Anarchy is basic to state-centric International Relations because sovereignty is basic to state-centric International Relations. As Hinsley and others have demonstrated, ‘sovereignty’ emerged in the sixteenth and seventeenth centuries as a double-headed notion (Hinsley 1966). On the one hand, rulers were sovereign in so far as they accepted no internal, ‘domestic’ equals; on the other hand, they were sovereign in so far as they accepted no external, ‘international’ superiors. This notion came to gain normative acceptance in the second half of the seventeenth century – conventionally, following the Westphalia Peace Conference that ended the Thirty Years War – and remains the base upon which the structures of anarchy are constructed. The extent to which the norms of Westphalia have governed international practice is debatable; the Westphalia notion of sovereignty may indeed, as Krasner suggests, be a matter of ‘organized hypocrisy’ given the extent to which rulers have actually always intervened in each other’s affairs, but, at least in principle, the claim to be a sovereign entails acknowledgement of the sovereignty of others (Krasner 1999; Kratochwil 1995).
In any event, the absence of an external superior implies the absence of ‘government’, which is the definition of anarchy. This is clear enough but it does involve glossing over the distinction between sovereignty as a juridical status and a political concept. On the one hand, to say of a state that it is sovereign is to make a judgement about its legal position in the world, namely that it recognizes no legal superior, that it is not, for example, a colony or part of a suzerain system. On the other hand, to say that a state is sovereign generally implies that it possesses certain sorts of capacities; the ability to act in certain kinds of ways, to perform certain tasks. One essential difference between these two meanings of sovereignty is that the first is unqualified – states either are, or are not, legally sovereign – while the second clearly involves matters of degree; that is to say, both the tasks themselves can be added to and subtracted from without losing the basic idea, and the manner in which they are performed can be more or less effective. On the one hand we have sovereignty as a status which states either possess or do not possess; on the other we have sovereignty as a bundle of powers and capacities which can grow larger or smaller.
This distinction was of no great significance in the early years of the ‘Westphalia System’ because the kinds of powers that states exercised were limited in scope and range. Tax collection and ‘pacification’ – the establishment of law and order – were the main domestic activities of states, and warfare and imperialism the main external activities; here differential capabilities were most striking, but this in no sense undermined the idea of anarchy – indeed, as Kenneth Waltz insists, a key feature of anarchy is that the units in an anarchical system try to perform the same functions with different capabilities (Waltz 1979). However, once it became accepted that amongst the functions of a sovereign state are the achievement of certain kinds of social goals and successful regulation, if not actual management, of the economy, the situation does change quite dramatically, because it is clear that exercising these powers effectively might well, in some circumstances, be impossible without external cooperation and a degree of pooling of sovereignty. Thus, to take a very simple example, one of the ‘powers’ a state has is the power to set up a postal service – but such a service will be of limited value unless it is possible to send and receive letters across state boundaries, and to arrange this effectively states have actually had to give up certain powers to an international body, originally the Universal Postal Union of 1874. The bundle of powers that a state possesses as a ‘sovereign’ body is thereby simultaneously diminished and enhanced – the state now has the capacity to set up an effective postal system, but it buys this capacity by giving up part of its capacity to regulate this system. Paradoxically, to be truly sovereign it may be necessary to surrender part of one’s sovereignty. Another way of putting the same point is that the ‘fit’ between state and society/economy has altered since the beginning of the Westphalia System. Initially social policy was minimal and economic activity was, for the most part, agricultural, local and small scale. However, with the coming of manufacturing and the factory system, and recognition that efficiency gains – economies of scale – could be achieved via production for a wider market, the range and scope of economic activity expanded, and with it the possibilities for social policy. The first consequence here was a step up in the optimum size of states; Britain and France created ‘single markets’ by removing local obstacles to trade, while Germany moved from a Customs Union to a single state. However, the needs of the new societies went beyond these steps and gradually, from the 1860s onwards, regulatory international bodies were established: the International Telegraphic Union of 1865; the establishment of an International Bureau of Weights and Measures in 1875; and the International Labour Office in 1901 (Murphy 1994). In the twentieth century, the League and UN systems accelerated the institutionalization of functional cooperation and institutions such as the IMF, the World Bank and the WTO attempted to regulate ever wider areas of state activity. Each of these new institutions grew out of the exercise of sovereign powers, but each constituted a diminution of sovereignty, in the sense that here we have powers which can only be exercised effectively by a degree of pooling of sovereignty.
Moreover, this process of institutionalized regulation does not simply involve the new social and economic forces of the last two centuries. It is also the case that the most basic external capacity of the state – the capacity to make war – is now regulated, albeit somewhat ineffectively, in a way that would have been difficult to believe 150 years ago. The various Hague and Geneva Conventions, the legal restraints of the UN Charter, and the emergence of customary restraints on the employment of force do place some inhibitions on the use of military power. In short, what these reflections suggest is that, although the world lacks government (because states have been unwilling to surrender their juridical status as sovereign) their attempts to rule effectively and exercise their political sovereignty have created extensive networks of global ‘governance’ – a somewhat archaic word which originally was synonymous with government, but which has been pressed into service as a convenient term for the collective impact of the various disparate quasi-governmental institutions which have proliferated (internally and externally) over the last century or more (Rosenau and Czempiel 1992). In this chapter the basic institutional framework of global governance will be examined, along with some theories of international cooperation – functionalism, neo-functionalism, federalism, regime theory and collective security.
One final caveat; the relevance of ‘global governance’ varies quite dramatically from issue to issue and from one part of the world to another. It would be a mistake to see the growth of global governance as a steady process encroaching on all areas of international life and all regions of the world. There are many parts of the world where a savage Hobbesian realism is the most accurate way of theorizing politics, domestic and international, and there are some aspects of international politics where no states have proved willing to give up their sovereign prerogatives. In short, and to reiterate an earlier point, global governance is not the same thing as global government – much less responsible and representative government; the extent to which the world as a whole is orderly and norm-governed should never be exaggerated.
