ABSTRACT
It is hardly surprising that some academics and policy makers are nostalgic for a return to the days of the Marshall Plan and the Bretton Woods system. After all, the past 25 years have not been the most celebrated in the history of the world economy. In the 1970s inflation rocked the economies of the OECD and reached still higher levels in many developing countries. In the 1980s mass unemployment returned to the economies of western Europe after 30 years of fullish employment, and more than thirty countries in the ‘South’ suffered grievously from a debt-cum-development crisis that saw 200 billion dollars transferred in net terms from the poorest to the richest countries. 1 Nor did the United States escape the turmoil unleashed by global restructuring in a world awash with credit monies. The Reagan boom of the mid-1980s gave rise to a ballooning budget and trade deficits in the US, and was financed in part by massive borrowing from America’s Asian creditors. In the course of just five years, from 1982 to 1986, an historic buildup of US net assets worth 141 billion dollars was turned into a net foreign debt of 112 billion dollars. 2 By 1987 every ‘family of four (in the United States) had borrowed some $9000 … from foreign lenders’; ‘little wonder’, then, as Benjamin Friedman put it that same year, that ‘most Americans think they are living well’. 3
