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This chapter examines the role of the Secretary-General as the “face” of the United Nations, focusing specifically on the two African Secretaries-General: Boutros Boutros-Ghali (1992–1996) and Kofi Annan (1997–2006). Though I characterize Boutros-Ghali and Annan respectively as “the pharaoh” and “the prophet”, every Secretary-General has exhibited such traits, as well as those of a third and more common metaphor of being a sort of “Pope”. Through these three lenses, the chapter examines the major achievements and failures of Boutros-Ghali and Annan, as well as the reaction of key actors at the United Nations to the efforts of both men to achieve their objectives in the areas of peace and security, socio-economic development, and “humanitarian intervention”. Since both Africans occupied the post for the fifteen years after the end of the Cold War, this is also a study of the role of the Secretary-General in the post-Cold War era. This period saw tremendous changes in the geopolitical landscape, including the collapse of the Communist Bloc and the rise of a unipolar world, the eruption of conflicts in the Balkans and Africa, and an increase in the membership of the United Nations from 159 to 192. All of these transformations had an impact on the United Nations in general but led, in different ways, to greater attention being paid to the role of its Chief Administrative Officer. Another reason to focus on the two African Secretaries-General concerns the importance of the United Nations to Africa and vice versa. [ABSTRACT FROM AUTHOR]

Introduction In 1982 the Republican administration of Ronald Reagan voiced concern over the state of emergency decreed by the Chilean military government of Augusto Pinochet and the increased levels of human rights abuses that were taking place. The administration threatened to direct its representative to the IMF to vote against the award of structural adjustment packages unless the Pinochet regime lifted its state of emergency and improved its record of respect for human rights. Three years later the Reagan administration also abstained in its support for World Bank and IMF loans to Chile for several months until the regime lifted its state of siege (Coad 1985; Omang 1985). Apparently the administration was concerned over the levels of human rights abuses taking place; most attention had been paid to the opposition press censorship (Coad 1985). This example provides an intriguing contrast to the founding charter of both the World Bank and International Monetary Fund, which excludes political considerations in the loan-agreement process of these institutions. When decisions are being made about the allocation, amount, and conditions under which resources are apportioned, the idea that only economic factors affect the evaluation of member countries' representatives to these decision-making boards, is, at best, wishful thinking: politics inevitably becomes involved. In our historical assessment of how these institutions came to make their decisions over the 1981–2003 period, we built upon the existing literature that identified significant factors affecting the decisions of these institutions to enter into structural adjustment agreements with developing countries. [ABSTRACT FROM AUTHOR]

Introduction What is the impact of the World Bank and International Monetary Fund on government respect for human rights and on equitable economic development? Many different groups have protested that the impacts have been negative. Recent anti-structural adjustment demonstrations have taken place at the 1999 Ministerial Meeting of the World Trade Organization (WTO) in Seattle, at the annual meetings of the IMF and World Bank (in Washington DC on alternate years), and at the annual summits of the Group of 8 (G8) industrialized countries. There were massive protests at the 2005 Summit of the Americas in Mar del Plata (near Buenos Aires), at the 2000 Annual Meeting of the IMF and World Bank in Prague, and at the 2001 G8 meeting in Turin, among others. Protesters have questioned the motives and criticized the impacts of these institutions on the economies and societies of liberalizing countries. The popular press has reported upon the activities of these institutions extensively, with much criticism of the austerity measures that have been associated with structural adjustment agreements and their harsh consequences in developing countries. With emotions raised and hyperbole flowing, we need to step back and ask if the criticism of these institutions is warranted. Has the academic community generated any answers when trying to assess the impact of these institutions? Recent studies which have controlled for what have become known as “issues of selection” have concluded that IMF structural adjustment agreements have deleterious consequences on economic growth (Przeworski and Vreeland 2000; Vreeland 2003). [ABSTRACT FROM AUTHOR]

Introduction There is a growing consensus that greater respect for certain human rights leads to economic development that benefits a broader section of society. In this chapter, we explore the logic behind this argument and discuss the relevant findings from previous research. Based on this logic and empirical findings, we conclude that the Bank and the Fund ought to be pursuing a human rights-based approach to economic development in less developed countries. In Chapter 11, we explicitly define what such an approach would look like. For now, let us simply define a human rights-based approach to economic development as one that explicitly seeks to improve the human rights practices of the governments of developing countries as a method to improve levels of economic development. We begin by defining economic development. Economic development that includes economic growth accompanied by a relatively high level of respect for economic and social rights has been described as “equitable economic development” (Sen 1999). It is also sometimes called “high-quality economic growth,” “pro-poor economic growth,” or “equitable economic growth,” the term we will use. This type of growth we believe is the appropriate measure to decide whether economic development is taking place within a society. This is also the standard that we believe should be used to evaluate the economic outcomes of structural adjustment programs. [ABSTRACT FROM AUTHOR]