Federalist ideas can be dated back at least to the peace projects of the eighteenth century and thus, strictly speaking, are the earliest attempts to reach an understanding of the growth of international institutions; however, there are good reasons for beginning this survey with an examination of functionalism. Functionalism is the most elaborate, intellectually sophisticated and ambitious attempt yet made not just to understand the growth of international institutions, but also to plot the trajectory of this growth into the future, and to come to terms with its normative implications. It is an original set of ideas, parallel in scope to realism, but, unlike realism, it has little contact with past diplomatic tradition. While one figure, David Mitrany, could reasonably claim to be the originator of functionalism, his account of the world has been taken up and employed in case studies and theoretical work by scholars such as Joseph Nye, Ernst Haas, J. P. Sewell, Paul Taylor, A. J. R. Groom and, in a rather idiosyncratic way, by John Burton and theorists of world society such as Christopher Mitchell and Michael Banks. Functionalism is certainly the most important approach to international institutions to have emerged in the twentieth century – which is not to say that all of its ideas, or even most of them, stand up to critical scrutiny.
The key to an understanding of functionalism is that although it offers an explanation for the past growth and future prospects of international institutions this is not its primary intention. Rather, it is an account of the conditions of peace. It emerged in the 1940s as a reaction to state-centric approaches to peace such as federalism and collective security. Mitrany’s insight was that these approaches failed not because the demands they made on states were too radical – the common criticism – but because they were not radical enough. Collective security leaves untouched the sovereign power of states to determine whether or not to respond to its imperatives; legally states may be bound to act in certain kinds of ways but they retain the power to disregard legality when it suits them. Federalism on a world scale might create the conditions in which states are no longer capable of acting in this way, but, for precisely this reason, states are unwilling to federate. Both approaches fail because they attempt to work with the grain of sovereignty while producing results which go against the grain of sovereignty – a frontal assault on juridical sovereignty which leaves political sovereignty intact is bound to fail. Instead, Mitrany argued that a ‘working peace system’ could only be constructed from the bottom up, by encouraging forms of cooperation which bypassed the issue of formal sovereignty but instead gradually reduced the capacity of states to actually act as sovereigns (Mitrany 1966). Two formulae here summarize the argument: ‘form follows function’ and ‘peace in parts’ (Nye 1971).
‘Form follows function’ collapses a number of propositions. First, cooperation will only work if it is focused on particular and specific activities (‘functions’) which are currently performed by states but which would be performed more effectively in some wider context. Second, the form which such cooperation takes should be determined by the nature of the function in question – thus, for some functions a global institution will be appropriate while for others regional, or even local, institutions are all that is necessary. Sometimes the exchange of information is all that is required, in other cases power of decision may need to be vested with functional institutions. Workers’ organizations and employers’ groups should be concerned with labour standards, medical doctors and health administrators with the eradication of disease. Each functional organization should be set up in such a way that it is appropriately designed to cope with its particular function. ‘Peace in parts’ describes the hoped-for collective outcome of these individual cases of functional cooperation. The functionalist model of sovereignty stresses the primacy of the political dimension of sovereignty described above. Sovereignty is a bundle of powers. As these powers are gradually shifted away from the state to functional organizations, so, gradually, the capacity of the state to act as a sovereign will diminish. There is an element of political psychology involved here; the assumption is that the loyalty individuals give to states is a product of the things states do for\ them and, as other institutions take over the performance of particular activities, so loyalty will drain away. Moreover, the result of functional cooperation is not to create a new, larger, more effective state – instead the territorial basis of the system will, itself, be undermined by the precept that form follows function. Gradually the territorial state will come to exercise fewer and fewer functions – instead states will be anomalous institutions attempting to be multi-functional and territorial in a world in which most of the business of governing and administration will be carried out by bodies that are functionally specific and non-territorial.
Mitrany’s basic ideas have inspired a number of later theoretical works, and some very famous case studies, in particular Beyond the Nation State, Ernst B. Haas’s account of the International Labour Organization (ILO), and Functionalism and World Politics, J. P. Sewell’s account of UNESCO (Haas 1964; Sewell 1966). Clearly the ‘functional agencies’ of the United Nations system provide a range of possible case studies – although, for the most part, they breach the injunction that ‘form follows function’, being global bodies, and mostly dominated by states rather than the performers of functions. Functionalism has also influenced thinking on regional organizations, although, as the next section will suggest, only in a ‘neo’ form. The connection between functionalist ideas and Burton’s notion of the ‘cobweb’ model of world society (Burton 1972) is clear, and acknowledged by writers such as Mitchell and Groom, if not by Burton himself. Accounts of the world economy which stress globalization owe much to functionalist thinking, likewise recent work on the de-bordering of states. In short, we have here a model of global governance which has quite widespread influence even if the full version of Mitrany’s vision is subscribed to by very few.
In a comment on Haas’s famous study, the English realist F. S. Northedge remarked that the ILO is ‘beyond the nation-state’ in the same way that Trafalgar Square is beyond Charing Cross Station. The meaning of this somewhat enigmatic remark is that while the ILO with its tripartite structure of state, trade unions and employers’ representatives is undoubtedly in a different place from (cf. spatially beyond) the nation-state, it can in no sense be said to have transcended that institution. An extremely elaborate network of institutions has emerged in the world but, contrary to the expectations of functionalists, the Westphalia System remains in place and sovereignty is undiminished as a guiding principle. It seems that the sovereign state has been able to ring fence functional cooperation, and isolate itself from the supposedly corrosive effects of functionalism. From a realist point of view it is clear what has gone wrong; the political psychology of functionalism is misconceived. Loyalty to the state actually rests on two pillars. First, it is an affective phenomenon rather than purely instrumental – for many, the state represents the nation, the nation is Burke’s contract between generations past, present and future, and this contract rests on ties of birth, language, attachment to a territory, and a culture, none of which are factors which can be diminished by functional cooperation across state boundaries. But second, in so far as loyalty is instrumental, it is the ability of the state to provide basic physical security that is the key, the ability to protect the people from outsiders – and the performance of this function is, literally under Mitrany’s model, the last thing that governments will surrender.
