Floating exchange rates preconditioned the rapid liberalization of global capital
Evidence
Most importantly, the more widespread adoption of flexible exchange rates became the central precondition for the rapid liberalization of global capital movements and thus the explosion of financial markets, which have been adequately described as the lever of the neoliberal counter-revolution in the coming decades. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 448
Categorization
- SEED: Angle: the ordoliberal/European resistance to floating rates as a competing ‘anti-financialization’ branch of neoliberalism — a counter-narrative to the monolithic story.
- XREF: connects to: Friedman argued flexible exchange rates were essential for free multilateral trade — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 646; Floating exchange rates created the risk exposure that currency futures were designed to hedge — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 656; Floating exchange rates triumphed despite starting as a minority view even among neoliberals — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 445 (+10 more)
Broader Connections
- Capital-account liberalization creates surplus-deficit imbalances and boom-bust cycles
#expands(0.80) — Natascha van der Zwan, Making Sense of Financialization, 34 - Western Europe diverged from the floating-rate norm via the Bundesbank and EMS
#qualifies(0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 448 - Reformers demand flexible exchange rates and growth-oriented central bank policy
#complicates(0.78) - Interwar inflation trauma made floating exchange rates widely unthinkable
#qualifies(0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 418 - Globalization and financialization form one mutually reinforcing process, not rival frameworks
#expands(0.72) — Natascha van der Zwan, Making Sense of Financialization, 30