64 International Organization reasons for disagreement between nations and between groups within nations on the choice of an international monetary regime.It draws on recent monetary history and on current discussions of reform of the monetary system for illustra- tions,and tries to suggest why cost-benefit analysis,while an appropriate frame- work in principle,is in practice so difficult to execute in this area.If the essay carries any principal message,it is that sources of disagreement do not generally derive from divergent interests,but rather from diverse perspectives and hence different conjectures about the consequences of one regime as compared with another.In short,disagreement arises mainly from ignorance about the true effects, so that we must use reasoned conjecture rather than solid fact to guide our choices, and reasonable people may and do differ with respect to their conjectures.The essay concludes with some brief observations on the appropriate role of interna- tional organizations in the international monetary arena and on the broad direc- tions I believe the international monetary system should take. I define a regime as any particular set of rules or conventions governing monetary and financial relations between countries.Regime seems preferable to system or order,both of which are sometimes used in this context,since it encompasses arrangements that are neither orderly nor systematic.A monetary regime specifies which instruments of policy may be used and which targets of policy are regarded as legitimate,including of course the limiting cases in which there are no restrictions on either.I propose here to outline a number of international monetary regimes in terms of their major features,and to offer some brief comments on their costs and benefits.Each regime has many variants,variants that may either aggravate or mitigate the disadvantages,so that the distinctions between them are not in fact as sharp as I sometimes make it appear.Moreover, each regime may operate in many different ways,and a given regime may either be resoundingly successful or totally stymied,depending on how the participants operate within it.Some regimes lack the technical requisites for success and are bound to fail;others,internally consistent,can work effectively in one political milieu but not in another.Students of international relations too often focus on the political milieu to the neglect of requirements of internal consistency and technical proficiency;economists are prone to the opposite error. One possible regime would be to have no rules or conventions at all-to allow each country to do what it thinks best,without any form of coordination.This may be called a free-for-all regime,with the understanding that in international monetary affairs governments and central banks are principal actors,so that the term free-for-all refers primarily to their actions,not merely to those of private 1A particularly poignant example of the severe limits a given regime can impose on the use of instruments of policy,and of the psychological hold a regime of long standing can have on even well-informed observers,is the surprised anguish of Fabian socialist Sidney Webb when,in 1931,in the face of enormous unemployment,Britain abandoned the fixed price of gold and allowed the pound to float:"No one told us we could do this."(A.J.P.Taylor,English History,1914-1945 [New York:Oxford University Press,1965]p.297,cited in Fred Hirsch, Money International [Garden City,N.Y.:Doubleday,1969],p.4.) This content downloaded from 211.80.95.69 on Mon,24 Jun 201304:23:40 AM All use subject to JSTOR Terms and Conditions64 International Organization reasons for disagreement between nations and between groups within nations on the choice of an international monetary regime. It draws on recent monetary history and on current discussions of reform of the monetary system for illustra￾tions, and tries to suggest why cost-benefit analysis, while an appropriate frame￾work in principle, is in practice so difficult to execute in this area. If the essay carries any principal message, it is that sources of disagreement do not generally derive from divergent interests, but rather from diverse perspectives and hence different conjectures about the consequences of one regime as compared with another. In short, disagreement arises mainly from ignorance about the true effects, so that we must use reasoned conjecture rather than solid fact to guide our choices, and reasonable people may and do differ with respect to their conjectures. The essay concludes with some brief observations on the appropriate role of interna￾tional organizations in the international monetary arena and on the broad direc￾tions I believe the international monetary system should take. I define a regime as any particular set of rules or conventions governing monetary and financial relations between countries. Regime seems preferable to system or order, both of which are sometimes used in this context, since it encompasses arrangements that are neither orderly nor systematic. A monetary regime specifies which instruments of policy may be used and which targets of policy are regarded as legitimate, including of course the limiting cases in which there are no restrictions on either.' I propose here to outline a number of international monetary regimes in terms of their major features, and to offer some brief comments on their costs and benefits. Each regime has many variants, variants that may either aggravate or mitigate the disadvantages, so that the distinctions between them are not in fact as sharp as I sometimes make it appear. Moreover, each regime may operate in many different ways, and a given regime may either be resoundingly successful or totally stymied, depending on how the participants operate within it. Some regimes lack the technical requisites for success and are bound to fail; others, internally consistent, can work effectively in one political milieu but not in another. Students of international relations too often focus on the political milieu to the neglect of requirements of internal consistency and technical proficiency; economists are prone to the opposite error. One possible regime would be to have no rules or conventions at all-to allow each country to do what it thinks best, without any form of coordination. This may be called a free-for-all regime, with the understanding that in international monetary affairs governments and central banks are principal actors, so that the term free-for-all refers primarily to their actions, not merely to those of private I A particularly poignant example of the severe limits a given regime can impose on the use of instruments of policy, and of the psychological hold a regime of long standing can have on even well-informed observers, is the surprised anguish of Fabian socialist Sidney Webb when, in 1931, in the face of enormous unemployment, Britain abandoned the fixed price of gold and allowed the pound to float: "No one told us we could do this." (A. J. P. Taylor, English History, 1914-1 945 [New York: Oxford University Press, 1965] p. 297, cited in Fred Hirsch, Money International [Garden City, N.Y.: Doubleday, 1969], p. 4.) This content downloaded from 211.80.95.69 on Mon, 24 Jun 2013 04:23:40 AM All use subject to JSTOR Terms and Conditions