Com Pol. Eco

Review: International Economy and State Strategies: Recent Work in Comparative Political
Economy
Reviewed Work(s): Politics in Hard Times: Comparative Responses to International
Economic Crises by Peter Gourevitch; Pathways from the Periphery: The Politics of
Growth in the Newly Industrializing Countries by Stephan Haggard; Reasons of State: Oil
Politics and the Capacities of American Government by G. John Ikenberry; France after
Hegemony: International Change and Domestic Reform by Michael Loriaux; Resisting
Protectionism: Global Industries and the Politics of International Trade by Helen V. Milner
Review by: W. Rand Smith
Source: Comparative Politics, Vol. 25, No. 3 (Apr., 1993), pp. 351-372
Published by: Comparative Politics, Ph.D. Programs in Political Science, City University of
New York
Stable URL: http://www.jstor.org/stable/422250
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Review Article
International Economy and

State Strategies
Recent Work in
Comparative Political Economy
W. Rand Smith
Peter Gourevitch, Politics in Hard Times: Comparative Responses to International

Economic Crises, Ithaca, Cornell University Press, 1986.
Stephan Haggard, Pathways from the Periphery: The Politics of Growth in the Newly
Industrializing Countries, Ithaca, Cornell University Press, 1990.
G. John Ikenberry, Reasons of State: Oil Politics and the Capacities of American
Government, Ithaca, Cornell University Press, 1988.
Michael Loriaux, France after Hegemony: International Change and Domestic Reform,
Ithaca, Cornell University Press, 1988.
Helen V. Milner, Resisting Protectionism: Global Industries and the Politics of

International Trade, Princeton, Princeton University Press, 1988.
Arguably, comparative political economy has been the most rapidly developing approach
within comparative politics during the past decade. Working at the intersection of politics,
economics, and history, numerous scholars have sought to link empirical research with
systematic theory. While these efforts have yet to yield a coherent body of theory, they
are increasingly producing a shared set of questions and answers. In the broadest terms,
comparative political economy seeks to account for variations in national developmental
paths by focusing on the interplay of three phenomena: classes, states, and the global
political economy.1 The range of such studies is vast, spanning historical epochs and
geographical boundaries and including such topics as class formation in nineteenth-century
Europe, authoritarian rule in the Third World, and the comparative analysis of
revolutions.
Given the profusion and diversity of research, it is opportune to take stock of the field's
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Comparative Politics April 1993
organization and direction, at least as practiced by political scientists. This article examines
one important focus of recent research, what Gabriel Almond has called the
"international-national connection," that is, the interaction of international and domestic
level variables, especially economic ones.2 The works under review explore this connection
from various perspectives. Despite their differences, they all seek to explain national-level
phenomena with reference to international as well as domestic variables. In so doing, these
works attempt to build explanatory frameworks that incorporate domestic and international
levels of analysis. To be sure, these emphases are not new; indeed, most work in
comparative political economy can be traced to such ancestors as Marx, Weber, Hintze,
Polanyi, and Gerschenkron, for whom the political was economic (and vice versa) and the
local and particular were components of a larger system. Still, these books, as well as the
larger research tradition they represent, diverge fundamentally from more recent approaches
that have dominated comparative politics.3
While their arguments can not be compressed into a single paragraph, these works do
share a general analytic framework. This framework holds that all nations must participate
and operate in an increasingly interdependent world economy that limits the range of
economic strategies any given nation may feasibly follow. As nations and firms become
progressively integrated into regional and global markets, governments everywhere must
take into account how their economic policies will affect their nations' and firms'
international position. The extent to which the international economy constrains the policy
choices of national political leaders is determined, in the first instance, by a nation's
"givens" such as size, geographic location, resource endowments, and economic structure.
Leaders also face domestic political constraints on their actions stemming from such
influences as the legacies of past policies, institutional forms and practices, interest group
mobilization, and prevalent collective beliefs and expectations regarding government
activity. Within this universe of economic and political limits, public officials still possess
maneuvering room, including both partial autonomy to determine economic strategies and
some capacity to execute them. The researcher's task is to identify, in specific
circumstances, the contours and boundaries of this autonomy and capacity.
Thus, a central focus of research is the economic strategies that national leaders adopt.
This research has emphasized three questions, which I will henceforth refer to as "what?,"
"why?," and "so what?". First, what economic strategies do states pursue? Facing a
common international environment, states adopt diverse economic strategies, ranging
between vigorous government intervention and a hands-off approach. A first task, then, is to
map the range of such strategies within and across nations within specific historical periods.
Second, why do states adopt these economic strategies? Once economic strategies have been
identified, analyzing their determinants becomes the next step. As indicated above, one
contentious issue is the relative importance of domestic versus international factors,
especially in explaining strategy change. Finally, what is the impact of state economic
strategies? Research has focused on effects at both the domestic level (on dimensions such as
national economic performance and collective welfare) and the international level (on
aspects such as the global trading system and the world monetary order).4
The works under review seek to trace and account for state economic strategies and thus
contribute to debate over the above questions. More generally, they also contribute to the
development of theoretical frameworks in comparative political economy. Our goal will be
352
W. Rand Smith
to see how these works accomplish (or fail to accomplish) these tasks. Before examining and
critiquing their arguments, however, we first need to account for the renewed interest in
comparative political economy in general and to identify its principal approaches.
Comparative Political Economy: Its Genesis and Contending Approaches
While scholarship in comparative political economy has its pantheon of intellectual ancestors,
the current interest reflects no mere hero worship. Rather, it stems from a reaction against two
dominant theoretical approaches of the 1960s and 1970s, political culture and dependency. This
reaction arose, in part, from important differences in theoretical and methodological assump-
tions; it also grew out of a recognition of fundamental changes in the global economy since the
1960s, which threw doubt on the suitability of these reigning approaches.
These two models suffered from several weaknesses, according to critics.5 The political
culture approach, by focusing on the values, ideology, and norms of mass publics and elites,
tended to confine politics to the attitudinal or psychological domain. This perspective held
that the key element in political processes was mass and elite "value orientations," not the
translation of these orientations and collective preferences into policies. This implied that
such phenomena as institutions, group organization, and even elite strategies for gaining and
consolidating public support were of secondary importance. Thus, critics charged, the
political culture approach provided at best a partial and misleading portrait of political life.6
Moreover, critics claimed, this approach, by embracing a more general developmental
perspective called "modernization" theory, contained a deterministic and ethnocentric bias.
That theory asserted that Third World development was in large part a process of replacing
"traditional" values (parochialism, fatalism, superstition) with "modem" ones (universal-
ism, instrumentalism, secularism). Since western societies were assumed by definition to be
modem, modernization was thus a process of following the West's footsteps. By positing
that political development in the Third World would duplicate the earlier experience of
advanced capitalist nations, modernization theorists argued that any departures from this
path were exceptions that should be corrected.7 Critics, including dependency theorists,
countered that, not only did such assumptions reflect westemers' arrogance, but developing
nations were unlikely to replicate the West's historical experience.
Finally, the political culture approach tended to separate political and economic
phenomena into discrete analytical categories. Once they were divorced, nations could be
studied as largely self-contained units with little or no reference to the international
economic environment, while within individual nations the "political" sphere could be
examined apart from economic factors.
By contrast, the dependency model, especially in its earlier versions as propounded by
such writers as Emmanuel, Amin, Frank, Rodney, dos Santos, and Baran, erred in the
opposite direction by largely reducing domestic politics to global economic relations,
specifically the exploitation of "peripheral" Third World nations by "core" western nations
and multinational firms.8 Whereas international economic constraints were absent from the
political culture perspective, these tended to be all-determining for some dependency
theorists. Indeed, critics claimed, for the latter the study of domestic politics and policy in
peripheral countries was virtually pointless (other than to catalogue the distorting effects of
353
dependency), since by definition dependency precluded autonomous state action.

