After Hegemony: Cooperation and Discord in the World Political Economy (1984) PDF

Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984...

Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  AFTER HEGEMONY Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  AFTER HEGEMONY Cooperation and Discord in the World Political Economy ROBERT O. KEOHANE Copyright © 1984. Princeton University Press. All rights reserved. Princeton University Press Princeton, New Jersey Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  Copyright © 1984 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, Chichester, West Sussex All Rights Reserved Library of Congress Cataloging-in-Publication Data Keohane, Robert O. (Robert Owen), 1941- After hegemony. Bibliography: p. Includes index. 1. International economic relations. 2. World politics —1945-. I. Title. HF1411.K442 1984 337 84-42576 ISBN 1-400809-754 This book has been composed in Linotron Sabon Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  To NannerI Overholser Keohane Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  PREFACE In its genesis and support, this is an old-fashioned book. It is essentially the work of an individual scholar, unaided by a research team or large- scale funding. Nevertheless, I have accumulated a number of institu- tional debts of gratitude during the seven years of research and writing. I benefited, during the early stages of reflection and reading, from being a Fellow of the Center for Advanced Study in the Behavioral Sciences during 1977-78, under a grant from the German Marshall Fund of the United States. Most of the research was done while I was teaching at Stanford University until the spring of 1981 and at Brandeis University since then. Stanford helped me to finance research assistance and a trip to the International Energy Agency in Paris in 1981. The Mazur Fund for Faculty Research at Brandeis supplied funds for pho- tocopying the manuscript and circulating it to colleagues. Thanks to a sabbatical leave generously provided by Brandeis University for the academic year 1983-84, I was able to devote myself wholeheartedly, between June 1983 and January 1984, to preparing the final manu- script. Wellesley College permitted me to use its convenient and well- organized library and to take advantage of its computer system for word-processing, which greatly expedited my work. Staff members of both the library and the computer center were most helpful. For all of this support I am most grateful. The overall argument of this book has never appeared in print before, although ''The demand for international regimes," published in International Organization, Spring 1982, contains early versions of some of the core ideas of chapters 5-6. The theme of Part III—the complementarity of hegemony and cooperation in practice—is also Copyright © 1984. Princeton University Press. All rights reserved. first presented here, but some of the case material has been published before. Chapter 8 builds on "Hegemonic leadership and U.S. foreign economic policy in the 'Long Decade' of the 1950s," published in William P. Avery and David P. Rapkin, eds., America in a Changing World Political Economy (New York: Longman, 1982). Chapter 9 is in part based on "The theory of hegemonic stability and changes in international economic regimes, 1967-1977." Sections of this chapter that reproduce parts of the earlier article, in modified form, are re- printed by permission of Westview Press from Ole R. Holsti, Randolph M. Siverson, and Alexander L. George, eds., Change in the Interna- tional System (copyright 1980 by Westview Press, Boulder, Colorado). Some of chapter 10 also appeared in "International agencies and the vii Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  PREFACE art of the possible: the case of the IEA," Journal of Policy Analysis and Management, vol. 1, no. 4 (Summer 1982), copyright 1982 by John Wiley & Sons. This book on cooperation also benefited from the noninstitutional cooperation of scores of friends, students, and colleagues—so many, indeed, that I refrain from trying to list them all, lest some inadvertently be excluded. Earlier versions of several chapters, in draft or as pre- viously published articles, were circulated to quite a few political sci- entists and economists, and I received many helpful observations, all of which I seriously considered and many of which led to changes. The willingness of scholars to devote time and intelligence to helping each other improve the quality of their work is one of the most re- warding features of contemporary academic life. Fortunately for me, the field of international political economy contains a large number of very talented and generous people. I do want to mention by name a small number of people who have made special contributions. Karen Bernstein and Shannon Salmon served ably as research assistants, gathering material used in chapters 8-10. I shared many early, otherwise uncirculated drafts with Helen Milner. I am grateful to her both for offering trenchant criticisms and for not giving up on the project even when my preliminary arguments may have seemed hopelessly contorted and confused. Joseph Nye, my close friend and former co-author, has been a valuable source of both intellectual perspective and moral support. Vinod Aggarwal, Robert Axelrod, James Caporaso, Benjamin Cohen, Robert Gilpin, Peter Gourevitch, Leah Haus, Harold Jacobson, Peter Katzenstein, Nannerl Keohane, David Laitin, Helen Milner, Joseph Nye, Susan Moller Okin, Robert Putnam, and Howard Silverman read all or large parts of the penultimate draft and gave me valuable comments. Equally important are the senior scholars whom I have sought to Copyright © 1984. Princeton