Transnational Economic Processes STOR Edward L.Morse International Organization,Vol.25,No.3,Transnational Relations and World Politics (Summer,.1971),373-397. Stable URL: htp:/links.jstor..0rg/sici2sici=0020-8183%28197122%2925%3A3%3C373%3ATEP%3E2.0.C0%3B2-I International Organization is currently published by The MIT Press. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use,available at http://www.jstor.org/about/terms.html.JSTOR's Terms and Conditions of Use provides,in part,that unless you have obtained prior permission,you may not download an entire issue of a journal or multiple copies of articles,and you may use content in the JSTOR archive only for your personal,non-commercial use. Please contact the publisher regarding any further use of this work.Publisher contact information may be obtained at http://www.jstor.org/journals/mitpress.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is an independent not-for-profit organization dedicated to creating and preserving a digital archive of scholarly journals.For more information regarding JSTOR,please contact support@jstor.org. http://www.jstor.org/ Fri Jul2223:27:242005
Transnational Economic Processes EDWARD L.MORSE CHANGEs in the structure of the global economy have resulted in a withering of governmental control of certain activities presumed to be de jure within the domain of governments.The international monetary crises of the Igoos have demonstrated the emergence of financial markets that seem to operate beyond the jurisdiction of even the most advanced industrial- ized states of the West and outside their individual or collective control.The flourishing of multinational corporations has affected the national science and economic growth policies of highly developed and less developed states alike by restricting the freedom of those governments to establish social priorities. Tariff reductions carefully and arduously negotiated on a multilateral basis through the General Agreement on Tariffs and Trade (GATT),through bilateral arrangements,or through emergent regional economic organizations have similarly increased the number of relatively nonmanipulable and un- known factors which must be accounted for in planning a wide spectrum of domestic and foreign economic policies-from regional development policy or anti-inflationary efforts on the domestic side to the international exchange rate of a state's currency. Whether these factors have become so significant as to render obsolete the state-centric view of international political and economic relations is a ques- tion which can be answered only when the limits upon restrictions on govern- mental operations become more clearly defined.It is,however,now obvious that the state-centric view must at least be modified and supplemented by additional frames of reference so that the factors which have impaired the effi- cacy of state-level decisionmaking processes can be more coherently analyzed. This essay is concerned with one set of factors salient in twentieth-century international relations which cannot satisfactorily be dealt with through tradi- tional references to autonomous national states.These factors are predomi- EpwARD L.MoRsE is assistant professor of politics and international affairs at the Woodrow Wilson School of Public and International Affairs and a faculty associate of the Center of International Studies,Prince- ton University,Princeton,New Jersey. 373
374 INTERNATIONAL ORGANIZATION nantly economic and are associated with changes in the global economy over the course of the past 1oo years.In particular,this essay is concerned with de- scribing those economic trends which have served to undermine the tradi- tional state-centric view.In addition to this descriptive task,this essay is also concerned with explanations of the growth of transnational economic activi- ties.In both instances the present endeavor inevitably covers issues of great controversy.On the one hand,proponents of the state-centric view have of- fered cogent reasons for maintaining,if modifying,the traditional perspective by treating phenomena such as multinational corporations,international eco- nomic organizations,and multinational economic treaty commitments as"en- vironing conditions"which have restricted but not invalidated the state-centric view.On the other hand,even among those who accept the evidence that these external factors ought to be isolated and analyzed apart from national govern- ments,there is no consensus on a theory which would explain the develop- ment of these factors or indicate their relevance. I have chosen to focus my attention on an empirical rather than a theoretical issue-namely,whether there exists in contemporary international economic relations an isolable set of factors which can be fruitfully thought of as trans- national and,if so,what the significance of those factors is for the foreign and domestic policies of various states.In so doing I have evaded the task of formulating a theoretical explanation of the growth of transnational economic activities.Neither I nor others have yet been able to develop or test a theory which would be adequate to that task.When such a theory is developed,how- ever,it will clarify what are currently the most arguable questions concerning international economic relations.Among these are the following questions:Is the level of international economic interdependence increasing or decreasing? Is such a change in economic interdependence universal or regional?Is the growth in transnational activities the consequence of permanent changes in international affairs in general or of the particular and transitory political con- figuration of forces which developed after World War II?Do transnational economic activities raise fundamental political questions about the ability of the modern nation-state to control them?Do the dynamics of transnational processes suggest a prognosis of stability or of instability in international af- fairs?Finally,what are the consequences of this prognosis for international peace? I.ECONOMIC ACTIVITIES AS TRANSNATIONAL PROCESSES If transnational interactions are understood as "the movement of tangible or intangible items across state boundaries when at least one actor is not an agent of a government or an intergovernmental organization,it immediately be- comes obvious why a transnational perspective on international affairs should 1 Joseph S.Nyc,Jr,and Robert O.Keohane,introductory essay to this volume,p.332
