International Economic Institutions and Great Power Peace

by Benjamin Fordham 

I enjoyed Jack Levy’s comments on how the world would have looked to people writing in 1912. As part of my current research, I’ve been spending a lot of time thinking about the three decades before World War I. As Levy pointed out, this last period of great power peace has some interesting parallels with the present one. Like today, the international economy had become increasingly integrated. For good reason, some even refer to this period as the “first age of globalization.” The period also saw the emergence of several new great powers, including Japan, Germany, and the United States. Like emerging powers today, each of these states sought to carve out its own world role and to find, as the German Foreign Secretary put it, a “place in the sun.” Like Levy, I don’t think these parallels we are doomed to repeat the catastrophe of 1914. I want to highlight the different institutional rules governing the international economic system today. The dangers discussed in the NIC report are real, but there is reason for hope when it comes to avoiding great power war.

The rules of the game governing the “first age of globalization” encouraged great powers to pursue foreign policies that made political and military conflict more likely. Declining transportation costs, not more liberal trade policies, drove economic integration. There was no web of international agreements discouraging states from pursuing protectionist trade policies. As Patrick McDonald‘s recent book, The Invisible Hand of Peace, explains nicely, protectionism went hand-in-hand with aggressive foreign policies. Many of the great powers, including the emerging United States, sought to shut foreign competitors out of their home markets even as they sought to expand their own overseas trade and investment. Even though markets and investment opportunities in less developed areas of the world were small, great power policy makers found these areas attractive because they would not export manufactured products. As one American policy maker put it in 1899, they preferred “trade with people who can send you things you ant and cannot produce, and take from you in return things they want and cannot produce; in other words, a trade largely between different zones, and largely with less advanced peoples….” Great powers scrambled to obtain privileged access to these areas through formal or informal imperial control. This zero-sum competition added a political and military component to economic rivalry. Increasing globalization made this dangerous situation worse, not better, in spite of the fact that it also increased the likely cost of a great power war.

In large part because of the international economic institutions constructed after World War II, present day great powers do not face a world in which protectionism and political efforts to secure exclusive market access are the norm. Emerging as well as longstanding powers can now obtain greater benefits from peaceful participation in the international economic system than they could through the predatory foreign policies that were common in the late 19th and early 20th centuries. They do not need a large military force to secure their place in the sun. Economic competition among the great powers continues, but it is not tied to imperialism and military rivalry in the way it was in 1914.

These international institutional differences are probably more important for continuing great power peace than is the military dominance of the United States. American military supremacy reduces uncertainty about the cost and outcome of a hegemonic war, making such a war less likely. However, as in the 19th Century, higher growth rates in emerging powers strongly suggest that the current American military edge will not last forever. Efforts to sustain it will be self-defeating if they threaten these emerging powers and set off a spiral of military competition. Similarly, major uses of American military power without the support (or at least the consent) of other great powers also risk leading these states to build up their military capabilities in order to limit American freedom of action. The United States will be better served by policies that enhance the benefits that emerging powers like China receive from upholding the status quo.

Although the differences in international institutions give reason for optimism about continuing great power peace, there are no guarantees. These institutions are not immutable. They rest on major power policy makers’ belief that they have more to gain from participation in the present system than they do from alternative foreign policies. Right now, this belief is well founded but it could be undermined if the system ceases to bring material benefits to powers capable of undermining it. If the predatory and imperialistic foreign policies of years leading up to 1914 once again offer real benefits, I suspect that new ideological justifications for them will not be hard to find.

 

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Benjamin O. Fordham is professor of political science at Binghamton University (SUNY). His research on the role of domestic political and economic interests in foreign policy making has been published in International Studies Quarterly, International Organization, the Journal of Politics, and other journals. He is currently working on a book about the domestic politics of American foreign policy during the 1890-1914 period.

By allandafoe Posted in GT2030

World War III?

by Richard Rosecrance

            Much has been made of the lessening of interstate conflict over the centuries and surely since World War II.  Whether this abstention from war will continue among Great Powers, however, is a function of the cost and benefit of territorial conquest.  Historians have argued that Great Powers got little benefit from additional territory after 1815, though imperialist expansion did not end until 1945.  Since 1950, imperial powers have had to retreat from their colonies and the world has admitted more than 100 new states to the international system.  Even if present-day economic interdependence continues, however, Great Power rivalries, like those from 1890 to 1914, will persist as one major power triumphs over another and alliance systems divide the world.

Since 1500 there have been thirteen cases of one Great Power approaching or passing a hegemonic leader in economic or military terms.  Of these, all but three ended in major war.  The United States passed Britain peacefully in 1890; there was no war when the Cold War between the West and the Soviet Union came to an end, and Japan surpassed the Soviet Union economically without incident in 1983.  Two factors seem to be important in preventing war.  First, was there a mere balance of power or a favorable overbalance on the side of peace?  And second, did the erstwhile hegemon accept the territorial and other demands of the rising power?  In 1900 Britain conceded to all US requests; and in 1989, the Soviet Union faced not merely a balance but a huge overbalance of power ranged against it.  Somewhat reluctantly, Russia endorsed democratic governments in its erstwhile satellites and gave independence to its restive Western provinces including the Baltic nations, Belarus, and Ukraine.  In future, China and later India will rise to leading and perhaps hegemonic power status.  Will the United States and the West then concede all Chinese demands?  Will there be an overbalance against Chinese power, with Europe, the United States and Japan aligned together?

            If not, the so-called Thucydides’ problem (where the rising power of one major state causes fear in lesser rival nations, which turn to war) might emerge once again.  To avert this outcome, the world needs to draw two conclusions:  the stronger the West, the less likely the conflict, and the more China accepts the existing rules of the international order, e.g., rule of law, intellectual property, property rights, and lessening arms races, the better the prospects of avoiding a new major clash.     

            The NIC document on the world in 2030 covers all possible bases without resolving these questions.  It accepts prior judgments about the decline of international conflict but also projects the possibility of war as new powers rise to hegemony, supplanting the United States.  I believe the key is to revivify the West by cementing Europe and the United States together and to tie China and India into the world trading system.  Production chains that link differentiated industries in East Asia with those in the West and Japan are entirely new and gratifying elements in the complex interdependence now in place.  These restraints did not exist in 1914.  At that time, all great powers accepted the inevitability of a new clash and did not hesitate when conflict loomed because they thought the war would be quick and it could no longer be postponed.  Today, partly because of nuclear weapons, no one thinks a conflict is inevitable.  The remaining uncertainty is whether a gradually liberalizing China will adhere to the rules of the game noted above, as it allows its internal provinces to follow more closely the models of Taiwan and Hong Kong.

 

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  • Richard Rosecrance is Director of the US-China Relations Program of the Belfer Center in Harvard’s Kennedy School of Government, Adjunct Professor of Public Policy and Senior Fellow at the Belfer Center, and Distinguished Research Professor of Political Science at UCLA.   Among many other books, he has written, The Rise of the Trading State, The Rise of the Virtual State, and forthcoming, The Return of the West: To Prevent Another World War I  (Yale University Press, Spring, 2013).
By allandafoe Posted in GT2030