A Nation Writ Large?: Foreign-Policy Problems before the by Max Kohnstamm

By Max Kohnstamm

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Exchanges are thought to be largely of one type: movement of goods, which can be controlled by tariffs and quantitative controls and an appropriate exchange rate. In fact, the sheer volume of transactions made possible by liberalisation of trade and capital movements, and the inclusion of all factors of production in the exchanges now taking place, have left all national economies exposed to influences from outside. A symptom and agent of this change is the multinational company; its result, international production.

The lesson of August 15, however, remains valid. In a world where full employment becomes an increasingly absolute demand - this now also applies to Japan - a new kind of mercantilism, the export of economic problems, could become the rule. Implicit in the new protectionism is also a downgrading of efficiency, relative to other concerns. It goes beyond safeguarding employment (still the most important instance) and extends towards safeguarding that broader goal, the quality of life. Symptomatic of this trend - and of its possible implications for the international economic system - was a recent proposal by a progressive personality of the Community, who advocated a 100 per cent tariff on goods produced in ways which pollute and waste resources.

To achieve this will be a delicate and difficult task. Before looking at some concrete instances of Community policy, it may be useful to restate what we see as the basic predicament of the international economic system, and define more sharply the role of the Community in it. We have said that further progress towards more freedom in international exchanges increases the efficiency and productivity of the industrialised countries, and is thus the precondition for any policy in pursuit of welfare which wants not only to distribute wealth more equally, but also to increase it.

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