The Fragmented World: Competing Perspectives on Trade, Money and Crisis

367 Pages·2015·6.76 MB·English

by  Chris Edwards

R O U T L E D G E R E V I V A L S R O U T L E D G E R E V I V A L S
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The Fragmented
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RoutledgeRevivals isan initiativeaimingtore-issueawealthofacademic d
workswhichhavelongbeenunavailable.Encompassingavastrangefrom World
acrosstheHumanitiesandSocialSciences, RoutledgeRevivalsdrawsupon
adistinguishedcatalogueofimprintsandauthorsassociatedwith
Routledge,restoringtoprintbooksbysomeofthemostinfluential
Competing Perspectives on
academicscholarsofthelast120years.
Trade, Money and Crisis
Fordetailsofnewandforthcomingtitlesinthe RoutledgeRevivals
programmepleasevisit:
http://www.routledge.com/books/series/Routledge_Revivals
Chris Edwards
ISBN 978-1-138-92626-4
,!7IB1D8-jcgcge!
www.routledge.com(cid:15)aninformabusiness
Routledge Revivals
The Fragmented World
This comprehensive textbook, first published in 1985, on the world
economy, written specifically for non-specialists, compares neo-classical,
neo-Ricardian and Marxist theories and policies in international eco-
nomics.
Theories of trade and money, and issues such as international debt
crisis, the rise of the newly industrializing countries and the demands
for a New International Economic Order, are explained clearly and
concisely. A wide range of economics across the political spectrum are
discussed. This accessible book will be of interest to anyone who wants
to make sense of the complexities of international economy and the
competing theories on trade, money and crisis.
Note from the Author:
30 years later….
I finished writing this book when I was 45 years old. That was in
1985. Now, three decades later, I have aged considerably, but I don’t
think the book has. I am still pleased with it and hope you are too.
The book presents theories of international trade and finance in a
Fragmented World through a comparative approach. This approach
followed the pattern set out in Why Economists Disagree, a book
which I wrote with John Cameron and Ken Cole in 1983.
At that time, the three of us were unhappy at the way in which eco-
nomics was being taught as a unified science with one set of funda-
mental principles. Now, thirty years later and following the financial
meltdown in 2008, there is an even more general dissatisfaction with
the way in which economics is presented. Protests from students about
the way in which economics is taught have ranged from Harvard in the
USA to Manchester in the UK.
John Cameron, Ken Cole and myself viewed (and still view) the
development of economics as the outcome of battles between compet-
ing schools of thought in attempts to explain ‘economic events’. Such
battles, we argued, are closely related to conflicts in the sphere of pol-
itics. This is the view in this book reproduced exactly as it was in
1985.
Chris Edwards, Norwich, February 2015
The Fragmented World
Competing Perspectives on Trade,
Money and Crisis
Chris Edwards
Firstpublishedin1985
byMethuen
Thiseditionfirstpublishedin2015byRoutledge
2ParkSquare,MiltonPark,Abingdon,Oxon,OX144RN
andbyRoutledge
711ThirdAvenue,NewYork,NY10017
RoutledgeisanimprintoftheTaylor&FrancisGroup,aninformabusiness
©1985ChrisEdwards
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
knownor hereafterinvented,includingphotocopyingandrecording,orin any
informationstorageorretrievalsystem,withoutpermissioninwritingfromthe
publishers.
Publisher’sNote
Thepublisherhasgonetogreatlengthstoensurethequalityofthisreprintbut
pointsoutthatsomeimperfectionsintheoriginalcopiesmaybeapparent.
Author’sNote
Pleasenotethefollowingerrorsfortheoriginal1985edition:
Page40;thequotefromMargaretThatchershouldread“unequal”not“equal”
Page135;thequotefromMarxshouldread“Ifgoldisexported,then,according
tothisCurrencyTheory,commoditypricesmustriseinthecountryimporting
thisgold……But,infact…anincreaseinthequantityofgoldlowerstheinterest
rate; and if not for the fact that fluctuations in the interest rate enter into the
determination of cost-prices, or in the determination of demand and supply,
commodity prices would be wholly unaffected by them” (Marx, 1972, 551;
emphasisadded).
Table 7.3 on page 175; delete “western” from “…the five western permanent
….”
