ORGANIZING THE WORLD'S MONEY: The Political Economy of International Monetary Relations by Benjamin J. Cohen

ORGANIZING THE WORLD'S MONEY: The Political Economy of International Monetary Relations

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A detailed and pragmatic proposal for reforming the international monetary order: ""the framework of rules, regulations, conventions, and norms governing the foreign financial conduct of nations."" Cohen (Economic Relations, Tufts) points out that the complicated process of providing for balance-of-payment adjustments and creating international liquidity involves political as well as economic considerations. International monetary relations, he states, are ""a mixed-motive game incorporating elements of both cooperation and competition."" Consequently, compromise will be necessary to establish a new order to replace the ad hoc arrangements in force since 1971 when President Nixon removed the dollar as the principal standard of value. In Cohen's view, the great difficulty in developing a new ""constitution"" for the international monetary system--the integrative mechanisms that exist to facilitate foreign currency exchanges--is the need to maximize both efficiency and consistency. He recommends a more active role for the International Monetary Fund (set up in 1945 to maintain equilibrium in global currency markets); tighter management of floating exchange rates, based on a crucial four-point ""code of good conduct""; a multiple reserve-currency standard; and fostering a gee-political climate that encourages negotiation. Cohen makes a closely reasoned argument against revival of the gold standard and a regime of absolutely floating exchange rates, but he calmly concedes that his judgments could be overtaken by events. A valuable primer on international monetary relations for laymen that specialists, too, will find challenging.

Pub Date: Nov. 18th, 1977
Publisher: Basic Books