Why have governments across Western Europe and North America turned to austerity in the wake of the global economic crisis of 2008? This book argues that this turn to austerity, and the resilience of neoliberal economic policies more generally, stems from the growing influence of state monetary agencies—central banks and treasuries—in the management of the global economy. Through a close analysis of historical documents, this book focuses on the critical decade of the 1960s when the acceleration of global financial transactions overwhelmed the existing institutions of international monetary ma ... More

Why have governments across Western Europe and North America turned to austerity in the wake of the global economic crisis of 2008? This book argues that this turn to austerity, and the resilience of neoliberal economic policies more generally, stems from the growing influence of state monetary agencies—central banks and treasuries—in the management of the global economy. Through a close analysis of historical documents, this book focuses on the critical decade of the 1960s when the acceleration of global financial transactions overwhelmed the existing institutions of international monetary management. As central banks stepped in to support the international monetary system, policy makers became dependent on monetary officials to stabilize and increasingly unstable global economy. Through case studies of economic policy making in the United States, United Kingdom, and Italy during this period, this book shows how this relationship of dependency gave monetary officials leverage to steer economic policy in the direction of austerity. In addition, this book shows that, after the collapse of the Bretton Woods international monetary system in the 1970s, state monetary agencies worked closely together to construct new international institutions to manage an evermore open, and volatile, global capitalism. While these efforts have not prevented global financial crises, they have further strengthened monetary authorities’ position in the international monetary system and increased their influence over national economic policy making.