The Pros And Cons Of GATT

From the early to mid 20th century, the U.S. underwent severe economic changes due to the internal problems. A system of laissez faire does not protect the people in the most damaging recession, the Great Depression. A shift from Hoover to FDR, leads to reform in the New Deal. Later in World War II, the U.S. will isolate itself to focus on the internal economy. The changes in the economy reflected back into the world and into domestic policy. Internally, reform and relief will bring back the nation and the focus of internal economy would create global problems. The U.S.’s economic policy shaped the nation as a welfare state from FDR’s New Deal and proved to be a world power from the causes and post war effects of World War II .

From 1929 to 1945, two catastrophes occurred: the Great Depression and World War II. American political leaders established a cause-effect relationship between economic collapse and total war, based on these two events, which defined their policy approach in the post-war period. In the 1930s, American leadership, and most importantly, President Franklin Delano Roosevelt, came to view economic decline, political radicalization, and instability as forming a vicious cycle that led to utter chaos and war. Although FDR did not know the future consequences of the economic fallout, he did know that breaking the cycle was of systemic importance. FDR’s policy platform, known as the New Deal, disregarded the historical wariness for government intervention and boldly connected economic security to freedom. Essentially, he attempted to push the American system to its limit in order to save it. Even with conservative elements constantly attempting to restrain his initiatives, FDR expanded his focus in the latter years of the 1930s to include international affairs as war broke out in Europe, Africa, and Asia. FDR and other government elites openly talked about the responsibility America had to build a new world order.

America at home: By the end of 1945, war induced prosperity launched the United States into an era of unprecedented economic growth. Pent up demand after years of wartime mobilization made Americans eager to spend. Over the next two years, the GDP tripled, benefiting a wider segment of society than anyone would have dreamed possible in the dark days of the Depression. American global supremacy rested in part on economic institutions created at a United Nations conference at Bretton Woods, New Hampshire, in July 1944. The International Bank for Reconstruction and Development (known commonly as the World Bank) provided private loans for the reconstruction of war-torn Europe as well as for the development of Third World countries. A second institution, the International Monetary Fund (IMF), was set up to stabilize the value of currencies and provide a predictable monetary environment for trade, with the U.S dollar serving as the benchmark for other currencies. The United States dominated the World Bank and the IMF because it contributed the most capital and the strongest currency. In 1947, multinational trade negotiations resulted in the General Agreement on Tariffs and Trade (GATT), which led to the establishment of an international body to oversee trade rules and practices. The

world was credit. In 1924, after a sharp decline in business, the Reserve banks suddenly cre­ated some $500 million in new credit, which led to a bank credit expansion of over $4 billion in less than one year. The initial impact this new expansion of national credit was in the short term beneficial to the economy, but the end result was catastrophic. It was the begin­ning of a monetary policy that led to the stock market crash in 1929 and the following depression. As our Government did not realize the mistake they have made; this lead to global declines in consumer demand, credit was a key when it came to borrowing money from banks. As less banks loaned money, afraid that their would not be any return on their loans. Less people had money, which lead other economies to fail because their consumers did not have any money for consumer goods. Furthermore, financial panics worldwide caused even more panic as governmental policies caused economic and global market output to fall.

After World War Two wealthy countries coordinated to avoid a race towards increasing tariffs, this was achieved by creating the

The trajectory of the United States as a capitalist country was effectively changed by the Great Depression. The stock market crashes and continuously failing banks, prompted for the government to become instrumental in the economy to prevent the tragedies occurred during the 1930’s. The New Deal proposed by president Franklin Delano Roosevelt dismantled the laissez-faire economy philosophy in the United States by transforming it to an economy where the government interfered to provide stability. Roosevelt’s new goals started a division between pre Great Depression liberalism and post Great Depression liberalism.

One of the very first substantial contributions to promoting international trade, was the General Agreement on Tariffs and Trade (GATT) , which established limits on tariffs in order to encourage economic collaboration and assistance between countries. As trade increased after the war, many economist believed that worldwide commercial agreements and the popularization of a free trade market, would help increase profitability in all countries that participated in the agreements. Later on in 1989, free trade advocates urged the Canadian, Mexican and US governments to come together in a free-trade agreement. The agreement between the three countries would substantially eliminate tariffs on agriculture and other products exchanged throughout the three countries. Additionally, it would reduce restrictions on foreign investments placed by industries.

