While social constructivism has moved into the mainstream of international relations theory, informing scholarship in the subfields of security studies and international organization, its application and status in international political economy (IPE) has lagged behind. From the articles in the highest-status political science journals to the works on graduate syllabi across the major research universities, the study of IPE has been dominated by a single view of markets, drawn from neoclassical economics, premised on a narrow view of rationality, and rooted in materialist foundations.

Over the past few years, however, a growing body of work in IPE and comparative political economy has emerged to challenge this approach. Jacqueline Best makes an important contribution to this emerging tradition. Her well-written and thoughtful new book offers novel insights on the history of the Bretton Woods system and a template for the governance of the contemporary international monetary system, while convincingly making the case for the merits of a constructivist approach to political economy. But her book also demonstrates the challenges faced by scholars seeking to understand how markets are socially constructed and culturally embedded. Best thus provides a convincing rejoinder to those who might argue that there is no place for constructivist work in IPE, while her work provides clues as to what this literature still needs to accomplish as it establishes itself as part of the traditional canon.

The central puzzle of The Limits of Transparency is rooted in an important real world issue: How can international financial markets, often highly fragile and prone to systemic crisis, be governed so as to promote economic and political stability? Best's answer is initially counterintuitive but, on consideration, a sensible one. Institutions and political leaders will be successful in part, she argues, because they are able to recognize the constructive role that ambiguity plays in governance, particularly in the realm of international finance. In her view, the collapse of the Bretton Woods exchange-rate regime was caused in large part by the increasing rigidity of the system and its corresponding inability to accommodate ambiguity. The lesson she draws is that transparency—the holy grail of policymaking in the post–Asian financial crisis era—can in fact be counterproductive, whereas the correct balance between ambiguity and coherence may produce better systemic outcomes.

While ambiguity is pervasive in political life, Best points out that money is an area where the centrality of ambiguity is perhaps most obvious. Financial value is itself irreducibly dependent on beliefs. A piece of paper with a euro symbol on it has value only as we agree intersubjectively that it does: The value of a bar of gold is equally a matter of faith, socially constructed. The fact that we all act “as if” these monetary phenomena have a material basis does not remove them from the realm of human interpretation, generated through social interaction. Best asserts that “[w]e can only ever manage, never eliminate, ambiguity” (p. 13), and in her account, it is the quest to eradicate ambiguity that gets policymakers into trouble.

But what, exactly, is ambiguity? The author usefully separates out ambiguity into three interacting strands, demonstrating how each was part of Bretton Woods. “Technical” ambiguity arises out of insufficient or incorrect information, keeping actors from determining things like the optimal exchange rate level or inflation rate. “Contested” ambiguity has more inherently political and distributional roots: It is produced “when political differences lead to contending explanations and solutions for a given economic problem” (p. 4), such as central bank independence. Finally, “intersubjective” ambiguity springs from the inherent ambiguity of economic communication and interpretation. Various actors may agree on the value of free markets, for example, but disagree over whether capital mobility is an essential part of that order. Her theoretical discussions are remarkably jargon-free and evidence a sophisticated intellect at work.

Best illustrates these various types of ambiguity by means of a close study of the changing content and practices of the Bretton Woods postwar international monetary system. The bulk of the empirical material traces the intellectual history and institutional rules of this system, including the negotiations leading up to its founding in 1944, the slow transition to currency convertibility through the 1950s, and its operation and demise in the early 1970s. Her account highlights the regime's shifting ability to manage ambiguity as a central reason for its waxing and waning, parsing out the ways in which the three types of ambiguity shaped its success at governance. She is persuasive, but more attention could usefully have been paid to the specific actors and coalitions that pushed for more or less ambiguity over the years. The nexus between strategic behavior and the construction of norms is critical to an understanding of the path of political action, but it remains an area incompletely addressed by many constructivist works in IR, this one included.

In addition, the Bretton Woods chapters, while useful in illustrating Best's argument, cover ground quite familiar to most political economists, and thus are not as compelling as the more contemporary empirical material in the next-to-last chapter, on the cult of transparency. In this treatment, Best offers a provocative and timely analysis of the ways in which the liberalization of finance, the rise of new classical economic theory, and the prescription of surveillance and transparency as the cure-all for financial instability came together. Drawing on the lessons of Bretton Woods, she offers a convincing critique of the potential for transparency to solve the problems of global finance, and makes the case for the effective and creative use of ambiguity in policymaking instead. A concluding chapter outlines a series of policy prescriptions that flow from her analysis. She evaluates in very practical terms the problems with the “new financial architecture” approach of the post–Asian financial crisis era, and offers a series of alternatives in areas ranging from International Monetary Fund policymaking to macroeconomic adjustment and exchange rate strategies, and to capital control issues.

The Limits of Transparency contributes to a much-needed broadening of the range of approaches to IPE. The claim that rationalist and materialist approaches are inadequate to explain outcomes has been well substantiated in the field of security studies. But a similar debate in the area of the economy has been strangely absent, despite the fact that markets do not exist outside of the social actors that create them. Best's book, along with work by Mark Blyth, Rawi Abdelal, Jonathan Kirshner, and others, demonstrates that many of the puzzles confronting us regarding the politics of money and finance can be unlocked if we move from a narrowly rationalist understanding of political economy to one also informed by constructivist insights. This book demonstrates that constructivism, done well, can be a model of theoretical clarity, empirically grounded, and can produce practical policy recommendations. In an area of universal importance such as the international financial system, how can we afford not to pursue such an approach?