The System Worked: How the World Stopped Another Great Depression

452 Pages·2014·3.35 MB·English

by  Daniel W. Drezner

THE SYSTEM WORKED
THE
SYSTEM
WORKED
HOW THE WORLD STOPPED
ANOTHER GREAT DEPRESSION
DANIEL W. DREZNER
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Library of Congress Cataloging-in-Publication Data
Drezner, Daniel W.
The system worked : how the world stopped another
great depression / Daniel W. Drezner.
pages cm
ISBN 978–0–19–537384–4 (hardback : alk. paper) 1.
Global Financial Crisis,
2008–2009. 2. Financial crises—Government policy. 3.
Finance—Government
policy. 4. Recessions—21STcentury. 5. Economic his-
tory—21STcentury. I. Title.
HB3722.D74 2014
330.9’0511—dc23
2013044640
7/452
1 3 5 7 9 8 6 4 2
Printed in the United States of America
on acid-free paper
This book is dedicated to Stephen D.
Krasner, the Graham H. Stuart Professor
ofPoliticalScienceatStanfordUniversity,
agiantinthestudyofglobalpoliticaleco-
nomyand,somemoonsago,mydisserta-
tion adviser. In my professional career,
Stevepushedmetothinkmorerigorously
and systematically about power than any
other colleague. It’s payback time.
CONTENTS
Acknowledgments
1. The Puzzle of Successful Global Governance
2. Yes, the System Worked
3. Why the Misperception?
4. The Role of Interest
5. The Role of Power
6. The Role of Ideas
7. Where Do We Go from Here?
Notes
References
Index
ACKNOWLEDGMENTS
This book has been an intellectual exercise in trying to
figureoutwhyIwassowrongsixyearsagoandwhyso
many other smart analysts have been so wrong since.
Back then, I had a pretty good idea for a book—it
wouldbeaclarioncallaboutthescleroticstateofmulti-
lateral economic institutions. In it, I would sagely ob-
serve that the last major burst of international institu-
tionalcreationhadbeeninthelate1940sandpointout
thatthedistributionofpowerlookedaweebitdifferent
in the twenty-first century. If current mismatches
between global governance structures and the distribu-
tion of power were allowed to fester, then those struc-
tureswouldrestuponveryshakyfoundations.Theriseof
theBRICsclearlymandatedsuchreforms.Iwouldwarn
thatalthoughreformingglobalgovernancewasathank-
less task, failure to take action would leave these
institutions ill-equipped for a severe global shock. Pro-
activestepswouldbenecessarytopreventtheglobaleco-
nomy from experiencing the 1930s all over again.
BeforeIcouldstartwritinginearnest,however,Leh-
man Brothers went bankrupt, the federal government
bailedoutAIG,andtheReservePrimaryFundbrokethe
buck. My warning was overtaken by events; the severe
global shock had happened.