Liberal Theories of International Relations: a primer

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POL 319


Dr. Lairson

September 4, 2014
Andrew Moravcsik, "Liberal Theories of International Relations: A Primer,"
Moravcsik places limits on the liberal theory of international politics he wants to discuss:
What does he leave out?


Utopian ideas of democracy and human rights
What does he want in?

The role of the varied social interests and values of states, and their relevance for world politics

Liberalism proposes what causal process for understanding international affairs?
Liberalism makes two very basic assumptions about how to think about international relations:
Two assumptions liberal theory makes are the assumptions of anarchy and rationality. Specifically, states (or other political actors) exist in an anarchic environment and they generally act in a broadly rational way in making decisions.
The anarchy assumption means that political actors exist in the distinctive environment of international politics, without a world government or any other authority with a monopoly on the legitimate use of force. They must engage in self-help.

The rationality assumption means that state leaders and their domestic supporters engage in foreign policy for the instrumental purpose of securing benefits provided by (or avoiding costs imposed by) actors outside of their borders, and in making such calculations, states seek to deploy the most cost-effective means to achieve whatever their ends (preferences) may be.

How are these assumptions different from realism/neorealism?
What assumptions does liberalism make that are unique?
(1) States represent social groups, whose views constitute state preferences;

(2) Interdependence among state preferences influences state policy.

What are state preferences and where do they come from?

  • States are, and always have been, embedded in a domestic and transnational society, which creates incentives for economic, social and cultural interaction across borders

  • Domestic groups are helped or hurt by different preferences and pressure governments. Domestic systems privilege some groups over others. States adopt preferences of powerful groups.

  • State preferences motivate foreign policy and define the interests and stake in global systems.

  • State preferences vary considerably from one state to another because domestic and international contexts vary.

  • The most important feature of the international system is the distribution of state preferences.

  • Global conflict and cooperation derives from similarities and differences in state preferences: nationalism and political ideologies; economic resources; interaction among elites competing for power.

  • A necessary condition for war is that social pressures lead one or more "aggressor" states to possess "revisionist" preferences so extreme or risk-acceptant that other states are unwilling to submit.

  • Situations of asymmetrical interdependence, where one state has more intense preference for an agreement than another, create bargaining power.

What specific assertions to liberals make about how international politics works?

  1. Collective identities and values create and define state preferences

  • Ideational liberalism views domestic social identities and values as basic determinants of state preferences.

  • National governing elites have strong preferences about the nature of the political, economic and social order in the nation. These preferences, and the foreign policies designed to insure their success and survival, create state preferences.

  1. The nature of the economic system and its position in the global economy create strong state preferences:

  • Commercial liberal theories seek to explain the international behavior of states based on the domestic and global market position of domestic firms, workers, and owners of assets. Commercial liberal theory posits that changes in the structure of the domestic and global economy alter the costs and benefits of transnational economic exchange, thus creating pressure on domestic governments to facilitate or block such exchanges through appropriate foreign economic and security policies.

  • Winners from global exchange compete against losers from global exchange and the nations’ institutions privilege one group over others.

  • Extensive research supports the view that free trade is most likely where strong competitiveness, extensive intra-industry trade or trade in intermediate goods, large foreign investments, and low asset specificity internalize the net benefits of free trade to powerful actors, reducing the influence of net losers from liberalization.

  • Where monopolies, sanctions, slavery, plunder of natural resources, and other forms of coercive extraction backed by state power are cost-effective means of elite wealth accumulation-as was true for most of human history-we should expect to see a positive relationship, between transnational economic activity and war.

  • Where, conversely, private trade and investment within complex and well-established transnational markets provide a less costly means of accumulating wealth and one that cannot be cost-effectively appropriated-as is most strikingly the case within modern multinational investment and production networks-the expansion of economic opportunities will have a pacific effect. Along with the spread of democracy and relative absence of nationalist conflict, this distinguishes the current era from the period before the First World War, when high levels of interdependence famously failed to deter war.

  1. What groups count the most in promoting their preferences as state preferences and national policy?

  • the nature of domestic political representation, which helps determine whose social preferences dominate state policy—thereby defining the “national interest”.

  • policy tends to be biased in favor of the governing coalitions or powerful domestic groups favored by representative institutions—whether those groups are administrators (rulers, armies, or bureaucracies) or societal groups that "capture" the state.

