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Many economists believe that money and international monetary system are or
at least can be economically and politically neutral. However in the modern
world the norms and conventions governing the system have important
distributive effects on the power of states and on the welfare of groups within
these states. (Para ve IN para sistemi siyasi ve ekonomik anlamda tarafsız olmalı
fakat böyle değil. Uygulanan normlar bazı ülkelerin daha güçlü ve etkin
olmasına neden oluyor) A well-functioning monetary system is the crucial (çok
önemli) connection of the international economy. It facilitates (kolaylaştırmak)
the growth of world trade, foreign investment and global interdependence. In the
present era, monetary stability has become particularly important. Money and
financial flows now asist trade flows and have become the most crucial link
among national economies. The efficiency and the stability of the international
monetary system, therefore, are major factors in the international political
economy. An efficient and stable international monetary system must solve three
technical problems;
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decline of American power toward the end of the century. Money has always
been an important factor in world politics. Rulers have required money to
finance their armies support their allies, and bribe enemies. The rise and the
decline of empires and powerful states have been facilitated by the loss of
precious metals. But in the modern world the important of money has multiplied
many times and its character has changed profoundly.
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The Era of Political Money;
During the 18th and 19th centuries, and financial revolution ocurred (oluştu).
Governments began to issue paper money, modern banking erose and public and
private credit instruments were started to use. The full impact of rise of political
money would not be realized until the Keynesian revolution but this financial
revolution did trasform the relationship of state and economy and in the way had
a profound impact on international economies and world politics. The financial
revolution, while solving one major economic problem, created another. On the
on hand it solve the historic problem of the inadequancy (yetersislik) of the
money supply. On the other hand, it created an inflationary bias and imbalances
the international problem of monetary instability.
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The Bretton Woods System (1944 – 1974)
The Western democracies, after the Great Depression and the Second World
War, established two sets of postwar economic priorities;
- 1) The first was to achieve economic growth and full employment.
- 2) The second priority was the creation of stable world economic order that
would prevent a return to the destructive economic nationalism of the 1930s.
The Bretton Woods Conference in 1944 was changed with the creation of such
a stable world economic order. A product of Americans British cooperation. The
Bretton Woods system has several key features. It determined a world in which
governments would have considerable freedom to pursue national economic
objectives, yet the monetary order would be based on fixed exchange rates in
order to prevent the destructive competitive depreciations (amortisman) and
policies of the 1930s. Another principle adopted was currency convertibility for
current account transactions. The international Monetary Fund was created to
superwise the operation of the monetary system and provide medium term
leading to countries experiencing temporary of payments difficulties. The
Bretton Woods system attempted to resolve the clash between domestic
autonomy and international stability, but the basic features of the system
autonomy of national policies, fixed exchange rates and currency conflicted with
another.
The Bretton Woods System reflected fundamental changes in social purposes
and political objectives. Whereas the 19th century Gold Standard and the
ideology of laissez-faire and subordinated (emrine) domestic stability to
international norms and the interwar period had reserved these objectives, the
postwar require tried to achieve both. The state around a greater role in the
economy to guarantee full employment and other goals, but its actions because
subject to international rules. In this way it would be possible for domestic
interventionism and international stability to co-exist.
Nations were encouraged to engage in the free trade with minimal risk to
domestic stability, although at some cost to allocate (ayırmak) efficiency. If they
should get involved in serious balance of payments (BoP) difficulties, the IMF
could finance deficits and superwise exchange rate adjustments; nation would
not need to restrict imports to correct a balance of payments diseqiulibrium.
(ödemeler dengesi kur ayarlamaları ile düzeltilir). International cooperation
would make it possible for state interventionism and the pursuit of Keynessian
growth policies to occur without risking destabilization of the exchange rate
system. Supporter of Bretton Woods believed that state and market had been
successifuly mixed.
The American economy become the primary empire of world economic
growth; American monetary policy become would monetary policy and outflow
of dollars provided the liquidity that geared (dişli) the wheels of commerce.
Following the revolution of the Organization Petroleum Exporting Countries
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(OPEC) in 1973 – 1974, which quadrupled world energy prices, the dramatic
shift of Japanese, West European and newly industrialized countries (NIC’s)
toward export led growth strategies made the American role even more central
global economic growth. When America grew, the world grew; when it slowed,
the world slowed.
After 1958 th faced with (karşı karşıya gelmek) potential chaos in the world
economy, the problem of the dollars shortage and the set of political conflict
with the Soviet Union, the US assumed primacy responsibility for the
management of the world monetary system begining with the Marshall Plan and
partially (kısmen) under the guide of the IMF. The Federal Reserve (FED)
became the world’s banker and the dolar became the bases of international
monetary system.
