Yes, Bretton Woods, which was the monetary conference in the summer of 1944 at which the Allies in the war against Nazi Germany, Imperial Japan, structured the post-war financial system, monetary economy, the exchange rate system has served ever since as a kind of lighthouse moment. A moment which we look back on and think this was a moment at which the leading figures of an enlightened... this was the United Nations, right? That essentially gathered, the United Nations was formed again in the conflict against fascism. They gathered together to consciously impose an order on the world economy. And then of course, after all, in the decades after World War II, the world economy in fact, both sides of the Iron Curtain, experienced hitherto unprecedented economic growth that ends in the early 1970s, certainly in the west, at the same moment as the Bretton Woods system disintegrates with the unilateral American decision to leave. And so in the minds unsurprisingly of people looking, both politicians, policy makers, thinkers looking for examples of moments where we've been able to summon collective agency to shape the economy, this is as good a moment as it gets. And I don't deny the utility of this. Like, we need stories to live by. We need narratives. We grow up with fairy tales. But I think Bretton Woods is one of those and it should be thought of that way. It's a good story to tell ourselves that this is possible. And I don't mean by that that nothing was achieved. Actual monetary systems were built. But if you dig into the depths of it, what you discover is first of all a kind of slippery evasion of uncomfortable details like the one I've just emphasized, which was this decision was made in the post-war period as an act of cooperation. It was a wartime alliance that was going to stamp itself on the world. So we don't like to talk about that too much and we don't like to talk about the actual economic history of Bretton Woods, which was agreed in '44, first attempted by the British, the strongest economy other than the US in the world probably, and an immediate failure. The Marshall Plan is necessary because Bretton Woods isn't working. Then the Europeans invent their own parallel currency system. And Bretton Woods as originally intended doesn't really come into effect until 1958 and immediately starts coming apart and things like the swap lines, like various types of instruments of monetary improvisation, have to be introduced. By '62 the gold market is put under control. Hence Goldfinger and the whole James Bond scenario. By '67 the thing is having a recession and in '71 the Americans, who were always in some senses the great power behind the system, say enough's enough. We don't want to tie the dollar to gold anymore. And by '73 the system's completely broken. And so, you know, if you do that work of digging into the fairy tale, unpicking the story, if you're minded to do that, that's what history actually tells you. And I think a mature approach to Bretton Woods should treat it this way, right? As a... if we're going to use the fairy tale, let's be conscious that we're using the fairy tale. If we actually want to understand how monetary systems work, if we applied this one, if we agreed to a new Bretton Woods system in 2026, it would come into operation sometime around 2040 and it would be dead by 2060. So, you know, if that's actually what we want, well then let's do another Bretton Woods.
In thinking not just about history and politics, but also you could say about our lives, right? We have a choice between thinking in terms of objects, thinking in terms of structures, thinking in terms of the given, and thinking in terms of flows, of processes, of action, of making, of creation, recreation, reproduction, and then obviously also the possibilities of degeneration, mutation, collapse, crisis, and so on. And I think one of the temptations of thinking about the Bretton Woods system is to ask ourselves, well, when are we going to get a new one like that? And that can be on the one hand a source of great hope, or if you think about the idea of China taking over the world, it can become a source of real fear. Whereas if we think about all of these processes as processes and we think more modestly, not can we get a new Bretton Woods or a new world order, but could we do some ordering? Could we just sort some things out? Could we create some alliances? Could we create some relationships? Could we tie some things together? We would get somewhere. Often critics will say, well, that sounds very fluxy. That sounds very unstable. Don't we need structures to give us stability and rein in the arbitrary rule of power? Sure, they do serve that purpose, but there are also other ways of securing agreement together, right? You can secure, for instance, a project. You can agree that we're going to do change together in a certain direction. That's not a constitution. That's not an order. That's a project. That's a program. And how do we make that powerful? How do we allow that to really orientate the future? We make it credible. We make it large. And we have a program that convinces people that we're serious about it and we really believe. In other words, we do politics of a kind, right? We do politics, real politics, not opinion-polled moving a percentage point here or there, but a certain sort of commitment to project. And that I think we have demonstrable reason to think actually works. If you look at the difference, a lot of the papers at this conference have focused on this, between the effectiveness of Chinese industrial policy and Western industrial policy. One of the things that's different is players in the Chinese electric vehicle market, for instance, know the regime is serious about this objective. And it's that combined with the money that really makes the difference. So common purpose, common direction, clarity of commitment, those sorts of things which are where politics and policy really meet may turn out to be fundamental to providing stability under circumstances of flux. Right? Pure rigidity is not going to work. The Scholz promise that everyone can just have their nice German life forever is fake news. It's a kind of populism in my view. The promise that we can make is that we will support people in the process of change. That's a plausible commitment and that's I think where a politics of a, a progressive constructive politics might actually find a starting point.
I do think that retrotopia is one of the temptations of the current moment. Any moment of massive flux and change, I think it's bound to be true that a certain sort of traditionalism, nostalgia, has a real appeal. And we see it in lots of different ways. I mean the most obvious is the Make America Great Again slogan, MAGA, but you also see it I think, without being too harsh, in the commitments of German politics for instance to the defense of industry in Germany as we know it. And there are very good reasons to want to defend industrial jobs and the industrial sector in Germany, but it's the 'as we know it' bit where I think things get difficult and where we do slide back into the zone of retrotopia because the 1960s maybe aren't coming back. No one in their right mind will want to go back to the 70s. They're not coming back, that era. Maybe even the early Merkel moment isn't coming back with the football summer and Germany on an upswing and exporting to China and building out the industry. None of that's coming back. On the other hand, there are very legitimate concerns about the future of industry, of locations, of workplaces, of jobs, and looking forward, the trajectory of technological innovation. So I don't think there's any alternative but the old mantra, which is intelligent industrial policy and joint European action. It's those two things put together which make Europe... I think quite reasonably, there's a lot of Americans at this conference, all of them now rather kind of eyeing up Europe and thinking well maybe there's hope here. And you know, more realistically I think that is where the hope is, right? That this could be a moment of crisis, of challenge, at which Europe actually finally does begin to overcome some of the hurdles to effective cooperation and scale. It's the two together, right, that we need: direction, cooperation, scale, that have so far stymied European policy. The problem, and this one should also say so as to not fall if you like into a utopianism, is to recognize the fact that these questions have been on the agenda for the best part of a decade. Right? When we talk about European sovereignty, when we talk about strategic autonomy, when we talk about the challenge of common action in Europe and the need for scale, this question has been posed for more than a decade and no country has been more resistant to the idea of getting on board with that than Germany. And Germany remains the most powerful player in the European system. So I think the challenge for a realistically future-orientated policy is to take both of those things on board, which is to insist that for a long time now in historical terms these have been the right answers and there is something wrong that we're still having to actually trot them out and argue as hard as we are and as effectively as we are. Of course we should go on doing it. As Max Weber said, politics is the boring of hard boards and we have to go on drilling those boards, but it's nevertheless something we should be realistic about. And push and push and push because the pressures are huge, right? Otherwise, the future is going to be made elsewhere. It's going to be made in some oligarchic nightmare in the United States or it's going to be made by China. And they are both making, right? They are both ordering, reordering, disrupting as we speak. So again, there's no safety in the status quo. It's not staying that way. The real question is, do we become proactive and start maneuvering ourselves or do you get run over?