  • "democratic peace," modern imperialism, and international trade and monetary cooperation

  • a liberal theory of war, which stresses risk -acceptant leaders and rent -seeking coalitions. There is substantial historical evidence that the aggressors who have provoked modern great-power wars tend either to be extremely risk-acceptant individuals, or individuals well able to insulate themselves from the costs of war, or both.

How are liberal theories different from realist theories?

  • the liberal approach is distinctively different than other widely advocated families of theories, which stress instead the distribution of coercive power, information, cultural beliefs and other characteristics of states.

  • the liberal approach provides a plausible theoretical explanation for variation in the substantive content of foreign policy. Neither realism nor institutionalism explains the changing substantive goals and purposes over which states conflict and cooperate.

  • the liberal approach offers a plausible explanation for historical change in the international system. The static quality of both realist and institutionalist theories, and their lack of persuasive explanations for fundamental long-term change in the nature of international politics, are recognized weaknesses.

  • Global economic development over the past five hundred years has been closely related to greater per capita wealth, democratization, education systems that reinforce new collective identities, and greater incentives for trans-border economic transactions. Realist theory accords such shifts no theoretical importance, but analyzes enduring patterns of state behavior reflecting cyclical shifts in power, as in the rise and decline of great powers.

  • the liberal approach offers a plausible explanation for the distinctiveness of modern international politics

  • Not only does liberal theory apply across a wide domain of circumstances, but its three variants—ideational, commercial, and republican liberalism—are mutually reinforcing. They are stronger taken together than separately.

  • liberal theories are easily combined with other international relations theories, generating multi-causal explanations. Surely there are cases in which a combination of liberal and other theories offers a better explanation of state behavior than any single sort of theory alone, liberal or otherwise. In such cases, a multicausal synthesis is required.

  • liberal theories explain when and why the assumptions about state preferences underlying realism or institutionalism hold

What are some of the problems with Moravcisk’s liberal theory:

  • The role of domestic interests in state preferences is clear. How does the global context affect domestic interests and thereby state preferences?

  • How do state interests affect state preferences? Do state interests affect state preferences?

John Ikenberry
Youtube at Duke Liberal Leviathan

Jack Levy, "Power Transition Theory and the Rise of China" in Robert Ross and Zhu Feng (eds.) China's Ascent, Cornell University Press, 2008, 11-33.

Asserts problems with PTT from its own limitations and the special features of the China rise process. China’s rise is more important in Asia than on a global scale – PTT does not deal with regional – global variations well
Organski – PTT to deal with BoP problems – which sees equilibrium as the natural state of affairs – O sees hegemonies and the transition from one H to another as normal IR
Dominant states use power to create a set of global political and economic structures and promote norms of behavior to stabilize the system so as to advance their security and economic interests
Use Ikenberry for the creation of international orders – must see this as a result of major ruptures in global relations and the defeat of alternative power aspirants
By contrast, O sees rise and fall of growth rates leading to change
You must be more than a dominant state to create global structures – you must demonstrate dominance in systemic war
O sees level of satisfaction and dissatisfaction as key variable – US or Germany
As rising state achieves parity and has large dissatisfaction that war is most likely
Post WWII has been era of US dominance – SU did not have parity – nuclear weapons were not the key variable
US China: China overtaking is inevitable; how dissatisfied will China be: interdependence + liberal democratic institutions + US accommodation will determine dissatisfaction.
** “Of the various international relations theories, power transition theory is probably the most widely used by scholars seeking to better understand the likely dynamics and consequences of the rise of China in the contemporary global systems” p 18 This is because the theory is multidimensional and dynamic in causal analysis, acknowledging traditional power relations, political preferences and changes in calculations through time.
Critique: Is population the most important feature of power? What about technological advantage? Leading sectors as the basis for economic strength has a focus on technology.
The theory posits a single hierarchy of global power; what if this is wrong? – Historically there are multiple hierarchies, often differentiated regionally.

Land power – regions; sea power global

Europe had a distinctive system of power relations from the global system before 1945
What are the incentives for the dominant state to adopt preventive war? Or the rising state to adopt war to change the system more quickly?
Further, regional issues may reinforce or reduce global power relations and conflicts.
Key prediction from Ronald L. Tammen* and Jacek Kugler page 45

this places China into the zone of parity and potential transition with the United States. Our empirical work shows that under conditions of parity, peace is achieved when both parties are satisfied. But if the challenger is dissatisfied, the probability of war increases dramatically”
TandK assert that nuclear parity, with both China and the US holding a position of mutually assured destruction, will increase and not decrease that chance of war between them.
There is considerable ambiguity about the circumstances that lead to war during the process of power transition. At what point does a rising state initiate war? To hasten the shift in power as it approaches parity with the hegemon or after it has already achieved dominance? Can we really expect an existing hegemon to await passively an attack and not engage in preventive war when it still has an advantage?

