World Leadership and Hegemony 9781685853167

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World Leadership and Hegemony

International Political Economy Yearbook, Volume 5 William P. Avery and David P. Rapkin, Series Editors

Board of Editors Jonathan D. Aronson, University of Southern California Richard Ashley, Arizona State University Thomas J. Biersteker, University of Southern California Volker Bornschier, University of Zurich James A. Caporaso, University of Washington Christopher Chase-Dunn, Johns Hopkins University Peter F. Cowhey, University of California, San Diego Robert W. Cox, York University Ernst-Otto Czempeil, University of Frankfurt Alain de Janvry, University of California, Berkeley Judith Goldstein, Stanford University Keith Griffin, Oxford University Hans-Henrik Holm, Aarhus University (Denmark) W. Ladd Hollist, Brigham Young University Raymond F. Hopkins, Swarthmore College Takashi Inoguchi, University of Tokyo Harold K. Jacobson, University of Michigan Robert O. Keohane, Harvard University Stephen J. Kobrin, New York University Stephen D. Krasner, Stanford University Robert T. Kudrle, University of Minnesota Bruce E. Moon, Lehigh University Heraldo Muñoz, University of Chile Lynn K. Mytelka, Carleton University E. Wayne Nafziger, Kansas State University Guillermo O'Donnell, University of Notre Dame Dieter Senghaas, University of Bremen Susan Strange, London School of Economics and Political Science William R. Thompson, Claremont Graduate School F. LaMond Tullis, Brigham Young University Laura DAndrea Tyson, University of California, Berkeley Raimo Váyrynen, Helsinki University Mark Zacher, University of British Columbia

World Leadership and Hegemony edited by

David P Rapkin

Lynne Rienner Publishers

• Boulder & London

Published in the United States of America in 1990 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1990 by Lynne Rienner Publishers, Inc. All rights reserved L i b r a r y of Congress Cataloging-in-Publication Data World leadership and hegemony / edited by David P. Rapkin p. cm. Includes bibliographical references. ISBN 1-55587-189-5 (alk. paper) 1. United States—Foreign relations—1945- 2. United States— Foreign economic relations. 3. United States—Politics and government—1945- 4. United States—Economic conditions—1945I. Title. E744.R37 1990 90-8464 327.73—dc20 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Libary Materials Z39.48-1984.

Contents

List of Contributors

vii

Acknowledgments

ix

1

2

3

4

5

6

7

The Contested Concept of Hegemonic Leadership David P. Rapkin

1

The Turn of Two Centuries: A Comparison of British and U.S. Hegemonies Lars Mj0set

21

The Legitimation of Hegemonic Power G. John lkenberry & Charles A. Kupchan

49

Power, Productivity, and the State: The Social Relations of U.S. Hegemony Mark E.Rupert

71

A Gramscian Concept of Declining Hegemony: Stages of U.S. Power and the Evolution of International Economic Relations Alan W. Cafruny

97

The Emerging Hegemony of Transnational Capital: Trilateralism and Global Order Stephen Gill

119

The G-7 After Hegemony: Compatibility, Cooperation, and Conflict Robert T. Kudrle & Davis B. Bobrow

147

v

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9

Contents Spending, Deficits, and Welfare Trade-Offs: Cause or Effect of Leadership Decline? Karen A. Raster

169

Japan and World Leadership? David P. Rapkin

191

10 The Limits of Hegemony: Capitalism and Global State Formation Christopher Chase-Dunn 11

213

Global Leadership: End Game Scenarios George Modelski

241

References

257

Index

279

About the Book

285

The Contributors

Davis B. Bobrow is dean of the Graduate School of Public and International Affairs, University of Pittsburgh. His most recent book is Policy Analysis by Design (coauthored with John Dryzek). His current research focuses on the evolving international strategies in foreign economic and military affairs of the mid-level powers, with special emphasis on Japan. Alan W. Cafruny is assistant professor of government at Hamilton College. He specializes in international relations and Western European politics, with an emphasis on international political economy. He is the author of Ruling the Waves: The Political Economy of International Shipping. Christopher Chase-Dunn is professor of sociology at Johns Hopkins University. He is the author of Global Formation: Structures of the WorldEconomy, and is currently doing research that compares the contemporary international political cconomy with earlier, smaller intersocietal systems. Stephen Gill is Hallsworth Fellow in Political Economy, University of Manchester, England; from late 1990 he will be associate professor of political science at York University in Toronto, Canada. His publications include The Global Political Economy (coauthored with David Law), Atlantic Relations: Beyond the Reagan Era (editor and contributor), and American Hegemony and the Trilateral Commission. G. John Ikenberry is assistant professor of politics and international affairs at Princeton University. He is the author of Reasons of State: Oil Politics and the Capacities of American Government, coauthor of The State, and coeditor of The State and American Foreign Economic Policy. He is currently working on a book about the spread of liberal state doctrines in the international system. Robert T. Kudrle is professor of public affairs and planning at the Hubert H. Humphrey Institute of Public Affairs, University of Minnesota. He is covii

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editor of The Industrial Future of the Pacific Basin (with Roger Benjamin). His current research concerns the foreign policies of the mid-level powers, U.S. foreign economic policy, and the political economy of foreign direct investment policy. Charles A. Kupchan is assistant professor of politics at Princeton University. He is author of The Persian Gulf and the West: The Dilemmas of Security, and is currently at work on a book about strategic beliefs, strategic planning, and the economic and military dilemmas of empire. Lars Mj0set is research associate at the Institute for Social Research, Oslo, Norway. He is the author of several articles on international political economy, and is c u r r e n t l y c o m p l e t i n g a b o o k titled Modern Hegemonies Compared. G e o r g e M o d e l s k i is p r o f e s s o r of political science at the University of Washington. He is author of Long Cycles in World Politics, coauthor (with William R. Thompson) of Sea Power in Global Politics 1494-1993, editor of Exploring Long Cycles, and coauthor (with Sylvia Modelski) of Documenting Global Leadership. David P. Rapkin is associate p r o f e s s o r and chair of the Department of Political Science, University of Nebraska-Lincoln. In 1988 and 1990, he has been Foreign Scholar at the University of Tsukuba, Japan. He edited (with William P. Avery) America in a Changing World Political Economy and Markets, Politics, and Change in the Global Political Economy. Karen A. Raster is assistant professor of political science at the University of California-Riverside. She is coauthor, with William R. Thompson, of War and State Making: The Shaping of the Global Powers. Mark E. Rupert is assistant professor of political science at the Maxwell School of Citizenship and Public Affairs, Syracuse University. He is the author of a forthcoming article in International Studies Quarterly, as well as several other articles on international political economy.

Acknowledgments

The idea for this volume of the Yearbook arose when we received several submissions for the previous volume that seemed better suited to the subject of leadership and hegemony—my apologies to those authors who thereby have had their manuscripts tied up for an inordinate time. The volume's gestation has been lengthened further by the circumstance of my editing it while in Japan. Notwithstanding the marvels of modern telecommunications technologies, the editor and contributors have suffered frustrations of incompatible hardware and software, failed fax transmissions, and the vagaries of international express mail services. This volume has been enabled by the cooperation of a number of people and institutions. The editor and contributors are especially indebted to our colleagues who assisted with the evaluation of manuscripts: Yutaka Akino, Robert Cox, Michael Doyle, Aurelia George, Joshua Goldstein, Takashi I n o g u c h i , Ikuo K a b a s h i m a , S t e p h e n Krasner, H i d e o Sato, William Thompson, and Harry Wray. Financial support has been provided by the College of Arts and Sciences at the University of Nebraska-Lincoln (UNL). The College of International Relations at the University of Tsukuba has been most generous in its provision of logistical support; Mieko Shinozuka has been especially helpful. So too has Helen Sexton at the UNL end. Indeed, undertaking this volume without her able services in the office next door has deepened my appreciation for the invaluable and cheerful "infrastructure" she provides. My thanks also for the encouragement and support of my colleague and Yearbook coeditor, William Avery; and for the patience, skill, and good h u m o r of Gia H a m i l t o n , p r o j e c t e d i t o r at Lynne R i e n n e r Publishers. David Rapkin

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David P. Rapkin

1

The Contested Concept of Hegemonic Leadership

Surely one of the more peculiar aspects of the concept of hegemonic leadership is that it was not the object of theory or research throughout the very period during which it was most comprehensively and successfully exercised, the first two or three decades after World War II. It began to draw scholarly attention only after certain events in the early 1970s (abandonment of the Bretton Woods system, failure of the Indochinese war effort, the initial OPEC oil shocks) were widely interpreted as signs either of the decline of the leadership position held by the United States in the world system or of deliberate U.S. retreat from the role. Kindleberger's (1973/1986) explanation of the Great Depression as due to a lack of leadership and Gilpin's (1975) comparison of the U.S. case with its nineteenth-century British antecedent were the seminal works that launched what has become a substantial literature. This literature now consists of a range of contending approaches, which differ in terms of theoretical emphases, use of history, characteristic methodologies, normative bases, and implications for the future. The scholarly debate on hegemonic leadership thus has become much wider than the (theoretically subsidiary) issue of recent and ongoing U.S. decline. But the questions surrounding this decline, owing to their immediacy and policy relevance, have remained a central concern. Indeed, by the 1980s the debate had spilled over into the public discourse in the United States and elsewhere, as evidenced by the controversy over decline in the 1988 U.S. presidential campaign and by the extraordinary popularity of Kennedy's (1987a) scholarly tome, as well as other books on the topic (e.g., Calico, 1987; Mead, 1987). Although each of the contributions to this volume bears more or less directly on the topic of U.S. decline, the primary purpose is instead to broaden our understanding of hegemonic leadership as a kind of national role and a type of world system. The chapters reflect the diverse normative, theoretical, and empirical approaches that have emerged after the first wave of (mainly structural realist) studies. This efflorescence of approaches has resulted in hegemonic leadership becoming an "essentially contested 1

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concept"—one that is widely shared but that lacks consensual agreement on its definition and rules of application (Gallie, 1962; Connolly, 1974). More specifically, When the concept involved is appraisive in that the state of affairs it describes is a valued achievement, when the practice described is internally complex in that its characterization involves reference to several dimensions, and when the agreed and contested rules of application are relatively open . . . then the concept in question is an "essentially contested concept." (Connolly, 1974: 10)

The balance of this chapter examines how the concept of hegemonic leadership has become contested in precisely these ways. It describes how each of the following chapters addresses an area of disagreement and thus contributes to the concept's elaboration and refinement. Although the authors' arguments and findings by no means point in a consensual direction a more modest objective has been attempted: "Mutual awareness among adversaries that some of their shared concepts are subject to essential disputes contributes to the intellectual development of all protagonists" (Connolly, 1974: 11).

THE CONTESTABILITY OF HEGEMONIC LEADERSHIP Systematic approaches to social science concept formation typically focus on matters of connotation and denotation (Sartori, 1984). Connotation involves specification of the substantive meanings we assign to terms. What Connolly (1974) calls "internal complexity" refers to a situation of multiple connotations in which those using the concept weight the various connotations differently. Denotation involves determining those real-world objects to which the concept applies. Connolly's problem of relatively open rules of application means that we have difficulty deciding what are actually historical cases or instances of the concept in question. As we will see, both the connotation and denotation of hegemonic leadership are disputed and, in consequence, those employing it "cannot specify an invariant set of necessary and sufficient conditions for the proper application of the concept" (Connolly, 1974: 14). There is yet another sense in which hegemonic leadership is contested: it is an appraisive concept in that some value its practice from a normative point of view whereas others clearly do not. Positivist methodologies attempt to define away this problem by distinguishing between scientific, or descriptive, concepts and normative concepts. The former are supposed to be objective, and operational, and hence not susceptible to such disputes; the latter are designated as a kind of battleground for philosophical and valuebased controversies but, for just this reason, are supposed to be excluded

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from the realm of scientific discourse. As critical theorists have insisted, however, this descriptive-normative dichotomy inescapably collapses for those concepts that are of both theoretical interest and practical import. In Connolly's (1974: 23) terms, "to describe is to characterize a situation from the vantage point of certain interests, purposes or standards."

