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

Abstract

This article examines the effects of the Asian crisis and especially the global financial crisis on developmental finance (that is, long‐term project finance and counter‐cyclical liquidity support) and the global financial architecture. In this connection three claims are advanced. The first is positive: that the crises occasioned meaningful although ad hoc, uneven discontinuities. The conjunction of discontinuities and continuities is imparting incoherence to the developmental and global financial architecture. The second claim is normative and controversial. Contrary to the common narrative, emergent incoherence is (on balance) productive of development and stability rather than debilitating. Actors in parts of the global South and East enjoy greater opportunities for institutional experimentation today in comparison with the limited space available in the coherent neoliberal era when the Bretton Woods institutions were monolithic. All of the experiments underway are not equally likely to survive, but even failures can provide lessons and networks that contribute to future successes. Emergent redundancy and new networks of institutional cooperation increase financial resilience. The article also explores the risks of incoherence and redundancy. The third claim is that productive incoherence can be understood within a ‘Hirschmanian mindset’ — an understanding of change and development informed by Albert Hirschman's theoretical and epistemic commitments.

The “New” Neoclassical International Political Economy of Macroprudential Regulation and Capital Controls: “Style” over “Substance”

“…However, Grabel later expanded the concept (2015, 2017) to account for the role the entities listed in the quote in the main text above played in productive incoherence’s onset within global financial governance. Finally, Grabel (2019) demonstrated this idea’s ontological properties reflect Hirschman’s views on the nature of change since they are both rooted in experimental, impromptu, practical responses to unbalanced, uncertain tensions.…”

A World on Fire: Observations and Speculations in a Crottyian Vein

“…The present moment is marked by destructive and productive incoherence (Grabel 2015, 2017, 2018, 2019, 2022, 2023). Destructive aspects of incoherence are readily apparent.…”

The Enlarged Global Financial Safety Net

“…Despite the increase in available resources in the GFSN, close coordination among its elements is required to increase its effectiveness. In support of this argument, Grabel (2019) notes that inconsistency and lack of coordination among financial institutions generate certain risks. GFSN institutions may pursue different goals, especially during times of crisis, thereby reducing the effectiveness of each other’s performance.…”

“…The authors pointed to the possibility of an enlarged understanding of the GFSN in the Eurasian context. Grabel (2019) argues that MDBs have significantly expanded their financing opportunities in response to problems caused by the flight of private lenders from the markets. This played a decisive role in supporting investments and the economy during the Global Financial Crisis.…”