International Monetary Power
Publication Year: 2006
Most economists and political scientists assume that efficiency, the invisible hand, is the preeminent factor in monetary decisions; questions of power and the role it plays in monetary policy are largely neglected. This pathbreaking book redirects attention to monetary power and provides an original framework for assessing its role in relations between sovereign states.
At present, states are the critical players in monetary relations; they control the production and distribution of the money supply, including the provision of international liquidity and the availability of payments financing. David M. Andrews and the contributors to this volume understand "power" as the capacity to alter the behavior of other actors, including the policies of other states. International Monetary Power provides a thorough overview of how money is used as a tool to achieve international political aims.
Contributors: David M. Andrews, Scripps College; Benjamin J. Cohen, University of California, Santa Barbara; Scott Cooper, Brigham Young University; Eric Helleiner, University of Waterloo; C. Randall Henning, American University and the Institute for International Economics; Jonathan Kirshner, Cornell University; Louis W. Pauly, University of Toronto; Andrew Walter, London School of Economics and Political Science
Published by: Cornell University Press
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Title Page, Copyright
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This book represents a genuinely collaborative enterprise. For some time I have puzzled over the question of international monetary power, its sources and its implications; but the topic has proved a difficult one to master. I suggested to this volume’s contributors that we tackle the subject together, and they agreed. ...
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This volume illuminates the power dimension of international monetary relations: its meaning, its sources, and its practice. Simply put, international monetary power exists when one state’s behavior changes because of its monetary relationship with another state. ...
Part One: Power, Statecraft, and International Monetary Relations
1. Monetary Power and Monetary Statecraft
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On October 31, 1956, British and French military forces invaded Egypt, determined to seize the Suez Canal and humiliate Egyptian president Gamal Abdel Nasser, who had nationalized the international waterway some three months earlier. About a week after the invasion, on November 5, the pound sterling came under sustained pressure on international markets. ...
Part Two: Monetary Power
2. The Macrofoundations of Monetary Power
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What are the foundations of monetary power? David Andrews (chap. 1 in this volume) distinguishes between two pathways for the exercise of monetary power: the macro-level, linked to the problem of balance-of-payments disequilibrium; and the micro-level, working through the capacity of money to alter actor interests and identities. ...
3. Domestic Sources of International Monetary Leadership
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Currency leaders enjoy various forms of influence and power. The “exorbitant privilege” of currency leaders, above all the ability to finance external deficits by issuing IOUs and thereby to delay adjustment, has in particular received great attention in the literature. But what produces currency leaders? ...
4. Below the State: Micro-Level Monetary Power
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The study of international monetary relations, whether conducted by economists or political scientists, has typically focused on the macro-level and especially on issues related to balance-of-payments disequilibria between states, as the preceding chapter suggests. These matters are unquestionably important. ...
5. Monetary Policy Coordination and Hierarchy
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Invoking a metaphor from family therapy, David Lake describes hierarchy as “one of the ‘dead horses’ plaguing the study and practice of international politics. It is a fact of international life, but we refuse to recognize it. Indeed, for much of the last fifty years, we have refused to talk about it, and now, after decades of trying to forget, we have even lost the language to describe it.”1 ...
Part Three: Monetary Statecraft
6. The Exchange-Rate Weapon and Macroeconomic Conflict
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Monetary statecraft, understood as efforts to influence the policies of other states by manipulating monetary conditions, has been a recurring feature of the global economy since World War II. At critical moments over the last four decades, the United States has exploited the vulnerability of countries in Europe and East Asia to changes in their currencies’ exchange rates ...
7. Currency and Coercion in the Twenty-First Century
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Most scholarship on monetary power—and especially those studies that have focused on the manipulation of currency values and monetary arrangements to advance political goals, or what this volume terms monetary statecraft— have emphasized the experiences of the twentieth century, and in particular the years 1914–89, the period between World War I and the end of the Cold War.1 ...
8. The Limits of Monetary Power: Statecraft within Currency Areas
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Despite the abundant literature on individual currency areas such as the franc zone and the sterling bloc, there has been a dearth of comparative political analysis of how these areas work. One important exception is Jonathan Kirshner’s analysis of how monetary power is exploited by leading powers within currency areas. ...
9. Monetary Statecraft in Follower States
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Common sense suggests that successful leaders need willing followers. Coercion can sometimes be effective, but, as every new parent soon learns, outcomes achieved through self-interested acquiescence tend to be more satisfactory and more enduring than those achieved through the application of brute force. ...
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Page Count: 224
Publication Year: 2006
Series Title: Cornell Studies in Money