Globalizing Capital: A History of the International Monetary System
Author: Barry Eichengreen
The importance of the international monetary system is clearly evident in daily news stories about fluctuating currencies and in dramatic events such as the recent reversals in the Mexican economy. It has become increasingly apparent that one cannot understand the international economy without knowing how its monetary system operates. Now Barry Eichengreen presents a brief, lucid book that tells the story of the international financial system over the past 150 years. Globalizing Capital is intended not only for economists but also for a general audience of historians, political scientists, professionals in government and business, and anyone with a broad interest in international economic and political relations. Eichengreen's work demonstrates that insights into the international monetary system and effective principles for governing it can result only if it is seen a historical phenomenon extending from the gold standard period to interwar instability, then to Bretton Woods, and finally to the post-1973 period of fluctuating currencies.
Eichengreen analyzes the shift from pegged to floating exchange rates in the 1970s and ascribes that change to the growing capital mobility that has made pegged rates difficult to maintain. However, he shows that capital mobility was also high prior to World War I, yet this did not prevent the maintenance of fixed exchange rates. What was critical for the successful maintenance of fixed exchange rates during that period was the fact that governments were relatively insulated from democratic politics and thus from pressure to trade off exchange rate stability for other goals, such as the reduction of unemployment. Today pegging exchangerates would require very radical reforms of a sort that governments are understandably reluctant to embrace. The implication seems undeniable: floating rates are here to stay.
Library Journal
Eichengreen (Univ. of California-Berkeley), the author of Golden Fetters: The Gold Standard and the Great Depression, 1918-1939, uses a detailed history of exchange rate systems to support his theory that the democratization of political processes has presented competing goals to policymakers, making it more difficult for them to commit to fixed rates of exchange. His explanation for the movement toward floating exchange rates is controversial but well argued. The information he cites is current, and he incorporates a discussion of the European Monetary System and its future. Eichengreen's presentation of history is solid, with ample references. General readers will benefit from the glossary of his technical terms. -- A.J. Sobczak, formerly at California State University, Northridge
Library Journal
Eichengreen (Univ. of California-Berkeley), the author of Golden Fetters: The Gold Standard and the Great Depression, 1918-1939, uses a detailed history of exchange rate systems to support his theory that the democratization of political processes has presented competing goals to policymakers, making it more difficult for them to commit to fixed rates of exchange. His explanation for the movement toward floating exchange rates is controversial but well argued. The information he cites is current, and he incorporates a discussion of the European Monetary System and its future. Eichengreen's presentation of history is solid, with ample references. General readers will benefit from the glossary of his technical terms. -- A.J. Sobczak, formerly at California State University, Northridge
Journal of Economics
Barry Eichengreen...proves that good economics writing can be fascinating, exciting, illustrative, and still make a compelling point based on thorough analysis....Tightly interweaving economic theory, politico-economic analysis, and historical fact, he takes the reader on a grand tour through his view of the last 150 years of the international monetary system.
What People Are Saying
Eichengreen's purpose is to provide a brief history of the international monetary system. In this, he succeeds magnificently. Globalizing Capital will become a classic.
Douglas Irwin
Eichengreen's purpose is to provide a brief history of the international monetary system. In this, he succeeds magnificently. Globalizing Capital will become a classic. -- University of Chicago
Table of Contents:
| Preface | ||
| Ch. 1 | Introduction | 3 |
| Ch. 2 | The Gold Standard | 7 |
| Prehistory | 8 | |
| The Dilemmas of Bimetallism | 9 | |
| The Lure of Bimetallism | 13 | |
| The Advent of the Gold Standard | 15 | |
| Shades of Gold | 20 | |
| How the Gold Standard Worked | 25 | |
| The Gold Standard as a Historically Specific Institution | 30 | |
| International Solidarity | 32 | |
| The Gold Standard and the Lender of Last Resort | 35 | |
| Instability at the Periphery | 38 | |
| The Stability of the System | 42 | |
| Ch. 3 | Interwar Instability | 45 |
| Chronology | 46 | |
| Experience with Floating: The Controversial Case of the Franc | 51 | |
| Reconstructing the Gold Standard | 57 | |
| The New Gold Standard | 61 | |
| Problems of the New Gold Standard | 63 | |
| The Pattern of International Payments | 68 | |
| Responses to the Great Depression | 72 | |
| Banking Crises and Their Management | 75 | |
| Disintegration of the Gold Standard | 77 | |
| Sterling's Crisis | 80 | |
| The Dollar Follows | 85 | |
| Managed Floating | 88 | |
| Conclusions | 91 | |
| Ch. 4 | The Bretton Woods System | 93 |
| Wartime Planning and Its Consequences | 96 | |
| The Sterling Crisis and the Realignment of European Currencies | 102 | |
| The European Payments Union | 106 | |
| Payments Problems and Selective Controls | 109 | |
| Convertibility: Problems and Progress | 113 | |
| Special Drawing Rights | 117 | |
| Declining Controls and Rising Rigidity | 120 | |
| The Battle for Sterling | 125 | |
| The Crisis of the Dollar | 128 | |
| Ch. 5 | From Floating to Monetary Unification | 136 |
| Floating Exchange Rates in the 1970s | 139 | |
| Floating Exchange Rates in the 1980s | 145 | |
| The Snake | 152 | |
| The European Monetary System | 160 | |
| Renewed Impetus for Integration | 167 | |
| The EMS Crisis | 171 | |
| Understanding the Crisis | 175 | |
| The Experience of Developing Countries | 181 | |
| The Asian Crisis | 186 | |
| Conclusions | 191 | |
| Ch. 6 | Conclusion | 192 |
| Glossary | 197 | |
| References | 205 | |
| Index | 221 |
New interesting textbook: Financial Accounting in an Economic Context or Economics of Social Issues
Firm, the Market, and the Law
Author: Ronald H Coas
Few other economists have been read and cited as often as R.H. Coase has been, even though, as he admits, "most economists have a different way of looking at economic problems and do not share my conception of the nature of our subject." Coase's particular interest has been that part of economic theory that deals with firms, industries, and markets—what is known as price theory or microeconomics. He has always urged his fellow economists to examine the foundations on which their theory exists, and this volume collects some of his classic articles probing those very foundations. "The Nature of the Firm" (1937) introduced the then-revolutionary concept of transaction costs into economic theory. "The Problem of Social Cost" (1960) further developed this concept, emphasizing the effect of the law on the working of the economic system. The remaining papers and new introductory essay clarify and extend Coarse's arguments and address his critics.
"These essays bear rereading. Coase's careful attention to actual institutions not only offers deep insight into economics but also provides the best argument for Coase's methodological position. The clarity of the exposition and the elegance of the style also make them a pleasure to read and a model worthy of emulation."—Lewis A. Kornhauser, Journal of Economic Literature
Ronald H. Coase was awarded the Nobel Prize in Economic Science in 1991.
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