International regimes,transactions,and change 381 What is the "generative grammar''that shapes the internationalization of political authority?The most common interpretation has been stated suc- cinctly by Kenneth Waltz:the elements of international authority,he main- tains,"are barely once removed from the capability that provides [their] foundation....''6 On this interpretation others,in turn,have built what now amounts to a prevalent model of the formation and transformation of inter- national economic regimes.In its simplest form,the model makes this pre- diction:if economic capabilities are so concentrated that a hegemon exists, as in the case of Great Britain in the late 19th century and the U.S.A.after World War II,an "'open''or "liberal''international economic order will come into being.In the organization of a liberal order,pride of place is given to market rationality.This is not to say that authority is absent from such an order.It is to say that authority relations are constructed in such a way as to give maximum scope to market forces rather than to constrain them.Specific regimes that serve such an order,in the areas of money and trade,for exam- ple,limit the discretion of states to intervene in the functioning of self- regulating currency and commodity markets.These may be termed "strong"regimes,because they restrain self-seeking states in a competitive international political system from meddling directly in domestic and inter- national economic affairs in the name of their national interests.And the strength of these regimes,of course,is backed by the capabilities of the heg- emon.If and as such a concentration of economic capabilities erodes,the liberal order is expected to unravel and its regimes to become weaker,ulti- mately being replaced by mercantilist arrangements,that is,by arrange- ments under which the constituent units reassert national political authority over transnational economic forces.If the order established by British eco- nomic supremacy in the 19th century and that reflecting the supremacy of the United States after World War II illustrate liberal orders with strong regimes,the interwar period illustrates the darker corollary of the axiom. I do not claim that this model is fundamentally wrong.But it does not take us very far in understanding international economic regimes,and,by extension,the formation and transformation of international regimes in gen- Functions of the Executive(Cambridge:Harvard University Press,1968),p.184.See also the important statement by Peter Blau,"Critical Remarks on Weber's Theory of Authority," American Political Science Review 57 (June 1963).An illustration (though unintended)of how not to think of authority if the concept is to be at all useful in a discussion of international relations is provided by Harry Eckstein,"Authority Patterns:A Structural Basis for Political Inquiry,"American Political Science Review 67(December 1973).More elaborate typologies of forms of authority relations in international regimes may be found in my papers,"'International Responses to Technology:Concepts and Trends,"International Organization 29(Summer 1975),and"Changing Frameworks of International Collective Behavior:On the Complemen- tarity of Contradictory Tendencies,"in Nazli Choucri and Thomas Robinson,eds.,Forecasting in International Relations (San Francisco:W.H.Freeman,1978). 4 Theory of International Politics (Reading,Mass.:Addison-Wesley,1979),p.88. The relevant literature is cited in Robert O.Keohane,"The Theory of Hegemonic Stability and Changes in International Economic Regimes,1967-1977,"in Ole Holsti et al.,eds., Change in the International System (Boulder,Col.:Westview Press,1980).International regimes, transactions, and change 381 What is the "generative grammar" that shapes the internationalization of political authority? The most common interpretation has been stated succinctly by Kenneth Waltz: the elements of international authority, he maintains, "are barely once removed from the capability that provides [their] foundation. . . ."'j On this interpretation others, in turn, have built what now amounts to a prevalent model of the formation and transformation of international economic regimes. In its simplest form, the model makes this prediction: if economic capabilities are so concentrated that a hegemon exists, as in the case of Great Britain in the late 19th century and t,he U.S.A. after World War 11, an "open" or "liberal" international economic order will come into being.' In the organization of a liberal order, pride of place is given to market rationality. This is not to say that authority is absent from such an order. It is to say that authority relations are constructed in such a way as to give maximum scope to market forces rather than to constrain them. Specific regimes that serve such an order, in the areas of money and trade, for example, limit the discretion of states to intervene in the functioning of selfregulating currency and commodity markets. These may be termed "strong" regimes, because they restrain self-seeking states in a competitive international political system from meddling directly in domestic and international economic affairs in the name of their national interests. And the strength of these regimes, of course, is backed by the capabilities of the hegemon. If and as such a concentration of economic capabilities erodes, the liberal order is expected to unravel and its regimes to become weaker, ultimately being replaced by mercantilist arrangements, that is, by arrangements under which the constituent units reassert national political authority over transnational economic forces. If the order established by British economic supremacy in the 19th century and that reflecting the supremacy of the United States after World War I1 illustrate liberal orders with strong regimes, the interwar period illustrates the darker corollary of the axiom. I do not claim that this model is fundamentally wrong. But it does not take us very far in understanding international economic regimes, and, by extension, the formation and transformation of international regimes in genFunctions of the Executive (Cambridge: Harvard University Press, 1968), p. 184. See also the important statement by Peter Blau, "Critical Remarks on Weber's Theory of Authority,'' American Political Science Review 57 (June 1963). An illustration (though unintended) of how not to think of authority if the concept is to be at all useful in a discussion of international relations is provided by Hany Eckstein, "Authority Patterns: A Structural Basis for Political Inquiry," American Political Science Review 67 (December 1973). More elaborate typologies of forms of authority relations in international regimes may be found in my papers, "International Res~onses to Technology: Concepts and Trends," International Organization 29 (Summer 1975, and "Changing ~Fkneworks of International Collective ~ehavior: On the Complementaritv of Contradictorv Tendencies." in Nazli Choucri and Thomas Robinson. eds.. . .forecast in^- in ~~ternational ~elaiions(San Francisco: W. H. Freeman, 1978). Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979), p. 88. 'The relevant literature is cited in Robert 0.Keohane, "The Theory of Hegemonic Stability and Changes in International Economic Regimes, 1967-1977," in Ole Holsti et al., eds., Change in the International System (Boulder, Col.: Westview Press, 1980)