Hegemonic Leadership as a Normative Concept T h e problem begins with the very terms used to label the concept. 1 Up to this point I have used the phrase "hegemonic leadership", a usage found in some, but not all, branches of the literature. In long-cycle theory, as represented in the work of Modelski (1978, 1987; also Modelski and Modelski, 1988), " w o r l d l e a d e r s h i p " is preferred and the term " h e g e m o n y " is e s c h e w e d altogether. This choice stems from long-cycle theory's positive valuation of the impact of world leadership, with emphasis given to reciprocity of gains b e t w e e n l e a d e r a n d f o l l o w e r s , d i f f u s i o n of e c o n o m i c a n d p o l i t i c a l innovations, minimal use of coercive means, and pursuit of general/systemic interests in order and stability. By contrast, Wallerstein's (1980: chap. 2; 1984: chap. 4) world-system theory uses the single term " h e g e m o n y " to refer to a n o r m a t i v e l y less desirable system based on domination, coercion, exploitation, and inequality, avoiding the term "leadership" or any of the positive qualities others attribute to it. Those approaching the topic from a Gramscian perspective also use the single term hegemony but—although their critical stance is clear—assign to it c h a r a c t e r i s t i c s c o n s i s t e n t with b o t h t h e M o d e l s k i and W a l l e r s t e i n interpretations. Cox (1983: 171), for example, regards a hegemonic world order as one that is "universal in conception, i.e., not an order in which one state directly exploits others but an order which most other states . . . could find compatible with their interests." Such an order entails a particular kind of ideological and cultural dominance, but it is a subtle dominance, based on consent, and should be differentiated from the coercive domination of one state by another. 2 Although certainly far from normatively endorsing the practices of hegemony, the Gramscian school explicitly recognizes and theorizes its generally beneficial aspects. In structural realist and liberal international approaches, the terms hegemony, leadership, and hegemonic leadership are used interchangeably to refer to a state role and a kind of international order (e.g., Gilpin, 1975, 1981, 1987; Krasner, 1976; Keohane, 1980, 1984). Generally favorable normative valuations follow from the order and stability attributed to properly functioning hegemonic systems, although it is acknowledged that the positive aspects of the hegemonic role are a variable feature and are subject to decay and/or abuse. 3 It would be much too simplistic to associate these different approaches to hegemonic leadership with rigid normative positions or to imply that they are locked into value-based quarrels that prohibit c u m u l a t i v e research

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progress. To the contrary, there is considerable common analytical ground across the different schools, and in many ways they have served to inform and enrich one another. Yet it would also be misleading to gloss over these different emphases or to suggest that they are of no theoretical and practical consequence. Even if we painstakingly avoid "prescribing," these consequences arise directly and unavoidably when the implications of our analyses are brought to bear on the current and future course of events. Should U.S. hegemonic leadership be extended, restored, pluralized, supplanted, abandoned, opposed, etc.? As Connolly (1974: 30) states, contests about appraisive concepts such as hegemonic leadership, therefore, "are not just about the concepts of politics but are part of politics itself. For to get others to accept my account of an appraisive concept is to implicate them in judgments to which I am committed and to encourage political activity congruent with those commitments." Consider Cox's (1987: 150) observation that "hegemony, though firmly established at the center of the world order, wears thin in its peripheries." As students from the Third World readily attest, from the vantage point of their countries the results of hegemonic order—for example, the practices of international financial institutions—are not construed as "international public goods"; more generally, they are much more likely than their counterparts from the Northern Hemisphere to challenge the notion of hegemonic order as a positively valued desideratum. Or, to put it differently, one person's hegemonic leadership is another's imperialism. If it is impossible, then, to purge concepts of their contested appraisive dimension, it is crucial that this dimension be explicitly acknowledged rather than swept under the illusory caipet of objective neutrality. What does this injunction imply for those who work with the concept of hegemonic leadership? On the one hand, paraphrasing Keohane's (1988: 380) discussion of international cooperation, "The analysis of hegemonic leadership should not be confused with its celebration." Keohane (1988: 380-381) proceeds to quote a passage from Bull (1977: 98), which is especially germane to our concern with the appraisive dimension of hegemonic leadership and order: "While order in world politics is something valuable, . . . it should not be taken to be a commanding value, and to show that a particular institution or course of action is conducive of order is not to have established a presumption that that institution is desirable or that that course of action should be carried out." 4 On the other hand, just as "exercising power" should not be equated with "causing harm" (Oppenheim, 1981: 51), the exercise of hegemonic leadership (a form of power) and the order it produces should not be reflexively appraised in negative terms. Within these two boundaries, there is no good alternative but to continue an open process of normative disputation.

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Multiple Connotations: The Internal Complexity of Hegemonic Leadership T h e circumstance of multiple connotations would not in itself be a conceptual problem if there were agreement concerning the relative importance of each connotation. But, of course, such agreement does not obtain f o r hegemonic leadership, and, to complicate matters further, each connotation is theoretically e m b e d d e d in a set of related concepts that are themselves c o n t e s t e d . Consider, f o r e x a m p l e , the f o l l o w i n g n o n e x h a u s t i v e list of concepts associated with one or another version of hegemonic leadership: hegemonic power (capabilities), regimes, order, cooperation, international public goods, ideology, class, global or hegemonic war, and long cycles or waves. Each of these is theoretically essential to a particular variant of h e g e m o n i c leadership, yet none is itself unproblematic; that is, none is uncontested in the different ways discussed by Connolly. The initial emphases of the literature came mainly from the structural realist emphasis on material capabilities and from Kindleberger's (1973) conception of world leadership as producing the international public good of stability (which is otherwise undersupplied). All subsequent approaches converge on the broad proposition that the exercise of hegemonic leadership has been enabled by one state's possession of capabilities extraordinary both in their diversity and degree of systemic concentration. 5 Economically, world leaders have enjoyed wide margins of advantage in production of highly v a l u e d a g r o i n d u s t r i a l g o o d s , as w e l l as in c o m m e r c e and a s s o c i a t e d invisibles. They have controlled, or at least maintained access to, raw materials, and they have structured global finance through control of the principal sources of capital. 6 This formulation seems straightforward enough, but conceptual and operational problems arise concerning which of these capabilities are most important, whether all must be present simultaneously, and just how much p r e p o n d e r a n c e vis-à-vis o t h e r states is necessary. And a l t h o u g h s h e e r economic weight is important (largely because of the leverage afforded by being able to manipulate access to lucrative domestic markets), Modelski (1987: 223-224) suggests that the economic essence of leadership lies more in qualitative than quantitative factors: World leaders serve as the source of innovations (especially in transportation, communications, and information), dynamism, and growth for the world economy. Internal complexity intensifies when military-strategic capabilities are factored into the hegemonic capabilities equation. What kinds of military capabilities are required, in what relative quantities, and how much weight should they be assigned in relation to economic capabilities? It is reasonable to say that almost all approaches accord primary theoretical importance to the economic capabilities necessary to exercise hegemonic leadership in the world economy; the military requisites of the hegemonic role are treated in a

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residual, much less specific fashion. The important exception is long-cycle theory, wherein capabilities of "global reach" (sea power and, more recently, air and space power) are theoretically central and, accordingly, have been given considerable operational specificity (Modelski and Thompson, 1988). In sum, those connotations addressing the material requisites of hegemonic leadership—just one facet of the concept's internal complexity—are contested. So, too, are the connotations representing the other initial thrust of the literature—that focusing on international public goods as the principal product, or output, of hegemonic leadership. The connection between these two sets of connotations is that the hegemonic leader's preponderant capabilities and advantages are argued to yield surplus resources, which then can be invested in the production of various international public goods. The hegemon's large stake in the stability and prosperity of the overall system provides the incentives for bearing the costs of supplying these scarce goods. Because this interpretation leads to the claim of widely shared benefits, which in turn undergirds positive normative appraisals of hegemonic leadership, it is a critical area of dispute. In his original formulation, Kindleberger (1973/1986) attributed the depth and duration of the Great Depression to British inability and U.S. unwillingness to provide the leadership function of stabilizing the international economy. Stability was construed as an international public good consisting of maintaining open markets for distress goods, providing countercyclical capital flows, and serving as a lender of last resort in crisis periods. In subsequent works, Kindleberger (1976, 1981, 1986) has expanded the list to include macroeconomic coordination, and stable international monetary and trading systems. Money and trade, as well as other functional issue areas in the world economy, have received considerable attention in applications of the argument to the post-1945 U.S. case. At this point several tendencies can be identified. One has been to disaggregate hegemonic order into issue-specific regimes, defined as "principles, norms, rules and decision-making procedures around which actors' expectations converge" (Krasner, 1983: 2). 7 Following Kindleberger's logic, the creation of regimes is held to be much more likely under the auspices of a hegemonic leader, but the maintenance of regimes in the face of hegemonic decline is taken to be a more open-ended question (Keohane, 1984). As Snidal (1985) notes, regimes, as components of order, are often presumed—sometimes explicitly, sometimes implicitly—to be international public goods with normatively desirable distributional consequences. The other tendency is toward more diffuse application of public goods reasoning to the hegemonic provision of stability, security, peace, and hegemonic order itself. These properties are somewhat diffuse to begin with; when loosely presumed to be international public goods and associated with the presence of a hegemon (e.g., Gilpin, 1981), their diffiiseness is amplified

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throughout the conceptual framework built around hegemonic leadership. 8 The use of public goods theory in the hegemonic leadership literature has been contested on a variety of technical grounds. 9 The most common criticism is that hegemonic regimes, particularly in trade, do not satisfy the public goods criterion of nonexcludability insofar as states can be excluded from the benefits the regime provides (Conybeare, 1984; Stein, 1984; Russett, 1985; Snidal, 1985). 10 It is also argued that an economically rational hegemon would gain more by imposing an optimum tariff than by seeking to construct a free-trade regime (Conybeare, 1984). Another, more fundamental criticism contests what Snidal (1985: 593) views as a hidden assumption that "collective action is impossible," thus implying that cooperation among states to provide public goods will not occur in the absence of a hegemonic leader. 11 One can agree with Gowa's (1989: 323) conclusion that these criticisms "have not . . . deprived hegemonic stability of its analytic base," while allowing that they have served to trim the more expansive claims concerning the relationship between hegemonic leadership and the publicness of the order it creates. T h e criticisms also have had the salutary e f f e c t of compelling more rigorous use of public goods logic. Furthermore, these disputes are an additional demonstration of the internal complexity of the hegemonic leadership concept. Yet, with the exception of Wallersteinian world-system theory, the connotational disputes discussed so far can be regarded as "in-house" disputes, conducted largely within a research tradition that is bound substantively by structural realism and liberal internationalism and epistemologically by positivism and rationalism. The most substantial revision to the meaning of hegemonic leadership has come from outside these boundaries, from the critical, historical materialist perspective derived from the work of Gramsci and developed by Cox (1981, 1983, 1987; see also Gill, 1986b, 1989). This perspective is well represented in subsequent chapters, so it will be given only cursory description here. Briefly, Cox's version of hegemony consists of a historical structure in which ideas, material capabilities, and institutions are congruent. The interaction among these elements of historical structure takes place across three interrelated levels: social forces emanating from the organization of production; forms of state, manifest in what Cox calls state/society complexes; and world orders. If it is fair to summarize the prevailing orthodoxy in terms of emphases on states, their material capabilities, and the systemic distribution of state capabilities (leavened recently by the institutionalist concern with regimes), Cox adds to these the traditional historical materialist focus on social forces and the Gramscian interest in ideas (values, theories, ideology). Cox's conception of social forces is broader and more interesting than the usual Marxist preoccupation with class struggle; it encompasses, for example, the ongoing process of the transnationalization of capital and

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production and the interaction of this process with contemporary forms of state and world order. But it is the central importance of ideas that adds constructively and uniquely to the internal complexity of the hegemonic leadership concept. In Cox's (1987: 7) formulation of hegemonic world order, The dominant state creates an order based ideologically on a broad measure of consent, functioning according to general principles that in fact ensure the continuing supremacy of the leading state or states and leading social classes but at the same time offer some measure or prospect of satisfaction to the less powerful.

Absent the cement provided by the hegemony of an ideology that fits with the prevailing configuration of material capabilities and institutions, and that rationalizes the social forces and forms of state and world order, we are left with an incomplete picture of a world of state actors grinding against one another in patterns determined by their relative capabilities. Some periods indeed resemble this picture, but not periods of hegemonic leadership, which consist of more than secondary states being induced or coerced into cooperating under the auspices of hegemonic regimes. In sum, the concept of hegemonic leadership is internally complex in the first sense of carrying multiple m e a n i n g s : d i f f e r e n t types of material capabilities, the relation of these capabilities to institutions alleged to supply generally beneficial international public goods, and the consensual glue found only in the realm of ideas. It is also internally complex in the sense that disputes over the validity and salience of these meanings "are surface manifestations of basic theoretical d i f f e r e n c e s that reach to the c o r e " (Connolly, 1974: 21).

Open Rules of Application: Historical Instances of Hegemonic Leadership The final sense in which hegemonic leadership is essentially contested involves disagreement over what periods have been (are) actual instances of the concept, that is, "the real-world counterparts . . . of the world in our head" (Sartori, 1984: 24). Two questions are at issue here: (1) how many historical cases have there been, and (2) are we still in the most recent case? In light of the fact that there are at the outer limit only a handful of cases for comparison and generalization, these disputes are critical from almost any methodological standpoint. Space does not allow detailed consideration, let alone resolution, of these questions, so I will simply sketch the axes of disagreement without probing the theoretical differences that underlie different /V-sizes or different periodizations of the same case. There is unanimous agreement that the post-1945 period has been one of

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U.S. hegemony. Aside from some regime analyses that count this as the only full-fledged case, there is wide agreement that nineteenth-century Great Britain also qualifies (although Chapter 2 suggests that it is more problematic than is often thought). Prior to this point in time, the field thins out rapidly for most analysts; seventeenth-century Netherlands is excluded on grounds of lacking preponderance by all but Modelski, Wallerstein and Goldstein (1988). Only Modelski, whose theoretical perspective is evolutionary, recognizes more than three cases; primarily on the basis of sea power, Modelski identifies sixteenth-century Portugal (as a partially formed embryonic case) and eighteenth-century Britain as instances of world leadership. The second question returns us to the topical matter of U.S. hegemonic decline: has the United States declined and, if so, has it declined below the minimal threshold of hegemonic leadership? This is an extremely complex question that engages all the theoretical issues raised above as well as a number of others. It is also a process that we must examine with the impaired vision that results from being too close to its unfolding (i.e., without benefit of hindsight). There is wide but not u n a n i m o u s agreement that U.S. h e g e m o n i c leadership has undergone a significant degree of decline, and somewhat less widespread agreement that, if it has not already fallen from the hegemonic position, its days are in any case numbered. A small but diverse minority insists that U.S. decline has been greatly exaggerated and that it is either still viable or capable of restoration (Strange, 1987; Russett, 1985; Gill, 1986b; Nye, 1988; Huntington, 1988/1989; Modelski, Chapter 11, this volume). Definitive answers to the question of U.S. decline likely will have to await another generation of scholars. Perhaps it will be the subject of a future volume of this Yearbook. For now, I point out that this question remains so " o p e n " precisely because of the openness of the hegemonic leadership concept's criteria of application, and that this problem is intrinsically related to the other ways in which the concept is essentially contested. Beyond that, I will free the reader to be swayed one way or the other by the arguments of the contributors to this volume.