In a related point, should we really discount the role of nuclear weapons in affecting the calculations relating to war? Can we imagine a set of circumstances where Chinese and U.S. leaders would opt for a nuclear war as a rational act?

Perhaps most important, power transition theory makes assumptions about the incentives for war that are too simple, ignoring too much the role of economic interdependence in generating reasons for avoiding war and discounting the role of nuclear weapons. And finally, the theory fails to consider how relationships within one region, such as among China, the U.S. and other Asian states can influence outcomes in the broader global system. A resolution of potential hostilities in East and Southeast Asia, or the breakdown into war, can affect significantly the global relationship of China and the U.S.
Too much of the thinking about this process comes from simple calculations of broad power relationships, with power defined too narrowly, and with incentives defined by judgments of gains from military conflict. Far too little examines the calculations based on the multiple and complex dimensions of global systems, from complex conceptions of power relationships and from the gains and losses from the many interactions other than military conflict. These arrangements generate an array of very important incentives affecting national calculations. Too its credit, power transition theory does acknowledge the degree to which a rising power is satisfied with the system, but gives little guidance as to where this comes from or how to integrate this into calculations based on traditional power relations. Dividing states into satisfied and dissatisfied is too simple and offers little guidance as to how we judge China in the present and over the next several decades. We have indications of satisfaction-dissatisfaction as being the result of the level of congruence of political economies of the various states, a version of the democratic peace theory.
But the really important question is whether China could become so dissatisfied as to engage in war or the risk of war to change that system. Is the power relationship with the U.S the only calculation that will affect that judgment? Could China design a military strategy that would permit it to defeat the U.S, and any allies and then redesign a system in its own image? Are the power relationships among the various states such that success for this was high?

Beyond the Four Percent Solution: explaining the consequences of China’s rise
As China’s power rises, policy-makers and scholars are struggling with the task of establishing analytic frameworks that are sufficiently broad to capture the momentous (and rare) phenomenon of a rising great power. We need to investigate how to think about China’s rise. I argue that a full solution to the question of China’s rise will require an ‘analytic eclecticism’ characterized by theoretical pragmatism, broadly formulated questions, and complex answers. I argue that China’s power is unquestionably rising and that its impact so far has been largely non-disruptive. I ascribe this to a complex array of interest-based, ideational, and actor-based variables.

International power refers to the ability of a state to resist, change, or otherwise influence the international context in which it exists. Among the dimensions generally considered important are ‘hard power’ indicators such as demography, geography, economy, and military that relate to material capabilities; and ‘soft power’ indicators of technology, organization, culture, diplomacy, and values that relate to social or human capabilities.

China’s impressive hard power is contrasted with its less-than-impressive soft power—its low position in the global value-added chain, poor human and social capital, lack of freedoms, and governance challenges. China ranked just 34th out of 48 developed and emerging economies for 2005 in the Global Innovation Scorecard, which includes business, human resources, and infrastructure capacities for innovation.10 Kim calculates that China’s ‘structural network’ power ranked only 24th in the world in 2000 (the US was first), behind the likes of middle powers like Poland and South Africa.11 The Economist’s index of innovation performance and environment, published in 2009, ranked China 54th out of 82 countries. However, a common finding of ‘soft power’ measurements is that China’s internal and external capabilities are improving. Beyond these objective measures of power, there is an important and often neglected subjective measure. China is today widely perceived to be a rising power, especially in the West.

What theory of IR does the following statements refer to?

Rising powers that adhere to existing norms and principles can be non-disruptive even as they change the balance of power. Paus and colleagues stress the increased economic competition and new power dynamics that are accompanying the rise of China,18 but these are separate from the ‘rules of the game’ to which their book is addressed. The US rise to replace Britain, for instance, is today seen as largely non-disruptive since it carried on and expanded the liberal rules of the game that had been taking shape under the British empire.

By contrast, in power-based or relative position-based definitions of world order, rising powers are disruptive by definition. Power transition theorists make China’s rise virtually synonymous with disruption because of the new constraints placed on US capabilities.19 Indeed, by using disruption to measure rising powers, power transition theorists are prone to conclude that China’s power is not rising because the US continues to project power relatively unconstrained.

