Cornell Studies in Political Economy – Serie

For more than half a century, the United States has led the world in developing major technologies that drive the modern economy and underpin its prosperity. Linda Weiss attributes the U.S. capacity for transformative innovation to the strength of its national security state, a complex of agencies, programs, and hybrid arrangements that has developed around the institution of permanent defense preparedness and the pursuit of technological supremacy. In America Inc.? she examines how that complex emerged and how it has evolved in response to changing geopolitical threats and domestic political constraints, from the Cold War period to the post-9/11 era.Weiss focuses on state-funded venture capital funds, new forms of technology procurement by defense and security-related agencies, and innovation in robotics, nanotechnology, and renewable energy since the 1980s. Weiss argues that the national security state has been the crucible for breakthrough innovations, a catalyst for entrepreneurship and the formation of new firms, and a collaborative network coordinator for private-sector initiatives. Her book appraises persistent myths about the military-commercial relationship at the core of the National Security State. Weiss also discusses the implications for understanding U.S. capitalism, the American state, and the future of American primacy as financialized corporations curtail investment in manufacturing and innovation.

In this volume, fourteen distinguished specialists in international political economy thoroughly explore the concept of international regimes—the implicit and explicit principles, norms, rules, and procedures that guide international behavior. In the first section, the authors develop several theoretical views of regimes. In the following section, the theories are applied to specific issues in international relations, including the General Agreement on Tariffs and Trade (GATT) and on the still-enduring postwar regimes for money and security.

The deterioration in the economic performance of the advanced industrial democracies during the 1970s provoked an intense debate about the role of government in economic adjustment and growth. In Governments, Markets, and Growth, John Zysman makes a significant contribution to our understanding of these critical international issues by demonstrating that there is a direct relationship between a nation's financial system and its government's ability to restart the growth engine.Professor Zysman argues that there are three distinct types of financial systems, each with different consequences for the political ties between financial markets, industry, and government. Zysman tests his argument by analyzing and comparing the patterns of industrial adjustment in five advanced nations. He contrasts the differing strategies of industrial adjustments primarily in France and Great Britain, but also in Japan, West Germany, and the United States. Governments, Markets, and Growth will be invaluable to the international banking and business community, a wide variety of government officials, and students of political science, economics, and business administration.

The newly industrializing countries (NICs) of East Asia have undergone rapid economic expansion over the past twenty vears. Unlike NICs elsewhere in the Third World, those in the Pacific basin-South Korea, Taiwan, Singapore, and Hong Kong-have managed to achieve almost full employment, a relatively egalitarian distribution of income, and the virtual elimination or poverty. In this collection of essays, nine development specialists explore the Asian NICs' exceptional ability to capitalize on the favorable economic environment of the 1960s and then to adapt flexibly to worsening conditions in the 1970s and 1980s.

In Politics in Hard Times, Peter Gourevitch explores the common political factors that shape economic policy choices. He focuses on three periods of economic crisis—1873–1896, 1929–1949, and 1971 to the present—and compares policy choices made in Britain, France, Germany, Sweden, and the United States.

Why do nations so frequently abandon unrestricted international commerce in favor of trade protectionism? David A. Lake contends that the dominant explanation, interest group theory, does not adequately explain American trade strategy or address the contradictory elements of cooperation and conflict that shape the international economy. Power, Protection, and Free Trade offers an alternative, systemic approach to trade strategy that builds on the interaction between domestic and international factors. In this innovative book, Lake maintains that both protection and free trade are legitimate and effective instruments of national policy, the considered responses of nations to varying international structures.

Conflict between labor and capital reflects the competitive and conflict-laden relations within the working class itself, Peter Swenson maintains. Fair Shares examines the internal conflicts of organized labor regarding distribution of wages in order to explain both union leaders' market-structuring objectives in the "political economy", and their imperative to shape and fulfill workers' notions of pay fairness in the "moral economy". Swenson develops an innovative theoretical approach to labor politics through a detailed comparative analysis of union centralization and collective bargaining in Sweden and Germany since the turn of the century.To create solidarity and overcome workers' opposition to centralized control of the labor movement, Swenson argues, union leaders depend heavily on moral appeals concerning fair pair distribution and on success in fulfilling workers' expectation of fairness. Swenson interprets union politics as the attempt to overcome what he calls the "wage policy trilemma"

In this lucid and theoretically sophisticated book, G. John Ikenberry focuses on the oil price shocks of 1973–74 and 1979, which placed extraordinary new burdens on governments worldwide and particularly on that of the United States. Reasons of State examines the response of the United States to these and other challenges and identifies both the capacities of the American state to deal with rapid international political and economic change and the limitations that constrain national policy.

