75 years of the Bretton Woods system and its institutions – the World Bank and International Monetary Fund:

Institutions of imperialist neo-colonial domination and plunder

In July 1944, while the Second World War was still raging, the United States invited delegations from 44 countries to the ski resort of Bretton Woods, New Hampshire. These countries were its allies in the World War.

The official aim of the conference was to define the basic features of an economic order for the post-war period. It was announced that the conference would provide the blueprint of a system that would stabilize the world economy and prevent a return to the situation that had existed between the two world wars.

This period between the two world wars had seen continued rivalry among imperialist powers and severe economic crises. The 1930s in particular were distinguished by high levels of unemployment, high inflation, trade barriers, strongly fluctuating exchange rates, gold shortages and a decline in economic activity by more than 60 %.

In stark contrast to the economic crises in the imperialist camp, the Soviet Union which had come into being as a result of the proletarian revolution in 1917, was witnessing a period of uninterrupted social development. By the mid-thirties the Soviet Union emerged as one of the biggest industrial hub in the world accompanied by rapid increase in employment and standard of living of the people.

By the mid 1940s the Second World War had considerably weakened the colonial powers such as Britain and France. The rise of liberation struggles in countries under colonial rule and the strike struggles of the working class were threatening the colonialist-imperialist order. The prestige of socialist Soviet Union was at a peak, having led a worldwide anti-fascist war to victory.  Many newly independent states were attracted to join or ally with the socialist camp headed by the Soviet Union.

This forced the Anglo-American imperialists to come together to work out new systems and institutions by which they could preserve their neo-colonial imperialist order and ensure that the newly independent countries would not break free from the imperialist stranglehold. 

The Bretton Woods Conference had been preceded by several years of secret negotiations between the US and British imperialists. They had already started working on plans for a new world monetary order since 1940.

The conference also marked the big shift in the global balance of power on the world scale from Great Britain to the US. Excessive war spending had turned Great Britain, already severely weakened by the First World War, into the world’s biggest debtor and pushed it to the brink of insolvency. Its economy was on its knees and the rise of the liberation movements around the world already heralded the final breakup of its colonial empire.

The United States emerged as the undisputed leader of the imperialist camp. Having become the largest international creditor, it held nearly two-thirds of the world’s gold reserves and commanded half of all global industrial production. In contrast to most European countries it faced very little loss of men and infrastructure in the War. In order to establish its supremacy, even while the Bretton Woods conference was going on, the US army’s general staff planned a nuclear assault on the Japanese cities of Hiroshima and Nagasaki in the most heinous way.

The British imperialists wanted the US to underwrite their war expenses and bail out their economy. The US imperialists had other plans. They saw a golden opportunity to take advantage of the weakness of their allies and establish the hegemony of their currency.

The leader of the US delegation, economist Harry Dexter White, presented the US imperialists’ plan that was finally adopted by the Conference. According to this “White Plan” the US dollar was to constitute the sole center of the world’s financial system. It was to be pegged to all other currencies at a fixed exchange rate. In turn, its exchange relation to gold was to be set at $ 35 per ounce of fine gold. This relationship of the US dollar to gold became the standard against which the relationship of all other currencies to the dollar was determined. This was called the Bretton Woods system.

The plan was supplemented by US demands for the establishment of two international organizations, the IMF and World Bank. The IMF took on the mandate of establishing financial stability in the capitalist camp. The World Bank took on the role of a lender of low-cost long-maturity loans to finance public investment in infrastructure, thereby creating lucrative markets around the world for giant American and European companies. The loans were initially directed towards the reconstruction of Europe. The operations of the Bank were scaled up subsequently to finance development in the poor and newly independent countries of Asia, Africa and Latin America. These institutions determined what “stability” meant. If a country defaulted on its loan payments or had to take a loan for its imports, these institutions intervened. By granting usurious loans to countries facing balance of payments problems they embroiled these countries further into the debt trap.

The US imperialists wanted a system that will enable it to obtain access to raw materials and capture global markets for their goods. This required replacing the hitherto most widely used currency, the British pound, by the dollar. Similarly Wall Street replaced London, thus establishing the US as the focal point of international trade and global finance. The British imperialists accepted their secondary role and the Anglo-American imperialists together set about to conquer the world under a new arrangement. 

By fixing all exchange rates to the US dollar, the US imperialists deprived all other participating countries of the right to control their own monetary policy for the protection of their domestic industries. This was a ferocious attack on the sovereignty of the rest of the world by the now dominant United States.

The distribution of voting rights dictated by the US imperialists in the proposed organizations was totally discriminatory. The US had veto rights in the World Bank. Member countries were not to be treated equally or assigned voting rights according to the size of their population. They were given voting rights corresponding to the contributions they paid. It was generally accepted that the chief of the World Bank would always be appointed by the US President, while the chief of IMF would always be a European. The US, by means of its financial superiority, secured itself absolute control over all decisions.

Representatives of the Soviet Union attended the Conference but later declined to ratify the final agreements, when it became clear that the Bretton Woods system would serve as a handmaiden of the US imperialists. The Soviet Union had already broken out of the imperialist system with the Great October Revolution of 1917, established the world’s first state of the workers and peasants and was proceeding on the path of building socialism.

They exposed the fact that the institutions the Bretton Woods conference had created were "branches of Wall Street", meaning they are meant to serve the US imperialist hegemony over the financial system of the capitalist camp.

In the post Cold War period, these institutions extended their poisonous tentacles even further. They pushed a standard recipe of policy reforms, referred to as the “Washington Consensus” on all borrower states. This was the much hated recipe of globalization, liberalisation and privatisation.

Whenever a country or a region became victims of a capitalist crisis, these institutions feasted on their agony like vultures. The SAPs dictated by the IMF forced countries to surrender their sovereignty and accept demands to privatise their public services, open up their markets for imperialist penetration, remove restrictions on the inward flow of foreign capital and agree to debilitating interest rates, and cuts on social spending.

In the eighties and nineties and to this day, several African and South American countries have become victims of the policies and actions of these institutions. In the late nineties, during the East Asian crisis, several countries in the region were forced to devalue their currencies and open up their markets for multinationals and monopolies. During the period following the 2008 global crisis, several European countries such as Portugal, Greece, Italy, Iceland and Spain were made to implement thoroughly anti-people policies in their countries after getting into a debt trap.

Throughout the world, World Bank and IMF-inspired projects have met with hatred and huge opposition from workers, peasants and intellectuals. Struggles and demonstrations against these institutions have often been the key feature of struggles all over the world for defending the sovereignty of nations.

The past 75 years have proved the fact that the Bretton Woods system and institutions were created by the US imperialists and their allies to establish their dictate over the peoples of the world in the post-World War period. This was a period when the entire imperialist system was threatened by the expansion of the socialist camp and the raging of liberation struggles around the world. Wherever the Bretton Woods institutions extended their tentacles, death and destruction followed. They have kept debtor countries chained to the imperialist system. They have become the most hated institutions around the world with massive demonstrations taking place against their efforts to enslave nations. While imperialists around the world celebrate the 75th anniversary of these institutions, the working class and toiling people of the world fervently wish an end to these institutions.  


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Jul 16-31 2019    World/Geopolitics    Privatisation    Rights     War & Peace     2019   

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  • Year: 1999
  • Author: CGPI
  • Languages: English
  • Mediums: Print
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Description: Consultative Conference - Renewal of India, Call of the New Century