Courtesy Reuters

Rethinking Foreign Economic Policy

In This Review

The Work of Nations: Preparing Ourselves For 21st Century Capitalism

By Robert B. Reich
Knopf, 1991
319 pp. $24.00
Purchase

The End of Laissez Faire: National Purpose and the Global Economy after the Cold War

By Robert Kuttner
Knopf, 1991
304 pp. $22.95
Purchase

Since the Eisenhower years the pivotal debates about America's role in the world economy have been mostly an inside-the-beltway affair. Such issues as protecting the steel or auto industries, propping up the dollar, cutting off trade with Moscow, manipulating foreign aid or pressing Japan and Europe to buy more American farm products have rarely challenged our most deeply held beliefs about economics or business. Throughout the Cold War foreign economic policy was seen as a way to strengthen the nation and its allies in the East-West competition. America's goals would be achieved by strong U.S. companies stretching their tentacles to every corner of the globe. America believed in Adam Smith and tried to convert anyone who would listen.

There have been tumultuous changes in recent years: the United States' shift from being the world's largest lender to its biggest debtor, fierce technological competition from Japan, the growing economic cohesion of the European Community, the crumbling of the Soviet empire, the crises in America's classrooms and on its city streets. Amidst all this the big question is whether the fundamental tenets of past economic policies are still correct. Two new books answer with an unambiguous "no." Written for a truly national audience, together they constitute a frontal assault on mainstream American policy. If they do not cause America to think hard about where it is headed in the coming decades, it is unlikely that anything in writing can or will.

II

Robert B. Reich's very first paragraph sets the tone for his thinking. "We are living through a transformation that will rearrange the politics and economics of the coming century," he says. "There will be no national products or technologies, no national corporations, no national industries. There will be no national economies. . . . All that will remain rooted within national borders are the people who comprise a nation." Is this another lesson about economic interdependence, another call for bigger and better summit meetings? Definitely not.

The Work of Nations starts with the

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