At Bretton Woods, the dollar at the center of a new world order

In July 1944, with the war still ongoing, representatives of the major Western powers were working tirelessly at Bretton Woods (United States) on ways to save a capitalist system whose responsibility for the advent of Nazism was overwhelming. The equation was complex: to promote reconstruction and learn from the major economic and financial crisis of the 1930s that led to the war, it was necessary to establish a monetary system of unfailing stability.

Closing ranks around the dollar, and by extension US capital, appears to be the only viable logic to the luminaries gathered there. The exchange rates between the major currencies and the greenback are fixed. The US currency is the only one still convertible into gold . All others gravitate around it with a fixed exchange rate.

Two international institutions, the IMF and what would become the World Bank, were created to oversee the system. The dollar thus acquired the status of a common global currency. As a reserve and benchmark currency, it became an instrument of US domination at least equal to its armada deployed in all parts of the globe. This privileged status allowed Washington to borrow at minimal cost and siphon off capital from around the world. Only the system's limitations emerged at the end of the Trente Glorieuses (Thirty Glorious Years).

In 1971, the Vietnam War revealed itself as a financial sinkhole. President Richard Nixon's administration then decided to partially dismantle the Bretton Woods system. To further place the dollar in a pivotal position, he decided to prohibit the convertibility of the greenback into gold. The major Western countries bowed. Washington would be able to suck up ever more global savings to channel them into its immense budgetary expenditures.

But a contradiction linked to the omnipotence of the greenback will be exacerbated in a world soon to be given over to liberal globalization. The strong dollar is a means for American multinationals to expand their conquests. At the same time, it is a vector of deindustrialization in the United States, as these same firms no longer hesitate to relocate their production to places where labor is cheaper.

This is the yardstick by which the trade war unleashed by Donald Trump must be assessed. He intends to drive down the value of the greenback to bring production and investment back to US territory. But at the same time, he needs to strengthen the dollar's imperial position to finance a public debt that currently stands at some $34.5 trillion with foreign capital. Unsustainable.

The future of humanity, its ability to overcome today's social and climate crises, is necessarily multilateral. It presupposes at least a de-dollarization as desired by the "Global South" with the BRICS and, at best, the emergence of a true global common currency to finance the necessary common public goods.