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This fall, you’ll likely hear many reminiscences of 1944. That was the year that John Maynard Keynes and Harry Dexter White, British and American envoys respectively, co-founded the Bretton Woods financial system. Eighty years later, as the world faces rising nationalism, protectionism and war, there is a dire need to reignite that spirit of cooperation.
Ahead of the IMF and World Bank’s annual meetings in Washington next month, there will be a tribute to the agreements that gave birth to these institutions. At the same time, their top executives are pondering how to recapture the zeitgeist of 1944.
This is very welcome. But, in my opinion, there is now another date that deserves even more attention. It’s 1919.
That was the year Keynes wrote his famous essay, “The Economic Consequences of Peace,” in which he expressed his horror at the policies of the victors of World War I.
That message is now chillingly real. I would like to tape Keynes’ words to the desks of all the leaders gathered in the United Nations General Assembly. And/or you want to turn the word into a meme for an audience of all ages to see.
At issue is the danger of complacency. When Keynes wrote his essays, he lived in a world that was experiencing an unprecedented explosion in the movement of traded goods, money, and people. On the eve of World War I, a wealthy “Londoner” could order many of the earth’s products by telephone while drinking his morning tea in bed. . . And rightly hoping for early delivery to his doorstep. ”
The happy creature can also “venture and share his wealth in natural resources and new ventures in all parts of the world.” . It ensures “future outcomes and benefits” and “cheap and comfortable means of travel to any country or climate, without passports or other formalities.”
In other words, globalization seemed like a great thing to elites. So were two other key features of the prewar period: free market capitalism and an explosion of technological innovation. This situation seemed so “normal, certain, and permanent” that the same elites began to notice signs of domestic and geopolitical stress, meaning that these three factors were affecting poorer countries and peoples. He paid little attention to the signs of pain he was causing.
Thus, “militarism and imperialism, racial and cultural conflicts, projects and politics of monopoly, restriction, and exclusion” are seen as “nothing more than daily newspaper entertainment,” that is, mere fodder for dinner discussion. I did.
And when the victors of World War I gathered in Paris in 1919, they were convinced that this war was nothing more than a slowdown on the path to progress, so they decided to impose cruel punitive policies on Germany. I felt that I could do it. Keynes’ (prescient) warning that such a politics of revenge would lead to more “conflicts” – extremist politics and war – went unheeded.
115 years later, there is a big difference from 1919. Today’s transformative technology is not radio but artificial intelligence, and European leaders no longer consider imperialism the norm (with the exception of Russia). More importantly, we are not out of a full-scale world war. Or not yet.
But Keynes’s warning about the dangers of complacency seems strangely familiar. After all, the elites of the 21st century have once again weathered the waves of globalization, capitalism, and innovation. And they also think the combination of the three is so good that it will continue to spread.
Like their predecessors, they have been slow to recognize how rising political and geopolitical tensions and the resentment felt by the losers of this trifecta have fueled populism in recent decades. Look at how badly Western business leaders have been affected by events in Russia. Or the collective shrug that emerged a year ago when the IMF warned that protectionism and geopolitical rifts could reduce global economic growth by as much as 7 percent.
And while business leaders are belatedly waking up to these risks, it feels like most still think such stress is just a speed bump to further progress. It remains difficult to imagine things reversing. As IMF chief Kristalina Georgieva said last year, in recent decades global per capita income has increased eight times, global capital flows tenfold and trade sixfold.
But 1919 shows why we need to imagine the unimaginable. At the end of the Paris “peace” conference, Keynes wrote a letter to his mother expressing his deep “melancholy” at the “evil” of revenge politics and the complacency of those around him. And, as he predicted, protectionism and political extremism then exploded, leading to World War II.
We are not condemned to repeat this dark pattern. But to avoid that, our business and political leaders need to reject politics of retaliation in China, the Middle East, or elsewhere and become even more vocal defenders of globalization, capitalism, and technological innovation. there is. Above all, we need to show that these three elements benefit everyone, not just the gilded elite. You can’t ignore the losers. There’s a reason the ghost of Keynes haunts us all.
gillian.tett@ft.com