates the least amount of regulation in treaties involving free trade. This system does not lay emphasis on social issues that can rise due to the results of deregulation and free trade policies.
  • Marxism: emphasizes redistribution and concentrates on class struggles and the rights of the proletariat and their roles in production. Marxism also focuses on revolutions to achieve equality amongst the classes which are produced due to acute economic gaps within the labor markets.
  • Western Capitalism: class, markets and states and the role of culture is recognized.

The North-South Gap and the Concept of Sustainable Development

The North-South gap in economic development comprises of the Global North, a region comprising of all the highly industrialized nations while the Global South refers to the countries which are lacking in terms of development and technology. The Global South is much larger in terms of area and population and seeks to improve inequality and poverty which it attributes to centuries of colonialism by the Global North.

Conclusion

Critics have pointed out that the development ideology has had a dismal record in any country or continent in which it has been applied. Although the rapid advent of industrialization, the consolidation of markets and the spread of international trade has certainly created more wealth, it has also widened the gap between the rich and poor in terms of extreme income inequalities.

References

Barnett, Michael N., and Martha Finnemore. “Chapter 3.” Rules for the World: International Organizations in Global Politics. Ithaca, NY: Cornell UP, 2004. 46. Print.

writes on international affairs | cyber • diplomacy • intelligence studies • statecraft • a private citizen • cosmopolitan • dedicated biryani fan •

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store