Dependency theory, one critic charged, asserted "a tyranny of the whole over the parts,"
that is, the hegemony of the capitalist world-system over its constituent units, and thus
tended "to deprive local histories of their integrity and specificity, thereby making local
actors little more than pawns of outside forces."'
Fundamental shifts in the global economy during the past two decades prompted scholars
to reexamine both the political culture and dependency approaches. Two shifts were
especially important. Most notably, the slowdown in growth following the two oil shocks of
1973 and 1979 caused universal political distress. Politicians could no longer assume a
growing economic pie, as they could during the earlier postwar boom; now citizens
demanded that their leaders regenerate it. Any presumed separation between politics and
economics became both theoretically and practically untenable: international economic
pressures helped shape domestic policy options, while governments sought to influence
economic growth, inflation, and unemployment. It was obvious, contrary to the political
culture approach, that explanations of domestic politics had to encompass economic factors
and that comparative analysis had to accommodate the mutual interactions between the
global political economy and national politics.
A second economic change that stirred rethinking of dominant paradigms was the
experience of Third World countries. By the 1970s it was apparent that for most such
nations very little "modernization" was taking place, or was even likely to take place, in the
manner that political culture theorists had predicted. Their optimistic scenarios whereby
Third World countries would emulate the historical experiences of advanced capitalist
nations appeared increasingly unrealistic. Dependency theorists, of course, had long argued
this point, but their claims as well were undermined by events, specifically the emergence of
several "newly industrializing countries" (NICs). At the least, rapid growth in such
countries as the "four tigers" (Hong Kong, South Korea, Singapore, Taiwan), Mexico, and
Brazil threw doubt on the core-periphery dichotomy. (The dependency-influenced
world-systems approach pioneered by Immanuel Wallerstein recognized an intermediate
category, the "semi-periphery," that applied to such anomalies, but the distinctions among
categories became increasingly blurred.) The NICs' rise suggested that Third World
dependency was not a permanent condition and that governments' development policies
could alter a nation's position in the global economy.
In response, a younger generation of scholars, still working within a dependencia
framework yet stripping it of its determinist bias, began exploring Third World economic
strategies. Their studies indicate that Third World countries are far from powerless in
shaping the nature of their economic relations with foreign capital; rather, such relations are
highly contingent on governments' policy choices. Third World elites can decisively shape
alliance and coalition patterns among local classes, establish varying economic relationships
with foreign capital, determine state structures of greater or lesser permeability and
autonomy, and pursue distinct economic strategies. Third World nations might remain
dependent, but they can also develop.10
These and other changes in the international economy have stimulated a veritable torrent
of research on the relationship between politics and economics and between international
and national level phenomena. However, no general consensus has developed around a
single best approach. Thus, in order to situate the books under review within the broader
354
W. Rand Smith
field of comparative political economy, it is necessary to classify, however sketchily, the

main contending approaches.11
Generally, these approaches fall into two broad categories, which I will label
inductive-historical (I-H) and deductive-axiomatic (D-A). Although it is far from clear that
these two approaches are incompatible, they can be distinguished in at least three ways. The
first difference concerns the question of linkage among levels of analysis. The D-A
approach, commonly known as rational choice theory, claims that explanations of collective
outcomes such as revolutions, state making, and interest group activity should be linked to
"micro-foundations," or assumptions and theories about individuals' preferences and
behavior.'2 This approach thus proceeds from assumptions about individual-level
("micro-level") social preferences under specified conditions. Central to all such
assumptions is that individuals generally act out of a self-regarding ("rational") calculus of
utility maximization. For the I-H approach, on the other hand, the main unit of analysis is
usually at the collective, as opposed to the individual, level, for example, classes and class
coalitions, governments and their constituent parts, political parties and organized interests,
transnational capital, and the international system of nation-states. The goals, motivations,
and preferences of these units are not assumed a priori; rather, they are inferred, if at all,
from actual behavior--after the fact, as it were. Moreover, while there is usually an implicit
assumption that the individuals comprising these units are self-interested, "rational" actors,
there is no systematic attempt to explain the actions of collective units on the basis of a
generalized theory of individual behavior.
A second difference concerns the status of theory. As its name indicates, the D-A
approach favors logically deductive, general (that is, non-historically-specific) theories.
Building on assumptions about individuals, researchers deduce (predict) how aggregates of
individuals such as rulers, electoral coalitions, interest groups, and classes are likely to
behave. Such deductions tend to be expressed formally, often in axiomatic, algebraic, or
notational form, and are expected to "travel," that is, apply in all (or at least most) historical
situations that contain the specific conditions. The I-H approach, by contrast, takes a more
relaxed view toward formal theory building and prediction. Theorizing precedes data
collection, as in the D-A approach, but theory tends to be place- and time-specific.
Finally, these approaches differ over the use of empirical evidence. The D-A approach,
beginning with propositions about "how things should work" given certain assumptions,
employs data to test (verify, falsify, or modify) the initially postulated outcomes. Theory
remains center-stage, while data play a supporting role. In the I-H approach, on the other
hand, scholars tend to be more concerned with developing an interpretation of specific
historical phenomena. Data collection is, of course, informed by theory, but attention is paid
primarily to building explanations that illuminate the particular phenomena observed.
Research within each of these approaches may be further classified according to the
explanatory variables that receive pride of place. With regard to explanations of state
behavior and public policy generally and economic strategies specifically, we may identify
three general types: international-system, society-centered, and state-centered."3 It should be
noted that this classification is itself problematic, since scholars in this field tend to think in
synthetic, dialectical, and interdisciplinary terms and hence would reject being pigeon-holed
in this fashion. This classification does not mean to imply that a particular explanatory type
355
excludes or neglects the other types of variables. Rather, the issue concerns their relative
importance.
First, international-system explanations, which include the "new dependency" emphasis
discussed above, privilege the role of transnational actors such as multinational
corporations, multilateral agencies (IMF, World Bank), regional trading and/or financial
blocs, international trade regimes, global capital markets, and even the global economy as a
whole.14 Society-centered perspectives tend to view the state as an arena for interest group
and class-coalitional conflict. In this perspective state behavior and policy outcomes are
decisively shaped by the relative balance of power of various contending groups, in
particular organized labor, capital, and agriculture. This perspective is represented by both
classical pluralist and Marxist theories, the "power resources" approach, and much of the
literature on corporatism.15 Finally, state-centered theories stress the state's potential for
independent action even in the face of powerful social opposition or international
constraints. State-centrists include neo-Marxists who argue for the state's "relative
autonomy" from capital, as well as "institutionalists" who hold that state structures are a
key determinant of the state's ability to select and carry out autonomous policies.16
Even this cursory summary should indicate that the inductive-historical and deductive-
axiomatic approaches are perhaps not so much mutually exclusive as engaged in different
kinds of theorizing and research. One of the challenges confronting comparative political
economy is to engage in debate over the relative utility of the two approaches and to explore
bases for synthesis and integration.
The Arguments
Against this backdrop of contrasting approaches, the works under review fall clearly into the
inductive-historical camp, although they all build explanations that leave room for the
"micro-foundations" advocated by deductive-axiomatic theorists. In most cases, however,
these foundations remain undeveloped and largely implicit. Moreover, these books make, at
best, only cursory attempts at formal theorizing of the deductive-axiomatic type. On
balance, they are concerned with explaining specific national historical patterns rather than
developing deductive theories about nation-states in general.
With regard to the issue of state economic strategies, these works also share the basic
analytical framework outlined in the introduction, and they all address, partially or
completely, the "what," "why," and "so what" questions raised earlier. Gourevitch,
Ikenberry, and Loriaux examine how some advanced capitalist nations (including the U.S.
and several western European countries) have reacted to disruptions and crises in the global
economy, Haggard focuses on growth strategies of six NICs, while Milner seeks to explain
a sea-change in world trade, namely why protectionist pressures did not greatly rise along
with economic instability in the 1970s as they had done in a comparable period, the 1920s.
