TRANSNATIONAL ECONOMIC PROCESSES 377 International economic policies have increased in political importance for three different kinds of states for three different sets of reasons.First,in the case of the industrialized societies of the West the post-World War II attempt to create an "Atlantic Community,"first through the Marshall Plan and later through the negotiation of tariff dismantling through GaTT,involved an amalgamation of security and welfare objectives.On the one hand,the com- munity was seen as an attempt to foster higher levels of interdependence among Western industrialized states so as to reinforce,through economic re- covery and economic growth,their collective defense against Communist expansion.On the other hand,the accrual of the welfare benefits of higher levels of trade was also viewed as an end in itself.'Second,in East-West rela- tions trade policies formulated in virtually all Western states during the Igoos were based on the notion that foreign economic policy could foster political liberalization in Eastern Europe.Third,in the case of relatively nonmodern- ized societies economic policies have grown in importance as a result of the relative impotence of these societies when compared to relatively industrial- ized states.Without the capacity to sustain traditional foreign policies based on the use of force the leaders of these states have collectivized their demands for a greater share of the world's wealth by supporting efforts to redistribute that wealth through trade and aid agreements with the wealthier societies of both East and West. As a result of these three reasons the same general conclusions can be reached:Economic change and economic policy have become central foci of international politics in the twentieth century.Any general theory which is to succeed in explaining the reasons why this focus has grown in importance must take into account the shift in the substance of international politics from a concentration on instruments of force to an emphasis on economic state- craft. II.THE "MYTH OF NATIONAL INTERDEPENDENCE"REEXAMINED If the politicization of economic activities accounts for their place in a dis- cussion of transnationalism,it does not provide an explanation of the emer- 7The same combination of "security"and "welfare"goals could be found among the various incen- tives for European integration.On the one hand,European unification was viewed as a means of putting an end to the divisive nationalisms which had been secn as a root of warfare and upheaval in Europe in the century preceding World War II.On the other hand,it was seen as the means of creating a market sufficiently large to support modern industrial growth.For a discussion of these motives in terms of functional,federal,and confederal approaches to European unity see Altiero Spinelli,The Eurocrats: Conflict and Crisis in the European Community,trans.C.Grove Haines (Baltimore,Md:Johns Hopkins Press,.1966),Pp.325. s For the most comprehensive review of political aspects of East-West trade see Samuel Pisar,Co- existence and Commerce:Guidelines for Transactions between East and West (New York:McGraw-Hill Book Co.,1970). The increased importance of economic relationships as a major concern of international politics is further explained by Susan Strange in "International Economics and International Relations:A Case of
378 INTERNATIONAL ORGANIZATION gence and growth of what may be called transnational economic activities. As I suggested above,a discussion of transnational economic activities ought to be concerned with two issues:I)the empirical question of whether trans- national activities exist and 2)the theoretical question of what sort of theory is necessary to explain the emergence of transnational activities and the dy- namics of their growth.It is the former issue to which the following discus- sion is largely directed.Problems arising from the theoretical issue are dis- cussed in section IV. Any discussion of the nature of transnational economic processes must re- late the emergence of transnational economic relations to relatively recent changes in international relations and include the magnitude of the growth of international economic activities.Because a theory to explain this growth is lacking,even the empirical concern of describing trends is confronted with frequently contradictory evidence.Some writers see these trends as support- ive of the thesis that transnational economic activities have grown in volume as well as significance during the past century.Others see the trends as re- flective of a substantially decreased significance in the external sector for vir- tually all societies which followed the growth in this sector before World War I These contradictions apparently reflect our inability to perceive clear- ly the dynamics of change since we are in the midst of a process which is as yet incomplete.As a result trends have become clearly discernible,but,as one student of modern economic growth has argued,"the final shapes of these characteristics are presently hidden from us.This limitation,however,should affect primarily questions of degree rather than kind,of intensity rather than being.It will be most important to bear this limitation in mind in evaluating the specific empirical coefficients-their stability and variability over time and space." There are several possible ways to organize a discussion of transnational economic trends.One would involve the specification of the nongovernmental participants including corporations,financial organizations,and other group- Mutual Neglect,"International Afjairs (London),April 1970 (Vol.46,No.2),pp.304-315;and my article,"The Politics of Interdependence,"International Organisation,Spring 1969 (Vol.23,No.2), pp,3I1-326. 10 Several of these contradictory interpretations are reviewed in my article in International Organiza- tion,Vol.23,No.2;and in Oran R.Young,"Interdependencies in World Politics,"International Journal, Autumn 1969 (Vol.24,No.4),pp.726-750. 11 Sce Kuznets;and Richard N.Cooper,The Economics of Interdependence:Economic Policy in the Atlantic Community (Atlantic Policy Series)(New York:McGraw-Hill Book Co.[for the Council on Foreign Relations],1968). 12 The most extreme statement of this viewpoint is found in Kenneth N.Waltz,"The Myth of Na- tional Interdependence,"in The International Corporation:A Symposium,ed.Charles P.Kindleberger (Cambridge,Mass:M.I.T.Press,1970),pp.205-223.See also Karl W.Deutsch and Alexander Eckstein, "National Industrialization and the Declining Share of the International Economic Scctor,1890-1959," World Politics,January 1961 (Vol.13,No.2),pp.267-299;and Karl W.Deutsch,Chester I.Bliss,and Alexander Eckstein,"Population,Sovereignty,and the Share of Foreign Trade,"Economic Development and Cultural Change,July 1962 (Vol.1o,No.4),pp.353-366. 13 Kuznets,pp.15-16
