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³ Stanley, Hoffmann, “Weighing the Balance of Power,” Foreign Affairs 50 (07 1972), p. 632Google Scholar; idem, “La nation, pourquoi faire?” in J. C.Casanova et al., Mélanges en l'honneur de Raymond Aron, (Paris, Calmann-Lévy, 1971), p. 336. We wish to acknowledge, though, that in his critical comments on this paper, Stanley Hoffmann has stressed that his dismissal of mercantilism as obsolete is perfectly compatible with his firmly held view that, contrary to the “liberal” conception, governments continue and will continue to manipulate domestic and international economics in order to reach national ends. In his view, however, “the neo-mercantiism which is thus practiced develops in an environment of such tight interdependence that it really has rather little in common with the zero-sum game mercantilism of the 17th century.” Our own opinion, as developed in this essay, is that interdependence is one of the very conditions of mercantilist attitudes.

⁴ Keynes, John Maynard, The General Theory of Employment, Interest and Money (London and Basingstoke: MacMillan, 1936), p. 383.Google Scholar

⁵ Schumpeter, , History of Economic Analysis, p. 336Google Scholar. See also Robinson, p. 7; Knapp, pp. 39–43; Michèle, Schmiegelow, “L'Adhésion de la Roumanie au FMI et la théorie des relations internales”, Revue française de science politique 24 (02 1974), p. 113.Google Scholar

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¹¹ See, for example, Jacques, Rueff, “The West is Risking a Credit Collapse”, Fortune 64 (07 1961), p. 126Google Scholar; idem, Le péché monétaire de l'occident (Paris: Plon, 1971); and Valéry, Giscard d'Estaing, “The International Monetary Order”, in Mundell, Robert A. and Swoboda, Alexander A., eds., Monetary Problems of the International Economy, (Chicago and London: The University of Chicago Press, 1969), p. 17.Google Scholar

¹² Kindleberger, Charles P., “The Politics of International Money and World Language,” Essays in International Finance, (Princeton), no. 61 (08 1967), p. 11Google Scholar; Paul, Einzig, The Destiny of the Dollar (London and Basingstoke: MacMillan, 1972), pp. 137–43Google Scholar. As to the case for floating rates, see Milton, Friedman, “The Case for Flexible Exchange Rates,” in Friedman, Essays in Positive Economics, (Chicago and London: University of Chicago Press, 1953), pp. 157–203Google Scholar. As evidenced by Friedman's reasoning, floating rates as well are defensible in terms of liberal economic theory. The “economic nationalism” of countries favoring floating rates can therefore only be rationalized in terms of the ends-means relationship between theory and policy in the particular circumstances of the economy concerned. It would go beyond the scope of this paper to do this in detail. However, the French case for fixed exchange rates and its modification after the floating of the franc in 1974 suggests ways of mercantilist rationalization of American and German policies as well, at least by implication. A good discussion of the relative value of the various choices for monetary reform in terms of American national interest in various hypothetical situations is provided by Aliber, Robert Z., “National Preferences and the Scope for International Monetary Reform,” Essays in International Finance (Princeton), no. 101 (11 1973)Google Scholar. For a discussion of the German advocacy of exchange rate flexibility—understandable only from the situation of a country combining persistent payments surpluses with a high political sensitivity towards inflation—see The German Council of Economic Experts, “Towards a New Basis for International Monetary Policy,” Princeton Studies in International Finance, no. 31 (October 1972), pp. 1, 7, 11.

¹³ See Aron, Raymond, Peace and War: A Theory of International Relations, trans. Richard, Howard and Fox, Anette Baker, (New York: Doubleday, 1966), p. 94Google Scholar; Hoffmann, , Contemporary Theory in International Relations (Englewood Cliffs: Prentice Hall, 1960)Google Scholar; Waltz, Kenneth N., Man, the State, and War (New York: Columbia University Press, 1959)Google Scholar; and Masters, Roger D., “World Politics as a Primitive Political System,” World Politics 16 (07 1964), p. 595.CrossRefGoogle Scholar

