chapter  13
The Domestic Politics of International Monetary Order: The Gold Standard
Pages 21

An international monetary regime is a set of clearly defined principles, rules, and conventions that regulate and harmonize the economic policies of member nations. From the perspective of international political economy, such a regime is something of an international public good. When a sufficient number of governments commit credibly to a set of international monetary rules, the result is that goods, services, and capital can flow across borders relatively unimpeded by currency concerns, creating joint-welfare gains and promoting technical efficiency. From a perspective of comparative politics, however, a smoothly functioning monetary regime is far from a natural state of affairs. Adherence to a common set of monetary rules and conventions requires a certain degree of macroeconomic-policy cooperation among member governments, despite potentially vast differences in the domestic constraints confronting policy makers. The overriding political obstacle in the way of establishing and maintaining a multilateral commitment to a common set of exchange-rate rules is that national politicians face heterogeneous domestic electorates and organized constituencies, not homogenous global ones. According to this view, the paradox is not the difficulty of designing a stable international monetary regime in a world of opportunistic but like-minded national governments, but that such systems, composed of an extremely diverse group of nation-states, have ever existed, let alone operated relatively smoothly for extended periods of time.