THE CONTRIBUTIONS The chapters are arranged in rough chronological order, beginning with United States-Great Britain comparisons, moving to consideration of earlier and current issues surrounding U.S. hegemonic leadership, and concluding with perspectives on the future. The Gramscian emphasis is represented in the first half of the volume. Lars Mjoset's comparison of British and U.S. hegemonies in Chapter 2 examines first the economic structure of productive forces (consisting of the international division of labor and prevailing technological paradigms within

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which they occurred), and then their principal regimes (trade, money, and security). T h e nineteenth century was characterized by multiple national systems of innovation and an extensive model of accumulation. Competition among the core industrial states (and their respective innovation systems) took place in a division of labor organized into vertical zones; each was highly dependent on trade with its zone in the periphery. In the post-1945 system, by contrast, the intensive accumulation associated with the Fordist national innovation system developed in the United States was pervasive throughout the core of the world economy. This dominance resulted in a horizontal division of labor with much greater interdependence among the core states and a less integral role for the periphery. The British-led trade and monetary regimes were more spontaneous and less a product of conscious design than the U.S. regimes. Moreover, the nineteenth-century regimes, particularly in money, afforded Great Britain much less structural power and freedom to act parochially than the United States h a s e n j o y e d . But M j o s e t ' s most important finding emerges from comparison of the interrelationships among the three regimes in the two hegemonies. In Great Britain's hegemony the core capitalist states were engaged in competition that was simultaneously economic and geostrategic. By contrast, economic competition across the capitalist core in the U.S. hegemony has not converged with military competition; rather, these same states have been allied against a commonly perceived external threat. 1 2 Mjoset concludes that this insulation of economic and military competition makes it unlikely that the present system will deteriorate into global war as did the British hegemony. Although both are clearly instances of hegemony, M j o s e t p o i n t s to s i g n i f i c a n t d i f f e r e n c e s that have b e e n overlooked in previous comparisons. In their exploration of legitimacy as a source of hegemonic power, G. John Ikenberry and Charles Kupchan point out that the realist tradition, although strongly emphasizing material capabilities, has also been concerned with the ideological and normative dimensions of power. They argue that this c o n n o t a t i o n a l w e i g h t i n g is c o m p l e m e n t a r y to and compatible with the Gramscian focus on ideational forces, and proceed to meld the two approaches in a comprehensive model of how "might" and "right" are combined to produce what they term "legitimate domination." There are scant formal-legal bases for legitimacy in the world political system, so legitimate domination instead rests on a process of learning and socialization to bring about a convergence of value orientations of secondary states with those of the hegemon. In the most thorough case, the secondary states' definitions of their interests are transformed so as to be consistent with the hegemon's normative conception of world order; changes in value orientations precede changes in the secondary states' policies. Alternatively, policy c o m p l i a n c e initially may be " c o e r c e d " by the h e g e m o n through positive inducements (side payments), with normative convergence

The Contested Concept

11

occurring later. Both of these paths to legitimate domination are distinct from situations in which a more powerful state coerces compliance through some mix of sanctions and inducements but no normative convergence takes place. Ikenberry and Kupchan apply this framework in two case studies: the successful post-1945 efforts of U.S. policymakers to shift the normative orientations of West European elites toward liberal multilateralism; and, efforts by Britain to introduce Western political values in nineteenth-century India. The first was an instance of normative persuasion preceding changes in policies and practices. In the Indian case, in which there was very little by way of preexisting shared culture or values, forceful policy coercion at the outset was followed by eventual acceptance, indeed internalization, of the political norms and principles introduced by the British. Ikenberry and Kupchan conclude that legitimacy is an important dimension of hegemonic p o w e r t h a t is not n e c e s s a r i l y c o r r e l a t e d with c h a n g e s in its m a t e r i a l dimensions. Preponderant capabilities, as traditionally conceived, may not be accompanied by legitimacy, or legitimacy may persist beyond the point at which preponderance in material forms of power is lost. In C h a p t e r 4, Mark R u p e r t ' s h i s t o r i c a l - s t r u c t u r a l analysis of U.S. hegemony fills another lacuna left by the realist emphasis on the material aspects of hegemony. Following Cox's (1981, 1987) view of hegemony as a complex of social relations that stretches from the local to the global level, Rupert describes the changes in the social organization of production that established the dominance of the Fordist accumulation model within the United States; these changes were a necessary precondition for the extemalization of this model across the core of the world economy, and thus also for the creation of global hegemony. From this standpoint, the basis for U.S. hegemonic power can be traced to the point of production, that is, to the factory floor, where Fordist mass production technologies required a more consensual, less coercive form of capitalist dominance. Skilled workers and their control over the production process were displaced by a kind of b u r e a u c r a t i z a t i o n of the realm of production. Workers' capacity for class-based political action was minimized, and class struggle was de-ideologized and transformed into a matter of bureaucratic and legal administration of the collective bargaining process. The role of the state in mediating class conflict was thereby greatly enlarged. And, as Mjoset also points out, the mass consumption side of the F o r d i s t e q u a t i o n was i n s t r u m e n t a l in r a t i o n a l i z i n g t h i s " p o l i t i c s of productivity" formula to disempowered and individuated workers. Maier (1978) has shown how the U.S. state, aided by the considerable resources at its disposal in the immediate postwar period, transplanted the " p o l i t i c s of p r o d u c t i v i t y " to W e s t e r n E u r o p e and J a p a n . R u p e r t h e r e demonstrates that this reconstruction of the core of the world economy along lines consistent with U.S. designs for world order was enabled by forms of power that have been left unaddressed in realist theories. These forms of

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h e g e m o n i c p o w e r derived f r o m a c o m p l e x n e t w o r k of social relations e x t e n d i n g f r o m f a c t o r y f l o o r to the global level, and not s i m p l y from possession and international exercise of preponderant material capabilities. In Chapter 5, Alan Cafruny applies Gramscian ideas to the evolution of h e g e m o n i c world o r d e r over the p o s t w a r p e r i o d . As do Ikenberry and K u p c h a n , C a f r u n y s u g g e s t s t h a t r e a l i s t ( o b j e c t i v e ) and G r a m s c i a n (subjective) versions of hegemonic power are not as disparate as commonly thought. Cafruny combines the two approaches by utilizing the ideal-typical categories of integral, declining, and minimal hegemony (Gramsci, 1971; F e m i a , 1981) to p r o d u c e a t h e o r e t i c a l l y and e m p i r i c a l l y m e a n i n g f u l periodization of U.S. hegemony. Each type/period describes a particular configuration of authority relations, including the degree of ideological consensus and characteristic political and economic forms. Integral hegemony describes the strongest and most stable type: a high degree of ideological consensus obtains, antagonisms are at a minimum, and the h e g e m o n is able to i m p l e m e n t policies that s a t i s f y the interests of secondary states as well as its own "economic corporate" interests. Cafruny demarcates 1944-1960 as the period of integral hegemony. The abundance of power resources in the United States enabled it to pursue policies that satisfied general interests, and consensus prevailed around the ideas of the "politics of productivity," Keynesian macroeconomic management, and the necessity of containing the Soviet Union. With the economic recovery of Western Europe and Japan and the emergence of disputes over the role of the dollar, 1960 marked the transition to a period of declining hegemony. The United States became less able and willing to bear the costs and make the concessions necessary to continue satisfying simultaneously its o w n and others' interests. Conflicts of interest between h e g e m o n and secondary states became more overt and subject to hard bargaining. U.S. abandonment of the dollar-gold standard in 1971 signaled the shift to a period of minimal hegemony, which has persisted to the present. U.S. l e a d e r s h i p h a s given w a y to pursuit of n a t i o n a l , rather than systemic, interests; contradictions and conflicts in money, trade, and other functional areas have deepened and become more overt; and the original ideological consensus has seriously deteriorated. Although the present system suffers from drift and instability, it is not nonhegemonic, that is, it has not broken down altogether. In Stephen Gill's analysis, presented in Chapter 6, Cafruny's period of minimal h e g e m o n y has constituted a turning point in the postwar world s y s t e m f r o m the h e g e m o n y of a single state, t h e U n i t e d States, to an emerging hegemony of internationally mobile, or transnational, capital. This transition has generated contradictions b e t w e e n transnational economic forces and political forces that are still organized on a national (territorial) b a s i s . G i l l e x t e n d s the G r a m s c i a n f o c u s by e x a m i n i n g the T r i l a t e r a l C o m m i s s i o n ' s e f f o r t s t o m a n a g e t h i s t r a n s i t i o n , to r e c o n c i l e the in-

The Contested Concept

13

congraencies between economic and political forces, and to construct the ideational foundations for a new, transnationalized form of hegemony. The Commission, a private international relations council, reflects an embryonic "global civil society" comprised of those economic elites associated with, and political elites and intellectuals supportive of, the most internationalized, economically liberal segments of capital. From Gill's historical materialist perspective, the Commission's membership represents a nascent synthesis of the material capabilities, institutions, and ideas appropriate to an eventual hegemony of transnational capital. Its main objective is to generalize and legitimize this synthesis in order to restore the ideological consensus lost in the period Cafruny conceptualizes as minimal hegemony. Gill proceeds by first describing the composition of the Trilateral Commission's membership and networks, its procedures, and its characteristic ideas. The heart of the chapter summarizes the Commission's agenda —the various world order issues and problems it has addressed—and the main lines of debate over these issues since its inception (not coincidentally f r o m the standpoint of C a f r u n y ' s periodization, in 1972). A l t h o u g h significant differences have certainly existed within the Commission, Gill stresses the importance of the trilateral process in minimizing frictions and forging shared concepts, strategic consciousness, and transnational networks of identity and interest. Robert Kudrle and Davis Bobrow assess the current state of, and future prospects for, cooperation among the Summit Seven (G-7) countries in Chapter 7. Although they acknowledge that the patterns of cooperation that characterized the zenith of U.S. hegemonic leadership are not likely to be restored, their review of cooperative efforts in the critical issue areas of exchange rates and macroeconomic compatibility, economic protection, and security reveal that the "sky is not falling." Moreover, present cooperative arrangements among more equal G-7 partners are closer to the true meaning of the term cooperation than the prior hegemonic "U.S.-dominant, everyoneelse-subordinate" arrangements. These earlier patterns, which were in any case far from perfect, are often reified into a "golden age" of cooperation that is then unrealistically extrapolated as a standard of comparison. Kudrle and Bobrow's conceptual framework for assessing the likelihood of cooperation emphasizes policymakers' expectations of costs and benefits across a weighted function of four state goals: security, autonomy, prosperity, and assertion. Their guardedly optimistic findings stem from their estimate that policymakers expect, and will continue to expect, the benefits of cooperation on balance to exceed the costs by an acceptable margin. In the area of e x c h a n g e rate m a n a g e m e n t and m a c r o e c o n o m i c compatibility, Kudrle and Bobrow point out that the principal complaints with the post-Bretton Woods, flexible rate "nonsystem"—exchange rate instability and, /more seriously, misalignment—stem more from irresponsible

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U.S. policies than from inherent obstacles to cooperation in the system itself. They also contend that in any event international cooperation can improve only marginally on independently sound national macroeconomic policies. With respect to e c o n o m i c protection, the authors acknowledge the negative impact o f the U.S. retreat from leadership of the GATT regime and o f the frequency o f strong domestic interests in protectionist policies in various G-7 countries. But they also stress that there has been no wholesale a b a n d o n m e n t o f the G A T T , which has always b e e n s u b j e c t to g r o s s exceptions due to domestic pressures. Expectations that recent trends toward b i l a t e r a l and r e g i o n a l t r a d i n g a r r a n g e m e n t s w i l l lead to i n c r e a s e d protectionism are premature; they may instead serve to facilitate further liberalization. In security policy, Kudrle and B o b r o w present a strong c a s e that cooperation among the G-7 members is increasingly viable. With regard to U . S . allies, greater security burdens have been assumed, bilateral and multilateral coordination in force planning has been attained, standardization and interoperability have been increased, and the defense technology base has been collaboratively modernized. Recent and likely future changes in Soviet policies that serve to reduce perceived threat will strengthen this conclusion. Kudrle and Bobrow conclude that posthegemonic cooperation seems to be proceeding apace, counter to the dire predictions o f Gilpin ( 1 9 8 7 ) and others. Whether or not one regards the goods produced by this cooperation as "public goods," their production will be sustained. Although there is and will continue to be discord, independent policies, and suboptimal production of international public goods, these are not novel developments and they do not imply chaos or crisis. In Chapter 8, Karen R a s l e r directly addresses the question o f U . S . decline by examining empirically one of the broad hypotheses purported to account for it: the "investment squeeze" hypothesis, which attributes the long-term downturn in U . S productivity growth to trade-offs between national spending and deficits, on the one hand, and investment, on the other. Rasler identifies three versions o f this hypothesis: capital shortage and profit squeeze, the crisis of advanced capitalism, and the dilemmas o f world leadership decline. Despite being generated from quite different theoretical and ideological perspectives, these hypotheses have converged on the arguments that productivity problems are a telltale indicator o f decline and that these problems are caused by profligate macroeconomic policies that suppress capital investment. Rasler operationalizes annual changes in capital investment, national spending (welfare, defense, and total), deficits, and profit rates over the 1 9 4 8 - 1 9 8 6 period, and uses time series regression models to determine if the central premise shared by these arguments is empirically supported. The key to these tests is whether the results are consistent across the entire period and

