Page 100 - Global Political Economy_Understanding The International Economic Order

INT ERNAT IONAL POLIT ICAL E CONOM Y
Content
The content of an international regime—the precise rules and deci-
sion-making techniques embodied in a particular regime—is deter-
mined by technological, economic, and political factors. An interna-
tional regime could not function well if its rules were counter to
scientific and technological considerations. Regimes governing inter-
national economic affairs must be based on sound economic princi-
ples and must be able to solve complex economic matters. The post-
war international monetary regime based on fixed exchange rates, for
example, had to solve such difficult technical problems as provision
of international liquidity and creation of an adjustment mechanism
for nations with balance of payments problems.
Economists, however, seldom agree on such complex issues; there
are, for example, several competing theories on the determination of
exchange rates. It is important to realize that the specific means cho-
sen to solve a given economic problem may have significant conse-
quences for individual states and/or may impinge on their national
autonomy. In the early postwar monetary system, the central role of
the U.S. dollar as a reserve and transaction currency greatly facilitated
financing of American foreign policy. Thus, while the content of an
international regime must be grounded on sound technical and eco-
nomic considerations, it is important to recognize that regimes do
produce political effects.
A number of regime theorists have a tendency to think of regimes
as benign. Regime theory has emphasized the efficiency and efficacy
of international cooperation and problem-solving and that regimes
are instituted to achieve interstate cooperation and information shar-
ing, to reduce transaction costs, and to solve common problems.
While these goals do exist, it is also true, as some scholars of institu-
tions point out, that institutions—and regimes—do create or preserve
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inequalities; regimes can also have a redistributive function. History
is replete with such examples as the carving-up of Africa at the Con-
gress of Berlin (1878)and the post–World War I mandate system.
The purpose, content, and actual consequences of every international
regime must be closely examined; there should be no assumption that
regimes are ipso facto of equal or mutual benefit to every participant.

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In his analysis of institutions and, by implication, regimes, Schotter, in his book
The Economic Theory of Institutions, identifies four types of problems whose solutions
lead to the creation of institutions: coordination problems, prisoner’s dilemma–type
games, cooperative-type games, and, most important for my present purpose, problems
of inequality preservation.
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