Economic Strategy and National Security: A Next Generation Approach

nation-states in which it locates its operating units. Economic linkages and relationships have leaped over national boundaries. Trade has broken down the compartmentalization of the world. As noted above, a global economy, in today's terms, is globalized production by supranational corporations.

A globalized economy presents problems that transcend the regulatory reach of the nation-state. Today, technological innovations are bringing about ever larger and more rapid flows of production and communication. This forces supranational corporations to seek ever wider and deeper forms of organization. Supranational corporations are becoming more organized and more planned. Governments and international institutions respond by developing wider and deeper forms of regulatory supervision.

Countries like the United States that depend increasingly on the workings of a globalized business system cannot, however, easily interfere with the dynamics of that system. The principles of the market mechanism and free trade retain their powerful influence in the world economic system. Moreover, efforts to interfere with the natural flows of business threaten to dampen the expansive forces of the emerging international economy.

Even a brief history of U.S. industrial growth--generated overwhelmingly by corporate enterprise--shows that such change gradually stimulated the intervention of regulatory supervision, in part to protect the market mechanism, and in part, to vitiate the deleterious effects of technological change on the American work force (i.e., serious problems of economic dislocation and social and political unrest). This point is critical for thinking about what a next-generation approach to economic strategy should look like.

To a greater extent than ever before, the United State's future is inextricably entangled in the changing structure of world economic affairs. At the same time, the United States faces a greater need than ever before to deal with the pressures and stresses that result from globalization and to come up with realistic policies that address the significant inventory of resentments accumulated by the

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