The Contested Concept

15

both the pre- and post-1966/1970 subperiods; the former covers the boom era of U . S . growth and productivity, and t h e latter, of course, the stage of d e c l i n e . If strong negative relationships o b t a i n only f o r the p o s t - 1 9 7 0 subperiod, it is difficult to attribute causal effects to the spending and deficit variables. To b r i e f l y s u m m a r i z e R a s l e r ' s six t a b l e s of f i n d i n g s , the t e m p o r a l i n c o n s i s t e n c y of the results d o e s not s u p p o r t t h e i n v e s t m e n t s q u e e z e hypotheses. The general pattern is that the expected negative relationships obtain for the entire period, statistically insignificant relationships characterize the earlier subperiod, but much stronger, statistically significant relationships are consistently found for the later subperiod. Hence, U.S. decline, at least insofar as it is reflected in slow productivity growth, is not explained by expanded government spending and deficits. Rasler concludes that the appearance of these trade-offs between spending and investment a f t e r 1966/1970 is instead either e f f e c t or s y m p t o m of less p r o x i m a t e , broader processes of decline that began to unfold earlier in the postwar era. In C h a p t e r 9, D a v i d R a p k i n e x a m i n e s t h e p r o s p e c t s f o r J a p a n undertaking world leadership activities. With the unilateral leadership role of the United States circumscribed by s o m e c o m b i n a t i o n of inability and unwillingness, and with Western Europe likely engrossed in intra-European m a t t e r s f o r t h e short- to m e d i u m - t e r m f u t u r e , J a p a n f a c e s e s c a l a t i n g pressures to deploy its considerable and rapidly mounting resources to world order purposes. At the same time, Japan's substantial stake in the prosperity and stability of the world system—arguably the largest stake among the core capitalist states—would seem to provide the incentives for a self-interested J a p a n to a t t e m p t to shape m o r e a c t i v e l y and c o n s t r u c t i v e l y its world environment. Like it or not, the weight of Japan's economic capabilities and activities is sufficient to consequentially affect this environment and others in it. Yet a long list of formidable internal and external constraints stands in the way of Japan's departure from its cautious, low-profile foreign policies and assumption of a world role commensurate in scope and responsibility to its wealth and dynamism. Several of the previous chapters stress the importance of legitimacy to world leadership; Rapkin argues in Chapter 9 that Japan suffers from a multifaceted "legitimacy deficit" among potential followers, as well as among those states with which it might be expected to jointly undertake leadership activities. The legitimacy deficit is a product of the legacy of militarism and colonialism, a reputation as the exemplar of successful neomercantilism, and a widely perceived inability to articulate universalizable norms, values and ordering principles. Internal constraints, which derive from various aspects of Japan's culture, society, and politics, may be even more intractable than the external ones. Nonetheless, there are certain signs that Japan has begun to play a more constructive "system supporter" role in the areas of foreign aid, security,

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moderation of its exports, stimulation of domestic demand, and liberalization of its i m p o r t and f i n a n c i a l m a r k e t s . R a p k i n c o n c l u d e s b y n o t i n g t h e extraordinarily short time frame within which Japan is expected to assume leadership activities, and by pointing to the possibility that failure to alter its world role more rapidly may precipitate others resorting to "managed trade" policies to cope with the competitive challenge Japan poses. In sum, the world order implications of Japan's rapid ascent remain highly uncertain. Christopher Chase-Dunn argues in Chapter 10 that the kind of order and stability that is historically associated with h e g e m o n y is transitory and punctuated with extremely destructive global wars. Because the lethality of contemporary technologies of destruction is so great as to raise the specter of species extermination, we can no longer risk the violence associated with the rise and fall of hegemonic states. From this line of reasoning, Chase-Dunn arrives at the necessity of establishing some form of world state. The chapter first reviews the extensive literature on civilizations and the evolution of political organization. There has been a long-run trend toward increasingly larger political units, although this evolutionary path has not been unilinear, rather, owing to oscillations between interstate systems and universal empires, it has been cyclical and stair-like. The unusual duration of the m o d e m interstate system, however, indicates that this alternating pattern has been interrupted—a d e v e l o p m e n t that C h a s e - D u n n attributes to the dominance of the capitalist m o d e of production. Mobility is essential to capital, and the political influence of capitalists has prevented the emergence of u n i v e r s a l e m p i r e s and a r r e s t e d o t h e r t e n d e n c i e s t o w a r d g l o b a l l y centralized political authority that would have curtailed the mobility of capital. T h e interstate system as a necessary structural foundation for the operation of capitalism thereby has been preserved. The previous pattern of alternation between interstate system and empire has been replaced since the inception of global capitalism by a hegemonic sequence: particular states rise, emerge dominant from global war, create h e g e m o n i c world orders, and eventually decline, with h e g e m o n i c order d e t e r i o r a t i n g into a n o t h e r global war. C h a s e - D u n n a c k n o w l e d g e s that hegemonic orders have been periods of stability, world economic growth, and relatively less warfare, but points out that the duration of such orders is relatively brief. Extrapolation of this sequence into the future suggests that continued U.S. decline will lead to another global war to resolve conflicts arising out of the redistribution of economic advantage. This prognosis, when joined with the mass destruction of nuclear weaponry, leads to the urgent prescription that the h e g e m o n i c sequence, which legitimizes and r e p r o d u c e s the s t r u c t u r a l b a s i s of w a r f a r e , be r e p l a c e d . C h a s e - D u n n concludes by exploring alternative strategies for the creation of a world state to control political violence. In the final chapter, George Modelski uses long-cycle theory to distill historical lessons about leadership and order that are rather different and

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more optimistic than those issuing from declinist perspectives. Modelski first critiques the conceptualization and policy implications of Kennedy's (1987a) influential history of the rise and decline of great powers, and then turns to democratization as a fundamental, although often overlooked, evolutionary process of the world polity, which offers promise of a normatively desirable world order. M o d e l s k i ' s conceptual critique centers on the failure to distinguish continental from oceanic powers in Kennedy's definition of great powers. This category mistake results in lessons being drawn for the contemporary United States from the experiences of Hapsburg Spain and other continental powers. These experiences are far less relevant to the present circumstances of the United States than is the lineage of oceanic states, including the Netherlands and especially Great Britain. Rather than the declinist analogy with the "Victorian sunset" of late nineteenth-century Britain, Modelski suggests that the "Georgian transition" accomplished by late eighteenthcentury Britain is a more appropriate model. In the Georgian transition, Britain renewed itself and the basis of its leadership, and positioned itself to address the world order problems of the impending century—precisely the challenges faced today by the United States. M o d e l s k i also c r i t i c i z e s K e n n e d y ' s ( 1 9 8 7 a ) o v e r e m p h a s i s on the material bases of great p o w e r status (economic growth and its military c o n s e q u e n c e s ) and c o r r e s p o n d i n g neglect of subjective factors such as identity, knowledge, learning, and legitimation. 1 3 This subjective side of power has been manifest in the evolutionary process of democratization, which has progressed to the point where the emergence of a Kantian peace community is no longer a hopelessly Utopian vision. Not coincidentally, this process has been advanced by the oceanic powers that have served as world leaders and which themselves have been laboratories of democratic practice. Democracy is the optimal "technology of collective choice" and hence is the best means to organize the networks of cooperation necessary to solve the world order problems of the twenty-first century: avoidance of global war, integrating the world community, and protecting the environment. The United States, with its unique attributes, diverse resources, and democratic experience, is well qualified to continue its leadership in search of solutions to these problems. Modelski concludes that the role of world leadership, however, will become more institutionalized and more specialized on global (rather than regional) tasks, and will evolve toward more pluralized forms.

CONCLUSION The theory and research reported in this volume certainly indicate that the concept of hegemonic stability is essentially contested. Although application of the thesis of essential contestability m a y not point the w a y t o w a r d

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resolution of conceptual disputes (Ball, 1988: 14), it does provide a useful way to "take stock" and make explicit that which is contested. This introductory chapter has sought to accomplish these more modest objectives and to locate the chapters within the contested conceptual terrain. The Gramscian concern with the ideation of hegemonic leadership clearly has forced its way into the concept's connotation, with consequences that confirm Connolly's (1974: 21) claim that "revisions that follow conceptual debates involve a shift in the theory that has housed the concepts." But we also must face the problems of commensurability and cumulation that inevitably result from the ontological, epistemological, and theoretical diversity that currently describes the concept. These problems are especially acute in relation to the kinds of subjective factors Gramscian theory has pushed to the fore. Keohane's (1988: 382) assertion in relation to the concept of institutions applies equally to the related concept of hegemonic leadership: "It will not be . . . fruitful indefinitely to conduct a debate at the purely theoretical level, much less simply to argue about epistemological and ontological issues in the abstract." Yet the epistemological issues do not simply go away, no matter how ardently we may go about our research. The contributions to this volume advance the respective research programs from which they derive and, to a lesser extent, indicate how the differences between research programs can be bridged. But until we agree on the prior question of what kind of knowledge "sticks to our epistemological ribs," it will be difficult to clear the contested conceptual thicket surrounding hegemonic leadership.

NOTES 1. For a fuller discussion of these terminological issues, see Rapkin (1987); Goldstein (1988) and Thompson (1988) provide useful discussions of the different conceptual approaches outlined here. This chapter uses the c o m p o s i t e term, "hegemonic leadership"; however, the title of the volume, World Leadership and Hegemony, separates the two terms so as to not identify any of the contributors with an unintended perspective. 2. At one point Cox (1983: 170) argues that the term "dominance" should be reserved for what Chinese leaders term Soviet "hegemonism," that is, outright dominance among states and/or the meanings associated with the term "imperialism". (Note that the terminological problem appears in the language of diplomacy as well as in scholarly discourse.) 3. See Kindleberger's (1981) discussion of the difficulties in distinguishing between dominance and leadership. Snidal (1985: 614) criticizes the presumption of benevolent, w i d e l y beneficial h e g e m o n y and contends that h e g e m o n y may be "benevolent, coercive but still beneficial, or simply exploitative." 4. Strange (1982a) criticizes the predilection for order found in the literatures on hegemonic leadership and international regimes.

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Concept

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5. For comparative discussion of different specifications of hegemonic capabilities, see Rapkin (1987: 139-144) and Thompson (1988: 113-124). 6. These components of hegemonic power are drawn from Wallerstein (1984: 38-39) and Keohane (1984: 32-33) who, although operating from quite different theoretical perspectives, largely converge on the definition of economic hegemony. One important distinction, however, is K e o h a n e ' s emphasis of " c o m p e t i t i v e advantages in the production of highly valued goods . . . involving the use of complex or new technology"; this stipulation highlights the qualitative factors discussed below. Also, Wallerstein (1984) adds specificity by hypothesizing a sequence in which hegemonic superiority is gained and subsequently lost: production, commerce, finance. Hegemony obtains only during that period when advantage is simultaneously held in all three. 7. For development and application of the regime concept, see Keohane and Nye (1977), Keohane (1980, 1982, 1984), Haas (1980), and the selections in Krasner (1983.) 8. Gilpin's (1987: 86-92) response to criticisms of his use of public goods reasoning acknowledges that they weaken the argument for the necessity of a hegemon. 9. These criticisms, as a set, are most fully developed in Snidal (1985); Gowa (1989) provides a useful summary, as well as a spirited rebuttal. 10. A less damaging criticism is that the goods produced by hegemonic regimes do not meet the " p u b l i c n e s s " criterion of jointness, that is, that one state's consumption of the good does not diminish the supply available to others (Snidal, 1985). 11. See, for example, Kindleberger's (1976: 37) pessimistic assessment of the prospects for collaborative leadership by the United States, Japan, and West Germany. Gilpin (1987: chap. 10) is also skeptical about the likelihood of pluralist leadership and policy coordination. Keohane's (1984) analysis offers a more sanguine view; see also Axelrod and Keohane (1986) and Chapter 7 in this volume. 12. For an earlier observation along these same lines, see Stein (1984: 380). 13. It should be noted that M o d e l s k i ' s long-cycle theory, although not Gramscian in orientation, has always been attentive to many of the subjective Gramscian concerns.

Lars Mj0set

2

The Turn of Two Centuries: A Comparison of British and U.S. Hegemonies

The comparison of British performance at the turn of the century and the fate of the United States in the 1970s and 1980s has been a popular approach to analyzing "hegemonic decline." The focus of most of the literature seems to be a search for similarities, perhaps motivated—at least in the United States—by the desire to avoid those factors that caused or accelerated British decline and, more generally, to shed some light on contemporary prospects for and hindrances to international cooperation. But failure to recognize significant differences between the two hegemonies and their respective periods runs the risk of facile comparisons and theoretically and practically flawed conclusions. While acknowledging that the British and U.S. cases are indeed both instances of the phenomenon of hegemony, this chapter aims to elucidate significant differences between the cases, and thus to induce some caution in their comparison. Most of the contributions to the debate on hegemony and hegemonic stability have been strikingly selective, taking one issue area (e.g., trade, money, or security) as paradigmatic.> In contrast, the approach pursued here is multicausal, in line with much recent neo-Weberian historical sociology and neo-Marxist political economy. Although a Kondratieff-wave chronology—as specified in the next section—has often been applied in the study of hegemonies, the following analysis relies on a framework that is both looser and more disaggregated. The notion of cycles is replaced by the notion of periods. The usually aggregated indicators of military and economic power are disaggregated and there is no attempt to apply the distinction between tangible and intangible resources. Indicators of great power resources such as numbers of warheads, rockets, engineers, size of GNP, industrial production, etc., are of interest only if they can be related to institutional and structural mechanisms that tell us something about the ability of a country to use its resources. Hegemony is defined here as a relationship of legitimate domination exercised by one country over the other great powers of the core of the world economy. In the era of industrial capitalism, the sources of hegemonic 21

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Mj0set

dominance may be divided into two major categories: real resources (productive forces) and institutional influence (power). These two dimensions are specified in the international column of Table 2.1. The hegemonic country is the heaviest single unit in the international division of labor, measured, for example, by its share of world trade. Furthermore, this country has a major share of world manufacturing production, dominating in the most advanced and efficient production processes. In other words, the hegemonic country is the source country of the decisive technological and institutional innovations that define the leading sectors of the relevant period. The diffusion of these innovations to follower countries is one of the major socioeconomic processes spurred by hegemonic dominance. This diffusion involves an influence by the hegemonic country on the national models of the follower countries, as seen in the national column of Table 2.1. The hegemonic country also exerts a decisive influence on constitutive international regimes: agreements concerning trade liberalization (the trade regime), the organization of the international monetary system (the monetary regime), and the network of security alliances (the security regime). Table 2.1 A Framework for the Analysis of Hegemony

Economic structure (productive forces)

International Level

National Level

International division of labor

Position in the international division of labor

Technological paradigms leading sectors

Development of leading sectors or adaptation to their spread Wage relations Interfirm relations Domestic financial system

Relations of production Politicalinstitutional dimension

International regimes Trade Money Security

Politicaladministrative system Constitution Laws State apparatus Education Patterns of mobilization National system of innovation

Using the framework outlined in Table 2.1, this chapter shuttles between the international and national levels (see also Beaud, 1987). The following comparisons concentrate on the international dimensions although,