Gourevitch's Politics in Hard Times examines two core questions. How do states respond
to international economic crises, and what factors explain their responses? Thus, his interest
centers on the types and determinants of state strategies, rather than on their consequences.
To answer these questions, the author studies how five nations (U.S., Britain, France,
Germany, and Sweden) reacted during three crisis periods (1873-96, 1929-40, and
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W. Rand Smith
1971-present). He argues that, in adapting to crises, national leaders will adopt one or more
of the following "policy packages": neoclassical liberalism that allows market forces to
carry out necessary adjustments; socialization and planning; protectionism; demand stimulus
through deficit spending; and mercantilism, or state action to aid specific industries and
firms. All of these strategies have been followed at one time or another by one or more of
the five nations studied.
Why does a nation pursue a particular policy package? Recognizing that states' responses
to the same external shock may vary widely (witness, for example, Britain's preference for
liberalism and free trade versus Germany's protectionism in response to the 1873-96 crisis),
Gourevitch rejects any single-factor explanation, such as the nature of the international
economic system. While international pressures are important, a country's response also
hinges on domestic factors, among which Gourevitch identifies its production profile, or
"the preferences of societal actors [especially major sectors such as business, labor, and
agriculture] as shaped by their situation in the international economy and the domestic
economy" (p. 54), intermediate associations, that is, interest group organization and
mobilization as well as the policy networks that link organized interests with political parties
and governmental bodies, state structure, or the main decision-making institutions, and
economic ideology, or national traditions of economic analysis.
Gourevitch examines how these factors have combined in specific historical situations to
shape governments' policy responses. He warns, predictably, that no single multifactor
explanation will suffice, since the relative weight of the various factors shifts from case to
case and crisis to crisis. Instead, he offers an explanatory framework that can be applied to
specific cases. The most powerful causal chain runs from the international economy to its
impact on the main domestic economic interests; that is, of the five factors, the two most
important are the international system and the production profile. (Gourevitch's framework,
then, partakes of both international-system and society-centered approaches.) Stated
schematically, crises in the international economy differentially affect the interests and
resources of three key sectors of the domestic economy--business, labor, and
agriculture--thereby producing distinct winners and losers and creating new possibilities for
alliance or conflict among these sectors. The "winners" then press their policy preferences
upon government. While these preferences influence government choices, they do not
determine them completely. State structures, intermediate associations, and economic
ideology also help shape strategy, although their impact is usually less than that of dominant
economic interests.
Gourevitch employs this framework in examining all three crises. For example, in
analyzing the most recent crisis (1971-present), he notes a convergence in state strategies
favoring neoliberal measures such as privatization, deregulation, and tax and social spending
cuts. The main reason for this convergence, which contrasts with more diverse national
responses to earlier crises, lies in structural changes in the international economy, notably
stagnation combined with growing interdependence and trade competition. These changes
have undermined the early postwar "compromise" between business and labor that featured
high welfare spending, nearly full employment, and capitalist investment control. As a
result, labor has lost power at the expense of business interests, which have successfully
pressed governments to adopt austerity policies. The form that these policies take in a given
357
nation depends on the specific configuration of the three other factors-- intermediate
associations, state structures, and economic ideology.
Given this panoply of variables, the reader is tempted to conclude that Gourevitch's
explanation is decidedly "overdetermined": when in doubt, throw in another factor! Far
from it, the author replies; if anything, this explanatory structure is incomplete. "The
historical reality of each case is too open, too uncertain, too plastic to sustain the
reductionism involved in tracing outcomes back to one feature or even one combination of
features of the system" (p. 67). Ultimately, he claims, state economic strategies are not the
automatic result of the various vectors of "causal factors," but rather the product of
unpredictable, perhaps even unintentional or accidental, action by political leaders. "How
[the five explanatory factors] combine turns on what individuals in actual historical
situations are able to do with them" (p. 67).
Is anything missing in this picture? Given Gourevitch's insistence on the role of individual
leaders, it is surprising that he has little to say about them. After stressing their importance,
the author fails to provide any theoretical framework that would help us predict or explain
the motivations, preferences, and behavior of individual political leaders. Occasionally
Gourevitch refers to the importance of "leadership" and "entrepreneurship," but he presents
no theory about the presence or absence of these qualities. At one point he argues that
politicians' freedom "is circumscribed by their need to construct support coalitions" (p.
239), but this is asserted rather than incorporated into his explanatory structure. The factor
of "economic ideology" often functions as a surrogate for leaders' preferences, but the
distinction remains murky.
The lack of a "micro-level" theory of decision making is, as noted above, characteristic
of the inductive-historical approach. Do leaders act to maximize national power, domestic
growth, equality, tax revenues, electoral survival, or personal power? Under what conditions
do they pursue one or more of these goals? The inductive-historical approach typically is
used to identify all influences that weigh on political leaders as they formulate economic
strategy, assess what they do in the face of these influences, then draw conclusions about
their motivations and preferences. In contrast, the deductive-axiomatic approach begins with
a theory of leaders' (or other actors') preferences, followed by an assessment of how specific
social conditions--such as the international system, organized interests, and institutions--
constrain or facilitate pursuit of their preferences.
Is Gourevitch's theoretical framework compatible with this latter approach? Given the
author's theoretical ecumenism, his willingness to suspend disbelief in any given
explanation until the facts are in, it is to be regretted that he never addresses this question.
As it is, the book is a significant contribution to the growing literature on the mutual
influences of international and domestic factors in economic decision making. It may be
asking too much, given the author's already expansive ambitions, for one book to engage
with a decidedly different approach. But one needs to go beyond merely asserting, as
Gourevitch does, that "leaders matter." The next step is to confront the theoretical debate
with the rational choice perspective, an opportunity that this book misses.
Like Gourevitch, both Ikenberry and Loriaux examine how states respond to international
crises. Their ambitions, however, are less general and comparative, being focused on single
countries, the U.S. and France, respectively, during a single crisis, the current period of
slowed growth and economic restructuring that began in the early 1970s. These more limited
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W. Rand Smith
aims notwithstanding, both books employ explanatory frameworks that invite cross-national
comparisons.
Ikenberry's Reasons of State attempts to trace and explain one element of the U.S.'s
adjustment to international crisis: its energy policy following the 1973 oil shock. He asks
how U.S. officials reacted to this crisis, what explains their responses, and what
consequences their actions produced. Ikenberry thus addresses all three of the central
questions raised above. In characterizing the U.S. response, Ikenberry first constructs a
two-dimensional typology of possible adjustment strategies to international shocks. One
dimension concerns the locus of state strategy, that is, whether a state seeks adjustment in
the international as opposed to the domestic arena, while the second dimension refers to the
state's objective, namely, whether it aims to transform or preserve existing arrangements
(labeled "offensive" and "defensive" strategies, respectively). These two dimensions
combine to establish a fourfold typology of possible adjustment strategies: international-
offensive, international-defensive, domestic-offensive, domestic-defensive.
U.S. energy strategy, the author argues, was both sequential and overlapping. All of the
above strategies were employed at one time or another, and at any given moment at least two
were used simultaneously. Initially, U.S. officials attempted an international-offensive
strategy by seeking to form a bloc of oil-consuming countries to force OPEC to roll back its
price increases. When this effort failed because of internal differences within the bloc, the
U.S. shifted to an international-defensive strategy to stabilize prices at their higher level.
Along with these international strategies, the U.S. also employed both defensive and
offensive domestic strategies. The defensive-domestic strategy consisted of oil and gas price
controls, which began with Nixon's 1971 wage-price freeze and ended with Carter's phased
decontrol plan of April 1979. Carter's action marked a turn to an offensive-domestic strategy
that employed the market to force adjustment to higher energy prices.
