Page 206 - Global Political Economy_Understanding The International Economic Order

SYS TEMS O F POLI TICAL ECONO MY
for Japanese access to the American market. Needless to say, Japan
and other countries that have been the object of such treatment have
deeply resented it and regard specific reciprocity as an unwarranted
interference in their domestic affairs. Whatever the merits of specific
reciprocity, it is one tool for dealing with the increasingly important
clash between national systems of political economy and the threat
that these national differences pose to maintenance of an open world
economy.
The most contentious issues lie outside the jurisdiction of interna-
tional organizations, and governments everywhere prefer that no in-
ternational organization should have the authority to enact, enforce,
or prescribe universal rules or regulations for conducting business.
Every government prefers to leave such matters in its own hands. At
the same time, however, every government (and certainly every busi-
ness firm) would like those government regulations, economic struc-
tures, and private business practices that constrain the activities of
its own firms in foreign markets to be eliminated. This objective of
transforming the regulations and business practices of foreign govern-
ments has been aggressively pursued by the United States and, to a
lesser extent, by Western Europe.
Competition policy is one critically important policy area that lies
outside the jurisdiction of existing international institutions and that
has become a source of increasing friction. Economists concerned
with competition policy refer to restrictive business practices that
pose an obstacle to economic growth, trade expansion, and other eco-
nomic goals. Competition policy applies to those domestic economic
policies and regulations that determine legal or legitimate forms of
business behavior and practices; such policies have become significant
points of contention between the United States and the developmental
states of East Asia. The antitrust tradition that attempts to prevent
collusive business practices and concentration of corporate power is
the essence of competition policy in the United States, and it facili-
tates entry into the American economy by foreign firms. Japanese and
South Korean competition policies, on the other hand, not only toler-
ate but actually encourage concentration of corporate power in the
form of the keiretsu and the chaebol. Although both these institutions
are troubled at the opening of the twenty-first century, it is unlikely
that they will be dismantled in the name of increased openness and
competition.
Can harmonization and the policy of specific reciprocity work rap-
idly and effectively enough to overcome the political problems raised
by national differences? Successive American Administrations have
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