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Globalization

Globalization

Globalization describes the changes in societies and the world economy that result from dramatically increased international trade and cultural exchange. It describes the increase of trade and investing due to the falling of barriers and the interdependence of countries. In specifically economic contexts, the term refers almost exclusively to the effects of trade, particularly trade liberalization or "free trade" (however, see "meanings" below). free trade showing some of the characteristics of globalization. Here, the corporation McDonalds is marketing their "McArabia" meal, consisting of grilled kofta.]] From 1910 to 1950, a series of political and economic upheavals dramatically reduced the volume and importance of international trade. But these trends reversed starting with WWI and continuing through WWII, when the Bretton Woods institutions were created (i.e. the IMF and the World Bank). After World War II, international trade dramatically expanded, fostered by international economic institutions and rebuilding programs. From the 1970s, the effects of this trade became increasingly visible in terms of benefits and disruptive effects. It is useful to distinguish economic, political, and cultural aspects of globalization, although all three aspects are closely intertwined. The other key aspect of globalization is changes in technology, particularly in transport and communications, which it is claimed are creating a global village.

Meanings

"Globalization" can mean:
- Globalism, if the concept is reduced to its economic aspects, can be said to contrast with economic nationalism and protectionism. It is related to laissez-faire capitalism and neoliberalism.
- Neocolonialism - the process of persuading rulers of (generally) lesser developed countries (LDCs) to alter political and economic policies in exchange for receiving loans from other states or, more commonly, through loans by state cartels such as the World Bank.
- It shares a number of characteristics with internationalization and is often used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation-state or national boundaries.
- Making connections between places on a global scale. Today, more and more places around the world are connected to each other in ways that were previously unimaginable. In Geography, this process is known as complex connectivity, where more and more places are being connected in more and more ways. Arjun Appadurai identified five types of global connectivity:
  - Ethnoscapes: movements of people, including tourists, immigrants, refugees, and business travellers.
  - Financescapes: global flows of money, often driven by interconnected currency markets, stock exchanges, and commodity markets.
  - Ideoscapes: the global spread of ideas and political ideologies. For example, Green Peace has become a worldwide environmental movement.
  - Mediascapes: the global distribution of media images that appear on our computer screens, in newspapers, television, and radio.
  - Technoscapes: the movement of technologies around the globe. For example, the Green Revolution in rice cultivation introduced western farming practices into many developing countries. Although Appadurai's taxonomy is highly contestable, it does serve to show that globalization is much more than economics on a global scale.
- In its cultural form, globalization has been a label used to identify attempts to erode the national cultures of Europe, and subsume them into a global culture whose members will be much easier to manipulate through mass media and controlled governments. In this context, massive legal or illegal immigration has been allowed, mainly in European countries.
- The formation of a global village — closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between "world citizens", and creation of a global civilization.
- Economic globalization — there are four aspects to economic globalization, referring to four different flows across boundaries, namely flows of goods/services, i.e. 'free trade' (or at least freer trade), flows of people (migration), of capital, and of technology. A consequence of economic globalization is increasing relations among members of an industry in different parts of the world (globalization of an industry), with a corresponding erosion of National Sovereignty in the economic sphere. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May, 1997). The World Bank defines globalization as the "Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries".
- In the field of Management, globalization is a Marketing or Strategy term that refers to the emergence of international markets for consumer goods characterized by similar customer needs and tastes enabling, for example, selling the same cars or soaps or foods with similar ad campaigns to people in different cultures. This usage is contrasted with internationalization which describes the activities of multinational companies dealing across borders in either financial instruments, commodities, or products that are extensively tailored to local markets.
- In the field of software, globalization is a technical term that combines the development processes of internationalization and localization.
- The negative effects of for-profit multinational corporations — the use of substantial and sophisticated legal and financial means to circumvent the bounds of local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.
- The spread of capitalism from developed to developing nations.
- "The concept of Globalisation refers both to the compression of the world and the intensification of consciousness of the world as a whole" - Roland Robertson

History

Since the word has both technical and political meanings, different groups will have differing histories of "globalization". In general use within the field of economics and political economy, however, it is a history of increasing trade between nations based on stable institutions that allow firms in different nations to exchange goods with minimal friction. The term "liberalization" came to mean the combination of laissez-faire economic theory with the removal of barriers to the movement of goods. This led to specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade. The period of the gold standard and liberalization of the 19th century is often called "The First Era of Globalization". Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was David Ricardo's work on Comparative advantage and Say's Law of General equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is contentiously debated. The "First Era of Globalization" is said to have broken down in stages beginning with the first World War, and then collapsing with the crisis of the gold standard in the late 1920's and early 1930's. Countries that engaged in that era of globalization, including the European core, some of the European periphery and various European offshoots in the Americas and Oceania, prospered. Inequality between those states fell, as goods, capital and labour flowed remarkably freely between nations. Globalization in the era since World War II has been driven by Trade Negotiation Rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

Nature and existence of globalization

There is much academic discussion about whether globalization is a real phenomenon or only an analytical artifact (a myth). Although the term is widespread, many authors argue that the characteristics attributed to globalization have already been seen at other moments in history. Also, many note that such features, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear. For example, the United States global interventionist policy is also a stumbling point for those who claim that globalization has entered a stage of inevitability. Thus, many authors prefer the term internationalization rather than globalization. In internationalization, the role of the state and the importance of nations are greater, while globalization in its complete form eliminates nation states. So, they argue that the frontiers of countries, in a broad sense, are far from being dissolved, and therefore this radical globalization process is not happening, and probably will not happen (see Linda Weiss), considering that in world history, internationalization never turned into globalization (the European Union and NAFTA are yet to prove their case). However, the world increasingly shares problems and challenges that do not obey nation-state borders, most notably pollution of the natural environment, and the movement previously known as anti-globalization has transformed into a movement of movements for globalization from below, seeking, through experimentation, forms of social organisation that transcend the nation-state and representative democracy. Whereas the original arguments that globalization is taking place can be refuted with stories of internationalisation, as above, the emergence of a global movement is indisputable and therefore we can speak of a real process towards a global human society of societies. Other authors have argued that we are in transition to a planetary phase of civilization; the exact form and character of the global society is contested and will be determined by the choices we make in the critical decades ahead. For example, the [http://www.gsg.org/ Global Scenario Group] has outlined alternative visions of the global future, with "market forces" or economic globalization being just one option, contrasted with "policy reform," "fortress world," "breakdown," "eco-communalism" and a "new sustainability paradigm."