University Press. All rights reserved. emulate: creative people who respect and care about younger thinkers, and who refuse to hide self-protectively behind reputations and titles. These intellectuals are willing to propose new ideas and to submit them to scrutiny. Knowing that social science advances not so much by the cumulative grubbing of facts as by the dialectical confrontation of ideas, they are not afraid to be criticized or even proven wrong. Among these mentors I include particularly Alexander George, Ernst Haas, Albert Hirschman, Stanley Hoffmann, Charles Kindleberger, Robert North, Raymond Vernon, and Kenneth Waltz—a diverse set of scholars united only by their fertile imaginations, intellectual hon- esty, and vigor of mind and spirit. Two men who were inspirations to me are no longer alive. One is viii Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  PREFACE Fred Hirsch, an imaginative political economist, author of Social Lim- its to Growth, and a great person who died too young. The other is Robert E. Keohane, my father. Although he had a powerful intellect, he never produced major works of scholarship; but my memory of the range and richness of his knowledge and his utter integrity still serve to warn me against superficiality and opportunism. The remaining members of my immediate family have made major contributions to this enterprise. My mother, Mary P. Keohane, has for over forty years provided me with a synergistic combination of maternal love, moral precepts, and intellectual stimulation. She con- tinues to be supporter, critic, and exemplar to me. Concern for my children's futures reinforces my belief in the urgency of understanding cooperation in world politics; but they themselves have more often reminded me that sometimes scholarship should be subordinated to fun. Nannerl Overholser Keohane, my wife, has played such an enor- mously important and multifaceted role that it is difficult for me to convey its significance. Her own writings set a high standard for depth of research, clarity of expression, and grace of style. Her accomplish- ments as college president both fill me with admiration and bolster my determination to make the most of the happy life of scholarship that dedicated people in such positions make possible. Her criticisms of my works and her high expectations for them impel me to greater levels of effort. In addition to everything else, she has been a source of love, moral support, and domestic contentment. Wellesley, Massachusetts January 1984 Copyright © 1984. Princeton University Press. All rights reserved. ix Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  CONTENTS PREFACE vii I Questions and Concepts 1 Realism, Institutionalism, and Cooperation 5 2 Politics, Economics, and the International System 18 3 Hegemony in the World Political Economy 31 II Theories of Cooperation and International Regimes 4 Cooperation and International Regimes 49 5 Rational-Choice and Functional Explanations 65 6 A Functional Theory of International Regimes 85 7 Bounded Rationality and Redefinitions of Self-interest 110 III Hegemony and Cooperation in Practice 8 Hegemonic Cooperation in the Postwar Era 135 9 The Incomplete Decline of Hegemonic Regimes 182 10 The Consumers' Oil Regime, 1974-81 217 IV Conclusion 11 The Value of Institutions and the Costs of Flexibility 243 Copyright © 1984. Princeton University Press. All rights reserved. BIBLIOGRAPHY 260 INDEX 281 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  AFTER HEGEMONY Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  PART I Questions and Concepts Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28. Copyright © 1984. Princeton University Press. All rights reserved. Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  1 REALISM, INSTITUTIONALISM, AND COOPERATION Since the repeal of the "iron law of wages," economics has ceased to be the "dismal science." Economists no longer believe that most people must exist at the subsistence level, but argue, on the contrary, that gradual improvement in the material conditions of human life is pos- sible. Yet while economics has become more cheerful, politics has become gloomier. The twentieth century has seen an enormous ex- pansion of real and potential international violence. In the world po- litical economy, opportunities for conflict among governments have increased as the scope of state action has widened. The greatest dangers for the world economy, as well as for world peace, have their sources in political conflicts among nations. In the study of politics, perhaps nothing seems so dismal as writing about international cooperation. Indeed, when I told a friend and former teacher of mine that I was writing a book on this subject, she replied that it would have to be a short book. Was I planning extra- large type and wide margins to justify hard covers? I could have retorted that my book would also discuss discord, a much more common feature of world politics. Yet the issue goes deeper than that. International cooperation among the advanced industrial- ized countries since the end of World War II has probably been more extensive than international cooperation among major states during any period of comparable length in history. Certainly the extent and complexity of efforts to coordinate state economic policies have been Copyright © 1984. Princeton University Press. All rights reserved. greater than they were between the two world wars, or in the century before 1914. Yet cooperation remains scarce relative to discord be- cause the rapid growth of international economic interdependence since 1945, and the increasing involvement of governments in the operation of modern capitalist economies, have created more points of