Slouching Toward Pluralism: An End to "The American Century"?
Kuttner, Robert
There is now widespread concern about the tension between America's economic interests and its continued geopolitical role as "hegemon" of the world system. At the simplest level this...
...In such circumstances "interdependence" becomes a mechanism to lower wages and living standards, and the putative efficiency gains of liberal trade are undone by the losses of falling wages...
...At first, commerce and nationalism fused, via mercantilism...
...However, the United States remains reluctant to let goat great cost to itself and to the world system...
...Free trade is to be defended against the onslaughts of protectionist fever...
...Gilpin advises us to look at international political economy both from the perspective of the system as a whole and from the vantage point of the nation-state...
...None of these writers is in any sense a radical, but their voices, significantly, are outside the mainstream...
...But—and here is the rub — "Despite the inability to control its fate, the modern state remains the primary unit of international politics...
...By the fourth variation several hundred pages later, it seems less a bellows than a windbag...
...Lehi Funabashi's Managing the Dollar is a superb chronicle of the diplomacy of muddling through...
...In the nineteenth century market and state separated, yet the state grew ever more gargantuan...
...225 Pluralism The sudden prospect of détente with the East further complicates this picture, for it invites Western Europe and Japan to effect their own rapprochement with the USSR and Eastern Europe...
...For the first 150 years of its existence, the United States mightily resisted the complications of global entanglement...
...Here, Rosecrance lets his heart run away with his head...
...This liability has been especially pronounced in U.S.-Japan diplomacy, where the combination of fealty to open markets and fear of Japan's slipping out of America's orbit have all but paralyzed U.S...
...But the combination of pluralism and laissez-faire could prove hazardous indeed...
...293 pp...
...Renouncing economic and geopolitical leadership would subject the United States to the same disciplines endured by lesser nations...
...Socially, however, they are essential underpinnings of Japan's efficient competitiveness...
...He sees world political economy as two ideal types—the Westphalian system of territoriality, sovereignty, military conquest, and "spurious independence," versus the liberal norms of trading states like Venice and modern Japan...
...Those who got a B or better in World History may wish to skip to the next-level course, beginning with Robert Gilpin's fine The Political Economy of International Relations and Richard Rosecrance's The Rise of the Trading State...
...Pluralism In this respect, Calleo's point is that twenty-five years after de Gaulle's independent foreign policy, eighteen years after Willy Brandt's Ostpolitik, and fifteen years after the collapse of Bretton Woods, it is time to recast the Atlantic alliance...
...Rather, the insecurity is engendering an upsurge of primal religious and nationalistic fanatacisms...
...But his canvas is so broad that, once again, most of his specifics are all too familiar...
...influence in Europe, and the risk of what some conservatives fear as "Finlandization...
...There is now widespread concern about the tension between America's economic interests and its continued geopolitical role as "hegemon" of the world system...
...He even hopes large states like the United States will decide to put their money on trade rather than militarism...
...Robert Gilpin, The Political Economy of International Relations...
...Bergsten, a former Carter administration subcabinet official with responsibility for international economic relations, now heads an influential think tank, the Institute for International Economics...
...Kennedy's basic point, distilled from a five hundred-year sweep of great-power political and economic history, is that differentials in growth rates inevitably shift power balances and that great nations get into difficulty when the costs of maintaining empire outrun their economic resources...
...As the dominant power and sponsor of a liberal trading system, the United States is essentially powerless to take a seriously hard line against the Japanese...
...Paul Kennedy, The Rise and Fall of the Great Powers...
...For example, a review of recent U.S...
...Domestically, the state finds itself "mediative" rather than sovereign—unable to control its own economy because of the largely uncontrolled global flows of capital...
...Until recently there SPRING • 1989 • 227 Pluralism was a tendency for Americans in particular to fuse (and confuse) those two perspectives, because the extraordinary dominance of the United States made the global capitalist system virtually an American system...
...But Calleo's analysis of NATO serves as a broader metaphor...
...Since any form of domestic economic planning would undermine the U.S.-inspired global liberal system, economic planning is verboten...
...A "devolution" of military and financial authority to other nations is necessary, both to reflect the new economic realities and to permit the United States to give long overdue priority to its own economic health...
...A good guide to the military, as opposed to the economic, dimension of the coming of geopolitical pluralism is David Calleo...
