Hi there. Welcome back. This week, we're going to examine the role that international organizations play in the world economy. We're going to do this by developing several of the strands that we've examined already earlier in the course. In week 2, we looked at some of the elements such as trade and finance that contribute to the current levels of globalization. In week 3, we focused our attention on the question of trust in individual societies, and staying at a national level. We saw in week 4, how levels of fractionalization inequality contribute to the building or undermining of levels of trust. Week 5, raise the question of whether trust could be built by creating a climate of good governance. Finally, in week 6, we looked at the question of whether by external assistance you could grow poorer countries. Now, except for the lectures on globalization, we concentrated our debate at the level of nation state. However, all of these issues can be raised at the international level but with one huge difference. Countries may have policy aims so they hope to realize at an international level, but they have far less control over the outcomes. Now, in this first video, we're going to trace the roots of the current system of international organizations. Just for historical accuracy and I am a historian, I have to mention that the first truly international organization was the International Telegraph Union created in 1865 to establish common standards for international telegraph communication. Close on it's hills, the General Postal Union, created in 1874 to establish common rates for international postage, to ensure that post in one country was actually delivered in another, and to establish the precedent of the country in which the mail was posted and stands were bought that they could keep the revenues. Both of these bodies still exists today under the umbrella of the United Nations. But the roots of the current international order lie in the failure of international organizations in the inter-war years. After the end of the First World War, the victorious nations had in 1920 created the League of Nations. This was an international body designed primarily to guarantee peace and security by encouraging negotiation, arbitration to resolve international disputes. By the time it collapsed into a Second World War, it was evident that the league had catastrophically failed to fulfill this primary aim. Now, several reasons have been offered for this failure. Firstly, the fact that the United States had failed from the start to join the organization, robbed it of some of its legitimacy and cloud. But given the fact that the American policy was becoming increasingly isolationist anyway, it's difficult to say what difference its membership would have made to the course of events. Now secondly, when countries considered their expansionist and national ambitions were being threatened, they simply left the organization. Germany did this in 1933 when the Nazis came to power. Japan walked out in the same year after the condemnation of its invasion of Manchuria. Italy abandoned the league in 1937 following the invasion of Avicennia. Now, less well-known but equally important are the activities of the League of Nations in the field of economics. After the dismemberment of the Austro-Hungarian empire at the end of the First World War, the successor states adopted aggressive protectionist trade policies, as they tried to recreate viable national economies. The league held a succession of conferences designed to bring down the level of import tariffs, all without success. Again, after the onset of the Great Depression, the league tried again without success to hold the upward drift of restrictive trade measures such as tariffs and quotas, as countries try to isolate their national economies from the downward global spiral. Once again, following the devaluation of Sterling in 1931, the league tried and failed to discourage the manipulation of exchange rates to secure national trade advantages. Finally, in 1933, it called a large international conference in London, designed to bring all of these issues together and link them together. Well, it collapsed. With it collapsed, the league finally abandoned its ambitions in this direction. Again, several reasons have been advanced to explain the failure. Firstly, there always seemed to be a problem about a greener strategy towards tackling trade and financial issues. At a slightly deeper level, was the fact that the groundwork for discussions was never adequately prepared in advance. The league never had sufficient staff and more important, still nobody seemed to see the need for a bigger staff. League officials never saw it as their task to prepare detailed recommendations, partly because it was reluctant to interfere with domestic policy matters. Now, this reluctance to overstep some invisible line between commercial policy on the one hand and general economic policy on the other, also contributed to an artificial compartmentalization of problems. Commercial policy was an integral part of economic policy as a whole, or at least it was rapidly becoming so. Now, among American policymakers surveying this collapse of collective security and the disintegration of the world economy, there was a general mindset that link the war directly to the depression. Great depression had contributed to a rise of protectionism. Behind these protectionist barriers dictatorships have been able to emerge, this in turn has led directly to the war. Post-war policy should be directed at avoiding any re-occurrence. You've also got to remember that the ruling Democrats led by President Roosevelt had already promoted widespread government intervention in the national economy in the form of the New Deal, and they were ready to employ the same approach to international problems. During the various meetings among the allies held in the closing years of the war, President Roosevelt gave a high priority to the creation of a new world order. One to which the United States would be committed and one which would also include the Soviet Union. This work was continued after his death. Now, anchoring the entire structure would be the United Nations. Its highest body would be the Security Council, which would be primarily responsible for maintaining world peace. There's one aspect however, we won't be discussing in this series of lectures. Trade and employment issues would be entrusted to an International Trade Organization. Monetary questions would fall under the remit of an International Monetary Fund and problems of post-war reconstruction will be tackled for two years by UN relief and aid administration, and when it's mandate had lapsed, responsibility for promoting economic development would fall to the International Bank for Reconstruction and Development commonly known as the World Bank. Okay. Let's sum up now. In this lecture, we've seen how the failure of international organizations to preserve peace and promote prosperity in the inter-war years had prompted a change in the American view of a new world order. Now, this in turn has led to the creation of new specialized agencies under the umbrella of the United Nations. Over the next three videos, we'll examine in turn the development of these agencies in the field of trade on the one hand and finance on the other. In the final video, will reflect on what lessons we can draw from their experience.
