Why does a common challenge, such as the oil crisis, elicit different national responses in the international political economy? The domestic structure of the nation-state is a critical intervening variable without which the interrelation between international interdependence and political strategies cannot be understood. The essay justifies this volume's concentration on a few advanced industrial states of the North; from a broader historical perspective it looks briefly at the interaction of international and domestic forces in the shaping of the international political economy; it examines two theories of foreign policy (international approaches and bureaucratic politics) in order to highlight the gap which this volume intends to fill; and it details the theoretical orientation informing the essays which follow.

The years immediately after World War II provided American policy makers with a unique opportunity to help shape the international economic order for a generation to come. United States objectives are usually described in terms of enlightened idealism or capitalist expansionism. But much of the way policy makers envisaged international economic reconstruction derived from the ambivalent way in which domestic economic conflict had been resolved before and during the New Deal. In the inconclusive struggle between business champions and the spokesmen for reform, Americans achieved consensus by celebrating a supposedly impartial efficiency and productivity and by condemning allegedly wasteful monopoly. Looking outward during and after World War II, United States representatives condemned Fascism as a form of monopoly power, then later sought to isolate Communist parties and labor unions as adversaries of their priorities of production. American blueprints for international monetary order, policy toward trade unions, and the intervention of occupation authorities in West Germany and Japan sought to transform political issues into problems of output, to adjourn class conflict for a consensus on growth. The American approach was successful because for almost two decades high rates of growth made the politics of productivity apparently pay off. Whether an alternative approach could have achieved more equality remains an important but separate inquiry.

The fundamental objective of American foreign economic policy after the Second World War was to establish a regime in which impediments to the movement of capital and goods were minimized. In this quest American central decision makers were largely successful because of America's external power. However, because of the weakness of the US political system, that is, the ability of private groups to check state initiatives, public officials were constantly faced with domestic political constraints. These constraints were more apparent in the area of commercial policy, where decisions involved Congress and executive agencies susceptible to societal influences, than in monetary policy, where decisions were made in a more insulated environment. The decline of America's external power, which became evident in the mid-1960s, was accompanied by growing demands for protection as more sectors of the American economy were adversely affected by foreign trade. This has led to increasing incoherence in US policy and greater instability in the international economic regime.

Economic policies in Britain after World War II, both domestic and international, were dominated by foreign policy goals. This provides the primary explanation for Britain's poor economic performance in the postwar years. Commitments made in the late 1940s and 1950s, particularly with regard to Britain's international position and responsibilities, and domestic economic policies devised to support these commitments, locked Britain into a low-growth situation. In the late 1950s and early 1960s, the widespread consensus supporting these commitments began to disintegrate and efforts were made to develop new policies directed toward stimulating domestic economic growth. These efforts were unsuccessful–largely because of the unwillingness of government leaders to shift national priorities away from traditional international commitments. This failure made it impossible for the British economy to meet the rising expectations of the British population and contributed, after 1967, to a widespread increase in social conflict. Compared to other advanced industrial nations, Britain's economic performance since 1945 has been poor. Britain's poor economic performance is due, however, not to the weakness of British governments or to their inability to resist demands made by interests groups, but rather to a series of policy choices, especially in the international area, that were inappropriate for Britain's resources but to which successive governments adhered with remarkable stubbornness and rigidity.

By many criteria, Japan is weak internationally. As a consequence one would expect its foreign economic policy to have been marked by limited choice, weakness, and constant vacillation in the face of external pressures. The domestic political structures of the country, however, have for most of the period since World War II permitted wide choice, strength, and consistency. A corporatist coalition of finance, major industry, trading companies, and the upper levels of the national bureaucracy, coupled with the consistent rule of the conservative Liberal Democratic Party, the systematic exclusion of organized labor from formal policy-making channels, and the lack of social overhead spending, has permitted the Japanese state to function as official doorman determining what, and under what conditions, capital, technology, and manufactured products enter and leave Japan. The strengths acquired from such past policies make it likely that the Japanese state will remain capable of dealing with the increasing domestic and international threats to its capacity to make relatively autonomous choices about Japan's international economic behavior.

During more than two decades, West German foreign economic policy has served a strategy of export-oriented growth. The success of this strategy is based on a number of factors, such as Germany's industrial structure, a favorable international environment, a pro-investment domestic economic policy and the constructive role of labor in postwar economic development. Decision making in foreign economic policy is characterized by the dominance of the export sector. The strategy of export expansion met withobstacles in two areas. In Eastern trade policy export interests clashed with the imperatives of “high politics” during the Cold War era. In monetary policy, the chronic undervaluation of the Deutsche Mark, a crucial factor of export competitiveness, collided with the goal of price stability. Both cases highlight the limits of export sector dominance. In recent years, the internationalization of German industry and the process of structural change have created problems that suggest that theGerman economy is reaching the limits of export-oriented growth. These pose new challenges to economic policy makers.

Italy's political economy is characterized by international weakness and internal fragmentation and polarization. Since 1947, Italy's foreign economic policies have been defined by a broadly-based political and social coalition dominated by the Christian Democratic party (DC). This coalition has incorporated or maintained close links with ministerial bureaucracies, the Bank of Italy, state-controlled industrial and commercial enterprises, large corporations, and Catholic trade unions. It has attempted to foster a postwar climate receptive to business interests and to foreign investment; one which would facilitate the maintenance of a stable domestic political and social order. At the same time, the DC coalition is so fragmented by factionalism and personal competition that economic policy making has lacked direction and has been marked by personalism and by improvisation. Italian policy makers operate in a precarious environment in that they must use political and economic weaknessin order to mobilize the international assistance needed to maintain the internal social order as well as external economic survival.

The French state bureaucracy, able partially to shelter itself from Parliament and to influence the industrial sector directly, has been able to protect national interests in an economically interdependent world. It struck a regional bargain that committed agriculture to the European Community and in effect provided a German subsidy to French farmers. It mediated between the national and international market to promote industrial modernization and force a restructuring of critical industrial sectors. It has grown increasingly sophisticated in its dealings with multinational companies. Early efforts to insist on purely French operations have been abandoned, permitting the state to negotiate more effectively with the multinationals and obtain substantive rather than symbolic goods. These policies have cushioned agriculture's transition into an industrial world and helped pressure a previously protected industry to modernize. Finally, the state has played trader, trying directly to market French goods and assure payment for imports in package trade deals. The French have not been able to impose their own rules on monetary and energy matters. Yet their efforts suggest that a nation-state can use administrative or domestic economic resources to reduce its vulnerability to international developments, though it cannot of course escape from the system.

An inventory of the objectives and instruments which characterize the differing political strategies of six advanced industrial states in the international economy yields three groups of states: the two Anglo-Saxon countries, mercantilist Japan, and the states of the European continent. Corresponding differences exist in the distinctive elements of domestic structure: the coalition between business and the state and the policy networks linking public and private sectors. An historical explanation of these differences is most appropriate. In the future, stresses in the relations between business and the state and contradictions between ruling coalitions and organized labor may lead to changes in political strategies.