potential friction. Interdependence can transmit bad influences as well as good ones: unemployment or inflation can be exported as well as growth and prosperity. American steel workers may lose their jobs because of subsidies to European steel producers by the European Economic Community and European governments; high interest rates in the United States may constrain economic activity abroad. Interdependence leads democratic governments to expand state ac- 5 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  QUESTIONS AND CONCEPTS tivity in order to protect their citizens from fluctuations in the world economy (Cameron, 1978). When this state activity takes the form of seeking to force the costs of adjustment onto foreigners, international discord results. Thus even a rising absolute level of cooperation may be overwhelmed by discord, as increased interdependence and gov- ernmental intervention create more opportunities for policy conflict. As in Alice in Wonderland, it may be necessary to keep running faster in order to stand still. Scholars should not wait for cooperation to become the rule rather than the exception before studying it, for ig- norance of how to promote cooperation can lead to discord, conflict, and economic disaster before cooperation ever has a chance to prevail. This book is about how cooperation has been, and can be, organized in the world political economy when common interests exist. It does not concentrate on the question of how fundamental common interests can be created among states. Thus two topics that could legitimately be treated in a book on international economic cooperation are not systematically considered: I neither explore how economic conditions affect patterns of interests, nor do I investigate the effects of ideas and ideals on state behavior. The theory that I develop takes the existence of mutual interests as given and examines the conditions under which they will lead to cooperation. I begin with the premise that even where common interests exist, cooperation often fails. My purpose is to diagnose the reasons for such failure, and for the occasional successes, in the hope of improving our ability to prescribe remedies. Because I begin with acknowledged common interests, my study focuses on relations among the advanced market-economy countries, where such interests are manifold. These countries hold views about the proper operation of their economies that are relatively similar— at least in comparison with the differences that exist between them and most less developed countries, or the nonmarket planned econ- Copyright © 1984. Princeton University Press. All rights reserved. omies. They are engaged in extensive relationships of interdependence with one another; in general, their governments' policies reflect the belief that they benefit from these ties. Furthermore, they are on friendly political terms; thus political-military conflicts between them compli- cate the politics of economic transactions less than they do in East- West relations. The arguments of this book surely apply to some relationships be- tween the advanced market-economy countries and less developed countries. These states have interests in common, which can only be realized through cooperation. To perhaps a more limited extent, my analysis should also be relevant to those areas of East-West relations where common interests exist. The focus of this book on cooperation 6 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  REALISM AND INSTITUTIONALISM among the advanced industrialized countries by no means implies that cooperation is impossible, or unnecessary, between North and South or East and West. To illustrate and test my ideas about cooperation and discord, however, I focus first on the area where common interests are greatest and where the benefits of international cooperation may be easiest to realize. Careful extension of this argument into East- West and North-South relations, including security as well as eco- nomic issues, would be most welcome. REALISM, INSTITUTIONALISM, AND COOPERATION Impressed with the difficulties of cooperation, observers have often compared world politics to a "state of war." In this conception, in- ternational politics is "a competition of units in the kind of state of nature that knows no restraints other than those which the changing necessities of the game and the shallow conveniences of the players impose" (Hoffmann, 1965, p. vii). It is anarchic in the sense that it lacks an authoritative government that can enact and enforce rules of behavior. States must rely on "the means they can generate and the arrangements they can make for themselves" (Waltz, 1979, p. 111). Conflict and war result, since each state is judge in its own cause and can use force to carry out its judgments (Waltz, 1959, p. 159). The discord that prevails is accounted for by fundamental conflicts of interest (Waltz, 1959; Tucker, 1977). Were this portrayal of world politics correct, any cooperation that occurs would be derivative from overall patterns of conflict. Alliance cooperation would be easy to explain as a result of the operation of a balance of power, but system-wide patterns of cooperation that benefit many countries without being tied to an alliance system directed against an adversary would not. If international politics were a state Copyright © 1984. Princeton University Press. All rights reserved. of war, institutionalized patterns of cooperation on the basis of shared purposes should not exist except as part of a larger struggle for power. The extensive patterns of international agreement that we observe on issues as diverse as trade, financial relations, health, telecommunica- tions, and environmental protection would be