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in a sense, each of the following sections deals with the whole. The attempt to carry through a multicausal analysis forces us to address the same complex matters at various points, each time from a different perspective. T h e next section analyzes economic structure, including both technological dynamics and the international division of labor. The following sections turn to the institutional side, analyzing the trade, money, and security regimes. 2 I will attempt to maintain an analytical separation between structural and institutional factors, although such a division is always artificial to some extent. Some scholars hold that a focus on regimes is sufficient, arguing that institutional features are involved even in quite " t e c h n o l o g i c a l " matters. As Strange (1982a) has argued, however, an exclusive focus on regimes may deflect attention from both structures and actors that are not covered by formal international agreements. Conducting the analysis entirely in terms of regimes also produces a segmentation of the object under study; in contrast, the present analysis tries to focus on the world economy as a totality. Thus, although the next section, devoted to structural features, deals to some extent with institutions, these institutions are not related to international regimes. Institutional c o m p l e x e s , like multinational corporations and even ways of life (the institution of the household), are seen as emerging from separate national models. The next section, therefore, includes some points from analysis of national models (see the national column of Table 2.1). 3

ECONOMIC STRUCTURE According to both Marx and Schumpeter, capitalism is the first social system that generates chronic pressure for new technologies. Capitalist firms always strive to gain technological leadership—which invariably turns out to be t e m p o r a r y — t h e r e b y e a r n i n g extra p r o f i t s . A c c o r d i n g to S c h u m p e t e r , innovations have clustered at certain points in historical time, and these clusters have been crucial determinants of long waves in the world economy. Schumpeter (1939) pioneered the analysis of the "cotton textiles" long wave ( K l ) , the "steam power and railway" long wave (K2), and the "electricity and heavy engineering" long wave (K3). The neo-Schumpeterians (e.g.. Freeman and Perez, 1988) have added a "Fordist and mass production" long wave (K4) and the presently emerging "information and communication" long wave (K5). Each long wave may be further divided into an A-phase (prosperity/recession) and a B-phase (depression/recovery). Several early studies (Wallerstein et al., 1979; Modelski, 1978) have tried to establish a connection between long waves and hegemonies. The parallels between England and the United States could then be stated as follows: K2A (the A-phase of the second long wave, 1845-1873) was the z e n i t h of B r i t i s h h e g e m o n y , w h e r e a s K 2 B ( 1 8 7 3 - 1 8 9 6 ) w i t n e s s e d a

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decentralization and equalization of economic and military power among a number of great powers, with no clear-cut new hegemon emerging. A new hegemony crystallized only after the turbulent K 3 , with World War I just after the turn from prosperity to recession and World War II just after the turn from depression to recovery in the late 1930s. The new hegemon is the United States; thus K 4 A ( 1 9 4 5 - 1 9 7 3 ) equals the K 2 A phase o f British hegemony, and the K 4 B phase ( 1973—) is the parallel fin de siècle, marked by déconcentration of power. More sophisticated models have introduced secular trends to account for remaining differences. I f the c h r o n o l o g y o f K o n d r a t i e f f waves were f i r m l y e s t a b l i s h e d empirically, and if there were clear causal paths from technological change to international relations, then the study of hegemonies would be a relatively simple matter. But, of course, things are more complex. The long waves chronology at best provides a first-cut periodization o f world economic developments. As for technological developments, one might argue that there is a more fundamental division involved. Historians of technology seem to agree that the turn o f the century marks a change from technological development b a s e d on e m p i r i c a l k n o w l e d g e and trial and e r r o r to t e c h n o l o g i c a l development based on systematic research (Rosenberg, 1972). Many studies have shown that Britain at this time lagged behind the United States and Germany precisely because the British were not able to relate knowledge derived from basic science to industrial restructuring. Nineteenth century B r i t i s h s o c i e t y c o u l d s u s t a i n l e a d e r s h i p in the s i m p l e m e c h a n i c a l t e c h n o l o g i e s o f the c o t t o n t e x t i l e s and railways long w a v e s , but the institutional frameworks o f the United States and Germany (especially systems of higher education and their linkages to industrial production) were much better suited to promote science-based industries. This basic division, however, cannot replace a more detailed periodization. Freeman and Perez ( 1 9 8 4 , 1 9 8 8 ) have attempted to overcome the Schumpeterian inclination toward technological determinism by considering institutions in relation to each long wave. Perez (1983, 1985) introduced the distinction between the technoeconomic paradigm and the socioinstitutional structure (which contains the national system of innovation as one important component). She claims that the recovery-prosperity sequence of the long wave reflects a match between paradigm and structure, with the recessiondepression sequence as a period o f mismatch. This is a neo-Schumpeterian restatement of the old institutionalist theory of institutional inertia. But Perez develops this theory for the world economy as a whole, thereby neglecting unequal developments across national societies. Such a theory works only for the historical periods during which the hegemony of one nation prevails. Thus, Freeman and Perez run into a number of problems when they get to the turn o f the last century since this period, like the present, was marked by déconcentration o f power. T h e

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u n e q u a l national d e v e l o p m e n t s of the K 3 p h a s e ( 1 8 9 6 - 1 9 4 5 ) m a k e it v i r t u a l l y i m p o s s i b l e to d i s t i n g u i s h one t e c h n o l o g i c a l p a r a d i g m (the p a r a d i g m s of K 3 and K4 actually h a v e m a n y c o m m o n f e a t u r e s ) , oneinstitutional structure of the 1880s and 1890s, or a match/mismatch sequence between these paradigms. Arrighi (1986), addressing this problem within a long-wave framework, argues that K2 and K4 were generated by the diffusion of technologies from one source country, with the A phases reflecting British and U.S. hegemony, respectively, and the B phases marking a breakdown of these arrangements into excessive competition. In contrast, K3 was constituted by three different national models f o r the generation and d i f f u s i o n of technology: British l i b e r a l c a p i t a l i s m , U . S . m a n a g e r i a l c a p i t a l i s m , and G e r m a n s t a t e interventionist organized capitalism. T h e s e three m o d e l s p r o v e d to be i n c o m p a t i b l e by the peak of the A p h a s e (World War I) and exhibited excessive competition in the form of geopolitical tensions and war throughout the entire B phase. The introduction of these three different models of capitalist development is certainly an improvement over the neo-Schumpeterian modifications, but the focus on unequal development should not be restricted to the third long cycle. A technology gap between the United States and Europe/Japan developed not in the 1920s and 1930s, but in the mid-nineteenth century. According to Chandler (1977), there were two major sources of U.S. managerial capitalism. The organizational innovation of managerial hierarchies developed first in the railway business (Schivelbusch, 1977). From these pioneering firms, managerial hierarchies spread to communications and to wholesale activities. The development of the telegraph, the department store, and mail order firms was spurred by the specific U.S. pattern of both strong urbanization and a large number of family farmers spread around the large areas of the western United States in the mid-nineteenth century. Only at the turn of the century did this pattern spread to firms involved in production. At this point, the development of managerial hierarchies coincided with another long-term trend, the "American system of manufacture." This system had developed from state armories in the early nineteenth century when, for military reasons, much effort had been made to achieve interchangeability in the production of rifles and o t h e r arms. T h i s gave rise to a n u m b e r of innovations in machine making, and at the end of the development of these skills Henry Ford's arrangement of special machinery mass produced the TFord (Hounshell, 1984; Piore and Sabel, 1984). Again, the specific demand structure of U.S. society was an important condition. T h e r e was ample private demand for mass produced guns in the frontier West, whereas in E u r o p e there was no demand outside the military. Similarly, there was demand for cheap, reliable private cars among middle- and high-income farmers in the countryside and among many professionals in more urban areas (Rosenberg, 1972). In Europe, apart f r o m military use, cars were

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expensive and unreliable luxury items. A l r e a d y in the m i d - n i n e t e e n t h century, B r i t i s h specialists and o t h e r Europeans admired and tried to import elements of the American system of manufacture. This system soon provided a m a j o r competitive advantage for U.S. exports, as well as the basis for the first U.S. foreign investments. U.S. industrial production caught u p with that of Britain in the 1890s. At the same time, the U.S. economy relied heavily on agricultural exports and still h a d a v e r y p r i m i t i v e m o n e t a r y system. T h e resulting multiplicity of e c o n o m i c interests was reflected in the U.S. position in the world economy. By 1896 c o r e i n d u s t r i a l i n t e r e s t s f r o m t h e N o r t h e a s t m a n a g e d to g a i n p o l i t i c a l h e g e m o n y over Midwestern agricultural interests and those representing the S o u t h ' s c o t t o n - b a s e d e x p o r t enclave. T h i s three-part e c o n o m i c structure w o u l d c o n t i n u e to i n f l u e n c e U . S . p o l i t i c s u n t i l w e l l into t h e t w e n t i e t h century. T h e m a s s p r o d u c t i o n , c o n t i n u o u s f l o w t e c h n o l o g i e s that d e f i n e d the American system of manufacture spread further during World War I and the 1920s. This system did not reach full flower, however, until World War II, during which time the automobile industry took over production of aircraft; the resulting cross-fertilization led to a n u m b e r of important innovations in m a c h i n e t o o l s a n d r e l a t e d p r o d u c t i o n t e c h n o l o g i e s . At t h i s p o i n t , t h e technology gap between the United States and the rest of the world was at its m a x i m u m (Maddison, 1982). In the postwar period, however, U.S. efforts in science-based industries were increasingly driven by military considerations, with the result that other countries were left to futher develop the commercial potential of the twentieth century technological paradigms. Ever since Ford introduced the m a j o r organizational innovation of the assembly line in the early twentieth century, the term " F o r d i s m " often has been used to describe the specificities of U.S. capitalism. However, as the Gramsci-inspired French regulation school (Aglietta, 1978; M j 0 s e t , 1985) defines this term, it includes m a s s consumption by workers; F o r d ' s doubling of the w a g e — t h e f a m o u s five-dollar d a y — i s inteipreted as an anticipation of p o s t w a r m a s s c o n s u m p t i o n . T h u s , the F r e n c h school looks at the Fordist mass production/mass consumption complex from a postwar European perspective because Fordism was first emulated in the postwar era in Europe (van der Pijl, 1984). However, these analyses do not emphasize the specific U.S. background of Fordism. If w e emphasize this background, w e find that the search f o r differences between U.S. and European developments should not be limited to the third l o n g cycle. F u r t h e r m o r e , w e end u p d o u b t i n g that the G r e a t Depression ( 1 9 2 9 - 1 9 3 3 ) of the third long cycle must necessarily have been due to the same kind of mechanism in all the industrialized countries. According to Mazier et al. (1984), the U.S. depression really was the first crisis of the mass production/mass consumption pattern, but with m a s s consumption limited to high- and middle-income strata. In Europe, on the

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contrary, the depression was still a crisis of "competitive regulation" (see also Lutz, 1984). This implies that the mechanisms of this crisis were quite d i f f e r e n t a c c o r d i n g to r e g i o n (and e v e n n a t i o n ) . T h e r e f o r e , the neoSchumpeterians' highly aggregated diagnosis of a mismatch at the world level will not do. Introducing the notion of Fordism, we have defined the real economic basis of U.S. hegemony. We are here quite outside the field of technology as such. According to the regulationists, Fordism is defined by its specific wage relation, the relations between firms, and a specific type of credit system (see the national level in Table 2.1). This system of institutional innovations constitutes a model of intensive accumulation, with a m a j o r i t y of the economically active population being wage earners demanding a variety of manufactured products. In contrast, the prevailing accumulation model in n i n e t e e n t h - c e n t u r y E u r o p e was extensive, with d o m e s t i c c o n s u m e r s demanding very few manufactured goods because their daily life was only partly integrated into the monetary economy. The institutional framework of t h i s a c c u m u l a t i o n m o d e l w a s c o m p e t i t i v e r e g u l a t i o n , m e a n i n g an individualized wage relation (no collective bargaining), competitive relations between family firms, and a credit system lacking m o d e m techniques of central bank intervention. 4 One conclusion concerning the technological basis of Fordism must be mentioned. The whole system of highly specialized inert machinery, which required long production series to pay off, was not the culmination of the science-based technologies developed at the turn of the century. It was rather the culmination of the mechanical technologies that preceded, and were relatively independent of, the most recent scientific discoveries (although, of course, many of the raw materials were steel and new alloys). These different accumulation models were connected with different structures in the international division of labor. 5 The late nineteenth-century international division of labor was characterized by the development of zones linked to the different great powers. For these powers, the periphery served as a "thermostat" (Lipietz, 1985). European growth and transformation depended on expanding world trade (Maizels, 1963: 192-193). In the period before World War I, world trade grew faster than world industrial production (Rostow, 1978: 67; Skarstein, 1982: 93). Only the United States was at that time less dependent on expanding world trade. In the "golden age" of the 1950s and 1960s, world trade also grew faster than world industrial production. But the pattern of the international division of labor was very different from the one just analyzed. Postwar trade shows a striking pattern of First World concentration. About two-thirds of the increase in world trade is accounted for by trade within what more or less comprised the core of the world economy, i.e., Western Europe and the United States (Krasner, 1979: 503). The fastest growing part of this trade has been intra-industry trade, that is, trade in different products produced in the