How has the U.S. government made the nation's foreign economic policy over the last hundred years? Social scientists have traditionally presented the American state as relatively weak, its policies as directly reflecting the domestic balance of strength among interested social groups and economic sectors. This collection of essays by seven notable young political scientists provides a theoretical reevaluation of the forces at work in national policy making and present evidence that the effectiveness of the national government in shaping U.S. policy has been greatly underestimated.

Events of the 1970s and 1980s have provoked intense controversy about the desirability of existing political and economic institutions. On the basis of an analysis of social welfare in varying types of market systems and in certain democratic political systems, Democracy and Markets illuminates alternative directions for institutional reform. Examining in detail the experiences of several democratic European countries, John R. Freeman considers whether a mixed ownership structure is preferable to a private ownership structure; and whether a pluralist type of democratic politics is preferable to a corporatist type.Freeman compares the benefits of the two economic and two political systems separately, and then analyzes the workings of four basic political economies. This analysis yields a welfare taxonomy for alternative forms of democratic capitalism and more specifically a characterization of the blends of collective gain and distributional equity that can be achieved in the four systems. Freeman demonstrates the validity of this taxonomy through an empirical investigation of the political economies of Britain, Austria, Sweden, and Italy. Under current conditions, he concludes, the corporatist-mixed system produces the most desirable blend of welfare outcomes.

Dynamic technological developments in industrial production, the rise of new social movements in national politics, and great changes in the international political economy have left a deep imprint on the Federal Republic. A compelling explanation of West Germany's success in maintaining economic prosperity and political stability under such challenging conditions has continued to elude observers. Under the editorship of Peter J. Katzenstein, thirteen distinguished scholars from both sides of the Atlantic here provide an original interpretation of the political economy of the Bonn Republic during the forty years since its founding, and explore in particular its extraordinary capacity for accommodating change.Whereas studies in political economy have typically focused on one level of political action—either the shop floor, or national politics, or the international system—this innovative account analyzes the interaction of change at all three levels, bringing together case studies drawn from six manufacturing and service sectors.

Rejecting conventional explanations for Syrian foreign policy, which emphasize the personalities and attitudes of leaders, cultural factors peculiar to Arab societies, or the machinations of the great powers, Fred H. Lawson describes key shifts in Damascus's response to regional adversaries in terms of changes in the intensity of political struggles at home. Periodic eruptions of domestic conflict have inspired Syria's ruling coalition to adopt a wide range of programs designed to buy off domestic rivals and perpetuate the predominance of individual coalition members. These programs have undermined the unity of the Ba'thi regime, increasing the chances that opponents will overturn the established order. Challenges to the Ba'thi regime become most threatening whenever crises of accumulation shake the domestic political economy, Lawson contends. Opposition forces gain strength when the state cannot sustain new investment or when competition increases between public and private enterprises. Political and economic trends inside Syria have determined why Damascus has since 1963 alternately escalated tensions with regional rivals and adopted more accommodating postures. Lawson traces this dynamic through five major episodes: the 1967 war with Israel; limited intervention in Jordan in 1970; the widening conflict in Lebanon in 1976; the defusing of conflict with Iraq in 1982; and the rapprochement with Turkey over Kurdish separatism in 1994. These patterns, Lawson suggests, may be characteristic of nations changing from one domestic economic system to a radically different one, as Syria has in the transition from state socialism to a privatized political economy.

In Cooperation among Nations, Joseph M. Grieco offers a provocative answer to a fundamental question in world politics: How does the anarchical nature of the international system inhibit the willingness of states to work together even when they share common interests?Grieco examines the capacity of two leading contemporary theories—modem political realism and the newest liberal institutionalism—to explain national responses to the non-tariff barrier codes negotiated during the Tokyo Round of international trade talks. According to his interpretation of realist theory, Grieco characterizes states as "defensive positionalists." As such, they often fail to cooperate because they fear that a joint endeavor, while producing positive gains for all participants, might also generate disparities in gains among the partners involved. Grieco demonstrates that this realist concept of defensive state positionalism gives rise to a better understanding of the systemic constraints on international collaboration and of the impact of anarchy on states than is offered by neoliberal institutionalism. Drawing on previously unreported archival materials, Grieco rigorously applies the two theories to an empirical analysis of the cooperative efforts of the United States and the European Community during the 1980s to regulate and reduce non-tariff trade barriers through the General Agreement on Tariffs and Trade.

