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International Economic Disintegration PDF

299 Pages·2007·15.35 MB·English
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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

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