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New Left Review 14, March-April 2002

Geoffrey Ingham on Philip Augar, The Death of Gentlemanly Capitalism. How the investment banks of the City of London were taken over by foreign capital, and whether their fate was avoidable.



In 1971 Richard Nixon set in train the sequence of events that has given the contemporary capitalist world its distinctive structure. What we now know loosely as ‘globalization’ began in earnest with the removal of the lynch pins of the Bretton Woods international monetary system—the breaking of the gold–dollar link in 1971 and, in 1974, the abolition of all exchange controls on capital movements to and from the US. The money market, as Schumpeter accurately observed, is the headquarters of capitalism, and Nixon’s actions were in part intended to ensure that it remained, if not geographically within US jurisdiction, then at least firmly under the control of its financiers. By the late 1960s, a view had formed in the US that the post-war international financial system was no longer in its interests. On the one hand, a revitalized Wall Street, riding on the backs of US multinational corporations, pressed for the global reach it had desired since the 1920s; it was now in a fit condition to throw off the Bretton Woods fetters. On the other hand, this ambition coincided with a re-definition of the American state’s own interests. An unimpeded inflow of capital, it was now argued, could finance the hegemon’s spiralling expenses. Doubts were also raised about the costs that global monetary responsibility might bring. Robert Gilpin’s influential view, later expressed in his US Power and the Multinational Corporation: The Political Economy of Direct Foreign Investment (1975), was that Britain had been weakened by its management of the international monetary order, and that this had played a part in its loss of dominance in the twentieth century. In 1944, the US had had little choice but to accept the hegemon’s burden; but by the early 1970s, things were beginning to take on a different complexion.

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Geoffrey Ingham, ‘Shock Therapy in the City’, NLR 14: £3

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