Introduction The accession of ten new member states to the European Union on May 1, 2004, brought deep changes to Europe's political economy, both toward the new member states and the EU's “new neighbors” to the east and south. To formulate a policy toward these “new neighbors,” the European Commission (EC) presented the European Neighbourhood Policy (ENP) strategy paper, setting out a new framework for relations and financial support for the neighborhood countries in May 2004 (EC, 2004a). The neighbors in question were Ukraine, Belarus, Moldova, Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, and the Palestinian Authority, with the recommendation to also include Armenia, Azerbaijan, and Georgia. Russia was included as a privileged partner. Then European Commission President Romano Prodi described the goal of the ENP as seeking to create a “ring of friends” around the EU, by offering close cooperation on issues ranging from political dialogue to economic integration. This initiative was supposed to allow these neighbors to participate in major EU policies and programs, and ultimately in the EU's single market. ENP participants were expected to form a relationship with the EU similar to that of the European Economic Area (EEA) members, such as Norway, Iceland, and Liechtenstein. This chapter describes the general framework of the EU's emerging relationship with its new neighbors and explores the potential economic impact of the ENP, both for the EU itself and for its neighbors in the Commonwealth of Independent States (CIS): Armenia, Azerbaijan, Belarus, Georgia, Moldova, Russia, and Ukraine. [ABSTRACT FROM AUTHOR]

Introduction In his revolutionary work, the godfather of modern fiscal policy Lord Maynard Keynes gave a central role to discretion in fiscal policy. Thus, in some ways, he, and even more his followers, who probably pushed his ideas beyond where he would have liked, gave policy makers what many of them had always wanted: a justification for spending more or, in particular cases, for reducing taxes without cutting public spending. A correct or effective discretionary fiscal policy is, however, difficult to pursue because it requires information and attitudes that are often in short supply. When countries try to fine-tune their fiscal policy, they often end up making mistakes. This chapter focuses on those difficulties within the European context. It discusses problems that have not received the attention that they deserve. Since it was first proposed, and then endorsed by the Keynesians, with a revolutionary fervor that at times paralleled that of true religious believers, countercyclical fiscal policy has been subjected to occasional criticism. Three major lines of criticism can be distinguished. First is the existence of various lags. It was noticed from the beginning that there are likely to be lags in (1) the recognition that fiscal action is needed, (2) the taking of the action, and (3) the time that passes between when the action is taken and when the economy begins to feel its effects. These lags reduce the effectiveness of countercyclical policy. [ABSTRACT FROM AUTHOR]

The EC's policy of conditional recognition, we have seen, represents a significant departure from legal thinking and historic state practice as well as a novel approach to conflict management. It is not, however, the first time that conditionality has been used in support of political aims. For more than two decades, states and multilateral organisations have been employing political conditionality in their relations with developing countries, often in pursuit of objectives akin to those of the EC in Yugoslavia, such as the promotion of human rights and, more recently, democratisation and ‘good governance’. Indeed, since the 1970s the EC/EU itself has used and continues to use political conditionality as part of its trade and aid programmes, imposing on recipient states requirements relating to their domestic political structures that in many ways are not unlike the requirements it stipulated for the new state authorities in Yugoslavia. This final chapter examines these parallel uses of political conditionality for what they suggest about the potential for, and the limitations of, conditional recognition as an instrument of conflict management. It charts the evolution of these policy initiatives and the thinking behind them – politically conditioned aid in particular – and explores the similarities they bear to the EC's use of conditional recognition. It also looks at how effective political conditionality has been and identifies factors that may account for its successes and shortcomings. [ABSTRACT FROM AUTHOR]

