Financial Statecraft: The Role of Financial Markets in American Foreign Policy
Author: Benn Steil
As trade flows expanded and trade agreements proliferated after World War II, governments—most notably the United States—came increasingly to use their power over imports and exports to influence the behavior of other countries. But trade is not the only way in which nations interact economically. Over the past two decades, another form of economic exchange has risen to a level of vastly greater significance and political concern: the purchase and sale of financial assets across borders. Nearly $2 trillion worth of currency now moves cross-border every day, roughly 90 percent of which is accounted for by financial flows unrelated to trade in goods and services—a stunning inversion of the figures in 1970. The time is ripe to ask fundamental questions about what Benn Steil and Robert Litan have coined as “financial statecraft,” or those aspects of economic statecraft directed at influencing international capital flows. How precisely has the American government practiced financial statecraft? How effective have these efforts been? And how can they be made more effective? The authors provide penetrating and incisive answers in this timely and stimulating book.
Foreign Affairs
Steil and Litan note an increasing tendency by the United States to try to influence international capital flows in order to further its foreign policy goals — whether to punish errant countries, inhibit the proliferation of nuclear weapons, slow the financing of terrorism, or prevent the laundering of drug money. The authors call this "financial statecraft" and provide a trenchant critical analysis of these efforts, which often turn out to involve symbolic politics at its worst: they have no impact on the stated objective, because the scope and operation of financial markets are now worldwide; they harm U.S. economic interests; and in some cases, they harm the alleged beneficiaries (refugees in the Sudan, for example). But the authors also argue that in certain respects the United States has engaged in too little financial statecraft. They attribute the financial crises of emerging markets during the past decade largely to the existence of separate national currencies and make a spirited case for "dollarization" — the adoption of the U.S. dollar, or perhaps the euro, as a replacement for national currencies by many developing countries. The United States, they argue, should facilitate that policy by sharing with such adopters the modest financial gains, called seigniorage, that arise from issuing a currency widely used by the public.
Read also John Barleycorn or Lemongrass and Sweet Basil
Freedom's Power: The True Force of Liberalism
Author: Paul Starr
A Pulitzer Prize-winning author, journalist, and intellectual argues for liberalism as the only viable response to the political and economic challenges of the modern world.
Liberalism in America is in greater peril than at any other time in recent history. Conservatives treat it as an epithet, and even some liberals have confused it with sentimentality and socialism. But Paul Starr, one of America's leading intellectuals, claims that, properly understood, liberalism is a sturdy public philosophy, deeply rooted in our traditions, capable of making America a freer and more secure country.
"Life, liberty, and the pursuit of happiness" remains as good a definition of liberalism's aims today as it was when Thomas Jefferson borrowed the language of John Locke for the Declaration of Independence. From its origins as constitutional liberalism in the seventeenth and eighteenth centuries, to the complexities of today's global political systems liberalism has provided the basis of the most prosperous and powerful states in the world. At a time when conservative policies are weakening America's long-term fiscal, economic, and international strength as well as its liberties, reinstating the power of liberalism is more urgent than ever.
The New York Times - Michael Lind
Freedom's Power is an impressive achievement that deserves to be pondered by the critics of contemporary American liberalism no less than by its supporters.
The Washington Post - Lynn Hunt
Riding to the rescue of those still traumatized by 20 years or more of successful demonization by the Republicans, Paul Starr…offers a lucid and well-informed explanation of the origins, history and current prospects of liberalism. Starr's achievement is not minor, for liberalism is devilishly difficult to pin down…Starr has more in mind, however, than a useful historical survey; he aims to provide a guide for the present. Believing that American conservatives have failed to achieve much of substance while in power these past decades, he senses an "opportunity to rebuild a political majority by showing how liberal ideas make sense for America and by reopening a conversation with people who believe that liberals have not shown any concern or respect for them." He is much more successful at justifying liberal ideas than at reaching out to skeptics.
