The End of Laissez-faire

In THE END OF LAISSEZ-FAIRE, Robert Kuttner offers an alternative vision for U.S. economic (and by implication political) policy. Given that no one country is able to assume economically and politically a hegemonic role in the world, Kuttner lucidly argues that the United States needs to appraise realistically the type of role it will play in the world community in the twenty-first century. A key element of this appraisal is the redefining of U.S. interests to focus on geoeconomic rather than geopolitical issues.

The end of the Cold War is an opportune time, according to Kuttner, for the United States to relinquish its self-imposed hegemonic responsibility for a world system constructed at Bretton Woods in 1944—a system which has been superseded by economic and political events of the past two decades. The reality of a globalized market economy dictates a geoeconomic framework financed by a new global monetary order where there are three major world currencies rather than one, and where goods and services are exchanged based on a trade strategy defined by reciprocal global rules.

The globalization of commerce without the globalization of political institutions presents the opportunity for market forces to overrun civil society. To counterbalance these supranational market forces, nation-states should pool their sovereignty in supranational public bodies that set common standards in areas such as finance, trade, labor conditions, and the environment. These public bodies would decrease the sovereignty of individual nations, but de facto sovereignty has been ceded to market forces already, Kuttner argues.

In contrast to Adam Smith’s theory of an invisible hand of private market forces guiding the world economy, Kuttner envisions the development of visible, public sector, supranational ones. The United States has the opportunity in the 1990’s to redefine its economic and political interests and assist in this development. By assisting in the construction of this geoeconomic order, the United States will not only strengthen the world economy, but its own economy as well.