The West German "economic miracle," Simon Reich suggests, may be best understood as a result of the discriminatory economic policies of the Nazi regime. Reich contends that ideological and institutional characteristics originating under fascism were sustained despite Germany's return to democracy and heavily influenced the economic success of its automobile industry. By contrast, the liberal economic policies of the British state led in time to the decline of an industrial sector that in 1930 had closely resembled its German counterpart. Through detailed comparative histories of German and British automobile firms, Reich challenges traditional explanations of the divergent performances of the two nations' economies and sheds new light on the relationship between state policy and economic success in pre- and postwar Europe. Liberal, nondiscriminatory British policies favorable to multinational investment contributed significantly to the decline of domestic firms, he argues, so that eventually multinationals could threaten the health of the entire British economy by investing elsewhere. The Nazi state, however, thwarted the development of American subsidiaries and fostered a core of producers, government officials, bankers, and labor union leaders.

In Ideas and Institutions, Kathryn Sikkink illuminates a key question in contemporary political economy: What power do ideas wield in the world of politics and policy? Sikkink traces the effects of one enormously influential set of ideas, developmentalism, on the two largest economies in Latin America, Brazil and Argentina.Introduced under the intellectual leadership of Raúl Prebisch at the U.N. Economic Commission for Latin America, developmentalism was embraced as national policy in many postwar developing economies. Drawing upon extensive archival research and interviews, Sikkink explores the adoption, implementation, and consolidation of the developmentalist model of economic policy in Brazil and Argentina in the 1950s and 1960s, focusing on the governments of Juscelino Kubitschek and Arturo Frondizi, respectively.In accounting for the initial decision to adopt developmentalist policies in Latin America and the persistence of the policy package in the region, she highlights the importance of political and economic ideas, the comparative effects of different national institutions, and the variable ability of political leaders to mobilize resources and support.

Pathways from the Periphery is an innovative interpretation of the development of the newly industrializing countries (NICs) which now dominate Third World industry and manufacturing trade. While such countries as Brazil and Mexico have achieved industrialization through strategies intended to foster self-reliance, the East Asian NICs—South Korea, Taiwan, Hong Kong, and Singapore—have grown rapidly through an aggressive policy promoting the export of manufactured goods. Stephan Haggard provides the first comprehensive comparison of the politics of industrialization in these East Asian and Latin American countries and offers new evidence on current issues in comparative political economy, including the implications of different growth paths for dependency, equity, and democracy.Recognizing the influence on development strategies of external shocks—such as depression, war, and reduced access to foreign capital—Haggard emphasizes the importance of domestic political institutions for economic decision-making. The East Asian NICs are characterized by close but regulated business–government alliances, weak labor movements, and politically insulated and administratively capable states: factors, Haggard shows, that have facilitated flexible and coherent industrial policies. He argues that "domestic" policy choices can shape the external constraints states face. The author considers in detail why Latin America's long-standing efforts to achieve self-reliance have ironically resulted in a dependence on international capital greater than that of the East Asian countries.Addressing a long-standing debate on the relationship between industrialization strategy and regime type, Haggard carefully assesses the connection between growth and democratic politics. Despite their authoritarian growth models the Asian NICs have, he observes, achieved greater equity than their Latin American counterparts. Although the "success" of export-led growth has in the past been associated with authoritarian rule, Haggard argues that no compelling theoretical reasons preclude democratic governments from achieving strong economic performance. Breaking new ground in theoretical inquiry and empirical research, Pathways from the Periphery will be welcomed by political economists, scholars and students of comparative politics, historians of Asian and Latin American public policy, and others concerned with the challenge of economic development.

Union of Parts examines one of the central puzzles in the economic and political successes of West Germany (FRG). In the decades between world war and reunification with the East, the FRG provided a model for combining high rates of unionization and substantial labor peace—indeed, for collaboration between organized labor and organized capital as both groups faced the dislocations involved in adjusting to a changing global marketplace.

Great Britain, France, Germany, and Japan. Surveying the development of the steel, automobile, and semiconductor industries in each of these countries, Jeffrey A. Hart illuminates the role of national policy in a changing world.Hart describes the global structure of production and consumption in the five major capitalist countries and offers a rich comparative history of their industrial policymaking. He concludes that variations in statesocietal arrangements—and the impact these differences have on the creation and diffusion of new technologies—provide the best explanation for divergences in international competitiveness. In Japan, state and business are allied, but labor is marginalized, whereas in Germany, labor and business are allied, and the state is decentralized. Yet both countries have become increasingly competitive because they have developed institutional mechanisms for technology diffusion. France's state-led system, in contrast, is linked with only moderate competitiveness. The decline of competitiveness in the United States and Britain, Hart concludes, may be attributed to state-societal arrangements that have allowed one actor-labor in Britain, business in the United States-to dominate policymaking.Rival Capitalists will be an invaluable source for policymakers and business analysts as well as scholars and students of political economy, international relations, industrial organization, industrial sociology, and comparative politics.

