Volcker Is Still a Force in Global Economics : People: The former Federal Reserve chief’s recent efforts have included talks with President Yeltsin’s economists about advising Russia on its shift from socialism to capitalism.

NEW YORK —  Relaxed and reflective, former Federal Reserve Board Chairman Paul A. Volcker, 64, sips black coffee at his marble-topped desk and ponders the global economic scene from his 40th-floor aerie in Midtown Manhattan.

“Stability and discipline are watchwords around the world,” he muses, reiterating a leitmotif from the years he defended fiscal integrity against political assault. “We hear less about this in the United States, but we’d better keep up. The United States is not going to have a strong international posture without a solid domestic base.”

Still a leading internationalist, Private Citizen Volcker, one of the architects of the current global economic system, travels overseas regularly. He wears many hats: chairman of the investment-banking firm J. D. Wolfensohn & Co.; head of the Trilateral Commission, a group of academic, business, labor and media professionals from North America, Western Europe and Japan who study issues involving the three areas, and chairman of the Group of 30, a New York-based “think tank” of international banking.

“I take the Concorde more frequently than I like to admit,” he says.

Recently, Volcker engaged in talks with economic advisers to President Boris N. Yeltsin about becoming a part-time consultant on Russia’s economic and banking reforms.

“(My arrangement) is very informal; there are lots of problems,” Volcker says. “If it gets more elaborate, I’ll need staff there. I can’t do it from here, and I can’t be there all the time. I’m really ambivalent. I have good relations with them, but there are a number of impasses.

“We talk so casually about these transitions, but they are very difficult. (The Russians) have no background in credit decisions, how to make loans, how to allocate money. They’re going through a mixture of passages from socialism to feudalism to some elements of capitalism.”

The rare opportunity to chat with Volcker is occasioned by publication of his book, “Changing Fortunes,” written with a former Japanese vice minister of finance, Toyoo Gyohten. The book--published by Times Books, a division of Random House Inc.--traces the decline of U.S. leadership in world economic affairs from the end of World War II. It developed out of joint lectures the two men delivered at Princeton University, where Volcker is professor of international economics.

Volcker and Gyohten leaven their sober subject with lively, behind-the-scenes tales of secret negotiations, close-ups of overbearing actors on the international economic stage and, in Gyohten’s case, playful humor.

For example, in one passage, Gyohten dubs his colleague “Ninja Volcker” for undertaking a tense, top-secret mission in 1973 to exhort the Japanese to revalue the yen. In another, he pictures former Treasury Secretary John B. Connally on the floor tracing the foot of Japanese Finance Minister Mikio Mizuta for the proper fit of custom-made Texas cowboy boots.

Though Volcker is no rollicking raconteur, his writing offers intriguing snapshots of some of the high and mighty. He admires Connally and confesses he felt a strong “sense of loss” at the end of Connally’s reign at the Treasury.

“He was . . . at times secretive and with a Texas-sized ego. He certainly demanded loyalty. But in turn, he strongly supported his subordinates and, without in any way involving me in his more political activities, taught me a great deal about the ways of power in Washington.”

Volcker discloses an intriguing tidbit about Connally’s successor, George P. Shultz, who, he writes, “successfully stonewalled White House requests for confidential information about individual tax returns during the Watergate years.”

He is less charitable toward President Ronald Reagan’s man at Treasury, Donald T. Regan. Volcker describes Regan haranguing his foreign counterparts at one meeting, “almost shouting” in response to criticism of U.S. budget deficits. “This was not,” he observes with characteristic understatement, “a high point for the niceties of international diplomacy.”

In the book, Volcker concludes that the breakdown of fixed exchange rates in the 1970s contributed to subsequent economic instability and slowed world growth. Yet he celebrates the considerable achievements of the postwar years: “Never have so many nations and so many people . . . enjoyed such an increase in prosperity and personal freedom as during the past 45 years.”

Ensconced in a black-leather swivel chair in his surprisingly modest Wolfensohn office--which is conspicuously free of photos showing Volcker with the heads of state who make up his inner circle--Volcker says the United States is in the midst of a “pretty sluggish” recovery. He confesses, though, that the economy is “maybe now a little stronger than I expected.”

Volcker predicts that the gradual strengthening will continue at a rate of about 2% growth in the gross national product--roughly half that of previous recoveries.

Large budget deficits trouble Volcker deeply, but not to the point that he can bring himself to support a constitutional amendment requiring balanced budgets. “Five years ago I testified that I was in sympathy with the goal, but couldn’t support putting it in the Constitution. You do get a little desperate after a while.”

To the man who beat back virulent inflation during his tenure at the Fed, that struggle today “also appears sluggish.” He believes, however, that inflation today is mainly “dampened.”

“It takes a long time,” he says. “These great, big budget deficits remind people that the threat of inflation still exists.”

He expects those deficits to keep long-term interest rates higher than Federal Reserve Chairman Alan Greenspan would like. Greenspan recently called high, long-term rates the biggest threat to the economy.

Casting an experienced eye over the international scene, Volcker offered the following additional observations:

* The slowdown in Japanese expansion may signal a new era of slower growth there that is more in line with other industrial powers. “Banks there have suffered what all banks around the world have suffered. They’re human, they’ve made bad loans, their profits are squeezed.

“For a long time (the Japanese) had access to cheap capital, but today with the stock market down and interest rates up, their cost of capital is equalized. It makes you wonder if this may make them less aggressive as international competitors.”

* Denmark’s rejection of monetary and political union with the European Community reflects broader opposition than the “great and mighty of Europe” care to acknowledge.

“They’ve been telling me not to worry, but I think (the European Community) has a bit of a problem. I wonder how the Danish reaction will rub off on other countries? We don’t know how much the problem is a unified currency, or how much is federation, too much strength in Brussels or Germany getting too dominant. I am a true-blue European. I think a common currency makes sense.”

* This is “not a brilliant period” for international cooperation on economic affairs. Struggle among members of the General Agreement on Tariffs and Trade “reflects the tension of internal domestic imperatives.”

Volcker sees the world drifting now into regional organizations. “That’s better than protectionism, but it has the potential for excluding smaller countries.”

* He disagrees with Treasury Secretary Nicholas F. Brady’s recent call for a stronger yen to help reduce Japan’s trade surplus. “I think we rely too much on depreciating the dollar. It’s too easy a recourse when you are blocked in other areas. Depreciation is a sop.”

* Despite domestic problems, the United States should not give up international leadership. “Real wages have not been going up, and that makes people edgy and concerned. But it doesn’t cost that much to be an international leader today. The cost is declining as the defense budget declines. Why do we find it such a burden? We have so much at stake on the outcome in the old U.S.S.R. I’m not ready to give up on the United States as international leader.”

Volcker, grandfather of three boys in Washington, D.C., still keeps a jam-packed schedule. Earlier this year, he chaired a commission that argued for better treatment of public servants. At a Middlebury College seminar, he urged students to pursue careers in civil service, contending that a higher standard of professionalism would restore the public’s trust in government.

How is this quintessential public servant enjoying the highly paid private career he long eschewed? “I’m torn in a number of directions. I teach. My public persona makes me (accept) pro bono work. I even try to do some investment banking from time to time.”