Managing the World Economy: Fifty Years After Bretton Woods.

The IIE has commemorated the "golden anniversary" of Bretton Woods with a "comprehensive review of the institutional framework for international economic cooperation" [p. v]. This volume presents the proceedings of a conference convened for that purpose. Its structure clearly reflects the two analytical foundations for the exercise as defined in the Preface by Fred Bergsten: "an appraisal of the present regime" and "an assessment of the future needs of the world." An historical "Overview" by Eichengreen and Kenen - lauded by the discussants, in turn, as "magisterial", "masterly", "comprehensive", and "excellent and helpful" - is followed by a section on "Managing the World Economy" with papers on the Monetary System (Williamson and Henning), Trading System (Jackson), and Development and Transition (Ardito-Barletta). Issue-specific chapters on "Managing the New International Economic Issues" - Financial System (Padoa-Schioppa and Saccomanni), IDI (Julius), Environment (Esty), and Migration (Withers) - combine appraisal of the status quo with exploration of future needs. "The Future" is covered by Fred Bergsten with an extensive set of proposals for "Managing the World Economy of the Future." In a final chapter the editor tackles the challenging task of pulling salient strands of the arguments together. Addresses delivered to the conference by Mahbub ul Haq ("The Bretton Woods Institutions and Global Governance") and by Lawrence Summers ("Shared Prosperity and the New International Economic Order") are presented in an Annex.

The time horizon extending from the Bretton Woods Conference into the indefinite future that is implied in the "analytical foundations" laid down by Bergsten defines a monumental task for the conference organizer-cum-editor-cum-rapporteur which is not diminished by the sensitivity of the subject matter. It would have been helpful if the editor had laid down in an introductory comment his perception of that task and guidelines for its execution. As it is, the reader can glean that vision only indirectly from the various contributions. But authors are notoriously prone to diverge from their "marching orders." Hence, the editorial vision remains shrouded in mystery, and the reader is left to wonder, for example, why the section ostensibly devoted to appraisal prominently features the well-known target zone proposal of John Williamson embedded in a blueprint for monetary reform, or why the issue-specific chapters are denied the benefit of the incisive and, at times, suitably provocative comments that are constructive complements to the other papers. More generally, a succinct taxonomy of particular issues to be addressed in the appraisal of the current regime could have encouraged in-depth consideration of problems that are easily sidestepped in the absence of such instructions. Such an approach might have promoted the structural cohesiveness of the book, and it would have enhanced our understanding of the present regime.

For instance, appraisal of existing institutions is seriously deficient without an investigation of their internal behavior. In the present volume, that fundamental issue receives prominent consideration only in the perceptive "Comments" by Emile van Lennep and Moises Naim, the latter complete with a quote attributed to a "most senior" official! The viability of flexible management of a rule-based system, and its implications for credibility in an increasingly volatile global environment, is another issue that invites systematic exploration in the present context. Instead of being subjected to painstaking examination, the Fund's operational adaptability is either endorsed as an astute evolutionary development or condemned as an abrogation of its basic mission as guardian of the international financial system. Regionalism evokes a similar duality of views - as threat and as useful stepping stone towards multilateralism and global integration. The tension between economic openness and national sovereignty surfaces in many contributions. Their mutual exclusiveness is unequivocally acknowledged by Bergsten. But the question remains whether the subterfuge of "nominal sovereignty" can be relied upon to satisfy the appetite of politicians.

On the other hand, Eichengreen and Kenen draw a useful distinction in their historical "Overview" between institutions with upper- and lower-case "i", denoting "organizations" and "rules," respectively. These two sets of institutions dearly are separable and their respective merits and efficacy should be examined, even if this raises formidable identification problems. If the organization enjoys a good track record but the rules are found wanting, an efficient response should focus on the latter. Conversely, lacklustre or incompetent implementation of effective rules clearly calls for reform of the organization. Yet this particular theme is not taken up assiduously in the various contributions, with the notable exception of the "Comments" by van Lennep and Naim, and it is dismissed in Bergsten's explicit assimilation [n. 3, p. 345] of the two categories of institutions.

A remarkably benign view of United States policy pervades the volume. U.S. leadership, buttressed by side payments, gets high marks for the success of the Bretton Woods I/institutions during the first twenty-five years. Latter-day American trade policy, judged elsewhere as "increasingly schizophrenic . . . since the 1970s,"(1) receives surprisingly muted criticism, while her unilateral actions even evince praise as instruments of trade liberalization (Alan Wolff, Kenneth Oye).

Authors cannot be oblivious of their audience. The immediate audience for these papers are the conference participants with strong representation from industry, government, and the press as well as academia. Professional interests are shaped by institutional affiliations, and the authors have to accommodate the resulting diversity. They have done so with great success. In the process they have provided the material for a book that offers to a far larger audience an eminently useful comprehensive overview of the performance of the Bretton Woods institutions and an outline of contemporary concerns in global economic management as well as some proposals for organizational change. Perhaps the editor was wise after all to desist from issuing constraining "marching orders."

Dietrich K. Fausten Monash University

1. Krueger, Anne O. American Trade Policy: A Tragedy In the Making. Washington: AEI Press, 1995, p. 30.