Chapter 3 argued for a view of diplomatic recognition as an informal regime governed by its own set of norms, legal as well as political, that historically have contributed to the maintenance of a stable order in the international system. Because the practice of recognition originates with states and serves to protect their interests, it is an inherently conservative institution. Outside of decolonisation states are reluctant to confer recognition on new claimants unless their claims are undisputed, for in the absence of terrae nullius (territories belonging to no one) recognition can only be achieved at the expense of existing states, and the dismemberment of one state is perceived to pose a threat to the integrity of all states as well as to weaken the foundations of the state-based international order. Although the EC's policy with regard to Yugoslavia might seem to contradict this view – to reflect instead an incautious and even subversive use of recognition – the EC, we have seen, sought to contain the disruptive effects of its actions by interpreting them so narrowly as to have limited application to other states. Statehood for Croatia thus would not mean statehood for, say, Spain's Catalonia or Russia's Chechnya. There is another way in which the practice of recognition, rather than serving to ensure stability, can be disruptive of the established order, and that is in its potential for exacerbating the violence that may accompany the creation of a new state, particularly if the parent state is contesting and seeking to suppress the emergence of the entity. [ABSTRACT FROM AUTHOR]

Chapter 2 examined the tradition of legal thinking and historic practice with respect to the recognition of states. The rationale for that exercise was the claim, in part, that if the EC's recognition of Yugoslav republics was driven primarily by political and strategic considerations, one could not dismiss the relevance of international law altogether. The claim rested on two observations: first, that the EC consciously and deliberately considered the question of recognition within a legal framework, evident most notably in its establishment of the Badinter Commission; and second, that the legal framework, once invoked, both facilitated and constrained the EC in some of its actions. This chapter returns to the latter point. For to suggest that the EC's response was at all moulded by international law would not only seem to contradict the views of legal scholars and political analysts alike who maintain that the Community's actions were motivated largely, if not entirely, by extra-legal considerations; it also begs a number of fundamental questions about the relationship between international law and politics in general and the bearing that both have on the recognition of states in particular. For instance, how does one distinguish conformity to law from the fortuitous coincidence of law and politics? And if international law at times does indeed facilitate and constrain international behaviour, how does it achieve that effect? [ABSTRACT FROM AUTHOR]

Since the Thirty Years' War, no people have been more profoundly injured and diminished than the Russian people by the successive waves of violence brought to them by this past brutal century. Introduction Karl Marx famously observed that while men make history, they do not usually do so in the manner that they intend. History itself, in the form of political, economic, social, cultural, and other historical influences or legacies, decisively shapes the range of public choice realistically available to leaders and societies. To what extent and how has Russia's distinctive historical experience in the Soviet period – which lasted for three-fourths of the twentieth century (compared to twelve years for Nazi Germany) – shaped the country's postcommunist circumstances and possibilities? The Soviet Union that emerged from the Russian Revolution developed a patrimonial society that was both more comprehensive and more intensive than that of Tsarist Russia at least since the freeing of the gentry from obligatory service to the crown under Catherine the Great. The fusion of de facto sovereign power in the form of the communists' monopoly of political power with the communist state's monopoly of virtually all forms of capital in the state-owned economy both reflected and propelled a level of international hostility that served to justify the Soviet patrimonial party-state system itself. [ABSTRACT FROM AUTHOR]

Immediately after the collapse of communism in Europe, many students of international relations predicted a return to balance-of-power politics among the great European powers. Others foresaw new balancing between the United States and Europe as the international system moved from a bipolar order to a multipolar world. A decade later, the distinguished observer Joseph Joffe argued that Western Europe and Russia might join together to offset American power: “Ten years after victory in the cold war, the United States is still No. 1 by any conceivable measure. But the lesser actors – Russia, Europe, China – are beginning to make true what history and political theory have predicted all along: Great powers will generate ‘ganging up.’ Nos. 2, 3, and 4 will seek to balance against Mr. Big.” And a recent book by a leading Europe scholar, Charles Kupchan, predicts that a united Europe will emerge as America's main long-term strategic challenger. Joffe, Kupchan, and other realists like John Mearsheimer and Kenneth Waltz eventually may be right. Perhaps the German, French, and Russian coalition during the 2003 Iraq war is just the beginning. In the future, realpolitik and balance of power may return as the organizing principles of international politics on the European continent. Someday, the “lesser” powers may seek to balance against the United States. To date, however, what is more striking is how wrong these realist predictions since 1989 have proven to be. [ABSTRACT FROM AUTHOR]