¹⁴ For discussion of mercantilism as a concept of integration, see Heckscher, vol. 1, p. 22; Robinson, , Freedom and Necessity, pp. 88–93Google Scholar; and Myrdal, , Economic Nationalism and Internationalism (Melbourne: The Australian Institute of International Affairs, 1957), p. 33Google Scholar. As for the concept of an economy as a social system, see Talcott, Parsons and Smelser, Neil J., Economy and Society: A Study in the Integration of Economic and Social Theory (New York: The Free Press, 1965), pp. 1–4, 34–49Google Scholar; Harrod, Roy F., Towards a Dynamic Economics (London: MacMillan, 1948)Google Scholar; and Knapp, pp. 23, 25, 27, 31. An example of the new mercantilism in the Eastern World is described in Schmiegelow, “L'adhésion de la Roumanie au FMI et la théorie des relations internationales.” On the nationalism of the welfare state, see Myrdal, Economic Nationalism and Internationalism, pp. 14–15; idem, Beyond the Welfare State: Economic Planning and its International Implications(New Haven and London : Yale University Press, 1960); its Keynesian aspects are stressed by Knapp, pp. 40–41; Robinson, Freedom and Necessity, p. 88; Gross, “Die Renaissance des Merkantilismus: Neue Phase des Keynesian-ismus”; Henry, Paul-Marc “La statue du Commandeur,” Le Monde, 18 05 1974, p. 44Google Scholar. As to Keynes' personal liberalism, see Keynes, John Maynard, “Am I a Liberal?” in Alan, Bullock and Maurice, Shock, eds., The Liberal Tradition from Fox to Keynes (Oxford: Clarendon Press, 1956), pp. 283–5Google Scholar. But one should also bear in mmd that in post-war Europe neo-Keynesian policies tended to be supported by political groups of Socialist or Social-Democrat orientation rather than by liberal forces. See Lutz, F. A., “Politische Uberzeugungen und nationalökonomische Theorie”, Ordo 9 (1957), p. 12Google Scholar, and Myrdal, , Economic Nationalism and Internationalism, p. 3.Google Scholar

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¹⁷ Indeed, for de Gaulle, the former cavalry general, the economy allegedly remained something like a quarter-master general's department (“l'intendance”) of the nation. Whether or not he actually pronounced the apocryphal phrase: “l'intendance suivra,” and no matter how much personal effort he dedicated to economic and financial matters, what counted for this “heroic leader” was high politics. See Philippe, Bauchard, Bilan de la Ve République: l'économie au service du pouvoir (Paris: Calmann-Lévy, 1967), p. 7Google Scholar. For discussion of the relevance of de Gaulle's charismatic leadership in terms of integration theory see Haas, , “The Uniting of Europe and the Uniting of Latin America,” Journal of Common Market Studies 5 (1966–1967), p. 315.CrossRefGoogle Scholar

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²³ Bauchard, , L'économie au service du pouvoir, pp. 53, 60–61. For a discussion of Debré's role in French politicsGoogle Scholar see Williams, Philip M. and Martin, Harrison, Politics and Society in de Gaulle's Republic (Garden City: Doubleday, 1971), pp. 35–48Google Scholar, 102. His Gaullist orthodoxy is best illustrated by himself in his Une certaine idée de la France (Paris: Fayard, 1972).Google Scholar

²⁴ See Philippe, Simonot, “Les banques centrales pourrount réévaluer leur or pour gager leurs emprunts et payer leurs dettes,” Le Monde, 13 06 1974, pp. 1 and 39.Google Scholar

²⁵ “Dix ans après,” Le Monde, 23 11 1968, p. 1.Google Scholar

²⁶ Club Jean Moulin, p. 17.

²⁷ See Rüdiger, Hopp, Schwankungen des wirtschaftlichen Wachstums in Westdeutschland 1949–1967 (Mejsenheim: Ham, 1969), p. 51.Google Scholar

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³⁰ Le Monde, 26 November 1968, p. 2. See also Jacques, Fauvet, “Le monde entier a cru à la dévaluation,” Le Monde, 26 11 1968, p. 1.Google Scholar

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³⁴ See “Interview de Michel Debré, Ministre de la Défense,” L'Express, 17–2301 1971.Google Scholar

³⁵ “Changement et continuité en diplomatie”, Le Monde, 7 06 1974, p. 1.Google Scholar

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³⁷ “Yves Cannac: L'un des pères de la Nouvelle Société,” Le Monde, 25 05 1974, p. 8.Google Scholar

