Exchange Rates: Government, Moral, or Market Order

Abstract

Discussions of international asset exchanges and capital flows occur in real world of institutional, political and hence moral settings. International trade and exchange rates are for the people affected quite specific, particular constraints. And the result of the con straints are, in effect, different for different actors. This particularistic view is not usually stressed in policy discussions. A good example is found in recent issue of Challenge (Jan.-Feb. 1986), an influen tial American liberal journal of economic opinion. Robert Trifiin and Lewis E. Lehrman engaged in kind of on the issue of exchange rates. We say a kind of debate because in the articles, Triffin and Lehrman presented their arguments without reference to each other. In reading the two pieces, we were not surprised to see Triffin and Lehrman repeat generalized positions which represent currently held views of other protagonists. Trimn, one of the imposing figures of international economic analysis, repeated his previous calls for government intervention and collusion, or in short government order. Lehrman, better known as conservative politician, attempted to place the contentious issues in setting of almost moral order.1 Yet the particularistic nature of the effectiveness of policy and program, we feel, is an essential ingredient of policy for it is undertaken to influence the course of events, global concept, by influencing individual actors. Both writers, we feel, tend to treat policy as somehow directly affecting classes of economic actors rather than individually situated actors whose reactions to policy create the class reaction. The significance of the particulars of time and place are generally played down in economic analysis and prognosis.