...There is growing acceptance of the idea that the United States cannot afford to play its old role and that it should not attempt to...
...For a closely grained look at the limits of conventional economic diplomacy, consult Clyde Prestowitz's Trading Places, and Yoichi Funabashi's Managing the Dollar...
...Early in the modern age, Renaissance Venice, the Hanseatic League, and the Dutch empire, among other small polities, achieved great influence not via territorial might or military conquest but by emphasizing trade...
...He wanted a world system that would allow nation states to pursue fullemployment welfare states at home...
...Two thoughts come to mind reading the work of policy operatives like Bergsten and Aho and Levinson...
...diplomatic goals, combined with America's relentless advocacy of a laissez-faire system, make it very difficult for the U.S to advance (or even to coherently define) its narrower economic goals as a nation...
...And concern for American competitiveness is seen as irrational protection of backward industries rather than as an alternative to a laissez-faire economy...
...In their global objectives, most states now pursue commercial rather than territorial advantage...
...Richard Rosecrance, The Rise of the Trading State: Commerce and Conquest in the Modern World...
...One key reason, says Gilpin, drawing on the work of Kindleberger, Robert Keohane, and John Ruggie, is that the hegemonic power must itself be committed to a relatively liberal international order, with fairly open markets and restrained military force, and must resist the temptation to take advantage of its dominant status...
...And in the United States and Thatcher's Britain, the process comes grotesquely full circle, in which the insecurity somehow generates chauvinist fervor—on behalf of ever purer capitalism...
...The American political system," he concludes, "finds it very difficult to face the reality of a plural world in which the U.S...
...In the short run, Germany and Japan find it in their self-interest to keep the U.S...
...But lately, in part because nuclear weapons make world war unthinkable, trading states have become a real alternative once again...
...Nineteenth-century Britain was the one exception in that it refrained from territorial expansion in Europe and used the strength of its arms mainly to defend its commercial access...
...But as Gilpin and others observe, the U.S.-dominated postwar system is unraveling...
...Moreover, on the few occasions when U.S...
...is no longer supreme" either vis-à-vis its ostensible allies or vis-à-vis the Soviet Union...
...Unfortunately, too, the backlash against the insecurity of a purely instrumental, capitalist world is not producing a new generation of social democratic stabilizers suitable for a global political economy in the tradition of humanistic liberalism...
...If you've taken a good modern world history course, nearly all of the first half of the book will be old hat...
...The promise of trade unionism and full employment foundered on a laissez-faire encounter with a global army of the unemployed...
...Here, the take is somewhat quirky, but interesting...
...450 pp...
...What makes Mead indispensable, however, is not what he adds to other writers' musings about the hubris of Vietnam, Nixon as the last liberal, and so on, but his original analysis of the crisis of global Keynesianism, in which global purchasing power is not distributed in a manner that allows the economy to consume all it produces, and essentially Marxian dilemmas overwhelm what remain of Keynesian stabilizers...
...We also have difficulty comprehending Japan's domestic system of social comity, with its seemingly archaic family farms, mom-and-pop retailers, and antiquated service sector...
...268 pp...
...For each in his own way has genuinely come to terms with the end of Pax Americana...
...If the very temple of laissez faire turns protectionist, why keep worshipping there...
...Militarily, no other nation is capable of leading the Western alliance...
...From time to time," he avers, "the less percipient leaders . . . would virtually kill the goose that laid the golden eggs...
...As an organizing entity, the state commands far more durable, extrarational loyalties than any institution of the market system...
...Though the essential world monetary system is unchanged, the world's major capitalist powers agreed first to drive down the value of the dollar, and then to jointly administer a system of currency zones...
...Much of Calleo's book discusses oscillations between America's postwar overextension and its episodic desire to return to its traditional isolationist impulses...
...In effect, despite the self-congratulation about the new system of managed exchange rates, the Plaza system falls far short of being the kind of stable monetary regime that Bretton Woods provided under American auspices for nearly thirty years...
...Japan's is result-oriented...
...Despite Rosecrance's celebration of trading states with Ricardian norms, neither Renaissance Venice, which carved out monopolistic concessions, nor modern mercantilist Japan is an entirely convincing example of a "liberal" power...
...This is a far bigger problem than merely the federal budget deficit, which gets disproportionate attention...
...negotiating capacity on trade and industrial objectives...
...He commends faster growth in Europe and Japan, budget balance and looser money in the United States...
