If triumphs in global economic co-operation were accorded the same importance as other diplomatic achievements—like peace treaties, say—then George Soros would not be sitting where he’s sitting right now.
Soros, the most influential hedge fund manager the world has ever known, is at the head of the table where a system of fixed exchange rates was signed into being near the end of the Second World War. That arrangement unravelled in 1971 thanks to Richard Nixon, it’s true, but the International Monetary Fund, the World Trade Organization, the G20 and the acceleration of globalization all flowed from those signatures. This chunk of rock maple is the epicentre of the economic system that has been in place for 67 years—albeit a bit shakily of late.
Lesser relics are protected from frivolous use by ropes and guards. But at the Mount Washington Hotel in Bretton Woods, New Hampshire, the site of the United Nations Monetary and Financial Conference in 1944—birthplace of the “Bretton Woods system”—the table sits out in the open. And talk about your frivolous activities: Soros is using the 14-place table to speak to a group of reporters! It’s like using Sir Winston Churchill’s desk from the Second World War to play a game of Battleship.
It’s not obvious that Soros knows the historical significance of his briefing location. But it’s clear he thinks the financial crisis has proven that the discipline of economics is bankrupt—a sentiment shared by more than a few people in economics itself. And he is very much aware of the historical significance of Bretton Woods. That’s why the New York-based Institute for New Economic Thinking (INET), which Soros seeded with $50 million (U.S.) to foment a revolution in the way economics is applied and taught, is holding its annual conference at the Mount Washington with the help of the Centre for International Governance Innovation, the think tank that Research In Motion co-chief executive Jim Balsillie established in 2002 to goose Canadians’ interest in international affairs.
Neither Soros nor Balsillie have a day-to-day role in their think tanks. But they certainly have a financial role, and on this weekend in April, their finances are being used to rustle up the ghosts of Bretton Woods to get the world economy back on track. There are no guests at the Mount Washington this weekend, only some 330 conferees, among them some of the biggest names in economics, both theoretical and applied: former Federal Reserve chairman Paul Volcker; former British prime minister Gordon Brown; Lawrence Summers, the Harvard professor who advised U.S. presidents Clinton and Obama; a handful of Nobel Prize recipients, including Joseph Stiglitz of Columbia University; and a couple of former IMF chief economists, including Kenneth Rogoff, the co-author of a landmark study on the history of sovereign debt defaults.
At the table with Soros is his handler, a slender, bearded man who, in a dark blue suit, pink shirt and a wool beanie, resembles U2 guitarist The Edge, dressed up for Sunday brunch at a fancy hotel. Soros, who wears hearing aids, sometimes strains to hear the questions. When this happens, The Edge repeats them: “WHAT LESSONS HAVE BANKERS LEARNED FROM THE FINANCIAL CRISIS?”
Soros gives a wry smile. “Not too many,” he says. “They would prefer to think of it as a nightmare that has passed.”
It’s a good line, both pithy and wise. But Soros’s swipe at the villains of the financial crisis hints at something else. As the finance industry’s nightmare fades, so too is the dream of those who had hoped that an economic calamity that rivalled the Great Depression in its destructive force could be used as impetus to bring order to the global economy. What the world needs is another Bretton Woods.
Persistently high unemployment and massive budget deficits are undermining the all-for-one-and-one-for-all spirit that characterized the initial response to the financial crisis. Gordon Brown, who led the Group of 20 summit in London in 2009 that pledged $1 trillion (U.S.) to fight the global recession, is now on the speaking circuit rather than at the helm of one of the world’s leading economies. Rahm Emanuel, who, as White House chief of staff, famously said that a crisis is a terrible thing to waste, is now mayor of Chicago, while his former boss struggles to recover from the “shellacking” the Democrats suffered in last November’s midterm elections.