TRANSNATIONAL ECONOMIC PROCESSES 379 ings which are highlighted in this volume.Alternatively,the pattern of inter- actions can be specified at a systemic level which would isolate a set of activi- ties analytically separable from the nation-state focus.Although an ideal long- run goal,this would require the definition of a theoretical framework which is beyond the scope of this essay,and it would carry the discussion far from its focus of transnational economic activities.Instead,I have chosen to treat both the general trends in economic activities and the controversial debate over them through a discussion of developments in international economic interdependence. Although it can lead such a discussion astray,a focus on international eco- nomic interdependence is central to a discussion of transnational economic processes.Transnational processes and international interdependence refer,in effect,to overlapping sets of phenomena.Interdependent behavior may be understood in terms of the outcome of specified actions of two or more parties (individuals,governments,corporations,etc.)when such actions are mutually contingent.These parties,then,are interdependent with respect to specific issue areas and not to the whole spectrum of their activities.None of the ac- tions involved is understood to be fixed.Nor need they be consciously per- ceived as mutually contingent or dependent,although such perception would be necessary if interdependence was to be manipulated by one or more of the parties involved.In this sense strategic interaction would be a subset of inter- dependence and would involve specified goal-oriented behavior on the part of at least two parties. Interdependence as defined above need not involve transnational processes. For example,the security of two states may involve a set of interdependent relationships but also involve no nongovernmental actors and therefore not necessarily be transnational.Similarly,transnational activities could exist with- out affecting the level of interdependence among certain groups.I presume this to be frequently the case with such less-tangible phenomena as ideolo- 14 There are other definitions which have been offered for "interdependence."Each has a different focus and therefore gives rise to different sets of questions.This one focuses on state actions and conse- quently lends itsclf to questions regarding the ability of a state's leadership to attain its objectives and its level of control over activities both within and beyond its borders.Interdependence has also been defined in systemic terms and in terms of the growth of political output or political goods. In systemic terms,for example,interdependence has been defined "in terms of the extent to which events occurring in any given part or within any given component unit of a world system affect (either physically or perceptually)events taking place in each of the other parts or component units of the system."Young,International Journal,Vol.24,No.4,p.726.This definition Iends itsclf to the formu- lation of hypotheses about the systemic effects of increases (or decreases)in the levels of interdependence: "The higher the ratio of interdependencics among the component units of a world system to inter- dependencies within the component units,the greater the proportion of any given unit's resources that will be devoted to external affairs."Ibid,p.741. In tcrms of political goods or "public goods"(those goods which,if consumed by any single member of a group,cannot feasibly be withheld from other members of the group)interdependence would be defined as a function of the scope and number of political goods produced in a group.See,for example, Norman Frohlich and Joe Oppenheimer,"Entrepreneurial Politics and Foreign Policy,"World Politics, forthcoming
380 INTERNATIONAL ORGANIZATION gies.By and large,however,I would hypothesize that as transnational pro- cesses increase in number and in scope for a specified set of states,the level of interdependence among them similarly increases.Although subject to empiri- cal verification this would seemingly be the case because state objectives would become increasingly a function of intersocietal interdependence. I treat this hypothesis as an assumption in the discussion below.Even though the focus on international economic interdependence raises operational difficulties which are as intractable as those of transnational economic rela- tions,the concept is useful for two reasons.First,much of the debate over changes in international economic relations has revolved around the question of whether there has been a secular increase in the level of international eco- nomic interdependence over the past century.Second,given the hypothesis stated above a number of questions about transnational economic processes are covered in a discussion of international interdependence. The discussion of international interdependence is controversial even before an attempt is made to measure the phenomenon or to trace longitudinal trends in its growth.Arguments against the usefulness of conceptualizing interna- tional politics in terms of notions of interdependence have recently been brought together in an essay by Kenneth Waltz,"The Myth of National In- terdependence."An analysis of Waltz's argument,therefore,serves as a useful foil for the present discussion.Waltz argues that "a comparison of the con- ditions of internal and external interdependence will make it clear that in international relations interdependence is always a marginal affair."1 While Waltz's analogy may be an apt one,his conclusion does not follow from his assumption.This is apparently a result of Waltz's bias against"the mistaken conclusion...that a growing closeness of interdependence would improve the chances of peace."Waltz's view that an increase in international inter- dependence would be destabilizing for international society as a whole is probably correct.Yet,his bias against the concept results in a failure to define it explicitly and also in the complacent belief that international affairs are more "stable"than other views might imply. The concept of interdependence ought to be viewed in neutral terms with- out the value judgments of optimists who invoke a harmony of interest theory or of pessimistic prophets of doom.Even here the analogy between interna- tional and domestic society remains appropriate.This distinction,however, need not imply that in international society interdependence is always mar- ginal.What it does imply is that the level of political integration outside the state is,by definition,lower than that within it.Interdependence,as defined above,has to do with the ability of statesmen to achieve those goals which have been set for them when goal attainment is contingent upon activities 15 Waltz,in Kindleberger,p.206. 16Ibid,P.205