Page 189 - Global Political Economy_Understanding The International Economic Order

CHA PTER S EVEN
rest of the world, Americans proclaimed, should adopt their model
of deregulation, open markets, and minimal government intervention
in the economy.
The claim that one economy is superior to others is difficult to
assess. Nations differ greatly in their standards of judgment. Should
one apply such criteria as the rate of economic growth, the extent of
economic equality and social well-being, or perhaps what some have
called a “misery index”? National values obviously differ on these
matters. The French, for example, reject what they consider to be the
ruthlessness of America’s emphasis on the market and its insufficient
attention to the problems of income inequality and economic insecu-
rity. Many American observers, on the other hand, believe that the
overly protective nature of the French state is largely responsible for
France’s economic troubles, especially its very high rate of unemploy-
ment. In short, an economic system strongly reflects the values of the
society in which it is embedded and must be judged, at least to some
extent, in terms of those values. The Japanese keiretsu, for example,
would certainly be incompatible with American opposition to concen-
trations of economic power.
The most objective measures of national economic performance are
an economy’s rates of economic and productivity growth. However,
even these measures have limitations. Productivity, particularly in
those service industries that increasingly characterize the American
and Western European economies, is difficult to measure. Another
difficulty is that when an economy is beyond a certain level of eco-
nomic development, its performance at any particular moment is
more a function of the phase of the business cycle than of the econo-
my’s inherent features. Although economists and governments do not
yet know how to manage an economy to avoid the business cycle,
a government’s use of macroeconomic policy obviously significantly
influences national economic performance.
Despite the difficulties of the endeavor, the effort to determine
whether particular economic arrangements are superior to others has
engaged many scholars. Karl Marx, Joseph Schumpeter, and Alexan-
der Gerschenkron have been among these scholars. One theme of
these early writers as well as more recent commentators is that the
stage or timing of economic development determines the nature and
appropriateness of an economic system. Each stage in the evolution
of technology and other aspects of capital accumulation is said to
require a different form of economic and sociotechnological organiza-
tion. Gerschenkron, for example, argued that the method of capital
accumulation (by business enterprise, banking system, or state) was
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