Despite its relative economic decline, the United States remains the dominant power in the world economy. The foreign economic actions taken by American officials, whether they involve trade, technology transfer, or the value of the dollar, continue to have profound consequences for other states in the international system, as well as for American domestic politics and economics. Thus, it is not surprising that the study of American foreign economic policy attracts considerable scholarly attention, and presently constitutes a major portion of the subfield of international political economy.

Basic analytic premises are an issue in contemporary debates about the U.S. foreign economic policy process. In dispute are the power structures alleged to govern the formation of American trade and international monetary policy. Thus, the literature supports both of these assumptions: the distribution of power is skewed towards private actors in the issue-area generally; the distribution of power varies according to issue-area. Within the camp of issue-specific power structures, as I shall discuss in more detail, support can be found for almost any assumption about the distribution of power prevailing, in the language of current debate, between “state and society.”

Trade policy is commonly seen as a product of domestic interest group politics. Despite the obvious economic distortions introduced by trade barriers, protectionism recurs, we are often told, because producers organize more readily than consumers and dominate the political process. In this “demand side” explanation of protection, the state is seen as the empty receptacle of societal bargaining with no independent voice or role.

The period from 1914 to 1940 is one of the most crucial and enigmatic in modern world history, and in the history of modern U.S. foreign policy. World War I catapulted the United States into international economic and political leadership, yet in the aftermath of the war, despite grandiose Wilsonian plans, the United States quickly lapsed into relative disregard for events abroad: it did not join the League of Nations, disavowed responsibility for European reconstruction, would not participate openly in many international economic conferences, and restored high levels of tariff protection for the domestic market. Only in the late 1930s and 1940s, after twenty years of bitter battles over foreign policy, did the United States move to center stage of world politics and economics: it built the United Nations and a string of regional alliances, underwrote the rebuilding of Western Europe, almost single-handedly constructed a global monetary and financial system, and led the world in commercial liberalization.

In 1930, Congress approved the highly restrictive Smoot–Hawley tariff, the textbook case of pressure group politics run amok. Four years later, Congress passed the Reciprocal Trade Agreements Act (RTAA), surrendering much of its tariff-making authority to a policy process in which internationalists had increasing influence. While the United States had used reciprocity to expand exports before, the stick of discriminatory treatment took precedence over the carrot of liberalizing concessions. With the transfer of tariff-making authority to the executive, the United States could make credible commitments and thus exploit its market power to liberalize international trade. Despite later modifications, the RTAA set the fundamental institutional framework for trade politics.

The study of postwar American foreign economic policy recently has been informed by a dual conventional wisdom: that the American state is relatively weak domestically, yet powerful internationally. Domestic weakness refers to the ability of private actors to penetrate and influence the state; to the institutional fragmentation and decentralization of the state apparatus; and to the difficulties state officials encounter in extracting resources from domestic society and in achieving their policy preferences in the face of domestic opposition. International strength, on the other hand, refers to the high degree of resources controlled by the United States relative to other nation-states, and to the ability of state officials to translate those resources into influence over international outcomes. In the early postwar period, America's external strength more than compensated for its internal weakness, and enabled state officials to pursue effectively their primary foreign economic policy objective: the creation of a liberal international economic order, characterized by the free movement of goods and capital across borders and by stable exchange rates.

The dramatic upheaval in oil prices in the 1970s posed difficult policy dilemmas for the United States. Like other industrial importing nations, the United States was forced to make decisions concerning how to adjust its economy and society to the new and troubling international energy reality. From the Nixon to the Carter administrations, government officials attempted to implement policies of energy adjustment. These efforts began with ill-fated international schemes to form a “consumer cartel” of industrial nations, and ended with the decision in 1979 to decontrol oil prices.

Nowhere is America's hegemonic decline more evident than in changing trade patterns. The United States trade balance, a measure of the international demand for American goods, is suffering historic deficits. Lowered demand for American goods has led to the under-utilization of both labor and capital in a growing number of traditionally competitive American industries. Conversely, Americans' taste for foreign goods has never been so great. Japanese cars, European steel, Third World textiles, to name a few, are as well produced as their American counterparts and arrive on the U.S. market at a lower cost.

It may well be that Poincaré's observation is correct, that natural scientists discuss their results and social scientists their methods. if so, it is because our guides to social reality are so frail. Approaches to political investigation are difficult to separate from the substantive puzzles that drive inquiry and the results that follow. In collective enterprises, such as this volume, the problem of approach or method becomes all the more central. We are left with no choice but to reflect on the tools that we use as well as the social reality that they promise to reveal.