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CIAO DATE: 9/5/2006
The Meaning of Monetary Power
Benjamin J. Cohen
February 2004
Center for International Studies University of Southern California
Abstract
What is the meaning of monetary power? No one doubts that money is inherently political, an integral part of global “high politics.” Yet remarkably few scholars of international relations have attempted to explore the notion of monetary power in formal analytical terms. As Jonathan Kirshner has accurately noted, the topic is “a neglected area of study” (1995:3).
The purpose of this essay is to promote a clearer understanding of the meaning of monetary power in world politics. Building in good part on earlier contributions of my own (including, in particular, Cohen 1966), I aim to establish a basic conceptualization of monetary power that can be used in a variety of analytical contexts – a master template, as it were, to facilitate dialogue among diverse scholars and intellectual traditions. What distinguishes power in the context of monetary relations, I argue, is its link to the problem of balance-of-payments disequilibrium. The central issue is the distribution of the burden of adjustment to external imbalance. Monetary power represents, first and foremost, a capacity to avoid adjustment costs, either by delaying adjustment or by deflecting the burden of adjustment onto others. Ceteris paribus, the greater is a state’s capacity to avoid adjustment costs, whether by delay or deflection, the greater is its monetary power.
