- New Horizons in International Business series
Edited by Alan M. Rugman and Gavin Boyd
Chapter 1: The American Political Economy
CHAPTER 1 27/6/03 1:17 PM Page 1 1. The American political economy Gavin Boyd The USA is a liberal knowledge-based political economy with an intensely individualistic culture that is a source of vigorous commercial and political entrepreneurship, but also of difficulties in the coordination of economic activities and in the aggregation of interests for governance aligned with the common good. Relations between enterprises tend to be extremely competitive and ventures in cooperation, while based on complementarities, are often instrumental rather than relational. The very active commercial rivalry contributes to potent political competition, resulting in hyper-pluralism that affects all areas of government. Market efficiencies and failures are linked in complex ways with government efficiencies and failures, and these assume international dimensions as the USA becomes more deeply involved in the world economy, through expanding transnational production and trade, and high volume operations in global financial markets. Prominent in the mix of efficiencies and failures are major macromanagement challenges: large trade deficits have become unsustainable, and strong speculative propensities in the financial sector cause dangerously high stock appreciations, followed by sharp declines after losses of investor confidence. Difficulties of functional coordination in the general interest affecting the evolution of the political economy as an advanced complex system were somewhat obscured during the l990s by continuing large speculative stock appreciations: there was unfounded optimism that productivity increases resulting from investment in new technology would sustain the boom although much of the wealth effect went into consumption. The recession that followed was made...
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