* Is war considered costly or not? The less costly, the more likely states will decide to settle their serious conflicts by recourse to it. The impact of nuclear war on the major powers today is a graphic example of mutually encouraging restraint and caution --- not that the spread of unstable nuclear weapons to authoritarian or totalitarian states led especially by charismatic leaders who hear voices in the night would be stabilizing here. Just the contrary.
* Are there numerous and effective international institutions to spell out rules of the game in specific functional areas like trade and carving up the electromagnetic spectrum and in foreign investment and arms control and the like?
* Is there a dominant country --- a formal empire like Rome or a dominant non-colonial hegemon like the US today --- that can and will use its huge power to influence the rules of the game and maintain international order?
* And finally --- the most important influence of all if we're interested in making sense of the strong nature of international order today, historically viewed --- a twist on whether there's a dominant country. In particular, if today we have an essentially liberal international order of market economics, a commitment in principle to human rights (as in the UN Charter), the UN system, cooperative security where possible as in the Security Council or NATO today, and arms control --- all liberal in nature --- it's because the major international rules and institutions reflect the ideological principles and beliefs of the two most powerful states of the last two centuries: Great Britain and the US, both liberal democratic in their political and economic systems. And their triumph in repeated major wars between the great powers.
Anglo-American Liberalism Triumphant
The latter point deserves some brief clarification. The enormous relative power of these two liberal states --- still closely allied even today, after the initial alliance was formed in 1941 when the US entered WWII --- meant that all the non-liberal challenging great powers was smashed in huge hegemonic warfare: Napoleonic France (1795-1815), Imperial Militarist Germany in WWI, Nazi Germany and Fascist Italy and Imperial Militarist Japan in WWII, and the Soviet Communist bloc in the cold war, 1945 - 1991. All these rivals were destroyed in the massive wars with the great liberal states and their allies, and all of them underwent major revolutionary changes in political system after their defeat. No exceptions. Period.
That international order today would be far different had it not been for the enormous power --- economic and military --- of the liberal democratic giants is something easy to grasp if we stop and imagine Nazi Germany and its fascist and militarist allies had won WWII. We would, of course, still have an international order of sorts --- just as triumphant Rome imposed one on all the conquered countries of the Mediterranean world and much of northern Europe for hundreds of years. But it would reflect Nazi and militarist Japanese racist views; would have an economic order based on slavery, extermination of alleged inferior races, and entail massive colonial rule and the exploitation of the surviving Untermeschen
countries. As with Rome or Sparta earlier, militarism and conquest would be extolled as the supreme virtues of the racially superior peoples.
Justice vs. Order in International Life
A series of quick clarifying remarks on a key related point, just set out in the section title here: the gap between justice and order.
In stable democratic countries of the sort found in the EU and the Anglo-American world, the tension between domestic law-and-order and a sense of pervasive justice and rightness about the existing system may exist --- hence the differences in partisan politics between the left and the right --- but that tension has been mitigated by a variety of developments over the last century or so: the growth of mass affluence, the emergence of a social security safety net and a welfare state, a progressive tax system for financing it, mass education, and the like. The clearest evidence here: the decline in ideological struggles over the modern democratic polity and market economy, especially in the EU, where both democracy and reformed capitalism were caught in a huge violent squeeze between extremist ideologies on the left and right. (Scandinavia and Holland, not to mention England --- all constitutional monarchies --- felt the rippling conflicts here much more mildly.)
By contrast, the gap between a fairly solid and effective international order of the sort that we have today --- especially compared to earlier periods in the 19th and 20th centuries --- and a sense of pervasive justice across the countries of the world reflects much greater tensions and discontents. The cultural gulfs are greater, as are the contrasts in standards of living. And of course, lacking world government, there is no compulsory tax system and redistributive policies that exist in the advanced industrial countries, including North America.
True, with the end of the cold war, the last systematic ideological challenge to the existing liberal-dominated international order ended: the destruction of the Soviet Union and its empire and global communism. Even post-Maoist China is rapidly integrating into the existing US-led international economic order. Earlier, fascisms of various kind were destroyed in World War II. And in modern industrial societies, socialist challenges have diminished in ambition and discontent and become a form of moderate Social Democracy, renouncing all aims to socialize the economy. Oppositely, though, there is the emergence of Islamist extremist with its appeal to many of the masses in dozens of Islamic countries, with Islamo-fascist terrorism the most extreme expression of this sense of widespread alienation and mental dislocation. There are also various vocal groups of anti-globalizers, most of them found, interestingly, in the developed world --- not elsewhere (with some exceptions among small coteries of intellectuals, grasping after new causes with the collapse of communism and statist nationalist economies in Latin America, India, and parts of Pacific Asia.)
PROBLEMS THAT COMPLICATE COOPERATION IN IR
What then are the specific difificulties of achieving cooperation among independent armed states in the international system that make it harder to initiate and --- especially in the face of major changes, such as new security threats that different countries, even allies, might intepret in discordant ways --- to sustain over time?
