Page 208 - Global Political Economy_Understanding The International Economic Order

SYS TEMS O F POLI TICAL ECONO MY
developments in Western Europe have facilitated adoption of the
principle of mutual recognition as an expeditious means to promote
the economic unification of the Continent.
Needless to say, the conditions that exist in Western Europe do not
exist anywhere else in the world. Within the North American Free
Trade Agreement area, although the United States and Canada are
very close in almost every aspect of national life, there is an enormous
gap between these countries and Mexico in many respects; the princi-
ple of mutual recognition is hardly applicable to NAFTA or to rela-
tions between North and South America. The economic, cultural, and
political diversity in the Asia/Pacific area is even more striking. The
principle of mutual recognition cannot serve as a means toward the
economic and political integration of that region and certainly cannot
provide the basis for a resolution of differences between the West and
these rising economic powers. At the heart of the problems is the fact
that economic and political affairs are intimately joined to one an-
other. It is therefore difficult to isolate the economy from the polity
so that the former may function according to the principles of neo-
classical economics. Moreover, if one incorporates religion as a vitally
important element in many of these states, as it is in the Middle East,
application of the principle of mutual recognition as a solution to the
problem of national differences becomes totally out of the question.

Conclusion
In the early years following the end of the Cold War, there was a
prevalent belief that the clash between capitalism and communism
would be replaced by a clash between rival forms of capitalism. This
belief, at least thus far, has been proved wrong. Yet it is obvious that
increasing interdependence of national economies has made legal,
policy, and structural differences among national societies both more
important and frequently also a source of tension and occasional po-
litical conflict. Differing national systems of political economy consti-
tute a serious obstacle to the movement toward an even more open
multilateral global economy. Differences in such matters as competi-
tion policy, business practices, and corporate structures have become
major concerns of international trade and other negotiations.

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