Who Adjusts? Domestic Sources of Foreign Economic Policy During the Interwar Years.

• Author: Fioretos, Karl-Orfeo

Beth A. Simmons. (Princeton, NJ: Princeton University Press, 1994) 330pp.

Within the field of international political economy, issues of foreign economic policy making, international cooperation, interstate conflict and preference formation have typically been explained as the consequences of externally determined circumstances, such as the structure of the international system and the distribution of capabilities within that system. More recently, however, a number of scholars have sought to redress the numerous empirical anomalies and theoretical shortcomings of this approach - known as the systemic approach - by dipping into the domestic level of analysis. Some scholars have favored combining the domestic and international levels of analysis by emphasizing the former's impact on the latter (the so-called "second image" approach), while others have emphasized the role of international factors on the shape of domestic politics (the so-called "second image reversed" approach).(1) Others still have sought to address the interdependent nature of the two.(2)

While addressing the interrelated nature of domestic and international politics, Beth A. Simmons's Who Adjusts? Domestic Sources of Foreign Economic Policy During the Interwar Years is ultimately the story of how domestic politics determine a state's choice of internal or external adjustment strategy and its overall foreign economic policy. Although Simmons writes that she does not intend to supplant systemic theories, her book goes far as a critique of systemic accounts of interwar Europe. In her study of why states chose to adhere to the interwar gold standard, international factors serve as constraints, but not as the main explanatory variable. Instead, Simmons directs our attention toward the importance of domestic variables, such as the partisan political composition of governments, the magnitude of labor unrest, the level of trade dependence and the degree of central bank independence from the executive branch of the government.

Due to the absence of variation in the systemic-level variable - international anarchy persisted, as did the absence of a state willing to act as the economic or financial hegemon - Simmons's theory is really one of how domestic variables gave governments incentives to pursue particular adjustment strategies and how these strategies determined the outcome of international cooperative ventures such as the interwar gold standard. Rather than constituting a theoretical shortcoming, however, this is really the strength of Who Adjusts? Because it does not capitulate to the systemic accounts of the interwar conflicts of Europe, the book is a persuasive theoretical and empirical study, and one that will provide a useful reference point for future researchers who wish to understand the role of domestic politics in shaping foreign relations.

There are three primary reasons for including domestic variables in the analysis of foreign economic policy and international cooperation. First, this approach allows us to tell the whole story: By covering the domestic level of analysis, we are able to trace the process by which particular policies are adopted and thus reach a more complete account of the processes that lead to national decisions. Second, the domestic level of analysis is a means to explain the variation in states' policy choices. By emphasizing the domestic characteristics of states as independent or, more commonly, intervening variables, a number of studies have accounted for the sources of...