International economic disintegration

299 Pages·1978·15.388 MB·English

by  Röpke, Wilhelm

INTERNATIONAL ECONOMIC
DISINTEGRATION

INTERNATIONAL ECONOMIC
DISINTEGRATION
BY
WILHELM ROPKE, Ph.D.
PROFESSOR OF ECONOMICS AT THE GRADUATE
INSTITUTE OF INTERNATIONAL STUDIES, GENEVA
Author of " Crises and Cycles," " German Commercial Policy," &c.
WITH AN APPENDIX
BY
ALEXANDER RUSTOW, Ph.D.
PROFESSOR AT THE UNIVERSITY OF ISTANBUL
LONDON EDINBURGH GLASGOW
WILLIAM HODGE AND COMPANY, LIMITED
1942
TO
EVA ROPKE
MY COURAGEOUS COMPANION THROUGH
TURBULENT YEARS
MADE AND PRINTED IN GREAT BRITAIN
BY
WILLIAM HODGE AND COMPANY, LIMITED
LONDON EDINBURGH GLASGOW
The paper and binding of tins book conform to the authori ed economy standard
PREFACE
THE idea of the present investigation originated in a conference of
economists, organized by the Rockefeller Foundation and held at
Annecy in July, 1936, for the purpose of discussing the most urgent
topics and the different possibilities of organized research in the field
of social science. At this conference there was general agreement
that, in view of the great structural changes taking place in the
economic system to-day, there should be organized an investigation
into " post-war agrarian and industrial protectionism." After I
had been charged, at the beginning of 1937, with the further
development of this project under the auspices of the Graduate
Institute of International Studies at Geneva, it was more speci-
fically defined as "an international investigation . . . into the
causes and reciprocal effects of industrial protectionism in the
agrarian states and of agrarian protectionism in the industrial
states, which has been characteristic of post-war commercial policy
everywhere and particularly in Europe." " This policy, restric-
tive of international trade, has been both the expression and the
condition of the most significant structural changes within the
nations," the statement went on. " It is because the nations, for
various reasons, some economic, some political, some psychological,
have wished to become more independent of each other, that they
have resorted to new forms and to a larger measure of protectionism.
And this, in turn, has obliged their former suppliers to retaliate."
The first step to be taken evidently was to prepare a preliminary
outline of the different questions and sub-questions connected with
the solution of the problem and to array them systematically. This
outline—which I presented in March, 1937—was a comprehensive
inventory of the relevant questions without any indication of the
relative weight of their importance, and a first demarcation of the
scientific territory which was to be occupied and cultivated later
in the course of the inquiry. An indication of the philosophy
underlying this outline of the problem was given some months later
in my paper on " International Economics in a Changing World "
(The World Crisis, ed. by the Graduate Institute of International
Studies, London, 1938, pp. 275-292) and worked out more fully in
my other paper on the " Decisive Problems of the Disintegration
of World Economy " (Swedish, in " Ekonomisk Tidskrift,"
January,- 1939).
PREFACE
In accordance with the nature of this preliminary outline, it
was to be left to the later development of the research work to
regroup the different questions whilst the choice of the most
important problems was to be made as the progressive execution of
the programme demanded. After a preliminary examination of all
the relevant factors, the next task was to find out Avhat were really
strategic problems which dominated the whole situation, to discover
the knots where a number of causal threads met together, and thus
to condense the investigation, which at first sight seemed to be
discouragingly broad, into a limited number of parts forming a
logically coherent whole. It was obvious, however, that this was a
task which could only be performed during the course of the investi-
gation, since it was a very important part of this investigation itself.
Only a continuous and patient study of the field of the investigation
could reveal the points on which everything else hinged, and any
objection to such a procedure would betray a misunderstanding of
that line of reasoning which was finally considered to be the most
fruitful. The real work had to be done by taking up now this, now
that causal thread, by connecting them and by experimenting with
solutions in order to see the true structure of the whole problem.
The first results of such a work are presented in this book.
To discover the strategic problems is an essential part of the
investigation itself since not only do these first reveal themselves in
the course of the actual study, but also the accomplishment of this
task is one of the main and most important results to be expected
from such an investigation. The phenomenon of the disintegration
of world economy presents itself as such an overwhelming and
bewildering mass of factors that any order brought into it would
mean an enormous progress over the present state of thought on the
subject, the most conspicuous feature of which is the general sense
of bewilderment and lack of real orientation. Not knowing, how-
ever, how to disentangle the causal threads in this phenomenon and
how to comprehend it in causal terms is generally only the first step
to accepting it as the result of historical " fate/' which simply
happens for unfathomable reasons and in face of which man feels
completely helpless. Lack of mental order and comprehension breeds
pessimism and resignation and thus becomes an important causal
factor in the further drift of international disintegration. A
successful reduction of this host of factors to a limited number of