TRANSNATIONAL ECONOMIC PROCESSES 375 focus on economic activities.Virtually any "tangible"item involved in such processes is likely to have a significant economic dimension in that it can be treated as a commodity or service to which monetary value can be attached. Whether it is a question of goods,information,or money itself,its presence is likely also to entail certain costs for the governments or societies involved. This economic aspect of transnational activities is central for several addi- tional reasons. First,transnational processes seem to have arisen in the contemporary inter- national system after the technological revolution induced persistent economic growth in the highly developed or modernized societies of Western Europe. The remarkable development of first the British and later other Western economies in the nineteenth century through the "extended application of science to problems of economic production"enabled these societies to mo- bilize resources on an unprecedented scale.?This mobilization of economic resources coupled with revolutionary innovations in the fields of transporta- tion and communication enabled Western states to expand their power and influence,if not their rule,over the rest of the planet.The linking up of the various states of the world through this process of growth in transnational economic phenomena was accompanied by an unprecedented mobility of certain factors of production (population,capital)as well as of output. Second,these economic activities were transnational,as defined above,as a result of the kind of political regimes in which the industrialization process first occurred.These states were,by and large,liberal democracies.Very little of the initial growth in trade was a result of planned governmental activities Rather,the responsibility for taking advantage of the economic potential of new technological innovations was usually in the hands of private industrial- ists and bankers whose main incentive was the profit motive.Given the nature of the regimes involved international economic activities were bound to have some transnational element,and these were generally private business enter- prises. Third,with the onset of sustained economic growth in what are now the most highly modernized societies economic values became a central substan- tive focus of political and other social activities.This was the case for several 2 Simon Kuznets,Modern Economic Growth:Rate,Structure,and Spread (Studies in Comparative Economics,No.7)(New Haven,Conn:Yale University Press,1966),p.9.A similar definition has been used to describe the revolution of modernization in human affairs;see C.E.Black,The Dynamics of Modernization:A Study in Comparative History (New York:Harper Row,1966),pp.1-9. 3 For example,overseas emigration from Europe was at a level of some 257,000 per year in 1846 and increased to a rate of 1.4 million per year at the outbreak of World War I.Thereafter the rate pre- cipitously declined.Similarly,world trade increased at an accelerating rate through the first half of the nineteenth century,reaching a per decade rate of growth of 61.5 percent in the 1840s and declining to about 47 percent at the outbreak of the First World War.It,too,later declined drastically.With the rapid growth of world trade in the century before World War I the share of the foreign trade sector in the national product also generally increased in the industrializing societies.More complete data on the period between the 183os and 196o can be found in Kuznets,pp.285-358
376 INTERNATIONAL ORGANIZATION reasons.First,economic values were central to the new secularism which ac- companied the breakdown of the feudal system and which is one of the dis- tinguishing characteristics of modern life.Second,with the growth of their domestic economies expectations of affluence became generalized in all socie- ties.Through this "revolution of rising expectations"political goods grew to assume more and more the substantive characteristic of economic goods.Thus, the growth of the"welfare state"and of governmental policies for health care, minimum wages,and the like reinforced the secular evaluation of public policy.*Third,those transnational ideologies which developed as explanations of a world characterized by sustained economic growth focused on economic activities.For liberalism this focus appeared in a dichotomy of economic and political activities.The modern state was thought to be the upshot of a his- torical development which permitted economic activities to flourish inter- nationally as political controls over the activities of individual citizens were dismantled.For Marxism-Leninism the withering of the state would result from economically determined processes which would enable "man"to over- come his alienation so as to develop freely his own individual capacities.In both cases the ideal was a transnational and universal humanitarianism based on the transcendence of the nation-state and the development of the potential of high levels of industrialization. The central position of economic activities in transnational processes has been reinforced by the more recent revolution in nuclear technology and its impact on international affairs.As a result of the development of nuclear tech- nology traditional foreign policy goals involving territorial accretion have be- come so politically and economically costly as to be virtually prohibitive.The well-known paradox of the inutility of force in the relations of those states which have been stalemated by the "balance of terror"has made it possible for international economic activities to increase tremendously in political sig- nificance.As the use of traditional instruments of force has receded in im- portance,plays for power and position subsequently have appeared in the international monetary and commercial systems. 4 For an important and stimulating discussion of the relationship between political and economic aspects of modernization in terms of the growth of public as opposed to private goods see Karl de Schweinitz,Jr,"Growth,Development,and Political Modernization,"World Politics,July 1970 (Vol.22, No.4),pp.518-540.De Schweinitz views political growth as the process by which the output of public goods is increased.This political output is jointly consumed by all members of the polity-whether or not they wish to consume them:"Everyone must consume political goods.Although I can choose to consume cigarettes,automobiles,or transistor radios,I have no choice but to consume the armed forces of the United States,the space program of NASA,the judicial system,the FBI,the Federal Reserve Authority,or the National Labor Relations Board."(P.525.) 5 For an elaboration of this paradox see Pierre Hassner,"The Nation-State in the Nuclear Age,"Sur- vey,April 1968 (No.67),pp.3-27;and Hans J.Morgenthau,"The Four Paradoxes of Nuclear Strat- egy,"American Political Science Review,March 1964 (Vol.58,No.1),pp.23-35. 6 For an elaboration of this argument see my article,"The Transformation of Foreign Policies:Mod- ernization,Interdependencc,and Externalization,"World Politics,April 197o (Vol.22,No.3),pp.379- 383;and Klaus Knorr,On the Uses of Military Power in the Nuclear Age (Princeton,N.]:Princeton University Press,1966),pp.21-34