World Cools to Capitalist Ideals as Faltering Countries Put New Controls on Free Markets, Industrialized Nations Debate How to Stem World Recession

By David R. Francis, writer of The Christian Science Monitor | The Christian Science Monitor, September 17, 1998 | Go to article overview

World Cools to Capitalist Ideals as Faltering Countries Put New Controls on Free Markets, Industrialized Nations Debate How to Stem World Recession


David R. Francis, writer of The Christian Science Monitor, The Christian Science Monitor


Since the fall of communism, Washington has tried to encourage "emerging nations" like Russia and South Korea to adopt nearly unfettered capitalism. But the spread of the global financial crisis from East Asia to Russia to Latin America has created a backlash.

Several governments have moved to introduce barriers to the free movement of money across borders. They are putting controls on foreign-exchange flows and foreign capital.

While the moves hardly represent a revival of the ideas of Karl Marx, they do bespeak a world trying to figure out the right balance of free markets and financial control in an era when one country's falling currency can trigger another's economic chaos.

"It is an understandable overreaction," says Robert Litan, an economist at Washington's Brookings Institution, of the controls.

So far, the Group of Seven most-industrialized nations have discouraged any reversion to a less rigorous form of free enterprise.

A statement by the G-7 finance ministers and central bank governors this week only promised a "cooperative international approach" to support those countries hit by the turmoil in global financial markets.

That statement and the call Monday by President Clinton for a meeting of the G-7 in Washington within a month to craft long-term solutions to the financial crisis encouraged investors. Stock prices in New York and elsewhere advanced early in the week. "This is the biggest financial crisis facing the world in a half century," Mr. Clinton told the Council on Foreign Relations in New York. With a quarter of the world's population living in countries in slumps, "the industrial world's chief priority today plainly is to spur growth," he said.

But how to achieve this growth is the key question. Stock-market investors welcomed the move by the scandal-harassed president to emerge from his personal troubles and deal with the international financial crisis.

They suspected Clinton and the G-7 were hinting at a coordinated drop in interest rates to prop up the global economy. But Hans Tietmeyer, president of Germany's central bank, the Bundesbank, denied this interpretation. "In Europe, no reason can be seen to relax monetary policy," he said Tuesday.

Japan, however, already lowered interest rates slightly last week to boost its dormant economy. The government now talks of a further easing of monetary policy. In the United States, Federal Reserve Chairman Alan Greenspan earlier this month noted that the central bank is now more open toward a looser monetary policy. And Britain has hinted it would go along with any plan to lower interest rates.

The major technical problem under review, particularly for "emerging" nations, is the sudden flow of money - currency and capital - out of a country when domestic and foreign investors become nervous.

Treasury Secretary Robert Rubin told Congress yesterday, "Just as capital flowed into emerging markets indiscriminately, and that was a mistake, capital is now flowing out indiscriminately, likewise a mistake. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

World Cools to Capitalist Ideals as Faltering Countries Put New Controls on Free Markets, Industrialized Nations Debate How to Stem World Recession
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.