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8 J. Common Mkt. Stud. 1 (1969)

handle is hein.journals/jcmks8 and id is 1 raw text is: INTEGRATION AND CONFLICT IN THE WORLD ECONOMY By HANS 0. SCHMITT* PROFESSOR Haberler has claimed that, whatever caused the conflicts that at intervals interrupted modern economic growth, they were not due to 'an inevitable economic nexus' in the sense that a 'deepseated real maladjustment' could have been identified in the evolution of world economy.' Professor Kuznets on the other hand considers it 'a moot, if highly intriguing, question whether the world wars of the twentieth century and the deep world fissure resulting from the emergence of Communist states are also consequences of the same forces, and thus highly likely, if not inevitable, consequences of modem economic growth'.2 If the distance between the two views is to be reduced in time, even fairly abstract models of the international system should begin to experiment with formulations that treat political as well as economic variables as endogenous. To treat economic transactions without consideration of possible political repercussions remains, of course, a legitimate partial equilibrium approach to international relations. In the theory of economic growth, equally important elements such as population and technical progress are also often treated as exogenous. Both are increasingly being reincorporated into more comprehensive models, however. A parallel effort is now proposed to allow for political feedback in the theory of international trade and factor movements. Conventional trade theory implicitly accepts the boundaries of its postulated trading units as given and unchanging. In the proposed reformulation, national boundaries cease to be parameters and become variables determined by particular patterns of resource flows. The free market, it is argued, tends to dissolve boundaries in favor of economic and ultimately political integration. Since, however, integration is a nuclear process, one in which nuclear regions and social groups gain ascendancy over others, it will regularly generate its own opposition. * The author is indebted to Professors Bela Balassa, Gottfried Haberler, Charles Holt, Charles Kindleberger, and Guy Orcutt for criticism of earlier drafts. Responsibility remains his own. I Gottfried Haberler, 'Integration and Growth ofthe World Economy in Historical Perspective', American Economic Review (March 1964), P. 2. 2 Simon Kuzmets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, 1966), PP. 499-500. The term 'nuclear process' was introduced into political science by Karl Deutsch, Nationalism and Social Communication (New York, 1953).

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