It could be argued that this realist position rests on as implausible a view of political psychology as does functionalism: very few states are actually nations; most people are more in danger from their own governments than from foreigners; much of the time ‘loyalty’ is coerced rather than freely given. However, behind the realist position lies a rather better general criticism of functionalism which rests on a less romantic view of the state. Mitrany – along with some at least of his successors – offered an essentially a-political account of functional cooperation. He approached problems with the soul of a technician. The underlying assumption is that the problems that functional cooperation is supposed to solve are essentially technical problems which admit to a technical solution. Administration can be divorced from politics – a very nineteenth-century, positivist view of the world, and one shared, for example, by John Burton whose notion of ‘systemic’ problem-solving, as opposed to the non-systemic approach of states, rests on a similar distrust and marginalization of the political (Burton 1968). The difficulty, of course, is that even the most technical of solutions to the most technical of problems will always have political implications, will always have the potential to benefit one group and disadvantage another. The basic rule of the Universal Postal Union, which is that each state has an obligation to deliver international mail on its own territory, seems as purely technical a solution to the problem of an effective mail system as can be imagined, yet it has enormous political implications when it comes to issues such as the dissemination of political, religious or pornographic material through the mail. The gathering of information for effective weather forecasting seems innocuous but will be resisted by closed societies. At the other extreme, no one needs to be reminded of the political implications of such matters as labour standards or the regulation of trade or international capital markets. All of these examples of functional cooperation involve the distribution of gains and losses, a determination of who gets what, where and when. There are no technical problems, there are no technical solutions, and because of this, states are often very unwilling to allow problems to be dealt with ‘functionally’. Thus it is that the state-centric nature of the functional agencies of the United Nations is not an accident. No major state has been willing to allow issues which it regards as political to be dealt with in an allegedly non-political way, and even if any state were so willing it is moot whether their populations would be equally tolerant when the consequences became clear.
For this reason, the full-blown functionalist model of international cooperation has to be regarded as a failure. Still, no theory of similar range or scope has yet been produced, and some at least of the language of functionalism persists in other, less ambitious, but perhaps more successful theories. Moreover, the functionalist opposition to the principle of territoriality strikes a chord in the context of an era of globalization in which new notions of political space are emerging.
Integration theory, federalism and neo functionalism
Functionalism looks to the creation of a new world order in which the sovereign state takes a back seat. By way of contrast, integration theory looks to the creation of new states by the integration of existing states, generally on a regional basis and possibly, in the long run, to the creation of a single world state. Since 1945 the most important testing ground for ideas on integration has been Europe, thus the following discussion of federalism and neo functionalism takes a European focus – however, it should be remembered that most of the godfathers of the European process saw this as a stepping stone towards, in perhaps the very long run, the integration of the world.
In the immediate post-war world, many of the leaders of Western Europe, concerned to avoid a third European war, looked to the creation of a United States of Europe, a federal, or perhaps confederal, arrangement in which the sovereignty of its members would be suppressed. Some early institutions – in particular the Council of Europe – represented this aspiration in embryonic form, but it became clear in the course of the 1940s that a direct assault on the sovereignty of European states would not succeed; a fact that was finally confirmed by the failure of plans for a European Defence Union (EDU), scuppered by the French National Assembly in 1954. Instead, the founding fathers of European integration – Monnet, De Gasperi and Schuman – drew on some functionalist ideas, and on the experience of American aid under the Marshall Plan, to chart a different route to European unity. Functionalists look to undermine state sovereignty from below, by stripping away the powers of the state piecemeal, salami-style: in the Committee for European Economic Cooperation – later to become the Organisation for Economic Co-operation and Development (OECD) – which was set up to distribute Marshall Aid, the European recipients were obliged to produce common plans for this distribution. The result of combining this strategy with that experience was a route to European political unity which went via European economic unity – hence the formation of the European Coal and Steel Community (ECSC) in 1952, and of Euratom and the European Economic Community (EEC) in 1956. These three institutions were later solidified as the European Community (EC), now rebranded as the European Union (EU).
These were, and are, unique organizations. Although in formal terms much of the decision-making power in the EU rests with state representatives in the Council of Ministers, the European Commission, a body of appointed bureaucrats (nowadays one Commissioner from each member state), has the capacity to initiate policy, the European Court is empowered to decide many intra-Community disputes, and, more recently, a directly elected European Parliament has some significant powers it can employ independent of state control. These institutions taken together mean that the (current) twenty-five member-states and 400 million citizens of the Union are taking part in a unique process of international institutional cooperation.
It clearly differs from the functionalist notions of Mitrany and his collaborators in two key respects. In the first place, the intention was – and is – to create a new state via international institution-building; the end result has always been intended to be the (con)federal Europe that could not be created by direct action. Although politicians in some parts of the community, especially Britain and Scandinavia, may find it convenient to deny this aspiration it remains central – although what federalism actually means in this context is contentious. In any event, the European institutions were not and are not designed on a ‘form follows function’ basis, hence the opposition of many integrationists to the quasi-functionalist principle of a ‘two- (or “n”-) speed Europe’ in which different parts of the Union integrate at different rates.
