Benjamin J. Cohen

The transatlantic divide: Why are American and British IPE so different?*

THE TRANSATLANTIC DIVIDE: WHY ARE AMERICAN AND BRITISH IPE SO DIFFERENT? * Benjamin J. Cohen An academic field of study may be said to exist when a coherent body of knowledge is constructed to define a subject of inquiry. Recognized standards come to be employed to train and certify specialists; full-time employment opportunities become available in university teaching and research; learned societies are established to promote study and dialogue; and publishing venues become available to help disseminate new ideas and analysis. In short, an institutionalized network of scholars comes into being, a distinct research community with its own boundaries, rewards, and careers. In that sense, the field of International Political Economy (IPE) has existed for less than half a century. IPE, Robert Gilpin once famously suggested, may be defined as “the reciprocal and dynamic interaction in international relations of the pursuit of wealth and the pursuit of power” (Gilpin 1975b: 43). In other words, IPE is about the complex linkages between economic and political activity at the level of international affairs. As a practical matter, such linkages have always existed. As a distinct academic field, however, IPE was born no more than a few decades ago. Prior to the 1970s, in the English-speaking world, economics and political science were treated as entirely different disciplines, each with its own view of international affairs. Relatively few efforts were made to bridge the gap between the two. Exceptions could be found, often quite creative, but mostly among Marxists or others outside the “respectable” mainstream of Western scholarship. A broad-based movement to build bridges between the separate specialties of international economics and international relations (IR) – in effect, to construct the field we now know as IPE -- was really of very recent origin. David Lake (2006) is right in describing the field today as a “true interdiscipline.” But it is hardly a monolith. Beyond an interest in marrying international economics and IR, there is no consensus at all on what, precisely, IPE is about. Once born, the field proceeded to develop along separate paths followed by quite different clusters of scholars. One source describes IPE today as “a notoriously diverse field of study” (Phillips 2005: 69). Another characterizes it, simply, as “schizoid” (Underhill 2000: 806). Globally, the dominant version of IPE (we might even say the hegemonic version) is one that has developed in the United States, where most scholarship tends to hew close to the norms of conventional social science. In the “American school,” priority is given to scientific method – what might be called a pure or hard science model. Analysis is based on the twin principles of positivism and empiricism, which hold that knowledge is best accumulated through an appeal to objective observation and systematic testing. In the words of Stephen Krasner, one of the American school’s leading lights: “International political economy is deeply embedded in the standard methodology of the social sciences which, stripped to its bare bones, simply means stating a proposition and testing it against external evidence” (Krasner 1996: 108-109). Even its * Based on a lecture presented to the inaugural meeting of the International Political Economy Society, Princeton University, Princeton, New Jersey, 17 November 2006.

Can the Euro Ever Challenge the Dollar

Can the euro ever challenge the dollar as an international currency? This article argues that Europes new money is fated to remain a distant second to Americas greenback, for four reasons. First is the persistent inertia of monetary behaviour, which will inhibit any rapid switch to the euro. Second is the cost of doing business in euros, which is unlikely to decline below transactions costs for the greenback. Third is an anti-growth bias built into EMU, which will limit returns on euro-denominated assets. And fourth is the ambiguous governance structure of EMU, which sows doubt among prospective euro users.

Balance-of-payments financing: evolution of a regime

The regime for payments financing embedded in the postwar Bretton Woods system was based on the principle, formally articulated in the Charter of the International Monetary Fund (IMF), that nations should be assured of an adequate but not unlimited supply of supplementary financing for balance-of-payments purposes. Norms included the obligation to avoid policies inconsistent with the IMF Charter (i.e., to play by the agreed rules of the game). In the 1970s the regime seemingly underwent profound change, as the private credit markets emerged as an increasingly important rival to the IMF as a source of payments financing. Nonetheless, this change fell short of a transformation of kind, insofar as the Fund continues to play a role as informal certifier of creditworthiness in the markets. Rather, it represents an example of ‘norm-governed change.’ Despite greater ambiguity in rules and decision-making procedures, a strong element of continuity in basic principles and norms remains.

In Whose Interest? International Banking and American Foreign Policy

Looks at how recent trends in international banking have affected U.S. foreign policy, and suggests solutions to the conflict between the private interests of American banks and the public interest.

A Grave Case of Myopia

Political scientists like to talk about the “median” voter—the representative voter in the middle. Suppose, analogously, we were to speak of the median scholar of international political economy (IPE) in the United States—the representative scholar in the middle of what elsewhere I have called the American school of IPE (Cohen 2008). This individual can be assumed to browse periodically through the standard literature, following current fashions in research. He or she may subscribe to mainstream U.S. journals like International Organization (IO) or International Studies Quarterly (ISQ) or buy books published by the country’s better known university presses, such as Princeton or Cornell. He or she might also sit in on a few IPE panels at the annual meetings of the American Political Science Association and International Studies Association or perhaps even the new International Political Economy Society. Would this median scholar, reasonably well informed and au courant, have been given any reason in recent years to anticipate that we all would soon be engulfed in the worst financial crisis since the Great Depression? The answer is No. The question is: Why? Much the same question was asked about international relations (IR) theory two decades ago after the sudden collapse of the Soviet Union. IR scholars too were caught short by a major structural shock. “The abrupt end of the Cold War,” wrote the eminent historian John Lewis Gaddis (1992/ 93:5–6), “astonished almost everyone. . . . [We] failed to see it coming.” Why was that? The consensus among IR theorists today is that the problem lay not in the quality of mainstream scholarship but in a signal failure of imagination: an inability or unwillingness to consider even the possibility of such a radical systemic change. In the words of Ted Hopf (1993: 202): “American social scientists did not look at the problem and then attack it with inappropriate theories and methods; they simply failed to look at the problem at all.” Summarized Richard Ned Lebow and Thomas Risse-Kappen (1995:2) in a comprehensive retrospective: “The profession’s performance was embarrassing. There was little or no debate about the underlying causes of systemic change. . . None of the existing theories of international relations recognized the possibility that the kind of change that did occur could

The Future of Global Currency : The Euro Versus the Dollar

Introduction Part 1: The Global Currency System 1. Life at the Top: International Currencies in the Twenty-First Century 2. The Euro and Transatlantic Relations Part 2: The Euro Challenge 3. EMU and the Dollar: Who Threatens Whom? 4. Global Currency Rivalry: Can The Euro Ever Challenge the Dollar? 5. Enlargement and the International Role of the Euro 6. The Euro in a Global Context: Challenges and CapacitiesDollar Dominance, Euro Aspirations: Recipe for Discord? 7. Dollar Dominance, Euro Aspirations: Recipe for Discord? Part 3: Glimpses of the Future 8. A One-and-a-Half Currency System 9. Toward a Leaderless Currency System 10. The International Monetary System: Diffusion and Ambiguity

Enlargement and the international role of the euro1

ABSTRACT How will enlargement of the European Union (EU) affect prospects for the euro as an international currency? Previously, I have argued that Europes joint currency is fated to remain a distant second to Americas greenback long into the foreseeable future because of three structural factors – relatively high transactions costs, due to inefficiencies in Europes financial markets; a serious anti-growth bias built into the institutions of Economic and Monetary Union (EMU); and, most importantly, ambiguities at the heart of the monetary unions governance structure. In this essay I extend my earlier analysis, focusing in particular on the impact of enlargement on the governance structure of EMU. From the start, internationalization of the euro has been retarded by a lack of clarity about the delegation of monetary authority among governments and EU institutions. The addition of a diverse collection of new members, with significantly different interests and priorities, can only make the challenge of governance worse, exacerbating ambiguity at the expense of transparency and accountability. Enlargement will diminish, not expand, the euros attractiveness as a rival to the greenback.

What Does the International Currency System Really Look Like

ABSTRACT There has been a lot of debate lately about the shape of the international currency system. Increasingly, we are told, the world is moving toward a multicurrency system with several poles, implying that the system is becoming more competitive. Polarity, however, is a notoriously crude measure of the level of competition in any kind of system, economic or political. If analysis is to be at all accurate, it should take into account not only the number of poles in a system but also the inequalities among them –an alternative approach encompassed by the concept of concentration. In this paper we make use of the concept of concentration to provide a more accurate picture of the competitive structure of the currency system today. When taking account of concentration as well as polarity, our results suggest that the competitive structure of the system is little changed over a period stretching back more than two decades.

The Yuan Tomorrow? Evaluating China's Currency Internationalisation Strategy

After long hesitation, China has begun a determined campaign to promote the role of its national money, the yuan or renminbi (RMB), as an international currency. Power resources are being employed strategically to widen foreign use of the RMB; wider use of the RMB, in turn, is expected to enhance China’s global prestige and influence. But can it be done? Should we really expect the ‘yuan tomorrow?’ In reality, the challenge that China faces is extraordinarily daunting. Successful internationalisation of the yuan any time soon is by no means guaranteed. The aim of this essay is to evaluate the strategy presently being implemented by Beijing to achieve its internationalisation goal. Following a brief outline of the principal features of Beijing’s campaign, I take up two critical issues. First is the question of strategic design. This is a matter of China’s intentions. What are the government’s ultimate objectives, and is its strategy properly conceived to achieve them? Second, I evaluate Beijing’s choice of means. This is a matter of China’s statecraft. Have the authorities chosen the right tools and instruments? Are the country’s power resources sufficient for the task at hand? Analysis suggests that while China’s strategy is soundly conceived, its chosen means may well prove inadequate owing to a range of practical limitations. The yuan’s tomorrow will remain a long way off.

Global Monetary Governance

1. Introduction Part 1: Challenges to Systemic Governance 2. The Political Economy of Monetary Reform Today 3. Balance-of-Payments Financing: Evolution of a Regime 4. The Triad and the Unholy Trinity: Lessons for the Pacific Region 5. Phoenix Risen: The Resurrection of Global Finance Part 2: Dealing with Financial Crisis 6. International Debt and Linkage Strategies: Some Foreign-Policy Implications for the United States 7. Developing-Country Debt: A Middle Way 8. Taming the Phoenix: Monetary Governance after the Crisis 9. Capital Controls: The Neglected Option Part 3: The New Geography of Money 10. The New Geography of Money 11. Monetary Governance in a World of Regional Currencies 12. The Geopolitics of Currencies and the Future of the International System 13. Dollarization: Pros and Cons 14. Are Monetary Unions Inevitable?