The security value of the US

In the security issue-area, the US-led hub-and-spoke system of security alliances in Asia is a core constitutive element of global order that is significantly affected by the preferences and actor interactions relating to a rising China (rather than by control variables). Thus far, all evidence points to the durability of this system. While there has been some modest defense strengthening—‘soft hedging’ or ‘institutional balancing’—by Japan, India, Singapore, South Korea, and the Philippines—there is little evidence of ‘deliberate force build-ups or other types of compensatory or anticipatory moves indicative of an arms race or security dilemma’ among Asian nations. The increased reliance on US security guarantees is certainly an effect of China’s rise, but it is not a disruptive effect.

In political economy, the World Trade Organization open trading regime is a core constitutive element of world order. Most analysts believe that the WTO system has emerged from China’s inclusion and rise, both strengthened and with its Western dominance largely intact.33 The WTO has accommodated China’s inclusion and China has largely played by the rules, especially where the US is concerned.34 ‘China is asserting itself in this key area while supporting the procedures of the WTO’, note three British scholars.35 Expectations of a new North – South confrontation have proven unfounded, although China has defended long-standing developing country preferences.

As a substitutive indicator, East Asian economic regionalism is useful because of its close symbolic association with the trade liberalization project. China’s economic rise has fundamentally reshaped trade and investment patterns throughout Asia,37 yet those changes have generally not disrupted the free trading norms of the post-war order. Overall, East Asia’s ‘open regionalism’ has tended to complement rather than challenge the WTO-led liberalization regime.

While China’s rise has shifted the balance of power in Asian regionalism, in particular at the expense of Japan,41 it has not disrupted the order on which global political economy is based.

The Complexity of Predicting China’s Rise

The second set of mechanisms is a set of ‘actor-centered’ variables that correspond to the major sources of behavior through which preferences (and the structural conditions that shape them) operate. This draws attention to the ways that preferences interact and are often transformed. It also draws attention to the wide range of actors involved.

Thus, the consequences of China’s rise involve a three-by-three-by-three hypothesis matrix of preferences, actors, and issue-areas. In other words, due attention must be paid to no less than 27 distinctive causal linkages in order to explain the outcome in question, in addition to a consideration of the interactions among them and the specification of control variables. Given the enormity of this challenge, it is no surprise that many scholars have chosen to focus on a smaller sub- set of these 27 and to have largely ignored interactions and controls. In particular, the combination of realism applied to Chinese foreign policy in the security area (one of 27, or 4%, of the pathways) has been a common approach to explaining the consequences of China’s rise.55 This is what I refer to as the ‘four percent solution’. While this selectivity is understandable, there is no reason to believe that this particular 4% holds the key to the other 96%. Indeed, it may lead analysts completely astray.


The security issue-area is a useful place to start because it illustrates most starkly the implications of shifting from a ‘four percent solution’ to a ‘one hundred percent solution’.

China has shifted from calling for a US withdrawal from Asia to seeming acceptance of the US security system there. Shambaugh documents how Beijing’s abandonment of calls to oust the US from Asia resulted from discursive interactions with other Asian states that taught Beijing that the US presence was widely deemed in the region to be stabilizing and thus legitimate.66 In countless other instances as well—the acceptance of de facto Taiwan independence,67 say, or the abandonment of proliferation to Pakistan and Iran68—core Chinese interests have been compromised. As China’s power has grown, Beijing’s interest perceptions have become especially fluid.

A ‘capitalist peace’74 has emerged from China’s rise to complement and reinforce the realist peace.75 As for constructivism, Kang and others have traced the emergence of shared norms in which China’s power in Asia is naturalized through reference to historical and cultural precedents.76 In other words, the accommodation of a rising China is as much normative as instrumental. The failure of the US in particular to engage in more serious balancing, despite the frustrated appeals of realists,77 is most notable in this regard.

Economic Relations

In global political economy, one must again begin with the realist account of China’s largely non-disruptive policy. ‘China’s trade policies are broadly supportive of a rules-based multilateral trading order’, concludes Lawrence.78 As a clear beneficiary of economic globalization, the Chinese state has an obvious ‘national interest’ in preserving access to global markets even when they come at some cost to domestic production.79 For Steinfeld, China is ‘playing our game’ because of these national interests.