These two departures from the functionalist model lead some writers to distil from the European experience an approach to integration they called neo functionalism, which could provide a theoretical basis for other examples of integration in, for example, Africa, or Latin America. It is important to put the matter this way round because sometimes the impression is given that Europe has been some kind of test for the neo functionalist model. Not so – the idea that integration between states could come as a result of a politically driven process of spillover, the heart of neo functionalism, was drawn from European experience rather than applied to it. In any event, regarded as a model, how does neo functionalism fare? Not very well has to be the basic answer. The European experience has not proved to be exportable; other examples of integration have generally not followed the European (neo functional) model. Moreover, even within Europe, the model clearly has not worked in any consistent way. Sometimes spillover has taken place, sometimes it has not. Some pressure groups have operated at the European level, others have not – it is striking, for example, that despite the obvious importance of the Common Agricultural Policy (CAP) and the extent to which CAP rulings are made in Brussels, farmers’ organizations throughout the Union remain largely oriented towards putting pressure on their home governments rather than the central institutions. ‘Functional autonomy’ is the watchword here. European integration has proceeded by stops and starts rather than as a smooth process of spillover – and the factors that have, at different times, restarted the process have not followed any obvious pattern. Integration has taken place in ways and at speeds determined by the course of events and not in accordance with any theoretical model. Later writers have stressed ‘inter-governmentalism’ – on this account, the process of integration is driven by interstate bargaining; particular problems emerge and are solved politically by state governments and not in accordance with any functional logic. However, intergovernmental bargaining could lead in some circumstances to a degree of ‘pooling of sovereignty’ and the emergence of ‘policy networks’ on a European scale may be responsible for some kinds of change. In any event, it seems clear that the European experience really is sui generis and it may not be sensible to look to find here any general lessons about the processes of cooperation
and international institution building.
However, before turning to the institutions of the global economy and the United Nations system, it may be worth briefly returning to the startingpoint of the post-war European experience, the aspiration to create a ‘Federal Europe’. A great deal of debate in Britain in the last quarter-century, and especially since the creation of a single European currency in 1999 (the ‘euro’), has centred on whether a federal Europe is desirable – an important issue since the Maastricht Treaty of 1992 specifically refers to this ambition, and the recently-drafted (2004) new constitution for the Union has a number of obviously federal features. Resistance to this step in the UK (and possibly elsewhere in Europe) is considerable, and it is not clear that the promised referendum on the constitution will produce a positive result – readers may know the answer to this question. Part of the problem here rests in the fact that ‘federalism’ has different connotations in Britain from much of the rest of Europe, especially Germany. In Britain, federalism is seen as a process of centralization that takes power away from the regions (i.e., the nation-states of Europe); in Germany, on the other hand, federalism is seen in the light of the movement from the Second and Third Reich to the Federal Republic of Germany – that is, as a process of decentralization. When Continental politicians talk of a European Federation they do not have in mind the ‘European Superstate’ deplored by British Eurosceptics. What makes this issue very complex is that on some accounts the European Union is already a federal system. Murray Forsyth points out that the defining characteristic of a federal system is that the federal authority has some powers that it can exercise effectively without reference to the lower levels and vice versa, and this is certainly the case within the European Union (Forsyth, in Brown 1994c: 56). The EU is a ‘weak’ federal system but a federal system nonetheless. There may be a wider point here. There are in the world today quite a number of organizations that have some powers of this kind, including, on some interpretations, the United Nations itself, and it may be that the general unwillingness of analysts to use older categories such as ‘federalism’ to describe this situation is a mistake.
Global economic institutions: Bretton Woods and after
In terms of global governance and the undermining of sovereignty, the EU is the most ambitious of contemporary international institutions, but on the world scene, an almost equally impressive set of institutions exists. Some historical background is necessary here. Before 1914 the world economy was nominally ‘self-regulating’; in practice British economic power provided a degree of actual regulation but most countries were on the gold standard, which meant no elaborate international monetary institutions were necessary and trade was relatively free, in accordance with the dictates of economic liberalism. This economy collapsed under the strain of war – with most of the participants imposing physical controls on exports and imports and going off the gold standard, ending the direct link between their currencies and the price of gold – but the intention was that this would be temporary and that the old liberal international economy would be re-established after the war was over. This proved impossible and after a brief interlude of prosperity in the 1920s, the Wall Street Crash of 1929 and bank failures in Europe in 1930 and 1931, virtually all countries introduced high levels of protection for their trade, and extensive monetary controls.
