[MUSIC]

Hi there.
Welcome back.
This week we're going to examine the role
that international organizations play in
the world economy.
And we're going to do this,
by developing several of the strands
we've examined all ready in this course.
Now, in this first video, we're going to
trace the roots of the current system of
international organizations.
Now, 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.
And close on its heels can 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 that the
country in which the mail was pasted and
the stamps were bought.
That they could keep the revenues.
And both of these bodies still exist 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 interwar 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 ti fulfill its 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 had robbed
it of its legitimacy and clout.
But given the fact that the American
policy was becoming increasingly
isolationist anyway,
its difficult to say what difference its
membership would've made
to the course of events.
Now secondly, when countries consider that
their expansion as 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
it's invasion of Manchuria.
And Italy abandoned the league in 1937
following the invasion of Abyssinia.
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 successive states
adopted aggressive trade protection as
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 halt the outward drift of
restrictive trade measures such as
tariffs and quotas, as countries tried 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.
And finally, in 1933, they called
a large international conference in
London designed to bring all of these
issues together, and link them together.
Well, it collapsed and with it's collapse,
the league finally abandoned its
ambitions in this direction.
Again, several reasons have been
advanced to explain the failure.
Firstly, there always seem to be a problem
about agreeing a strategy towards
tackling trade and financial issues.
At a slightly deeper level,
was the fact that the groundwork for
discussion 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 policy makers surveying
this collapse of collective security and
the disintegration of the world economy
there was a general mindset that linked
the war directly to the depression,
the great depression that contributed
to a rise of protectionism.
Behind these protectionist barriers,
dictatorships have been able to emerge and
this in turn had led directly to the war.
Post-war policy should be directed
at avoiding any reoccurrence.
You've also got to remember
that the ruling Democrats,
led by President Roosevelt, had already
promoted wide-spread government
intervention in the national economy
in the form of the New Deal, and
they were ready to employ the same
approach to international problem.
So, 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.
And this work would
continued after his death.
Now, anchoring the entire structure
would be the United Nations.
It's highest body would be
the security council which would be
primarily responsible for
maintaining global peace.
Ann this 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 would be talked for
two years by UN relieve and
aid administration.
And when it's mandated 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 the New World Order.
And how this, in turn, had 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.
And in the final video,
we'll reflect on what lessons we
can draw from their experience.