In this chapter we complement the quantitative analysis of the previous chapters with an historical narrative that follows the evolution of the global capital market from its formative stages in the late nineteenth century. How did the market evolve to such levels of sophistication and geographical extent by the period 1870–1913? Why did it then decline so dramatically in the first half of the twentieth century, from 1914 to the 1940s? And why was the pace of rebuilding so slow in the postwar era? Where do we stand now, at the start of the twenty-first century? And how do the economic, historical, and political events of the twentieth century inform these questions? Capital without constraints: The gold standard, 1870–1931 The classical gold standard era The story begins with the emergence of a global gold-standard monetary regime in the 1870s and 1880s and the rise of a world capital market centered on the key financial center of that era, London. The story of the convergence by many different nations on a single monetary standard is now well know, and it exhibits all of the “network externality” properties. Of course, those same increasing-returns aspects driving the adoption of this institutional device, the gold standard, made it also equally susceptible to extinction in the event of crisis and suspension, as we shall see. Nonetheless, with British leadership, the gold standard eventually became an almost universal regime by the 1890s and 1900s, especially in the principal trading nations of the world, replacing silver and bimetallic standards along the way. [ABSTRACT FROM AUTHOR]

INTRODUCTION On February 13, 2002, Japanese Prime Minister Koizumi directed ministries to formulate emergency countermeasures to deflation, stating, in a press release that “while deflation has a varied background, the resolution of the immediate financial problems is indispensable to overcoming deflation” (italics added). Koizumi linked deflation, shown in Figure 9.1, to banking problems and a credit crunch, and called on the Bank of Japan to take action. The same press release goes on to state, “In particular, with regard to the disposal of non-performing loans which presently stands as a top-priority issue, actions shall be taken to achieve concrete progress in line with the ongoing process of special inspections, thereby solidifying the prospects for an early resolution of the so-called ‘non-performing loans problem.’ Meanwhile, the government shall stand ready to take any and all necessary measures to prevent a financial crisis. Overcoming deflation will require the government and the Bank of Japan to act in unison. Therefore, we turn to the Bank of Japan with the request that it act with due audacity in implementing monetary policy” (italics added; Japan Ministry of Foreign Affairs 2002). The call by the Prime Minister for the government to take emergency action reflects the concern that the deflation in Japan, if allowed to persist, would gradually erode the foundation of the economy and eventually lead to a much deeper and dramatic decline reminiscent of the Great Depression in the 1930s. Initially viewed by policy makers as a “good deflation,” price declines were now seen as a harbinger of economic collapse. [ABSTRACT FROM AUTHOR]

Have it as you will. In the 1970s, the Community was ground between the hither and nether millstones, stuck between a rock and a hard place, flattened between exogenous pressure from above and endogenous force from below. It was, so to speak, sandwiched. Pressed between the two thick slabs of bread were a thin slice of processed ham, a single soggy piece of lettuce, browning and curled at the edges, and a solitary smear of butter. Who could be blamed for not wanting a bite? Cast aversion and distaste aside. Lend an ear. The struggling Community was stuck between the world monetary disorder that bore down on it from above and the thickening mass of national protectionism that swelled up from below. The two left little wiggle room for the Commission, the Council, or the court stuck in between. The co-editor of the decade's standard work on the EC concluded that the policy context of the European Economic Communities seems [close] to that identified by Lindblom in his “muddling through model” of public policy making … [whose tendency is] to prefer maximizing security to radical and comprehensive innovation, [and] … the policy process as a whole [is] characterized by incrementalism and a high degree of continuity. Is that a surprise? Is there anything to add to the elegant formulation of this eminent Yale political scientist? The results were, under the harsh conditions of the era, actually a bit better than muddling through. [ABSTRACT FROM AUTHOR]

“Re-launching of Europe” is the phrase coined to capture the spirit of the lengthy round of diplomacy that began at Messina, Sicily, on 1 June 1955. It opened less than a year after the EDC fiasco and concluded, after the initialing of the Treaty of Rome on 25 March 1957, with the establishment of the machinery for a future customs union – the European Economic Community, or Common Market – on 1 January 1958. The term “re-launching,” or “re-launch” as it is sometimes translated from the French rélance, is no misnomer: The first ship to embark, with Schuman Plan on its prow, had gone aground and so a second one of improved design, the Messina, set out five years later, heading off in another direction – toward market liberalization. No one knew how to find the destination, whether the vessel in question would be sturdy enough to get there, or whether a still stouter tub, following a somewhat better tack, might arrive first. The fog of uncertainty would not soon lift. Europe was becoming liberal, more or less, but the course was not set. Doubt would remain the rule even after 1960, when a competitive yet cooperative European Free Trade Association (EFTA) came into being as a potential rival, co-partner, or merger candidate of the EEC. Outcomes would be determined by economic trends, the continuation of the boom under way; by high politics, the European states' relationships with each other and with the United States; and by the personalities and policies of officeholders in Washington, Paris, London, Bonn, and Brussels. [ABSTRACT FROM AUTHOR]

