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State-led or capital-driven? The fall of Bretton Woods and the German currency float reconsidered

journal contribution
posted on 2023-06-08, 15:27 authored by Julian GermannJulian Germann
This article argues that the lead role of West Germany in the transition from fixed to floating exchange rates sits uneasily with accounts that conceptualise the breakdown of Bretton Woods in terms of hegemonic power politics, the influence of global economic interests or a neoliberal paradigm shift. Short of a convincing explanation, the German currency float seems to be a prime example of states surrendering to financial markets. The article offers an alternative interpretation that focuses on the nexus between state agency and capital accumulation. German authorities were indeed confronted with a destabilising influx of dollars that undermined their available policy options. But as they realised that these inflationary flows emanated from the same export-oriented forces in whose interest they had sought to hold on to an undervalued currency, they chose floating in order to regain command over liquidity and create an anti-inflationary programme that was at the heart of Germany's subsequent ability to better manage the 1970s crisis than its partners. Attention to the particular circumstances and consequences of these ‘structured choices’, I conclude, may offer a more compelling account of financial globalisation as a state-led project than those which generalise from the US context.

History

Publication status

  • Published

File Version

  • Published version

Journal

New Political Economy

ISSN

1356-3467

Publisher

Taylor & Francis

Issue

5

Volume

19

Page range

769-789

Department affiliated with

  • International Relations Publications

Notes

Awarded the New Political Economy Graduate Student Prize for Best Paper in 2013.

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2013-07-26

First Compliant Deposit (FCD) Date

2021-03-08

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