Page 188 - Global Political Economy_Understanding The International Economic Order

SYS TEMS O F POLI TICAL ECONO MY
different from one another, and their fundamental differences are sig-
nificant for the nature and dynamics of the world economy.
The significance of the differences among national economies be-
came more and more apparent in the late 1960s and 1970s as a con-
sequence of the increasing interdependence of national economies. As
economies became more integrated with one another, the domestic
and international spheres became more closely linked to one another,
and national policy makers became more and more concerned about
the domestic economic structures and private economic practices of
other societies that might affect the welfare of their own citizens and
nations. As these national differences have become more significant,
several questions have arisen: (1) Is one national system superior to
the others, and should it therefore be the model for other economies?
(2) Do national systems of political economy compete with one an-
other in a “Darwinian struggle” for survival and dominance? and (3)
Are systems of political economy converging?

Is One System Superior to the Others?
At one time or another during the postwar era, one or another na-
tional economy has been declared superior. In the 1970s, the German
system of the Social Market was assigned credit for the postwar Ger-
man “economic miracle”; as one enthusiastic writer stated, West Ger-
many had become a juggernaut and a challenge to all other econo-
mies. In the 1980s, attention shifted to Japan, which was then
enjoying a huge trade surplus and a rapid rate of economic growth;
at that time, the Japanese system of state-led capitalism or develop-
mental state capitalism became the envy of the rest of the world and
the model to be emulated. Both Germany’s and Japan’s stakeholder
capitalist systems were judged superior to America’s shareholder
(stockholder) capitalism, in part because the former were believed to
free corporate leaders from short-term shareholder demands for
higher dividends and thus to enable them to take a long-term view in
their investment and other decisions. When Japan plunged into a seri-
ous financial crisis and recession in the 1990s, the prize for best per-
formance went to the United States, whose economy was booming
throughout much of the decade; American public officials, econo-
mists, and commentators announced that America’s shareholder and
free-market capitalism had proved superior to all others. The out-
standing success of the American economy, many argued, was due to
the fact that in the 1980s and 1990s the United States had created a
novel type of economy based on a “New Economic Paradigm.” The
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