Dominance and Leadership in the International Economy: Exploitation, Public Goods, and Free

Rides
Author(s): Charles P. Kindleberger
Source: International Studies Quarterly, Vol. 25, No. 2, Symposium in Honor of Hans J.
Morgenthau (Jun., 1981), pp. 242-254
Published by: Blackwell Publishing on behalf of The International Studies Association
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 Dominance and Leadership
in theInternationalEconomy
Exploitation,Public Goods, and Free Rides

CHARLES P. KINDLEBERGER
Departmentof Economics
MassachusettsInstituteof Technology

It is oftendifficult
to distinguishdominancefromleadershipin international
economic
relations.The latterconcept,however,rejectsexploitationand impliesan oftencritical
functionintheprovisionofpublicgoods. In itsabsence,theprovisionofsuchpublicgoods
as a marketfordistressgoods,a steadyflowofcapital,and a rediscountmechanismmay
disappear. This stabilizationfunctionwas providedby the United States in the first
postwardecades,buttheU.S. nowhas neitherthewillnortheinternational acceptanceto
play such a role. And a successoris not in sight.

In 1960,beforethebalance-of-payments troublesofthefallof
thatyear,I wrotean articleon "The End oftheDominantRole of
the UnitedStates and the Futureof World Economic Policy."
This was a responseto a requestfroman AmericanCommission
on National Policy,if I recallits name,appointedby President
Eisenhowerand headed by JohnJ. McCloy, to explorefuture
coursesof actions.(The exerciseis an ancientone in American
publiclife,undertakenby FrancisA. Walkerin the 1880sand by
WesleyC. MitchellforHerbertHooverin the 1920s,as wellas by
Nelson Rockefeller, whenhe was contesting theRepublicancan-
didacyforthe presidencyin 1968.) My articlewas writtenhur-
riedly,in a couple of eveningsin a hotelin Paris,and was not
welcomedin the UnitedStates. It saw thelightof day onlyin a
Frenchversion(Kindleberger,1961).It concluded,rightly I still

AUTHOR'S NOTE: This article,whichappearedoriginallyin Hommagea Francqis

de Grenoble, 1978), has been slightlymodifiedand
Perroux (Presses Universitaires
broughtup to date.
INTERNATIONAL STUDIES QUARTERLY, Vol. 25 No. 2, June 1981 242-254
? 1981 I.S.A.
242
 Kindleberger/ INTERNATIONAL ECONOMY 243

think,that the United States could no longerdictateto other

countrieswhatneededto be done in thefieldofeconomicforeign
policy;it was obligedat thattimeto ask, not tell them.Domi-
nance was givingway to leadership.
Dominance was a conceptintroducedinto economicdiscus-
sion, especiallyFrencheconomicdiscussion,by Francois Per-
roux, professorof economics at the Colkge de France and
directorof the InstitutScientifiqued'EconomieApplique'e.One
country,firm,or persondominatedanotherwhentheotherhad
to take account of what the firstentitydid, but the firstcould
equally ignorethe second. It was a peculiarlyFrenchidea, with
strongovertonesof resentment at alleged dominationby the
UnitedStatesinfieldsofforeign exchange,tradepolicy,multina-
tional enterpriseand the like.
Leadership may be thoughtof at firstblush as persuading
othersto followa givencourseofactionwhichmightnotbe inthe
follower'sshort-run interestifit weretrulyindependent.As will
be suggestedbelow,it has strongelementsof botharm-twisting
and bribery.Withoutit, however,theremay be an inadequate
amount of publicgoods produced.This last is a relativelynew
conceptin economicsof greatsalienceforpoliticalscience.
A publicgood is one theconsumptionofwhichbyan individ-
ual, household,or firmdoes notreducetheamountavailablefor
otherpotentialconsumers.The classical example of the pure
publicgood is the lighthouse.By no meansare all publicgoods
pure, and one can conjure up complex mixed cases. Radio-
directionalsignalsfornavigationrequiretheconsumerto have a
radio-receiver:a privategood to receivea publicbenefit.Roads
can be so congestedthatthelastcaron itconvertsitfroma public
good to a publicbad. Generaleducationis a mixtureofpublicand
privategood. It increasestheproductivity and enjoymentof the
individual,hiscapacitiesforcitizenship, and hisresponsiveness
to
economicstimulifromothers.The theoryofclubsinvokesgoods
whichare consumablewithoutbeingexhaustedbya collectivity,
but exclude othersoutside the group. One could go on. For
presentpurposes,however,it is enough to note that withina
singlecountry,manypublicgoods are providedby thegovern-
mentthrougha budget,mostprivategoods by the market.
244 INTERNATIONAL STUDIES QUARTERLY