absent. At the other extreme from these "Realists" are writers who see co- operation as essential in a world of economic interdependence, and who argue that shared economic interests create a demand for inter- national institutions and rules (Mitrany, 1975). Such an approach, which I refer to as "Institutionalist" because of its adherents' emphasis on the functions performed by international institutions, runs the risk of being naive about power and conflict. Too often its proponents 7 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  QUESTIONS AND CONCEPTS incorporate in their theories excessively optimistic assumptions about the role of ideals in world politics, or about the ability of statesmen to learn what the theorist considers the "right lessons." But sophis- ticated students of institutions and rules have a good deal to teach us. They view institutions not simply as formal organizations with head- quarters buildings and specialized staffs, but more broadly as "rec- ognized patterns of practice around which expectations converge" (Young, 1980, p. 337). They regard these patterns of practice as sig- nificant because they affect state behavior. Sophisticated institution- alists do not expect cooperation always to prevail, but they are aware of the malleability of interests and they argue that interdependence creates interests in cooperation.1 During the first twenty years or so after World War II, these views, though very different in their intellectual origins and their broader implications about human society, made similar predictions about the world political economy, and particularly about the subject of this book, the political economy of the advanced market-economy coun- tries. Institutionalists expected successful cooperation in one field to "spill over" into others (Haas, 1958). Realists anticipated a relatively stable international economic order as a result of the dominance of the United States. Neither set of observers was surprised by what happened, although they interpreted events differently. Institutionalists could interpret the liberal international arrange- ments for trade and international finance as responses to the need for policy coordination created by the fact of interdependence. These ar- rangements, which we will call "international regimes," contained rules, norms, principles, and decisionmaking procedures. Realists could reply that these regimes were constructed on the basis of principles espoused by the United States, and that American power was essential Copyright © 1984. Princeton University Press. All rights reserved. 1 In a preliminary draft I referred to "Functionalists" rather than "Institutionalists," since the scholars to whom I am alluding often adopted the former label or some variant of it, for themselves. On the suggestion of a reader, however, I altered the terminology in order to avoid confusion between "Functionalism" and the functional theory of international regimes presented in chapter 6. It should be emphasized that, as noted in the text, I employ a stylized contrast between Realism and Institutionalism to focus sharply on the issues addressed by this book, not to identify any given author with a simplistic variant of either position. For instance, although Stanley Hoffmann writes of international relations as "a state of war," his highly nuanced view of world politics would not normally be considered representative of Realism. Among the Institutionalists as well, there is substantial variation. Ernst Haas, for instance, has taken state power more seriously, and has been more cautious about the growth of international insti- tutions, than David Mitrany. 8 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  REALISM AND INSTITUTIONALISM for their construction and maintenance. For Realists, in other words, the early postwar regimes rested on the political hegemony of the United States. Thus Realists and Institutionalists could both regard early postwar developments as supporting their theories. After the mid-1960s, however, U.S. dominance in the world political economy was challenged by the economic recovery and increasing unity of Europe and by the rapid economic growth of Japan. Yet economic interdependence continued to grow, and the pace of in- creased U.S. involvement in the world economy even accelerated after 1970. At this point, therefore, the Institutionalist and Realist predic- tions began to diverge. From a strict Institutionalist standpoint, the increasing need for coordination of policy, created by interdependence, should have led to more cooperation. From a Realist perspective, by contrast, the diffusion of power should have undermined the ability of anyone to create order. On the surface, the Realists would seem to have made the better forecast. Since the late 1960s there have been signs of decline in the extent and efficacy of efforts to cooperate in the world political econ- omy. As American power eroded, so did international regimes. The erosion of these regimes after World War II certainly refutes a naive version of the Institutionalist faith in interdependence as a solvent of conflict and a creator of cooperation. But it does not prove that only the Realist emphasis on power as a creator of order is valid. It might be possible, after the decline of hegemonic regimes, for more sym- metrical patterns of cooperation to evolve after a transitional period of discord. Indeed, the persistence of attempts at cooperation during the 1970s suggests that the decline of hegemony does not necessarily sound cooperation's death knell. International cooperation and discord thus remain puzzling. Under what conditions can independent countries cooperate in the world Copyright © 1984. Princeton University