Several key elements characterized what in effect because a gold-exchange
standard based on the dolar. As other nations pegged (saptanmış) their currencies
to the dolar a system of fixed exchange notes was achieved; the adjustment
(ayar) process involved simply taking action that changed the per value of a
currency against the dolar. Because the dolar was the principle reserve currency
international liquidity became a function of American balance of payments,
which was in frequent deficit (açık) from 1959 on. The dolar was as good as
gold; even in fact was better. It became the principal medium of exchange unit
of account, and store of value fix the world. For the two decades of the 1959
outflow of dollars caused by chronic American budget deficit desire the world
economy. Then the crisis cause and the Bretton Woods system collapsed.
In 1973, the Bretton Woods system came to an end. In March the decision was
taken to let exchange rates floot. Some major points of the world economy after
Second World War or of post-war.
1) Two institution had been established IMF and WB (Trans of Bretton Woods).
IMF has 3 functions.
a) To promote consolidation (borcunu ödeyemeyen bir ülkenin borcu
erelemesi) and callibration with members countries.
b) To administrate “the constitution of international monetary system”.
c) To support the member country who are in BoP deficit.
2) Only the US would be able to turn back to Gold Standard system because
after WWII, 80% of worlds money gold revenues had been obtained by US. And
the value of 1 once of gold = $35 which means US would increase the dolar
supply.
3) Each member would established a per value for its currency and maintain
market exchange rate for its currency within 1% of the declared per value
pegged (saptanmış)/ fixed exchange rate “bound”(bağlı)
Ex: TL / $ = 2.40 bu değere +1% ile -1% dalgalanmaya izin veriliyor.
4) Member countries would freely buy and sell gold in the settlement of
international transtion.
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5) Member countries could adjust (ayar) initial per values up to 10%. But any
adjustment more than 10% requires the approval (onay) of the fund. If there in a
fundamental disequilibrium.
If 10% change is not enough and goes to IMF it will be accepted that country
less fundamental disequilibrium.
6) After a transitional (geçiş) period, currencies should be convertible. Free
change among national currencies.
7) Countries were permitted to use control to suppress (bastırmak) under desired
capital flows. According to consensus nations could be free to control the capital
movement as mobility.
8) If a countries currency became scarce in the fund, fund could outhorized other
countries to adopt exchange controls on imports and other current account
purchase from the surplus country.
International Trade
International trade is one of the international political economy’s oldest and
most controversial subject. International trade is considered to be part of the
production structure of the international political economy. The production
structure is the set of relationships between states and other actors such as
international businesses that determine what is produced, where, by whom, how,
for whom and at what price. Together with the international financial,
technological and security structures, trade links nation-states and actors,
furthering their interdependence and some believe globalization conditions that
benefit but are also sources of tension between states and diffrent groups within
them.
The US and its allies created the General Agreement on Tariffs and Trade
(GATT) to promote liberal trade values and objectives equal with US political
and military strategic objectives. In on effort to further liberalize world trade, in
1995 the The World Trade Organization (WTO) replaced the GATT. Trade is
always political, one of the theorist mentioned in this way (Robert Kurther). The
eonomies of trade cannot be seperate from its political aspects. Although the
production structure is still largely domestic in the sence that most of the goods
and services consumed in nations today are produced domestically. International
trade has been growing dramatically. This reflects the increasing
internationalization or globalization of production.
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demonstrated that free trade increased efficient and had the potential to make
everyone better off (daha iyi). It mothered little to liberals, who produced the
goods, where, how, or under what circumstances as long as individuals were free
to buy and sell them on open markets. The world was becoming a global
workshop, where everyone benefited, guided by the “invisible hand of the
market”.
The law of comparative advantage is simple. When people and nations
produce goods and services, they have to give up something to get them. We
normally think that the “something” we give up is money, but that the misses the
point. What we really give up are the other goods and services that could have
been produced instead. This is what economists call an opportunitiy cost. The
law of comparative advantage holds that we gain when we find ways to
minimize the opportunitiy cost that we pay. In this way, for example, if we give
up more when we produce oil at home that what we have to give up in exchange
when we buy it from another countries are better off.
The law of comparative advantages invites us to compare the opportunity cost
of producing on item ourselves with the opportunity cost of buying it from
others and to make a logical and efficient choice between the two. In Ricardo’s
day, the law of comparative advantage specified that Great Britain should import
foods grains rather than produce them at home because the cost of imports was
comparatively less than the cost of domestic production. Ricardo proposed that
free trade could benefit all trading partneers and by causing goods to be
produced where their opportunity cost were the lowest, thus increase the wealth
of nations (and of people).
If trade were only about comparative advantage and whether nations are better
of trading versus the extreme of being self-sufficient, it would not be so
controversial. However, this is not the case. According to economic liberals, the
issue of who benefits the most from these efficiencies depends upon whether the
terms of trade favor the importer on the exporting nation. However, liberal trade
theories do not wash in the real political world. States naturally desire to protect
themselves and their businesses from the negative effects of trade. Trade
protection takes many forms; policies designed to encourage exports and
policies designed of discourage imports.