Jean Monnet has a strong claim to be called the Father of Europe. Monnet deserves almost single-handed credit for creating in 1951 the first of Europe's epochal institutions for integration, the European Coal and Steel Community (ECSC). He was also the power behind the grandiose but ill-fated European Defense Community (EDC), a scheme for an integrated armed force composed of multinational units and tied into the NATO command structure that was rejected by France in the summer of 1954. Jean Monnet was, in addition, the moving force behind EURATOM (European Atomic Energy Commission) – a proposal for a continental nuclear power industry – which he put forth in conjunction with the “re-launching” of Europe in 1955. Unlike EDC, EURATOM would not be dead on arrival; instead, along with the ECSC, it would develop into an organ (though only an appendage) of the European Economic Community (EEC). As president from 1954 to 1975 of the Action Committee for the United States of Europe, a lobby for the integration cause, Monnet would be an inexhaustible font of unification and federation initiatives. Yet after the mid-1950s he was reduced to the status of an outsider and could influence the integration process only indirectly through allies in Washington, Bonn, Brussels, and other capitals. Thereafter, many initiatives associated with Monnet stemmed from self-anointed disciples – “monnetists” – acting (sometimes without specific authorization) on his behalf in a manner thought to be consistent with his “spirit.” [ABSTRACT FROM AUTHOR]

“Globalization” may now be a buzzword, but it reflects an important if as yet poorly understood reality. A “new international division of labor” has emerged, with extensive and expanding trading networks between countries, as well as new production networks (or “chains”) established by multinational companies (MNCs). Tariffs have declined to negligible levels among the industrialized countries, and successive negotiation rounds of the General Agreement on Tariffs and Trade (GATT) have increased the openness to trade of the developing countries as well. Meanwhile, the latter have become major exporters of manufacturing goods. Their share of world manufacturing output grew from 5 percent in 1953 to 20 percent in 1994. The world trade–GDP ratio has doubled to around 15–20 percent since the 1950s, and the emergence of global markets has been accompanied by the growth of global production and intra-industry trade. Currency transactions, meanwhile, doubled between 1989 and 1992, to Ɂ.2 trillion per day – a figure much larger than the currency reserves of the world's central banks (Garrett 1998a: 790). As a result of these and associated developments, it has been argued that the role of the nation-state in the international system has been fundamentally transformed. The “old” social contract – and its diverse institutionalization in Europe's welfare states – was very much part of the “golden age, ” during which there was a coincidence of national sovereignty (preserved with the help of exchange and trade controls), uninterrupted growth, and the Keynesian welfare state (Ruggie 1982). In the new “global era, ” so the argument goes, the state no longer has the capacity to defend competitiveness within economic borders or to sustain national social contracts and workers' rights and entitlements. [ABSTRACT FROM AUTHOR]

There once was a time, not long ago, when Europe was close to full employment. In the 1960s and early 1970s, after the completion of the postwar recoveries and before the demise of the Bretton Woods exchange rate regime, unemployment rates throughout Europe were generally in the range of 2 to 3 percent or lower (European Commission 1998b: 224–53). It appeared, as Andrew Shonfield proclaimed in Modern Capitalism, that, with few exceptions, governments had – through indicative planning; increased cooperation between business, government, and labor; and the application of Keynesian principles to macroeconomic policy – overcome the job-destroying effects of business cycles and recessions (Shonfield 1969). Now, some three decades later and in the wake of the major recessions of 1974–75, 1980–84, and 1991–94, Europe is afflicted with enduring high levels of unemployment. Throughout the 1990s, the fifteen member states of the European Union (EU) experienced an average rate of unemployment of about 10 percent, an almost fivefold increase from the average for the fifteen states in the 1960s. Even some half-dozen years after the end of the last major recession, and despite the sustained recovery in much of Europe in the last half of the 1990s, the rate of unemployment remained close to double digits in the EU as a whole and in double digits in the eleven member states that formed the euro-zone, and it was expected to remain at or close to those levels in the foreseeable future. What makes the long-term deterioration in employment in Europe especially notable, of course, is the fact that it has been far more severe than in other advanced economies (see Table 1.1). [ABSTRACT FROM AUTHOR]

