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Highest stakes: The economic foundations of the next security system
Brief Reviews Gaddis says that he -began to write the essays in 1985,when he realized how few scholars even considered the possiblity of Soviet defeat, and thus had a long-term perspective for analyzing the cold war. In fact, Gaddis somewhat overstates his case: Richard Pipes was confident that the Soviet Union would fall in the foreseeable future, and Zbigniew Brzezinski predicted the fall a few years ahead of the fact. Gaddis’s analysis is insightful, but think of this as a “post-game wrap-up” for the cold war-it’s too soon to really understand why one side rather than the other won and the implications for the future, but an experienced color commentator can provide great insight about some of the pivotal moments while reviewing the video tape.
INTERNATIONAL ECONOMICS
by Patrick Clawson Highest Stakes The Fkommic Foundations of the Next fkcurlty System. Edited by Wayne Sandholtz et al. New York: Oxford University Press, 1993. 272 pp. $11.95,paper. Many approaches can be taken to show how changing economic circumstances will affect national security. The economist emphasizes the effect of growth rates on national income; the political scientist looks at how alliance systems will evolve. The members of the Berkeley Roundtable on the International Economy (BRIE) writing in this volume approach the matter from their impressive knowledge of high technology. ‘Ihe merit of their presentation is principally the ability to weave threads drawn from technological trends rather than in the overall structure of the argument. The basic structure of the argument is that the United States has lost technological and industrial leadership because of innovations by Japan and Europe, that traditional defense spending risks undermining the U.S. military position by diverting resources that could be used to develop commercial technologies, and that a world without U.S. domination may not be pleasant. The only path-breaking part of the argument is the latter point. The BRIE team sets out three possible futures: managed multilateralism, or an adjusted version of what exists now; benign regionalism, a defensive protectionism that isolates each of three regional blocs; and regional rivalry, in which each bloc adopts beggar-thy-neighbor strategies to accumulate state power at the expense of the others. The team sees no reason to exclude the third possibility, for which reason it concludes that the future could be malign. Most of the volume is devoted to four essays that examine the security implications of the technologies and industries in, in turn, Japan, Europe, the United States, and the developing world. The latter essay, which considers Brazil as a case study, argues that military industrialization in the developing world will not be challenging enough to change the world security system; perhaps so, but surely that result depends upon the time frame chosen. In their Spring 1994 I 329
Brief Reviews list of blocs, the authors would have done well to consider the two (mostly) ex-communist giants, China and Russia. China’s double-digit industrial growth rates could propel it into advanced information industries, while Russia retains a vast wealth of human capital devoted to military industries. Protectionism and World Welfare. Edited by Dominic Salvatore. Cambridge: Cambridge University Press, 1992. 447 pp. $69.95 ($19.95, paper). In debates about trade policy, commentators and politicians universally assume that the theoretical superiority of free trade has been demonstrated by economic science. Those advocating barriers to trade bear the burden of proving why that theoretical result is not applicable in the case at hand. The eighteen essays collected by Salvatore from the most illustrious and illuminating trade economists demonstrate that, contrary to the popular wisdom, economists argue vigorously among themselves about the usefulness of trade barriers. Jagdish Bhaghwati shows that challenges to free trade are nothing new among economic theorists; such giants as John Maynard Keynes generally supported protectionism. Bhaghwati is, as ever, an eloquent spokesman for unilateral free trade even if all other countries are protectionist, paraphrasing Joan Robinson: why fill our harbor with rocks just because our neighbors do? Paul Krugman provides a stimulating case for industrial policy, though one that assumes a familiarity with microeconomic concepts. A long-time opponent of industrial policy, he has changed his mind, based on theoretical and weak empirical evidence that protectionism, by encouraging the start-up of domestic firms, can promote exports, thereby stimulating both growth and trade. Rudiger Dornbusch defends focusing on free trade with favored partners-specifically, the United States and Latin America-rather than pursuing the Holy Grail of worldwide trade liberalization. Ronald McKinnon and K.C. Fung argue that as long as exchange rates among Europe’s German mark bloc, the United States, and Japan swing wildly 10 to 30 percent from one year to the next, the producers in each bloc can be expected to demand protection against the currency gyrations. They review the mechanisms used in the European Community to offset such exchange rate oscillations, The five essays in the final section review the effects of protectionism on economic well-being in, respectively, the United States (Salvatore), Japan (Ryuzo Sato et al.), Western Europe (Norman Scott), developing countries (G.K. Helleiner), and Eastern Europe (Jozef Van Brabant). Given the difficult task of synthesizing many elements, the authors produce solid but not memorable essays. The volume’s interest lies not so much in any overall assessment of the effect of protectionism on well-being as in the stimulating arguments about the merits of particular trade-inhibiting strategies. RegIonal Integration and Global Trading. Edited by Kim Anderson and Richard Blackhurst. New York: St. Martin’s Press, 1993. 502 pp. $45.00. Regional trading blocs seem to be the wave of the future. The European Community is dismantling barriers among its members while fighting with might and main to protect from foreign competition its producers in fields as diverse as agriculture and culture. The North American free trade pact looks to be a 330 I Orbis