Page 192, line 31; “….the overwhelming rate of exogenous” should read “the
overwhelmingroleofexogenous….”
Page197,line16;“…..product)ormorethan….”shouldread“…product)of
morethan…”
Page304,line24;“…sellingthepatientmedicine…”shouldread“….selling
thepatentmedicine…”
Disclaimer
The publisher has made every effort to trace copyright holders and welcomes
correspondencefromthosetheyhavebeenunabletocontact.
ALibraryofCongressrecordexistsunderLCcontrolnumber:84020782
ISBN13:978-1-138-92626-4(hbk)
ISBN13:978-1-315-68337-9(ebk)
The Fragmented World
COMPETING PERSPECTIVES ON TRADE,
MONEY AND CRISIS
Chris Edwards
Methuen
London and new york
First published in 1985 by
Methuen & Co. Ltd
11 New Fetter Lane, London EC4P 4EE
Published in the USA by
Methuen & Co.
in association with Methuen, Inc.
733 Third Avenue, New York, NY 10017
© 1985 Chris Edwards
Typeset by Scarborough Typesetting Services
and printed in Great Britain by
Richard Clay (The Chaucer Press) Ltd
Bungay, Suffolk
All rights reserved No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic, mechanical
or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
British Library Cataloguing in Publication Data
Edwards, Chris, 1939-
The fragmented world: competing perspectives
on trade, money and crisis. -
(Development and underdevelopment)
1. Economics
I. Title. II. Series
330.1 HB171
ISBN 0-416-73390-5
ISBN 0-416-73400-6 (pbk.)
Library of Congress Cataloging in Publication Data
Edwards, Chris.
The fragmented world.
(Development and underdevelopment)
Bibliography: p.
Includes index.
1. International economic relations.
2. Economic development.
I. Title. II. Series.
HF1411.E3 1985 337 84-20782
ISBN 0-416-73390-5
ISBN 0-416-73400-6 (pbk.)
Contents
LIST OF TABLES ix
LIST OF FIGURES xi
SERIES EDITORS’ PREFACE xiii
PREFACE AND ACKNOWLEDGEMENTS XV
1 The world division of labour and economic theories 1
1.1 The world division of labour - what do we have to
explain? 1
1.2 Economic theories - the competing explanations
and their sources 6
Notes on further reading 15
Summary 16
2 The free-marketeers and the rise and fall of the
Heckscher-Ohlin theory 17
2.1 ‘Free to choose’ - the essence of subjective theory 17
2.2 The rise of the Heckscher-Ohlin theory 21
2.3 The fall of the Heckscher-Ohlin theory 29
Notes on further reading 40
Summary 42
3 The rise of cost-of-production theory 44
3.1 Pluralism and distribution 44
3.2 The ‘Sraffian’ approach to trade theory 48
Notes on further reading 53
Summary 54
4 Neo-Ricardianism and unequal exchange 55
4.1 From Prebisch to Emmanuel - the foundations of
unequal exchange 55
4.2 Emmanuel’s unequal exchange 62
4.3 Neo-Ricardian policies on distribution and
development - an overview 74
vi THE FRAGMENTED WORLD
Notes on further reading 82
Summary 84
5 Marxist theories - underdevelopment or uneven
development? 88
5.1 Marx’s method and the critique of capitalism 88
5.2 Neo-Marxist theories of underdevelopment -
origins and analysis 101
5.3 Theories of underdevelopment - the criticisms 109
Notes on further reading 116
Summary 119
6 Trade, money and crisis 123
6.1 Trade, money and balance-of-payments adjustments 123
6.2 World crisis - excess money supply, distributional
conflict, or capitalist contradiction? 137
Notes on further reading 161
Summary 164
7 Capitalism, international money and transnational
corporations 166
7.1 The expansion of capitalism 166
7.2 The international monetary system 167
7.3 Transnational corporations 194
Notes on further reading 203
Summary 206
8 The Third World, nationalism and a NIEO 208
8.1 The growth of the Third World and import
substitution 208
8.2 The new industrial countries - a new international
division of labour? 218
8.3 South-south co-operation - and regional integration 224
8.4 South-south co-operation - the new international
economic order (nieo) and commodity cartels 231
Notes on further reading 254
Summary 257
9 The state, imperialism and socialism 260
9.1 The capitalist state 260
9.2 Imperialism 268
9.3 Socialism and the Soviet state 274
Notes on further reading 282
Summary 286
CONTENTS vii
10 Summary and conclusions 288
10.1 Free trade is fair trade 289
10.2 Unfair trade and unequal exchange - the case for
institutional intervention 293
10.3 Capitalism and uneven development - the case for
socialism 300
Notes on further reading 309
REFERENCES 310
INDEX 334