Introduction The classical gold standard era from 1880 to 1914, when most countries of the world defined their currencies in terms of a fixed weight (which is equivalent to a fixed price) of gold and hence adhered to a fixed exchange rate standard, has been regarded by many observers as a most admirable monetary regime. They find that its benefits include long-run price level stability and predictability, stable and low long-run interest rates, stable exchange rates (McKinnon, 1988), and hence that it facilitated a massive flow of capital from the advanced countries of Europe to the world's developing countries. Others have taken a less favorable view of the gold standard's performance. Some criticize the record of relatively high real output and short-term price variability (Bordo, 1981; Cooper, 1982; Meltzer and Robinson, 1989), and some have faulted it for subordinating domestic stability to the maintenance of external convertibility (Keynes, 1930). A persistent critique of the gold standard is that it provided a favorable experience for the core countries (France, Germany, the United Kingdom, and the United States), but a less favorable experience for the peripheral countries of the developing world (DeCecco, 1974). For the core countries the balance of payments adjustment mechanism was stable, so few crises occurred; the peripheral countries, by contrast, were subject to shocks imported under fixed exchange rates from abroad and frequently suffered exchange rate crises and a destabilized growth pattern. [ABSTRACT FROM AUTHOR]

After twenty years of floating exchange rates, there is now considerable interest, among those concerned over its perceived shortcomings, in an eventual return by the world to a fixed exchange rate regime. This interest has been enhanced by the apparent success of the European Monetary System (EMS) and the prospects for European monetary unification. The Bretton Woods system was the world's most recent experiment with a fixed exchange rate regime. Although it was originally designed as an adjustable peg, it evolved in its heyday into a de facto fixed exchange rate regime. That regime ended with the closing by President Richard Nixon of the gold window on 15 August 1971. Twenty years after that momentous decision, a retrospective look at the performance of the Bretton Woods system is timely. This chapter presents an overview of the Bretton Woods experience. I analyze the system's performance relative to earlier international monetary regimes – as well as to the subsequent one – and also its origins, operation, problems, and demise. In the survey, I discuss issues deemed important during the life of Bretton Woods and some that speak to the concerns of the present. The survey is limited to the industrial countries – the G-10 and especially the G-7.1 do not examine the role of the International Monetary Fund (IMF), the fundamental organization of Bretton Woods, in the economies and international economic relations of the developing nations. [ABSTRACT FROM AUTHOR]

The gold standard: A subject of perennial interest The classical gold standard ended in 1914 but it has been the focus of great interest by policymakers and scholars ever since. On four occasions in this century the gold standard rose to the forefront of discussion: after World War I, during World War II, in the mid-1960s, and in the early 1980s. After World War I, in the face of high inflation and volatile exchange rates, the great powers pushed to return to the gold standard. The Cunliffe Committee report of 1918 urged a return to the prewar standard except that the system would be based upon gold bullion rather than gold coin. The Genoa conference of 1922 recommended restoration of a gold exchange standard as soon as feasible. By 1928 most of the world was part of a gold exchange standard that collapsed several years later during the Great Depression. During World War II, American planners for the postwar international monetary order attached priority to a gold nominal anchor for the dollar and hence for other currencies pegged to the dollar. Adherence to limited gold convertibility, they believed, would ensure exchange rate stability and thereby encourage the growth of international trade. The resulting Articles of Agreement negotiated at Bretton Woods in 1944, although incorporating the gold parity (at least for the dollar) of the classical gold standard, eschewed many of its other features. [ABSTRACT FROM AUTHOR]

Early Metzler: formal I An early formal development of the keynesian model of an open economy was Lloyd Metzler's thesis (submitted at Harvard University in 1942), from which two chapters were published in the journals. The two papers are clearly of a piece. They are different in style, as befit the respective journals (Econometrica and the Journal of political economy) at that time, but in content they are both studies in the application of keynesian analysis to the open economy problem. Distinguishing between various channels of adjustment, price (including price level, exchange rate, and interest rate changes), real income effects, and Ohlin-type expenditure and purchasing power changes, he concentrates his attention on the real income effects. While not as rich as Machlup's study (see below) in the proliferation of disturbances and varying institutional environments, Metzler's two papers here are spare and elegant; they constitute a breakthrough in the formal application of the keynesian apparatus to the open economy. The model is the same in both – a simple two-country keynesian model, in which consumption, imports, and investment are lagged functions of income. The first paper treats the issue of the dynamic stability of income in an open economy. If any parameter of the model changes, will income converge to a new equilibrium, given that the current account is unconstrained? If stable, what will the new equilibrium for the two countries, and the world, look like? [ABSTRACT FROM AUTHOR]

