"Several areas in economics today have unprecedented significance and vitality. Most people would agree that stabilization policy ranks with the highest of these. Continuing inflation and periodic serious acceleration of inflation combined with high and secularly rising unemployment combine to give the area high priority. This book brings us up to date on an extremely lively discussion involving the role of expectations, and more particularly rational expectations, in the conduct of stabilization policy. . . . Anyone interested in the role of government in economics should read this important book."—C. Glyn Williams, The Wall Street Review of Books

"This is a most timely and valuable contribution. . . . The contributors and commentators are highly distinguished and the editor has usefully collated comments and the ensuing discussion. Unusually for a conference proceedings the book is well indexed and it is also replete with numerous and up-to-date references. . . . This is the first serious book to examine the rational expectations thesis in any depth, and it will prove invaluable to anyone involved with macroeconomic policy generally and with monetary economics in particular."—G. K. Shaw, The Economic Journal

James Madison is the thinker most responsible for laying the groundwork of the American commercial republic. But he did not anticipate that the propertied class on which he relied would become extraordinarily politically powerful at the same time as its interests narrowed. This and other flaws, argues Stephen L. Elkin, have undermined the delicately balanced system he constructed. In Reconstructing the Commercial Republic, Elkin critiques the Madisonian system, revealing which of its aspects have withstood the test of time and which have not. 

The deficiencies Elkin points out provide the starting point for his own constitutional theory of the republic—a theory that, unlike Madison’s, lays out a substantive conception of the public interest that emphasizes the power of institutions to shape our political, economic, and civic lives. Elkin argues that his theory should guide us toward building a commercial republic that is rooted in a politics of the public interest and the self-interest of the middle class. He then recommends specific reforms to create this kind of republic, asserting that Americans today can still have the lives a commercial republic is intended to promote: lives with real opportunities for economic prosperity, republican political self-government, and individual liberty.

With evidence drawn from Argentina, Chile, Mexico, Great Britain, and Hungary, Re-forming the State examines the processes leading to, and the political effects of, market reform experiments and focuses specifically on the patterns of collective action and coalition building that drive privatization. The author's argument calls into question established approaches in the discipline of economics and in the fields of comparative and international political economy.
The experience of privatization shows that the public and the private are neither contradictory nor mutually exclusive spheres, and that power relations between them are not necessarily zero-sum. To stress the point, the author borrows from the literature on state formation, which has extensively examined the historical processes of key private groups. The evidence presented shows why and how, by restructuring coalitional and institutional arenas, the state uses marketization to generate political order and to distribute political power. Thus, the author specifies the conditions under which political change is conceived in terms of and channeled through economic policy; in other words, how the state is "re-formed" through privatization. Re-forming the State thus highlights how privatization is simultaneously a movement from public to private, but also a movement from non-state to state, as the reduction of state assets leads to institutional changes that increase state capacities for defining and enforcing property rights, extracting revenue, and centralizing administrative and political resources.
Hector E. Schamis is Assistant Professor of Government, Cornell University.

The political economic history of Latin America in the post-World War II era has largely been one of underachievement and opportunities lost. This all changed with the wave of market reforms that were implemented in the 1990s. However, the precise role of these reforms as an agent of change is still hotly debated. This in-depth analysis of the Peruvian case argues for an explanation that treats institutional innovation and state reconstruction as necessary conditions for the apparent success of the market in Latin America.

Exploring how state intervention has been both the cause of Latin America's economic downfall in the 1980s and the solution to its recovery, Reinventing the State analyzes three main phases of state intervention: the developmentalism that lasted until 1982, the state in retreat of the 1980s, and the streamlined state of the 1990s. Through a comprehensive examination of the Peruvian experience, the book explains the country's impressive turnaround from the standpoint of institutional modernization and internal state reform.

Written for a broad academic audience, the public-policy community, and the private sector, this book is also meant as a quick primer for any journalist, consultant, or private-sector analyst in need of an overview of the region's market-reform effort and how it has played out in Peru.

Carol Wise is Associate Professor, School of International Relations, University of Southern California.

With globalization drawing countries closer together, greater international cooperation is essential for peace and stability. The collective arrangement made by governments to manage their trade relations is one of the few successes of globalization. This book assesses the progress of multilateral trade cooperation, exploring the interests at work and the issues raised in successive postwar rounds of negotiations. It traces how the narrow perception of reciprocity has gradually yielded to a broader evaluation of the benefits to the regime as a whole as the major trading nations have mutually reduced trade barriers. Andrew G. Brown demonstrates the increasing importance of rule making and shows the diversity of issues on which negotiations have focused, such as customs procedures, technical standards, subsidies, anti-dumping duties, intellectual property rights, and the treatment of foreign direct investment. Despite the progress, however, the regime has remained vulnerable. The book also analyzes the major sources of strain that have been evident.

This is a nontechnical book for those curious about the possibilities for cooperation among states and should be of interest to both the nonspecialist and the specialist. It draws on more than one discipline to interpret the events, lying in the triangle bounded by political science, economics, and history.

Andrew G. Brown is a former Director of the General Analysis and Policies Division for the United Nations, New York.

Explores ways that the tragedy of the commons can be avoided by people who use common-property resources

Economic news once confined to the business pages of the newspapers now receives headline coverage, whether it involves protests in Seattle or sweatshops in Asia. As attention is increasingly focused on economic policy, it becomes even more important for noneconomists to be able to make sense of these stories. Is the Asian economy sinking or rising? What effects will a single European currency have on the US economy? Kenneth W. Dam's The Rules of the Global Game provides, in clear and practical language, a framework to help readers understand and answer such questions. Dam takes us beyond the headlines and inside the decision-making process as it is populated by lobbyists, special interest groups, trade associations, and public relations firms. While some economists and thinkers have idealized plans for US international economic policy, Dam, currently the deputy secretary of the treasury, manages to merge this idealism with a consideration of what it means to govern at the intersection of competing groups with competing claims.

In The Rules of the Global Game, Dam first lays out what US international economic policies are and compares them to what they should be based on how they affect US per capita income. With this foundation in place, Dam then develops and applies principles for elucidating the major components of economic policy, such as foreign trade and investment, international monetary and financial systems, and current controversial issues, including intellectual property and immigration. Underlying his explanations is a belief in the importance of worldwide free trade and open markets as well as a crucial understanding of the political forces that shape decision making. Because economic policy is not created in a political vacuum, Dam argues, sound policymaking requires an understanding of "statecraft"-the creation and use of institutions that channel the efforts of interest groups and political forces in directions that encourage good economic outcomes.

Dam's vast experience with the politics and practicalities of economic policy translates into a view of policy that is neither academic nor abstract. Rather, Dam shows us how policy is actually made, who makes it, and why, using examples such as GATT, NAFTA, the US-Japan semiconductor agreement, and the Asian financial crisis. A rare book that can be read with pleasure and profit by layperson and economist alike, The Rules of the Global Game allows readers to understand the policies that shape our economy and our lives.