In the theoryof representative democracy,Downs (1957),

Breton (1974), Olson (1965), Buchanan (1965) and othersin
economics,and Froelichet al. (1971) in politicalsciencesuggest
that public goods are underproducedrelativeto privategoods
becauseofthefallacyofcomposition,or whatsomecall the"free
rider."The voterwill get it anyhow;whythenshouldone work
and lobby,undertaking transactionscostswhichareexpensive,if
in any eventone is goingto geta fullshare?Whenno one pushes
to vote expenditureon a publicgood, it maynotbe producedat
all. Thus,vestedinterests whosebenefits are sufficient
to warrant
exertiongeta disproportionate shareofthepublicgoodstheyare
interestedin. This accords with the commonplaceview that
governments take bettercare of producersthan of consumers,
and accountsforthe successof the military-industrial complex
and the automobile-gasoline-highway lobby in havinggovern-
mentspendmoneyon publicgoods congruent withtheirinterests.
There need not be corruption.Choice amongcompetingpublic
goods is expensive,and theprincipleof thefreeridemeansthat
thosewithonlylimitedbenefits frompublicgoodsdo notgettheir
fullshare.Publicgoodsareunderproduced. Notethatthisis quite
differentfromtheGalbraithviewthatprivategoodsare overpro-
duced because of the powerof advertising. It assumesthatpro-
ducerand consumerare both rational.
UntilFroelichet al. producedPoliticalLeadershipand Collec-
tive Goods, thiswas the position.The publicgood was a useful
conceptfor research.The economichistorianJonathanPincus
(1977, 1972)appliedthetheoryofpublicgoods to tariff informa-
tion, provingthroughmultipleregressionthat interestsin the
United States which were concentrateddid better,that is,
receivedhighertariffs, in thetariff
of 1824,thanthosewhichwere
widelyspread."A commodityis knownbythesenatorsitkeeps,"
as thesayinggoes. It paid, in 1824,to be concentrated,owninga
largepieceofa fewsenators,ratherthana smallportionofmany.
And in an interesting article,Koichi Hamada (1977) calls mone-
taryintegrationa publicgood whichis underproduced becauseits
benefitsare too widelyspread.
This theoryof representative democracy,however,neededa
place forleadership.Froelichetal. providedan economictheory
 Kindleberger/ INTERNATIONAL ECONOMY 245

