Charles Kindleberger, Comparative Political Economy: A Retrospective.

Eichengreen, Barry

Charles Kindleberger, Comparative Political Economy: A Retrospective, MIT Press, 2000.

Comparative Political Economy may not be Charles Kindleberger's first collection of previously published work, but it is the essential one. Its twenty-one chapters reflect the author's own assessment of his most significant contributions to scholarship and policy, written in the course of more than sixty years. The resulting volume has been carefully edited and beautifully produced, fittingly enough, by the MIT Press. That these pieces have appeared before does not diminish the pleasure of finding them all in one place.

Included are the classics on which the professor's reputation as an eminent international economist rests, like "The Case for Fixed Exchange Rates" and "The Dollar and World Liquidity." Other chapters have stimulated entire scholarly industries outside of Kindleberger's own disciplinary bailiwick. Articles like "Group Behavior and International Trade" and "The Rise of Free Trade in Western Europe," for example, have set the research agenda for an entire generation of international relations specialists. "Germany's Overtaking of England" and "The Aging Economy" have provoked a large body of work on economic growth and "convergence," in this case by economic historians and theorists.

Most interesting of all are a number of less prominent items whose significance is only now coming to light. (One hesitates to call these pieces "neglected," since, given the author's stature, little that Professor Kindleberger has written is neglected.) Here are four articles of which I was ignorant but vow to keep by my bedside and, more importantly, my keyboard.

"The Formation of Financial Centers" is must reading for anyone seeking to understand the battle for financial supremacy in Europe. In Kindleberger's analysis, the politics drive the economics rather than the other way around. His specific forecast may have been wide of the mark (in this article, published in 1974, Kindleberger predicts that Brussels will emerge as Europe's financial center!), but the good burghers of Frankfurt will take heart.

"Standards as Public, Collective and Private Goods" was similarly published two decades ago, but the issues it raises have come to the fore in the wake of the Asian crisis. The international policy community is now attempting to set international standards for everything from prudential supervision to data dissemination, with the goal of making the world a safer financial place. Kindleberger reminds us that international standards are rarely created de novo; more typically they evolve from previously-established national standards, and it is the large countries' standards that tend to be generalized. We should not be surprised, in other words, that the United States is playing a lead role in the current round of financial standard setting.

"International Public Goods without International Government" encapsulates the dilemma of our age: How can we regulate global financial markets in the absence of global government? Cultivating norms and building institutions that will encourage policy coordination and collective action is the best way forward, the author argues -- through the Basle Committee and the Financial Stability Forum, in other words, and not by imagining we can create a World Financial Authority.

Finally, "The Politics of International Money and World Language" will serve as a useful corrective for those confidently predicting that dollarization will sweep Latin America and who dismiss national pride as a factor in maintaining a national currency. Or, as a British eurosceptic might say, they don't call it "Esperanto money" for nothing.

Though Professor Kindleberger has been at work on these issues for six decades, these are just four examples of how he is still ahead of his time.

One warning: the cognoscenti will have to overcome a slight feeling of disorientation. While most of the chapters are self-contained articles, a number of them are short extracts from longer works. Finding chapter 14 of Kindleberger's masterwork on the 1930s, The World in Depression, or chapter 2 of another classic, Manias, Panics and Crashes, is a little like picking up a "Best of Beethoven" CD and hearing only one movement of a favorite symphony. It's sweet music, but it works better when heard as part of the longer composition. One hopes that readers new to Professor Kindleberger's oeuvre will similarly be led to explore the entire catalog.

Barry Eichengreen is George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley.