Alternative To Monetary Disorder By Edward Hirsch & Michael Doyle [Short Review]

[Tachyon Flare]

Alternative To Monetary Disoder

Short Review:

This material is from a book called "Alternatives To Monetary Disorder," one of many books from the 1980s Project / Council on Foreign Relations (Copyright 1977). The bold quotation is a fascinating perspective on "controlled disintegration." The material is ultimately a solution for economic crisis by dismantling sovereignty. It does this under an ad hoc, ergo propter hoc argument but nonetheless they conclude that creating a central world bank or a form of institution will provide a solution to growing economic crisis. An institution that takes precedence over national sovereignty that will oversee economic development and order. The book refers to "collectivism" as a positive connotation; one gets the impression that this book strong denounces "individualism." The quote by Edward L. Morse no doubt is disgruntled with a dollar denominated world. Various "alternatives" are proposed, each monetary regime implies a top down currency control mechanism to stabilize nation state because the current economic system is inadequate. It is also fascinating to note, that Friedrich List is mentioned. Friedrich List being a staunch proponent of protectionism rather than free trade policy (such as GATT, NAFTA). It clearly admits that protectionism has benefits but majority of the book advocates free trade (See quote below). Most of the monetary alternative are not only top down controls, but are hierarchal / tiered systems that are favorable to only European countries. I believe in the current economic crisis, there will some institutions / individuals who will advocate such a system which will come at the expense of nation rights in order to stabilize markets. The material also advocates the fixed exchange rates like the Smithsonian agreement (which failed miserably!) instead of the current floating exchange rate system (also known as dirty floats). Fred Hirsch and Michael Doyle care nothing for nation state, they want a new form of "order." The authors do not even mention the gold standard or any form commodity to restrict currency. Personally speaking, although they make some interesting points, it is rather distasteful (The quote below on controlled disintegration is disturbing). It almost seems that the powers to be want a self-induced disintegration to introduce a world currency. (Note: Fabian Socialist J. M. Keynes wanted the world currency to be called “bancor,” the "unita" [proposed by World War II U.S. Treasury official Harry Dexter White]). I get the impression that these people want an elastic currency controlled by a federation or centralized banking system to solve economic disorder.

-Tachyon

"PREREQUISITES OF A CONTROLLED LOOSENING

The international economy in the 1980s is therefore likely to be a considerably looser regime than the international order established on paper (and at least substantially in reality) in the original articles of the IMF and in the provisions of the GATT. The system is likely to be loose in a variety of ways: replete with exceptions on aspects such as the monetary regime, customs unions, free-trade areas and association agreements, and containing special provisions for developing countries and domestic producers facing injury.
The obvious danger in such a regime resides in its potential instability. Some limited loosening is by no means unequivocally undesirable. It can be seen as a rational response to the earlier tendency, which was most manifest in the 1960s, for economic integration to run far ahead of both actual and desired political integration, thereby forcing countries into suboptimal policy choices. A degree of controlled disintegration in the world economy is a legitimate objective for the 1980s and may be the most realistic one for a moderate international economic order. A central normative problem for the international economic order in the years ahead is how to ensure that the dis-integration indeed occurs in a controlled way and does not rather spiral into damaging restrictionism."

-Fred Hirsch and Michael Doyle

"In a tiered system the tasks for American statecraft will be great. What is being requested is that a form of collective leadership be developed in the management of the interanational economy to
replace the individualistic leadership of the United States that has prevailed since World War II."

-Edward L. Morse

"These normative nationalistic concerns are far from new; they were eloquently addressed by Hamilton in his Report on Manufactures of 1790, in which he expressed the opposition of American nationalists to their country's assuming the role of a raw material exporter to Britain. Nationalists feared and opposed two aspects of this role: the tying of American economic development to the British economy and the growing dependence on Britain for goods vital to national defense. Friedrich List, inspired by Hamilton's observations of American trade policy, outlined in American Political Economy what he saw as the proper object for a developing country's commercial policy:

This object is not to gain matter, in exchanging matter for matter, as it is in individual and cosmopolitical [liberal] economy, and particularly in the trade of a merchant. But it is to gain productive and political power by means of exchange with other nations; or to prevent the depression of productive and political power, by restricting that exchange. [Friedrich List, Outlines of American Political Economy]

At the earliest stages of development, a free-trade policy designed to encourage new commodities and techniques may be advantageous; but at later stages, and in order to develop a national culture and a national system of industry, protection will be needed to stimulate the growth of infant industries and avoid foreign-dominated dependence."