of leadershipto go withit. Leaders workforsomethingcalled

"leadershipsurplus."Theycompetewithotherpotentialleaders
for ascendancy,and once in officemaximizetheirsurplusor
profitby providingcollectivegoods againsttaxes,donationsor
purchasespromisedin theelectionprocess.A leader'spersonality
mayplay a role,as he or shederivespleasureor utilitysimplyby
beinghead of theadministrative office.In thisinstance,coststo
theleaderofexertionare matchedbyrewardsofa nonpecuniary
nature.Froelichet al. allow littleroom in theirtheoriesforthe
hereditary leader,orforleadershipresponsibilities, unlessthelast
can be regardedas a negativesurpluswhichis minimized through
fulfillment of explicitor implicitcommitments.
Leaders of courseare subjectto moraldecay,as Lord Acton
noted in saying,"Power corrupts,and absolutepowercorrupts
absolutely." Responsibilitycan degenerateinto exploitation.
Exploitationhas beendefined,unsatisfactorily in myjudgement,
as a positioninwhicha country, firm,individual,and thelikegets
moreincomeor productthanthelowestpossibleamountitwould
be willingto accept in the circumstances (Penrose, 1959). This
impliesa close to nonsensepositionin whichtwo partiesto a
transactioncan each exploittheotherwhenbothreceivea higher
pricethanthereserveprice,or minimumreturnat whichitwould
be willingto operate.JohanGaltung,theNorwegiansociologist,
has definedexploitationas dependence,'whichalso strikesmeas
bizarre.
Interdependententities-husband and wife,two countries
trading with another, professorand student-are mutually
exploitingeach other(in a privateaside, MartinBronfenbrenner
believessuchmutualexploitationoccursfrequently. Take a mar-
riedcouple: he treatsheras a servant,and shetreatshimas a meal
ticket).The essenceofexploitationis thatone partyexertspower
to producea resultmorefavorableto itthanifthatpowerhad not
been exerted.The typicalillustration is a monopolistor monop-
sonist(monopolybuyer),whichrestrictshis or her sales (pur-
chases) to forcebuyer(seller)to pay a higher(accept a lower)
price than would obtain in a perfectly competitivemarketin
whichall sellersand buyerswere without power to affectthe
price.
1. At a seminarat the Institutdes Hautes Etudes Internationales,
March 1971.
246 INTERNATIONAL STUDIES QUARTERLY

Whenthereare bigrents,as economistscall them,or a surplus

thatvastlyexceedswhatis necessaryto gettheworkdone,thereis
a strongpossibilitythatthetwosidesto a transaction willeach see
itselfas exploitedwhenit maybe onlytryingto provideleader-
ship.The operationis regardedas a zero-sumgamewhereasmost
economists (and political scientists?)would regard it as a
non-zerosumgamefromwhichbothpartiescan benefit.Take the
multinational corporationthatdiscoversoil in a poor country.Is
it leadingor exploiting?The answerturnson thecounterfactual,
or whatwouldhavehappenedin othercircumstances. And when
both partieschoose different counterfactuals, the roomfordis-
agreementis enormous.The corporationcomparestheexisting
situationwiththatbeforeits discoveryof oil, the countrywith
circumstances in whichone ofitsowncitizenshad discoveredthe
oil and furnishedthe necessarytechnologyto develop it. The
companyresentsany and all taxes,untilitscounterfactual shifts
to nationalizationas a possibility.The countryresentsthecom-
pany's profits.In these circumstances,extramarketpower is
likelyto be applied by the country,whetheras leadership,or
exploitationof the companyis difficult to determine.
Leadershipcan degenerateintoexploitation.It can also degen-
erate into confusionand anomie. Pincus believesthata public
goods theoryoftariff-making, as exemplified inthetariffof 1824,
is akin to theview of Schattschneider (1935) who wroteon the
Smoot-Hawleytariffrevisionof 1930.That is notmyinterpreta-
tion. I regardSchattschneider as concludingthat the Smoot-
Hawley tariffwas the result of Hoover's abdication of his
responsibilities,of failureto lead. There weretariffsforevery
industry, and rateswerefixedbylobbyistsaftertheyhad sentthe
congressmen fromthe committeeroom.
For Adam Smith,withinan economypublicgoods consisted
of defense,law and order,and a minimumnumberofroadsand
bridges.To thislist,JohnStuartMill added tranquility. Other
economistsnotedthatthe government mustprovidethe public
good ofmoney,to theextentthattheeconomydid notreston the
pure gold standardwithoutbanking(whichcould be said to be
privately produced)and rulesfortheconductofenterprise. With
Keynes,thelistof publicgoods was enlargedto includestability
of nationalincome,soughtthroughfiscalas well as monetary
 Kindleberger/ INTERNATIONAL ECONOMY 247