How can these shifts be explained? Like Gourevitch, Ikenberry identifies a menu of
possible international ("systemic") and domestic ("societal") factors. Recognizing that
these various factors are not so much right or wrong as in need of integration, he advocates
an "institutional" approach in which
the task is to appreciate the interaction of [systemic and societal] variables and the manner in
which the organizational features of the state and the activities of executive officials and
politicians mediate larger societal and international forces. This approach is "institutional"
because it conceives of mediation and interaction as grounded in institutional relationships that
persist over time and that are relatively resilient against the idiosyncratic actions of groups and
individuals. (p. 31)
This perspective requires examination of the history of government-business relations in

the petroleum industry, since patterns of interaction strongly conditioned how the
government responded to disruptions in the world oil market. Drawing on government
documents and interviews with several important public officials, Ikenberry argues that,
when the 1973 crisis hit, the government inherited an institutional legacy of limited and
indirect authority over the domestic oil industry. Given few alternatives for adjustment
vis-a-vis the domestic economy (that is, both radical intervention and deregulation were then
infeasible), government officials first sought adjustment in the international arena through
359
cooperation with other western oil-consuming nations. Failure in this arena forced officials
back to a domestic strategy. Finally, after much trial and error, they successfully
decontrolled domestic oil and gas prices, a strategy that induced greater conservation among
consumers and producers.
Ikenberry argues that the U.S. government's "institutional structures" were decisive in
shaping this response. Moreover, he claims, price decontrol, far from signaling the
government's abdication of authority over energy policy, reflected officials' capacity to use
institutional instruments to accomplish their aims. In this case, executive officials
maneuvered to tie domestic oil pricing to crucial foreign economic issues--especially
coordination of macroeconomic policies with the Group of Seven--thus recasting the stakes
of oil pricing from a struggle of domestic interests to a question of the nation's international
priorities and commitments. Officials, in effect, "packaged" oil decontrol to the Congress
and consuming public as a necessary measure in the country's foreign economic policy.
Thus, decontrol was ultimately possible, he argues, because of "the special access executive
officials had to the international system" (p. 167).
Ikenberry's explanation centers on the role of executive officials in utilizing the state's
unique resources to achieve their goals. In concluding that political institutions gave
policymakers tools for taking independent action, the author makes much of the "capacities"
of the American state. (Paradoxically, he points out, this action took the form of dismantling
a governmental regulatory structure.) These institutions, according to the classic portrait, are
fragmented, weak, and often captured by powerful private interests. Conceding that this
image often fits the case of energy adjustment policies, Ikenberry nonetheless argues that
officials, after repeated failures, used these institutions to transcend private interests and take
effective action.
This study contributes to the state-centered literature that stresses state officials' capacity
for autonomous action. In his studies of various energy programs, the author illuminates the
complex turns of policymaking, taking account of the manifold pressures - international
markets, sectoral interests, and intragovernmental conflicts--that influence executive
officials. He is especially good at revealing how indeterminant, incoherent, and
contradictory U.S. economic "strategy" tends to be.
However, the same critique raised earlier against Gourevitch can be raised here: although
state officials figure centrally in Ikenberry's analysis, there is no effort to develop the
"micro-foundations" of their actions, as rational choice proponents advocate. As with
Gourevitch, this lacuna in no way invalidates the author's findings, but it leaves a gap in his
explanations. His theory helps explain why U.S. officials acted as they did in this particular
energy crisis. It may even help predict what they might do in other comparable situations.
But if there is to be any engagement and possible synthesis with the rational choice
approach, analyses such as Ikenberry's, which stress leaders and institutions, must begin the
discussion.
On an empirical level, the author occasionally pushes his data too far to fit his theory. A
case in point is the 1979 decontrol decision, which, he concludes, exemplifies the American
system's institutional capacity. Yet his fascinating narrative of executive decision making
and of the crucial 1978 Bonn summit, based in part on interviews with such key officials as
James Schlesinger and Stuart Eizenstat, depicts a universe of indecision, uncertainty, and
internal conflict. Moreover, a plausible case can be made that the decontrol decision owed as
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W. Rand Smith
much to international factors, namely, the manifest harm done by price controls to the
American economy in world markets, as to domestic political capacity. The author is, of
course, aware of these factors, yet he makes virtue of necessity by claiming that the move
toward decontrol resulted mainly from domestic factors. American leaders were stumbling
even as they were pushed into a decision. To be sure, a decision was made, but it does not
quite demonstrate the institutional capacity Ikenberry claims for it. Despite these
weaknesses, this book demonstrates what a successful case study should do: employ data
about a specific phenomenon in order to build theories whose application extends beyond the
case itself.
Like Ikenberry, Loriaux examines efforts by state officials in a single country to wrestle
with disruptions in the international economy. Specifically, France after Hegemony seeks to
explain a startling, paradoxical shift in France's financial policy during the 1980s. Before
this decade, the French government had often been described as a paragon of state
intervention. But in 1984 the Socialist government under President Frangois Mitterrand,
which only three years earlier had launched a dirigiste economic reform program, began to
liberalize the financial system. Within months it virtually deregulated credit policy, created
a financial futures market, phased out exchange controls, and slashed subsidies to industry.
How could a government that had long exemplified state activism suddenly become an
apostle for unfettered financial markets (not to speak of free markets generally), especially
under the Socialists' sponsorship?
This question of the Socialists' U-turn has intrigued numerous observers who have
emphasized such factors as party and coalitional politics, institutional arrangements
(especially centralization of power in the pragmatist Mitterrand's hands), and the effects of
initial policy errors on France's international position.17 Loriaux is the first, however, to
seek an explanation in the nature of France's financial system. To understand that system
and the Socialists' shift, he argues, one must return to the 1940s and the creation of the
Bretton Woods system, the international monetary order of fixed but adjustable exchange
rates sponsored by the United States. The book recounts how France adapted to this new
system, in the process becoming progressively less able to adjust to shocks that might befall
it. Thus, in 1971, when the U.S. abandoned this system and inaugurated a new regime of
floating exchange rates, France was ill prepared. The 1980s neoliberal shift was a delayed
but inevitable response to this change. Through a history of adjustment attempts, Loriaux
provides a case study of national responses to a changing global economic order that
operates on two levels: first, as a novel interpretation of postwar French political economy
that explicitly links domestic structures and practices to the international economy and,
second, as an analysis of the contradictory dynamics of the postwar global economic order
itself.
The author argues that, although the United States sought initially after World War II to
establish a liberal trade and financial order, it quickly subordinated that goal to the
containment of Soviet influence in Europe. This aim could best be achieved, the U.S.
believed, by ensuring economic growth throughout the region. Using the dollar as the
lynchpin of a fixed but adjustable exchange rate system, then spending and loaning its
dollars lavishly, the U.S. successfully reflated the devastated region. After the initial
reconstruction of the late 1940s and early 1950s, this "Pax Americana" continued to assure
a stable world monetary order during most of the next two decades. This order, Loriaux
361
claims, provided European governments with a kind of generalized insurance against

economic risk because it allowed them to pursue expansion without worrying greatly about
the international monetary consequences. In effect, these countries could manage their
economies as if risk (in the form of trade deficits, currency crises, and ultimately the cutoff
of international credit) no longer existed. (This low-risk environment the author, borrowing
from psychology, labels "moral hazard.") Largely freed from such worries, governments
intervened extensively in their domestic economies, spent liberally, and "managed" their
trade. These departures from U.S. free market ideals were, however, a price the U.S. was
willing to tolerate in exchange for political support.
The permissive American policy was tailor-made for countries such as France (as well as
Italy, Greece, and Turkey) where strong Communist parties coexisted with fragile
governments and successful economic performance was crucial for governmental stability.
Fearful of early political collapse, the U.S. supported the 1945 Monnet plan, an ambitious
package of investments and imports that would not have been feasible without American
backing. With U.S. support, however, successive French governments erected a financial
structure, which the author labels an "overdraft economy," that both promoted growth and
protected vulnerable but potentially unruly groups against the disruptions of growth.
Farmers, workers, small shopowners, artisans, and even entrepreneurs, all were sheltered
from economic shock by various side payments from the state, such as protected markets,
social welfare benefits, and price and income supports.
