In grossman's reconstruction of marx's theory of accumulation and crisis, the capitalist system comes to suffer from a break-down in international cooperation. spiro's findings are consistent with marxian theory here. >From the review by Michael Anderson in Business History Review, Summer 2000: [Spiro's] argument focuses on America's declining hegemony. It turns on teh common assumption that a hegemonic power is required for the sommoth functioning of intl capital markets--known in the IPE literature as the 'the theory of hegemonic stability' (THS). According to the THS, the hegemonic nation provides the public goods of confidence, liquidity, and a payments- adjustment mechanism. From 1945 to 1971, American supposedly played that role, much as Britain was thought to have done prior to 1914. In the early 1970s, the collapse of the Bretton Woods regime, the ascedancy of the Japenese and Western German economies, and the stagnation of its own economy threatened America's hegemonic status. Then OPEC shocked the world. As the acknowledged hegemonic power, America was expected to adopt the legitimate course of cooperating within the system to address OPEC's challenge. "S marshalls a plethora of public statements by US officials to show that hey paid lip service to this notion of legitimacy. yet as his data and numerous interviews show, US officials acted otherwise. Fearing the consequences of a market regulated outcome, they instead used the power of the state to direct OPEC surpluses into US govt securities. Among other activities treasury sectys Simon and Blumenthal cut secret deals with Saudi monetary authorities s that Arab kingdom could purchase T bonds outside the usual auction. Moreover, they convinced the Saudis to continue to price oil in dollars and not to diversify their portfolios into securities and deposits denominated in competing currencies. "US officials also failed to abide by agreements with OECD partners. they competed for capial rather cooperating in its distribution. (europeans and Japan did so as well, but their actions seemed more acceptable because they were not the hegemonic power.) indeed officials of the Nixon, Ford and Carter administrations activiely discouraged any coordiation of intl policy. They felt that private capital markets were not up to the task of handling increased flows. Moreover, the feared the consequences for America's budget deficits and payments position. Yet in their statements to the press and to Congress, they justified their actions in the shared language of accepted norms. That is, they insisted that markets were working to allocate capital and were cooperating with their counterparts in the OECD and at the IMF. "Spiro concludes that the 'American response was therefore exploitative of its hegemonic position...the revised theory predicts that cooperation after hegemonic decline is unlikely. Rather Spiro expects stability and cooperation in such circumstances to break down. "Spiro's book fits into the recent IPE literature challenging the popular idea that the state has grown increasingly powerless in the face of globalization." rb
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