From the Top–Down: The New Financial Architecture and the Re-embedding of Global Finance

Abstract

After decades of touting the International Monetary Fund (IMF) as a neutral, expertise-based institution, Fund representatives have recently adopted a surprisingly normative tone in their policy statements. IMF staff and leaders have begun to talk about the value of ‘good financial citizenship’, ‘civility’ and the goal of ‘civilising globalisation’. This new institutional vocabulary appears most commonly in the context of calls for a new financial architecture—the most influential of current responses to the recurring financial crises of the past decade. In this article, I will attempt to excavate some of the foundations of this new architecture, paying particular attention to the logic of its newly normative vocabulary. In doing so, I will make use of a concept that has most frequently been used to make sense of the postwar financial system—‘embedded liberalism’. Coined by John Gerard Ruggie but inspired by Karl Polanyi, this term was used to describe the peculiar compromise of the postwar order: while the Bretton Woods regime sought to promote a liberal financial order, Ruggie argued, it also embedded those universal liberal principles within the particular social and political norms of member-states. With the end of the Bretton Woods regime, however, many have argued that there has been a progressive disembedding of liberalism, as we have witnessed the gradual marketisation of domestic society and the increasing subordination of domestic stability to the principle of international economic liberalisation.