| Book Review | The American Historical Review, 109.5

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| Book Review | The American Historical Review, 109.5 | The History Cooperative

Book Review

Comparative/World

Francis J. Gavin. Gold, Dollars, and Power: The Politics of International Monetary Relations, 1958–1971. (The New Cold War History.) Chapel Hill: University of North Carolina Press. 2004. Pp. xii, 263. $45.00.

Bretton Woods is back in fashion, due to some suggestive parallels with the international monetary situation forty years ago. Now, as then, the international system is made up of a center and a periphery. The center has the exorbitant privilege of issuing the currency used as international reserves and a tendency to live beyond its means. The periphery is committed to export-led growth based on the maintenance of an undervalued exchange rate, a corollary of which is its accumulation of low-yielding international reserves. In the 1960s, the center was the United States, while the periphery was Europe and Japan, many developing countries not yet having been fully integrated into the international system. Now there is a new periphery, China, but the same old core, the United States. Because China has 200 million rural unemployed still to be shifted to the export sector, it is happy to stick with an undervalued exchange rate and continue accumulating dollars indefinitely, this being the price of social peace and prosperity at home. The United States, meanwhile, still enjoys the luxury of living beyond its means. Given this happy equilibrium, there is no reason to worry about the problem of global imbalances. The current system, like Bretton Woods before it, has many years to run.

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