Characteristics

Globalization has become identified with a number of trends, most of which may have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends is debated.
- Economically
  - Increase in international trade at a faster rate than the growth in the world economy
  - Increase in international flow of capital including foreign direct investment
  - Erosion of national sovereignty and national borders through international agreements leading to organizations like the WTO and OPEC
  - Development of global financial systems
  - Increase in the share of the world economy controlled by multinational corporations
  - Increased role of international organizations such as WTO, WIPO, IMF that deal with international transactions
  - Increase of economic practices like outsourcing, by multinational corporations
- Culturally
  - Greater international cultural exchange,
  - Spreading of multiculturalism, and better individual access to cultural diversity, for example through the export of Hollywood and Bollywood movies. However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures also takes place.
  - Greater international travel and tourism
  - Greater immigration, including illegal immigration
  - Spread of local foods such as pizza and Indian food to other countries (often adapted to local taste)
- Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites and telephones
- Increases in the number of standards applied globally; e.g. copyright laws and patents
- The push by many advocates for an international criminal court and international justice movements (see the International Criminal Court and International Court of Justice respectively).
- Some argue that even terrorism has undergone globalization, with attacks in foreign countries that have no direct relation with the own country. Barriers to international trade have been considerably lowered since World War II through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:
- Promotion of free trade
  - Of goods:
    - Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
    - Reduced transportation costs, especially from development of containerization for ocean shipping.
  - Of capital: reduction or elimination of capital controls
  - Reduction, elimination, or harmonization of subsidies for local businesses
- Intellectual Property Restrictions
  - Harmonization of intellectual property laws across nations (generally speaking, with more restrictions)
  - Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the US)

Anti-globalization

US Main article: "Anti-globalization". Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term; it can lead to some confusion, as activists typically oppose certain aspects or forms of globalization, not globalization per se. Activists themselves, for example Noam Chomsky, have said that this name is meaningless as the aim of the movement is to globalize justice. Indeed, the global justice movement is a common name. Many activists also unite under the slogan "another world is possible", which has given rise to names such as altermondialisme in French. There is a wide variety of kinds of "anti-globalization". In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations and the working class into account. Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor. Many "anti-globalization" activists see globalization as the promotion of a corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that increasing autonomy and strength of corporate entities increasingly shape the political policy of nation-states. Some "anti-globalization" groups argue that globalization is necessarily imperialistic, is one of the driving reasons behind the Iraq war and that it has forced savings to flow into the United States rather than developing nations. Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises. The main opposition is to unfettered globalization (neoliberal; laissez-faire capitalism), guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are supposedly not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism". Some "anti-globalization" activists object to the fact that the current "globalization" globalizes money and corporations, but not people and unions. This can be seen in the strict immigration controls in nearly all countries, and the lack of labour rights in many countries in the developing world. Another more conservative camp opposed to globalization are state-centric nationalists who fear globalization is displacing the role of nations in global politics and point to NGOs as impeding upon the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan and Jean-Marie Le Pen. The movement is very broad, including church groups, national liberation factions, left-wing parties, environmentalists, peasant unionists, anti-racism groups, libertarian socialists, and others. Most are reformist (arguing for a more humane form of capitalism) and a strong minority is revolutionary (arguing for a more humane system than capitalism). Many have decried the lack of unity and direction in the movement, but some such as Noam Chomsky have claimed that this lack of centralization may in fact be a strength. Protests by the global justice movement have forced high-level international meetings away from the major cities where they used to be held, into remote locations where protest is impractical.

Pro-globalization (globalism)

Supporters of democratic globalization can be labelled pro-globalists. They consider that the first phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of World citizens. The difference with other globalists is that they do not define in advance any ideology to orient this will, which should be left to the free choice of those citizens via a democratic process. Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, they claim that this leads to lower prices, more employment and higher output. Libertarians and other proponents of laissez-faire capitalism say higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world produce higher levels of material wealth. They see globalization as the beneficial spread of democracy and capitalism. Critics argue that the anti-globalization movement uses anecdotal evidence to support their view and that worldwide statistics instead strongly support globalization:
- the percentage of people in developing countries living below US$1 (adjusted for inflation and purchasing power) per day has halved in only twenty years [http://iresearch.worldbank.org/PovcalNet/jsp/index.jsp], although some critics argue that more detailed variables measuring poverty should instead be studied [http://www.transnational.org/features/chossu_worldbank.html].
- Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Child mortality has decreased in every developing region of the world [http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=2429]. Income inequality for the world as a whole is diminishing [http://www.columbia.edu/~xs23/papers/worldistribution/NYT_november_27.htm].
- Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000 [http://www.freedomhouse.org/reports/century.html].
- The proportion of the world's population living in countries where per-capita food supplies are under 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s.
- Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.
- There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water [http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VC6-4F02KWN-8&_user=10&_coverDate=01%2F01%2F2005&_rdoc=1&_fmt=full&_orig=browse&_cdi=5946&_sort=d&_docanchor=&_artOutline=Y&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=273c9d354f2f52b3b14606a5a3b2d69f#bfn25]. However, some of these improvements may not be due to globalization, or may be possible without the current form of globalization or its negative consequences, to which the global justice movement objects. Many pro-capitalists are also critical of the World Bank and the IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. Many loans have been given to dictators who never carried out promised reforms, instead leaving the common people to pay the debts later. They thus see too little capitalism, not too much. They also note that some of the resistance to globalization comes from special interest groups with conflicting interests, like Western world unions. Others, such as Senator Douglas Roche, O.C., simply view globalization as inevitable and advocate creating institutions such as a directly-elected United Nations Parliamentary Assembly to exercise oversight over unelected international bodies.