Beijing’s attachment to a rules-based global trade order and to Asian regionalism have often been ‘irrational’ from any reasonable realist perspective—its acceptance of Asian financial cooperation84 and free trade with ASEAN,85 say, or its role in the Group of 22 that held up WTO trade talks in the interests of the principle of reciprocity in 2003. Constructivist accounts show how engagement with regional and global trade institutions and actors have shifted Beijing’s perceptions of its national interest and generated irrational commitments to liberalization and to a rules-based global economic order.86 Thus, Beijing’s support of world economic order is only partly a given. It is also a result of persuasion and norm diffusion that depends on the role of other actors.

foreign actors have helped Beijing to rethink its policies of national protection (in favor of liberalization) and legal particularity (in favor of legal universalism). For instance, widespread global protests led Beijing to back down on a proposed government procurement strategy in 2009 that would have locked foreign technologies out of the Chinese market. Likewise, Beijing ended a threat to cancel Google’s business license in China shortly after the company shut down its search engine in the country because of domestic censorship laws. In both cases, the diffusion of norms to persuasive domestic voices led to an about-face.

While China’s rise was expected to disrupt global economic order because of its non-market economy and its non-transparent legal and political system, global order has instead been strengthened.

Rights and Domestic Governance

Since the late 1990s, China’s foreign policy has progressively abandoned absolute notions of state sovereignty in favor of an acceptance, however muted, of the importance of rights and broader domestic governance norms in international order.90 Particularly notable have been those instances where Beijing has supported international efforts to build or restore democracies—in East Timor, Cambodia, Sudan, and Afghanistan, for instance.

Again, the lack of any system of domestic representation makes the liberal explanation of this unsustainable. While realist explanations can be mustered, they are difficult to square with the fact that such engagement remains an unalloyed threat to the ruling Chinese Communist Party. Realism can explain Beijing’s default position towards the global rights regime, but not changes in that position. Instead, one must see China’s rights turn as a result of the state’s changing perceptions of the domestic96 and international utility of rights. Several authors have documented the ‘identity transformation’ that has overcome the Chinese state in which it has rethought international human rights as largely consistent with its ‘national interests’.

Overall, this analysis suggests that China’s foreign policy is an important part of the explanation of China’s so-far peaceful rise. ‘China today shows most of the markers of a conservative great power accepting the basic principles of the existing international order’, notes Legro.103 However, in terms of issue-areas and preference theories, the ‘four percent solution’ is wanting. China’s biggest contribution to non-disruption has come in the realm of political economy, where it is a cooperative great power, and perhaps secondly in rights, where the gap between its traditionally conceived (anti- rights) interests and its actual (rights-acknowledging) behavior is greatest. In security, perhaps because of the tragic mind-sets that wrack that issue, China’s contribution to non-disruption has been less, yet that is only a reminder of the challenges to interest-based frameworks of Chinese behavior. Liberalism remains generally unconvincing in the case of Chinese foreign policy. Meanwhile, while realism and constructivism are generally seen as polar opposites, the study of China shows how closely linked they are. Great powers that have a strong core of objective national interests, as does China, are almost by virtue of that bound to be highly ideational in their foreign policies, so numerous are the potential conflicts and competitions they face. Great powers like China that are realist by nature become constructivist by necessity. Like rising great powers before it,104 China has been forced to rethink its interests and to rethink the world order in which they compete. In doing so, it has been socialized by many influences—learning from post-War Europe,105 from Asian neighbors,106 and from its interactions in international institutions.

"Deep Interdependence and the Political Economy of Power Relations in Asia"
Thomas D. Lairson

What is the basic causal process in deep interdependence?

Deep interdependence sees three eras of globalization from 1820-2014

1820-1914 – nation-centered production + imperialism

globalization accelerates over entire era, driven by production and distribution costs based on economies of scale

nation-based and energy-intensive production, nation-based institutions and a global system of imperialism combine to create incentives for aggressive nationalism and mitigate pressures for avoiding war

weak global institutions and norms for avoiding war

shallow interdependence – portfolio investment and little FDI

divergence with very few poor nations able to industrialize – high barriers to entry

Increasing great power conflict – 1870-1914

1914 – liberalism fails, as interdependence is not a significant barrier to war


Globalization and interdependence decline and production remains nation-centered

1939 – liberalism fails again, as interdependence has little impact on war

1960-2014 – emergence of deep interdependence

Globalization creates rapid and substantial convergence of rich and poor states

Nations and firms moved from wigs and construction, to steel and shipbuilding, to autos and semiconductors, to computers and LCD screens, and on to smartphones and tablets, all in the space of five decades.

