The political economy of the post-World War II West was shaped by normative understandings and institutional arrangements that scholars describe as embedded liberalism. It coupled governments’ commitments to progressively liberalize trade as well as establish free and stable exchange rates with maintaining adequate domestic policy space, including capital controls, to provide social investments and safety nets, and to buffer economically and socially dislocating effects of liberalization. (Ruggie, 1982). Although largely an Anglo-American design it also captured core interests and concerns of European social democracies and social market economies and formed the basis of the General Agreement on Tariffs and Trade (GATT) and the Articles of Agreement of the International Monetary Fund (IMF). In the industrialized world, this grand bargain led to one of the longest and most equitable periods of economic expansion in history.
Ruggie, John Gerard. "The Paradox of Corporate Globalization: Disembedding and Reembedding Governing Norms." HKS Faculty Research Working Paper Series RWP20-023, August 2020.