See also


- Marketization
- Mundialization
- Westernization

External links

[http://216.194.69.38/users/roche/writings/documents/nuclear/UNParReform.pdf Douglas Roche's proposal for UN Parliamentary Reform, in PDF] Category:Postmodernism Category:International trade Category:Culture Category:Society Category:Business Category:Politics Category:Neologisms Category:Types of words Category:Word coinage Category:Linguistics Category:Cultural assimilation ja:グローバリゼーション

International trade

International trade is the exchange of goods and services across international boundaries. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the usually primary meaning of "globalization". International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

Regulation of international trade

Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure. Communist and socialist nations often believe in autarky, a complete lack of international trade. Fascist and other authoritarian governments have also placed great emphasis on self-sufficiency. No nation can meet all of its people's needs, however, and every state engages in at least some trade. Free trade is usually most strongly supported by the most economically powerful nation in the world. The Netherlands and the United Kingdom were both strong advocates of free trade when they were on top, today the United States, the United Kingdom and Japan are its greatest proponents. However, many other countries - including several rapidly developing nations such as India, China and Russia - are also becoming advocates of free trade. Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services. During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression. The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, NAFTA between the United States, Canada and Mexico, and the European Union between 25 independent states. There is also the newly established Free Trade Area of the Americas (FTAA), which provides common standards for almost all countries in the American continent.

Risks in international trade

The risks that exist in international trade can be divided into two major groups:

Economic risks


- Risk of insolvency of the buyer,
- Risk of protracted default - the failure of the buyer to pay the amount due within six months after the due date, and
- Risk of non-acceptance
- Surrendering economic sovereignty

Political risks


- Risk of cancellation or non-renewal of export or import licences
- War risks
- Risk of expropriation or confiscation of the importer's company
- Risk of the imposition of an import ban after the shipment of the goods
- Transfer risk - imposition of exchange controls by the importer's country or foreign currency shortages
- Surrendering political sovereignty
- International trade de-humunizes the economy.

See also


- List of international trade topics
- Balance of trade
- Comparative advantage
- Customs union
- Economics
- Free trade
- Free trade area
- Most favoured nation clause
- OPEC
- Trade bloc
- List of countries by imports
- List of countries by exports Category:International trade Category:Economics

Liberalization

In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. Liberalization of autocratic regimes may precede democratization (or not, as in the case of the Prague Spring). In the arena of social policy it may refer to a relaxation of laws restricting for example divorce, abortion, homosexuality or drugs. Most often, the term is used to refer to economic liberalization, especially trade liberalization or capital market liberalization, policies often referred to as neoliberalism.

Liberalization and privatization

Although economic liberalization is often associated with privatization, the two can be quite separate processes. For example, the European Union has liberalized gas and electricity markets, instituting a system of competition; but some of the leading European energy companies (such as EDF and Vattenfall) remain partially or completely in government ownership. Liberalized and privatized public services may be dominated by just a few big companies, particularly in sectors with high capital costs such as water, gas and electricity. In some cases they may remain legal monopolies, at least for some part of the market (e.g. small consumers).

Liberalization vs Democratization

There is a distinct difference between liberalization and democratization, which are often thought to be the same concept. Liberalization can take place without democratization, and deals with a combination of policy and social change specialized to a certain issue such as the liberalization of government-held property for private purchase, whereas democratization is more politically specialized that can arise from a liberalization, but works in a broader level of government.

See also


- Electricity liberalization
- Oligopoly
- Marketization Category:Macroeconomics Category:Liberalism als:Liberalisierung



Kofta

Kofta is the common English name for a Middle Eastern food, at its most basic consisting of balls of minced meat mixed with spices or onions. They can be grilled, fried, baked or marinaded, and may be served with a spicy sauce. Variations occur in North Africa, the Mediterranean, Central Europe, Asia and India. The word 'kofta' appears to be derived from the Persian "koffteh", which means 'pounded meat', and appears in some of the earliest Arabic cooking books. These early recipes generally concern seasoned lamb rolled into orange-sized balls, and glazed with egg yolk and sometimes saffron. This method was taken to the west and is referred to as gilding, or endoring. Many regional variations exist, perhaps the largest being the Iranian koofteh Tabrizi, with an average diameter of 20cm (8"). It appears that the Moghul emperors took kofta from Persia to India, serving the variation nargisi kofta, which consist of the ground meat mixture wrapped around a hard-boiled egg. The name comes from the resemblance to narcissus flowers when the ball is cut open.

References


- Margaret Shaida - "The Legendary Cuisine of Persia"

1950

1950 (MCML) was a common year starting on Sunday (link will take you to calendar).

Events

January


- January 5 - U.S. Senator Estes Kefauver introduces a resolution calling for examination of organized crime in the U.S.
- January 6 - The United Kingdom recognizes the People's Republic of China. The Republic of China severs diplomatic relations with Britain in response.
- January 9 - The Israeli government recognizes the People's Republic of China.
- January 11 - Huk guerillas attack the town of Hermosa in Bataan, Philippines.
- January 12 - Huk guerillas attack the town of Tuyn, kill two and torch the city of Staingnacan.
- January 12 - British submarine Truculent collides with a Swedish oil tanker in River Thames - 64 dead.
- January 13 - Finland forms diplomatic relations to People's Republic of China
- January 15 - Volcanic cloud kills 5000 in Mount Lamington, New Guinea
- January 17 - The Great Brinks Robbery - 11 thieves steal more than $2 million from an armored car in Boston, Massachusetts
- January 21 - Alger Hiss is convicted of perjury
- January 23 - The Knesset passes a resolution that states Jerusalem is the capital of Israel.
- January 24 - Cold War: Klaus Fuchs confesses his wartime espionage at Los Alamos to British interrogators - formally charged February 2
- January 26 - India promulgates its constitution forming a republic and Rajendra Prasad is sworn in as its first president.
- January 28 - Somaliland is put under Italian mandate
- January 29 - Lord Balfour criticizes the fact that rationing is still in force in Britain
- January 31 - President Harry S. Truman announces a program to develop the hydrogen bomb
- January 31 - Last Kuomintang troops surrender in continental China

