Chairman King, Ranking Member Moloney and distinguished members of the committee, my name is Peter Henry Blair. I am Associate Professor of Economics at the Stanford University Graduate School of Business. I am also a Faculty Research Fellow of the National Bureau of Economic Research, and my research is funded by the National Science Foundation's Early CAREER Development Program. I have wirtten extensively on the economic effects of capital account liberalization. Thank you for the opportunity to discuss the implications of my research for the financial services component of the recent U.S. trade agreements with Chile and Singapore.

After the devastation of World War II, Germany and Japan built national capitalist institutions that were remarkably successful in terms of national reconstruction and international competitiveness. Yet both "miracles" have since faltered, allowing U.S. capital and its institutional forms to establish global dominance. National varieties of capitalism are now under intense pressure to converge to the U.S. model. Kozo Yamamura and Wolfgang Streeck have gathered an international group of authors to examine the likelihood of convergence to determine whether the global forces of Anglo-American capitalism will give rise to a single, homogeneous capitalist system. The chapters in this volume approach this question from five directions: international integration, technological innovation, labor relations and production systems, financial regimes and corporate governance, and domestic politics.

In their introduction, Yamamura and Streeck summarize the crises of performance and confidence that have beset German and Japanese capitalism and revived the question of competitive convergence. The editors ask whether the two countries, confronted with the political and economic exigencies of technological revolution and economic internationalization, must abandon their distinctive institutions and the competitive advantages these have yielded in the past, or whether they can adapt and retain such institutions, thereby preserving the social cohesion and economic competitiveness of their societies.

This paper assesses Pan Wei's proposal for a 'consultative rule of law system' for China, finding it a potentially important step along the path of political reform. China urgently needs political reform to deal with the rapidly mounting problems of corruption, abuse of power, financial scandals, rising crime and inequality, and declining legitimacy of the Chinese Communist Party. A rule of law, with an independent judiciary and other autonomous institutions of horizontal accountability, is vital if China is to rein in these problems and deliver better, fairer, more transparent and effective governance. However, Pan Wei's proposed system goes only part of the way toward addressing the deficiencies of governance in China, and is therefore best viewed as a transitional framework. To work, horizontal accountability must be supplemented with and reinforced by vertical account ability, through competitive elections, which give local officials an incentive to serve the public good and enable bad officials to be removed by the people. Ultimately, I argue, China can only achieve adequate and enduring political accountability by moving toward democracy. Among the other issues addressed in the paper are the architecture and appointment of a system of horizontal accountability for China; the role of the Communist Party (or its successor hegemon) in a 'rule of law' system; and the timing and phasing of the transition to a rule of law.

Reprinted in Suisheng Zhao, ed., Debating Political Reform in China: Rule of Law vs. Democratization, 2006.

We provide new measures of ethnic, linguistic and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literaturer and we compare our new variables with those previously used. We also revisit the question of the effects of ethnic, linguistic and religious heterogeneity on the quality of institutions and growth.

The basic argument of this article is that the globalization perspective in all of its variations (and there are many) exaggerates the amount of change in the contemporary global system. States are for the most part exactly what they have always been, the most important actors in the modern international system -- which is not to argue that they are now, or have ever been, immune to influence from other actors or that they have ever been able to fully control economic or other kinds of transactions. The hyperglobalist argument -- which sees states as fundamentally outmoded, incapable of carrying on the basic functions of governance -- is wrong. Transformationist arguments are also for the most part incorrect, but here it is necessary to distinguish among different kinds of claims, which are obfuscated by the emphasis on complexity, interconnectedness and multiple actors.

Synthesizing decades of sociological work at Stanford University on the development of the modern nation-state system since World War II, contributors argue that striking similarities increasingly characterize nation-state structures and policies, suggesting that countries across different domains are following the same models or scripts of what a nation-state ought to be.

Equality points to one of the critical dimensions along which the quality of democracy varies. 1 What is at stake is political equality, not equality in everything human beings have reason to value, nor equality in the most important structures of social inequality – in class, status, and power. However, political equality is intertwined with, and profoundly shaped by these structures. Political equality is affected by social and economic inequality in two broad ways: dominant groups can use their social and economic power resources more or less directly in the political sphere, and they can shape the views, values, and preferences of subordinate groups by virtue of their status and their influence on education, cultural production, and mass communication, exerting “cultural hegemony”. Political equality will be extremely limited unless these effects of social and economic equality are substantially contained.

There is a reading of democracy in both these countries that is not optimistic. In a recent assessment of the nature of Brazil's democratic regime, Kurt Weyland characterized Brazil's democracy as "low quality." He bases this characterization on Brazil's gross level of inequality and the incapacity of Brazilian civil society effectively to demand that government redress inequality. He goes on to argue that it is precisely because Brazil's democracy is of "low quality" that it can survive so well.

Russia, once seen as America's greatest adversary, is now viewed by the United States as a potential partner. This book traces the evolution of American foreign policy toward the Soviet Union, and later Russia, during the tumultuous and uncertain period following the end of the cold war. It examines how American policymakers -- particularly in the executive branch -- coped with the opportunities and challenges presented by the new Russia.

Drawing on extensive interviews with senior U.S. and Russian officials, the authors explain George H. W. Bush's response to the dramatic coup of August 1991 and the Soviet breakup several months later, examine Bill Clinton's efforts to assist Russia's transformation and integration, and analyze George W. Bush's policy toward Russia as September 11 and the war in Iraq transformed international politics. Throughout, the book focuses on the benefits and perils of America's efforts to promote democracy and markets in Russia as well as reorient Russia from security threat to security ally.

Understanding how three U.S. administrations dealt with these critical policy questions is vital in assessing not only America's Russia policy, but also efforts that might help to transform and integrate other former adversaries in the future.

James M. Goldgeier is professor of political science and international affairs at George Washington University. He is also a senior fellow at the Council on Foreign Relations.

Michael McFaul is a senior associate at the Carnegie Endowment, the Peter and Helen Bing senior fellow at the Hoover Institution, and an associate professor of political science at Stanford University.