Essay About Significance Of The Collapse Of Bretton Woods Focuses And Western Europe

Debate About the Significance of the Collapse of Bretton Woods Focuses on Two Main Issues
Significance: Debate about the significance of the
collapse of Bretton Woods focuses on two main issues:
why it happened and what it led to. For many commentators,
the end of Bretton Woods reflected a decline in US
hegemony (Gilpin 1987). For hegemonic stability theorists,
a hegemonic power is one that is willing and able to
act in ways that allow other states to make relative gains,
so long as these help to sustain the liberal economic
order. However, confronted by the rise of Japan and
Western Europe and facing a growing balance-ofpayments
deficit, the USA opted to place its national
interests before those of the liberal world economy.
Others, nevertheless, argue that the end of Bretton Woods
was not so much an example of declining hegemony but
an exercise of audacious hegemonic power in its own
right. In this view, the USA had become a ‘predatory
hegemon, willing to dismantle a system of global governance
that no longer served its interest. This process was
completed in the 1980s by the establishment of the
‘Washington consensus. For economic liberals, however,
these changes had less to do with hegemonic power and
more to do with the futility of trying to regulate a market
capitalist system. From this perspective, Bretton Woods
was doomed to collapse, sooner or later, under the weight
of its economic contradictions: markets and regulation are
simply not compatible.