International Economic Disintegration

THE foregoing chapters of this study have led step by step from the narrower and more direct aspects of economic nationalism to its wider contexts. In this manner, the changes in the texture of world economy brought about by national economic policies reveal themselves as conditioned by factors which are much more comprehensive than those which formerly determined the commercial policy of the different nations.

It is still possible and fruitful to study the present phase of international economic disintegration under the more traditional aspect of the limited and well-defined factors of commercial policy proper—working, as it were, with an “as if” philosophy pretending that nothing else had happened than the increased desire for protection in agriculture or industry. In the preceding parts devoted to the new protective policies in agriculture and industry attention has been consciously restricted as far as possible to a narrower range of problems, but even there it was clearly impossible to do full justice to the subject without stressing the wider contexts which make us understand how much is really involved. Thus it was said, for instance, that the problem of agricultural protectionism to-day must be ultimately conceived as a problem of the place which is to be given to agriculture in an economic system undergoing the most far-reaching changes, while on the other hand the fate of the economic and social system as a whole will be decisively determined by the solution worked out for the problem of agriculture. It is equally obvious that the industrial protectionism of new countries has taken on forms and dimensions which also make it imperative to connect it with changes going much beyond that limited scope under which the process of industrialization has been previously studied. Moreover, it has become an indisputable necessity to follow up the lines which lead from these policies of agricultural and industrial protectionism to the common sources of international economic dislocation. One of these consists in the disturbances and fundamental changes which occurred in the monetary-financial mechanism of world economy, throwing out of gear that mechanism of international economic equilibrium to which the world had become accustomed under the reign of the former gold standard and which had been, implicitly or explicitly, presupposed by the orthodox theories of international trade and commercial policy. The other of those common sources of international economic dislocation is to be sought in the universal drive for economic stabilization. Both of these groups of changes—which are closely interlocked—found their place in the immediately preceding parts VI and VII.

Now our outlook must be made still wider if we want to gain a full understanding of the present policies making for international economic disintegration. All those changes in the internal structure of national economies, to which reference has been made so often in the course of the present enquiry, finally demand a special and comprehensive analysis which definitely shifts the searchlight of study on this subject which, after all, overshadows all others. From whatever direction we approach the phenomenon of international economic disintegration—be it from agricultural protectionism or from the policy of industrialization of new countries or from the monetary-financial disintegration of world economy or from the new trends in national business-cycle policies—all threads of causation will ultimately lead us to a fact which is both trivial and important: the gradual dissolution or breakdown of the old liberal order of economic society. It is obvious, that a liberal order of world economy can hardly be expected to be maintained while within the different national economies the liberal order is giving way more and more to a new order characterized by conscious direction of the national economic process, by social control, by monopolistic and interventionist rigidities and by growing collectivization and politicalization of economic life. The methods and forms of this development vary from country to country or from one group of countries to another, but there can be no mistaking the general trend which is common to all; notwithstanding various and important differences in detail, our whole economic system is moving from old to new forms just as our whole solar system is moving toward the constellation of Hercules.

In order to perceive the bearing of this development on international trade it is well to imagine for a moment that it had already found its logical conclusion in the erection of national socialist systems in the full sense of this term and then to ask oneself what this would inevitably mean for international trade and for commercial policies. Reason and experience would equally suggest that the nationalization of foreign trade—in the double sense of the strictest governmental control and of the use of this control for the purpose of economic nationalism—would become at once an integral part of the socialist system. In other words, trade between national socialist systems would be conducted on lines made ominously familiar by the regulation of foreign trade to-day in those countries which have already moved the furthest away from the old liberal order to a more collectivist structure of the national economy.