358 WORLD POLITICS countries have caught up with the United States,it still remains the strongest,especially when its military might is considered.Thus,this ar- gument depends on military capabilities being an important factor in trade policy considerations.However,the fungibility of these power re- sources is questionable.3s In fact,the second type of hegemonic stability argument denies this fungibility.Considering only trade-related power resources,it suggests that U.S.hegemony has not declined enough to evoke extensive protectionism.34 But in comparison to its trade position in the 1g2os,the U.S.held a similar,or even less dominant,position in the 1970s.One explanation for this disparity is the lag phenomenon discussed earlier.A third argument modifying the thesis of hegemonic stability holds that different configurations of states in terms of their relative eco- nomic power lead to different outcomes in trade policy.But this argu- ment is not able to explain the differences between the 192os and 197os, since the configuration of states at those two points(1929 and 1977)was very similar.35 A second type of explanation focuses on the existence of an interna- tional regime in trade.In this view,the creation of the cATr system after World War II and its continued functioning have been partially respon- sible for the maintenance of a relatively open international economy.In the Igzos,the lack of any such regime helped to spread protectionism. GATr is seen as working against protectionism in numerous ways.Some analysts argue that it operates through the externalization of a norm- i.e.,"embedded liberalism"-which promotes trade but also minimizes its domestic costs and,with it,protectionist demands.6 Others suggest that the regime and its norms are embodied in domestic policies and prac- tices and that it is effective through constraining and shaping domestic behavior.37 Still others see the regime as encouraging international com- s David Baldwin,"Power Analysis and World Politics:New Trends Versus Old Politics," World Politics 31 (January 1979),161-94;Keohane and Nye (fn.13),chap.2. Ibid.,chap.3;Robert O.Kcohane,After Hegemony:Cooperation and Discord in the World Political Economy (Princeton:Princeton University Press,1984),chaps.4,9;Vinod Aggarwal, Liberal Protectionism:The International Politics of Organized Textile Trade (Berkeley:Univer- sity of California Press,1985),chaps.2,7. Lake (fns.1,9,and 20).To overcome this difficulty,Lake makes two points:first,that due to the disruption caused by World War I,much greater uncertainty existed in the 19z0s, which prompted more protectionist activity.Second,he implies that the height of protection- ism globally was in the 1930s,not the Igzos,when the structure was somewhat different.Pro- tectionism,however,was rising world-wide throughout the 192os;it hit its peak in the U.S by 1930 and elsewhere by 1933 or 1934.This explanation of trade policy outcomes is more sophisticated and perhaps more accurate than other hegemonic stability arguments,but it still has difficulty accounting for the differences between the 19zos and the 1970s. John Ruggie,"International Regimes,Transactions,and Change,"International Organi- sation 36 (Spring 1982),379-415. s7 Charles Lipson,"The Transformation of Trade,"International Organization 36(Spring358 WORLD POLITICS countries have caught up with the United States, it still remains the strongest, especially when its military might is considered. Thus, this ar￾gument depends on military capabilities being an important factor in trade policy considerations. However, the fungibility of these power re￾sources is questionable.33 In fact, the second type of hegemonic stability argument denies this fungibility. Considering only trade-related power resources, it suggests that U.S. hegemony has not declined enough to evoke extensive protectionism.34 But in comparison to its trade position in the 1920s, the U.S. held a similar, or even less dominant, position in the 1970s. One explanation for this disparity is the lag phenomenon discussed earlier. A third argument modifying the thesis of hegemonic stability holds that different configurations of states in terms of their relative eco￾nomic power lead to different outcomes in trade policy. But this argu￾ment is not able to explain the differences between the 1920s and I~~OS, since the configuration of states at those two points (1929 and 1977) was very similar.35 A second type of explanation focuses on the existence of an interna￾tional regime in trade. In this view, the creation of the GATT system after World War I1 and its continued functioning have been partially respon￾sible for the maintenance of a relatively open international economy. In the 192os, the lack of any such regime helped to spread protectionism. GATT is seen as working against protectionism in numerous ways. Some analysts argue that it operates through the externalization of a norm￾i.e., "embedded liberalismH-which promotes trade but also minimizes its domestic costs and, with it, protectionist demands3 Others suggest that the regime and its norms are embodied in domestic policies and prac￾tices and that it is effective through constraining and shaping domestic behavior.37 Still others see the regime as encouraging international com- 33 David Baldwin, "Power Analysis and World Politics: New Trends Versus Old Politics," World Politics 31 (January 1979), 161-94; Keohane and Nye (fn. 13), chap 2. 34 Ibid., chap. 3; Robert 0. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: Princeton University Press, 1984), chaps. 4,9; Vinod Aggarwal, Liberal Protectionism: The International Politics of Organized Textile Trade (Berkeley: Univer￾sity of California Press, 1985), chaps. 2, 7. 35 Lake (fns. I, 9, and 20). To overcome this difficulty, Lake makes two points: first, that due to the disruption caused by World War I, much greater uncertainty existed in the 1920s, which prompted more protectionist activity. Second, he implies that the height of protection￾ism globally was in the 193os, not the 1920s, when the structure was somewhat different. Pro￾tectionism, however, was rising world-wide throughout the 1920s; it hit its peak in the U.S. by 1930 and elsewhere by 1933 or 1934. This explanation of trade policy outcomes is more sophisticated and perhaps more accurate than other hegemonic stability arguments, but it still has difficulty accounting for the differences between the 1920s and the 1970s. 36 John Ruggie, "International Regimes, Transactions, and Change," lnternational Organi￾zation 36 (Spring 1982), 379-415. 37 Charles Lipson, "The Transformation of Trade," lnternational Organization 36 (Spring