Unrealised global governance innovations from 1942 to 1950

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A (very) short introduction to an essay on unrealised institutions in global governance in the post-war era. The World Food Board, International Clearing Union and International Trade Organization …

A (very) short introduction to an essay on unrealised institutions in global governance in the post-war era. The World Food Board, International Clearing Union and International Trade Organization each went unrealised - the presentation introduces the how, why and what went wrong, before hinting at the lessons we can learn from these failures.

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  • As you read in the abstract, I’m going to look at what didn’t happen, in an age of creation. I’ll set out the ideals – how they were proposed, and what happened to them.Food is a good place to start:
  • This is FDR agreed – his four freedoms speech – the third of which was freedom from want.
  • The very first UN conference (and technically of course it’s not the UN at this point) is the 1943 Hot Springs Conference on Food and Agriculture photos.There, the nations agree to found the UN FAO – and here
  • , in Quebec, October 1945 the FAO is founded.
  • This is sir JBO, who wasn’t an official rep cos the British had got upset with him. He was however a renowned nutrition scientistAnd he said: 'if the nations cannot agree on a food program affecting the welfare of people everywhere, there is little hope of their reaching agreement on anything'After going through 17 other candidates, eventually people can only agree on BO. And gets to work on a project, presented at 1946 Christiansborg, in Denmark. He proposes a World Food Board.
  • - bear in mind that Europe's starving
  • , there had been 2-4m deaths in Bengal two years before and that earlier that year the first World Food Survey has found that 1bn people (remember there are only 2.38bn on the planet at this time);
  • Everyone’s like ‘bravo bravo’, US delegate says: ‘ we strongly favour the general objectives laid down by Sir BO’ – i.e. we don’t agree with him; so they send it away to a Commission, which reports back in a positive more detailed fashion – to no avail. The US and Britain and rejected the whole idea, Soviets were suspicious – the Commissions findings aren’t adopted in the meantime...the Bretton Woods institutions have been created, and they go on to become bastions of US power and US theory’s of development and capitalism.
  • This is Keynes at Bretton Woods, in 1944.This is the idea of an International Clearing Union – based on an international currency, the Bancor. The idea was that each member state would have a set amount of bancor credits, and if at the end of a trading year, they had spent more on exports than they had on imports, they could draw on these credits as an overdraft. On the flipside, if you earned more than you spent, your credits would grow – and eventually, if your credits grew too large you might be required to revalue your currency or pay ‘interest’. All they were really doing, Keynes argued, was applying domestic commercial banking to countries.The idea was that it would allow the seriously damaged economies of Europe (esp the UK) to spend its way back to full employment, while not creating a huge savings glut on the other side of the Atlantic – it would encourage them to keep spending.
  • Not surprisingly, the US wasn’t hugely enamoured: and at the same time as Keynes, this man, HDW is working up proposals in the US: he suggests an International Monetary Fund – where the funds facility is massively more limited – and focused on fixed exchange rates to prevent competing currency devaluations. Yet this would mean severe balance of payments shortages – not great for Europe. There follows a great exchange of ideas over the next year, before the allied nations meet in 1944 at the United Nations Monetary and Financial Conference Bretton Woods, New Hampshire to discuss how its’ going to go down. The US wins and the international currency never happens. Keynes’ hopes are dashed a second time, at the inaugural conference of the IMF and Bank – Savannah, Georgia in 1946: he argues for a New York base for the institution; and for PT directors, appointed from national institutions – that way an organisation crafted on the relationship between nations, closely situated near the UN complex, and New York financial centre – instead
  • the US gets its institution – to direct the rest of the world, based , so conveniently in Washington.
  • The third part of Bretton Woods agreement after then Fund, Bank - was meant to be the ITO.And at London and Geneva, 1946-7, the nations agree to remove quantitative restrictions on imports; the Keynesians manage to establish the importance of full employment; Nehru (not that one, but a cousin) manages to get another chapter in the treaty on development. Pretty cool – but, they split the negotiations into two – the ITO, and the actual reciprocal tariff reductions and the general clauses of obligations on tariffs.That latter section becomes the GATT.
  • But here in Havana 1948, agreed by delegates across the economic spectrum – the US agrees to developing world protection of infant industries, , and to one-country one-vote.
  • Due to certain US laws – the GATT part can go through straightaway – but the rest of the charter constitutes a treaty, so has to get 2/3 votes in Senate...so, given the lack of support for the other chapters in the US, and having got the GATT, Truman is not moved to push it until 1950, within weeks, the Korean War broke out and they withdraw it from the Senate. All that other goodness lost.

