Abstract
Economic disruptions of the past 20 years have periodically focused the American public’s attention on international economic problems. The determinants of energy and food prices, plant location, the value of the dollar, and domestic financial stability all have global dimensions; and if newspaper articles and television reports are any indication at all of popular consciousness, many Americans recognize this new reality. Unfortunately, an expansion of our regional vision does not guarantee a more cosmopolitan populace. External economic disturbances are just as likely to generate an inward-looking hostility. There certainly is evidence that many U.S. citizens would support a more nationalistic economic program, but specific protectionist proposals have received surprisingly little coherent support in Congress. There are two plausible explanations for this anomaly. Corporations and government agencies with strong interests in overseas trade and investment can effectively lobby representatives to prevent measures that would restrict international economic intercourse. Or the public itself may believe that no measure—however useful for particular sectors of the populace—could really improve the general welfare of U.S. citizens.1
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Notes
Heckscher points out that this new emphasis on organizing state policy according to consistent economic principles was also—and, perhaps, primarily—against the disintegrative, particularistic tendencies of Medieval society. Eli F. Heckscher, Mercantilism rev. ed. (London: George Allen and Unwin, 1955), pp. 33–44.
This exploration is ultimately inspired by Veblen’s attempt to analyze the rule of finance within the modern firm. Thorstein Veblen, The Theory of Business Enterprise (New York: Mentor Books, 1958).
Another, more “Keynesian” proposal of the late 1960s called for the creation of an international reserve unit in relation to which all national currencies would be fixed. This more ambitious version of the SDR initative would permit periodic devaluations or revaluations, but this framework would interpose an administrative procedure between the gains and losses of reserves and the determination of appropriate exchange rates. Fritz Machlup, Remaking the International Monetary System: The Rio Agreement and Beyond (Baltimore: The Johns Hopkins Press, 1968).
For the most compelling early articulation of this open-economy emphasis on monetary policy, see Robert A. Mundell, International Economics (New York: The Macmillan Company, 1968).
Richard N. Cooper, “Economic Mobility and National Economic Policy,” in Economic Policy in an Interdependent World: Essays in World Economics (Cambridge, MA: The MIT Press, 1986), pp. 85–86.
The economic history of the 1920s indicates a possible connection between an unstable and stagnant world economy and attempts to preserve a liberal system of international exchange. This experience lay behind Keynes’s own protectionist arguments during the 1930s and early 1940s. For a detailed economic history of this period, see Derek H. Aldcroft, From Versailles to Wall Street, 1919–1929 (Berkeley: University of California Press, 1981).
For a brief commentary on Keynes’ perspective, see John Willoughby, “A Reconsideration of the Protectionism Debate: Keynes and Impport Controls,” Journal of Economic Issues vol. 16, June, 1982, pp. 555–61.
Thus, Fritz Machlup wrote in the mid-1960s: Counterflows of private capital induced by “financial corrective” may in rare circumstances remove the need for real adjustment. But in more usual circumstances the correction of the imbalance will be only temporary and the need for real adjustment merely postponed. “The Capital Account and the Balance of Payments,” in Maintaining and Restoring Balance in International Payments (Princeton: Princeton University Press, 1966). p. 170.
OECD, National Accounts, 1972–84, Vol. II (Paris: OECD, 1986), p. 49.
Mira Wilkins points out, in fact, that the first U.S.-based international banking operations evolved from trading companies who “found trading in money to be more lucrative than trading in goods.” Mira Wilkins, The Emergence of Multinational Enterprise: American Business Abroad from the Colonial Era to 1914 (Cambridge: Harvard University Press, 1970), p. 13.
Stephen Hymer makes a similar argument when analyzing the rise of the modern supranational corporation. See “The Multinational Corporation and the Law of Uneven Development,” in J. Bhagwati, Ed., Economics and World Order from the 1970s to the 1990s (Basingstoke, Eng: Macmillan, 1972).
The merchandise trade deficit of the United States hovered between 25 and 34 billion between 1977 and 1981. Given the inflationary conditions of this period, there was some real improvement in trade competitiveness during most of the Carter years. Economic Report of the President, 1987 (Washington, D.C.: Government Printing Office, 1987), p. 361.