February


- February 1 - Chiang Kai-shek re-elected as a president of the Republic of China
- February 4 - Ingrid Bergman's illegitimate child arouses ire in USA
- February 9 - Red scare: In his speech to the Republican Women's Club at the McClure Hotel in Wheeling, West Virginia, Senator Joseph McCarthy accuses the United States Department of State of being filled with 205 Communists.
- February 11 - Two Vietcong battalions attack a French base in Indochina
- February 11 - Finland recognizes Indonesia
- February 12 - Pro-communist riots in Paris
- February 12 - European Broadcasting Union founded
- February 13 - In USA army begins to deploy anti-aircraft cannons to protect nuclear stations and military targets
- February 14 - The Soviet Union and the People's Republic of China sign a mutual defense treaty
- February 15 - Juho Kusti Paasikivi re-elected president of Finland
- February 19 - Konrad Adenauer tries unsuccessfully to negotiate with East Germany to begin unification.
- February 12 - Albert Einstein warns that nuclear war could lead to mutual destruction
- February - British Labour Party forms a new government.

March-April


- March 1 - 7.25 PM West South Baptist Church(negro) in Bestridge, Nebraska blows up - all the choir is late for rehearsals
- March 1 - Klaus Fuchs is convicted of spying for the Soviet Union by giving them top secret atomic bomb data.
- March 1 - Acting Chinese President Li Tsung-jen ends his term in office
- March 1 - Chiang Kai-shek resumes his duties as Chinese president after moving his government to Taipei, Taiwan
- March 3 - Poland states that it intends to exile all Germans.
- March 8 - The Soviet Union claims to have an atomic bomb.
- March 12-March 13 - In Belgium, the referendum over the monarchy shows 57.7% support the return of king Léopold III, 42.3% against.
- March 14 - Ship Cygnet hits mine off the Dutch coast.
- March 17 - University of California, Berkeley researchers announce the creation of element 98 which they have named "californium".
- March 20 - Government of Poland decides to confiscate the property of Polish church
- March 22 - Egypt demands that Britain remove all its troops in Suez Canal
- April 15 - King Léopold III of Belgium announces that he is ready to abdicate in favor of his son Baudouin
- April 24 - Jordan formally annexes West Bank
- April 27 - Apartheid: In South Africa, the Group Areas Act is passed formally segregating races.
- April 27 - Britain formally recognizes Israel

May-June


- May 6 - Tollund Man found
- May 9 - Robert Schuman presents his proposal on the creation of an organized Europe, indispensable to the maintenance of peaceful relations. This proposal, known as the "Schuman declaration", is considered to be the beginning of the creation of what is now the European Union.
- May 11 - Kefauver Committee hearings about US organized crime begin
- May 25 - Brooklyn-Battery Tunnel is formally opened to traffic
- May 29 - St. Roch, first ship to circumnavigate North America arrives in Halifax Nova Scotia.
- June 3 - First ascent of Annapurna I, 10th highest mountain in the world.
- June 6 - Turkey: The Adhan in Arabic is legalized
- June 8 - Sir Thomas Blamey becomes the only Field Marshal in Australian history.
- June 10 - French police capture escaped murderer Emile Buisson in Paris restaurant
- June 24 - 58 persons were killed when a commercial airliner crashed into Lake Michigan. The reason for the disaster is unknown. Only fragments of the plane and the bodies of passengers were ever found.
- June 25 - Beginning of Korean War. In the USA, people began to hoard supplies in case of rationing and shortages.
- June 25 - NSC-68 enacted by President Truman, setting US foreign policy for the next twenty years.
- June 28 - Korean War - North Korean forces capture Seoul
- June 29 - United States defeats England 1-0 in the . For more details, see England v United States (1950).

July


- July 5 - Sicilian bandit leader Salvatore Giuliano killed in a shootout with carabinieri
- July 5 - Korean War: Task Force Smith - First clash between American and North Korean forces.
- July 5 - Zionism: The Knesset passes the Law of Return which grants all Jews the right to immigrate to Israel.
- July 6 - East Germany agrees with Poland on the Oder-Neisse line - West Germany does not at this time
- July 16 - Uruguay beat Brazil 2-1 to win 1950 World Cup
- July 17 - Julius and Ethel Rosenberg arrested
- July 19 - 15 SS-men sentenced to death in East Germany
- July 20 - Tydings committee report to US senate denounces Joe McCarthy - he begins a public attack on members of the committee standing for election in 1950
- July 20 - In Belgium, the United Chambers adopt a decree which reinstates King Léopold III in his royal dignity.
- July 23 - King Léopold III of Belgium returns to Brussels
- July 24 - Hoax by J. Bam Morrison begins the tradition of "Sucker Day" in Wetumka, Oklahoma
- July 25 - Walter Ulbricht elected the general secretary of the communist party of East Germany
- July 28 - In Belgium, demonstrations and strikes break out as a result of King Léopold III's return. In Liège, three labourers are shot.

August-September


- August 5 - Florence Chadwick swims over English Channel in 13 hours, 22 minutes
- August 5 - A bomb-laden B-29 Superfortress crashes into a residential area in California. 17 dead, 68 injured.
- August 6 - Riot in Brussels in monarchist demonstrations
- August 8 - Winston Churchill supports idea of pan-European army allied with Canada and USA
- August 15 - Earthquake and floods in Assam, India - 574 deaths, 5,000,000 believed homeless
- September 1 - Hungarian major general Laszlo Viragen defects to Austria and applies for political asylum
- September 4 - Beetle Bailey comic strip started.
- September 7 - Coal mine collapses in New Cumnock, Scotland - 13 miners dead. 116 rescued.
- September 7 - The gameshow Truth or Consequences debuts on television.
- September 12 - Communist riots in Berlin
- September 13 - First main-line diesel-electric locomtives run in Australia
- September 15 - Allied troops land in Inchon, occupied by North Korea, to begin the Battle of Inchon.
- September 19 - West Germany decides to fire all its communist officials
- September 26 - Indonesia admitted to the United Nations

