Paris. -- According to Walter Russell Mead of the World Policy Institute in New York -- writing in his institute's quarterly journal -- the smoke of current controversy over U.S. foreign policy obscures the existence and importance of an old and firmly established foreign policy tradition that goes back to Thomas Jefferson's war against the Barbary Pirates.
This policy consists in a tireless search for access to markets for American manufactures, together with the defense of free passage for commerce. This policy took U.S. Marines to the Halls of Tripoli in 1804, the U.S. Navy to its China Station in the mid-19th century to enforce an "Open Door" to China trade, and it continues to drive American trade policy today, under both Democrats and Republicans.
It is the reason American governments spent a decade fighting for the GATT Uruguay Round's global tariff reductions, and for creation of a World Trade Organization.
It is the reason the United States wanted a North American Free Trade zone, bludgeoning the Canadians into it (albeit with Prime Minister Brian Mulroney an enthusiastic victim), and then more or less annexing the Mexican economy.
That caused American exports to Mexico to boom while Mexico's commercial balance went from plus $1.7 billion in 1989 to minus $24 billion last year. Speculative as well as manufacturing investment poured into Mexico until the artificially inflated peso had to be devalued in December. The United States then discovered that it had acquired not only Mexico's markets but Mexico's inflation, social tensions and political crisis.
The head of the IMF, Michel Camdessus, said last week that a global crash was narrowly averted by Washington's hijacking of IMF intervention funds to serve in place of the rescue package Congress seemed unwilling to provide -- further angering West European governments, who believe the U.S. already high-handed in what it demands of the international community but parsimonious in what it pays.
The storm has temporarily subsided. However, the economist and former French prime minister, Raymond Barre, suggests that we may yet need to go through a global crash "in order to define new rules for the game" -- a game now largely driven not by economic fundamentals but by speculative fund flows controlled by 29-year-old traders whose professional qualifications do not require knowledge of economics, society or politics, only familiarity with margins, arbitrage, conventional opinion and the latest rumors.
Committed free-traders still insist that from the total of these self-interested decisions -- from the minds and mouths of such babes -- eventually comes the greatest good for everyone, from Wall Street investors to Mexican peasants to German central bankers, and to you and me. Others doubt this.
A number of proposals now have been made for re-establishing firebreaks between national or regional economies, so that what the Franco-British financier James Goldsmith has described as "a simple, local Latin American financial crisis" cannot next time turn into a global catastrophe, as it nearly did this time.
He wants regional preference among economies at more or less the same levels of development, with barriers between them. The sense of the discussion at the recent World Economic Forum in Davos was that financial globalization has outstripped society's controls, with extremely dangerous implications. The U.N.'s Boutros Boutros-Ghali wants private transnational corporations more closely associated in the future with international economic decision-making.
Peter Sutherland, temporarily the head of the new World Trade Organization, proposes a new decision-making group to take the place of the Group of 7 main industrial nations, who are accused of looking after their own interests rather than those of a larger community. "If the world's present economic leadership does not broaden its membership and its outlook . . . it will find itself marginalized," he says.
Most important, however, is the need for intellectual movement, away from the current canonical belief that pure financial return is the sole valid criterion for economic decision-taking. That logic gave us Mexico, where over the last decade productivity in the country's new border industries, serving U.S. markets, increased by 47 percent as real wages fell by 29 percent.
It is the logic that has opened Mexico's markets to North American industrialized agricultural production, which will destroy Mexico's peasant agriculture, thereby sending millions more from the land into the cities -- and into North American immigration. Market dogma has already done this to Africa. Is it impossible to learn?
William Pfaff is a syndicated columnist.