The Politics of International Economic Relations: Session 3 7 November 2006

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The Politics of International Economic
Relations Session 37 November 2006
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Overview

• Hegemonic Stability Theory
• The Emergence of Regime Theories

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HST

• Research program
• Regimes are established and maintained by actors
  who hold a preponderance of power resources
  relevant to a particular issue-area
• Regimes decline when power becomes more equally
  distributed among their members
• HST explains creation and maintenance of the
  international economic infrastructure

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HST

• Two main versions
• Liberal version (Kindleberger, Ikenberry)
• Leadership Theory
• Realist version (Krasner, Gilpin)
• Hegemony Theory
• Neomarxist version (Wallerstein)
• Role of hegemony for creating and maintaining
  open world economy (necessary condition)

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HST Liberal Version

• Kindlerger 1973 on the Great Depression
• for the world economy to be stabilized, there
  has to be a stabilizer, one stabilizer
• Stability as an international public (or
  collective good)
• Public good (non-exclusion, non-rivalry)

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HST Liberal Version

• Non-rivalry in consumption
• If good is supplied to a member, automatically to
  all
• E.g. a sidewalk, MFN
• Non-exclusion
• Free-riding possibility
• E.g. Stability of monetary system helps all
  members (e.g. Soviet Union)

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HST Liberal Version

• Providing a public good type of collective
  action problem (Olson)
• Hegemon necessary as in order to overcome the
   collective action problem  
• Power and willingness to lead
• Kindleberger decline of the US in 1960s as
  development that hurts the system

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HST Realist Version

• Hegemony theory From the structure trade policy
  preferences are derived, preference distribution
  in turn explains international economic openness
• States posses utility functions that include
  relative goals such as power or security
• Maximization of objectives depend upon positions
  within the international system

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HST Realist Version

• When influence of hegemons decline, their
  appetite for international economic order also
  wanes and they are more concerned with their own
  particular national interest
• Gilpin (1970s) sceptical about outflow of capital
  to rival states at the expense of the hegemons
  own economic base

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HST Neo-Marxist Version

• Wallerstein alternative theory of hegemonic rise
  and decline (World Wars and Hegemonic Phases)
• Within the core one state leads in
  agro-industrial productivity, followed by
  dominance in commerce and finance
• One power can largely impose its rules and its
  wishes in the economic, political, military,
  diplomatic and even cultural arenas
• Rise and fall is explained by phases of expansion
  and contraction in the world economy

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HST Criticism

• Susan Strange (1987) The myth of Americas lost
  hegemony
• Is the US in decline?
• Outflow of capital investments and provision of a
  stable international currency (lender of last
  resort / in times of crisis) more important than
  liberalism in trade
• Structural power

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HST Criticism

• Nature of the hegemon (coercive or benevolent)
• A hegemon needs to be committed to values of
  liberalism
• Soviet Union (two hegemons?)

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HST Criticism

• Cooperation among states possible without hegemon
  (in absence of)
• Duncan Snidal 1985
• An oligopolistic group can substitute for
  unilateral hegemonic leadership
• Each member knows that the decision to free-ride
  can cause the collapse
• Pre-existing regimes create ongoing relationships
• Only few issue-areas have characteristics as
  depicted by HST
• Empirical 1990s countries extended collaboration
  in trade despite a relatively more even
  dispersion of economic power in the global system

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HST Criticism

• Its not just about the hegemon that maintains
  order, but also recognition of hierarchy be
  others (Soviet threat led the UK, France and
  Germany take a secondary role)
• Interests of other states in an open economy

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HST Criticism

• It is much more about domestic politics (e.g. why
  the US was not stabilizing in the 2nd half of the
  20s, changes to the Bretton Woods system...)
• McKeown on liberal policies under British
  hegemony (factor of business (boom and slump))
• Strange (inconsistent policies due to powerful
  lobbies)
• Decline Domestic reasons or external reasons

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HST Criticism

• Krasner Text
• Criticism from David Lake
• Difficulty in aggregating multiple objectives
  when openness exerts conflicting pressures.
• Depending on weight attached to objectives
  predictions vary
• 4 Variables Hierarchy (political power,
  national income, economic growth, social
  stability)

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Regimes

• Definition (Krasner 1983)
• Implicit or explicit principles, norms, rules,
  and decision-making procedures around which
  actors expectations converge in a given area of
  IR
• Difference Regime / IO

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Regime-Definition

• Principles are represented by coherent bodies of
  theoretical statements about how the world works.
  The GATT operated on the basis of liberal
  principles which assert that global welfare will
  be maximized by free trade
• Norms specifiy standars of behavior, and identify
  the rights and obligations of states (e.g. GATT
  tariffs and non-tariff barriers shall be reduced)
• Together Norms and Principles define the
  character of the Regime (Little 2005)

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Regime-Definition

• Rules operate at a lower level of generality,
  they are often designed to reconcile conflicts
  which may exist between principles and rules
  (e.g. enabling clause, SD for developing
  countries)
• Decisionmaking procedures identify specific
  prescriptions for behaviour (e.g. system of
  voting, processes during Ministerial meetings)
  that can change over time
• around which actors expectations converge

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Regimes 3 Schools (Hasenclever et al. 1996)

• Interest-based
• Power-based
• Knowledge-based
• Differences Degree of Institutionalization
  (Effectiveness, Robustness)

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(Neo-liberal) interest-based

• Mainstream in analyzing IOs
• Contractualism Cooperation in PD situation
• Collective Action, Cooperation Problem
• PD
• Multiple meetings (evolution of cooperation,
  iterated game)
• Regimes help through providing information (e.g.
  Monitoring on compliance (Keohane reputational
  effects)
• Situation-Structuralism Different strategic
  situations
• Coordination vs. Collaboration (Assurance and
  Suasion Situations)

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PD-situation
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Power-based

• HST
• Krasners Case for a Power-Oriented Research
  Program
• Who gets what is veiled by the PD with a single
  Pareto-optimum
• Problem of Cooperation Battle of Sexes
• The role of power
• Limited autonomy of regimes
• The meaning of anarchy (Grieco)
• Relative vs. absolute gains

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Power-based

• Single vs multiple pareto optimum
• Pareto-inefficient outcomes

F
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Knowledge-based

• Weak Cognitivism
• Ideas (Road Maps, Focal Points)
• Learning Cooperation
• Epistemic Communities
• Strong Cognitivism
• Norms as Constitutive Elements
• Compliance Pull and Legitimacy
• Power of Arguments
• Power of Identity

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Regimes Cave! Hic Dragons - Beware, here be
dragons!

• Strange (1983)
• A fashion that explains temporary events (missing
  long-term predictions)
• Imprecise definitions
• Relationship among principles, norms, etc,
• When do we know that convergence emerges?
• Value-biased (every one wants regimes!)
• Fails to take into account the dynamic reality of
  world politics
• State-centric paradigm

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From Regimes to IOs to Global Governance

• The role of IOs
• The (re-)emergence of private authority in the
  analysis of IR
• New networks in providing public goods
• E.g. Public-private partnerships
• Global networks
• Global Governance and cosmopolitan democracy