...America's inevitable relative decline reflects what a number of other scholars, beginning with Charles P. Kindleberger, have analyzed as the paradox of hegemony...
...As the first modern theorist to appropriate the Greek word hegemonia, the Italian Marxist Antonio Gramsci, put it, "The crisis consists precisely in the fact that the old is dying and the new cannot be born...
...But as things turned out, "Containment became the basis not for a plural world but for American empire...
...The first time the reader encounters Kennedy's bellows, it seems quite ingenious...
...The current international system may enjoy an eerie calm geopolitically (at least compared to the recent past), but it remains an anarchic mess economically, and this must spill over into politics...
...The emerging system may be less stable (the bipolar system of the cold war wasn't all that stable anyway), but the freeing of the United States to pursue national economic and social goals could be a welcome respite from the demands of hegemony...
...Other nations tolerate American hegemony as long as it serves their economic interests...
...And Japan, which has reaped such gain from the world trading system, needs to take greater responsibility for balance in the system...
...The Reagan administration's policy shift, orchestrated by then Treasury Secretary James Baker and his deputy Richard Darman, was an epic case of reversing course without revising stated ideology...
...Co Fred Bergsten's new book, America in the World Economy, is representative of this genre...
...Thus far, the cheap dollar has not solved the problem...
...To some extent, the European fear of U.S...
...Prestowitz tells story after poignant story of how America's reverence for laissez-faire undercut our ability to even identify, let alone advance, clear sectoral goals in our diplomacy with the Japanese...
...economy on life supports...
...How will states reclaim the economic sovereignty necessary to broker domestic social peace...
...Even where the United States specified diplomatic goals, such as "internationalization" of the yen, the Japanese responded in a way that served Tokyo 232 • DISSENT Pluralism rather than Washington or Wall Street...
...Another indicative illustration of establishment thinking is C. Michael Aho and Marc Levinson's After Reagan: Confronting the Changed Global Economy...
...Like Gilpin, Rosecrance looks hopefully to a more pluralist world in which trade will sweeten bellicose impulses...
...This dilemma was compounded during the Reagan presidency by self-defeating economic policies and a reversion to militarism under Reagan in a vain effort to recapture America's past preeminence via enhanced chauvinism and spending on weaponry...
...381 pp...
...As the United States declines," Prestowitz concludes, "it is increasingly faced with the choice between maintaining its non-interventionist free trade policies and of ensuring the health of important industries...
...Here again, though the Europeans and the Japanese are in principle willing to commit additional capital, the United States remains reluctant to give up the reins...
...It seems all but impossible in a laissez-faire global economy...
...withdrawal seems simultaneously to offer Europe a more tranquil relationship with the USSR and a more uneasy one...
...During the remarkable thirty-year period of a U.S.sponsored protectorate, state and market coexisted in a delicate equipoise in which capitalist economic growth was nicely balanced by Keynesian and social democratic stabilizers in most of the industrial north...
...We learn that Bismarck was far less threatening to the balance of power than Hitler, that the First World War exhausted Britain and France, that Victorian England exported capital rather than goods, that the Allies' triumph reflected their superior productive capacity...
...Where Kennedy's method is historical, Gilpin examines the economic logic of the international system: the coexistence of state and market, the appeal of rival Marxian, liberal, and nationalist interpretations, the emerging role of multinational corporations, the politics of trade and global finance, and so on...
...Walter Russell Mead, Mortal Splendor: The American Empire in Transition...
...Bergsten also advocates greater "convergence" of the major SPRING • 1989 231 Pluralism Western economies...
...SPRING • 1989...
...We continue to enjoy disproportionate influence in such economic institutions as the International Monetary Fund (IMF), World Bank, General Agreement on Tariffs and Trade (GATT), and so on, and in the councils of the cold war as well...
...forces in Western Europe...
...In principle, NATO always permitted a mutual, multilateral sort of alliance, but in practice "Postwar American leadership . . . developed a characteristic style that clothed the realities of hegemony in the trappings of pluralism...
...But if we relinquish power kicking and screaming, we probably will pay a far greater price than if we relinquish power gracefully...
...His subtext is that laissezfaire nations generally outperform statist ones...
...The continuing reign of the weakened dollar, for example, offers benefits not available to any other nation...
...Ever since Nixon, the campaign for "burden sharing," according to Calleo, has been "a policy designed to shore up hegemony rather than share it...