Global system pulls hostile nations into joining – China – low barriers to entry

Globalization and interdependence advance through new systems of production and global institutions

Knowledge-intensive products and production processes – value-added comes from knowledge

Apple Computer
Increasing returns

Think: transistors – computers – mobile phones – auto brakes

Deep and complex interdependence

  • Dense and mutually reinforcing forms of exchange and interaction – strategic alliances

  • Fragmented and distributed supply chains – global production networks

  • Global knowledge, production and innovation networks

  • Global norms for economy and security – created by great powers - IMF, WTO, WB, INGOs

  • Increasingly open system for trade and investment

  • Peace-oriented norms and institutions

  • Global value added comes from position in global knowledge, production and innovation networks

The process of global trade expands from a traditional exchange of physical goods across borders to a complex system of transactions involving parts and components, points of assembly, various forms of foreign direct investment, portfolio investment, debt (government and private), new private and public systems of infrastructure supporting exchange such as logistics, port services, training for workers, educational systems, trade related finance, bargains between firms and nations regarding the terms of production, knowledge flows generated directly and indirectly by this system, negotiated rules among states (and firms) governing these transactions, and relationships of structural power among states and firms. Contemporary trade involves continuous two-way flows of things, people, training, investment, and information that used to take place within national factories and offices

What is complex and deep interdependence and how does this affect the potential for war?

It is in global knowledge networks where the primary factor of production is created, expanded and distributed. The combination of global knowledge and production networks, global financial markets, systems of global foreign direct investment, relationships of structural power, relationships and partnerships among nations and firms, strategic knowledge alliances among firms, and the rules and norms arising from global institutions comprises much of what we have termed complex and deep interdependence. The structural characteristics of this system create incentives that affect the behavior of states and firms.
The global system creates massive gains and states will to work to support and preserve it

System of economic resources supporting economic growth

The economic fates of firms and states have become increasingly intertwined: with states linked to firms; with multiple states linked to individual firms; with states operating to create competitive environments to attract firms, often by building enhanced knowledge capabilities; with local clusters of specialized capabilities emerging from the interaction of state policies and firm strategies.

Innovation now typically focuses on capturing cost gains from technology, creating new organizational forms so as to capture increasing returns from knowledge, and especially from recombinant innovation that operates across wider areas of the value chain. The proliferation of new knowledge-based products, processes and services across the fragmented value chain creates even more opportunities for recombinant innovation.

Creating the iPhone 6

The global system

  • The pace of innovation and technological change has accelerated so much it has led to a rising turbulence in markets, so the number and relative positions of firms in global market share rises and falls quickly and with much greater variation, a result of hyper-competition. This process extends to nations that fail to take aggressive efforts to sustain competitive improvements and find themselves and their firms quickly falling behind.

  • No firm or nation possesses the capacity to accumulate enough knowledge to operate alone; knowledge autarky is not an option for a firm or a nation. This is a consequence of the complex diffusion patterns of knowledge and the reality of rapid and constant changes – any advantage is very short-lived. Of particular importance, the complexity of advancing knowledge through innovation means virtually no firm is able to operate alone. Knowledge creation, especially through product innovation, resides in assembling and recombining systems of complementary knowledge. Firms “can no longer project themselves from nation-centric strongholds that function as containers of comparative advantage.” Instead, they need strategies that globally mobilize country-specific strengths and freely leverage them with partners, suppliers, and customers. The greatest challenge for firms and nations is keeping up with change, which requires expanding, maintaining, and enhancing the institutions that participate in global knowledge networks. Evidence for this comes from the global nature of the complex and deep networks of knowledge, especially the systems of strategic and other knowledge alliances among firms.

  • The new global system of complex and deep interdependence is qualitatively different from the interdependence in the past, largely as a result of the increasing role of knowledge and technology in production. The nature of production itself, the processes of economic competition, the nature of trade, the distribution of gains, and the dynamism in the global system all reflect the role of knowledge and explosive effects of increasing returns. The actors in the system and the forms of interaction are diverse, intensely complex, mutually reinforcing and subject to accelerating change. The nature of production – with the fragmentation of the value chain and its dispersal across many nations – has changed along with the system of exchange among the actors. Partnerships of states and firms proliferate, the number and variety of firms expand, and the set of interactions among the elements of the value chain multiplies in volume and variety, binding together the actors in different ways. The depth and complexity of co-opetition among actors increases at a rapid pace. Along with these changes come new incentives for states in their security and political relations with each other.