The centerpiece of this structure was a financial system that depended chiefly on
"institutionally allocated credit" (private and public banks as well as other lending
institutions) rather than "asset-based credit" (stocks and securities). For example, 85 percent
of all credit to firms and households in 1976 came from institutional lenders, compared to 51
percent in the U.S. (p. 59). While some analysts have viewed France's financial system as
the instrument of decisive, effective state intervention,'8 Loriaux claims that this structure
ultimately weakened the economy as well as the government's ability to guide it. For
technical reasons that can not be examined here, this financial structure gave rise to a
political economy that was more resistant to "internal" monetary adjustment (government
control over credit and money supply) than to "external" adjustment (devaluation). That is,
whatever problems the economy generated, such as inflation and foreign payments
imbalances, could be more easily handled through external, rather than internal, adjustment,
that is, through devaluation rather than credit contraction. Happily, the Bretton Woods
system of fixed but adjustable exchange rates permitted France periodically to employ such
external adjustment measures. Without fixed rates, however, the economy would become
especially vulnerable because, the author argues, France's overdraft economy lacked
effective means of controlling its own money supply.
The French postwar "miracle" thus rested on a deceptively fragile base, which became
evident in the mid 1960s as the United States gradually abandoned its financial underwriter
role. During the next decade, as the 1971 "Nixon shock" coupled with two oil crises created
an increasingly competitive, unstable global economic order, France had great difficulty
managing its currency, trade, and production. Inflation, firm indebtedness and failure to
invest, and trade deficits-all by-products of the overdraft economy-became endemic and
resistant to cure. Since the floating exchange system no longer allowed France to depend on
devaluation alone to correct payments deficits (since currency values were subject to market
362
W. Rand Smith
forces), the government sought other solutions such as foreign borrowing and selective
credits to export industries. Such measures, however, did little to erase the economy's
underlying structural problems. By the early 1980s, given the exhaustion of other policy
options, a wholesale overhaul of the financial system became likely, if not inevitable.
In explaining the Socialists' shift to liberalization, Loriaux obviously favors the impact of
international factors, especially the long-term impact of floating exchange rates. But he does
not view the Socialists' move as mere fatalism in the face of market constraints. In an
interesting interpretation, the author argues that the Socialists' shift represented a reasserti
of the government's control over economic affairs.
The Socialists embraced liberalization not because of ideological preference but because of the
imperative need to restore the state's power to exercise control over the evolution of fundamenta
monetary quantities: monetary growth, prices, credit, and the values of the currency. (p. 270)
Similarly, France's enthusiasm for European economic integration stems from the sam
impulse to ease the constraints of the overdraft economy. For example, France favored the
European Monetary System because, by fixing exchange rates within the twelve-membe
European Community, the EMS helped dampen the inherent inflationary tendenci
produced by a constantly depreciating franc.
Finally, Loriaux considers the consequences of Socialist financial reform, namely
whether these efforts have eliminated the overdraft economy. He finds that the centerpie
of the old system-firms' reliance on institutional lenders-remains intact. However, by
exposing these lenders to the financial market, the reforms have made them responsible f
their own financial strategies. Lending institutions can now be expected to "relay . . . t
dictates of the marketplace to the industrial firms that continue to depend on them" (p. 276
Loriaux sees the prospect that France's financial system might come to resemble Germany'
in its reliance on credit provided by independent banks and other institutional lenders.
France after Hegemony makes important contributions to an already rich literature o
French political economy. In addition to providing a heretofore neglected financia
perspective on the Socialists' 1983-84 policy reversal, it also examines the structur
weaknesses in the postwar French economy more comprehensively than other available
sources. Moreover, it challenges the conventional view that a "strong" French state play
a key role in stimulating growth.19 Loriaux depicts a state that, in effect, shrinks from
confrontation with social groups while coddling them and free-rides on America's financia
coattails. While not altogether convincing, this depiction will force scholars to reconside
the sources of France's impressive postwar recovery.
The book also contributes to the literature on comparative political economy in two ways
First, as the author demonstrates in the final chapter, the concepts of "moral hazard" an
"overdraft economy," which describe conditions created and/or facilitated by U.S.
economic hegemony between 1947 and 1971, apply beyond the French case. In brief bu
suggestive profiles, Loriaux demonstrates how such countries as Japan, South Korea, an
Finland manifested some of the same symptoms as France. Thus, there is, as wit
Ikenberry's book, an important comparative dimension. Second, this study is a model o
how to construct explanations that interweave domestic and international levels of analysis
363
Rarely do books that explore the international-national connection move so seamlessly

between the two levels.
However, the reader should be forewarned that this book makes few concessions to those
unschooled in international or domestic monetary policy. Although a certain amount of
technical language and complexity inheres in the subject itself, the reader gets little help by
way of nontechnical definitions and context. For example, such apparently key terms
as "rediscountable medium-term loans" and "semipublic financial institutions" are either
undefined or defined cursorily, then employed at will. Nowhere is there an overall
description of the French banking system.
A more serious difficulty is that several links in Loriaux's argument are not clearly
specified or convincingly demonstrated. For example, he claims that the overdraft economy
grew out of both an opportunity (U.S. monetary support) and a constraint (political
weakness coupled with unruly social groups). Yet the role that each of these factors played
remains shadowy. The author asserts that the "tolerant world economic order" (p. 183)
between 1947 and 1965 sustained the overdraft economy, but the historical chapters (4-6)
only sketchily demonstrate this connection. The link remains ambiguous between the
existence of "moral hazard" and the creation of an institutionally allocated credit system (as
the mainspring of the overdraft economy). The author seems to imply that the latter was an
inevitable response to the former. However, if this is so, since "moral hazard" pervaded the
postwar international economy, why was this type of financial system not more widely
adopted throughout western Europe?
Moreover, the causal links are not clearly established between domestic protest, real or
potential, and specific financial policies. The author argues that the overdraft economy was
"a development driven by fear of the redistributive implications of modernization" (p. 153),
yet such fear is more imputed than demonstrated in this analysis. The record of the
government's social policies between 1947 and 1981 indicates that any such "fear" of social
groups was, to say the least, selective and not general, as Loriaux implies. In particular,
industrial workers can hardly be said to have fared well economically (compared with their
West European counterparts) during this period, nor did unions receive much attention from
successive governments. Thus, it is difficult to sustain the thesis that the government was
"coddling" labor. What is needed is a more nuanced treatment of relations between the state
and the main "societal actors," in particular, fuller recognition of the consistent class biases
of government policy.
Unlike the previous books, Stephan Haggard's Pathways from the Periphery examines,
not state responses to specific international shocks, but rather the developmental
"pathways" of six newly industrializing countries (NICs). These nations, the author argues,
have followed three "trajectories" toward industrialization. The first is import substitution
industrialization (ISI), followed by Mexico and Brazil, that aims at bolstering domestic
industries that can displace imported manufacturing goods. Typical ISI measures include
high tariffs, fiscal and financial support of domestic industry, and promotion of state-owned
"national champions" and multinational firms in order to generate investment and exports.
A second trajectory, export-led growth, seeks to produce high volume, labor-intensive goods
for export. This has been the path of South Korea and Taiwan, which chose this course in
the early 1960s after earlier attempts to export primary products and develop import
substitutes. The third trajectory, entrepot growth, is actually a variant of export-led growth
364
W. Rand Smith
and has been pursued by Hong Kong and Singapore. These two city-states began by
providing commercial and financial services to imperial (especially British) interests in East
Asia, but in the 1950s and 1960s, while continuing to specialize in services, they, like Korea
and Taiwan, adopted an export-led strategy. Haggard attempts to explain why each of these
countries took the path it did, an approach which leads him to examine key shifts in policy
direction.
His explanation, like those of the above books, features the interaction of international
and domestic factors. Haggard finds that international factors-in particular, shocks and
pressures from depression, wars, and external intervention-have most strongly stimulated
economic reform. For example, in Mexico and Brazil the upheavals of the 1930s depression
and World War II discredited existing policies, setting the stage for an ISI strategy. External
factors were also crucial in Korea's and Taiwan's shift to export-led growth; specifically,
their balance of payments crises in the early 1960s caused the U.S., which had sustained
these economies since 1945, to demand that the governments abandon ISI in favor of
exports.