policy.Today we recognizeotherpublicgoods, suchas control

over privatenegativeexternalities, as in pollution.
The analysisof publicand privategoods is also applicableto
the internationaleconomy. For privategoods, read national
benefits,and for public, cosmopolitangoods, for the mainte-
nance of theworldeconomy.The questionis how to distinguish
dominationand exploitationfromresponsibility in theprovision
of cosmopolitangoods in theworldeconomy,and whetherthere
are not occasionswhentheworldsuffers fromtheunderproduc-
tionofthepublicgood of stability, not because ofgreedyvested
interestsand dominationor exploitation,but because of the
principleof the freerider.
This was thethemeofmybook on theworlddepressionofthe
1930s(Kindleberger,1973).I arguedthatfortheworldeconomy
to be stable,itneedsa stabilizer,somecountrythatwouldunder-
take to provide a marketfor distressgoods, a steadyif not
countercyclical flowof capital,and a rediscountmechanismfor
providingliquiditywhenthemonetarysystemis frozenin panic.
Today I would add thattheworldleadershipmustalso manage,
in some degree,thestructure of foreign-exchange ratesand pro-
vide a degreeof coordinationof domesticmonetarypolicies.
Britain,withfrequent assistancefromFrance,furnished coher-
enceto theworldeconomyalongtheselinesduringthenineteenth
centuryand throughthe "belle epoque." The UnitedStatesdid
so from1945(or perhaps1936)to 1968(or 1963or 1971).From
1919to 1939,Britaincould not,and theUnitedStateswouldnot,
act in the capacity of world leader. I find great difficulty in
acceptingthe views of Williams,Kolko, and otherrevisionists
who maintainthattheUnitedStatessoughtworlddominanceas
earlyas WorldWarI, or 1898.The beginnings ofworldpowercan
be seenin thespreadofNew Yorkfinanceabroad,to be sure,but
in spiteof Wilson,the leadingpoliticalfiguressuch as Hughes,
Lodge, Harding,Coolidge,Hoover,and thefirst-term Roosevelt
wereisolationists,readyto intrudeon theworldsceneonlybriefly
and wantingno part of Europe's or Asia's problems.
There is a legitimatedebate, perhaps,betweenFrenchand
Americanpositions,whetherthe UnitedStatessoughtdomina-
tion or was only tryingto providethe public good of world
248 INTERNATIONAL STUDIES QUARTERLY

stabilityin the period afterWorld War II. Francois Perroux

suggestedit was also exploitation.At leastthroughtheperiodof
theMarshallPlan, theAmericancase thatitspurposewas leader-
ship,eventhoughdominationwas inadvertently involved,is not
primafacie wrong.But whateverelementsof dominationwere
intended,I believedand believethattheyhad runout by 1960.
Part of theworld'seconomicproblemtodayis thattheUnited
States has resigned(or been discharged)as leader of the world
economy,and thereis no candidatewillingand acceptableto take
itsplace. We have notonlytheendto thedominationrolewhichI
detectedin 1960,but also faintsignsoftheend of UnitedStates
leadership.The leadershippersistsperhapsin MiddleEast peace-
keeping.It is hard to detectin mattersof trade,aid, capital
movements,monetaryreform,and the like.
How shouldone distinguish exploitationfromleadership?The
issueis complex,and theanswernotobvious.Managementofthe
gold-exchangestandardby Britainfrom1870to 1913and bythe
UnitedStates from1945to 1971 can be viewedas provisionof
eitherthepublicgood ofinternational money,ortheprivategood
for itselfof seignorage,whichis the profitthat comes to the
seigneur,or sovereignpower,fromthe issuance of money.Of
course it can be both. Public goods are sometimescompetitive
withprivategood-as whenthereis a choicebetweentaxingto
build a lighthouseor a publicpark,and not taxing-and some-
timescomplementary: maintenanceof Pax Britannicaor Pax
Americanaprovidespeace fortheworldas wellas thestatusquo
fortheprovider.Or Prussiaacceptinga disproportionately small
shareof the revenuesof Zollvereinas againstthesmallerstates
and principalities it seducesintojoining.
This is a leadershiptraitaccordingto Olson and Zeckhauser
(1966),who observethattheleaderofthealliancepaysmorethan
a pro rata shareof thegeneralbenefitsofthealliancebecauseof
thefreeriderprinciple.In returnforitsside-payment to Bavaria,
Wurtenberg,Baden, and othersmall states,Prussia earned a
leadershipsurplusin prestigeand powerfromforgingImperial
Germany.The difficulties ofthe EuropeanEconomicCommun-
itymay be traceableto lack of a leadershipwillingto bear the
burdensof the group,or perhapsto the factthatthelong-time
 Kindleberger/ INTERNATIONAL ECONOMY 249