Should national governments regulate foreign investment? The question is hotly contested in today's international trade debates. Barbara Jenkins here addresses this complex issue in a timely account of market relationships among North American nations.Jenkins provides up-to-date, detailed analyses of foreign investment regulations and policies in Canada, Mexico, and the United States. She identifies inherent contradictions in the general tactic that all three countries have pursued-simply relying on the pressures of the market rather than planning active strategy—and she assesses the likely effects on foreign investment of the recently concluded Canada—U.S. Free Trade Agreement and the potential North American free trade agreement. Free trade and the absence of adjustment policy, she argues, expose key political actors such as business and labor too broadly to market forces. The result is a projectionist reaction on the part of these domestic actors, which ultimately defeats efforts to liberalize trade and investment relations.In current approaches to foreign investment regulation, Jenkins detects divergent trends among the three countries: while Ottawa and Mexico City continue to liberalize their investment strategies, Washington is growing more interventionist. She shows, however, that the interventionism of the United States reflects a nationalistic trend rather than a commitment to a coherent strategy. Cautioning that the conclusion of a North American free trade agreement will only exacerbate the inadequacies of current policies, Jenkins concludes by offering recommendations for future action.The Paradox of Continental Production will be stimulating reading for policymakers, political economists, and other observers of Canadian, Mexican, and U.S. politics.

Since World War II, Japan has become not only a model producer of high-tech consumer goods, but also-despite minimal spending on defense-a leader in innovative technology with both military and civilian uses. In the United States, nearly one in every three scientists and engineers was engaged in defense-related research and development at the end of the Cold War, but the relative strength of the American economy has declined in recent years.What is the relationship between what has happened in the two countries? And where did Japan's technological excellence come from? In an economic history that will arouse controversy on both sides of the Pacific, Richard J. Samuels finds a key to Japan's success in an ideology of technological development that advances national interests.From 1868 until 1945, the Japanese economy was fired by the development of technology to enhance national security; the rallying cry "Rich Nation, Strong Army" accompanied the expanded military spending and aggressive foreign policy that led to the disasters of the War in the Pacific. Postwar economic planners reversed the assumptions that had driven Japan's industrialization, Samuels shows, promoting instead the development of commercial technology and infrastructure. By valuing process improvements as much as product innovation, the modern Japanese system has built up the national capacity to innovate while ensuring that technological advances have been diffused broadly through industries such as aerospace that have both civilian and military applications.Struggling with the uncertainties of a post-Cold War economy, the United States has important lessons to learn from the way Japan has subordinated defense production yet emerged as one of the most technologically sophisticated nations in the world. The Japanese, like the Venetians and the Dutch before them, show us that butter is just as likely as guns to make a nation strong, but that nations cannot hope to be strong without an ideology of technological development that nourishes the entire national economy.

Between 1973 and 1980, the cost of crude oil rose suddenly and dramatically, precipitating convulsions in international politics. Conventional wisdom holds that international capital markets adjusted automatically and remarkably well: enormous amounts of money flowed into oil-rich states, and efficient markets then placed that new money in cash-poor Third World economies. David Spiro has followed the money trail, and the story he tells contradicts the accepted beliefs. Most of the sudden flush of new oil wealth didn't go to poor oil-importing countries around the globe. Instead, the United States made a deal with Saudi Arabia to sell it U.S. securities in secret, a deal resulting in a substantial portion of Saudi assets being held by the U.S. government. With this arrangement, the U.S. government violated its agreements with allies in the developed world. Spiro argues that American policymakers took this action to prop up otherwise intolerable levels of U.S. public debt. In effect, recycled OPEC wealth subsidized the debt-happy policies of the U.S. government as well as the debt-happy consumption of its citizenry.

"Backward," "corrupt," and "clientelistic" are adjectives often used to describe Italy's political economy. In the late 1980s, however, Italy outperformed some neighbor states considered more efficient and stable. Richard M. Locke resolves the apparent contradiction between these contrasting views of Italy as he reconstructs the failures of state reform initiatives as well as the successes of industrial change in key sectors. In the process, he maps out a new micro-political approach to comparative political economy.Locke analyzes Italy's economy, not as a coherent national system, but as a composite of heterogeneous entrepreneurial patterns. The characteristics of these diverse local economies shape the strategic choices of economic actors, he maintains, and help explain how divergent patterns of dynamism and decline can coexist within the same country.