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³⁹ See note 20. As to the inflationary repercussions of the French policy of growth see Gruson, p. 40; Vasconcellos, A. S. and Riker, B. F., “An Evaluation of French National Planning: 1949–1964,” Journal of Common Market Studies 8 (1970), p. 226CrossRefGoogle Scholar. Regarding the general significance of the “Keynesian Revolution” see Adolph, Lowe, On Economic Knowledge: Toward a Science of Political Economics (New York and Evanston: Harper & Row, 1965), p. 217Google Scholar; Parsons and Smelser, p. 246; and Knapp, pp. 33, 41. How the French technocracy embraced Keynesian theory is described by Pierre, Lalumière, L'inspection des finances (Paris: P.U.F. 1959), p. 180Google Scholar; Kesler, p. 263; Gruson, p. 40; and Schmiegelow, , “The Role of the State Elite in France,” pp. 42–44.Google Scholar

⁴⁰ Haas, , The Uniting of Europe (Stanford: Stanford University. Press, 1958), p. 454Google Scholar. The quotation is from Hart, Henry M. and Sacks, Albert M., The Legal Process: Basic Problems in the Making and Application of Law (Cambridge, Mass.: Tentative Edition, 1958), p. 111.Google Scholar

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⁴³ Kesler, p. 248. That Mendesian reformism can have “nationalist” repercussions as well is, of course, the point which we try to make in this paper.

⁴⁴ For details see Schmiegelow, “The Role of the State Elite in France,” pp. 20–22; 32–33; 92–106. As regards “European” socialization through interpenetration and secondment, see Lawrence Schemmann and Werner Feld, “The European Economic Community and National Civil Servants of the Member States,” International Organization 26 (Winter 1972), p. 132.

⁴⁵ See also McCracken, Paul W., “Elevating the Transatlantic Dialogue,” Wall Street Journal, 05 24, 1973, p. 8Google Scholar; Paul, Fabra, “Une liberté d'inaction,” Le Monde, 22 01 1974Google Scholar; and Schäfer “In Europa haben national Interessen den Vorrang,” p. 5.

⁴⁶ Yeager, pp. 161–67; Kindleberger, , International Economics, pp. 253–70Google Scholar. For a discussion of trade elasticities as variables of integration and interdependence, see Tollison, Robert D. and Willet, Thomas D., “International Integration and the Interdependence of Economic Variables,” International Organization 27 (Spring 1973), pp. 261–2.CrossRefGoogle Scholar

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⁴⁸ See the German Council of Economic Experts, “Toward a New Basis for International Monetary Policy,” pp. 1, 7, 11Google Scholar; Karl, Schiller, “Konvertibilität-Liquidität-Parität: Zum Problemwandel der Währungspolitik in der Nachkriegszeit” in Gerhard Schröder et al., Festschrift für Ludwig Erhard zum 75. Gerburtstag (Frankfurt, Berlin and Vienna: Propyläenverlag, 1972), pp. 208–22Google Scholar. Alfred Müller-Armack et al., Stabilität in Europa: Strategien und Institutionen für eine europäische Stabilitätsgemeinschaft (Düsseldorf and Vienna: Econ Verlag, 1971), pp. 89 ff, are particularly critical of Giscard's model of policy. Regarding the ideological underpinnings of the German position, vis-à-vis the French “Planwirtschaft” see Alwin, Münchmeyer, “Soziale Marktwirtschaft: Ein Modell für Europa” in Schröder et al., pp. 324–36Google Scholar. For an introduction to the German economic system, see Reinhard, Blum, Soziale Marktwirtschaft: Wirtschaftspolitik zwischen Neoliberalismus und Ordoliberalismus (Tübingen: J. C. B. Mohr (Paul Siebeck), 1969)Google Scholar. See also Shonfield, p. 239.

⁴⁹ Deutsche, Bundesbank, Report for the Year 1972, p. 25Google Scholar; Heiko, Körner, “Ungelöste Probleme der aussenwirtschaftlichen Absicherung,” Jahrbuch für Sozialwissenschaften 20 (1969), p. 235Google Scholar; Horst, Friedrich, “Instrumente der aussenwirtschaftlichen Absicherung,” Wirtschaftsdienst (Hamburg) no. 3 (1973), p. 151.Google Scholar

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⁵⁴ Pompidou made the statement in his press conference of September 21, 1972. See Le Monde, 22 09 1972, p. 2.Google Scholar

⁵⁵ Fabra, , “La dislocation,” Le Monde, 11 05, 1971, p. 1Google Scholar. See also Simonot, , “La France et le prix de l'or,” Le Monde. 29 04 1971. p. 1.Google Scholar