leader, France, was interestedin the privatenationalgoods of

gloire,trade benefitsforthe Communaute', as well as the cos-
mopolitangood of the Community.
Butmyconcernis withthoseinstanceswheretheabundanceof
freeridersmeansthatthepublicgood is underproduced, and that
thereis neitherdominationnorself-abnegation in theinterest of
responsibility.
Take firstthe position of small countries.In international
economics,we have the so-called "small-country assumption,"
whichmeansthata countrycannotaffectitstermsoftrade(the
pricesat whichit buysits importsand sells its exports),and if
capital is mobile,theoutsideworlddetermines itsmoneysupply
and itsinterest rate.Small countrieshaveno economicpower.At
the same timetheyhave no responsibility fortheeconomicsys-
tem,norany necessityto exertleadership.Theyseemto pose no
problemsfor the internationaleconomy,and in a numberof
instances-Sweden,Canada, New Zealand,and so on-they can
usuallyserveas examplesthroughgenerousaid, or theprovision
of troopsto the UnitedNations,and the like. But it is of some
interestthat on two occasions-in 1931 and again in 1971-it
was the small countries,more or less simultaneouslyand in
pursuitoftheirprivateinterest, thatpushedBritainfirst, and then
the UnitedStates,offthe gold standard.
It maybe appropriateto regardtheseactionsas causaproxima,
ratherthancausa causanswhichwas one ofthenumberofcausae
remotae.When actions of small countriesare not independent
but stimulatedbythesameforcesas others,and eitherconcerted
or more usually stimulatedby what the Supreme Court calls
"conscious parallel action," the small become powerfulwilly-
nilly,forgood or ill forthe system.
Parenthetically, I have a strongbias againstconspiracytheor-
ies of history.I do notbelieveinthenotionthattheextremeleft,
theextremeright,thepowerelite,theestablishment, oil compan-
ies, professoriat,military-industrialcomplex,and so on, can be
regardedas singledecision-making unitswithdetailedprograms
forimposingtheirwillon theunsuspecting world.We knowfrom
Speer's diaries how chaotic were the governmentalprocesses
250 INTERNATIONAL STUDIES QUARTERLY