Press. All rights reserved. political economy? In particular, can cooperation take place without hegemony and, if so, how? This book is designed to help us find answers to these questions. I begin with Realist insights about the role of power and the effects of hegemony. But my central arguments draw more on the Institutionalist tradition, arguing that cooperation can under some conditions develop on the basis of complementary inter- ests, and that institutions, broadly defined, affect the patterns of co- operation that emerge. Hegemonic leadership is unlikely to be revived in this century for the United States or any other country. Hegemonic powers have his- torically only emerged after world wars; during peacetime, weaker countries have tended to gain on the hegemon rather than vice versa 9 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  QUESTIONS AND CONCEPTS (Gilpin, 1981). It is difficult to believe that world civilization, much less a complex international economy, would survive such a war in the nuclear age. Certainly no prosperous hegemonic power is likely to emerge from such a cataclysm. As long as a world political economy persists, therefore, its central political dilemma will be how to organize cooperation without hegemony. C OOPERATION AND V ALUES Cooperation is elusive enough, and its sources are sufficiently multi- faceted and intertwined, that it constitutes a difficult subject to study. It is particularly hard, perhaps impossible, to investigate with scientific rigor. No sensible person would choose it as a topic of investigation on the grounds that its puzzles could readily be "solved." I study it, despite the lack of rich, multi-case data suitable for the testing of hypotheses and despite the relative paucity of relevant theory, because of its normative significance. This choice poses problems both for the author and for the reader. My values necessarily affect my argument; yet I am sufficiently pos- itivistic to attempt to distinguish between my empirical and normative assertions. Except for this chapter and chapter 11, After Hegemony represents an attempt at theoretical, historical, and interpretive anal- ysis rather than an exercise in applied ethics. I seek to increase our understanding of cooperation, in the belief that increased understand- ing can help to improve political amity and economic welfare, though not with the naive supposition that knowledge necessarily increases either amity or welfare. I try to provide an account of cooperation that can be analyzed, if not tested in a strict sense, by others who do not share my normative views, even as I recognize that, except for my own values, I would never have decided to write this book. Yet since Copyright © 1984. Princeton University Press. All rights reserved. I can surely not keep my analysis entirely distinct from my values, it seems fair to the reader for me to indicate briefly my thoughts about whether, or under what conditions, international cooperation is a "good" that we should strive to increase. Cooperation is viewed by policymakers less as an end in itself than a means to a variety of other objectives. To inquire about the moral value of cooperation is partly to ask about the ends for which it is pursued. Along with many others, I would disapprove of cooperation among the governments of wealthy, powerful states to exploit poorer, weaker countries. Even if the goals sought through cooperation were judged desirable in principle, particular attempts to achieve them could have perverse effects. That is, the consequences of cooperation could 10 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  REALISM AND INSTITUTIONALISM be adverse, either for certain countries not fully represented in decision- making or for overall world welfare. When the conventional inter- national economic wisdom is misguided, cooperation can be worse than doing nothing. So the economic orthodoxy of 1933 appeared to Franklin Delano Roosevelt when he wrecked the London Economic Conference of that year (Feis, 1966); and so does the internationally oriented Keynesianism of the Carter Administration now appear to economic theorists of rational expectations who put their trust in markets (Saxonhouse, 1982). Under conditions of interdependence, some cooperation is a necessary condition for achieving optimal levels of welfare; but it is not sufficient, and more cooperation may not necessarily be better than less. Although it would be naive to believe that increased cooperation, among any group of states for whatever purposes, will necessarily foster humane values in world politics, it seems clear that more ef- fective coordination of policy among governments would often help. Internationally minded Keynesians recommend extensive harmoni- zation of macroeconomic policies (Whitman, 1979). Even proponents of international laissez-faire, who reject these proposals, have to rec- ognize that free markets depend on the prior establishment of property rights (North and Thomas, 1973; Field, 1981; Conybeare, 1980; North, 1981). People may disagree on what forms of international cooper- ation are desirable and what purposes they should serve, but we can all agree that a world without any cooperation would be dismal indeed. In the conclusion, I return explicitly to the problem of moral eval- uation. Is it good that the international regimes discussed in this book exist? In what ways are they deficient when evaluated by appropriate moral standards? Would it have been better had they never come into being? No comprehensive or definitive answers to these questions are offered, but the importance of the problem of ethical evaluation de- Copyright © 1984. Princeton University Press. All rights reserved. mands that