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Internationale Kartelle und Aubenpolitik.

Internationale Kartelle und Au[beta]enpolitik We live in a time of stubborn trade imbalances and difficult debates about the proper roles of unfettered competition, antitrust policy, and state-guided coordination in managing the nation's foreign trade. Under these conditions, it is instructive to consider the interplay between politics and economics in the conduct of both foreign policy and trade policy in another era on the European continent. Internationale Kartelle und Au[beta]enpolitik offers several interesting stories of the period between the two world wars, ranging from steel cartels in Europe to patent agreements in Europe and the United States, to textiles in Britain and the Far East.

In his introductory essay, Clemens Wurm admits that the variety of international and national cartels makes assessment of their impacts difficult at best, and overall conclusions all but impossible. Case studies should seek patterns in the face of constraints imposed by technologies, costs, and demand, as well as by politics, both domestic and foreign. Wurm sets out the large question: were the cartels the products of foreign policy or did business leaders make independent decisions driven by their own complicated economic motives?

Ulrich Nocken first focuses on European steel, 1924-26. Nocken's work, based on careful examination of archival records of negotiations among business and government in the dark days of reparation payments and territorial disputes over control of the Saar, finds an international cartel that in some sense compensated for the folly of the politicians, "creat[ing] a balance between the basic industries of France and Germany acceptable to both sides" (p. 35). However, French business lacked a coherently articulated set of goals, and German business cooperated more closely with the German government. The business goals were clearly related to the vertical structures of coal and steel; the differences in government-business cooperation are more difficult to explain. Nocken concentrates on the process by which the international cartel agreements were negotiated in the mid-1920s. At first, German business leaders were unwilling to trade off economic for political concessions, and successfully convinced German politicians not to put politics ahead of economics, but eventually the politicians "deliberately created [an] atmosphere of uncertainty" (p. 50) that forced the industrialists to come to an international cartel agreement on their own. At the same time, failures of domestic cartels prompted greater attention by business to making the international cartels work. On balance, there were episodes when business led government, but others when government, perhaps indirectly, forced the hand of business. Nocken shows that clear and convincing patterns are difficult to discern.

John Gillingham's briefer essay covers more ground: coal and steel in the interwar period. Gillingham's main conclusion appears to be that international cartels were a necessary step toward "functional integration" (p. 88) across European borders, a result that occurred only after 1945. I am unconvinced. Functional integration could also mean long-term agreements between buyers and sellers supplemented by spot-market transactions and based on reasonably competitive markets and a stable legal climate. Cartels are not obviously a necessary condition for the current move toward European economic integration; in fact, antitrust policy is becoming more important as nationalized European firms are exposed to more competition. The breadth of Gillingham's contribution is to be admired, however, and one hopes that future debates will ask what "functional integration" really means.

Wurm's own case study demonstrates again the lack of simple conclusions. Britain in the mid-1920s had laissez-faire policies that became difficult to sustain in the face of European cartels and tariffs. British steel was difficult to cartelize: vertical disintegration and a greater dependence on international trade made effective horizontal agreements elusive. But 1929 changed all this: tariffs provided a climate more conducive to domestic and then to international cartelization, but without any clear connection to the politics of appeasement. The government more actively pushed the British textile industry toward an agreement with Japanese producers, in this case as part of its appeasement policy. Wurm demonstrates clearly the complexity of historical reality, and provides the best answers to his own questions.

Finally, Joachim Kossmann probes American politics in the late 1930s, focusing on patent and licensing agreements. This essay should be seriously considered by "reformers" of American antitrust law who would allow greater freedom for companies to cooperate in controlling the use and economic benefits of patents and licenses. The interplay of foreign policy and international cartels is best exemplified by the beryllium industry. In 1934, the major American producer signed an agreement with the major German producer that prohibited the Americans from supplying British users. As beryllium was a significant input into the production of aircraft components, the British government threatened to "seize" German patents registered in Britain and make them available to British producers. This caused the Germans to cave in, and in 1939 the Americans got the right to supply beryllium to Britain. Kossmann's research, based on the hearings of the Congressional Temporary National Economic Committee, shows that politics can dominate attempts by business to monopolize.

Given the sometimes perplexing wealth of detail and the lack of even simple theoretical structures, these essays are stronger in their individual lessons than in their broad conclusions; an explicit testing of various theories may be too much to ask, given the facts. However, historical research in this field continues to be bound by archives and generally disengaged from economics (see, however, Daniel Barbezat's and my articles in the Journal of Economic History, 1989). Future work in this area should blend hard economic constraints and incentives with the imperatives of domestic and foreign policy.

Lon L. Peters is senior economist with the Public Power Council in Portland, Oregon. He is the author of articles and papers on German cartels before the First World War, energy economics, industrial policy, and the management of common property resources. At present, he is examining the relative performance of for-profit and non-profit electric utilities and the role of predatory pricing in regulated industries.
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Author:Peters, Lon L.
Publication:Business History Review
Article Type:Book Review
Date:Jun 22, 1990
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