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⁶⁴ This has repeatedly been a theme of OECD recommendations to Germany. They stressed that Germany could contribute to international payments equilibrium in permitting domestic inflation to develop according to international standards. See Kindleberger, , “Germany's Persistent Balance of Payments Disequilibrium,” in Baldwin, Robert E. ed., Trade, Growth and the Balance of Payments (Chicago: Rand, McNally, 1966), p. 231Google Scholar. As far as “world patterns” of inflation are concerned, see Henry, “La statue du commandeur,” p. 44. That these world patterns are far from being so harmonious as to achieve international payments equilibrium is a point made by Myrdal, Economic Nationalism and Internationalism, p. 14; Einzig, , The Destiny of the Dollar, pp. 142–3Google Scholar; and, as regards the situation of 1974, Jenkins, , “Survival of the Fittest,” The Guardian Weekly, 8 06 1974, p. 15.Google Scholar

⁶⁵ Mathieu, , “Une operation en deux temps,” p. 5Google Scholar; and “Währungsschlange prähistorisch”, Handelsblatt, 4 05 1974, p. 2.Google Scholar

⁶⁶ Hoffmann, , “The European Process at Atlantic Cross Purposes,” Journal of Common Market Studies 3 (1965), p. 89Google Scholar. To be sure, Hoffmann seemed to use the discontinuity concept mainly to contend Haas' and Schmitter's neo-functionalist concept of a continuum from economics to politics. In his comments to this paper he stresses that a discontinuity in the ideal types of “low” and “high” politics does not mean a complete dichotomy in practice. Thus he qualified the discontinuity concept in his “Weighing the Balance of Power,” p. 632. Yet his proposition that mercantilism is an anachronism is certainly related to this concept.

⁶⁷ See, for example, Gilpin, “The Politics of Transnational Economic Relations”; Waltz, “The Myth of National Interdependence” in , Kindleberger, The International Corporation: A Symposium, (Cambridge, Mass.: The M.I.T. Press, 1970), pp. 205–26Google Scholar. For policy-oriented studies, see Cohen, Benjamin, American Foreign Economic PolicyGoogle Scholar; and Cooper, Richard N., “Trade Policy is Foreign Policy,” Foreign Policy 8 (Winter 1972–1973), p. 18.CrossRefGoogle Scholar

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⁶⁹ Benjamin, Cohen, “American Foreign Economic Policy: Some General Principles of Analysis,” p. 16.Google Scholar

⁷⁰ Haas, , Beyond the Nation State, p. 50.Google Scholar

⁷¹ Parsons and Smelser, pp. 19, 39–51, 102. We wish to state, though, that our propositions are without any implications as regards the specific positions taken by Parsons and Smelser in terms of economic theory. A particular analytical dimension is opened to sociological functionalism by Lowe's methodology for a “political economics.” See Lowe, pp. 4, 143; and Heilbroner, pp. 165–92.

⁷² Haas, , Beyond the Nation State, p. 47Google Scholar. See also idem, “The Study of Regional Integration: Reflections on the Joy and Anguish of Pre-theorizing,” in Leon N.Lindberg and Stuart A.Scheingold eds., “Regional Integration: Theory and Research,” International Organization 24 (Autumn 1970), p. 627; Lasswell, Harold D., Politics: Who Gets What, When, How (New York: McGraw Hill, 1936)Google Scholar; and Keohane, and Nye, , Eds., “Transnational Relations and World Politics,” p. 346.Google Scholar

⁷³ The argument, here, is methodologically analogous to the one which Modelski has used to describe concrete international systems in terms of two analytical systems. See George, Modelski, “Agraria and Industria: Two Models of the International System,” World Politics 14 (1961), p. 120.Google Scholar

⁷⁴ For discussion of the problem of content in functionalist paradigms, see Kaiser, Ronn D., “Toward the Copernican Phase of Regional Integration Theory,” Journal of Common Market Studies 10 (03 1973), pp. 208–15.Google Scholar

⁷⁵ See Gerhard, Niemeyer, Law without Force: The Function of Politics in International Law, (Princeton: Princeton University Press, 1941)Google Scholar; and Haas, , Beyond the Nation State, pp. 42–6.Google Scholar

⁷⁶ Popper, , Conjectures and Refutations: The Growth of Scientific Knowledge (New York and Evanston: Harper and Row, 1965), p. 37Google Scholar, and idem, The Poverty of Historicism (New York and Evanston: Harper and Row, 1964), p. 3.