Order and Disorder in the World Economy: International Finance in Evolution

Duncan Cameron
1983 Studies in Political Economy  
Crisis in the world economy has transformed the international financial order which has dominated since Bretton Woods. The emergence of world markets for credit and finance has accompanied the evolution from a principally international economy, based on relations among national producers, towards a more global economy dominated by transnational corporations (TNCs). The transnationalization of investment production has been encouraged by the policies of the International Monetary Fund (IMF),
more » ... ary Fund (IMF), which promote capital imports for deficit nations on terms favourable to creditors rather than debtors. The erosion of American financial hegemony, and the breakdown of the Bretton Woods understanding have increased the importance of access to private international finance for states experiencing balance of payments deficits. Under the rules of the old monetary system, states settled payments imbalances quasi-automatically through transactions in the foreign-exchange market. In the evolving global order, the importance of official reserves acquired in the market has declined, and the significance of international credit provided by transnational financial capital has increased. Through its conditional lending to Third World states the IMF plays a major role in establishing creditworthiness for private lending. Within the industrialized world the economic crisis has been accentuated by the rationalization of production on a world scale, which occurs as TNCs invest in labour-saving technology and export capital
doi:10.1080/19187033.1983.11675664 fatcat:lhifnex6wzcafinnp6nvu2u6r4