The leader of the old system, Britain, left the gold standard for good in 1931 and in 1932 established a system of Imperial Preferences, at last abandoning free trade and following the lead of the highly protectionist Hawley–Smoot Tariff which the United States Congress had passed in 1929. Between 1929 and 1933 trade crashed world-wide, declining by the latter year to less than one-quarter by value of its 1929 figure. The Great Depression of the 1930s was trade-led – unlike, for example, the recessions of the 1980s when trade actually increased year on year, even when overall output fell. When recovery began in the 1930s it was on the basis of trade blocs – the Dollar Area, the Sterling Area, the Gold Franc Area and so on – and with much resort to bartering, usually on a basis which reflected political power rather than economic advantage, as with some of the barters arranged by the Nazis in the late 1930s whereby, say, Romania would be obliged to exchange its oil for cuckoo clocks and other inessentials. In the collective memory of the world capitalist system this whole period was a disaster, and it remains the case that the memory of the Great Depression is one of the factors that promotes cooperation in the world economy today. On some accounts, it was a lack of leadership that produced the depression – Britain no longer had the ability to lead, the United States had not the will. In any event, by the mid-1930s the United States was already taking the initiative at international trade conferences, and with the coming of the war and the establishment of the United States as the arsenal of democracy and the world’s leading financial power, America was in a position to determine the future shape of the world economy, along with its now junior partner, Britain. The US view was that it was the failure of the old liberal order that led to war, and thus it was absolutely essential to re-establish that order after the war ended – this involved a commitment to free trade (or at least the replacement of physical controls and trade blocs by tariffs) and the restoration of convertible currencies by the abolition of currency blocs and exchange controls. The British disagreed; led by John Maynard Keynes, the radical economist of the 1930s and a convinced protectionist, who was now Lord Keynes and a Treasury insider with great influence on policy, they were no longer free-trade oriented, and were committed to the Sterling Area. But US economic power was, in the last resort, too great to be resisted – ironically, since the US wished, in principle, to remove power considerations from institutional arrangements. As noted above with respect to functionalism, this is rarely possible, and never when it comes to core economic matters. The British and Americans met at Bretton Woods, New Hampshire, in 1944 to negotiate the shape of the post-war economic order, which thus became known as the Bretton Woods System (BWS). The BWS met American notions in several ways. In the first place, attempts were made to ‘de-politicize’ the international economy by dividing up the various international issues amongst separate institutions. Thus an International Trade Organization (ITO) would handle trade matters, a World Bank would handle capital movements, and an International Monetary Fund (IMF) would deal with international money and balance of payments crises. These separate institutions would be functional agencies of the UN but isolated as far as possible from the Security Council and other UN bodies dealing with ‘political’ affairs; indeed, in practice, the UN has had no effective control over these organs. Moreover, the new institutions were to be run by boards of directors and managing directors who, although appointed by states (in proportion to their relative economic strength – no question of ‘one state, one vote’ here), would have fixed terms of office and would be expected to act as functionaries rather than as political representatives. The emphasis would be on technical solutions to technical problems.
In the second place, these organs were to be regulatory rather than managerial. Thus the World Bank would not have funds of its own beyond a small amount of working capital, but would raise money commercially that it would then lend on to states at commercial rates to supplement private loans and intergovernmental dealings. The IMF would not be a world-wide central bank with the capacity to create international money (as Keynes had proposed) but a regulatory body designed to police a set of rules which required convertibility and national action to defend exchange rates. The IMF would help states to deal with balance of payments crises, but it would also lay down conditions for its help, thereby policing the policies of its members. The ITO would police the trade policies of its members, ensuring that the rules limiting quotas and promoting tariff reductions were enforced, although in the event it would be nearly 50 years before the World Trade Organization (WTO) was finally established in 1995, and in the meantime a more limited General Agreement on Tariffs and Trade (GATT) performed this function.
In the immediate post-war period it was impossible to bring these institutions on line. No country in the 1940s was able to compete with the United States, which was the home of over half the capitalist world’s industrial production. In practice, what led to the reconstruction of the capitalist world economy and a generation of prosperity was the Cold War. Marshall Aid, the European Recovery Programme, transferred some $15 billion in grants to Europeans and the Japanese – far more capital and on easier terms than Keynes had envisaged in his schemes – but it operated explicitly as a response to the threat of communism. Without such a spur there was no possibility that Congress would have passed such a generous programme. The attempt to de-politicize international economic relations stood revealed as a pious hope rather than a reality. In any event, for two decades after the early 1950s the world economy experienced unprecedented growth and prosperity. This growth was concentrated heavily in Europe and Japan, but even Britain and the United States grew steadily, and growth rates in what was coming to be called the Third World were high, although often undermined by rising populations. By the end of the 1950s most of the leading economies had re-established currency convertibility, and the GATT ‘rounds’ of tariff negotiations were well under way. Going into the 1960s the system seemed to be working pretty well, albeit not quite as originally intended. However, in the 1960s, crisis followed crisis for the BWS, and by 1973 – when the attempt to work with fixed currency rates was abandoned – it is widely regarded as having, to all intents and purposes, ceased to exist. Partly this was because of continual currency crises; the system worked via ‘reserve currencies’ (the dollar and, to a much lesser extent the pound sterling) which had somehow to be made widely available for use by third parties without this undermining the issuing countries. Squaring this particular circle remains impossible, hence the current system of floating exchange rates. The decline of Bretton Woods was also a function of the rise of new economic actors. Still, although the Bretton Woods System went into abeyance, the Bretton Woods institutions remain in existence, finding new roles.
The new roles of the IMF and World Bank are largely oriented towards the developing world; instead of handling the short-term currency and capital needs of the developed world, these two institutions have gradually become responsible for promoting growth in the so-called ‘South’. Their role in this respect has been deeply controversial. IMF ‘conditionality’ – the terms under which assistance is given to borrowers – is widely regarded as incorporating advice that is inappropriate and burdensome for developing economies, and similar kinds of criticisms have been leveled at the World Bank and the WTO. Whereas genuine free trade might be to the advantage of the developing world, the unwillingness of the advanced industrial countries to liberalize trade in agriculture in particular is a source of deep resentment – even the recently completed preliminaries of the Doha Round of trade negotiations (July 2004) place no timetable on the liberalization of trade in this area. In any event, the South has created its own global economic institutions. A key date here is 1964, which saw the formation of both the United Nations Conference on Trade and Development (UNCTAD) and the Group of 77. UNCTAD was a body set up by the UN to hold regular conferences on trade issues as they affected the South. Unlike the IMF or World Bank, UNCTAD works on a one-state, one-vote basis, thereby maximizing the key advantage held by the South in international fora – their sheer weight of numbers. The same is true, incidentally, of the WTO, where with good leadership, such as that provided by Rwanda for African states in the July 2004 negotiations, the South can exercise a great deal of power, and where major Third World countries such as Brazil and India have real clout. The Group of 77 was the group of ‘less-developed countries’ that pressed for UNCTAD in the UN – which, given the pace of decolonization, more or less immediately had more than 77 members but still retained the name. As well as all these formal institutions, economic decision-making also takes place in other fora such as the G7 – annual meetings of the heads of government of the leading industrial powers (G8 when Russia attends) – via UN Conferences on particular big issues, smaller scale local trade agreements, policy networks and informal meeting-places of the rich and influential such as Davos and Bilderberg. For this reason it makes sense to think of the governance of international economic relations – and perhaps other, social areas – in terms that go beyond the merely institutional; in terms, that is, of regimes.