“When the Dollar Was Devalued,” The Economist Vol. 240, No. 6678, August 21, 1971, p. 53.
Harold Wilson first attacked the Gnomes of Zurich during the mid-1960s. Anthony Sampson, The Money Lenders: Bankers and a World in Turmoil (New York: Viking Press, 1981), p. 207.
“Le Bon Choix,” The Economist Vol. 286, No. 7282, March 26, 1983, p. 11.
Bob Jessop makes the argument that businesses will often not be able to articulate a common stance that reflects the interests of “capital in general.” Bob Jessop, The Capitalist State (New York: New York University Press, 1982).
“The Rising Yen,” The Economist Vol. 240, No. 6680, September 4, 1971, pp. 57–58.
As Milward puts it: The response of the European economies to their increasing international payments difficulties was not, however, as it had been in 1920, to deflate, but, with the exception of Italy, to maintain inflationary boom conditions while increasing the level of control over foreign trade. Alan S. Milward, The Reconstruction of Western Europe, 1945–51(Berkeley: University of California Press, 1984), p. 465.
The regime literature can be widely divergent. Steven Krasner, for instance, has argued that trading and finance regimes are mainly dependent on continued U.S. hegemony, while John Ruggie has stressed the shared commitments of most state managers to some form of liberal Keynesianism. For a further exploration of these perspectives, see Stephen Krasner (Ed.), International Regimes (Ithaca: Cornell Press, 1983).
this approach does not explain the formation of a liberal Keynesian regime, but rather concentrates on explaining its historical reproduction.
Howard W. Wachtel, The Money Mandarins (Pantheon Books, New York, 1986) p. 100.
This attempt to separate trade from capital accounts was France’s first reaction to the Nixon shock. “Waiting on the Six,” The Economist Vol. 240, No. 6678, pp. 55–9.
Richard N. Cooper, “Economic Mobility and National Economic Policy,” in Economic Policy in an Interdependent World: Essays in World Economics (Cambridge, MA: the MIT Press, 1986), pp. 71–122.
This conclusion tends to contradict the argument that intensified international competition will suppress profits more than wages. It is possible that a strong labor movement might be able to resist wage-cutting strategies and force corporations to accept a lower profit share. This is the scenario outlined by Andrew Glyn and Bob Sutcliffe in British Capitalism, Workers and the Profit Squeeze (Harmondsworth, Eng: Penguin, 1982). On the other hand, it is plausible to expect that capital would eventually relocate and eventually capture a larger global share of income. I am grateful to Sam Bowles for first suggesting these ideas.
Even the United States has played this game. In order to attract U.S. banks away from their havens in the Cayman Islands and elsewhere, the Federal Reserve created deregulated and tax free enterprise zones for International Banking Facilities. Wachtel, The Money Mandarins Pantheon Books, New York, 1986, pp. 110–118.
E.J. Kolde writes: No tax system, however involved, can be expected to fully incapacitate the transfer-pricing mechanism. Indeed, it appears that as a multinational firm matures and develops greater operational integration among its affiliates, the opportunities for employing the transfer price tend to increase sharply irrespective of national tax laws. E.J. Kolde, The Multinational Company (Lexington, MA: DC Heath and Company, 1974), p. 193.
A British example of this leftist nationalism is: CSE London Working Group, The Alternative Economic Strategy: A Labour Movement Response to the Economic Crisis (London: CSE Books, 1981).
Howard Wachtel, The Money Mardarins, pp. 204–214. Wachtel’s other reforms focus on policy coordination issues that are similar to already outlined liberal planks.
Elizabeth Bailey, “Foreword,” in W. J. Baumol, J. C. Panzer and R. D. Willig (Eds.), Contestable Markets and the Theory of Industrial Structure (New York: Harcourt, Brace and Jovanovich, 1982), p. xx.
Jurgen Habermas is one of the most recent theorists to discuss the liberatory potential of knowledge. See the discussion of Perry Anderson, In the Tracks of Historical Materialism (London: Verso, 1983), pp. 55–67.
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Willoughby, J. (1988). National Economic Management and the Supranational Economy. In: Peterson, W.C. (eds) Market Power and the Economy. Recent Economic Thought Series, vol 15. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-2673-8_5
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