A Vision for the Economy: Openness, Diversity, and Cohesion
Reviewed by Richard N. Cooper
This book is the capstone volume of an ambitious research program sponsored by the Brookings Institution on the integration of national economies into the world economy. It draws on detailed work by others published separately in 21 short volumes on various dimensions of world economic integration. Underlying many of the studies is the analytic distinction between national self-sufficiency, shallow integration, and deep integration among national economies. For the past 50 years most countries have been engaged in a process that the authors call shallow integration, reflected institutionally in organizations such as the International Monetary Fund and the World Trade Organization, whereby countries trade goods, services, and capital with one another but otherwise attempt, circumstances permitting, to maintain national freedom of action with respect to most aspects of economic policy. According to the authors, as global markets become more integrated, these national differences will increasingly be seen as a source of unfair advantage or disadvantage, and domestic political pressures will mount to remove the disadvantages. This process will result in some convergence of national economic policies. But convergence, they argue, may not always be desirable, and in any case the focal point of the convergence may not be the most socially beneficial one.
This suggests that efforts should be made to achieve deep integration, by which the authors mean international cooperation designed to preserve diversity when it is desirable and to move convergence in a socially desirable direction. Of course, many international agreements that can be used toward these ends already exist. The authors call for additional cooperation, especially in competition policy, product standards, public support for basic science and technology, and international environmental issues. More ambitiously, they identify taxation and macroeconomic coordination as candidates for cooperation, but are less sanguine about success in those areas. Readers will be pleased or distressed, depending on temperament and experience, that the authors favor the creation of new international institutions -- open-membership functional clubs to address each area, and a club of clubs to coordinate them.
