Ruggie: At Home Abroad, Abroad at Home

Ruggie, JG. 1995. At home abroad, abroad at home: international liberalisation and domestic stability in the new world economy. Millenium: Journal of International Studies 24, no. 3: 507.

Ruggie presents a brief argument about how Carr and Polanyi, though being polar opposite in much of their thought, agreed about the effect of self-regulating market solutions post WWII. This was termed by Ruggie to be the embedded liberal compromise, where states would protect their domestic policies from external shocks from the market, but would also pursue broadly liberal policies internationally. The success of this system, which promoted fixed exchange rates and autonomous monetary policy, eventually led to the rise of the movement of capital and floating exchange rates.

"In this article, I develop a provisional schematic formulation of this new world economy's key institutional features and consequences. I focus on three sets of issues in particular: the growing role of domestic domains as issues over contention in international economic policy; the denationalization of control over significant decisions regarding production, exchange, and employment; and the growing difficulty experienced by governments in living up to their part of the domestic social compact on which post-war liberalization has hinged" (508).

The Financial Times and the Economist both wrote in late 1990s about how, even while we were experiencing the most robust of capitalist situations, that the reality of welfare capitalism was still quite clear: "These two British publications are among the most irrepressible and articulate advocates anywhere of free markets and free trade. What, then, possessed them to worry about the economic security of workers and sustaining welfare capitalism, and, even more curiously, to suggest that governments have a role to play in achieving those objectives? The answer is surprisingly simple. Both realize that the extraordinary success of post-war international l liberalization has hinged on a domestic social compact between state and society. Both see that this social compact is everywhere fraying; and both fear that if it unravels altogether, so will international liberalization" (523).

"The new world economy that has emerged over the past few decades poses significant challenges to governments because it is disembedded in several key dimensions. The first is in its policy templates: the mental maps of spaces and structures within which policy-makers visualize the basic contours of their world...The second, related source of disembeddedness is the world of policy-making itself. International as well as domestic economic policy targets are increasingly elusive because instrumentalities are no longer as effective. This loss of efficacy, in turn, reflects the fact that the theoretical, conceptual, and statistical bases of policy too often still reflect previous policy templates and the cause-effect relations that pertained in that earlier world. Last, the new world economy is increasingly disembedded from the domestic social compact between state and society on which the political viability of the post-war international economic order has hinged. Policy attitudes towards the new world economy have shifted in the direction of neoliberalism to an extent that is beginning to be of concern even to staunch guardians of market orthodoxies in the leading financial journals of Britain and the United States" (525).

"Constructing a contemporary analogue to the embedded liberalism compromise will be a Herculean task" (525).