Continuity, Discontinuity and Incoherence in the Bretton Woods Order: A Hirschmanian Reading

Economic crises call attention to the limitations of prevailing economic orthodoxies and the institutional and regulatory architectures of the time. Consequently, crises often generate proposals for systemic change and sometimes create space for radical ideational change. The Global Financial Crisis beginning in 2008 prompted several actors to propose systemic reform, including rebuilding the international monetary system from the bottom up. Long-term project finance and counter-cyclical liquidity support in emerging markets and developing economies (EMDs) have evolved during the Asian Crisis and the Global Financial Crisis.

A journal article published as part of a special issue of Development and Change by Ilene Grabel examines the effects of the Asian Crisis and the Global Financial Crisis on developmental finance and the global financial architecture. The author updates the empirical discussion of innovations in EMD development finance institutions and focuses on implications for the Bretton Woods order.

The article advances three main claims. First, that the financial crises resulted in meaningful but ad hoc and uneven discontinuities. The conjunction of continuities and discontinuities creates incoherence in the developmental and global financial architecture. Second, contrary to popular belief, emergent incoherence creates development and stability. Actors in parts of the Global South and East enjoy greater opportunities for institutional experimentation in comparison with the limited space available in the coherent neoliberal era when the Bretton Woods institutions were monolithic. Finally, productive incoherence can be understood within a ‘Hirschmanian mindset’ – an understanding of change and development informed by Albert Hirschman’s theoretical and epistemic commitments.

This study was edited by William N. Kring and Kevin P. Gallagher.