At the end of the Second World War, representatives of the victorious allies met to decide how to structure a post-war economic environment that would avoid another Great Depression and the kind of financial problems that might spark new wars. Part of the solution agreed was the creation of two institutions, the International Monetary Fund (IMF) and the World Bank. These have become known as the Bretton Woods Institutions because that was the place where the relevant conference was held (it is a mountain resort now in New Hampshire). The IMF was designed to help countries overcome short-term negative exchange rate change problems. The World Bank was designed to offer low cost loans to poorer countries to come up with good development projects.

This was all well and good but the power of the two Institutions was limited, since few countries really wanted to use them. In the post-war Cold War period, there were alternatives for what were usually called Third World countries and they could play the capitalist and the communist world against each other in order to secure funding for their (often corrupt) development projects. This had changed by 1989 when the Soviet economy collapsed and most of the Communist world entered the market-driven system. The Bretton Woods Institutions were then used, partly against the will of some of their members, to promote an agenda that required the countries calling upon them for help (and suddenly there were many such countries) to follow a series of structural reforms which followed what has become known as a neoliberalist agenda. This involved policies which prevented government subsidies, slashed public sector services and imposed market-driven mechanisms throughout the economy concerned. As Mike Davis explains in Planet of Slums: “The 1985 Baker Plan (named after then Secretary of Treasury James Baker but drafted by his deputy secretary, Richard Darman) bluntly required the 15 largest Third World debtors to abandon state-led development strategies in return for new loan facilities and continued membership in the world economy. The Plan also pushed the World Bank to the fore as the longterm manager of the scores of structural adjustment programs that were shaping the brave new world of the so-called “Washington Consensus (p.153).””

The results of these policies have been uniformly disastrous, with many millions of people thrown into poverty and the resultant death rate from disease and misery incalculable. Only those countries with the strength to resist some of the provisions, such as South Korea, were able to escape recession after the IMF boys came to town. As the current ongoing economic crisis has demonstrated in full measure, the pretence that free market activities will provide sustainable and equitable economic growth has been exploded beyond repair (it is unfortunate that it took such a crisis before so many people were prepared to accept this). For the foreseeable future, it seems likely that the people of the world will look to their governments to provide the institutions that will keep them as safe and secure as may be possible – at least this realization has taken place while it is still possible for states to lead the effort towards creating the large-scale changes necessary to protect society from global climate change.