Gunnar Myrdal and the Failed Promises of the Postwar International Economic Settlement

An International Economy: Problems and Prospects
Gunnar Myrdal
New York: Harper and Row, 1956

During his decade of employment as head of the United Nations Economic Commission for Europe (1947–57), Gunnar Myrdal wrote a series of works, of varying length, on the competing aims of economic internationalism and nationalism and the possibility of their reconciliation. The longest and most systematic was An International Economy: Problems and Prospects (1956), which offered a comprehensive overview of international economics in the non-Soviet world. Myrdal’s book was both a coming to terms with the failures of the postwar international settlement and a recommitment to the ideals of the “New Internationalists”—himself among them—who had shaped it. What wartime planners in the 1940s had attempted to realize, and what had never come to pass, was a durable reconciliation of the national welfare state with an open world economy, one embracing not only the rich countries but also the poor and rapidly decolonizing ones—which were not yet an “integral part of the world economy,” as Myrdal put it, “in any sense that can make the internationalist happy” (167).

Myrdal structured the argument of an International Economy around a dialectical historical progression from the international, to the national, to the synthesis of both. Until World War I, he wrote, there had existed a highly integrated “partial” world economy, characterized by the free movement of capital, labor, and goods, although largely excluding nonwhite peoples outside of small economic enclaves in Europe’s colonies. This system broke down permanently in 1914. In the face of a series of postwar crises, culminating in the Depression, states took on unprecedented powers to insulate their citizens from the instability of external economic forces, a process that accelerated a secular trend toward “national integration” in the developed world—”away from a free market economy governed by the interplay of market forces,” he wrote, “and towards an ever greater volume of interventions by governments and organized social groups” (25). These interventions required the elaboration of an ever more complex set of restrictions on trade and payments, causing the free world economy of the prewar era to recede further and further from view. As welfare and employment came to be seen as basic guarantees of citizenship, it became clear that no state would give up its new monetary and fiscal powers as demanded by reintegration into a world economy founded on the gold standard. Once the “Achilles’ heel of industrial society” was discovered—mass unemployment—the antinomy between economic internationalism and economic nationalism was resolved decisively in favor of the latter (19). Calls to reverse this process were not only politically reactionary but went against an “immutable historical trend” toward the consolidation of national welfarism. “There is no retreat from the welfare state,” Myrdal wrote. “The biggest break we can expect in the trend towards the welfare state is the flatness of an individual step in a staircase” (52).

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About Jamie Martin

Jamie Martin is a postdoctoral research fellow in the Laureate Program in International History at the University of Sydney. His research focuses on nineteenth- and twentieth-century European and international history and the history of capitalism. His current book project, Experts of the World Economy: European Stabilization and the Transformation of Global Capitalism in the Era of Total War (under advance contract at Harvard University Press) looks at the origins of the earliest international schemes to govern the world economy, which emerged out of European-led efforts to stabilize international order in the aftermath of World War I.