...At bottom his only point is that a military machine is very expensive...
...This perfectly describes the current predicament of the United States and, by extension, of the global political economy...
...Hohenzollerns, and the usual European wars, but at the breathless pace of one hundred pages per century he is both too detailed and too general...
...But this logic forces the United States to subordinate its own national goals to "system goals" such as holding the Western alliance together, maintaining the constituency for liberal trade, or rallying support for the laissez-faire view on refinancing Third World debt...
...He has a soft spot for the Cobdenite view that military adventurism is bad for business and that the cross-national linkages of doux commerce damp down the risk of war...
...Washington: Institute for International Economics, 1988...
...How will rules be imposed on the essential anarchy of the international system...
...Ironically, Kennedy states in his preface that his original intent was to write a short "essayistic" (his word) book but that he couldn't resist fleshing out the historical references...
...The manuscript is full of "purblind" people...
...Funabashi's story is one of minimalist statecraft...
...We had barely a generation of social democratic-Keynesian social peace before laissez-faire returned through the back door of international economics...
...Now, however, we are entering a new age, in the very shadow of great power stalemate, in which commerce can at last be preeminent, and the state will, uh, wither away...
...Indeed, the hegemon must bend over backwards to indulge its wards, who thrive in the shadow of the peacekeeper and can preoccupy themselves with commercial prowess while the hegemon strangles in its military machine...
...When Kennedy turns to the interplay of economics and geopolitics, his hypothesis is substantially tautological: If an imperial power ultimately faded, it must have overstretched, musn't it...
...Bergsten has achieved some notoriety for insisting that the solution to America's trade imbalance is an ever cheaper dollar...
...Recalling the origins of the NATO alliance, Calleo observes that George Kennan, the architect of "containment," wanted to create a shield behind which a pluralist reconstruction of a self-reliant Europe could proceed...
...Washington: Institute for International Economics, 1988...
...And no transnational governing mechanisms have yet been invented to fashion a global fiscal and monetary policy and global full employment, let alone global income redistribution...
...During the heyday of the territorial nation state, which Rosecrance calls the "Westphalian System" (after the 1648 Treaty of Westphalia), territorial ambition pretty much carried the day...
...This general dilemma—the tension between America's geopolitical goals and its economic health—has been widely remarked by commentators of diverse ideological and philosophical orientations...
...Ideology, domestic politics, international economics, and global geopolitics now interact in complex and poorly understood ways...
...At some point, barring a sudden inspiration of new, robust statecraft, the system is at risk of degenerating into either depression or overt political conflict among the major capitalist nations no longer united by a common Soviet threat...
...Despite worsening fiscal pressures, the search for a cheap technological key to military supremacy has proven illusory...
...And the geopolitics has been a nostalgic attempt to perpetuate relationships that are no longer financially viable, in which the crippled dollar continues to dominate global finance, the United States still carries the banner of free trade while indulging the hegemon's tolerance 228 • DISSENT Pluralism of mercantilism in its allies, and the collapse of the Third World is seen as a minor issue...
...troops and missiles in their midst as a welcome trip-wire (deterring Soviet attack) or as an unwelcome magnet (inviting same...
...Our system is processoriented...
...If the dominant power fails to restrain itself, "hegemony" —a fairly benign brand of dominance in Kindleberger's conception—mutates into simple tyranny, of the sort that the Nazis or the Soviets exercised over their satellites...
...226 • DISSENT Books Discussed in this Essay Michael C. Aho and Marc Levinson, After Reagan: Confronting the Changed Global Economy...
...Not only is the American economic position weakened both relatively and absolutely...
...What about the latent mercantilism of many trading states that do well enough as free riders on the liberal norms of the system but who would be in SPRING • 1989 . 229 Pluralism trouble if big states became mercantilists, too...
...Budget balance, policy coordination, moderate debt relief, management of exchange rates, and of course a fierce defense of free trade: "The fact that foreign governments offer producer subsidies is no reason for the U.S...
...Yoichi Funabashi, Managing the Dollar: From the Plaza to the Louvre...
...A former business executive fluent in Japanese and genuinely knowledgeable about Japanese society, he soon became a leader of the hard-liners in the administration...
...The world system is evolving from a bilateral one, whose capitalist half was dominated both politically and economically by the United States, into a more multilateral one reminiscent of the nineteenth-century European concert...
