Sample Essay

The capital flows needed to be controlled to lend stability to the war torn economies of Europe and the dollar was proposed to be the new currency. Under the Bretton Woods interventionist policies, the US started giving out loans to Britain and other European countries for their reconstruction which had multiple purposes. The loans were in dollars and were advanced so that the consumption of US goods increased. This was not a fair tactic as experts considered it unethical in light of the fat that the US could print notes to sustain demand for it own products more than anything else. (Lambie G. 2009)

Moreover the Bretton Woods arrangements led to the development of a new form of state where intervention was considered necessary to control and correct market failures via the government intervening to save the financial market and impose exchange controls etc. Thus it was basically a capitalist state that the Bretton Woods system proposed, but it was also a ype of welfare state where the government interfered in making policies such as pegging of exchange rate to control speculation and hence volatility in the capital markets. (Eichengreen B. 2006)

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