Publishers Weekly
Part political theory and part intellectual history, this book tracks the development of liberalism as the world's dominant political tradition and argues for its continued ascendancy as the best guarantor of individual rights and prosperity on the global stage. Starr, a Princeton sociology and public affairs professor and founding editor of the American Prospect, explains modern liberalism as an evolutionary process, rooted in classical laissez-faire liberalism, and gradually accreting a greater role for the state to provide a social safety net, defend equal rights for all and institute true democratic pluralism. Defending liberalism from its socialist as well as its conservative critics, Starr sees his ideology as a middle path, harnessing the creative power of the free market while tempering some of its capriciousness. A central thesis is that "[t]he peculiar internal tension of liberal constitutions is that they constrain power even as they authorize it—that is, they attempt to curb the despotic power and ambitions of individual rulers and officials and, by doing so, to permit stronger systemic capacities." The first section of the book discusses the causes and consequences of liberal revolutions in Britain, America and France, while later chapters cover recent events, including the 2006 congressional elections. Complex macroeconomic, demographic and philosophical trends are presented engagingly and understandably for casual readers and political buffs alike. (Apr.)
Copyright 2007 Reed Business InformationForeign Affairs
Starr, a distinguished political sociologist, offers an eloquent restatement of the principles and promise of modern liberalism. In recent decades, the "liberal project" in the United States seems to have lost its way, while conservatism has come into its own. Starr sets out to recover the guiding ideas of American liberalism and defend their relevance today. Part of his book is a sweeping intellectual history of "constitutional liberalism" -- a retelling of the great movements of Anglo-American liberal political development, in which citizenship rights and limited government were secured. He argues that liberalism is not simply a set of principles about freedom and equality but a "discipline of power" -- ideas about how to both control and create power. Accordingly, the singular achievement of liberalism has been restricting arbitrary power and thereby unleashing the ability of society to generate wealth, knowledge, inclusion, and opportunity. Starr acknowledges the decline of liberal innovation in recent the decades, but he resists the conservative charge that New Frontier and Great Society liberalism was tried and failed. To reinvigorate the liberal project, he urges a public philosophy of "partnership," which at home means moving beyond interest-group liberalism and abroad means a return to multilateralism and a community of democracies. Starr's contribution is to help restart the national conversation about the sources of American greatness.
Jack Forman - Library Journal
Written as "a rebuttal to contemporary conservatism and as a corrective to some currents of liberal thought and progressive politics," this intellectual history and political analysis attempts to show that modern liberalism is really a continuation of the classic liberal tradition, emphasizing constitutional government and individual rights. Starr (sociology & public affairs, Princeton Univ.; editor, The American Prospect; The Social Transformation of American Medicine) defines liberalism as "a design of power in support of freedom" and argues clearly and convincingly for liberalism as a middle ground between conservatism and socialism. In discussing the development of classical liberalism and modern democratic liberalism, Starr ranges far and wide over English, French, and American history. In looking at the present, he attacks Bush's unilateralism, insensitivity to the world's environmental problems, and lack of concern for economic equality. He believes that liberalism can regain a national majority by looking at domestic bread-and-butter issues in terms of the national interest rather than the objectives of specific interest groups and by recommitting to a multilateral approach to foreign policy. For academic and larger public libraries.
Kirkus Reviews
Pulitzer Prize-winner Starr (The Creation of the Media, 2004, etc.) is liberal and proud of it. The editor of The American Prospect offers a decidedly upbeat account of the liberal tradition. It best reflects America's founding ideals of "life, liberty, and the pursuit of happiness," argues Starr (Sociology and Public Affairs/Princeton Univ.), and has proven a workable basis for strong, enduring liberal democracies in our time. In its broadest meaning, he writes, liberalism refers to the principles of constitutional government and individual rights that emerged in the 17th- and 18th-century writings of such thinkers as Locke, Montesquieu and Madison. It animated the American and French Revolutions and led to the birth of the modern liberal state. By constraining arbitrary power and unleashing freedom's power, constitutional liberalism sought to create a free, fair and prosperous society. Beginning in the late-19th century, democratic forces spurred the rise of modern liberalism, with its penchant for government regulation, stronger protection of civil liberties and respect for cultural diversity. While criticized from both the right and left, liberal democracies work, Starr avers. They have proven flexible, pragmatic and successful; they have weathered depressions and world wars. In the 1960s, when many deemed liberalism a failure, they fostered a great moral transformation that rectified injustices, expanded freedom and democracy and changed America for the better. Analyzing the consequences of the Bush administration's conservative policies-growing economic inequality, environmental deterioration, long-term fiscal problems, the Iraq War-the author believes liberals now have anopportunity to build a political majority and lead the nation in a progressive direction. To do so, they must develop organizational strength, achieve intellectual coherence reflecting liberal principles and create a program based on shared prosperity. An informed and eloquent case for liberalism as the American way.
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