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Dollar Hegemony
Abstract
Today, the world economy operates under the artifice of US hegemony, fortified by the US dollar as an international reserve and vehicle currency. How did the United States arrive at achieving such pre-eminence? From 1944 to 1973, the financial architecture of the world economy centred on a US engineered Keynesian accumulation agenda as a response to the devastation wrought by the Great Depression. The capitalist institutional structure, or social structure of accumulation (see Kotz et al., 1994), rested on finance being subservient to the promotion of industrial enterprise. With socially-engineered capital–labour compromises in developed countries, neo-colonial governing institutions in the Third World, active State regulation in decisions with respect to capacity utilization, and a co-respective form of competition among large corporations set by regulations that brought together monetary authorities, large banks as well as large industrial capitalists, the post-World-War-II system was the era of "regulated capitalism". Altogether, the world system was underpinned by the Bretton Woods arrangement, which called for globally fixed exchange rates against the US dollar tied to the price of gold and capital controls. The international political-economic conditions were such that domestic macroeconomic autonomy, specifically with respect to monetary policy, for aggregate demand management
This paper argues that it is both an ethical and an epistemological necessity to re-cognize modernity from a native perspective. Once we dare to give up the conventional perspective, problematize modernity, and
explore its contingencies and complexities in history, we will know that the mainstream understanding of modernity is a Eurocentric hegemonic discourse. This discourse has not only created many myths about Europe, but also has led us to misunderstand our own history – we were even glad to do so. This articlee explores the conceptual history of “modern” and modernity as well as the sociology of knowledge about research on modernity and modernization. Putting them back in their historical context of the alternating hegemony between the East and West on the one hand and between Europe and the USA on the other hand, and exploring the changing meaning of the reference to “the West”, I demonstrate why modernity is a hegemonic discourse. Finally, I appeal for an active search for Taiwan’s standpoint and, with this, build a local view about the world and history.
This paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money; but also as a result of an incomplete understanding of what a monetary hegemon does. The hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but rather to provide an asset free of the risk of default. It is argued that the current crisis in Europe illustrates why the euro is not a real contender for hegemony in the near future.
In this paper we discuss some features of the balance of payments position of the country that issues the key currency under different international monetary standards. The analysis takes a Sraffian 'standpoint', where the monetary rate of interest of the central country is seen as an independent policy variable. The critical analysis of the theories and experiences of earlier standards helps us to understand the current 'floating dollar standard' in which the US economy becomes completely free of any balance of payments constraint. Copyright 2003, Oxford University Press.
Bretton Woods The Elgar Companion to Post Keynesian Economics
- M Vernengo
Vernengo, M. (2003), " Bretton Woods ", in J. King (ed.), The Elgar Companion to Post
Keynesian Economics, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp.
30–34.
The Dollar and Its Rivals: Recession, Inflation, and International Finance
- R Parboni
Parboni, R. (1981), The Dollar and Its Rivals: Recession, Inflation, and International
Finance, London: Verso.