ABSTRACT
There are makers, breakers, and takers of international economic regimes. Economic transactions do not take place in a political vacuum. Political power is needed to establish a system or regime-a pattern of rules, norms, and practices. In international affairs that power can only come from a state or group of states. Historically, a stable international economic regime has been associated with a hegemonic maker of the system. Medium-size states can be breakers of the system. They do not have the power to establish a regime, but by changing their policies they may be able to undermine an ongoing pattern of rules and behavior: they can move international economic relations from the pole of order toward the pole of chaos. Small states are takers of the system. They can adjust their own policies to try to maximize their particular objectives, but, for them, the general nature of the regime is a given. In the period after the Second World War, the United States was the
maker of the system. Its power and policies shaped the international economic regime. An exposition of American foreign economic policy must examine its external consequences in terms of establishing, maintaining, and undermining the international economic regime, as well as the domestic determinants of US policy. The fundamental objective of American central decision makers was to
create a liberal international economic regime. This meant that barriers to the movement of goods, services, capital, and technology would be minimized. It also meant that these transactions would be carried out by private, as opposed to state-owned, firms. American leaders sought this objective not only because it was initially in the economic interest of the US, but also because America’s liberal ideology led them to believe that such a regime would promote prosperity and peace around the world. In pursuing this goal American central decision makers confronted exter-
nal and internal constraints-resistance from other international actors and from particular domestic interest groups. This dual challenge of external and internal resistance must be faced by any state leader. The US was more constrained by internal than by external factors, at least
from 1948 until the last ten years. The US emerged from the Second World
War in a position of unprecedented international power. The economies of all of the other major industrial states had been severely strained or destroyed by the global conflagration. It was not until the late 1960s or the 1970s that the decline in America’s relative international position began to impose limits on the ability of the US to maintain a liberal global order. However, US central decision makers were persistently confronted by
challenges from domestic groups. This endemic problem was a product of the structure of the American political system. The key characteristic of that structure is that power is fragmented and decentralized. The American state-those institutions and roles that are relatively insulated from particularistic pressures and concerned with general goals (primarily the White House and the State Department and to a lesser extent the Treasury and Defense Departments)—is weak in relation to its own society. In comparison with their counterparts in other industrial countries, US central decision makers have difficulty extracting the domestic resources that they need to implement state policies. The potential international power of the state-the ability of central decision makers to change the behavior of other international actors and to provide collective goods for the international system if all of the society’s resources could be used for state purposes (that is, if there are no domestic constraints)—is great. But the actual power of the statethe power resulting from the resources that central decision makers can actually extract from their own society-is much less. The problems presented by domestic political weakness were more man-
ifest for commercial policy than for monetary policy. American monetary policy and the orderliness of the international monetary regime very closely paralleled the rise of American external power through the early 1960s and the decline that followed. But commercial policy, where Congress was a relatively more important decision arena, always presented American central decision makers with domestic constraints: it was necessary to buy off some import-competing industries that were being hurt by the pursuit of a liberal global order. However, even here, the pervasiveness of ideology, the vision of peace and prosperity flowing from a free and open international economic system, offered US leaders a lever of power that dampened, even if it did not entirely suppress, demands for protectionism. America’s foreign economic policy has moved through four stages during
the postwar years, distinguished by changes in specific international economic policies. Each of these shifts reflected changes in the international position of the United States and in the constraints imposed by domestic pressure groups.