they be raised. THE PLAN OF THIS BOOK I hope that After Hegemony will be read not only by students of world politics but also by economists interested in the political underpinnings of the international economy and by citizens concerned about inter- national cooperation. To encourage readers outside of political science, I have tried to eliminate professional jargon wherever possible and to define my terms clearly using ordinary language. Yet since this book is meant for people with different disciplinary backgrounds, and since it draws on disparate traditions to do so, its key concepts may be 11 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  QUESTIONS AND CONCEPTS easily misunderstood. I hope that readers will be careful not to seize on words and phrases out of context as clues to pigeonholing my argument. Is it "liberal" because I discuss cooperation, or "mercan- tilist" because I emphasize the role of power and the impact of he- gemony? Am I a "radical" because I take Marxian concepts seriously, or a "conservative" because I talk about order? The simplemindedness of such inferences should be obvious. Since I use concepts from economics to develop a political theory about cooperation and discord in the world economy, I need to be particularly clear about my definitions of economics and politics and my conception of theory. Chapter 2 discusses these questions, as a necessary prologue to the development of my theory in Part II. Chapter 3 then prepares the ground for a serious analysis of cooperation, and the effects of institutions on it, by examining the "theory of hegemonic stability," which holds that order, in the Realist lexicon, depends on the preponderance of a single state. Chapter 3 argues that although hegemony can facilitate cooperation, it is neither a necessary nor a sufficient condition for it. We will see later that hegemony is less important for the continuation of cooperation, once begun, than for its creation. Part II, which constitutes the theoretical core of this book, begins by defining two key terms, "cooperation" and "international regimes." Since these terms are used in chapter 3 before their full elaboration in chapter 4, it is important to note here that cooperation is defined in a deliberately unconventional way. Cooperation is contrasted with discord; but is also distinguished from harmony. Cooperation, as com- pared to harmony, requires active attempts to adjust policies to meet the demands of others. That is, not only does it depend on shared interests, but it emerges from a pattern of discord or potential discord. Copyright © 1984. Princeton University Press. All rights reserved. Without discord, there would be no cooperation, only harmony. It is important to define cooperation as mutual adjustment rather than to view it simply as reflecting a situation in which common interests outweigh conflicting ones. In other words, we need to dis- tinguish between cooperation and the mere fact of common interests. We require this distinction because discord sometimes prevails even when common interests exist. Since common interests are sometimes associated with cooperation but sometimes with discord, cooperation is evidently not a simple function of interests. Especially where un- certainty is great and actors have different access to information, ob- stacles to collective action and strategic calculations may prevent them from realizing their mutual interests. The mere existence of common 12 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  REALISM AND INSTITUTIONALISM interests is not enough: institutions that reduce uncertainty and limit asymmetries in information must also exist. Using chapter 4's definitions of cooperation and international re- gimes, chapters 5-7 present my functional theory of international re- gimes. Chapter 5 employs game theory and collective goods theory to argue that "the emergence of cooperation among egoists" (Axelrod, 1981, 1984) is possible, even in the absence of common government, but that the extent of such cooperation will depend on the existence of international institutions, or international regimes, with particular characteristics. Rational-choice theory enables us to demonstrate that the pessimistic conclusions about cooperation often associated with Realism are not necessarily valid, even if we accept the assumption of rational egoism. Chapter 6 then uses theories of market failure in economics, as well as more conventional rational-choice theory, to develop a functional theory of international regimes that shows why governments may construct regimes and even abide by their rules. According to this argument, regimes contribute to cooperation not by implementing rules that states must follow, but by changing the con- text within which states make decisions based on self-interests. Inter- national regimes are valuable to governments not because they enforce binding rules on others (they do not), but because they render it pos- sible for governments to enter into mutually beneficial agreements with one another. They empower governments rather than shackling them. Chapter 7 relaxes our earlier assumptions of rationality and narrow egoism. First it explores the implications of deviating from the premise of classic rationality by assuming, more realistically, that decisions are costly for governments to make. That is, governments operate under the constraints of "bounded rationality" (Simon, 1955), rather than as classically rational actors. On this assumption, regimes do not sub- stitute for continuous calculations of self-interest (which are impos- Copyright © 1984. Princeton University Press. All rights reserved. sible), but rather provide rules of thumb to which other governments also