"Free capital movement establishes what international economists have called a "virtual parliament" of investors and lenders, who carry out a "moment-by-moment referendum" on government policies. The "virtual parliaments" can "vote" against these policies if it considers them irrational: enacted for the benefit of people, rather than profit for concentrated private power. They can "vote" by capital flight, attacks on currencies, and other devices offered by financial liberalization. [John Maynard] Keynes considered the most important achievement of Bretton Woods to be establishment of the right of governments to restrict capital movement."
"Keynes regarded speculation as destructive. His basic insight is well described by Indian economist Prabhat Patnaik, at the UN conference of October 30 on the global financial crisis. Patnaik explains that Keynes "had located the fundamental defect of the free market system in its incapacity to distinguish between `speculation' and `enterprise.' Hence, it had a tendency to be dominated by speculators, interested not in the long-term yield on assets but only in the short-term appreciation in asset values. Their whims and caprices, causing sharp swings in asset prices, determined the magnitude of productive investment and, therefore, the level of aggregate demand, employment and output in the economy. The real lives of millions of people were determined by the whims of 'a bunch of speculators' under the free market system." The replacement of governmental "demand management" by "bubble booms" created by speculators is a prime cause of the current financial crisis, Patnaik argues plausibly, supporting Keynes's analysis. "
"Since financial liberalization and the related neo-liberal programs were introduced in the 1970s, there has been considerable deterioration where the programs have been adopted, though there has been rapid growth where they have been mostly ignored, notably in East Asia . . . . The Bretton Woods years were the era of substantial progress in establishing basic social and democratic rights, which have been under attack during the neo-liberal/financial liberalization period. To take just the United States for illustration, during the Bretton Wood years, economic growth was not only unusually rapid but also egalitarian: the poorest quintile did as well as the richest. And social indicators, general measures of the health of the society, closely tracked growth. Since the late 1970s, for the majority of the population real incomes have stagnated, work hours have increased, benefits have declined, and social indicators not only did not track growth, but in fact steadily declined."
I hope everyone realises that the model Keynes and Noam are decrying here is the very same one that the Labour government did everything they could in their twelve years of power to follow. Its also the same one Thatcher embraced as if it were a genocidal ex-dictator.