Domestic factors such as country size, sectoral interests, organizations, state institutions,
and economic ideas also affected the timing and form of shifts in economic strategy. For
example, in Korea the relative weakness of labor and business, the military's strength, the
availability of policy tools (especially the government's control over the financial system),
and the ideas of U.S. economic advisers all shaped the adoption of an export-led strategy.
Especially important was the insulation of political elites from popular pressures (especially
labor and agricultural interests) through a repressive legal system. By contrast, governments
in Brazil and Mexico lacked such insulation, since their ISI strategy's protectionism had
created mass constituencies in favor of the status quo. Thus a shift to an East Asian
export-led strategy was politically unfeasible, and these governments have stuck with ISI,
albeit with some important reforms, even in the face of currency, inflation, and debt crises.
Pathways from the Periphery does for the explanation of NIC strategies what Politics in
Hard Times does for the advanced capitalist nations: it provides an inclusive, flexible
theoretical framework along with a range of cases that demonstrates the framework's utility.
Unlike Gourevitch, but like Ikenberry and Loriaux, Haggard gives relatively more weight to
institutional influences and less to social groups and sectors by stressing "the independent
interests and organizational capabilities of state elites" (p. 269). Otherwise, Haggard's and
Gourevitch's approaches are strikingly similar: both consider a range of "competing"
explanations of state economic strategies that feature both international and domestic
variables, examine the historical record, and conclude that the proposed explanations are not
so much competing as incomplete. While external shocks are important, their effects are
mediated by a host of specific domestic factors. No single explanation, or combination of
explanations, can explain all cases.
The danger in this type of approach, which Haggard does not entirely escape, is that
historical complexity not only precludes theoretical parsimony, it may preclude theory
altogether. (To be sure, understanding historical complexity must precede sound theory
building.) For example, the second chapter ("Explaining Development Strategies"), rather
than "explaining" strategies, presents a series of comparative taxonomies that, while
respecting historical nuances, becomes exceedingly complex. We are still left some distance
away from a comparative theory that encompasses the NICs' divergent trajectories. This
365
reservation notwithstanding, the author has admirably integrated theory and data; he has
brought together a staggering amount of material on six important countries into a single
theoretical framework. For that reason, development specialists will find this a valuable,
even landmark, work.
Unlike Gourevitch, Haggard also weighs the consequences of state economic strategies,
especially vis-h-vis three aspects of political development: dependency, equity, and
democracy. He argues, first, that the export-led strategy has been more effective than ISI in
diminishing dependency on foreign capital. Export-led growth favored the development of
local firms, whereas ISI, despite the aim of protecting local industry, has actually deepened
the countries' dependency on foreign direct investment and savings. Second, the Asian NICs
have generally outperformed Brazil and Mexico on equity issues such as providing
employment, improving absolute income, and reducing poverty. Finally, although both the
export-led and ISI strategies have usually been carried out by authoritarian governments, the
author finds no evidence that authoritarian rule necessarily produces optimal or efficient
economic policies or that democratic government necessarily generates popular pressures
that preclude efficient allocation of resources. These are all plausible arguments, and the
author presents some interesting evidence, especially on foreign investment and income
distribution patterns over time. But this section, the last third of the book, is less convincing
than the earlier analysis of the types and determinants of state strategies.
The last book under review, Helen Milner's Resisting Protectionism, joins the others in
seeking to explain why states choose particular economic strategies, in this case concerning
trade policy. The author poses a puzzle: why was there no significant global rise in
protectionism during the 1970s? The puzzle lies in the similarities between this decade and
the 1920s, when economic distress within the context of a declining hegemonic state (Great
Britain) triggered trade wars and widespread protectionism. Such global conditions also
existed in the 1970s-namely, recession coupled with America's hegemonic decline-yet
there was no similar surge of protectionism.
Milner qualifies her approach by focusing on the "trade preferences of domestic, nonstate
actors" (p. 15)-that is, specific firms and industries--rather than trade policy per se. Still,
her work is relevant in understanding state strategies, since, she argues, the preferences of
major economic actors strongly influence policy formation. Why, then, did firms and
industries in advanced capitalist nations not rally to protectionism during the 1970s?
The author's explanation rests on a simple, sensible theory of firms' trade preferences: the
more firms are integrated in the world economy, the more likely they are to resist
protectionism. Integration is defined in two dimensions: export dependence and
"multinationality," or the importance of a firm's foreign production and profits compared
with its home market. Milner hypothesizes that firms that are high on both of these
dimensions (that is, that depend heavily on exports and foreign operations) will resist
protectionism as a response to import competition, because it is contrary to their interest in
low tariffs worldwide. Conversely, firms that are low on these dimensions will tend to favor
protectionism, because it can not damage the firms' competitive position. (Firms that are
high on one dimension and low on the other comprise intermediate categories in terms of
trade preferences.) Milner tests her argument through case studies of eighteen American and
French industries in the 1920s and 1970s.20 For each industry she examines how it
responded to global and domestic market shifts, specifically whether it preferred
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W. Rand Smith
protectionism or free trade. Her findings support the above hypotheses: in both the 1920s
and 1970s, internationally integrated U.S. firms backed free trade, whereas domestically
oriented firms favored higher tariffs. The same pattern held for French firms in the 1970s.
What distinguished the 1970s from the 1920s, Milner argues, was that the global context
had changed. Specifically, increased interdependence had integrated American and other
nations' firms more fully into the world economy, thereby dampening protectionist
preferences in two ways. First, the number and importance of internationally integrated, and
thus antiprotectionist, firms had mushroomed by the 1970s, compared with the earlier
period, and thus these firms' political weight had grown proportionally. Second, rising
interdependence also increased divisions among firms within specific industries, as some
firms became integrated internationally while others remained tied to the domestic market,
thereby weakening the ability of particular industries to mobilize for protection.
Did firms' trade preferences influence policy outcomes? Milner argues that they did; there-
fore, the rise in firms' free trade preferences helped shape antiprotectionist policies. Her
evidence, though, is hardly unequivocal: of the twelve U.S. and French cases studied for the
1970s, industry demands were decisive in only two-thirds. The author also finds a similar level
of industry influence in both the U.S. and France. This result not only adds generalizability to
her industry-preference theory; it also casts doubt on institutionalist approaches that posit
important differences between a "weak" American and a "strong" French state. These pur-
ported contrasts, she concludes, have been overdrawn. The French state, in particular in its
trade policy in the 1970s, demonstrated far less internal unity and insulation from societal
pressures than the classic portrait. Compared with the above works, all of which stress the
independent effects of institutional arrangements, Milner gives less weight to such factors.
One link in Milner's argument remains unconvincing, however. That is the claim that,
because the number of internationally oriented firms increased between the 1920s and
1970s, protectionist pressures diminished. As Milner writes:
[I]n periods when such international ties are more prevalent, demands for protection throughout
the economy will be less. Much higher levels of such ties, almost ten times greater, in fact, were
apparent in the 1970s than in the 1920s. In the 1970s, therefore, many more firms willing to
resist the temptation to demand protection in times of economic stress existed. (pp. 245-6)
While this is a plausible claim, the author presents little conclusive evidence to establish the
link between the increase in the number of such firms and the lack of protectionism. While
she establishes a correlation, she has not demonstrated a causal relationship.
As with the other authors under review, Milner uses historical cases to support a
theoretical argument whose applicability transcends the cases themselves. These case
studies, exhaustively compiled and documented (in 1,102 footnotes!), give her conclusions
strong weight. Moreover, this work, like the others, connects international and national
levels of analysis, demonstrating the need for comparative studies to incorporate the former
into explanations of "domestic" phenomena.