October


- October 1 - The comic strip Peanuts by Charles M. Schulz is first published in seven US newspapers.
- October 3 - Getúlio Dornelles Vargas, elected president of Brazil, for a five-year term.
- October 5 - Indonesian government quells riots in the Moluccas
- October 11 - The Federal Communications Commission issues the first license to broadcast television in color, to CBS (RCA will successfully dispute and block the license from taking effect, however).
- October 15 - In East Germany, communists win 99.7% of the vote
- October 20 - Australia passes the Communist Party Dissolution Act, later struck down by the High Court.
- October - Sister Mary Teresa begins her charity work in Calcutta and becomes known as Mother Teresa

November


- November 1 - Pope Pius XII defines a new dogma of Roman Catholicism: that God assumed Mary's body into Heaven after her death.
- November 1 - Puerto Rican nationalists Griselio Torresola and Oscar Collazo attempt to assassinate US President Harry S. Truman, who is staying at the Blair-Lee House in Washington, D.C. during White House repairs.
- November 4 - United Nations ends the diplomatic isolation of Spain
- November 8 - Korean War: While in an F-80, United States Air Force Lt. Russell J. Brown intercepts two North Korean MiG-15s near the Yalu River and shots them down in the first jet-to-jet dogfight in history.
- November 11 - The Mattachine Society founded in Los Angeles as the first Gay liberation organization
- November 13 - Colonel Carlos Delgado Chalbaud is kidnapped and murdered in Caracas.
- November 18 - United Nations accepts the formation of Libyan national council
- November 20 - T. S. Eliot speaks against television in the UK
- November 22 - Anti-British riots in Egypt
- November 22 - Shirley Temple announces her retirement from show business
- November 23 - George Robb was born in Aylth, Scotland
- November 26 - Korean War: Troops from the People's Republic of China move into North Korea and launch a massive counterattack against South Korean and American forces, ending any thought of a quick end to the conflict.
- November 28 - Greece and Yugoslavia reform diplomatic relations
- November 29 - Korean War: North Korean and Chinese troops force a desperate retreat of United Nations forces from North Korea.
- November 30 - Truman threatens to use nuclear weapons in Korea

December


- December 3 - Etna volcano erupts in Sicily
- December 12 - Paula Ackerman becomes the first woman in the United States to serve a congregation as a Rabbi, a few weeks after the death of her husband.
- December 24-December 25 - Scottish nationalists take the Stone of Scone from Westminster Abbey
- December 28 - The Peak District becomes Britain's first National Park.

Unknown date


- Ralph Schneider founds Diners Club - it initially only works in 27 restaurants in New York City.
- United Nations building finished.
- First pagers developed.
- Antihistamine discovered.
- First TV remote control, Zenith Radio's Lazy Bones is marketed.
- IBM Israel begins operating in Tel Aviv
- Japanese soldier Yuichi Akitsu surrenders in the Philippines
- President Harry Truman sends United States military personnel to Vietnam to aid French forces.
- National Council of the Churches of Christ in the USA founded.

Births

January-February


- January 12 - Sheila Jackson Lee, American politician
- January 16 - Debbie Allen, American actress, dancer, and choreographer
- January 18 - Gilles Villeneuve, Canadian race car driver
- January 21 - Billy Ocean, West Indian-born musician
- January 23 - Richard Dean Anderson, American actor
- January 24 - Benjamin Urrutia, Ecuadoran author and scholar
- January 29 - Jody Scheckter, South African race car driver
- February 3 - Morgan Fairchild, American actress
- February 4 - Pamela Franklin, British actress
- February 6 - Natalie Cole, American singer
- February 10 - Mark Spitz, American swimmer
- February 12 - Michael Ironside, American actor
- February 13 - Peter Gabriel, British musician
- February 16 - Peter Hain, British politician
- February 18 - John Hughes, American film director, producer, and writer
- February 20 - Ken Shimura, Japanese television performer and actor
- February 22 - Julius Erving, American basketball player
- February 22 - Julie Walters, English actress
- February 22 - Miou-Miou, French actress
- February 22 - Ellen Greene, American actress
- February 25 - Neil Jordan, Irish film director, writer, and producer
- February 25 - Néstor Kirchner, President of Argentina
- February 26 - Helen Clark, Prime Minister of New Zealand

March-April


- March 2 - Karen Carpenter, American singer and drummer (d. 1983)
- March 4 - Rick Perry, Governor of Texas
- March 9 - Doug Ault, baseball player (d. 2004)
- March 9 - Danny Sullivan, American race car driver
- March 11 - Bobby McFerrin, American singer
- March 11 - Jerry Zucker, American film producer, director, and writer
- March 13 - William H. Macy, American actor
- March 18 - Brad Dourif, American actor
- March 20 - William Hurt, American actor
- March 26 - Teddy Pendergrass, American singer
- March 29 - Bud Cort, American actor
- March 30 - Robbie Coltrane, British actor and comedian
- April 3 - Sally Thomsett, British actress
- April 4 - Christine Lahti, American actress
- April 5 - Agnetha Fältskog, Swedish singer and songwriter (ABBA)
- April 10 - Ken Griffey, Sr., baseball player
- April 12 - Kari Palaste, Finnish architect
- April 22 - Peter Frampton, English musician
- April 25 - Lenora Branch Fulani, American Presidential candidate
- April 28 - Jay Leno, American comedian and talk show host
- April 29 - Paul Holmes , a radio and television broadcaster in New Zealand

