FREEING MONEY - WHY HAVE STATES BEEN MORE WILLING TO LIBERALIZE CAPITAL CONTROLS THAN TRADE BARRIERS

This article investigates why advanced industrial states have chosen t o dismantle their postwar capital controls during a period - the 1970s and 1980s - when they became less enthusiastic about eliminating trad e restrictions. Four explanations are presented. First, the unique mob ility and fungibility of money was important in both encouraging compe titive deregulation pressures and making the control of financial move ments difficult, each of which created differing collective action dyn amics in the financial sector than existed in the trade field. Second, the US and Britain played a leading role in encouraging financial lib eralization because they held distinct 'hegemonic' interests in financ e that did not exist to the same degree in the trade sector. Third, do mestic coalitions of neo-liberal advocates and internationally-oriente d corporate interests encountered relatively little domestic political resistance to their demands for financial liberalization because of t he low domestic political visibility of international financial issues . Finally, financial liberalization and trade protectionism may in fac t have been directly related: it has proven difficult for states to ma intain liberal practices in finance and trade at the same time.