INTERNATIONAL ECONOMICS
by Patrick Clawson Highest Stakes The Fkommic Foundations of the Next fkcurlty System. Edited by Wayne Sandholtz et al. New York: Oxford University Press, 1993. 272 pp. $11.95,paper. Many approaches can be taken to show how changing economic circumstances will affect national security. The economist emphasizes the effect of growth rates on national income; the political scientist looks at how alliance systems will evolve. The members of the Berkeley Roundtable on the International Economy (BRIE) writing in this volume approach the matter from their impressive knowledge of high technology. ‘Ihe merit of their presentation is principally the ability to weave threads drawn from technological trends rather than in the overall structure of the argument. The basic structure of the argument is that the United States has lost technological and industrial leadership because of innovations by Japan and Europe, that traditional defense spending risks undermining the U.S. military position by diverting resources that could be used to develop commercial technologies, and that a world without U.S. domination may not be pleasant. The only path-breaking part of the argument is the latter point. The BRIE team sets out three possible futures: managed multilateralism, or an adjusted version of what exists now; benign regionalism, a defensive protectionism that isolates each of three regional blocs; and regional rivalry, in which each bloc adopts beggar-thy-neighbor strategies to accumulate state power at the expense of the others. The team sees no reason to exclude the third possibility, for which reason it concludes that the future could be malign. Most of the volume is devoted to four essays that examine the security implications of the technologies and industries in, in turn, Japan, Europe, the United States, and the developing world. The latter essay, which considers Brazil as a case study, argues that military industrialization in the developing world will not be challenging enough to change the world security system; perhaps so, but surely that result depends upon the time frame chosen. In their Spring 1994 I 329
Brief Reviews list of blocs, the authors would have done well to consider the two (mostly) ex-communist giants, China and Russia. China’s double-digit industrial growth rates could propel it into advanced information industries, while Russia retains a vast wealth of human capital devoted to military industries. Protectionism and World Welfare. Edited by Dominic Salvatore. Cambridge: Cambridge University Press, 1992. 447 pp. $69.95 ($19.95, paper). In debates about trade policy, commentators and politicians universally assume that the theoretical superiority of free trade has been demonstrated by economic science. Those advocating barriers to trade bear the burden of proving why that theoretical result is not applicable in the case at hand. The eighteen essays collected by Salvatore from the most illustrious and illuminating trade economists demonstrate that, contrary to the popular wisdom, economists argue vigorously among themselves about the usefulness of trade barriers. Jagdish Bhaghwati shows that challenges to free trade are nothing new among economic theorists; such giants as John Maynard Keynes generally supported protectionism. Bhaghwati is, as ever, an eloquent spokesman for unilateral free trade even if all other countries are protectionist, paraphrasing Joan Robinson: why fill our harbor with rocks just because our neighbors do? Paul Krugman provides a stimulating case for industrial policy, though one that assumes a familiarity with microeconomic concepts. A long-time opponent of industrial policy, he has changed his mind, based on theoretical and weak empirical evidence that protectionism, by encouraging the start-up of domestic firms, can promote exports, thereby stimulating both growth and trade. Rudiger Dornbusch defends focusing on free trade with favored partners-specifically, the United States and Latin America-rather than pursuing the Holy Grail of worldwide trade liberalization. Ronald McKinnon and K.C. Fung argue that as long as exchange rates among Europe’s German mark bloc, the United States, and Japan swing wildly 10 to 30 percent from one year to the next, the producers in each bloc can be expected to demand protection against the currency gyrations. They review the mechanisms used in the European Community to offset such exchange rate oscillations, The five essays in the final section review the effects of protectionism on economic well-being in, respectively, the United States (Salvatore), Japan (Ryuzo Sato et al.), Western Europe (Norman Scott), developing countries (G.K. Helleiner), and Eastern Europe (Jozef Van Brabant). Given the difficult task of synthesizing many elements, the authors produce solid but not memorable essays. The volume’s interest lies not so much in any overall assessment of the effect of protectionism on well-being as in the stimulating arguments about the merits of particular trade-inhibiting strategies. RegIonal Integration and Global Trading. Edited by Kim Anderson and Richard Blackhurst. New York: St. Martin’s Press, 1993. 502 pp. $45.00. Regional trading blocs seem to be the wave of the future. The European Community is dismantling barriers among its members while fighting with might and main to protect from foreign competition its producers in fields as diverse as agriculture and culture. The North American free trade pact looks to be a 330 I Orbis