  • Thought of as a complex adaptive system, deep interdependence involves five structural features. First, it is composed of a large number of quite different but tightly coupled complementary elements. Second, change in the elements of the system and in the nature of relationship of the elements is rapid and significant. Third, the elements and relationships are widely distributed in space and connected through complex networks. Fourth, there are significant differences in the degree of connectedness among the actors. Finally, the predominant source of energy in the system – knowledge – is a shared, distributed, cumulating and evolving resource. The incentives for actors in such a system are differentiated with a predominant pattern among those with the largest stakes in the system.

What are the micro-processes that relate these systemic structures to the threat and use of military force to gain state goals?

  • Complex and deep interdependence affects the way gains are achieved but also the ways costs are distributed.

  • The predominant form of incentives and behaviors affects the ability of actors to achieve gains independently of the gains of other actors.

    • Gains can now be most reliably achieved through accessing resources spread across many nations, with efforts to become a global economic player in a knowledge-intensive world mandating a multitude of alliances in global networks. That is, firms and states must establish extensive links into the system of deep interdependence in order to achieve consistent gains in wealth and technological capabilities.

  • At the same time, the contemporary system of complex and deep interdependence undermines efforts by nations to impose costs on other nations that do not also fall on themselves.

  • The confluence of the deep mutuality of interdependence in achieving gains and experiencing costs generates incentives for cooperation in managing the deep and complex interdependences among states.

  • The depth of interdependence and the potential fragility of the system also generate strong incentives to cooperate in order to avoid the widespread costs of system failure. We have an economic peace, in which states operating through global production, knowledge, investment and trading networks don’t go to war with each other, nor can they effectively coerce each other.

  • Power relations shift from an emphasis on the threat and use of military force to the creation and manipulation of structural power.

How is the concept of deep interdependence distinctive?

Realism/Neorealism and Liberalism/Neorealism all assume an anarchic environment

Neorealism sees this environment generating intense security dilemmas, power focus, fear of attack, preparation for war, hard and soft balancing, and war

Liberalism sees anarchy tempered by pressure from global business to avoid war because it disrupts business and is bad for profits

Neoliberalism sees international institutions conditioning state preferences against the use of force

Deep interdependence focuses on the intersection of the domestic and global socio-economic environment and the incentives for using force to resolve conflicts

Major emphasis on the changing nature of systems of production, global economic, institutional and norms systems – global system is major causal force

Deep interdependence sees anarchy mitigated by global systems in certain circumstances.

McKinsey, "Strategy, Scenarios and the Global Shift in Defense Power"

The art of strategy, in defense as elsewhere, involves understanding possible futures to inform present decisions.

To succeed, decision makers should look behind the headlines of the day to ask the right questions about what will affect their organization in
the future. This requires considering the deeper underlying trends that will reshape the strategic landscape in the years ahead. Foremost among them is the shift in global economic power.

how the profound shift in economic power since the end of the Cold War has already reshaped the world’s strategic landscape, including the distribution of global defense spending. unexpected scale
and pace in the shift of defense spending from the United States and its treaty allies1 to emerging economies.

Since 1991, for instance, the
United States has embarked upon a new military intervention roughly every two years. North Atlantic Treaty Organization (NATO) forces have been at war in Afghanistan for over a decade. South Korean and Japanese forces have deployed for the first time to the Middle East. Mean- while, the United Nations has launched a new peacekeeping operation every six months.

Does the amount of war indicate the ideas of deep interdependence are wrong?

Future historians will likely point to 2007–08 as an inflection point in global history. For the
first time in over two centuries—since the start
of the Industrial Revolution—the majority of the world’s economic growth took place in the developing world, driven in large part by China, India, and other Asian economies.

Significantly, 2008 was also the first time ever that a majority of people

lived in cities. The pace of urbanization is staggering. More than 1.3 million people migrate every week to urban areas. And this historic migration will likely continue unabated for the next two decades, mainly in the emerging economies of Asia, Latin America, and, increasingly, Africa.

Between 2009 and 2012, China’s economy grew over 30 percent and India’s 22 percent in real terms, whereas Germany’s grew 7.9 percent and the United States’s 7.1 percent.6 And in 2008, for the first time, a Chinese company led the world in international patent applications.