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same sector (Ruggie, 1982: 400). Most of this trade is in manufactured products, indicating strong interdependence among the productive systems of the First World countries. Competition tends to be oligopolistic rather than price-related, and nonprice factors (quality, design, service networks) are very important. Another prominent feature is growing intrafirm trade, that is trade within multinational firms (the United Nations Conference on Trade and Development estimated that this accounts for about 30 percent of world trade in the 1960s; Skarstein, 1982: 100). International investments and s h o r t - t e r m f i n a n c i a l f l o w s s h o w t h e s a m e p a t t e r n of F i r s t W o r l d concentration. Both intraindustry and intrafirm trade indicate an exchange of products that is more complex than in the nineteenth century case. If one looks at broad Standard International Trade (SITC) categories, it seems that specialization is decreasing within the First World and that industrial structures are becoming more similar. On a more disaggregated level, however, there are important patterns of specialization. Ruggie (1982: 401) points out that this postwar international division of labor implies "a critical shift in functional differentiation from the level of country and sector to the level of product and firm." This "complex interdependence" may be seen as a stronger type of interdependence than the type found in the late nineteenth century, when trade mostly occurred between sectors and between continents. Long-term c a p i t a l m o v e m e n t s at that t i m e w e n t p r i m a r i l y to the l a n d s of recent settlements, f i n a n c i n g infrastructural investments linked to the railway complex (Ruggie 1982: 400-402). Aglietta (1982) dubs this a vertical division of labor, wherein each great power has its own trade zone. The postwar international division of labor, in contrast, is a horizontal one. As mentioned, the complex interdependence pattern is characteristic of economic integration between the United States and Western Europe. But the core of the world economy also includes the most recent m e m b e r of the group of capitalist great powers, Japan, where the Fordist concepts were introduced by the U.S. occupation forces in the late 1940s. By means of "reverse engineering" (Freeman, 1987: 7 9 - 8 3 ) Japanese industry caught up with the United States in record time. However, Japan's integration into the world e c o n o m y has b e e n m a r k e d by the a b s e n c e of i n t r a - i n d u s t r y and intrafirm trade. Japanese exports are highly concentrated in a few advanced manufacturing sectors with high value added, whereas the preponderance of the country's imports consist of raw materials, food, and fuels (Menzel, 1989: 106-107). The pattern of integration in the Pacific region resembles a vertical nineteenth-century economic zone, with Japan, at the apex of the hierarchy, supplying advanced industrial goods in exchange for raw materials and semifinished goods (This pattern is beginning to change as the region's newly industrialized countries, especially South Korea and Taiwan, are exporting more and more industrial goods.) Only the United States plays a

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dual role in the region, exporting both raw materials and high-tech products. The structural bases of British and U.S. hegemony are best compared by relating these differences between vertical and horizontal patterns of trade integration to further differences between extensive and intensive forms of accumulation. From this perspective, the structural economic basis of U.S. hegemony began to weaken in the late 1960s, leading to crisis in the intensive accumulation model. Also, a new technoeconomic paradigm based on information technologies has been replacing the Fordist paradigm. Whereas both Western Europe and Japan managed to catch up with the United States in the Fordist paradigm, Japan in the 1980s is claimed to have developed an edge, and indeed opened a new technology gap vis-à-vis the rest of the world (Freeman, 1987: 91). 6 If this diagnosis is correct, this is the first time in the twentieth century that a technology gap has opened during a period of relative peace. Moreover, we seem to be witnessing the first pure "technology race" in modern history. It is also striking that the country that has developed this new technology gap displays a different pattern of trade integration than that characteristic of the United States and Western Europe. In sum, what we have termed economic structure, consisting of technological dynamics and the international division of labor, differed significantly across the periods of the British and U.S. hegemonies. These differences had consequences for the character of the institutions, or regimes, of the two hegemonies, a subject to which we now turn.

THE TRADE REGIME It is difficult to find a trade regime in any strong sense in the mid-nineteenth ccntury. In the major trading countries, the quest for free trade was connected to internal political struggles. The earliest British proposals stemmed from Tooke and the London merchants in the early 1820s and, somewhat later, from Huskisson and the Board of Trade. These visions were part of a general ideological inspiration from liberal and natural right ideas of freedom and equality, promoted by a number of small interest groups (not only certain merchants, but also groups working for administrative reform). Paul Bairoch (1976) proposed the following periodization: A first phase of unilateral British free trade ran from Peel's reforms of the 1840s until 1860. A second phase of limited multilateralism started with the AngloFrench Treaty of Commerce in 1860 and ended between 1879 (the new German protectionism) and 1892 (the new French protectionism). The third phase was a return to unilateral free trade, which Britain continued until 1931. The first effective British free trade offensive was the work of Tory prime minister Peel in the 1840s. According to Cain and Hopkins (1986), these reforms responded to a grave internal crisis between 1837 and 1842,

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with mobilization by the Anti-Corn Law League and the Chartist struggle for universal male suffrage. They claim that despite expansion of the textile and iron industry, there was a continuing crisis of excess capacity and low profitability.This crisis was at its worst in the depression of 1 8 3 7 - 4 2 , when a sharp rise in urban unemployment fuelled the unrest which expressed itself in the Chartist movement. Failure to solve these problems by imperialist measures abroad only served to emphasize industry's desire for free trade as a means of cutting costs. The result was that free trade was pushed further and faster than was thought expedient by the bulk of landed interests. (Cain and Hopkins, 1986: 516)

Conditions were favorable for agriculture at that time, so the repeal of the Com Laws caused trouble only from the 1870s onward (Crouzet, 1982). In the summer of 1846 Peel argued that the repeal was necessary to terminate a possible "hostile conflict" between "great and powerful classes" in England. In the United States, the liberalization of trade also was clearly a c o n s e q u e n c e of d o m e s t i c political t e n s i o n s during the J a c k s o n era (Meuschel, 1981: 145). In Germany, the Prussian Junkers, who were confident about the competitiveness of their agriculture, had favored liberal trade policies since 1818. The Zollverein was formed in the 1830s and 1840s, partly as a reaction to British protectionism. However, within the Zollverein, Prussia yielded and tariffs on textiles and iron products were raised in the 1840s. During the 1850s and 1860s, Prussia led the process of German integration, and, in his sophisticated strategic maneuvers, Bismarck tried to coopt the Liberal party, thus continuing support for free trade. In the 1860s and 1870s, a number of bilateral treaties involving mostfavored nation (MFN) clauses were successfully negotiated. As noted in Bairoch's periodization, this was a time of truly free international trade. The treaties, taken as a set, were the closest approximation to a trade regime during the nineteenth century. Then, as now, security considerations were important. The paradigm case of a bilateral trade treaty, the CobdenChevalier treaty of 1860, is itself a good example of the trade-security linkage: Anglo-French discussions of tariff reduction were spurred by the regime of Napoleon III, who "was interested in a commercial treaty at least partly because of his desire to win British diplomatic support and even a British alliance" (McKeown, 1983: 84). Throughout the period 1815-1870 France tried to establish alliances that would help to regain its old status among the great powers. McKeown quotes Cobden's statement to the effect that the material gains meant little to the British, and claims that there were British worries about a French invasion. The new steamships could cross the channel quickly, and by 1860 experts held that the British navy no longer had the strength of its two strongest challengers (the "two-power standard"). The

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Manchester liberals seem to have been calm, but they hoped that free trade would reduce tension, and thereby also the military budget ( M c K e o w n , 1983: 84). British free-trade policies were solidly institutionalized and supported at home, but fragile abroad. A coordinated, cooperative international institution f o r m a l l y i n d e p e n d e n t of the British s t a t e — c o m p a r a b l e to the p o s t w a r G e n e r a l A g r e e m e n t on Tariffs and Trade ( G A T T ) — d i d not exist. This institutional weakness contributed to the rapid dissolution of the system in a c h a i n reaction f o l l o w i n g B i s m a r c k ' s m o v e s in 1879. In that particular historical conjuncture, Bismarck staged a new alliance, the "marriage of iron and rye." He alienated the Liberal party, terminated his "cultural struggle" against the Catholics, and established a "blue-black" coalition between the Conservative Junker party and the Catholic Centre party. Milward and Saul (1977: 55) argue that the tariff of 1879 "has to be seen as a set of political alliances and to criticize its economic rationale is to attack it on a superficial level"; and point out that "in general it was true everywhere in the last quarter of the century that in the return to protection the political influences far outweighed the economic." Bismarck's tariff of 1879 marks the beginning of spiraling protectionism. But Bairoch's claim of unilateral British free trade after 1870 must be modified. Britain was able to control trade within its empire by means of political dominance and nontariff barriers. Britain had an export surplus with India; this was due more to increases in value than in volume. This meant that there were price increases due to monopolization of trade and displacement of price competition (De Cecco, 1976: 123). Whatever regime had existed in the 1860s eroded into separate arrangements within each of the zones dominated by the respective great powers. Whereas the nineteenth-century free trade-episode was both started and terminated as a c o n s e q u e n c e of quite separate political tensions in the nineteenth-century great powers, a deliberate regime was established in the postwar period. Although the plans for an autonomous International Trade Organization were never realized, the General Agreement on Tariffs and Trade, formed among 23 nations in 1947, grew into a loose framework for organizing trade negotiations. Using Ruggie's (1982) phrase, the nineteenthcentury free-trade arrangements expressed a " d i s e m b e d d e d liberalism," scarcely concerned with the domestic costs of adjustment. Within the GATT f r a m e w o r k , nation-states are allowed to control a d j u s t m e n t , but in the exercise of this control they are expected to remain loyal to basic liberal p r i n c i p l e s . " T h e G A T T tries less to o v e r r i d e t h e s e d o m e s t i c p o l i t i c a l calculations than to moderate their impact on the larger network of liberal trade" (Lipson, 1982: 425). The M F N clause is a crucial element in GATT, as it was in nineteenth-century free trade, "but unlike its predecessor it is built o n multilateral commitments, organized around regular consultations and

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periodic negotiations" (Lipson, 1982: 426). The organization allows countries to escape obligations earlier agreed to if this is decisive for national development. The turn to free trade was, in the British case, a response by the Tory g o v e r n m e n t to a g r a v e d o m e s t i c crisis. T h i s is v e r y d i f f e r e n t f r o m the p o s t w a r U . S . c a s e , w h e r e f r e e t r a d e w a s m u c h m o r e of a r e s p o n s e to geopolitical and international economic considerations. U.S. enthusiasm for f r e e trade, and its role as a very generous actor in the G A T T system in the 1950s and 1960s, was closely related to its concern for containment of the C o m m u n i s t threat in E u r o p e and Asia. Whereas other countries were forced to give priority to short-term material interests, the United States, according to Krasner (1978), was operating at a higher level in the hierarchy of needs, and thus it could afford to give priority to the "idealist" goal of security and containment in the 1950s and 1960s. T h e e m b e d d e d liberalism of the p o s t w a r G A T T r e g i m e was crucially dependent on the spread of Fordism to Western Europe during the "golden a g e " (see Chapter 4). As the crisis in this accumulation model developed in the early 1980s, the free-trade regime persisted, although increasingly beset by thorny problems and controversies. Sectors that are heavily involved in intra-industry trade usually produce differentiated, R&D-intensive goods. A d j u s t m e n t costs—and consequently the pressure for state protection—here seem to be m u c h lower than in sectors producing simpler, standardized goods. Intra-industry trade implies that the firms that face competition f r o m outside are also heavily involved in export markets. Thus, they are likely to avoid d e m a n d s for protectionism. This structural feature interacts with the efforts at liberalization within the trade regime (GATT). 7 T h e agreements m a d e during G A T T ' s Tokyo Round of the 1970s confirmed that trade liberalization tends more and more to be a First World phenomenon. " T h e less important role played by intra-industry trade in c o m m e r c e between L D C s and developed countries implies higher adjustment costs for any given v o l u m e of trade and m a y be an additional source of protectionist pressure" (Lipson, 1982: 445). Although a global structure of economic zones comparable to that of the nineteenth-century has not e m e i ^ e d , the c o n t e m p o r a r y structure w e h a v e described has given rise to three broad categories of problems in the trade regime. First, problems have arisen between the United States and Western Europe in trade outside of the manufacturing area in those sectors, especially agriculture, not marked b y the c o m p l e x i n t e r d e p e n d e n c e characteristic of intra-industry and intrafirm trade. Second, Japan's trade problems with the United States and Western Europe are basically due to the fact that Japan is at the apex of a Pacific economic zone, maintaining a vertical pattern of trade integration—one which is quite different f r o m the horizontal international d i v i s i o n of l a b o r that c h a r a c t e r i z e s N o r t h A t l a n t i c trade. T h i r d , r e g i m e p r o b l e m s in trade b e t w e e n the core capitalist c o u n t r i e s (particularly the

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United States) and the Third World stem from the virtual complete absence of complex interdependence. Thus, the Third World's demands for changes in the trade regime, voiced in the 1970s in UNCTAD and other U N bodies, can be viewed as pleas to extend the tenets of embedded liberalism to cover its trade with the advanced capitalist countries. The concessions demanded to ease Third World adjustment problems were perceived at best as requests for unwarranted privileges, at worst as proposals for an authoritarian trade regime. This structural diversity accounts for the increasing fragmentation of the trade regime since the 1970s. In the 1930s, the trade regime, circumscribed by the rigidity of economic zones, broke down; today trade continues to grow, but the regime is split in pieces and is marked by ad hoc solutions: "managed trade" or "voluntary export restraint" in some fields, liberalization in o t h e r s . L i p s o n d e s c r i b e s t h e 1970s t r a d e r e g i m e as a " p a t c h w o r k arrangement for world trade that is neither openness nor autarky" (Lipson, 1982: 446). In this situation, the GATT regime persists, but the results of its successive rounds of negotiations vary according to which interests (from which areas of the world economy) are involved.

THE MONETARY REGIME The "trade regime" represented by the network of bilateral trade treaties signed between 1860 and 1880 had begun to erode before a proper monetary regime was established. Such a monetary r e g i m e w a s connected to the international gold standard, which was in operation under British dominance in the 1870-1914 period (for a definition, see Cohen, 1977: 77). Like the nineteenth-century trade regime, the fin de siècle gold standard was not a result of deliberate regime construction (De Cecco, 1976: 53, 61; Keynes, 1923). In the case of U.S. hegemony, the high point of trade liberalization occurred in the 1960s; in that period, the Bretton Woods monetary system was still in operation. The United States already possessed a fully developed banking system as its hegemony was being established in the late 1940s, whereas British international banking was a result of the financial revolution of the 1870s. Formally, the Bretton Woods system may be compared with the gold standard system, whereas the post-Bretton Woods system (from 1971) is a monetary system based on a fiduciary standard (the dollar) only. Actually, applying C o h e n ' s ( 1 9 7 7 : chap. 7) definition of a h e g e m o n i c m o n e t a r y s y s t e m , w e f i n d that a gold s t a n d a r d s y s t e m c a n n o t be c l a s s i f i e d as hegemonic, but a fiduciary system is hegemonic. As we will see, this has given the United States considerably more room for maneuver than Britain enjoyed at the turn of the century.