May-September


- May 1 - Danny McGrain, Scottish footballer
- May 1 - Dann Florek, American actor
- May 3 - Howard Ashman, American lyricist (d. 1991)
- May 7 - Randall 'Tex' Cobb, American boxer and actor
- May 12 - Bruce Boxleitner, American actor
- May 12 - Gabriel Byrne, Irish actor
- May 13 - Stevie Wonder, American singer and musician
- May 16 - Johannes Georg Bednorz, German physicist, Nobel Prize laureate
- May 17 - Janez Drnovšek, Slovene politician
- May 17 - Valeria Novodvorskaya, Russian politician and dissident
- May 18 - Thomas Gottschalk, German television host
- May 18 - Rodney Milburn, American athlete (d. 1997)
- May 18 - Mark Mothersbaugh, American composer and musician (Devo)
- May 22 - Bernie Taupin, English songwriter
- May 22 - Mary Tamm, British actress
- June 1 - Tom Robinson, English singer and musician
- June 3 - Suzi Quatro, American singer and actress
- June 6 - John Byrne, American comic book creator
- July 18 - Sir Richard Branson, British entrepreneur
- July 18 - Glenn Hughes, American vocalist (d. 2001)
- July 19 - Per-Kristian Foss, Norwegian Minister of Finance
- August 11 - Gennidy Nikonov, Russian weapon designer
- August 14 - Bob Backlund, American professional wrestler
- August 15 - Anne, Princess Royal of England
- August 16 - Hasely Crawford, West Indian athlete
- August 27 - Charles Fleischer, American actor
- September 2 - Rosanna DeSoto, American actress
- September 14 - Paul Kossoff, British guitarist (Free) (d. 1976)
- September 17 - Narendra Modi, chief minister of Gujarat
- September 21 - Charles Clarke, British politician
- September 21 - Bill Murray, American actor and comedian
- September 28 - John Sayles director and screenwriter

October-December


- October 1 - Randy Quaid, American actor
- October 5 - Jeff Conaway, American actor
- October 9 - Jody Williams, American teacher and aid worker, recipient of the Nobel Peace Prize
- October 12 - Kaga Takeshi, Japanese actor
- October 22 - Bill Owens, Governor of Colorado
- October 28 - Sihem Bensedrine, Tunisian human rights activist
- October 31 - John Candy, American comedian and actor
- October 31 - Jane Pauley, American television broadcaster and journalist
- November 1 - Robert B. Laughlin, American physicist, Nobel Prize laureate
- November 21 - Alberto Juantorena, Cuban athlete
- November 22 - Lyman Bostock, baseball player (d. 1978)
- November 28 - Russell Alan Hulse, American physicist, Nobel Prize laureate
- December 1 - Keith Thibodeaux, American actor and musician
- December 5 - Camarón de la Isla, Spanish singer (d. 1992)
- December 18 - Leonard Maltin, American film critic
- December 23 - Michael C. Burgess, American politician
- December 25 - Manny Trillo, baseball player

Unknown date


- Charles Lee Ray, American serial killer (d. 1988)

Deaths


- January 21 - George Orwell, English author (b. 1903)
- February 6 - Georges Imbert, Alsatian chemist (b. 1884)
- February 25 - George Minot, American physician, recipient of the Nobel Prize in Physiology or Medicine (b. 1885)
- March 5 - Sid Grauman, American restaurateur (b. 1895)
- March 9 - Danny Sullivan, American race car driver
- March 19 - Walter Haworth, British chemist, Nobel Prize laureate (b. 1883)
- March 19 - Edgar Rice Burroughs, American author (b. 1875)
- March 24 - James Rudolph Garfield, U.S. politician (b. 1865)
- March 30 - Joe Yule, Scottish-born comedian (b. 1894)
- April 19 - Ernst Robert Curtius, Alsatian philologist (b. 1886)
- May 1 - Lothrop Stoddard, American eugenicist (b. 1883)
- May 9 - Esteban Terradas i Illa, Catalan mathematician, scientist, and engineer (b. 1883)
- May 10 - Belle da Costa Greene, American librarian, bibliographer, and archivist (b. 1883)
- July 22 - William Lyon Mackenzie King, Canadian politician (b. 1874)
- September 10 - Raymond Sommer, American race car driver (b. 1906)
- September 11 - Jan Christian Smuts, Prime Minister of South Africa (b. 1870)
- September 21 - Arthur Milne, British space physicist (b. 1896)
- October 23 - Al Jolson, American musician (b. 1886)
- October 29 - King Gustav V of Sweden (b. 1858)
- November 2 - George Bernard Shaw, Irish writer, Nobel Prize laureate (b. 1856)
- November 3 - Koiso Kuniaki, Prime Minister of Japan (b. 1880)
- November 25 - Johannes Vilhelm Jensen, Danish writer, Nobel Prize laureate (b. 1873)
- December 2 - Dinu Lipatti, Romanian pianist (b. 1917)
- December 5 - Shri Aurobindo, Indian guru (b. 1872)
- December 11 - Leslie Comrie, New Zealand astronomer and computing pioneer (b. 1893)
- December 27 - Max Beckmann, German painter (b. 1884)

Date unknown


- Ernest Cherrington, American temperance movement leader (b. 1877)
- William E. Johnson, American Anti-Saloon League leader (b. 1862)

Nobel Prizes


- Physics - Cecil Frank Powell
- Chemistry - Otto Paul Hermann Diels, Kurt Alder
- Medicine - Edward Calvin Kendall, Tadeus Reichstein, Philip Showalter Hench
- Literature - Earl (Bertrand Arthur William) Russell
- Peace - Ralph Bunche

Fields Medalists


- Laurent Schwartz, Atle Selberg Category:1950 ko:1950년 ms:1950 ja:1950年 simple:1950 th:พ.ศ. 2493

Bretton Woods system

The Bretton Woods system of international monetary management established the rules for commercial and financial relations among the world's major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order in world history intended to govern monetary relations among independent nation-states. Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel, situated in the town of Bretton Woods, New Hampshire, for the United Nations Monetary and Financial Conference. The delegates deliberated upon and finally signed the Bretton Woods Agreements during the first three weeks of July 1944. Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF). These organizations became operational in 1946 after a sufficient number of countries had ratified the agreement. The chief features of the Bretton Woods system were, first, an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold; and, secondly, the ability of the IMF to bridge temporary imbalances of payments. In face of increasing strain, the system eventually collapsed in 1971, following the United States' suspension of convertibility from dollars to gold. Until the early 1970s, the Bretton Woods system was effective in controlling conflict and in achieving the common goals of the leading states that had created it, especially the United States.

