Who Adjusts_- Domestic Sources of Foreign Economic Policy During the Interwar Years Beth A. Simmons

Who Adjusts_- Domestic Sources of Foreign Economic Policy During the Interwar Years Beth A. Simmons

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Who Adjusts?: Domestic Sources of Foreign Economic Policy During the Interwar Years Beth A. Simmons Interwar period between WWI & WWI was prevalent with int’l economic conflict, period known as a period of rampant economic nationalism, monetary instability, Argued that protectionism impoverished trading partners & made the Great Depression even worse Many scholars of int’l relations have argued that the nature of the int’l system contributed to economic conflict. The war had not settled the battle for hegemonic power in Europe & only brought on a period of transition that in which states openly prepared for the final battle System of alliances was weak & multipolar arguably lessening states’ incentives to “invest” in cooperation Interwar years were something of an anomaly for explanations behind the actions of state behaviour Spectacle of the US, the most powerful state in the int’l system, refusing to exercise leadership to ensure economic openness poses a puzzle for theories of hegemonic stability Variations that liked from country to country in their policies for over two decades cannot be easily attributed to the uncertainty engendered by systemic multipolarity Study argues that an important part of the explanation for int’l economic outcomes during the interwar years arose from the internal politics & institutions prevalent within many countries after the Great War. E.g. countries met with payment deficits had 2 choices: adjust internally (reducing prices & demand) or adjust externally (adopting beggar-thy-neighbour policies, would push problem of adjustment onto country’s trade partners) Profile emerges of the domestic political characteristics associated with benign, norm-abiding adjustment during the interwar years: stable govt & quiescent labour movements contributed to int’l economic cooperation, while domestic political & social instability undermined it Conservative polities with independent monetary institutions tended to maintain currency stability, but threw up protective barriers to trade. However, left-wing govts & govts that could influence their central banks tended to reduce trade protection but sacrificed the gold value of their currency. The Problem: Explaining International Economic Relations During the Interwar Years Key to understanding economic conflict & cooperation during the interwar years is to understand states’ willingness & ability to play by the int’l economic rules of the game on which the gold standard was based o 1st, states had to make balance of payments a higher priority than the condition of their domestic economy o 2nd, states had to maintain reasonably open trade relations so that gold standard adjustment could take place o 3rd, exceptional finance had to be provided by either the central banks or private banking consortia from surplus countries in some cases if fixed rates
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This note was uploaded on 04/28/2011 for the course POLI 243 taught by Professor Markbrawley during the Spring '09 term at McGill.

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Who Adjusts_- Domestic Sources of Foreign Economic Policy During the Interwar Years Beth A. Simmons

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