The neoclassicals viewed short-term capital movements as a phenomenon that resulted from central bank policy and performed the role of financing imbalances. The anti-neoclassicals either denied that this was the way the world functioned or, more often, argued that it ought not to work that way. Hawtrey challenged the neoclassical concept of short-term capital movements as playing a benevolent role: adjusting and financing imbalances. Hayek argued that short-term financial capital movements should not be thought of or treated differently from any other kind of trade in assets (including goods), and should not be deliberately elicited by central bank policy (see Chapter 7). The late classicals used long-term capital movements as a starting point for analyzing the classical adjustment mechanism. That is, capital flows constituted the disturbance they chose in exploring empirically (“inductively”) the process of adjustment; short-term capital movements were often, in their work, important components of the adjustment, substituting for gold movements, and offering temporary financing. The group of writers I am discussing now fixed their attention on capital movements, primarily short-term capital movements, with the aim of sorting out when they were endogenous and when exogenous, when financing, when destabilizing. They emphasized monetary and money market phenomena, and the possibly stabilizing or destabilizing effects of these, through internal, domestic monetary repercussions. I am thinking here of people such as Bloomfield (1950), Kindleberger (1937), Nurkse (1944). Predating most of these is the Italian, Marco Fanno (1935 and 1939). [ABSTRACT FROM AUTHOR]

What became known as the keynesian theory of international payments was not, to my knowledge, ever spelled out by Keynes. The marginal propensity to import, and then the multiplier, began to appear in the late 1930s and early 1940s, associated with the names of Harrod (1933), Machlup (1939, 1943), Metzler (1942a, 1942b), Neisser and Modigliani (1953), Paish (1936), and others. A detailed account of these is presented in Chapters 14 and 15 on “the keynesians.” The full-blown integration of keynesian macroeconomic theory with endogenous capital mobility, monetary changes, and some notion of balance of payments equilibrium (even of a short- or medium-run nature) did not appear until the 1950s, with Meade, Mundell, Fleming, and, with great qualification, Metzler, whom I discuss in Chapter 16. Keynes himself, after the Treatise and the Macmillan Committee testimony, which were roughly coeval, wrote nothing of importance on international economics except for the proposals and correspondence regarding the postwar monetary plans. These, however, constitute a major body of work expressing his views on the international monetary system and the problems he thought were likely to arise in the postwar period. While they are less formally expressed, more diffuse, and more “politically” oriented than the earlier writings I have discussed, they do reveal an analytical stance which is highly recognizable and worth exploring. In the letters and drafts (and redrafts) of plans for the postwar monetary system (Keynes 1940–4 [1980]) several themes are prevalent throughout. [ABSTRACT FROM AUTHOR]

The actual liquidation of the remnants of empire will mark the end of an era. It should improve the chances for a more stable and peaceful world. In recent decades various books and numerous articles have examined the political evolution of Britain's colony of Hong Kong, as it moved closer towards reintegration with China in 1997. Several revived themes of the ‘last colony’ and the end of empire. H. A. Turner, in The Last Colony: But Whose?, whilst recognising that a number of British colonies remained, stressed that ‘Hong Kong is by far the most lustrous jewel of the once-Imperial Crown's otherwise residual adornments, and one whose economic light bid fair to outshine its nominal possessor's.’ Beyond Hong Kong, other enduring colonies were regarded as of no political or economic significance, distant and quaint relics of Britain's imperial past. Except when a crisis propelled them to the front page of daily newspapers, as happened when Argentina attacked the Falkland Islands in 1982, they were simply ignored. Whilst the actual political status of ‘colonies’ is subject to dispute, there remain a substantial number of distinct territories – not least Macao, just west of Hong Kong – that are far from being independent, sovereign states. Though the changing status of Hong Kong has intermittently focused attention on surviving outposts of the British empire, other developed nations – the United States, France, Denmark, the Netherlands, Portugal, Spain, Australia and New Zealand – also have distant territories that remain, in some way, politically dependent on the metropolitan power. [ABSTRACT FROM AUTHOR]