Conclusion
Whatever their differences, these books all focus on state economic strategies, especially
those enacted in response to global economic changes during the past two decades. Thus,
367
they are sufficiently related to permit some conclusions about the "what," "why," and "so
what" questions raised at the outset. First, with regard to types of state strategies, all of
these books note a global tendency during the past two decades: a narrowing of the range of
economic policies. States have increasingly adopted policies that seek to promote domestic
competition and external competitiveness of firms and industries within a liberal trade order.
Throughout the OECD countries, and even among erstwhile protectionist NICs such as
Mexico and Brazil, governments have increasingly opted for strategies that favor free (or at
least freer) markets, both domestically and globally. (Current developments throughout
much of the erstwhile Communist bloc also reflect this trend.)
What does this movement represent? Whereas this neoliberal trend is often portrayed as a
process of "deregulation," a withdrawal of the state from economic activity, Ikenberry and
Loriaux argue that officials enacted liberal policies in order to reassert, not relinquish,
authority over economic outcomes. Milner views this changing state-business relationship as
one of growing interdependence, as firms depend on their governments to create conditions
needed for a stable, open world market, while governments, of course, rely on firms to
generate growth. Assessing this relationship more politically, Gourevitch perceives a
strengthened alliance between capital, especially large firms, and the state, at the expense of
labor. At the least, these studies instruct us to examine not just the content of economic
policies, but their meaning within a matrix of relations among societal and state actors. This
means viewing the present neoliberal trend, not, as celebrants would have it, as the state's
"moving aside" (finally!) in favor of the market, but as adaptations by state officials to
power shifts at both international and domestic levels.
Second, in examining the determinants of state strategies, these works examine an array
of international and domestic factors. To explain the neoliberal convergence, the authors
emphasize key shifts in the nature and impact of the global economy beginning in the 1960s.
These include both long-term influences-the decline of the U.S.'s role as financial
hegemon along with a new, unstable monetary order (Loriaux), the rise of new competitor
nations to challenge the core capitalist producers (Haggard), and the internationalization of
production (Milner)-and momentary shocks such as energy price disruptions (Ikenberry).
From the standpoint of national political leaders, the international economy has become both
more interdependent and foreboding. Mutual reliance has accompanied slowed growth,
financial imbalances, and sharpened trade competition.
This increase in national vulnerability raises the issue of economic sovereignty, namely,
whether global interdependence is rendering distinct state "strategies" irrelevant. If such is
the case, there is little point in exploring either the determinants or consequences of state
strategies, since all states must bow to international pressures. This conclusion would be
unwarranted. As these works illustrate, though these large-scale transformations hit all
nations, national leaders respond differently. How they respond depends on a host of
specific domestic factors, most notably the organization of principal sectoral interests
(especially capital, labor, and agriculture) and institutional structures. (Milner, who finds
policy similarities between France and the U.S. despite institutional differences, partially
disputes this view.) In any case, while fiscal and monetary policies have indeed converged,
important national policy differences persist in such areas as industrial innovation,
investment, and labor markets.21 Moreover, though the current era may be marked by a
neoliberal trend in state strategies, one can not assume that this tendency is either unique or
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W. Rand Smith
of indefinite duration. Given the current instability and tension in the world economy, it
would be premature to proclaim the end of history.
What is called for are further studies, like those of Gourevitch and Milner, that allow us
to place our present era in comparative historical perspective. One question that arises, for
example, is whether the purported link between growing interdependence and neoliberal
strategies holds for other historical periods. There is perhaps too great a tendency to view the
present epoch-whether it be labeled post-Fordist, post-Bretton Woods, or posthege-
monic-as sui generis. Comparisons of the connections between the international economy
and state strategies across different historical periods can help us better understand our own
era.
Finally, these works give relatively slight attention to the consequences of s

compared with their emphasis on determinants. Regarding national-level con
Haggard, with his assessment of the impact of NIC strategies on dependen
democracy, mounts a systematic analysis. With respect to international con
Milner's analysis of the antiprotectionist impulse connects, albeit indirectl
behavior and international-level outcomes. Loriaux raises the intriguing possi
creation of a relatively risk-free international system under the Pax Americ
national patterns of behavior that ultimately undermined that system, but this
developed. Thus, there remains considerable room for research on the
strategies.
This lacuna notwithstanding, these works demonstrate the value of linking the study of
international economics and national economic strategies. They reflect a trend within
comparative politics to incorporate external, especially economic, factors into explanations
of domestic politics. Merging with the broader comparative political economy movement in
the allied disciplines of history and sociology (interestingly, relatively few economists
identify with this movement), political scientists have progressively blurred the distinction
between international and national levels of analysis, considering the two levels to be
intertwined and inseparable. Increasingly, comparative studies begin by assuming that what
happens within states can not be divorced from the international economy within which all
states interact. As the above works illustrate, this assumption holds much promise for the
future of comparative politics.
The next step will be to explore grounds for synthesis among contending approaches.
Comparativists will need to move both "downstream" and "upstream" in this exploration.
One direction is down to "micro-foundations," or the individual level, as the
deductive-axiomatic approach terms it. Although all of these works flirt with aspects of the
deductive-axiomatic approach-Haggard even claims that his work "falls broadly within the
realm of rational-choice theorizing" (p. 4)-their engagement with this approach is
half-hearted at best. This is not to advocate a rational choice approach or claim its
superiority-for the record, this reviewer favors the inductive-historical approach-bu
rather to urge that inductive-historical approaches give more attention to the micro-macro
linkage issues that rational choice advocates have raised.
A second direction is "up" to the international level. These works, for all their attention
to the international economy and to general issues of interdependence, only sketchily
examine the historical phases of world capitalism and relate distinct national patterns t
these phases. For example, the "regulation school" emphasizes that long swings in th
369
global economy result from the rise and decay of particular types of production systems
("regimes of accumulation"), which themselves depend on particular institutional
arrangements ("modes of regulation") to ensure growth. The world-system approach also
examines capitalism as a global historical process that has passed through identifiable
phases.22 While they have their own weaknesses, these approaches signal the importance of
systematically approaching the nature of international capitalism and specific national forms
of capitalism. From the perspective of an individual state, the global economy is not just a
set of "external constraints"; it is, rather, a generalized and historically specific system of
production and exchange. This system is also internally differentiated, assuming distinct
national forms. Comparative political economy, by its emphasis on national variations,
naturally pays heed to this latter aspect. It also needs to relate these variations more
systematically to the larger context-the forms and phases of world economic development.
NOTES
The author gratefully acknowledges the invaluable comments of Chris Howell and two anonymous review
earlier version of this article, as well as the encouragement of Ezra Suleiman.
1. See Peter Evans and John D. Stephens, "Studying Development since the Sixties: The Emergence
Comparative Political Economy," Theory and Society, 17 (October 1988), 713-735.
2. Gabriel A. Almond, "The International-National Connection," in Gabriel A. Almond, A Discipline
Schools and Sects in Political Science (Newbury Park: Sage Publications, 1990), pp. 263-289. See als
Gourevitch, "The Second Image Reversed: The International Sources of Domestic Politics," Inter
Organization, 32 (Autumn 1978), 881-911.
3. The reader will have noted that four of the five books are published by Cornell University Press in th
Studies in Political Economy series, edited by Peter J. Katzenstein, which has published many importan
comparative political economy during the past decade. The explanatory framework just outlined is shared b
the volumes in this series. For a seminal work in this field, see Peter J. Katzenstein, ed., Between Power an
Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978
4. Examples include Kerry Schott, Policy, Power and Order: The Persistence of Economic Problems in
States (New Haven: Yale University Press, 1984); Peter J. Katzenstein, Small States in World Markets:
Policy in Europe (Ithaca: Cornell University Press, 1985); Ronald P. Dore, Flexible Rigidities: Industrial
Structural Adjustment in the Japanese Economy, 1970-1980 (Stanford: Stanford University Press, 1986
Garrett and Peter Lange, "Performance in a Hostile World: Economic Growth in Capitalist Democracies, 1974
World Politics, 38 (July 1986), 517-545; Richard Rosecrance, The Rise of the Trading State: Commerce an
in the Modern World (New York: Basic Books, 1986).