International regimes and regime theory
The notion of an international regime emerged out of the complex interdependence model of international relations of the 1970s, which became a prime focus of debate between neoliberals and neorealists in the 1980s. For once, there is a generally-accepted (albeit slightly contentious) definition of a regime which states that it is a set of ‘implicit or explicit principles, norms, rules and decision-making procedures around which actors’ expectations converge in a given area of international relations’ (Krasner 1983: 2). To illustrate, consider the current trade regime using Krasner’s expansions of the key terms.
The principles (‘beliefs of fact, causation and rectitude’) upon which the trade regime is built are that trade is good, free trade is better than controlled trade and free trade promotes peace. These principles constitute the ‘embedded liberalism’ of the trade regime, and they exist in the background even when contrary practices are sanctioned. The norms (‘standards of behaviour defined in terms of rights and obligations’) of the regime give these principles some practical content. Thus, for example, it is a norm that if it is not possible for trade to be free, tariffs are a better mechanism for restraint of trade than physical quotas because they cause less interference in the market and are less discriminatory in impact. The rules (‘specific prescriptions or proscriptions for action’) of the trade regime set out in detail what these norms imply, and set out the sanctioned exceptions to these norms; they are to be found in the WTO Charter, in the Multi-Fibre Arrangement (MFA) and in various other legal and quasi-legal documents. The decision-making procedures (‘prevailing practices for making and implementing collective choice’) in this case focus on meetings of the WTO, the conference diplomacy of bodies such as UNCTAD, and, at a different level, on the trade disputes procedures set out in the WTO Charter. Principles, norms, rules and decision-making procedures may be explicit or implicit. Explicit rules are written down somewhere, implicit rules are understood without being written down. Thus, for example, ‘customs unions’ and ‘free trade areas’ such as the European Union and the North American Free Trade Area are explicitly licensed even though clearly discriminatory, while ‘voluntary export restraints’ (VERs) are implicitly accepted. VERs are agreements whereby one party promises to limit exports to the other; such restraints are discriminatory and breach the norms and principles of the trade regime but are acceptable because of the fiction that they are voluntary, a fiction that everyone goes along with, for their own reasons. This is a case of an ‘implicit’ rule of the trade regime and it is every bit as important as the explicit rules set out in the various treaties which establish the regime.
‘Around which actors’ expectations converge’ – here we come to the heart of the matter. The ‘actors’ in world trade – firms, states and individual consumers – have expectations about the principles, norms, rules and decision-making procedures that will apply in this area, and if these expectations converge, there is a regime, but if not, not. ‘Converge’ is a word which was deliberately chosen to avoid the idea that expectations have to be exactly the same (which, much of the time, they clearly are not) or that rules will always be obeyed (which, equally clearly, will not always be the case). Instead ‘expectations converge’ suggests that most of the time the actors will have similar expectations and most of the time they will be fulfilled – thus, for example, there is a degree of predictability and regularity about trade matters that is appreciably greater than would be expected in the absence of a regime. Regimes are clearly seen as part of global governance, but it should be noted that, despite the importance of the WTO in the trade case, they represent a clear break from the emphasis on institutions characteristic of the BWS. The WTO is important, but so are other institutions such as UNCTAD and the MFA, and informal ‘institutions’ based on implicit rules may be as important as, or more important than, the official bodies. Regime theory emerges out of the neoliberal theory of International Relations; that is to say that its root assumption is that states – and, for that matter, firms – are rational egoists operating in an anarchical system.
From a neoliberal perspective it is not too difficult to see why states (and firms) would want to cooperate – there are absolute gains to be had from cooperation, that is from mutual adjustments, and on neoliberal assumptions, states are concerned to make absolute gains. The problem is that the temptation to cheat may be overwhelming. States will continually be placed in a situation where it is in their interests that cooperation take place, but even more in their interests that the cost of cooperation be carried by others. This is a classic collective action problem. In domestic societies, one of the roles of government is to solve problems of collective action by enforcing compliance with a system of rules which are, in principle, in the common interest. The most influential explanation for this phenomenon is the theory of hegemonic stability.
It is not clear who first used the term or popularized the idea, but an important early statement of what came to be known as the theory of hegemonic stability is that of Charles Kindleberger in the final chapter of his economic history of the 1930s, The World in Depression 1929–1939 (1973). In examining explanations for the Great Depression, he tells the basic story as follows: the international economic system before 1914 was not, as it was usually taken to be, self-regulating. Instead, the hegemonic financial power of Great Britain, exercised by the quasi-autonomous Bank of England, had been employed to smooth over problems of cooperation generated by the operation of the gold standard. Britain had had the capacity to do this, given its enormous holdings of overseas capital. It also had had the will to do this, because, as the largest financial power, it had the biggest stake in the preservation of the system. Its role as the hegemon was widely, albeit tacitly, accepted as legitimate by other members of the system. Capacity, will and legitimacy need to be found in one country if the system is to work. In the 1930s they were not and the system collapsed. But, after 1945 a new hegemonic economic power emerged, the United States. The US was the strongest financial and productive power and had the capacity to provide hegemonic leadership. Because the US leadership of the time recognized that it was in their interest to promote a flourishing world economy, the US was prepared to use this power to promote cooperation. And because of the poverty of the rest of the capitalist world, and their fear of the Soviet Union, American leadership was widely accepted. Thus it was that the post-war institutional structure was underwritten by the power of the US. The GATT rounds of tariff reduction were driven by American leadership, and the willingness of the US to abide by the rules of the system, and to use its political power to encourage others to do likewise, was critical. Moreover, because of the strength of the United States it was able, if it wished, to turn a blind eye to infractions of the rules by other states, if by so doing it was able to preserve the system. Thus the hegemonic power of the United States was able to act as a kind of substitute for international government, but without violating the basic assumption of rational egoism; the US performs this role because it is in its interests to do so. As the country with the largest stake in the preservation of the system, it is willing to act in accordance with the rules and to bear most of the transaction costs of running the system, not as an act of altruism but on the basis of enlightened, medium-term, self-interest (Ikenberry 2001).