After World War II, the Western economic powers implemented the Bretton Woods System, an attempt to concurrently return to, build upon, and strengthen the pre-World War I economic system. The stringency of the Gold Standard was replaced by an economic system in which currencies were tied together by the more flexible US dollar, which was itself backed by gold. Free trade was reimplemented by GATT, which would later become the WTO. Under the Bretton Woods System, the world saw an incredible amount of post-war economic growth. Jeffry Frieden points out that in the postwar period, advanced capitalist nations “grew three times as fast as in the interwar years and twice as fast as before World War I”. The Bretton Woods System allowed for

Clearly, the U.S. was going from being a traditional debtor of Europe before World War I to becoming its creditor: America had financed the war and it was issuing loans for its reconstruction. However, the attitudes in the U.S. were evolving in an unusual direction: an increasing number of American financiers were starting to literally seek ut potential borrowers which led to competition among U.S. banks and the spreading of unsound lending.2 The main object was to "do the most business", even at the expense of essential caution. What seemed like a beginning of recovery from the Great War, was in fact an immense accumulation of debts, which made the international economic order vulnerable to depression.

US known as free-market model and now challenged by anti-protester and IMS's structural adjustment policies, failing with banking system,debt during the years of 2008-9.

Neoliberalism, or an approach to economics and social studies in which control of economic factors is shifted from the public sector to the private sector, experienced a rise in the global north, which is hindering development. With the fall of the Soviet Union came the implementation of Structural Adjustment, which consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experienced economic crises. The Structural Adjustment was implemented in the global south, which allowed for liberal-capitalism to become globally hegemonic. With that being said, over the past couple of years, neoliberal capitalism has slowly declined due to economic/financial, political, and ecological crises.

This trend was popular in colonial times and has survived due to help from international organizations such as the IMF and the World Bank. One such way this that has been encouraged is through the Washington Consensus. The IMF and World Bank implemented the Washington Consensus, a set of fixed ideas about international trade and economic development, through structural adjustment programs which were mandatory for countries if they wished to borrow money from either of the organizations (Nederveen, 2004, p. 11). In conjunction with structural adjustments to continue the dependency theory, the United States uses both the IMF and the World Bank as tools to further their foreign policy and to support US aims and polices (Finnegan, 2003, p. 43). These programs were supposed to reduce poverty and facilitate growth but really just ended up screwing over many countries. Additionally, they were really just ways for America to assert their control under the guise of an international organization providing support to developing countries’ economies (Finnegan, 2003, p. 42). Ultimately structural adjustments were used to implement policies that the United States thinks is best for the world and promote American values (Manzo, 1999, p. 112). The World Bank and the IMF listen to the rich countries and implement policies that they believe are best for those countries that are in development while creating a situation that contributes to the continuation of a cycle of dependency (Manzo, 1999, p. 110). Ultimately neoliberalism has created a global regime that promotes dependency on the United States and allows them to decide what is best for countries that are still developing (Nederveen, 2004, p. 7). In the end, the fact that neoliberalism has many of the same contradictions that

participants in this conference created three organizations to help regulate the international economy. The first is the International Monetary Fund (IMF) which was established with the idea of regulating monetary policy. One of the benchmarks of the IMF is the stabilization of exchange rates and the loaning of money to help stabilize countries with balance of payments deficits. The second organization established was the General Agreement on Tariffs and Trade (GATT) whose main focus was on a liberal trading order.

Prior to analyzing the debt crisis of the early 1980s, it is necessary to delineate the notion of neoliberal globalization. In general, the current state of the political and economic system of capitalism is characterized through globalization, the integration of global economies, and is furthered through neoliberal notions of free markets. When states begin to adhere to neoliberal globalization and liberalize their economies through privatization, decentralization, and policies of free trade, the “globalization project” advances. However, various abrupt predicaments such as debt crises is likely to transpire through the system with a series of negative impacts on national economies. When this occurs, states will utilize explicit strategies to

The Marshall Plan, or the European Recovery Plan, was aimed towards “reviving Europe’s state of economy” (Fauri, Francesca, and Tedeschi pg.167). After World War II, As Europe’s economy declined, producers in Europe lacked confidence in their products. Europe’s economy had suffered the “absence of goods in the market, political instability, and fear of financial chaos;” however, as to what caused this conflict was by the lack of confidence of making income (Eichengreen pg.15). The United States saw this as an opportunity to prosper their own economy and spread their corporations overseas. As such, the Marshall plan was enacted in order to “liberalize production,