adhere. These rules may provide opportunities for governments to bind their successors, as well as to make other governments' policies more predictable. Cooperation fostered by awareness of bounded ra- tionality does not require that states accept common ideals or renounce fundamental principles of sovereignty. Even egoistic actors may agree to accept obligations that preclude making calculations about advan- tage in particular situations, if they believe that doing so will have better consequences in the long run than failure to accept any rules or acceptance of any other politically feasible set of rules. Chapters 5-6 and the first two sections of chapter 7 adopt the premise of egoism. The last two sections of chapter 7 relax this as- 13 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  QUESTIONS AND CONCEPTS sumption by distinguishing between egoistic self-interest and concep- tions of self-interest in which empathy plays a role. Actors that inter- pret their interests as empathetically interdependent, in our terminology, may find it easier to form international regimes than those whose definitions of self-interest are more constricted. I explore the strengths and limitations of egoist and empathetic interpretations of state be- havior by analyzing two features of the world political economy that may appear puzzling from an egoistic standpoint: the facts that regime rules and principles are sometimes treated as having morally obligatory status and that unbalanced exchanges of resources often persist over a considerable period of time. The argument of Part II, taken as a whole, constitutes both a critique and modification of Realism. Realist theories that seek to predict in- ternational behavior on the basis of interests and power alone are important but insufficient for an understanding of world politics. They need to be supplemented, though not replaced, by theories stressing the importance of international institutions. Even if we fully under- stand patterns of power and interests, the behavior of states (and of transnational actors as well) may not be fully explicable without un- derstanding the institutional context of action. This institutionalist modification of Realism provides some rather abstract answers to the major puzzle addressed by this book: namely, how can cooperation take place in world politics in the absence of hegemony? We understand the creation of regimes as a result of a combination of the distribution of power, shared interests, and pre- vailing expectations and practices. Regimes arise against the back- ground of earlier attempts, successful or not, at cooperation. Fur- thermore, the theory of Part II explains the continuation of existing regimes even after the conditions that facilitated their creation have disappeared: regimes acquire value for states because they perform Copyright © 1984. Princeton University Press. All rights reserved. important functions and because they are difficult to create or recon- struct. In order to realize fully the significance of this theoretical ar- gument for understanding contemporary international regimes, we need to combine it with a historical understanding of the creation of contemporary international regimes and of their evolution since the end of World War II. This is the task of Part III. Part III argues that the creation of contemporary international re- gimes can largely be explained by postwar U.S. policy, implemented through the exercise of American power. As American economic pre- ponderance eroded between the 1950s and the 1970s, major inter- national economic regimes came under pressure. Thus far Realist ex- pectations are met. Yet the changes in these regimes did not always 14 Keohane, Robert O.. After Hegemony : Cooperation and Discord in the World Political Economy, Princeton University Press, 1984. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/bibliotecaie-ebooks/detail.action?docID=5543821. Created from bibliotecaie-ebooks on 2025-01-07 15:51:28.  REALISM AND INSTITUTIONALISM correspond to the shifts in power, and the decline of American he- gemony did not lead uniformly to the collapse of regimes. Cooperation persists and, on some issues, has increased. Current patterns of discord and cooperation reflect interacting forces: the remaining elements of American hegemony as well as the effects of its erosion, the current mixture of shared and conflicting interests, and the international eco- nomic regimes that represent an institutional legacy of hegemony. The first step in the empirical analysis of Part III is to examine how American hegemony actually operated. Chapter 8 therefore discusses American hegemony during the two decades of U.S. dominance, span- ning the years from the Truman Doctrine and Marshall Plan (1947) to the late 1960s, when the United States began to show signs of seeking to protect itself from the impact of economic interdependence. The sources and practices of hegemonic cooperation are the focus of attention here. The episodes studied in this chapter illustrate the in- timate connection between discord and cooperation pointed out in chapter 4, and they also reveal that inequalities of power can be quite consistent with mutual adjustment, policy coordination, and the for- mation of international regimes. Hegemony and international regimes may be complementary, or even to some extent substitute for each other: both serve to make agreements possible and to facilitate com- pliance with rules. This period of hegemonic cooperation was short: Henry Luce's "American Century" was under severe pressure after less than twenty years. No system-level theory accounts for this, since—as chapter 8 shows—one of the most important reasons for the brevity of U.S. domina