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US commercial and monetary policy: unravelling the paradox of external strength and internal weakness

Published online by Cambridge University Press:  22 May 2009

Stephen D. Krasner
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Extract

The fundamental objective of American foreign economic policy after the Second World War was to establish a regime in which impediments to the movement of capital and goods were minimized. In this quest American central decision makers were largely successful because of America's external power. However, because of the weakness of the US political system, that is, the ability of private groups to check state initiatives, public officials were constantly faced with domestic political constraints. These constraints were more apparent in the area of commercial policy, where decisions involved Congress and executive agencies susceptible to societal influences, than in monetary policy, where decisions were made in a more insulated environment. The decline of America's external power, which became evident in the mid-1960s, was accompanied by growing demands for protection as more sectors of the American economy were adversely affected by foreign trade. This has led to increasing incoherence in US policy and greater instability in the international economic regime.

Type
Research Article
Information
International Organization , Volume 31 , Issue 4 , Autumn 1977 , pp. 635 - 671
Copyright
Copyright © The IO Foundation 1977

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References

1 The approach to foreign policy analysis that has been used in this essay, which begins with the needs of the state and then looks to external and internal dangers and opportunities, is suggested by mercantilist writings of the 16th, 17th, and 18th centuries. Mercantilist policies were designed to strengthen and unify the state against both the universalism of the Church and the particularism of medieval society. SeeHeckscher, Eli F., Mercantilism, Vol. 1 (London: G. Allen and Unwin, 1935), p. 21Google Scholar.

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