economy was one of a colonized status rather than a "developing" status with interests at odds to the wealthy colonial powers (Nelson, 1990, pp. 34-35).
The Depression and, later, World War II shattered the presupposed stability of laissez faire economic relations and ushered in a new set of economic philosophies based on state intervention and careful management of economic affairs, including the regulation of international financial markets. Governments played had previously played a limited role in managing business relations and even the banking system had been deregulated in the global economy. Change came swiftly in favor of state intervention. The change in economic relations toward a more regulated system was not due simply to new theoretical insights; instead, the new theoretical insights (championed in the United States largely by John Maynard Keynes) was due to the pressures of economic collapse and international anarchy. Innovation in domestic and international economic relations was an "innovation of desperation rather than design" (Nelson, 1990, p. 35).
Regulation of the international economy coalesced in the summer of 1944. Shortly after the Normandy invasion, 730 governmental and business leaders from 45 countries--including John Maynard Keynes--met at the Mount Washington Hotel at Bretton Woods, New Hampshire. Their explicit object was to rewrite the rules of international exchange in financial markets to reign in the anarchy of the global free market that had been unleashed by the war and was being exploited in the new self-serving environment of developed countries versus developing countries. The group finished its work within a month, laying the foundations of the World Bank and the International Monetary Fund (IMF) so that the developed countries could cooperatively regulate international financial markets. The point of the cooperative regulation was to stabilize international financial markets to ensure eco...