The Political Economy of the Special Relationship: British Development and American Power

Breaking from the traditional understanding of Anglo-American relations in terms of the cultural, diplomatic and military ‘Special Relationship’, this thesis explores the interdependent political-economic development of Britain and the United States. I argue that this interdependence has generated a specifically Anglo-American field of capitalist development that has been crucial to the transformation of the global political economy, particularly with regard to the creation and eventual undermining of the Bretton Woods monetary order. Reflecting the imbalance of power between Britain and the U.S., the thesis focuses principally upon the role of American power in shaping the transformation of Britain’s political economy and affecting Britain’s position within the global political economy. Moving away from the narrow preoccupation with decline that has dominated studies of British capitalism, I open up the study of British development within a broader transatlantic horizon that enables an alternative analysis which reveals important aspects of the politics of financial globalisation and the transformation of the U.S. political economy. I argue that the financial relationship between the two states and the key role of interaction between bankers in London and New York, in collaboration with their respective Treasuries and Central Banks, was crucial to the post-war transformation of the global political economy. The interactive development of Anglo-American finance was central to the development of financial globalisation, undermining the Bretton Woods order in the process. Anglo-American bankers alongside their respective Central Banks and Treasuries formed the basis of enduring economic orthodoxy within both states and presided over financial deregulation that critically undermined the basis of the Keynesian state in Britain. In the U.S., these transatlantic deregulatory dynamics eroded the basis of financial regulations that had been central to the politics of the New Deal. In both countries, the financial communities supported monetarism and the neoliberal central banking regimes of the Thatcher-Reagan era, which spurred a wider endorsement of the politics of price stability throughout the global political economy.