The origins of the Bretton Woods System

The political basis for the Bretton Woods system are to be found in the confluence of several key conditions: the shared experiences of the Great Depression, the concentration of power in a small number of states, and the presence of a dominant power willing and able to assume a leadership role in global monetary affairs.

The experiences of the Great Depression

A high level of agreement among the powerful on the goals and means of international economic management facilitated the decisions reached by the Bretton Woods Conference. The foundation of that agreement was a shared belief in capitalism. Although the developed countries differed somewhat in the type of capitalism they preferred for their national economies (France, for example, preferred greater planning and state intervention, whereas the United States favored relatively limited state intervention); all nevertheless relied primarily on market mechanisms and on private ownership. Thus, it is their similarities rather than their differences that appear most striking. All the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons. The experience of the Great Depression, when proliferation of foreign exchange controls and trade barriers led to economic disaster, was fresh on the minds of public officials. The planners at Bretton Woods hoped to avoid a repeat of the debacle of the 1930s, when foreign exchange controls undermined the international payments system that was the basis for world trade. The "beggar thy neighbor" policies of 1930s governments—using currency devaluations to increase the competitiveness of a country's export products in order to reduce balance of payments deficits—worsened national deflationary spirals, which resulted in plummeting national incomes, shrinking demand, mass unemployment, and an overall decline in world trade. Trade in the 1930s became largely restricted to currency blocs (groups of nations that use an equivalent currency, such as the "Pound Sterling Bloc" of the British Empire). These blocs retarded the international flow of capital and foreign investment opportunities. Although this strategy tended to increase government revenues in the short run, it dramatically worsened the situation in the medium and longer run. Thus, for the international economy, planners at Bretton Woods all favored a liberal system, one that relied primarily on the market with the minimum of barriers to the flow of private trade and capital. Although they disagreed on the specific implementation of this liberal system, all agreed on an open system.

"Economic security"

capital Also based on experience of interwar years, U.S. planners developed a concept of economic security—that a liberal international economic system would enhance the possibilities of postwar peace. One of those who saw such a security link was Cordell Hull, the U.S. secretary of state from 1933 to 1944.1 Hull believed that the fundamental causes of the two world wars lay in economic discrimination and trade warfare. Specifically, he had in mind the trade and exchange controls (bilateral arrangements) of Nazi Germany and the imperial preference system practiced by Britain (by which members or former members of the British Empire were accorded special trade status). Hull argued that:
[U]nhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war... if we could get a freer flow of trade... freer in the sense of fewer discriminations and obstructions... so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace.2

The rise of governmental intervention

The developed countries also agreed that the liberal international economic system required governmental intervention. In the aftermath of the Great Depression, public management of the economy had emerged as a primary activity of governments in the developed states. Employment, stability, and growth were now important subjects of public policy. In turn, the role of government in the national economy had become associated with the assumption by the state of the responsibility for assuring of its citizens a degree of economic well-being. The welfare state grew out of the Great Depression, which created a popular demand for governmental intervention in the economy, and out of the theoretical contributions of the Keynesian school of economics, which asserted the need for governmental intervention to maintain adequate levels of employment. At the international level, these ideas also evolved from the experience of the 1930s. The priority of national goals, independent national action in the interwar period, and the failure to perceive that those national goals could not be realized without some form of international collaboration resulted in "beggar-thy-neighbor" policies such as high tariffs and competitive devaluations which contributed to economic breakdown, domestic political instability, and international war. The lesson learned was that, as New Dealer Harry Dexter White, the principal architect of the Bretton Woods system, put it:
the absence of a high degree of economic collaboration among the leading nations will... inevitably result in economic warfare that will be but the prelude and instigator of military warfare on an even vaster scale.3
To ensure economic stability and political peace, states agreed to cooperate to regulate the international economic system. The pillar of the U.S. vision of the postwar world was free trade. Free trade involved lowering tariffs and among other things a balance of trade favorable to the capitalist system. Thus, the more developed market economies agreed to the U.S. vision of postwar international economic management, which was to be designed to create and maintain an effective international monetary system and foster the reduction of barriers to trade and capital flows.

The rise of U.S. hegemony

International economic management relied on the dominant power to lead the system. The concentration of power facilitated management by confining the number of actors whose agreement was necessary to establish rules, institutions, and procedures and to carry out management within the agreed system. That leader was the United States. As the world's foremost economic and political power, the United States was clearly in a position to assume the responsibility of leadership. The United States had emerged from the Second World War as the strongest economy in the world, experiencing rapid industrial growth and capital accumulation. The U.S. had remained untouched by the ravages of World War II and had built a thriving manufacturing industry and grown wealthy selling weapons and lending money to the other combatants; in fact, U.S. industrial production in 1945 was more than double that of annual production between the prewar years of 1935 and 1939. In contrast, Europe and East Asia were militarily and economically shattered. As the Bretton Woods Conference convened, the relative advantages of the U.S. economy were undeniable and overwhelming. The U.S. held a majority of world investment capital, manufacturing production and exports. In 1945, the U.S. produced half the world's coal, two-thirds of the oil, and more than half of the electricity. The U.S. was able to produce great quantities of ships, airplanes, vehicles, armaments, machine tools, chemicals, and so on. Reinforcing the initial advantage—and assuring the U.S. unmistakable leadership in the capitalist world—the U.S. held 80 percent of the world's gold reserves and had not only a powerful army but also the atomic bomb. As the world's greatest industrial power, and one of the few nations unravaged by the war, the U.S. stood to gain more than any other country from the opening of the entire world to unfettered trade. The United States would have a global market for its exports, and it would have unrestricted access to vital raw materials. The United States was not only able, it was also willing, to assume this leadership role. Although the U.S. had more gold, more manufacturing capacity and more military power than the rest of the world put together, U.S. capitalism could not survive without markets and allies. William Clayton, the assistant secretary of state for economic affairs, was among myriad U.S. policymakers who summed up this point: "We need markets—big markets—around the world in which to buy and sell." There had been many predictions that peace would bring a return of depression and unemployment, as war production ceased and returning soldiers flooded the labor market. Compounding the economic difficulties was a sharp rise in labor unrest. Determined to avoid another economic catastrophe like that of the 1930s, U.S. President Franklin D. Roosevelt saw the creation of the postwar order as a way to ensure continuing U.S. prosperity.