strategic problems is, therefore, the first requisite of constructive
action.
From the beginning I was convinced that in order to carry out
vi
PREFACE
this ambitious and highly complex research programme, it was
necessary to avoid working with a co-operative research organization
before the foundations had been thought out thoroughly. Other-
wise, it would be difficult to prevent such an investigation from
becoming an amorphous collection of studies lacking coherence and
directive ideas. It would not be indiscreet to suggest that in recent
years not a few research programmes seem to have suffered in this
respect.
Following this procedure I worked out, with a minimum of
assistance, the present study which—under the title of " Interim
Report on International Economic Disintegration "—was sent to a
number of experts in the summer of 1939. These experts were
invited to a small conference which was to have been held in Geneva
at the beginning of September when the report was to have been
critically examined and the further research procedure discussed.
Although the outbreak of war frustrated all these plans, it was sug-
gested that at least my report should be published in a definite form
after the necessary alterations and additions had been made, and a
number of suggestions and critical views collected. In presenting
now this final result I want to express rny sincerest thanks to all
those who helped me with this task. While my heaviest debt of
gratitude lies with the Rockefeller Foundation and with the
directors of the Graduate Institute of International Studies, Pro-
fessors Paul Mantoux, and William E. Rappard, I want to state
how much I owe especially to the very helpful suggestions and
criticisms made by Professor Howard S. Ellis (University of
California), Professor Allan G. B. Fisher (The Royal Institute of
International Affaires), and Professor Alexander Rustow
(University of Istanbul). The latter kindly contributed a special
memorandum attached to this volume. For the agricultural part I
enjoyed the help of Dr. Count Finckenstein, for the industrial
chapter that of Dr. E. Peltzer. The graphs have been made by Dr.
A. Kozlik (Ohio State College).
The purpose of this book is to make a new and more promising
approach to the diagnostics of that long-run crisis in international
economic relations which is one of the most striking symptoms of
the general economic, social, and political crisis of occidental
society. I believe that the urgent necessity of such an approach
has been enhanced rather than diminished by the outbreak of the
war. However, I would betray my own philosophy if I regarded
this book as anything more than a mere beginning, an invitation to
constructive criticism, and a way of opening or furthering a dis-
vii
PREFACE
cussion for which the world seems to be ripe. In submitting this
book to criticism, I am not afraid to expose myself as one w<ho
believes not only in the scientific legitimacy but even in the utmost
scientific necessity of employing a measure of judgments, which is
ultimately based on a definite conception of what is wrong with
the world, and of what should be done in order to put it right again.
Those who are shocked by such an attitude may be reassured that
I gave more thought to this methodological problem than I am
able to explain on this occasion.1
It is hoped that anybody knowing the difficulties of publishing
a book under the present circumstances—especially if the author
and the publisher are separated by the main theatre of war—will
readily excuse both the delay in publication and the fact that when
the book finally comes out it will no longer be in accord in every
respect with the actual situation, in spite of the many efforts to
keep it up to date while the printing was being done. Therefore, an
appeal is being made to the chivalrous sentiments of the critics who
will easily console themselves with the many other aspects of the
book calling for criticism.
WILHELM ROPKE.
GRADUATE INSTITUTE OF
INTERNATIONAL STUDIES
(GENEVA), 1942.
1 Cf. my paper " A Value Judgment on Value Judgments " in which I am
explaining my attitude in this very important methodological question. It will
probably be published in the " American Economic Review."
PUBLISHERS' NOTE
Owing to the difficulty of communicating with Professor Ropke
during the preparation of this work, He is not to be considered respon-
sible for every word of the text. The same applies to the Appendix
contributed by Professor Hiistow.
vin
CONTENTS
PAGE
INTRODUCTION - - - - - - - - -- 1
PART I
THE MEANING OF INTERNATIONAL ECONOMIC DISINTEGRATION
CHAPTER I
Historical Orientation _ _ _ . _ - _- 11
CHAPTER II
The Quantitative Aspect of International Economic Disintegration 23
CHAPTER III
The Qualitative Aspect of International Economic Disintegration
(Functional Disturbance) - - - - - -- 30
(a) General Appraisal - - - - - - -- 30
(b) The Break in the Intercommunicating Character of World
Economy (Bilateralism and Formation of Economic
Blocs) - - - - - - - -- 34
(c) The Erratic Character of World Trade 45
(d) The Break in the International Monetary and Financial
System - - - - - - - -- 52
(e) The Increased International Immobility (Nationalization)
of Production Factors - - - - -- 52
(f) The Influence of the New Character of Protectionism - 56
CHAPTER IV
Conclusions - - - - - - - -- 61
PART II
ECONOMIC AND SOCIO-POLITICAL INTEGRATION AND DISINTEGRATION
(The Extra-Economic Framework of World Economy)
CHAPTER V
The Importance of the Extra-Economic Framework for the working
of the Economic Process - - - - - -- 67
CHAPTER VI
Economic and Socio-Political Integration and Disintegration in
the International Field - - - - - -- 72
b ix