Book Review

ORBIS, Summer, 1994 by Patrick Clawson

We appear to be living in an age in which the foreign policy of the United States is more a matter of buying and selling this and that than safeguarding and advancing the national interest as more broadly and traditionally conceived. The present incumbent in the White House emphasizes economic renewal at home as the best guarantee of true American security, and in the actual pursuit of foreign affairs seems to summon enthusiasm for study or action primarily when U.S. techno-wonders are to be hawked. Now that Mr. Clinton has traded the battle fleet for the costermonger's wagon, what, if anything, does the academy have to say to us about such a state of affairs concerning the affairs of state? Surprisingly, quite a lot.

This may seem a whimsical conclusion at first blush. After all, contemporary debates among experts on international economic policy descend into the mind-numbing minutiae of econometric models: How many jobs will NAFTA create or destroy? How much will the U.S. trade deficit with Japan shrink if the dollar trades at 100 yen instead of 120? How much are Japan's imports reduced by administrative regulations? Economists strain to answer such questions with an air of scientific accuracy in order to bolster their authority, even though science is not exactly what they're up to. To be sure, economists surge forward defending their myriad models, each purporting to show definitive results, but each model coincides parsimoniously with the political inclinations of the statistician.

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Therefore, statistical studies do not provide a fully satisfactory method to decide among alternative international economic policies, or to probe the contemporary link between economic goals and political ambition. But the two books reviewed here veritably do. Judith Goldstein's Ideas, Interests, and American Trade Policy and Beth Simmons's Who Adjusts? Domestic Sources of Foreign Policy during the Interwar Years are not strictly economic analyses. Rather, they are excursions in economic history. Both authors are honest historians, each one far enough removed from present confabulations to examine the past on its own terms. Neither seems particularly interested in making points about contemporary debates; they are rather more disposed to expend energy to show that economic history can illuminate the way forward. Ironically, this lack of interest in contemporary matters is probably the best guarantee of contemporary utility, partly because it is only by stepping back that one appreciates economics as one of the human sciences, having far more in common with sociology and cultural anthropology than the current crop of macroeconomists would have us believe.

Goldstein's choice of venue is the history of the choice between free trade and various forms of protectionism. Her thesis is that, even in this most material of materialist domains, trade policy is determined by ideas as well as by interests. She disputes the conventional argument that the nineteenth-century American debate between protectionists and free-traders reflected sectional interests, with the industrial northeast wanting to shelter its infant industries and the agricultural south wanting cheap manufactured goods.

Her key historical example is the protectionist policy of the Republican Party from the Civil War through the Depression. The Republicans originally adopted protectionism in the belief that it served the interests of free labor, their core constituency of the period. By the 1890s, protectionism dearly worked against America's narrow and immediate material interest: as the world's major manufacturing nation, the United States could have used freer trade to expand its sales abroad without worrying overly much that foreign competition would displace workers at home. Goldstein argues that while protectionism was not the optimal policy for this period, it did not interfere much with domesticially based American growth and, therefore, politicians were not forced to think through the consequences of their traditional stance. When economic problems grew acute during the Depression, the first impulse of beseiged politicians was to reinforce their long-time policy stance--that is, to reinforce protectionism--rather than to consider whether a new set of policies was appropriate. In short, the qualities inherent in the structure of ideas, with all their arational cognitive coping mechanisms, far better explain what actually occurred than do changes in the balance of forces among various material interests.

But ideas alone do not determine policy. Goldstein demonstrates that economists came to a broad consensus in favor of free trade decades before public policy changed in that direction. She argues that economic theories were long unable to influence public policy because they were too abstract and because economists commanded little respect. The eventual change in policy came from a marrying of the pro-free trade intellectual position with the practical needs of politicians: Franklin Roosevelt's desire to expand the powers of the presidency made him eager to gain authority to negotiate reciprocal agreements lowering tariffs, and this in turn launched the process of trade liberalization.