Monday, 20 November 2000

From "International Regimes, Transactions, and Change [...]"

By John Gerard Ruggie.

Liberal internationalist orthodoxy, most prominent in New York financial circles, proposed to reform the old order simply by shifting its locus from the pound to the dollar and by ending discriminatory trade and exchange practice [...] Opposition to economic liberalism, nearly universal outside the United States, differed in substance and intensity depending upon whether it came from the Left, Right, or Center, but was united in its rejection of unimpeded multilateralism [...] The task of postwar institutional reconstruction [...] was to maneuver between these two extremes and to devise a framework which would safeguard and even aid the quest for domestic stability without, at the same time, triggering the mutually destructive external consequences that had plagued the interwar period. This was the essence of the embedded liberalism compromise: unlike the economic nationalism of the thirties, it would be multilateral in character; unlike the liberalism of the gold standard and free trade, its multilateralism would be predicated upon domestic interventionism.

[...]

Free exchanges would be assured by the abolition of all forms of exchange controls and restrictions on current transactions. Stable exchanges would be secured by setting and maintaining official par values, expressed in terms of gold.

[...] that a multilateral order gained acceptance reflected the extraordinary power and perseverance of the United States. But that multilateralism and the quest for domestic stability were coupled and even conditioned by one another reflected the shared legitimacy of a set of social objectives to which the industrial world had moved, unevenly but "as a single entity." Therefore, the common tendency to view the postwar regimes as liberal regimes, but with lots of cheating taking place on the domestic side, fails to capture the full complexity of the embedded liberalism compromise [...]

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