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In the period 1870-1890 the British banking system was superior to those of other countries, due to joint stock, deposit banks, and its monop o l i s t i c f i n a n c i n g of i n t e r n a t i o n a l trade. Sterling w a s the m o s t stable international means of circulation. Because Britain was the largest importer of food and industrial raw materials, London had organized international markets for all relevant commodities. Britain was the dominant international carrier and insurer. The London accepting houses had unique experience in attracting commercial paper from all over the world. Most lines of debt clearance ran through London (Williams, 1968), and British deposit banks controlled a huge quantity of funds for financing world trade. The system was definitely monocentric. British domestic savings were the source of the "raw materials" that the British financial system channeled throughout the world (De Cecco, 1976: 104). According to Aglietta (1979, 1982), most countries were linked to the London-based private banking network, and hence were directly dependent on the fluctuations of the London interest rate. When the rate rose, credit contracted and industrial production declined. This created a hierarchy of national financial markets in which all players were sensitive to the influence of London. These circumstances synchronized business cycles throughout Europe, thereby stabilizing the balances of payments. These rapid transmissions corresponded to the "vertical" structure of trade organized in zones, wherein large countries each had their colonies as receivers of foreign investment, sources of raw materials, and outlets for exports, but all countries depended on a British-based monetary regime. "The stability of the pound sterling in Europe was fundamentally due to the fact that the other European countries did not directly object to the expansion of British capital, but that their trade with the rest of the world flowed through L o n d o n " (Aglietta, 1979: 837). Large private banks and central banks of all core nations, as well as of smaller nations, kept sterling balances on their London accounts. London was the major entrepôt of world trade, and earned increasing rentier incomes f r o m f o r e i g n investments. T h u s Aglietta (1979: 809) finds that British hegemony was supported by a consistent current account surplus (Britain's only deficit was in 1877); this situation, of course, differs shaiply from the post-World War II case, in which the United States registered chronic current account deficits. The "main axis" of international regulation was not in the core itself, but rather in the core/periphery structure of the British Empire, including India and the exceptional U.S. case. Accumulation in core and periphery followed o p p o s i t e c y c l e s . M o r e s p e c i f i c a l l y , t h e p h a s e s of l o n g - t e r m c a p i t a l m o v e m e n t s in the p e r i p h e r a l (settler) c o u n t r i e s , w h i c h p r o d u c e d r a w materials, were opposite to the phases of accumulation in the core countries, which produced means of production, means of transportation, and other facilities. This structural network secured the cohesion of the sterling system.

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In the Bretton Woods system, on the other hand, First World integration was always decisive. In 1890-1910, the period in which the gold standard became generalized in the developed world, the vertical structure of zones became increasingly polycentric. Only Britain had full gold convertibility. Most other countries controlled gold flows across their borders, as it was unlikely that gold would remain in their country if full automaticity was allowed. National leaders also gave priority to the defense of their gold reserves in other ways. The fragile state of international relations convinced them that they had better hoard a war treasure. In particular, the Boer War ( 1 8 9 9 - 1 9 0 2 ) was interpreted as a threat to security. Gold hoarding reflected the fact that geopolitical tensions developed between states with similar capitalist economic systems. This, as we shall see in the next section, is a major difference from the postwar situation. As World War I approached, gold reserves in central banks b e c a m e increasingly important. A decrease of reserves would inevitably be regarded as a sign of political weakness and financial insecurity. T h e gold standard lasted only as long as the political domination of periphery countries by the core—especially British exploitation of India—remained unchallenged (De Cecco, 1976: chap. 4). Because monetary authorities in the gold standard countries had to defend their gold reserves, they needed a supply of foreign currency deposits to provide room for action. Smaller countries kept reserves in Britain, and to some extent also in France and Germany. This gave the dominant countries the possibility of spending more on current and capital accounts, and thereby of sustaining their foreign investments. T h e gold standard presupposed that some countries held currency reserves in addition to gold and that they held these in core countries. Each of the dominant countries—Britain as centeipiece, Germany, and France—maintained an "international oligopoly" vis-à-vis the "client" states in its zone. Often these arrangements were forced on clients. For example, British possessions could not choose to hold gold and instead had to deposit their surplus in sterling in London, But arrangements had to be negotiated with more independent countries. This fact made the system very unstable. For Britain, the United States was the greatest disruptive factor. Lacking a central bank prior to 1913, the United States in practice used the London money market as its central bank. London therefore had to cope with the seasonal oscillations in U.S. d e m a n d f o r m o n e y (which were linked to agricultural fluctuations, as well as to primitive banking practices in the South and Midwest), diverse U.S. crises, and the U.S. absorption of gold. In 1910, the United States had 31 percent of all official monetary reserves; its gold h o l d i n g s were as great as those of Britain, F r a n c e , and G e r m a n y combined (De Cecco, 1976: Table 13). In addition, there were tensions between the Bank of Britain and the large joint stock banks. On the other hand, India was the most important stabilizing factor: the

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large Indian surplus was always invested in London. But the disruptive f o r c e s — U . S . financial anarchy and the gold preference o f independent states—made it ever more difficult to attract to London deposits that were needed. Therefore, London increasingly had to attract funds via increased interest rates, in order both to attract foreign money and to induce Britishowned money to return to London. T h e portfolio o f British commercial banks changed accordingly: the share of foreign bills, compared to home bills, grew. According to De Cecco, this was the mechanism by which London was able to absorb the U.S. fluctuations. As geopolitical tensions grew, competition for gold escalated among core central banks. British banks found it impossible to attract gold. During this decade, the gold/sterling system developed into a more complete gold standard (De Cecco, 1976: 124). Rather than expressing British hegemony, the pure gold standard indicated declining confidence in the hegemonic power. Britain had to carry an increasing burden of adjustment: decreasing imports, increasing exports, and attempts to solve the crisis by recourse to the current, rather than capital, account. 8 It became increasingly difficult for Britain to control the system. Following Keynes (1914), De Cecco holds that the risk o f war undermined the system; even before World War I, the m o n e t a r y system b r o k e down and had to be rescued by g o v e r n m e n t intervention. Here we must examine the interaction between monetary and security developments and how this interaction affected the crumbling balance o f power. The gold standard, in and of itself, was not a regime. In the liberal view, it was an automatic mechanism in need o f no institutional integration. According to the analysis above, however, the gold/sterling system was managed by the Bank of Britain, which maintained fragile compromises at the domestic level with the new joint stock banks, and at the international level with the financial institutions o f the other great powers. To the extent that there was a monetary regime, it was not constituted by ministers, officials, or diplomats. Not even the claim that it was constituted by central bankers tells the whole story. According to Polanyi ( 1 9 4 4 : 10), the international network o f haute finance during 1 8 7 0 - 1 9 1 4 was the "main link between the political and the economic organization o f the world," supplying "the instruments for an international peace system." High finance, Polanyi contends, played the role that had been performed earlier in the nineteenth-century by the royal dynasties and Catholic episcopacies (the Holy Alliance and the Concert of Europe). T h e s e bankers had much more prestige than their upcoming colleagues in the mortgage, savings, and joint stock investment institutions (Mayer, 1 9 8 2 : 68). They had representatives in all of Europe's capitals, worked closely with diplomats, and ensured confidence among statesmen and international investors.

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Of course, haute finance had underwritten war, but Polanyi argues that they realized their own business would have been harmed if a devastating war broke out b e t w e e n the great p o w e r s . T h u s , they a d m i n i s t e r e d bankruptcies and struck deals between the great powers in order to avoid the escalation of rivalries linked to the financing of railroad construction in faraway countries. Polanyi claims that high finance not only coordinated the monetary regime, but at the same time also secured peace; that is, high finance created a stable security regime. High finance had become a transnational institution, which, independently of any single government, made the balance of power work. The fragile peace of 1871-1914 was an "armed peace," but high finance required good behavior and responsible budget policies by its borrowers. "The Pax Britannica held its sway sometimes by the ominous poise of heavy ship's cannon, but more frequently it prevailed by the timely pull of a thread in the international monetary network" (Polanyi, 1957: 14). Polanyi's analysis is contrary to Hobson's (1904) contention that the dominance of international finance in Britain created underconsumption at the national level, outward expansion of capital, clashes in the periphery, and, ultimately, general war. But as Arrighi points out, these contrasting views may be but two sides of a real contradiction. High finance differed from the contemporary multinational corporation in the sense that it did not produce anything. It was therefore dependent on state power, operating in the respective zones, to protect earlier portfolio investments and to create new opportunities (Arrighi, 1976: 122). On the other hand, high finance had to avoid escalation to war. In the end, it failed to maintain peace. Another discrepancy b e t w e e n Hobson and Polanyi emerges: Hobson held that a liberal world undisturbed by the manipulations of finance capital would secure a lasting peace, whereas Polanyi held that peace would last only as long as high finance was able to contain the tensions between the great powers. P o l a n y i ' s position seems more in line with the institutionalist position. Britain's b u r d e n of a d j u s t m e n t created real e c o n o m i c p r o b l e m s in addition to t h e o t h e r internal w e a k n e s s e s d i s c u s s e d earlier (primarily B r i t a i n ' s i n a b i l i t y to k e e p u p w i t h n e w c o m p e t i t o r s in t h e e m e r g i n g electricity-chemicals complex). Maintenance of the permanent balance-ofpayments surplus on which British hegemony relied was directly threatened by changing patterns of production and trade. But it was difficult to comprehend the implications of these developments as they unfolded. Aglietta (1979) points out a contrast between the private character of the British system (the workings of which were obscured by "automatic movements of private capital") and the official character of the Bretton Woods system (the operation of which was clearer to most participants because it depended mainly on the actions of central banks).

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The Bretton Woods system was a monetary regime deliberately created as part of the postwar settlement. The story of the Bretton Woods system and its domination by the United States, rather than management by the supranational institutions envisaged by Keynes and White, has been told many times. Originally designed as a gold standard system, it instead quickly became a dollar standard system. As already pointed out, because it was based on a chronic U.S. current account deficit, it was structurally very different from the British system. In the British hegemony the rhythms of accumulation in manufacturing industries ran parallel, and there was rapid transmission of financial tensions ( m e d i a t e d t h r o u g h L o n d o n ) . In t h e U . S . h e g e m o n y t h e r e h a s b e e n a desynchronization of the cycles among core countries, stronger autonomy of national economic policies, and a less immediate monetary constraint than in the British precedent (Aglietta, 1979; 1982). When the United States faced the threat of a loss of confidence at the time of the Vietnam War, it managed step by step to block convertibility, that is, to block the reintroduction of a gold standard. Britain, however, was linked to a gold standard system. As the U.S. current account deficit began to increase, European central banks had to hoard increasing amounts of dollars. Finally, in 1971, the United States denied gold convertibility even to central banks. From that time, a new exchange rate regime based on nonconvertibility and "managed floating" developed. T h e British structural surplus w a s destined to erode, but the U.S. structural deficit on current account seemingly can be increased indefinitely. More precisely, the monetary constraints faced by the United States are less dependent on pure economic mechanisms. The fact that the United States could delink the dollar entirely from gold must be analyzed in relation to the U.S. position in the security regime. Management of the U.S. dollar deficit by European private and central banks gave rise to important new financial innovations, the so-called Eurod o l l a r or o f f s h o r e c u r r e n c y m a r k e t s . T h e s e i n n o v a t i o n s m u l t i p l i e d in importance as the 1974—1975 economic downturn was felt. Actors in the real economy hired specialists in financial intermediation to hedge against the increased uncertainty connected to exchange and interest rate instability (Strange, 1986). Thus short-term capital flows, precisely that component the Bretton Woods system was designed to contain, have exploded. If a country runs a lasting external deficit, either it is unable to adjust or it lacks autonomous sources of wealth. For the United States, this source of wealth is its seigniorage in the world economy; for countries belonging to the Organization of P e t r o l e u m E x p o r t i n g C o u n t r i e s ( O P E C ) , it is their oil reserves. Such a surplus position or, as in the U.S. case, the privilege of not needing to be concerned with a growing deficit, is no guarantee of ability to recover from the structural crisis. On the other hand, Japan's surplus or Sweden's ability to recover from a large current account deficit indicates

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strong adjustment potential. Here the technological restructuring race interacts with financial instability. T h e existence of large disequilibria, and t h e a b s e n c e o f c o n c e r t e d a c t i o n to r e f o r m a n d s t r e n g t h e n i n t e r n a t i o n a l regimes, may hinder even countries with effective national innovation s y s t e m s b y f e e d i n g the anarchical f r e e float of short-term capital and by c r o w d i n g out in v a r i o u s w a y s i n n o v a t i o n and research and d e v e l o p m e n t ( R & D ) policies. Just as important, crucial structural transformations at the national level m a y be impaired. Here, the United States, as the seignior of the monetary system, exerts a m a j o r influence. If its policies d o not take into account its informal role as world central bank, U.S. attempts to solve its internal problems can be quite parochial and can exacerbate instability in the larger world economy (Cohen, 1977). One significant conclusion of our c o m p a r i s o n of the nineteenth- and twentieth-century monetary systems is that in the British case, transition to a f u l l y f i d u c i a r y s t a n d a r d w a s n o t p o s s i b l e . If it is a g r e e d t h a t t h e r e a l economic basis of British h e g e m o n y had been eroding since the 1870s, the monetary regime offered few possibilities to defend it by m e a n s of seigniorage in the world monetary system. This holds true at least in a relative sense c o m p a r e d to the s e i g n i o r a g e g a i n s r e a p e d b y t h e U n i t e d S t a t e s in t h e post-Bretton Woods monetary system. British parochialism at the turn of the century w a s c o n f i n e d to the f o r m a l empire; India and o t h e r parts of the empire were denied a gold standard (Ingham, 1984: 124) and trade was controlled by m e a n s of nontariff barriers. In contrast, U.S. parochialism since the late 1960s affects the whole core of the international e c o n o m i c system. A f u n d a m e n t a l c o m p a r a t i v e f i n d i n g , then, is that the gold s t a n d a r d system restrained British freedom of action (or its potential f o r parochialism) to a m u c h larger extent than the dollar standard system restrains the U S in the present monetary regime of floating exchange rates and nonconvertibility.