undertheNazis. The "truebeliever"findsor suspectsomniscient,

omnipotent, and omnipresent oppositioneverywhere.2
The problemof middle-sizedcountriesis a delicateone, as I
have indicatedin a paperon France'sconversionsofdollarsinto
goldin 1931and againin 1965(Kindleberger, 1972).Bigenoughto
do damageto thesystem,butnotsubstantialenoughto stabilize
it, the questionis whethermiddle-sizedcountriesshould runa
largeriskofprivatehurtin theinterest ofpublicstability,or seek
to protectthemselves at theexpenseofthesystem.I havea British
friendwho becomesindignantwhenhe hearstheratscriticized
forleavingthesinkingship."What,"he asks,"do theywantthe
ratsto do? Stay on the bridgewiththe captainand salute?"
Countriespowerfulenoughto take leadershipresponsibility
may dischargeit, may become corruptedintotakingdominant
advantageof it, maydo the one and be perceivedas doing the
other, or may abdicate responsibility. It is also possible, as
alreadyindicated, thatthey willexerciseleadershipand do well
out ofit.Butthesystemis essentiallyunstable,subjectto entropy.
Even if it is not perceivedas domination,leadershipis not
regardedas legitimate."Whathas he done forme lately?"is the
appositetag. And thecountrywith,letus say,risingimportsas it
struggles to keepmarketsopen,an overvaluedexchangerateas it
acceptsthedevaluationsofothers,an undueshareoftheburdens
of NATO or of foreignaid, beginsto concernitselfwiththefree
ridesof othersand talk of moreequitableburden-sharing.
The need fora leaderto assumetheburdenis nowherebetter
illustratedthan in the reparations/war-debts/commercial-debts
issue ofthe 1920sand 1930s.Britain'sreadinessto cancelrepara-
tions insofaras the United States relievedit of war debts is
understandable ineconomicterms,as itswardebtsreceivableand
2. Barnetand Muller(1975) hintdarklythattheenergycrisiswas contrivedbytheoil
companiesto raisetheirprofits,saying,"The extentto whichthecrisiswas a resultofcon-
spiracymaynotbe knownuntilhistorians are givenaccessto theoilcompanies'equivalent
of the PentagonPapers." The correctposition,in myjudgment,is set out in Goodsell
(1974: 85): "Our evidencesuggeststhatratherthanbeingin conspiratorial alliancewith
oligarchicelites,the(foreign)businessmensharewiththema certainnumberofgoals and
values."Conspiracyis, of course,possible,but I believethatmosttimesitsappearanceis
theresultoflike-minded people,similarly
placed,responding in thesamewayto thesame
stimulus.
 Kindleberger/ INTERNATIONAL ECONOMY 251

share of reparationsreceiptswouldjust about equal war debts

payable;but it could hardlygratifytheUnitedStates,whichhad
alreadygivenup a share of reparationsand would lose on bal-
ance, or France,whichwas to be a net recipientof reparations
over war debts payable to Britainand the United States. In
addition,to keep commercialdebts alive when it had fewin-
volveda loss forFranceand a benefitforBritainand theUnited
States.
Lend-leaseor the Marshall Plan weregesturesmoreapprop-
to sustainoverlongyears.The
riateto leading.Theyare difficult
leader becomes corrupt,or is perceivedas such; the leader
becomestiredof freerides,or believeshe or she is beingbank-
ruptedby excessiveburdens,or both.The economiclimitto the
burdena countrycan sustainis of coursemuchgreaterthanthe
political limit,as is evidentwhen one contemplatesthat the
UnitedStatesused halfitsincomeforwar.The statementmade
frequently, forexample,bySenatorRobertTaft,that"mycountry
could not afford"something-saythe Marshall Plan-is to be
translatedintoa moreaccurateform:"I do notwant,or I believe
votersin the UnitedStates do not want,to reducethe United
States'standardoflivingbyenoughto carrya particularburden."
A systemofworldeconomybased on leadershipis thusunsta-
ble over timein muchthesame waythata Pax Britannica,Pax
Americana,balance-of-power system,or oligopolyis unstable.
The threatmay come fromthe outside in the presenceof a
thrustingaggressivecompetitoranxious for the prestige,and
possiblytherealincome,ofthedominanteconomy.Prussiainthe
second halfof the nineteenth centuryis theprimeexample,but
one could take EnglandwithitshatredoftheNetherlandsin the
seventeenth century,or theFranceofNapoleonas examples.The
leadercan be overthrown bytherefusaloffollowersto submitto
whattheyhave come to thinkof as exploitation.
Butchangecan also comefromwithin.The leadergrowsweary
under burdenswhichgrow as more and more freeridersseek
moreluxuriousfreerides.The meansofstabilizing thesystemare
self-evident.

(1) Relyon long-run oftheparticipants

self-interest alongthelinesof
Kant'sCategoricalImperative, themto renouncefree
expecting
252 INTERNATIONAL STUDIES QUARTERLY

ridingand to act in waysthatcan be generalizedto all participants.

This is a counsel of perfection.
(2) Bind the membersof theinternational community to rulesof con-
duct,to whichtheyagree,and whichwillrestrain each memberfrom
freeriding,and allocate burdensequitably,as a matterof inter-
national legal commitment. Not only will countrieschiselon the
but
commitments, they willfreeridetheapplicationofsanctions,as
experienceunderthe League of Nations and the UnitedNations
amplydemonstrated.
(3) Form a worldgovernment.

