Changing Economic Policy by Seizing Economic Opportunity: The Case of Closing the Gold Window, 1971

• In Event: 282 - Regular Session. Economic Sociology. Financial Globalization

Abstract

To contribute to sociological analysis of economic policy making, we propose to focus on economic opportunity situations. We define economic opportunity situations as those in which policymakers capitalize on the perception of economic conditions as objective and impervious to political choice, and therefore present their proposed policy change as inevitable for preventing a potential economic crisis. This effectively eliminates the need to assume political responsibility for otherwise controversial decisions. In the first part of the paper, we define economic opportunity and the conditions that help actors identify and seize it. To illustrate the applicability of this concept, we then present a case of the 1971 suspension of gold convertibility in the U.S. Using historical analysis of documents from the Treasury Department Record Group kept in the National Archives in College Park, Maryland, we detail the unfolding of monetary reform leading up to the 1971 suspension of gold convertibility and trace how policy makers seized economic opportunity to change existing policy. They did so by capitalizing on the fact that existing economic conditions in the late 1970s could be perceived as objectively leading to a crisis that needed to be prevented. However, as the discussions of key players reveal, they picked from multiple possible courses of action, neither of which was clearly superior in economic efficiency. The one they did pick, however, aligned well with certain political interests.

Authors

• Nina Bandelj, University of California-Irvine

• Christoffer Zoeller, University of California-Irvine