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By Max Kohnstamm

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It may seem utopian to suggest, at a time when progress within the European Community is manifestly difficult and slow, that it is time we took our own theories seriously enough to apply them to the new reality and examine in which fields harmonisation, financial solidarity and joint management are already feasible and necessary on a global scale. But there is little hope that the world will stand still until the Community has completed its slow progress towards full economic union. Joint economic management The idea that the lowering of economic barriers among nations does not make sense unless it is accompanied by a minimum of joint management and joint social responsibility, was already seen in the founding days of the present system.

40 A Nation Writ Large? To put it differently. this conflict represents a 'load' on the international economic system, which must not exceed the 'capability' of the system to deal with it. The troubled state of present international economic relations shows that the load is growing more rapidly than the capability of the system we have. There are two ways of dealing with this problem. One is to reduce the load: by retreating from interdependence, insulating oneself from the international economy.

In fact, of course the system was very much managed indeed - by the United States. The chief trade policy instrument of this management was a very selective and gradual application of the liberal precepts subscribed to. In the monetary field, the foreign exchange needed for expansion of trade was made available by direct transfers and loans, while at the same time permitting discriminatory foreign exchange controls. In other words, the system worked because of its exceptions. Moreover, liberalism was applied only among equals - the Europeans - but not between Europe and America, except in one direction: tariff-cuts negotiated in the first post-war 'Rounds' only benefited Europe.

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