...But today, the United States no longer is strong enough to play the role of benign hegemon, and the globalization of finance and commerce is eroding the balance between market and state...
...About one-third of America's total military outlays goes to pay the cost of keeping U.S...
...Can we sufficiently trust aggressive states to the point where all nations can lay down their arms...
...But, as Funabashi shows, the process of exchange-rate coordination has been far less smooth than its public image...
...As Paul Kennedy wrote in The Rise and Fall of the Great Powers: It has been a common dilemma facing previous "number one" countries that even as their relative economic strength is ebbing, the growing foreign challenges to their position have compelled them to allocate more and more of their resources into the military sector, which in turn squeezes out productive investment and, over time, leads to the downward spiral of slower growth, heavier taxes, deepening domestic splits over spending priorities, and a weakening capacity to bear the burdens of defense...
...ro r the moment the world economy seems perched precariously on the blade of an unstable equilibrium, in which just enough remains of the shell of the Bretton Woods machinery and just enough ad hoc coordination and muddle-through economic diplomacy endures to keep the dollar from crashing and to keep the Third World out of explicit bankruptcy...
...As disgraced former Axis powers, they have been slower still to flex their economic muscles in the geopolitical realm via Gaullist-type independent foreign policies...
...However, warns Gilpin, "If other states begin to regard the actions of the hegemon as self-serving and contrary to their own political and economic interests, the hegemonic system will be greatly weakened...
...What is left out is either an analytic discussion of all the other ways in which hegemonic status paradoxically undermines the hegemon or reporting on the specific dynamics of how this paradox operates...
...In economic terms, these are understood as anomalous inefficiencies...
...Generally, military concerns, which had higher priority on the American side, overwhelmed our economic concerns...
...It also becomes far more difficult to strike equitable social contracts at home, of the sort that flourished during the social democratic golden age, in which the Western democracies were able to build mixed economies sheltered by relative autarky...
...Lately, Germany, Japan, and the new industrial powers of the Pacific basin have accomplished much the same thing...
...Thus synthesized in a single paragraph, Kennedy's book seems like a splendid prologue to contemporary debate...
...In this respect he is rather at odds with Reagan-style conservatism, which marries a hard military line with an embrace of Adam Smith...
...The original impulse was correct...
...To be sure, the book includes an exhaustive bibliography and some satisfying new morsels, but Toynbeean it isn't...
...The alternative is commercial prowess...
...Boston: Houghton Mifflin, 1987...
...365 pp...
...Keynes, in reconstructing the global capitalist system, understood the system's deflationary biases and attempted to build institutions such as the IMF that would have an expansionary bias instead...
...What makes the state at last vestigial is not communism, but capitalism...
...The immediate obstacle is American resistance...
...The Keynesian-social democratic compromise was a delicate enough trick at the level of the nation-state...
...It also means that the United States must be willing to genuinely share dominion Despite all sorts of establishment noises about "interdependence" and "coordination," it is not at all clear that plural leadership is what Washington wants...
...Even the administration's mainstream critics, for the most part, focused on the conventional view that the only thing seriously wrong with the global economic system and America's role is the U.S...
...I suspect, however, that Rise and Fall, last year's must-read for aspiring global political economists, gathered dust on a great many coffee tables...
...We pledge allegiance to the flag of the United States of America...
...When he at last gets to the twentieth century, Kennedy provides useful (though fairly standard) statistical and narrative comparisons of the economic capacities of the great powers...
...Even Star Wars can be seen as a yearning for Fortress America...
...Rosecrance thinks he discerns an epochal shift in the dynamics of international relations, comparable to the shift from the onedimensional authority of the Holy Roman Empire to the bifurcated world of global markets and nation states...
...The ultimate problem with Rosecrance's rosy scenario for a pluralist capitalist world of "trading states" is this: The essence of capitalism is that relations are ad hoc, transient, and purely instrumental...
...Thus, the United States has continued in the role of hegemon: military protector and economic arbiter of the capitalist world—at escalating cost to its own economic health...
...He spends his first two hundred pages putting his own original interpretation on the sunset of American empire...
...withdrawal has far more to do with concerns about the resurrection of ancient geopolitical conflicts within Europe (such as German unification) that have been conveniently sidelined by the cold war and the U.S...