Rapid shifts in the global center of economic gravity:

Changes in Defense Spending 1991-2011

Today, the United States remains the world’s preeminent military power in scale, sophistication, battle-tested experience, and global reach.
US defense spending in 2011 was more than five times that of the next highest defense
spender, China. America’s traditional allies also occupy important positions in the global
defense landscape. Japan, France, and the United Kingdom ranked third, fourth, and fifth
in defense spending in 2011. The momentum, however, is unmistakable: emerging econ-
omies are positioned to displace the other developed economies in the top tier of defense spenders. China’s rise in defense spending is starkest. In 2011 it spent $126 billion, more than twice as much as the countries that are the
next largest spenders: Japan, France, the United Kingdom, and Russia.

Predicting Future Defense Spending


The Revolt of the Weak


SEPT. 1, 2014

The toughest part of governing is the effect on the mind of those who govern. As Henry Kissinger said, once you get in government you are not building up human capital; you are just spending it down. People in senior positions are simply too busy to learn fundamental new viewpoints. Their minds are locked within the ones they brought into power.

Then there is the problem of myopia. People at the top of government confront such a barrage of immediate small issues — from personnel to scheduling — that it is hard for them to step back and see the overall context in which they operate.

Finally, there is the problem of the bunker. People in power are hit with such an avalanche of criticism — much of it partisan and ill-informed — that they naturally build mental walls to protect themselves from abuse.

All of which makes it hard to govern now. We are not living in a moment of immediate concrete threat, but we are in a crisis of context.

The specific problems that make headlines right now are not cataclysmic. The venture by President Vladimir Putin of Russia into Ukraine, for all its thuggery, is not, in itself, a cataclysmic historical event. The civil war in Syria, for all its savagery, is not a problem that threatens the daily lives of those who live outside.

These problems are medium-size, but the underlying frameworks by which nations operate are being threatened in fairly devastating ways. That is to say, there are certain unconscious habits and norms of restraint that undergird civilization. These habits and norms are now being challenged by a coalition of the unsuccessful.

What we’re seeing around the world is a revolt of the weak. There are certain weak movements and nations, beset by internal contradictions, that can’t compete if they play by the normal rules of civilization. Therefore, they are conspiring to blow up the rule book.

The first example is Russia. Putin is poor in legitimacy. He is poor in his ability to deliver goods and dignity for his people. But he is rich in brazenness. He is rich in his ability to play by the lawlessness of the jungle, so he wants the whole world to operate by jungle rules.

There has been a norm, generally operating over the past few decades, or even centuries, that big, powerful nations don’t gobble up everything around them just because they can. But this is precisely the norm that Putin is brazenly crushing under foot. If Putinism can effectively tear down this norm, more and more we’ll live in a world in which brazenness is rewarded and self-restraint is punished.

Then there are the Islamist movements like the Islamic State in Iraq and Syria, or ISIS. This movement is poor in offering a lifestyle that most people find attractive. But it is strong in spiritual purity, so it wants to set off a series of religious wars and have the world organized by religious categories.

There has been a norm, developed gradually over the centuries, that politics is not a totalistic spiritual enterprise. Governments try to deliver order and economic benefits to people, but they do not organize their inner spiritual lives.

This is precisely the norm that ISIS and other jihadi groups are trying to destroy. If they succeed, then the Middle East will devolve into a 30 years war of faith against faith. Zealotry will be rewarded, and restraint will be punished.

Putin and ISIS are not threats to American national security, narrowly defined. They are threats to our civilizational order.

If you are caught up in that day-to-day business of government, you are likely to see how weak Putin and ISIS are. You are likely to conclude that you don’t need to do much, because these threats will inevitably succumb on their own to their internal contradictions. But their weakness is their driving power; they only need to tear things down, and, unconfronted, will do so.

People who conduct foreign policy live today under the shadow of the postwar era. People instinctively understand that just after World War II, Harry Truman, George Marshall, Dean Acheson and others did something remarkable. They stepped outside the immediate crush of events and constructed a context in which people would live for the next several decades.

Some of the problems they faced did not seem gigantic: how to prevent a Communist insurgency from taking over a semifailed government in Greece. But they understood that by projecting American power into Greece, they would be establishing certain norms and creating a framework for civilization.

Then, democratic self-confidence was high. Today, unfortunately, it is low. This summer, the bad guys have looked energetic while the good guys have looked tired. We’ll see at the NATO summit meeting in Wales this week if there’s a leader who can step outside the crush of events and explain how fundamental the threat to the rules of civilization now is.

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