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TITLE: The Battle of Bretton Woods
AUTHOR: Benn Steil
PUBLISHER: Princeton (£19.95)

Benn Steil is a clever fellow. Formerly of Chatham House and now director of international economics at the Council on Foreign Relations in New York, he can translate British foibles for an American audience and vice versa. This book gives him plenty of room to show off, since his two protagonists – Maynard Keynes towards the end of his life, and Harry Dexter White – were chalk and cheese.

Keynes was the not-so-humble British aristo, with a brain the size of a planet, who revolutionised economics, for better or worse, and who was, by the mid-1940s, a global celebrity. White, son of Jewish immigrants (where did that Dexter come from?), was his antithesis: a bit of a plodder, uncharismatic, but dogged and driven. Between the two of them, they were tasked by their governments with building a post-war economic order that would not (as after Versailles) carry within it the seed of future conflict.

The basic plot is well known, as are the two institutions, the IMF and World Bank, which resulted. But, by focusing on Keynes and White, Steil manages to wring a great deal of human interest out of the macroeconomic desert.

What I certainly hadn't understood was just how badly Keynes failed. Yes, he had a weak hand to play in that Britain was broke from 1941 on, and was very much a junior partner in the Atlantic Alliance. But he played it badly. He got up the Americans' noses, and up plenty of British noses, too. And he had an irritating habit, each time he lost, of retroactively moving the goalposts and claiming some kind of victory. What he signally failed to do was capitalise on the goodwill towards Britain that existed in much of the US, if not in anti-imperial Washington. Instead, he seemed to epitomise the sense of European superiority that Americans find offensive.

Oh, and the economics... Steil is a dab hand at illuminating the serial shifts in Keynes's world-view: consistency was not his forte. Not only (as Tim Congdon has pointed out) was Keynes a monetarist, he was also a protectionist, a believer in Imperial preference and (from time to time) a gold bug.

As for White, he doesn't get off easily. There has long been a debate as to whether he was a Soviet spy, an 'agent of influence' or just a mildly deluded leftist fellow-traveller. Steil is not inclined to forgive, relying on Venona decrypts, he plonks White mid-way between the first two categories – though that doesn't mean that everything White did had Moscow in mind. What is fascinating is that White saw no conflict between his efforts to build the post-war economic architecture that his bosses (FDR, Truman and Morgenthau) wanted and his belief that Sovietstyle socialism would eventually triumph – even when Russia declined to join the Bretton Woods twins.

White is a fascinating figure and both he and his wife probably deserve a deeper, post-Venona look. Unlike Keynes, he delivered what his government wanted and he may have taken some satisfaction in making sure that the Brits went away from Bretton Woods empty-handed.

That said, the Fund and Bank, as they developed over time, bore little relation to the blueprint that White drew up and manouvered around perfidious Albion. Institutions have a survival instinct of their own, and the Fund, in partuicular, has reinvented itself at least three times since 1944.

Relevance for today? Well, there is a coda in the book in which Steil tries to cast today's US/China rivalry in the same mould as US/UK relations in the 1940s. There are some similarities, in that China is the rising power (as the US was), but, as he acknowledges, they are probably misleading. The US in 2013 has a lot more going for it than Britain – bankrupt, broke and bombed – in 1944. Read the book for what it is: a masterful (and readable) account of American realpolitik and British delusion.

Andrew Hilton