...Uniquely, the United States can incur foreign debts in its own currency, and then, at its pleasure, devalue that currency, effectively devaluing the debt...
...234 • DISSENT...
...Nor have the Group of Three, or Five, or Seven even begun to tackle more serious issues such as the Third World debt...
...given the dominance of Japanese and European capital in any such refinancing, it would also be expensive for American influence...
...The remedy...
...For the most part, it adds a fairly thin economic overlay to standard political history...
...As détente becomes more likely, the United States finds it even harder to pursue its own economic self-interest within the noncommunist economic and political alliance, lest Tokyo and Bonn cease behaving as loyal client states...
...Like Kennedy, Rosecrance is at heart a nineteenth-century liberal, with im mense enthusiasm for the multiple virtues of trade...
...218 pp...
...To many observers Europe seems schizophrenic on this question...
...But "competitiveness" for Bergsten will flow mainly from getting America's macroeconomic house in order...
...For Gilpin, the effective choice for the world economy is a collapse or an improbable new hegemon or a difficult new system of stable pluralism...
...Rosecrance foresees that in coming years, the military-political model of territorial advantage will give way to a positive-sum system of benign trading states...
...This prospect, though certainly attractive, begs a few key questions...
...For a time," writes Gilpin, "the United States was able to mask its decline and defer difficult choices by exploiting its hegemonic economic position...
...Funabashi, one of Japan's most distinguished economic journalists, managed to interview all the major players in the now famous Plaza Accord of September 1985, which ended the experiment in floating exchange rates...
...With the sovereignty of the nation-state weakening, all of the anarchic tendencies that used to infect national capitalisms— chronic overcapacity, competitive deflation, a race to cut wages, instability originating in the financial sector—are reborn at the level of the global economy...
...His case is all the more persuasive now, because the book was written before Gorbachev's 230 • DISSENT recent peace overtures made détente even more plausible...
...Mead's book, in many respects, is the most provocative of the lot...
...But with the weakening dollar and the escalating foreign debt, those days are ending...
...Princeton: Princeton University Press, 1987...
...Times celebrated its "Toynbeean sweep" —most of the book is a disappointing slog...
...288 pp...
...But, says Calleo, Western Europe has long since grown up to the point where it can and should take greater responsibility for its own national security, even if this means different perceptions of the Soviet menace, diminished U.S...
...At the simplest level this tension is embodied in the escalating gap between the cost of policing the world and the resources of the U.S...
...The means, in other words, were coming to devour the ends...
...Gilpin writes: "In the closing decades of the twentieth century the United States has found itself caught between its many commitments and its decreased power, the classic position of a declining hegemon...
...Professor Kennedy's 678-page tome was a surprise bestseller of 1988...
...New York: Basic Books, 1986...
...Calleo, who has also written widely about international economics, thinks it is time not just for "burden sharing" but for genuine power sharing among the Western nations...
...Yet its perceived dynamics and possible solutions vary widely according to the stance of the observer...
...The hegemonic nation—Britain in the mid-nineteenth century, the United States in the late twentieth—stabilizes the global system and enjoys many perquisites of its preeminence, but ultimately the hegemonic role undermines the economic standing of the hegemon...
...Kennedy offers numbing detail about Hapsburgs, Huguenots...
...withdrawal...
...Prestowitz's book is mostly a memoir of appalling diplomatic misadventures, which might be subtitled, "The Keystone Kops Meet MITI...
...C. Fred Bergsten, America in the World Economy: A Strategy for the 1990s...
...Prestowitz was the Reagan administration's chief trade negotiator with the Japanese...
...Instead, the Reagan administration looked precisely in the opposite direction toward an America "standing tall" in military might and in a position to tutor other nations on the virtues of laissez-faire...
...Most disappointingly, Kennedy's concluding analysis of just how military goals subvert economic ones is abbreviated and one dimensional...
...But the IMF mutated into an austerity agent...
...Kennedy is very fond of a giant bellows as an economic metaphor, sucking in capital and fanning economic activity, or whatever...
...In world history according to Rosecrance the modern age began when the state became supreme...
...In Kindleberger's classic formulation, it was the failure of any state to perform these vital functions during the interwar period that led to financial collapse and the Great Depression...
...And as the cold war thaws, the geopolitical rationale for other nations to accept the discipline of an American military is also weakened...
...We still rely on the state for ultimate security—but the polity is ever less able to provide it as laissez-faire triumphs...