However, hegemonic leadership is a wasting asset which creates the conditions for its own downfall. The hegemon is required to play fair – in the case of the trade regime, to open its borders to imports and to eschew the sort of creative measures that can undermine the rules of the system. However, its rivals are not so hampered. They will use the regime set up by the hegemon to the full, taking advantage of access to the hegemon’s market, but relying on the hegemon not to overreact to their own measures to prevent its access to their markets. Gradually, the material basis upon which hegemony rests will be eroded and the hegemon will cease to have the capacity to act as such – instead it will start to play fast and loose with the formal rules, and, as a result, will no longer have the legitimacy to act as hegemon. In the end, it will be perceived by other members of the system as acting solely in its own interests rather than in the interests of all. This, it is suggested, is more or less what has happened to US economic hegemony over the last 50 years – gradually its trade rivals outproduced it, partly because it was hampered in its actions by its responsibilities, and America then became incapable of continuing to act in the interests of all, and liable to succumb to the temptation to act on short-term self-interest, financing the Vietnam War by inflation rather than taxation, for example. The good news is that regimes may well survive ‘after hegemony’ (Keohane 1984). The hard work of setting up regimes has been done, and the remaining task is the easier one of keeping them ticking over. The very fact that rules are written down and thus institutionalized makes it more likely that states will abide by them, while the institutions can provide a great deal of useful information that will prevent states acting against their own interests. The hypothesis is that most of the time when states act as free riders it is either because they do not believe they will be found out, or because they do not appreciate the longer-term consequences of their actions. The existence of institutions makes it unlikely that either position will hold, which creates an incentive to cooperate. Thus it is that cooperation can continue – but at ‘sub-optimal’ levels by comparison with the cooperation that can be generated by a hegemon.
Global governance and (collective) security
As suggested at some length in previous chapters, issues of security and insecurity have always been at the heart of the anarchy problematic, and it might have been expected that a chapter on global governance would begin by addressing these issues directly and substantively, rather than by examining regional cooperation and economic governance. The ‘Peace Project’ designers of the eighteenth century would have expected this, as would most theorists of international organization in the 1920s and 1930s, who regarded the design and re-design of the League of Nations as their primary task. Even after 1945, the ‘world peace through world law’ movement continued to think in terms of reform of the central security institution rather than the indirect approach to peace via functionalism and integration theory (Clark and Sohn 1966). In fact, it is clear that frontal assaults on sovereignty in bodies such as the League or the UN have been amongst the least successful innovations of the last hundred years.
The most important twentieth-century attempt to change directly the way the world handles security issues was the doctrine of ‘collective security’ – the attempt to replace the ‘self-help’ balance of power system that prevailed before 1914 with a system that involved a commitment by each state to the security of every other state. The fate of this doctrine in the 1930s in the context of the theoretical debate between liberal internationalism and realism; a second ‘take’ on this failure, concentrating more on the institutional side, and carrying the story through to the post-1945 era, is now called for. The formation of the League of Nations in 1919 emerged out of the contingencies of the First World War, and the United Nations was formed from the wreckage of the League at the end of the Second World War, but the roots of these institutions go much further back in the history of the European states-system. ‘Roots’ in the plural is important here, because a central problem of these bodies has always been that they have attempted to institutionalize and fuse two quite separate traditions, with quite different normative approaches to the problem of international order and global governance – the tradition of the ‘Peace Project’ and the tradition of the ‘Concert of Europe’.
The most famous ‘Peace Project’ was Kant’s ‘Perpetual Peace’ of 1795, but while the phrase ‘perpetual peace’ was a commonplace amongst the creators of ‘Peace Projects’ in the seventeenth and eighteenth centuries, Kant’s work was actually untypical of most others (Reiss 1970). The basic idea of these projects was clear, even though they differed markedly as to detail (Hinsley 1963). In order to overcome the scourge of war, the states of Europe would form a kind of parliament or federal assembly wherein disputes would be solved. Projectors differed as to such matters as voting mechanisms and enforcement procedures, but collective decision was central – states would no longer have the power to act as judges in their own cases. Impartial rules would be impartially applied to all. International relations would become a realm of law and not a realm of power – although the ‘projectors’ were suspicious of the international lawyers of the day, regarding them as, in Kant’s phrase, ‘sorry comforters’; that is, apologists for power politics and the rights of states.
The Concert of Europe was very different in approach. This notion emerged in the nineteenth century, initially via the medium of the formal congresses which dealt with the aftermath of the Napoleonic Wars, later on a more informal basis. The idea of the Concert was that the Great Powers would consult and, as far as possible, coordinate policy on issues of common concern. The root idea was that great power brought with it great responsibility; managing the system in the common interest was something that the powers should do if they could – but, crucially, it should be noted that the ‘common interest’ was weighted towards the interests of the Great Powers themselves. Sometimes ‘managing the system’ might involve preserving a balance of power amongst the great at the expense of lesser players – as with the wholesale reorganizations of boundaries that took place after 1815. Sometimes, if the great powers were in conflict, it could not work at all, and Bismarck for one was wont to regard the notion of a European interest with disfavour. In any event, the Concert of Europe was, in no sense an impartial body, dispensing impartial laws. If it worked at all, it worked partially, in the interests of order perhaps, of the Great Powers certainly.
