In writing this paper, I received helpful advice from Robert Keohane, Stephen Krasner, Peter Cowhey, John Ruggie, and Jonathan Aronson. An earlier version was presented at the Tokyo meeting of the International Studies Association, the British International Studies and the Japan Association of International Relations in October 1977.

¹ For detailed evidence of the trend, see Nowzad, B. and others “The Resurgence of Protectionism,” Finance and Development (09 1978)Google Scholar. Whether described, as in Europe and Japan, as a depression or, in America, more euphemistically as a “recession,” the reactions are much the same.

² By surplus capacity'I mean, simply, a situation in which demand is insufficient to absorb production at prices high enough both to maintain employment and to maintain profitability for all the enterprises engaged. The reverse of the same coin is under-consumption: the consequence is a need for either increased demand or adjustment of supply.

³ A problem of surplus capacity worth noting is the production of ethylene, the major building block of the chemical sector and one of the by-products of refining crude petroleum which every oil-producing state is keen to produce for itself. Consultation between these states and the European countries has failed to produce a solution before the seventeen new plants now planned come into production and the battle for market shares begins. As observed in the Economist, 2 July 1977, p. 68, these plants “fortoken either one of the biggest shifts in the international division of labor ever seen in any industry—or a lot of rusting chemical cathedrals in the desert.”

⁴ Blackhurst, R., Marian, N., Tumlir, J., “Trade Liberalization, Protectionism and Interdependence,” GATT study in International Trade, 5 (1977): 60Google Scholar.

⁵ According to Adam Smith, the three essential duties of government to society were to provide security from internal and external violence, to administer justice and see to the provision of roads, harbors, and other public goods. Kindleberger, along with many economists, argues that the present political system, lacking an effective magistrate, fails to provide either political or economic security, a more equitable distribution of income, or sufficient regulation of markets to prevent abuses of economic power. “Pluralism in the international political system,” he concludes, ”tends to under-produce vital public goods and to over-produce a public bad, neonationalism.” See Kindleberger, C. P. “Government and International Trade,” Princeton Essays in International Finance (1978), p. 15Google Scholar.

⁶ Milward, Alan, “Peace and Protectionism in the 19th and 20th Centuries,” unpublished paperto the International Political Economy Group, St. Catherine's College, Oxford, 02 1978Google Scholar.

⁷ Cf. Polanyi, Karl, The Great Transformation (New York: Farrar & Rinehart, Inc., 1944)Google Scholar.

⁸ I put both concepts in quotation marks because they are descriptive similes rather than scientifically proven phenomena. They are persuasive and gain currency because of the vividness of the analogy; but whether the analogy is valid is another question. “Take-off” whether applied to economic development by Rostow and many others after him (or to the political integration of Europe by, among others, Ralf Dahrendorf) is another example of a descriptive simile substituting for objective analysis. The important distinction between theories based on a descriptive version of events and theories that seek to explain why this happened rather than that, is one which Jean Baechler usefully makes in his analysis of Marxist theories of capitalism in The Origins of Capitalism, Cooper, B., trans., (Oxford: Blackwell, 1975)Google Scholar.

⁹ Haas, E., “Is there a hole in the whole? Knowledge, technology interdependence and the construction of internatonal regimes,” International Organization 29, 3 (Summer 1975)CrossRefGoogle Scholar.

¹⁰ See for example Luard, Evan, International Agencies: the emerging framework of interdependence (London: Published for the Royal Institute of International Affairs by McMillian, Dobbs Ferry, N.Y.: Oceana Publications, 1977) which asserts throughout the expansion of international government and assumes a parallel extrapolation of power with budgetary expenditure (p. 320)CrossRefGoogle Scholar. Indeed, it is hard for texts on international organization (unless they specifically insist on the contrary view) not to give the impression that an expansion of activity is accompanied by an expansion of influence. And if international relations scholars remain sceptical, many contemporary international lawyers seem vastly impressed by the “expansion” of international economic law, human rights law, and so forth. Certainly the work of Richard Falk and other ”global centralists” implicitly argues that “development” of the United Nations and other institutions is a feasible strategy for the creation of a new system of world order. See Falk, Richard, This Endangered Planet: prospects and proposals for human survival (New York: Random House, 1971)Google Scholar.

¹¹ UN Yearbook of Statistics.

¹² GATT, Annual Report, 1976/77Google Scholar. See also Blackhurst, R., Tumlir, J., “Adjustment, trade, and growth in developed and developing countries,” GATT Studies in International Trade, 6 (09 1978)Google Scholar.

¹³ Financial Times, 3 October 1978.

¹⁴ Employment in manufacturing is estimated to have grown in developing countries in 1973–1976 by an annual average of 3 percent against an annual fall in employment in manufacturing in developed countries of 2 percent. Similarly gross fixed capital formation rose in the developing countries by 9 percent and fell in the developed countries by 2 percent in the same period. “Trade Liberalization. Protectionism and Interdependence,” GATT Studies in International Trade 5 (1977)Google Scholar.

¹⁵ Strange, S., “The Study of Transnational Relations,” International Affairs (07 1976)Google Scholar.

¹⁶ For a fuller account see Gerard, and Curzon, Victoria, “The Management of Trade Relations in the GATT” in International Economic Relations: the western system in the 1960s and 1970s, Shonfeld, A., ed., (Beverly Hills, Calif.: Sage Publications, 1976)Google Scholar.

¹⁷ Strange, S., Sterling and British Policy: a political study of an international currency in decline (London, New York: Oxford University Press, 1971)Google Scholar.

¹⁸ Curzons, op. cit.

¹⁹ This is a tricky indicator. Numbers employed may be reduced far more rapidly as a result of rationalization and modernization of plant, substituting capital for labor, than through competition from foreign imports.

²⁰ An important question for the LDCs. In 1974 they ran an overall deficit in textile trade with developed countries of $1330 million (in 1970, $1130 million)—but an overall surplus on trade in clothing of $3940 million (in 1970, $850 million).

²¹ The U.S. ban on exports of nylon yarn in 1974 was a recent demonstration of such power, but substitution in textile markets is high and no such seller's power would be effective for very long.

²² Market-sharing among producers of chemicals has an even longer history.

²³ Hayward, J. in Big Business and the State: Changing relations in Western Europe, Vernon, R., ed. (Cambridge, Mass.: Harvard University Press, 1974)Google Scholar.

²⁴ Hudson, M., Global Fracture: the new international economic order (New York: Harper & Row, 1977)Google Scholar. The cartel also made it easier to get around U.S. limits on tonnage of steel imports by substituting high value special steels for more ordinary grades.

²⁵ Strange, S., “Who runs world shipping?” International Affairs (07 1976)Google Scholar. Also Keohane, R. and Nye, J., Power and Interdependence: world politics in transition (Boston: Little, Brown, 1977)Google Scholar.

²⁶ Grubel, M. Albert, quoted in The Times, 25 04 1978Google Scholar.

²⁷ OECD, Maritime Transport Report (1978)Google Scholar.

²⁸ Curzons, op. cit.

²⁹ Keohane and Nye, op. cit.

³⁰ Warley, T. K., “Western Trade in Agricultural Products” in Shonfield, , op. cit., Vol. 1Google Scholar.

³¹ Heilbroner, R., Business Civilization in Decline (New York: Norton, 1976)Google Scholar.