...Kennedy has a weakness for tinny phrasemaking...
...First, despite the now conventional plea that the reader acknowledge the reality of a changed world in which the United States is no longer dominant, the policy prescriptions subconsciously presume a continued American hegemony whose logic dictates that the United States continue to champion liberal trade and laissez-faire finance...
...A more pluralist world offers both risks and gains...
...Now that the promise of containment has at last been fulfilled—a more restrained Soviet Union and an economically vital Europe— governments on both sides of the Atlantic are uneasy about revising the inherited, increasingly outmoded assumptions of NATO...
...Unfortunately, the mainstream policy debates in Washington and on Wall Street have hardly addressed this central question of how the United States might relinquish hegemony gracefully and at the same time build a more stable and equitable global economic order with shared responsibilities...
...In this dialectic the Europeans alternately resent America's intrusive domination of their foreign policy—and resist periodic impulses toward East-West détente that would bring about a U.S...
...New York: Random House, 1987...
...In short, the domestic costs of American hegemony grow ever greater...
...New York: Basic Books, 1987...
...But underneath the saga of diplomatic bungles is a relentless logic...
...government to do the same...
...Both the expenses of the cold war and the costs of keeping the dollar dominant have sapped America's economic strength...
...it has only made America poorer...
...The resulting outflow of European and Japanese capital from the United States, though temporary, set off just enough alarm bells to help trigger the October 1987 stock crash...
...military protectorate and far less to do with palpable fears of the Red Army...
...For these analysts the absence of social and economic stabilizers in a global economy is not a problem...
...Of course, events are gradually pushing the United States in that direction in any case...
...Yet the domestic politics of the past decade has been precisely an exercise in avoiding these choices...
...But pressing Japan for specific results in the form of market shares in this or that product is viewed as a frontal assault on the very premise of the liberal trading system...
...For now the anomalous emergence of Japan and Germany as economic giants while remaining geopolitical pygmies and the converse position of the United States as hegemon-indecline have created a kind of gridlock...
...And weapons of mass destruction are so unusable that they become "ceremonial" and atavistic...
...but the consequent decline in wealth, and thus in military power, was soon obvious to all but the most purblind...
...But these efforts are hopelessly at odds with the centripetal, pluralist forces in the world...
...To the extent that American leaders imagine a successor system, it is a relentlessly laissezfaire one, where the only replacement for American power is the giddy anarchy of market power, which is no viable system at all...
...he is thinking mainly of fiscal and monetary policy...
...But obviously the United States cannot continue running budget and trade deficits to breathe life into global demand, ultimately collateralized by American industrial assets that are being sold off at an increasing rate...
...financial dependence), not that foreign brokers got to play as equals in the Tokyo capital markets...
...On the other hand, the very internationalization of the world economy under laissez-faire auspices makes the system more anarchic...
...But events are forcing change...
...If one is an optimist, the demise of the Bretton Woods system, the "imperial overstretch" of the United States, the prospect of a genuine end to the cold war, the coming of age of at least some Third World nations, all promise a new pluralism—what John Kennedy called a world "safe for diversity...
...Like Kennedy, Rosecrance has one simple point to make: Geopolitical dominance is not the only possible strategy for a nation state...
...A new, less dominant role for the United States within the Western alliance is the counterpart to a more pluralist world economic regime...
...As Walter Russell Mead SPRING • 1989 233 Pluralism observes in Mortal Splendor, workers in the Third World are typically paid something like half, relative to their productivity, the pay rate of workers in the Western world...
...The logic involves both the cold war and the GATT' system...
...Exchange rates are to be subject to market forces but stabilized by the use of "target zones" and coordinated central bank purchases...
...For Calleo, America's military and monetary dominance have been masks to hide America's underlying competitive weakness...
...the U.S.-sponsored institutions of the postwar economic system—GATT, IMF, World Bank, and so on—have also been relatively weakened...
...Financing the cost of [U.S.] hegemony was, in itself, threatening to make the international system unworkable...
...And "if there is a way out, it lies through Europe" as an independent emerging superpower: "History has come full circle: the Old World is needed to restore balance to the New...
...231 pp...
...America's abrupt deterioration, according to Gilpin, forces difficult choices among the uses of its national wealth: consumption, investment, and defense...
