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• DE-GLOBALISATION • DEREGULATION • DEBT • DEMOGRAPHY • DEMOCRACY
Ultimately, the international imperatives of the Bretton Woods system came in a severe conflict with
the domestic policy objectives, and the US policymakers – unsurprisingly – sided with the latter.
President Richard Nixon suspended the gold window in 1971.
Bretton Woods 2 – Globalisation turbo-charged
The soft multilateralism of Bretton Woods system was succeeded by a regime of turbo-charged
globalisation—a deeper and more ambitious integration of the global system propelled by unhindered
free markets, free capital mobility, further lowering of trade barriers, and financial deregulation and
establishment of a monetary system centred on the dollar, without any backing of gold.
Again, as Rodrik’s political trilemma would suggest, the choice of deeper global integration rendered the
Under Bretton nation-states progressively weaker. Take the case of European integration—a project that culminated
Woods 2, the in fully open borders (free movement of goods, capital and labour) and an outright monetary union,
imperative of but it ended up weakening the nation-states. The locus of policymaking in Europe shifted from national
national self- capitals/democratic realm to the international/technocratic arena—the European Commission, the
sufficiency European Council, the European Court of Justice and so on, resulting in weakening of democratic
was sacrificed
in pursuit of accountability and alienation among voters.
global efficiency Fundamentally, under Bretton Woods 2, the imperative of national self-sufficiency was sacrificed
in pursuit of global efficiency. This system did help in expanding the global economic pie, but its
fruits have been unevenly distributed. Large MNCs and wealthy individuals, particularly in rich nations,
gained while middle classes stagnated.
190
Exhibit 2:
Widening
inequality
in the US
170
(Index, rebased to 100) 150
130
110
90
1985 1991 1997 2003 2009 2015 2021
US Real GDP per capita US Real median household income
Source: UN, Nuvama Research
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