Both of these traditions still exist at the beginning of the twenty-first century. Movements for institutional reform of the UN and global ‘democratization’ clearly draw on the tradition of peace projects, but, on the other hand, for example, the informal ‘contact group’ of the United States, Russia, Germany, France and Britain, which oversaw policy on former Yugoslavia during the Bosnian war of the early 1990s, was clearly a (wider) reincarnation of the Concert of Europe, with a similar attitude to the rights of smaller countries, as the Bosnian Government discovered to its cost. However, the actual institutions set up in the League and UN represent an uneasy and unsuccessful hybrid of both traditions.
Thus the doctrine of Collective Security draws on the universalism of the Peace Projects – one for all and all for one – but is meant to be operated by states which retain the power of deciding when the obligations of collective security are binding, unlike the institutions envisaged by most of the projectors. Moreover, collective security defends a status quo, with only a passing nod in the direction of mechanisms for peaceful change, while the peace projectors envisaged that their deliberative bodies would be able to bring about such change in a lawful manner. The Council of the League and the Security Council of the UN clearly reflect the idea of a Concert of Great Powers, but they also attempt to be representative of the rest of the system, and the norms the Security Council is supposed to enforce are norms which stress the equality of states, not their differentiation. As with the Concert, it has been tacitly recognized that the Councils would operate effectively only when there was consensus amongst the Great Powers. In the League, unanimity in the Council was required, with the exception of the interested parties, who, if they were unable to find any friends, generally responded to a negative vote by walking out, while in the UN the famous ‘veto’ for the five permanent members of the Security Council made such a walkout unnecessary. However, the universalism of the organizations has made it difficult for this prerequisite to be explicitly defended, and hence the persisting sense that the veto was some kind of mistake made in 1945, rather than an essential feature of the system. The (Security) Council has been expected to enforce the norms of collective security and universalism, while, in its very nature, it represents the alternative, Concert, tradition. A great deal of the rather poor record of these global institutions since 1919 can be explained in terms of the contradictory impulses of these two traditions. In effect, the system works properly only when they both point in the same direction, which does happen sometimes, but obviously cannot be relied upon. The only clear-cut example of a collective security enforcement action occurred in Korea in 1950 as a result of the temporary absence of the Soviet Union (one of the veto powers) from the Security Council. Even in 1990, when universal principles and the interests of most of the Great Powers pointed in the same direction with respect to Iraq’s invasion of Kuwait, the Coalition that enforced the law acted outside UN control, albeit with the sanction of a Security Council resolution. Nonetheless, it is possible to exaggerate the extent to which the UN system has failed to address problems of security. As in the case of European integration, the failure of grand theory has been accompanied by quite a high degree of institutional and conceptual innovation. When in the 1950s the UN was stymied by the Cold War, the then Secretary General of the UN, Dag Hammarskjöld, invented the notion of ‘preventive diplomacy’ – proactive attempts to keep the Cold War out of particular areas – and, with others, pioneered the notion of ‘peacekeeping’ (the employment of troops in UN uniforms with a mandate to assist the sides to a conflict if they wished to be kept apart). The UN has also offered mediation services, truce observers, and a number of other ‘good offices’ that parties to a conflict could use. There can be little doubt that these innovations have been genuinely helpful in a number of cases – and in the 1990s there were an increasing number of occasions upon which the UN was called upon to provide such services. What is striking about these innovations is the way in which they combine the pragmatism of the Concert tradition with a ‘politics from below’ element which is universalist in origin. As with Concert politics, peacekeeping is, in the jargon of social work, ‘non-judgemental’; the UN is able to act to help preserve order because it does not take sides, and does not concern itself with the rights and wrongs of the case. This refusal to judge is, of course, totally against the ethic of collective security, which rests crucially upon a willingness to identify the wrongdoer – and it is noticeable that the UN’s attitude is often criticized by those who feel they can actually tell right from wrong: witness, for example, the resentment of the Bosnian Government at the apparent willingness of the UN to treat Bosnian Serbs on a par with the ‘legitimate’ authority. However, the non-judgemental quality of the UN is much appreciated by many smaller member-states, who fear that if judgement is to be the norm they are more likely to be in the dock than on the bench.
Preventive diplomacy and peacekeeping are not substitutes for collective security; they do not answer the basic question which is whether it is possible for international institutions to take us beyond a realist, self-help system in matters of security. Functionalism tries to do this by undermining sovereignty directly, but has been no more successful than were the Peace Projects of the eighteenth century. The attraction of collective security was that it did not try to undermine state sovereignty as such; rather it attempted to get sovereign powers to support a wider interest than the national interest. In the formal sense it failed in that there have been very few cases which have been overtly collective security operations – however, in an informal sense, some elements of a collective security system do seem to have taken hold. The closest analogy to an informal collective security system may be the old English common law idea of a posse comitatus – men called out by the sheriff to assist in the enforcing of the law, a notion which encompasses both medieval England and the ‘posse’ of Western movie fame. Something like this seems to be the best way of looking at the Gulf War of 1990–1. A group of states acted together to expel Iraq from Kuwait – the Coalition as posse – and the lawfulness of this action was attested to not by the presence of a sheriff, but by a positive vote of the UN Security Council. In 1995 the posse – this time in the guise of NATO – intervened in Bosnia to create a ‘level killing-field’ (again with the approval, but not under the command, of the UN), while in 1999 the NATO posse operated in Kosovo without the approval of the UN Security Council (albeit without its opposition either). In 2003 a much attenuated posse invaded Iraq, this time very much against majority opinion in the UN,