...But in order to sustain the more liberal sort of hegemony, the hegemonic power has to make it worth the while of other states, serving as the market of last resort, the banker of last resort, as well as the military guarantor of peaceful commerce...
...The dynamics of this problem, of course, are far more subtle and complex than merely the price tag of serving as global policeman...
...Clyde Prestowitz, Trading Places: How We Allowed Japan to Take the Lead...
...To permit a refinancing of Third World debt would not only be expensive for American banks...
...New York: Basic Books, 1988...
...Despite being lionized by reviewers—the N.Y...
...Where Robert Keohane's 1984 book, After Hegemony, was mainly about economic dominance, Calleo's similarly titled Beyond American Hegemony is concretely about the politics of the Atlantic military alliance...
...but we pledge allegiance to the House of Morgan only until Citibank makes us a better offer (nor does it pledge reliable allegiance to us...
...Paradoxically, Europe, in the very path of imagined Soviet expansion, is generally more relaxed about the actual risks of a Soviet military incursion than the United States...
...He also supports modest debt relief for the Third World...
...David Calleo, Beyond American Hegemony: The Future of the Western Alliance...
...That, of course, requires the United States not just to bargain harder for access to markets and perhaps to commit heresies like economic planning...
...Bergsten does allow himself to call for "an activist trade policy," but this turns out to mean aggressively championing freer trade and the GATT negotiations...
...Philosophically, Kennedy is something of a nineteenth-century liberal...
...Bergsten's IIE, despite a distinctly Democratic party flavor, is the embodiment of the bipartisan, laissez-faire consensus...
...The main explanation for the book's surprising Pluralism vogue must be that both points touched quivering nerves...
...economic diplomacy makes it painfully clear that the primacy of the cold war in U.S...
...negotiators did press for a specific goal, the Japanese were able to go over their heads to stress their loyalty as a cold-war ally...
...Though markets are still held to reign supreme, somehow markets were getting the value of the dollar wrong and had to be manipulated, notwithstanding the ideological embarrassment...
...Though the major nations were able to agree during 1986 and 1987 on coordinated cuts in interest rates—a major stimulus to world economic expansion—the United States annoyed first Tokyo by refusing to support the dollar at the symbolically important 150-yen level and then annoyed Bonn by playing a game of chicken with rising interest rates intended to pressure the Germans into stimulating their economy...
...economy, an economy that no longer looms as large as it once did...
...Yet even Reaganites have concerns about the costs of what Kennedy calls "imperial overstretch" —a problem common to Bourbon Spain, Hapsburg Austria, Edwardian Britain, Nazi Germany, and post–Postwar America...
...Europeans have not been clear whether they view U.S...
...But hegemony, once tasted, proves very difficult to give up, even as its fiscal and economic costs increase...
...Looking at Japan through laissez-faire lenses and believing that protectionism can only harm the protectionist, we find it hard to grasp that the Japanese really are brilliant mercantilists who have devised a new synthesis of fiercely competitive capitalism at home and economic nationalism abroad...
...678 pp...
...Economically, Germany and Japan, despite their economic might, have been slow to let the yen and the deutsche mark play the financial role of reserve currencies that might lead to a genuine tripartite world economic order...
...Thus the dilemma: The United States is no longer able to provide the world economic system with stabilizing ballast, or to enforce a set of coherent rules...
...budget deficit and derivative imbalances...
...Gilpin, like Kennedy, offers a quasi-textbook, but a more instructive and original one...
...Contrary to the apostles of the theory that hegemony is necessary to bring stability to an otherwise anarchic global political economy, Calleo, like Keohane, argues that pluralist regimes have functioned well during much of world history and could work in the twentyfirst century...
...Conversely, the prospect of U.S...
...His head, however, discerns a real problem: The "mediative" state so characteristic of a laissez-faire system of trading nations lacks the power to solve the problems of its citizens...
...This book, which grew out of a Council on Foreign Relations study group, concedes the diminished American standing in the world and the shift to global interdependence in which "the traditional instruments of economic policy are blunted...
...This prospect appalls Washington, whose leadership is predicated on the value of its military protectorate to Japan and Western Europe...
...New York: Council on Foreign Relations, 1988...
...An internationalized yen turned out to mean that the Japanese bought American Treasury Bonds and corporate stocks (neatly increasing U.S...
...Richard Rosecrance's The Rise of the Trading State is a good companion to Gilpin...
Vol. 36 • April 1989 • No. 2
