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COPYRIGHT NOTICE: G. John Ikenberry, Thomas J. Knock, Anne-Marie Slaughter & Tony Smith: The ... - page 17 / 25





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16 Introduction

all seen as sources of instability and war. Accordingly, American liberals— starting with FDR and Truman—were convinced that an open system of free trade was an essential precondition for all other progressive interna- tional steps. Wilson and the architects of the Versailles settlement had given short shrift to economics, setting the stage for the economic calami- ties of the 1930s, according to John Maynard Keynes.23 So in the 1940s, Truman emphasized the need for an “economic peace,” which would involve tariff reductions and rules and institutions of trade and invest- ment. Conicts would be captured and domesticated in an iron cage of multilateral rules, standards, safeguards, and dispute resolution proce- dures. According to Truman, “this is the way of a civilized community.”24

Further, a new social bargain would underlie the liberal economic order. Progressive notions embedded in New Deal liberalism were brought forward into America’s vision of postwar arrangements. This was the mes- sage that Roosevelt and Churchill communicated to the world in the At- lantic Charter of 1941. The industrial democracies would provide a new level of social support—a safety net—under the societies of the Atlantic world. If the citizens of these countries were to live in a more open world economy, their governments would take steps to stabilize and protect market society through the welfare state. Job insurance, retirement sup- port, and other social protections were to help the industrial democracies operate in a free trade system. An open system would provide both win- ners and losers. Economists argue that in such a system, the winners al- ways win more than losers lose, and if there is a compensation mechanism it is possible for the whole of society to benet. It was the building of such a compensation mechanism—the modern welfare state—that provided a fundamental support to an economically integrated Western democratic order.25

New permanent multilateral institutions would be deployed to manage a widening array of political, economic, and social relations. It was not enough simply to open the system up. There would need to be an array of transgovernmental and international organizational institutions that would bring government ofcials together on an ongoing basis to manage economic and political change. This was the conviction of the economic ofcials who gathered in Bretton Woods in 1944. Many of them took the lesson from the heightened role of governments during the economic

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