World Financial Orders: An Historical International Political Economy
enough to include emergency provisions and suspensions of appropriate policies if necessary. However, Brown neglects to consider how these "escape clauses" will affect expectations, especially in financial markets. I believe Paul Davidson (1994, chapter 16), who studied the issues of savings surpluses and capital flows before Brown, offered a more useful reform program. Although he did not focus explicitly on Japan, Davidson similarly criticized post-Bretton Woods monetary arrangements for fostering explosive exchange rate fluctuations, international liquidity crunches, and speculative excesses and for hindering international cooperation. Unlike Brown, however, Davidson draws from Keynes rather than Friedman and recommended a system of fixed exchange rates with flexible adjustment clauses similar to the Bretton Woods system. The key benefit here is the stability of exchange rate expectations combined with the means to counter financial crises when necessary. Moreover, Davidson's policies are also consistent with the goal of ensuring full employment through activist domestic policy rather than constraining it as Brown proposed. What is necessary is obtaining the necessary international cooperation to construct such a system-a goal unlikely to be reached soon in the "America goes it alone" era.