The Atlantic Charter

Franklin D. Roosevelt 1941 in the North Atlantic that resulted in the Atlantic Charter, which the U.S. and Britain officially announced two days later.]] Throughout the war, the United States envisaged a postwar economic order in which the U.S. could penetrate markets that had been previously closed to other currency trading blocs, as well as to open up opportunities for foreign investments for U.S. corporations by removing restrictions on the international flow of capital. The Atlantic Charter, drafted during President Roosevelt's August 1941 meeting with British Prime Minister Winston Churchill on a ship in the North Atlantic was the most notable precursor to the Bretton Woods Conference. Like Woodrow Wilson before him, whose "Fourteen Points" had outlined U.S. aims in the aftermath of the First World War, Roosevelt set forth a range of ambitious goals for the postwar world even before the U.S. had entered the Second World War. The Atlantic Charter affirmed the right of all nations to equal access to trade and raw materials. Moreover, the charter called for freedom of the seas (a principal U.S. foreign policy aim since France and Britain had first threatened U.S. shipping in the 1790s), the disarmament of aggressors, and the "establishment of a wider and permanent system of general security." As the war drew to a close, the Bretton Woods conference was the culmination of some two and a half years of planning for postwar reconstruction by the Treasuries of the U.S. and the U.K. U.S. representatives studied with their British counterparts the reconstitution of what had been lacking between the two world wars: a system of international payments that would allow trade to be conducted without fear of sudden currency depreciation or wild fluctuations in exchange rates—ailments that had nearly paralyzed world capitalism during the Great Depression. Without a strong European market for U.S. goods and services, most policymakers believed, the U.S. economy would be unable to sustain the prosperity it had achieved during the war. In addition, U.S. unions had only grudgingly accepted government-imposed restraints on their demand during the war, but they were willing to wait no longer, particularly as inflation cut into the existing wage scales with painful force. (By the end of 1945, there had already been major strikes in the automobile, electrical, and steel industries.) Financier and self-appointed adviser to presidents and congressmen, Bernard Baruch, summed up the spirit of Bretton Wood in early 1945: if we can "stop subsidization of labor and sweated competition in the export markets," as well as prevent rebuilding of war machines, "oh boy, oh boy, what long term prosperity we will have."4 Thus, the United States would use its predominant position to restore an open world economy, unified under U.S. control, which gave the U.S. unhindered access to markets and raw materials.

Wartime devastation of Europe and East Asia

Furthermore, U.S. allies—economically exhausted by the war—accepted this leadership. They needed U.S. assistance to rebuild their domestic production and to finance their international trade; indeed, they needed it to survive. Before the war, the French and the British were realizing that they could no longer compete with U.S. industry in an open marketplace. During the 1930s, the British had created their own economic bloc to shut out U.S. goods. Churchill did not believe that he could surrender that protection after the war, so he watered down the Atlantic Charter's "free access" clause before agreeing to it. Yet, U.S. officials were determined to break open the empire. Combined, British and U.S. trade accounted for well over half the world's exchange of goods. If the British bloc could be split apart, the U.S. would be well on its way to opening the entire global marketplace. But as the nineteenth century had been economically dominated by Britain, the second half of the twentieth was to be one of U.S. hegemony. A devastated Britain had little choice. Two world wars had destroyed the country's principal industries that paid for the importation of half the nation's food and nearly all its raw materials except coal. The British had no choice but to ask for aid. In 1945, the U.S. agreed to a loan of 3.8 billion. In return, weary British officials promised to negotiate the agreement. For nearly two centuries, French and U.S. interests had clashed in both the Old World and the New World. During the war, French mistrust of the United States was embodied by General Charles de Gaulle, president of the French provisional government. De Gaulle bitterly fought U.S. officials as he tried to maintain his country's colonies and diplomatic freedom of action. In turn, U.S. officials saw de Gaulle as a political extremist. But in 1945 de Gaulle—the leading voice of French nationalism—was forced to grudgingly ask the U.S. for a billion dollar loan. Most of the request was granted; in return France promised to curtail government subsidies and currency manipulation that had given its exporters advantages in the world market. On a far more profound level, as the Bretton Woods conference was convening, the greater part of the Third World remained politically and economically subordinate. Linked to the developed countries of the West economically and politically—formally and informally—these states had little choice but to acquiesce to the international economic system established for them. In the East, Soviet hegemony in Eastern Europe provided the foundation for a separate and stable international economic system. In short, the confluence of these three favorable political conditions—the concentration of power, the cluster of shared interests and ideas, and the hegemony of the United States—provided the political capability to equal the tasks of managing the international economy.

The design of the Bretton Woods system

Free trade relied on the free convertibility of currencies. Negotiators at the Bretton Woods conference, fresh from what they perceived as a disastrous experience with floating rates in the 1930s, concluded that major monetary fluctuations could stall the free flow of trade. The liberal economic system required an accepted vehicle for investment, trade, and payments. Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use. In the past this problem had been solved through the gold standard, but the architects of Bretton Woods did not consider this option feasible for the postwar political economy. Instead, they set up a system of fixed exchange rates managed by a series of newly created international institutions using the U.S. dollar (which was a gold standard currency for central banks) as a reserve currency.

Informal regimes

Previous regimes

In the nineteenth and twentieth centuries gold played a key role in international monetary transactions. The gold standard was used to back currencies; the international value of currency was determined by its fixed relationship to gold; gold was used to settle international accounts. The gold standard maintained fixed exchange rates that were seen as desirable because they reduced the risk of trading with other countries. Imbalances in international trade were theoretically rectified automatically by the gold standard. A country with a deficit would have depleted gold reserves and would thus have to reduce its money supply. The resulting fall in demand would reduce imports and the lowering of prices would boost exports; thus the deficit would b