Abstract
The thesis analyses the relationship between U.S. level of development and foreign trade policy responses to economic crises. The aim is first to show that the Theory of the Productive Powers, developed by Friedrich List, is able to explain U.S policy reactions in 1873 and 1973, which neo-classical economic theories, exemplified by Paul A Samuelson s Factor Price Equalisation Theorem, can not, and second, to show through the hegemonic stability theory and through an examination of the concept of vested interests, why standard neo-classical theory is unable to explain the mentioned policy reactions. Two questions are therefore addressed: what foreign trade policies did the United States apply before, during, and after the crises of 1873 and 1973, and why did these policies be applied?
The findings are that U.S. foreign trade policy was overwhelmingly protective in the first period, as predicted by List, and overwhelmingly free trading in the second, also as predicted by List. Further that the change in foreign trade policy coincided with a change in level of development, i.e. the evolution from laggard to leader, and a switch in trade theoretical interest. In short, because the gains from free trade accrue to the leader, not the laggard, and because the leader or hegemon through theory can control trade flows, the hegemon has a vested interest in theory itself. That is why neo-classical economic theory is unable to explain U.S. foreign trade policy.