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Capital and the Nation-State: a reply to Frieden
Few writers have the good fortune to encounter such a scrupulous reviewer as Jeff Frieden.  He has fairly and accurately represented the key ideas in The Dollar and Its Rivals,  demonstrating their relevance to the debate on imperialism; and he has brought out those weak areas in my analysis which, despite attempts to remove them, are also of concern to myself. Although I am still a long way from definitive conclusions, I shall nevertheless try to clarify a number of points. Frieden thinks I am on shaky ground in adopting a ‘statist’ approach to the international economy. His critique falls into two parts: the first concerns the importance of private actors in the international economy, while the second stresses the composite and often conflictual character of the major interests within national capitalism (finance and industrial capital, agriculture and industry, large and small firms, producers for the internal and the external market, enterprizes and trusts, associations of independent producers, and so on). If one part of this critique is valid, it does not necessarily follow that the other holds good. On the first point, excessive weight should not be attached to private actors, even when they take the form of multinationals or international banks. The influence of traditional free-market theory has obscured the role of governments in the international economy. For neo-classicists insist that there is no break in continuity between the internal and international markers: choices involving the maximization of household utility and enterprize profitability are supposed to determine international equilibrium as well as international trade. If an economy has problems in its relationship with the rest of the world, manifesting themselves in a balance-of-payments deficit, then international equilibrium will be restored through such automatic mechanisms as a price-variation triggered by the flow of foreign currencies or variations in the exchange-rate. According to this view, state intervention can only serve to remedy defects in the automatic mechanisms of equilibrium. Any other intervention in trade and international settlements would have a damaging effect and anyway be cancelled by the spontaneous equilibration of market forces.
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