Do people's beliefs help to explain foreign policy decisions, or is political activity better understood as the self-interested behavior of key actors? The collaborative effort of a group of distinguished scholars, this volume breaks new ground in demonstrating how ideas can shape policy, even when actors are motivated by rational self-interest.After an introduction outlining a new framework for approaching the role of ideas in foreign policy making, well-crafted case studies test the approach. The function of ideas as "road maps" that reduce uncertainty is examined in chapters on human rights, decolonialization, the creation of socialist economies in China and Eastern Europe, and the postwar Anglo-American economic settlement. Discussions of parliamentary ideas in seventeenth-century England and of the Single European Act illustrate the role of ideas in resolving problems of coordination. The process by which ideas are institutionalized is further explored in chapters on the Peace of Westphalia and on German and Japanese efforts to cope with contemporary terrorism.

How can the global environment be safeguarded in the absence of a world government? In the vanguard of efforts to address this critical question, Oran R. Young draws on environmental issues to explore the nature of international governance. Young's analysis invokes the distinction between "governance," a social function involving the management of interdependent individuals or groups, and "government," a set of formal organizations that makes and enforces rules.

Has global liberalism made the nation-state obsolete? Or, on the contrary, are primordial nationalist hatreds overwhelming cosmopolitanism? To assert either theme without serious qualification, according to Ernst B. Haas, is historically simplistic and morally misleading. Haas describes nationalism as a key component of modernity and a crucial instrument for making sense of impersonal, rapidly changing, and heterogeneous societies. He characterizes nationalism as a feeling of collective identity, a mutual understanding experienced among people who may never meet but who are persuaded that they belong to a community of kindred spirits. Without nationalism, there could be no large integrated state.Nationalism comes in many varieties, some revolutionary in rejecting the past and some syncretist in seeking to retain religious traditions. Haas asks whether liberal nationalism is particularly successful as a rationalizing agent, noting that liberalism is usually associated with collective learning and that liberal-secular nationalism delivers substantial material benefits to mass populations. He also asks whether liberal nationalism can lead to its own transcendence. He explores nationalism in five societies that had achieved the status of nation-states by about 1880: the United States, Britain, France, Germany, and Japan.Several of these nation-states became exemplars for later nationalists. A second, forthcoming volume will consider ten societies that modernized more recently, many of them aroused to nationalism by the imperialism of these "old" nation-states.

Far from being an inevitably aggressive and destructive force, nationalism is, for Ernst B. Haas, the primary means of bringing coherence to modernizing societies. In the second volume of his magisterial exploration of this topic, Haas emphasizes the benefits of liberal nationalism, which he deems more progressive than other nation-building formulas because it relies on reason to improve citizens' lives.The Dismal Fate of New Nations considers several societies that modernized relatively recently, many of them aroused to nationalism by the imperialism of the "old" nation-states. The book probes the different patterns of development in emerging countries—Iran, Egypt, India, Brazil, Mexico, China, Russia, and Ukraine—for insights into the possibilities and limitations of all nationalisms, especially liberal nationalism.Employing a systematic comparative perspective, Haas organizes the book around the notion of change and its management by political elites in Asia, Eastern Europe, Latin America, and the Middle East. Haas particularly wants to understand how nationalism plays out in the politics of modernization within non-Western cultures, especially those where religions other than Christianity predominate. Where the hold of religion remains formidable, he argues, the mixture of traditional and secular-modernist institutions and beliefs will challenge the victory of liberal nationalism and the very success of nation-state formation.

The emerging consensus that institutions shape political and economic outcomes has produced few theories of institutional change and no defensible theory of institutional origination. Kiren Aziz Chaudhry shows how state and market institutions are created and transformed in Saudi Arabia and Yemen, two countries that typify labor and oil exporters in the developing worlds.In a world where the international economy dramatically affects domestic developments, the question of where institutions come from becomes at once more urgent and more complex. In both Saudi Arabia and Yemen, fundamental state and market institutions forged during a period of isolation at the end of World War I were destroyed and reshaped not once but three times in response to exogenous shocks.Comparing boom-bust cycles, Chaudhry exposes the alternating social and organizational origins of institutions, arguing that both broad changes in the international economy and specific forms of international integration shape institutional outcomes. Labor and oil exporters thus experience identical economic cycles but generate radically different state, market, and financial institutions in response to different resource flows. Chaudhry supplemented years of field work in Saudi Arabia and Yemen with extensive analysis of previously unavailable materials in the Saudi national archives.