Transcript

  • 1. Hope and failure in a dayof miraclesUnrealised global governanceinnovations from 1942 to 1950
  • 2. flickr.com/photos/keithwj/
  • 3. This is Sir John BoydOrr. Renowned nutritionscientist. Founder of theRowett Institute.Great Scot.Not an officialrepresentative at theQuebec conference ashe’d upset the BritishGovt with reports ofchild malnutrition inWW2.
  • 4. Due to his prominence as ascientist, he’s invited tospeak at the conferenceanyway.He gives a kick-ass speech,helping the delegatesrecognise the importanceof their work.As a result, the FAO electshim their first Director-General.
  • 5. if the nations cannot agree ona food program affecting thewelfare of people everywhere,there is little hope of theirreaching agreement on anything’‘I want no millionaire to havean orange, until all childreneverywhere have had food’ Boyd Orr
  • 6. Meanwhile
  • 7. In 1943, the world hadwitnessed the Bengal Famine,in which somewhere betweentwo and four million peopledied.
  • 8. And in 1945, theFAO’s first WorldFood Survey finds: One billion people are not getting an adequate daily calorie intake (At this time there are only 2.4bn people on the planet.)
  • 9. Flickr: Esmtll
  • 10. The World Food BoardAn executive agency of UN FAO with three tasks:1. Manage buffer stocks to stabilise prices2. Provide capital for the developing world, supplied at low rates. Agricultural development = better fed people = better productivity = growth = long term ability to pay back the capital loans.3. Provide emergency aid: at a certain point, money doesn’t matter – if people are starving, feed them. With multilateral food aid from any buffer stocks surplus
  • 11. But the US doesn’t fancypaying for something itcan’t control.The UK doesn’t want tolose cheap imports from itscolonies.
  • 12. Meanwhile, at Bretton Woods..
  • 13. International Clearing Union 1. Each member state starts with a set amount of Bancor credits. 2. If they spent more on imports than they gained through exports, they could draw on Bancor credits as an overdraft. 3. On the flipside, if they earned more than they spent, their credits would grow. 4. An imbalance, credit or debt, would be discouraged through interest payments and ultimately currency revaluations.
  • 14. All they were really doing,Keynes argued, was applyingdomestic commercial bankingprinciples to the closedinter-state economy.The idea was that it would allowthe seriously damagedeconomies of Europe (especiallyBritain) to spend their way backto full employment, while notcreating a huge savings glut onthe other side of the Atlantic, costhe US would be incentivised tokeep spending.
  • 15. But the clearing uniondoesn’t benefit the US.Instead, Whiteproposes Int’lMonetary Fund underUS control. #Wins
  • 16. Photo: endthelie.com
  • 17. Meanwhile, in London, (andthen shortly afterwards inGeneva and then Havana)...
  • 18. www.unmultimedia.org
  • 19. www.unmultimedia.org
  • 20. What might have been?What can we learn fromfailure?
  • 21. It’s about people.Brilliant individuals likeKeynes could only fighttheir corner so hardbefore they lost theirbackers at home.The passion of those likeBoyd Orr might haveaggravated others, andthey may haveoverlooked otheropportunities to see theirgoals met.
  • 22. But ideas don’t die. Chinese Finance Minister Zhou Xiaochuan recently suggested that the world could reconsider Keynes’ bancor.
  • 23. So watch this space.
  • 24. FIN