By way of an answer, we start with another key theoretical premise: the international system lacks effective, legitimate, fully institutionalized world government . . . the case even in today's unusual rule-based system where essentially --- other than the rage of Islamo-extremism and incoherent angry anti-globalizers with no clear ideas about anything, except that capitalism seems to suck in their minds ---there are no clear ideological challenges to triumphant Anglo-American liberalism as the basic underpinning of contemporary international order. Even so, cooperation can be very difficult. Take security cooperation. The recent wrangles in the UN Security Council over Iraq --- which divided even long-standing NATO allies (Britain and the US as opposed to Germany and France) --- showed how hard it can be to agree on whether to use force or not against even an outlaw state, Saddamite Iraq, condemned in 16 UN Security Council Resolutions. The last resolution, 1441 --- passed last November --- found Iraq was in "material breach" of UN rules and laws: a fancy diplomatic way to refer to a casus belli, a legitimate cause for going to war.
These are fairly general points. Can we be more specific? Sure. Four systematic obstacles to cooperation in international affairs loom especially large.
* Hostile rival states may not want to cooperate at all: rather, hurt or destroy one another. States at odds with one another for ideological, religious, or other idea- and moral-infested rivalries are good examples.
* Even if states want to cooperate, they might reject a cooperative economic or military arrangement like free trade or arms control --- or go along initially but later defect --- if they worry about relative gains in the new cooperative relationship. The problem here is not whether the individual state itself isn't benefitting from the new cooperation, but whether the other partner-states might not be getting more benefits . . . and specifically in ways that could change the distribution of wealth and military power between them and consequently lead in the future to eventual harm to the lagging states.
* The political leaders of a state might want to cooperate --- say, in free trade or further economic and political integration in the EU (for certain EU members) --- but find that domestic contituencies, including the electorate, won't go along. Even if a new free trade treaty or EU accord is reached and goes into effect --- think here of the eurozone commitment to limit state budgetary deficits to under 3.0% of GDP --- govenments may find that domestic politics or economic conditions make it impossible to adhere to the cooperative arrangement with other states. (Briefly to clarify: the EU Growth and Stability Pact --- signed in 1997 --- prohibits the member-states of the eurozone from running an annual budgetary deficit of more than 3.0% of GDP. France, Germany, Italy, and Portugal are way over that limit this year, and the French government has been especially criticized by the EU for violating eurzone budget rules.)
* Particular problems pertaining to the provision of public goods, a term we'll clarify immediately. The provision is part and parcel of a wider problem of collective action among self-interested actors or agents: in this case, free-riding. Simply note for the moment that such problems are overcome in a nation-state with legitimate government by government policies, backed by its instituionalized authority and, if need be, coercive power.
Public Goods and Free-Riding and Prisoners' Dilemma Defection or Cheating
The first three obstacles just set out are fairly easy to grasp. The latter one --- collective action problems --- is a more technical matter that needs to be explained.
On October 9th, remember, we talked about collective goods problems and how free-riding by rational self-interested actors complicates their provision. Public goods, recall, are a sub-category of collective goods: non-contributing actors, free-riders, will enjoy all their benefits --- national defense, a solid system of legal protection, and the like --- and yet can't be excluded from their use once they're provided. That being the case, such public goods ordinarily won't be produced. A kind of "Let George Do It" attitude will prevail among all self-interested actors. Any actor or small group that provides them won't, among other things, be able to collect revenue from everyone else enjoying their benefits. What follows? These problems of free-riding necessitate a role for authoritative government policy to provide public goods, something even Adam Smith recognized: taxes are collected --- and at times conscription used --- to provide national defense, and courts and the police are used to condemn law-breakers and incarcerate them. Note that free-riding --- defection from paying the costs of such public goods while enjoying their benefits --- can be revised and understood as a form of the Prisoners' Dilemma, where defection (cheating) is the dominant strategy in a cooperation game.
In IR, of course, there is no authoritative institutionalized government to provide public goods this way for the countries of the world.
WHAT FOLLOWS FOR COOPERATION?
In international affairs, where a compulsory court system and police powers aren't institutionalized, cooperation is frequently much harder to create than in domestic affairs, and harder to sustain if national interests or priorities conflict. In the USA, a contract can be enforced by authoritative courts and the use of police power. In international affairs, defection from an arms control treaty or free-riding on the security contributions of American military efforts in NATO or elsewhere can't be punished this way; and how to deal with defectors or free-riders can create major problems for the states that are the victims.
France is a good example of such free-riding: it quit the integrated military structures of the alliance in 1966 and ordered the alliance and US troops off its soil, yet because American forces and NATO continued to protect West Germany, and all the other neighboring countries of France, the country went on enjoying all the protective public-good benefits of NATO in the cold war while its government claimed --- loudly and repeatedly --- to be following independent foreign and nuclear policies. It always played well, and still does, with the French public. What's more, an institutionalized kind of anti-Americanism among the French elites --- not necessarily the mass public --- reinforces these tendencies today, with their clear appeal to French pride and aspirations to great power status and influence. See the buggy French Foreign Policy)
Recent developments in institutional liberalism show that there may be some ways to get around these problems in international affairs, but none is sure-fire, and none ever will be . . . not as long as the peoples and leaders of nation-states prefer independence to voluntarily created, effective, and legitimate world government.
