Neoliberals pushed floating exchange rates and open capital flows that disciplined welfare spending.
Evidence
In 1971 the Bretton Woods system had ended in its original form when the United States unilaterally ceased exchanging dollars for gold. By 1973, responding in part to the diligent persuasion of Haberler and other neoliberals, the States let the dollar “float,” allowing market demand (alongside targeted state interventions) to dictate its value. In turn, many of the world’s currencies floated too, launching an era of a variety of monetary strategies ranging from flexible exchange rates to “managed floating.” Simultaneously, the end of IMF authorization for controls on capital movements brought back the “hot money” flows of the 1930s, amplified in volume by the greater global connectivity of telecommunications. New investment flows were available to nations worldwide, but capital flight could also be punitive if foreign investors disapproved of costly policies like building domestic welfare states through higher taxation. — Quinn Slobodian, Globalists, 792
Categorization
- XREF: Core to the reader’s stated goal — this is the causal mechanism of ‘insulating markets from democracy’: capital flight disciplines costly welfare policies, making the market a check on democratically chosen spending. — connects to: Neoliberals split into warring factions over fixed versus floating exchange rates — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 41; 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; Neoliberal ‘freedom’ prioritized cross-border capital mobility over domestic welfare. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 423 (+2 more)
Broader Connections
- Neoliberal ‘freedom’ prioritized cross-border capital mobility over domestic welfare.
#corroborates(0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 423 - Early neoliberals favored the gold standard and opposed floating rates
#contradicts(0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 428 - Neoliberals split into warring factions over fixed versus floating exchange rates
#complicates(0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 41 - Neoliberals captured global financial institutions to discipline nation-states
#expands(0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2131 - Floating exchange rates triumphed despite starting as a minority view even among neoliberals
#complicates(0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 445