5. This section does not pretend to be a full critique of the political culture and dependency approaches. R
am interested in identifying the central theoretical assumptions on which scholars in comparative political
have sought to demarcate themselves from these earlier models.
6. Carole Pateman, "The Civic Culture: A Philosophical Critique," in Gabriel A. Almond and Sidney Ve
The Civic Culture Revisited (Boston: Little, Brown, 1980); Ronald Rogowski, Rational Legitimacy: A T
Political Support (Princeton: Princeton University Press, 1976).
7. Evans and Stephens, p. 715; see also J. Samuel Valenzuela and Arturo Valenzuela, "Moderniz
Dependency: Alternative Perspectives in the Study of Latin American Underdevelopment," Comparative
(July 1978), 535-557.
8. Arghiri Emmanuel, Unequal Exchange (New York: Monthly Review Press, 1972); Samir Amin, Accu
on a World Scale: A Critique of the Theory of Underdevelopment (New York: Monthly Review Press, 19
Gunder Frank, Latin America: Underdevelopment or Revolution (New York: Monthly Review Press, 196
Rodney, How Europe Underdeveloped Africa (London: Bogle-L'Ouverture, 1973); Theotonio dos Sa
Structure of Dependence," American Economic Review, 60 (May 1970), 231-246; Paul Baran, The Politica
of Growth (New York: Monthly Review Press, 1962).
370
W. Rand Smith
9. See, for example, Tony Smith, "The Underdevelopment of Development Literature: The Case of Dependency
Theory," World Politics, 32 (January 1979), 247-288.
10. See Fernando Henrique Cardoso and Enzo Faletto, Dependency and Development in Latin America (Berkeley:
University of California Press, 1979); Peter Evans, Dependent Development: The Alliance of Multinational, State, and
Local Capital in Brazil (Princeton: Princeton University Press, 1979). Also see Theodore H. Moran, Multinational
Corporations and the Politics of Dependence (Princeton: Princeton University Press, 1974); Gary Gereffi, The
Pharmaceutical Industry and Dependency in the Third World (Princeton: Princeton University Press, 1983); David G.
Becker, The New Bourgeoisie and the Limits of Dependency: Mining, Class, and Power in "Revolutionary" Peru
(Princeton: Princeton University Press, 1983); Douglas C. Bennett and Kenneth E. Sharpe, Transnational
Corporations versus the State: The Political Economy of the Mexican Auto Industry (Princeton: Princeton University
Press, 1985); Gary Gereffi and Donald L. Wyman, eds., Manufacturing Miracles: Paths of lndustrialization in Latin
America and East Asia (Princeton: Princeton University Press, 1990).
11. The following discussion makes no pretense to completeness. It is suggested as a first attempt at taxonomy and
as a means of contrasting the books under review with alternative approaches.
12. Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988), p. 203.
13. These types were suggested by Eric N. Nordlinger, On the Autonomy of the Democratic State (Cambridge,
Mass.: Harvard University Press, 1981), ch. 1, and G. John Ikenberry, Reasons of State (Ithaca: Cornell University
Press, 1988), ch. 2.
14. In addition to the works cited in note 10, see Jeffry A. Frieden, "Invested Interests: The Politics of National
Economic Policies in a World of Global Finance," International Organization, 45 (Autumn 1991), 425-451; Ronald
Rogowski, Commerce and Coalitions: How Trade Affects Domestic Political Alignments (Princeton: Princeton
University Press, 1989). I would also include in this category two other "schools." On the dependency-derived
world-system approach developed by Immanuel Wallerstein, see Immanuel Wallerstein, "The Rise and Future Demise
of the World Capitalist System: Concepts for Comparative Analysis," Comparative Studies in Society and History, 16
(September 1974), 387-415. On the French "regulation" school (whose framework is similar to that of the U.S.-based
Union for Radical Political Economics) see Robert Boyer, La thdorie de la regulation: Une analyse critique (Paris:
Editions de la D6couverte, 1986); David M. Gordon et al., Segmented Work, Divided Workers: The Historical
Transformation of Labor in the United States (Cambridge: Cambridge University Press, 1982).
15. Representative works using an inductive-historical approach include Ralph Miliband, The State in Capitalist
Society (London: Weidenfeld and Nicolson, 1969); Leo Panitch, Working Class Politics in Crisis (London: Verso,
1980); Walter Korpi, The Democratic Class Struggle (London: Routledge, 1983); John D. Stephens, The Transition
from Capitalism to Socialism (Urbana: University of Illinois, 1979, 1986); Philippe C. Schmitter and Gerhard
Lehmbruch, eds., Trends towards Corporatist Intermediation (London: Sage, 1979). The deductive-axiomatic
approach is represented by Levi; Samuel L. Popkin, The Rational Peasant: The Political Economy of Rural Society in
Vietnam (Berkeley: University of California Press, 1979); Robert H. Bates, Markets and States in Tropical Africa
(Berkeley: University of California Press, 1981); Adam Przeworski, Capitalism and Social Democracy (Cambridge:
Cambridge University Press, 1985). Methodologically, these works owe much to the pioneering work of Anthony
Downs, An Economic Theory of Democracy (New York: Harper and Row, 1957), and Mancur Olson, The Logic of
Collective Action (Cambridge, Mass.: Harvard University Press, 1965).
16. State-centered inductive-historical works include Peter B. Evans et al., eds., Bringing the State Back In
(Cambridge: Cambridge University Press, 1985); Theda Skocpol, States and Social Revolutions: A Comparative
Analysis of France, Russia, and China (Cambridge: Cambridge University Press, 1979); Stephen D. Krasner,
"Approaches to the State: Alternative Conceptions and Historical Dynamics," Comparative Politics, 16 (January
1984), 223-246; Alfred Stepan, The State and Society: Peru in Comparative Perspective (Princeton: Princeton
University Press, 1978); Bob Jessop, The Capitalist State (Cambridge: Martin Robertson, 1982); Peter Hall,
Governing the Economy: The Politics of State Intervention in Britain and France (Oxford: Polity, 1986).
Deductive-axiomatic works include Levi; Barry Ames, Political Survival: Politicians and Public Policy in Latin
America (Berkeley: University of California Press, 1987); Douglass C. North, Institutions, Institutional Change, and
Economic Performance (Cambridge: Cambridge University Press, 1990).
17. See, for example, David R. Cameron, "The Colors of a Rose: On the Ambiguous Record of French Socialism'"
(Cambridge, Mass.: Working Paper Series, Center for European Studies, Harvard University, 1988); George Ross and
Jane Jenson, "Political Pluralism and Economic Policy," in John S. Ambler, ed., The French Socialist Experiment
(Philadelphia: ISHI, 1985), pp. 25-59; Daniel Singer, Is Socialism Doomed? The Meaning of Mitterrand (New York:
Oxford University Press, 1988).
371
18. See John Zysman, Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change
(Ithaca: Cornell University Press, 1983).
19. See, for example, Andrew Schonfield, Modern Capitalist Planning (New York: Oxford University Press, 1965),
ch. 5; Richard F. Kuisel, Capitalism and the State in Modern France (Cambridge: Cambridge University Press, 1981);
William James Adams, Restructuring the French Economy (Washington, D.C.: The Brookings Institution, 1989).
20. The cases, which consume three-fifths of the book, are woolen goods, watches and clocks, textile machinery,
fertilizer, photographic equipment, and newsprint for the U.S. in the 1920s; footwear, radios and television, watches
and clocks, tires, machine tools, and semiconductors for the U.S. in the 1970s; and footwear, radios and television,
watches and clocks, tires, flat glass, and pharmaceuticals for France.
21. Geoffrey Garrett and Peter Lange, "Political Responses to Interdependence: What's 'Left' for the Left?,"
International Organization, 45 (Autumn 1991), 539-564.
22. See the sources cited in note 14.
372

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