The world of Bretton Woods
The encyclical Populorum Progressio (PP) was published on March 26th, 1967, just as the decade of the sixties was coming to an end. It was an extraordinary time. After rebuilding the wreckage left after World War II, national economies, especially in Europe, were suddenly and steadily growing.
At that point, it was becoming clear how timely the agreements were that had been reached at Bretton Woods (New Hampshire, U.S.A.) to establish a postwar, international economic order with the creation of three supranational institutions: the International Monetary Fund (IMF) in the area of finance, the World Bank in the area of development, and the International Trade Organization (ITO).
After the United States Congress, afraid of losing autonomy in trade matters, failed to ratify the third of these, 23 countries gathered in Geneva in 1947, and through negotiations aimed at reducing trade tariffs, approved the General Agreement of Tariffs and Trade (GATT), an international accord on duties and commerce.
The aim of both the GATT and the WTO was to obtain a free market system on a global scale, beginning from a situation riddled with difficulties. The first five rounds of negotiations from 1947 to 1961 basically established product–by–product negotiated tariff reductions. The “Kennedy Round” (1964–1967) of negotiations, which basically covered the three years leading up to Populorum Progressio, went on to confront a wider range of issues and procedures.
During the peace of the next twenty years, a Keynesian type of economic politics guaranteed economic stability and made possible sustained economic growth. This allowed Western societies to finance various means of providing federal welfare. In terms of breadth and depth, the economic progress in the wake of Bretton Woods was greater than in any other period. Not without reason was it said that if there was ever a golden age of globalization, that was it.1
By 1967 most of the former colonies had achieved independence; an achievement in which they placed great hopes and expectations. The socioeconomic choices of these countries greatly varied. There was no general sense that they would eventually suffer an economic crisis. But symptoms were already emerging that the world situation simply could not endure. There were unacceptable inequalities in levels of production and revenue between First World countries and their former colonies. It was within this socioeconomic context that Populorum Progressio came to light.
It appeared two years after the closure of Vatican II. In a moment of such ecclesial renewal and hope, Paul VI’s encyclical made explicit the points that the Council had dedicated to the topic of development in the Pastoral Constitution Gaudium et Spes. The conciliar fathers were aware both of the fact that the economy had become an instrument with the capacity to meet the growing needs of the human family, and the agonizing fact that enormous swaths of the world’s population were living without basic needs being met. It was time to introduce deep reforms in socioeconomic life and serious changes in mindsets and habits (cf. Gaudium et Spes, 63).