Back to free-riding and public goods provision in IR . . . a theoretical twist.
In particular, according to some economists and political scientists, a small group of self-interested actors with an intense interest in creating a public good --- in the absence of authoritative government --- might go ahead and absorb the costs in order for the good to be created. They will do this even if they know that free-riders won't or can't be excluded from enjoying the benefits of the resulting public goods. In technical terms, this is known as a K-group --- a term coined by Thomas Schelling back in the 1970s, a creative pioneer in game theory and its application to deterrence theory and arms control whom I once worked with.
Is the K-group twist sound? Not necessarily in IR. In an international system of self-help and security dilemmas, the problem of relative gains may bedevil even a small K group of state actors. It's not clear why they would be exempt, especially if they're great and mid-size powers. Suppose, to illustrate this, that the US, Japan, Germany, France, and Italy --- the rich industrial capitalist countries --- decided if the WTO didn't exist to go ahead and create such a global rule-based trade organization on their own. Not only would they have to absorb the costs of doing this, those costs, it needs to be immediately noted, would entail that they being opening up their own economies extensively on their own to attract dozens or hundreds of other countries to join. They would even have to offer, it seems, lopsided benefits to attract the other countries --- such as foreign aid or, initially at any rate, non-reciprocal admission to the markets of the free-trade countries. A problem would immediately arise. Why would the difficult of agreeing on the distributional benefits of free trade not complicate the cooperation of the small number of K-group countries?
Why would they be exempt from such worries about relative gains? In game-theory, to be blunt, there is no clear reason why they should be.
How then, it might be asked, did free trade ever arise in the first place: above all, in the late 19th century for three decades or so, and again after WWII and ever since . . . now even, increasingly, covering the former Communist closed countries of the Soviet bloc and post-Maoist China?
For realists --- and some liberals, it should be added --- only a hegemon, an overwhelmingly powerful and rich country, can overcome these distributional questions of relative gains, cheating, and free-riding.
More concretely, the dominant hegemon would do this do this if it's a capitalist liberal country like the US in the post-1945 period, or Britain in the latter part of the 19th century, given its huge economic lead and its leaders' beliefs that free trade is in the national interest. (Obviously, a triumphant Nazi Germany in WWII or Soviet Union in the cold war wouldn't be interested in rule-based free trade: rather in Nazi economics, extermination, and slavery, or in Communist economics and Soviet imperialism.) ANd note: historically --- given the dislocating effects of free trade on countries that open up rigid economies: e.g., distributional conflicts among groups that benefit or lose from international trade, the loss of certain policy autonomy at home, protectionist backlashes, political catering to such backlash interests and the like --- widespread free-trade has emerged and lasted for generations among large numbers of countries only when there's been such a hegemon to take the lead and absorb the costs.
In the US case, we took the lead in creating and managing the GATT rule-based system committed to freeing trade in goods, services, and investment eventually after 1945: we used Marshall Aid to that end, we opened up our huge wealthy market to the Europeans and Japanese and others without demanding initial reciprocity, and we became eventually indifferent to whether or not other countries --- including giants like Germany, Japan, the current EU, and China --- relied on export-led growth into the US market above all and garnered huge bilateral trade surpluses with us. For that matter, since the early 1970s, the US government --- whether Democrats or Republicans control the White House or Congress --- has been relatively indifferent to the size of current account deficits: trade in goods, services, and unilateral transfers like foreign aid or Mexican workers here sending dollars back home to Mexico.
An Added Incentive: Security Concerns
During the cold war, moreover, American governments were further indifferent to these economic imbalances --- if they can be called that --- because we subordinated essentially the resulting trade matters to security concerns. Our main aim, after all, was to create wealthy, powerful allies in Europe and Asia in the global cold war struggle with the Soviet Union and capitalism. Interestingly, the indifference continued generally after 1991.
Only when the resulting current account imbalances grew so large that they began to produce big protectionist backlashes here and generate concerns among foreign investors in the US --- the case of the early 1980s and maybe, it seems, again today --- have we sought to have the dollar's exchange rate decline in currency markets, precisely to reduce the size of the trade and other current account deficits. This worked in the late 1980s. By 1991, the dollar had lost 60% or so of its exchange rate compared to the Yen and German Mark (to which the EU currencies were then tied), and US exports had doubled while imports fell off dramatically. By that year, the US current account turned into a surplus. And surprisingly, there was no harm to the US economy: interest rates didn't rise as the inflow of net capital slowed down, nor did inflationary pressures emerge. More surprising still, the EU economies and Japan actually grew faster despite the big slowdown of net exports to the US.
Will a similar decline of the dollar bring similar benefits today?
Regarding your allusion to what might have happened had the Axis won World War II, there is an interesting short story by C.M. Kornbluth called "Two Dooms" that portrays life in North America under Nazi Germany and Imperial Japan. It isn't pretty. A shame that people still can't understand that all of humanity is better with America as a hegemon rather than some of the other contenders of the 20th century.
By the way, can't other countries retaliate against the lowering of the U.S. dollar by devaluing their currency in return? China, for example, is said to keep its currency artificially low.