Lawrence Broz 219England’s commitment to the gold standard that the regime was able to accommodate
the handful of shocks that it experienced.
The international externalities of heterogeneous national preferences can, of
course, be negative as well as positive. The collapse of the gold standard in the
interwar period, the breakup of the Bretton Woods system in the early 1970s,
and the 1992 crisis in the EMS can all be interpreted as the result of large
negative externalities produced by the policy choices of the major states, in
response to domestic political forces. Although we still lack general propositions
about the conditions in which national interests sustain (or fail to sustain) an
international regime, the research presented here is a necessary first step toward
understanding international monetary relations. The value of the framework,
and the measure against which it should be judged, is primarily empirical. The
quality of the externalities produced by national policy choices determines the
stability of the international monetary system. The facts of the nineteenth-century
case of the gold standard are more consistent with this view than with models
derived from existing international relations theory—hegemonic stability theory
and regime theory. Although future theoretical work must specify the precise
conditions under which heterogeneous national social orders will or will not
generate the systemic public goods by which international social orders are
maintained, this chapter has demonstrated the benefit of shifting the focus from
international to domestic social order.