The political requisites of an open international economic system: United States balance of payments policies during the 1960s

This paper explores the political context of an increasingly familiar phenomenon: unilateral interference with international trade and payments. The particular case examined is that of US balance of payments policy between 1960 and 1971, during which time the country which had been the world's foremost advocate of an open world economy attempted to separate the US and international capital markets. The policy is explained at two levels: systemic political imperatives to explain the overall structure of policy choices, and domestic bureaucratic politics to explain the changing sources and objectives of policy. The Bretton Woods system linked US political power to the international monetary system in such a way as to leave the US no choices but those of capital export controls or the destruction of the entire system, as the US balance of payments moved into deficit. The domestic policy process reacting to these international strains followed a pattern of progressive politicisation, which lifted the issue out of the hands of the Treasury and into the White House. Finally, it is suggested that an examination of the political structures which led to restrictive policies in the monetary sphere may shed some light on the current trends toward protectionism in the trade area.