Nation-states fear becoming too dependent on others for certain goods. Based
on security concers, many nations prefer being relatively self-sufficient when it
comes to food and natural resources and raw materials that sustain a nation’s
basic industries. By the turn of the 20th century, protectionist trade policies were
on the rise as the major powers once again raced to stimulate industrial growth.
Structuralists, look at the international trade quite differently than to liberals
and protectionist. First; they label the early mercantilist period as one of
classical imperialism. Imperialism of the major European powers originated in
their own economics. Mercantilist policies that emphasized exports because
necessary when industrial capitalist societies experienced economic depression.
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Manufacturers over produced industrial products and financiers had a surplus of
capital to invest abroad. Colonies served at least two purposes. They were a
place to dump these goods and place where investment could be mode in
industries that profited from cheap labor and access to plentiful quantities of
natural resources and mineral deposits. Trade helped colonial mother countries
dominate the undeveloped colonial territories of the world. Lenin argue that in
the period of modern imperialism, toward the end of the 19th centry, capitalist
countries used trade to spread capitalism into under developed region of the
world. The “soft power” of finance as much as the “hard power” of colonical
conquest helped establish empires o dependency and exploitation. During the
early colonial period, developing regims of the world remained on the periphery
of the international trade system. They provided their “mother” countries with
pricious goods and mineral resources along with markets for manufactured
products. Structuralists argue that industrializing core nations converted these
resources and minerals into finished and semi-finished products, many of which
were sold to often major powers and back to their colonies.
Andre Gunder Frank and other theorists who apply structuralist ideas and
argument to analyze the international effects of colonialism and imperialism on
such countries as Brazil, argue that trade helped generate dependency of
peripheral regions and nations on the industrialized core nations. While
particular sectors of core economies have developed political end economic
conditions for the masses of people within peripheral nations and regions have
become underdeveloped since contact with the industrialized nations through
trade.
Likewise, modern world system structuralism such as Immanuel Wallerstein,
states the linkage between capitalist core countries and periphery and semi-
periphery regions of the world. Patterns of international trade are largely
determined by on international division of labor that accompanies (eşlik)
capitalism. Within these different structuralist perspectives there are a number of
views as to how trade might help more fairly distribute or evin redistribute
income among the nations of the world. Contemporary trade policy is deeply
continued by all three IPE perspectives on trade. But, there is a consensus in
favor of a liberal international trade system.
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the ITO would serve as an international counterbalance (karşılık) to domestic
tendencies toward protectionism.
In 1948, GATT become the primary organization responsible for the
liberalization of international trade. The GATT sought (aradı) to the liberalize
trade through a series of multilateral negotiations, called rounds, where the main
trading nations of the world would each agree to reduce their own protectionist
barriers in return for free access to each other’s markets. The GATT was based
on the principle of reciprocity (karşılıklılık) and non-discrimination. Trade
consensions were reciprocal – all member nations agreed to lower their trade
barriers together. The principle of non-discrimination required that imports from
all countries be treated the source – imports from one nation cannot be given
preference over those from another. This is called Most Favored Nation (MFN)
trading states. This principle was designed to prevent bilateral trade was.
Member nations slowly peeled (soyulmuş) away the protectionist barriers they
had enacted (yürürlüğe girdi) in the 1930’s, allowing international trade to
expand dramatically.
But it was impossible to divorce polities from trade, ever under GATT rules.
Some nations were not willing to automatically grant (vermek) this priviledge to
their trading partners.
GATT also allowed exemptions (muafiyetler) allowed many of the war –
ravaged (perişan) nations to resolve balance-of-payments shortages. In the lose
of agricuture they reflected food in shortages in Europe and the need for
financial assitance to formers. GATT’s membership was theoretically open to
any nation, but until the 1980’s most communists countries refused to gain it,
viewing GATT as a tool of Western imperialism.
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The Uruguay Round and WTO;
The eigth (8) GATT round the Uruguay round got underway in 1986 in Punto
del Este, Uruguay. Generally speaking liberals tend to views the Uruguay round
as a success related to the impact it and post GATT rounds have had on the
volume and value of international trade. Many import quotes have been done
away with and export subsidies brought under control.
Specifically, the final agreement of the Uruguay round resulted in the
establishment of new rules and regulations on the trade of older trade items
including agriculture and textiles and such protectionist measures dumping and
the use of state subsidies.
Agricultural trade remained one of the major sticking points of the Uruguay
round. In 1996 at Singapore WTO members, agreed to promote better working
conditions for some 250 million children in LDC’s and to uphold internationally
recognized labor standards. Meanwhile Greenpeace and other Non-
governmental Organizations (NGO) have sponsored alternative trade meatings
held alongside multilateral trade negotiations.
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Third World export markets and their desire for even greater … to LDC
resources and now materials. In the Uruguay round and the agreement was
reached between the industrialized developed and developing nations whereby
LDC’s gained more access to the markets the industrialized nations for many of
their raw materials and semifinished and finished products in exchange for
developed nations access to LDC markets for some of their new trade goods
such as telecomunication technology and services.
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