I choose notto discussitem3,whichsetslimitstofreerideswithin

national states,on the groundthat its idealisticand visionary
characteris self-evident.Free ridingor escape fromwhat was
believedto be excessiveburdensbya regionalunitmighthaveto
take the formof secession,but thereseemsno doubtthatin the
presentstate of inadequate sense of world social and political
cohesion,it would do so.
For as farahead as today'ssocial scientistscan see,I thinkitis
necessaryto organizetheinternational community-bothrelated
to policyand economyalike-on thebasisofleadership.Entropy
is inevitable.Afterbreakdown,therefollowsa long,drawn-out,
and dangerousprocessof establishing a new basis oflegitimacy,
undera newleader.Self-consciousness intheroledoes notappear
to be a help, and will make manycandidates,as today in the
economicfield(Germany,Japanand Switzerland),hesitantand
shy.But leadershipto providethepublicgood ofstability, prop-
erlyregarded,misunderstood as exploitation,or snipedat byfree
riders,seems a poor system,but like democracy,honesty,and
stablemarriages,is betterthanthe available alternatives.
I shouldperhapsadd thatI have notdiscussedthepossibilities
of a compromiseamongthesesystems, wheretwoor morecoun-
triestake on the task of providingleadershiptogether,thus
adding to legitimacy,sharingthe burdens,and reducingthe
dangerthatleadershipis regardedcynicallyas a cloak fordomi-
nationand exploitation.In 1931,thesuggestionwas widespread
that France and the UnitedStates togethermake a big loan to
Germany.The Frenchinsistedon politicalconditions,theUnited
States was unwillingto throwgood moneyafterbad, although
thatis the crux of rediscounting in a crisis.
 Kindleberger/ INTERNATIONAL ECONOMY 253

AfterWorld War II, ErnestBevin suggestedto WilliamL.

Claytonand Lewis W. Douglas thatthe"specialrelationship" be
reinstituted by the United States undertakinga preliminary,
antecedentMarshall Plan for the United Kingdom,following
whichbothcountrieswouldundertaketheeconomicrecoveryof
thecontinent.The idea was neverseriouslyconsidered,and Bri-
tain'sdecisionin 1962to applyformembership in theCommon
Marketput "paid" to the special relationship.
For a timeitlookedas thoughtheEuropeanCommunity itself
would emergeas an economic and politicalentitycapable of
rivalingtheUnitedStatesforworldeconomicleadership(outside
the Socialistblocs),perhapssucceedingto firstplace as theUni-
ted Statesfaltered.In thatevent,domesticeconomicand political
concernsin France,Britain,and Italyand theOst-blocpolicyof
Germanyhave turnedattentionfromworld to national and
regionalconcerns,and thereappears to be no readinessin the
Communityto take on widerresponsibilities.
A fourthidea is fortheUnitedStates,Germany,and Japanto
agreeto a simplesetof rulesin themonetaryfieldto givecoher-
ence to theirpoliciesand worldstability(McKinnon, 1974).The
sinceitappearsas an attackon the
idea is politicallyunattractive
European Community-especiallyagainst France, on the one
hand, and could be regardedas a divisionof the world into
regionalblocs on the other.In addition,thereis no Japanese
appetiteforworldresponsibility.
I concludethatthedangerwe faceis nottoo muchpowerinthe
international economy,but too little,not an excess of domina-
tion,but a superfluity of would-befreeriders,unwillingto mind
the store,and waitingfora storekeeper to appear. No place, to
quote PresidentTruman,forthebuck to stop.I saythiswithout
implicationthatthereis anythreatto theworldeconomicsystem
fromoutside.Butwithouta stabilizer, thesysteminmyjudgment
is unstable. It is perhapstoo strong say thata worldof Den-
to
marksis as unstableas a worldofPrussias,butitposes theissue.

Date ofreceiptoffinalmanuscript:
10/14/80
254 INTERNATIONAL STUDIES QUARTERLY

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