THE SECURITY REGIME We n o w turn to comparison of the relationship b e t w e e n the monetary and s e c u r i t y r e g i m e s in t h e t w o h e g e m o n i e s . A t t h e t u r n of t h e c e n t u r y c o m p e t i t i o n a m o n g the m a j o r capitalist p o w e r s a m o u n t e d to a c o m b i n e d military and technological contest. This contrasts decisively with the postwar U.S. case, in which military and economic competition have not coincided and in w h i c h c o m p e t i t i o n b e t w e e n c o r e industrial capitalist c o u n t r i e s is limited mainly to a technological restructuring race. In discussing the monetary regime, we alluded to increasing tension in the nineteenth-century European balance-of-power system. T h e r e are doubts as to whether this system can be regarded as a regime at all, but, whether a regime or not, it was crumbling as a consequence of unequal development of its m a j o r players. In this section w e c o n c l u d e o u r d i s c u s s i o n of regimes,

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focusing particularly on interactions between the transformations in the fields of trade, money, and security. The nineteenth-century balance-of-power system was partly constructed in order to contain Russia's ascent as a great power. The balance-of-power was weakened by the unification of Germany, which had grown impressively in terms of both population and industrial production. The great powers were in competition worldwide, and it is important to note that the alliance system was very fluid. Britain first allied with Russia in the periphery in the late nineteenth-century, then with France in the early twenticth-ccntury. 9 In their strategic plans, the Germans imagined that war could be waged in such a way as to k e e p Britain out of a continental conflict (Van Evera, 1985: 8 2 - 8 3 ) . F u r t h e r m o r e , the most i m p o r t a n t zone of c o n f l i c t — e v e n t u a l l y triggering world war—was the eastern parts of Europe. With less offensive strategic thinking, it has been argued, the "Austro-Serbian conflict would h a v e been a m i n o r and soon-forgotten disturbance on the p e r i p h e r y of European politics" (Van Evera, 1985: 105). In all the major countries, there was a "cult of the offensive." Several recent studies claim that this was the m a j o r ideological reason f o r the escalation to war. This cult saw nations as species struggling for survival, and its implicit assumption was that offensive strategies would guarantee survival (Van Evera, 1985: 62). Such a cult was quite paradoxical, since both s o c i o e c o n o m i c transformations and the development of military technology made defensive strategies most relevant. Both of the most recent technological systems—the railway and the electrical-chemical complexes—made their influence felt. Railways and commercial networks were quite dense, facilitating flexible f o r m s of defense in which troops were moved quickly by train, whereas invaders had to march. The development of smokeless gunpowder, machine guns, and longer range rifles were partly spinoffs from the new chemical revolution. These new guns and the practice of trench warfare m a d e old forms of attack, with bayonets and close fighting, futile (Howard, 1985). This should have been inferred from the experience of both the Boer and the R u s s o - J a p a n e s e w a r s , but military elites and statesmen were u n a b l e to apprehend it. Instead, all influential decisionmakers believed that a quick war could be fought and won. The real events of the war proved the opposite: it lasted for four years, and power resources (as indexed by civilian productive capacities of the different countries) decided the outcome (Kennedy, 1985). As f o r the o u t b r e a k of war, Calleo argues that Britain declined to maintain the balance-of-power. London did not attempt to placate Russia and France, nor did it want to collaborate seriously with Germany. Calleo (1978: 34) attributes this to i n d u s t r i a l c o m p e t i t i o n : " G e r m a n y ' s c o m m e r c i a l aggressiveness and general ambition to be a ' w o r l d ' power had steadily eroded whatever British goodwill and detachment may once have existed." Somewhat schematically, we may see this as a British choice between the

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United States and Germany. The Germans actually hoped that Britain would prefer a "special relationship" with them in order to halt U.S. expansionism, but Britain instead hoped to coopt the United States. A f t e r World War I, the great p o w e r club was no longer exclusively European in composition. In the east, Japan had expanded rapidly, but the m o s t significant d e v e l o p m e n t was the emergence of the t w o twentiethcentury superpowers flanking E u r o p e — t h e Soviet Union and the United States. In Europe, the alliance between bourgeoisie and aristocracy was destroyed, and the m a j o r societal cleavage was n o w between labor and bourgeoisie. In contrast, power relations within the Soviet Union and the United States were one-sided. Following the Russian Revolution, the Soviet Union was ruled according to the principles of a planned economy by an elite that claimed to represent the working masses. All of the old regime, including the entire aristocracy, had been violently brushed aside by the revolution. The United States, on the other hand, manifested a relatively pure form of capitalism, although, as we have seen, it was a capitalism organized and managed in ways not envisioned in the classical liberal model. Notably, there was virtually no radical pressure from organized labor. World War II has been regarded as a reprise of the tensions that led to World War I. In World War I, the entry of the United States was decisive; in World War II, U.S. and Soviet support of the allied bloc was crucial to the outcome. World War II was won with U.S. weapons and Soviet soldiers, but t h i s g r a n d a l l i a n c e b r o k e u p as s o o n as t h e p e a c e w a s o r g a n i z e d in 1945-1946. The cold war implied a growing polarization between the Eastern and Western blocs, the latter including the m a i n losers of the war (western Germany, Italy, and Japan). At this point, U.S. hegemony was constituted. As part of the strategy for containing communism, Fordist norms of production and consumption were promulgated across Western Europe. The interaction of this influence with domestic political constellations created the European social d e m o c r a c i e s and w e l f a r e states and p r o d u c e d a variety of c o m promises between labor and capital. The politics of nineteenth-century hegemony involved a specific British version of the bourgeoisie-aristocracy alliance. U.S. hegemony, on the other hand, reflected a capitalism that politically was immune to influence not only from all the European "old regime" institutions (church, king, aristocracy), but even from organized labor. Although there are strong traditions of grassroots mobilization in the U.S. labor movement, the comparative lack of ties among unions, shop floor collectives, and political parties is striking. T h e t w o m a j o r U.S. political parties, c o m p a r a t i v e studies h a v e s h o w n , are nonprogrammatic parties (Skocpol and Ikenberry, 1983; Shefter, 1986). The contrast with Western Europe's multiparty systems, and especially with its social democracies, is noteworthy. A s o m e w h a t speculative implication of these d e v e l o p m e n t s is that

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Western European class compromise-oriented capitalism never gained a hegemonic position in international capitalism. The first plans for a reorganized world economy reflected such views, coinciding at that time with Roosevelt's New Deal internationalism. But as soon as the cold war developed, U.S. hegemony attained its major characteristics, and international relations were structured with institutions dominated by the United States and reflective of the values and interests of that country. These institutions related to the Western interest sphere, that is the First World, and to selected Third World (colonial or postcolonial) areas. At the security level, of course, North Atlantic Treaty Organization (NATO) and other regional U.S. alliances became the crucial parts of the regime. In the historical context of British hegemonic decline, there was no military alliance among the major capitalist countries. Also, these countries were marked by the legitimation problems of liberal capitalism, and their bourgoisies were tempted by the influence of aristocratic-nationalist rhetoric. There was a correspondence between economic and military competition. The historical context of U.S. hegemony, in contrast, involves the whole array of advanced capitalist countries (reflecting different varieties of organized capitalism) joined in one network of U.S.-centered military alliances. They are allied against a superpower incarnating a different kind of sociopolitical system—state socialism. There is thus a noncorrespondence between economic and military competition. Furthermore, technological developments in the two superpowers are oriented toward the arms race, whereas the defeated World War II powers in the Western alliance (Germany and Japan) were not allowed to rearm. The United States developed a form of "military Keynesianism," and now seems to be suffering from the adverse economic consequences of the high priority placed on its military-industrial complex over the postwar period. The Western allies were left to develop increasing numbers of civilian spinoffs from the U.S. innovations. (As already mentioned, Japan has used this opportunity to greatest advantage.) The grand postwar conflict with the Eastern bloc has tied the Western countries closely together. There is a pattern of mutual determination between the new type of economic interdependence (typical of the Fordism diffused in the postwar period) and the institutional cohesion of the Western alliance. East-West geopolitical competition has forced the advanced capitalist countries in the Western alliance into p e a c e f u l e c o n o m i c competition. This is not a general proof of the stability of the mutual deterrence regime; rather, it is only a reminder that the historical context has changed decisively from the nineteenth-century fin de siècle to the present one. In fact, the whole period 1914-1945 may be seen as the violent, closing phase of a period during which the fragile power balance among the European great powers was the most decisive element in international relations. This was so despite the fact that the United States was already quite influential in the interwar period.

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Many problems emerged in the Third World, which developed into a heterogeneous mix of young countries as a consequence of decolonialization. Strategic areas in the Third World proved to be areas of tense conflict between the two superpowers. To the United States, the Third World became the far empire, as opposed to the near empire of the First World. But now, unlike during previous periods, the alliance networks and the integration of the far empire involve relations with sovereign states, making direct dominance difficult. In addition, integration by the modern multinational corporation is often involved, although, as discussed earlier, the pattern of integration via intra-industry trade is largely absent. Economic competition among the Western countries takes place in a strategic context, which until recently has been dominated by the perceived threat of Soviet military expansionism. Even given the peculiarities of U.S. politics, a cycle of U.S. diplomacy toward the Soviet Union has developed (Calleo, 1987). T h e cycle alternates between confrontation (rearmament, cold war) and détente. The first cycle was Truman's cold war ( 1 9 4 7 - 1 9 5 3 1955), followed by Eisenhower's attempt to sustain hegemony cheaply. In the s e c o n d cycle, with K e n n e d y ( 1 9 6 0 - 1 9 6 9 ) , a new o f f e n s i v e started, peaking with the Vietnam War, and leading to Nixon's détente, which was continued by Ford and Carter (1969-1979). The third phase started with Carter's new cold war, heightened greatly by Reagan through much of his two administrations (1979-1987), followed by the new détente started in Reagan's second term (1987). The relations between Western Europe and the United States have been m a r k e d b y a sort of " A t l a n t i c c o m p r o m i s e , " w i t h t h e U n i t e d S t a t e s dominating in matters of security. Calleo (1987) claims that Western Europe h a s t e n d e d to c o u n t e r a c t the U.S. c y c l e — a l t h o u g h W e s t e r n E u r o p e a n countries generally have favored U.S. rearmament, they have not been willing to sever their diplomatic, economic, and cultural ties with Eastern Europe (see also Gaddis, 1982). They typically argue that these ties may give rise to political reforms in the East. Thus, Western European diplomacy has tried to insulate European détente from bilateral tensions between the United States and the Soviet Union. T h e U.S. view has been that Western Europe is not a safe zone for détente. The Soviet Union depends heavily on economic relations (trade and investment) with Western Europe, and this can and should be used as leverage if the Soviet Union shows signs of aggression in other parts of the world. Thus, the arms race and manipulation of economic incentives will induce the Soviets to abandon, or at least refrain from, ambitions of world dominance. There are also concerns elsewhere in Western Europe about the potential strategic implications of German reunification, as well as worries about U.S. willingness and/or ability to sustain the strategic balance. A m i d s t these d i f f e r i n g v i e w s of h o w to c o p e with the S o v i e t U n i o n , the E u r o p e a n Economic Community (EEC), as it becomes more tightly integrated, has

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become more critical of U.S. parochialism in economic policies (e.g., low oil prices, the instability of the dollar, and persistent budget deficits). According to Calleo (1987), the cycle in U.S. foreign policy persists because the United States is not willing to sustain permanent rearmament nor to pay the price of full détente, namely the acceptance of the Soviet Union as an equal partner in global management. In the latest cycle (turning from cold war to détente in 1987), the United States has become somewhat more accommodating toward the Soviet Union, partly in response to Gorbachev's overtures, but also because of the growing U.S. deficit problems. At this point, as in earlier phases, Western Europe has become skeptical and questions the U.S. ability to maintain the military balance. Today, however, major changes in Soviet Union and Eastern European domestic and foreign policies seem to be taking place. Whether these promising changes will terminate the postwar security cycle remains to be seen. The comparison of security regimes yields the basic conclusion that the U.S.-centered alliance network is much stronger and more stable than the nineteenth-century balance-of-power—a result that stems from differences in the relationships between military and economic competition across the two periods. British h e g e m o n y operated in an environment that pitted the principal capitalist powers against each other in a strategic competition that was both geopolitical and economic. In contrast, economic competition during the period of U.S. hegemony has been conducted among capitalist powers that are simultaneously allied politically and militarily against a noncapitalist adversary that poses no serious economic challenge.

CONCLUSION The path from British to U.S. hegemony traversed two world wars, both of which crucially influenced the trajectory of technological change and the pattern of the international division of labor. In addition, wc have traced major changes in the regimes of trade, money, and security. The comparisons of the two hegemonies have thus focused on diffeences both in their constituent regimes and in the ways these regimes were interrelated. For instance, the nonconvergence between geopolitical and economic competition within the U.S. hegemony sharply distinguishes it from the British precedent. In consequence of this "insulation" of regimes, it is unlikely that twentieth-century hegemony will deteriorate into another sequence of global war. This expectation derives more from the factors examined here than from the usually cited presence of nuclear weapons and the doctrine of mutual deterrence. One, of course, can imagine various scenarios in which the two types of competition would again converge, such as an economically invigorated Eastern bloc or a militarily renascent Japan. But for the foreseeable future, it

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seems likely that competition within the core of the world economy will be limited to a kind of pure technology race. Even in the case of greater convergence, however, other significant structural differences will persist. Referring to the complex interdependence of postwar trade and investment patterns between the United States and Western Europe, Arrighi (1976: 104) argues that "whereas nineteenthcentury English formal imperialism was an unstable phenomenon destined to pass into a state of universal anarchy and war, the informal American imperialism represents a relatively stable tendency." The transnational corporation has radically changed the situation obtaining at the beginning of the century, when the export of capital from core countries (largely limited to speculative and interest-bearing investment and to the appropriation of natural resources) directly depended for its profitability on monopolistic positions backed by state power. The profitability of modem TNCs does not normally depend on the establishment of such positions but rather on superior organization which can fully develop, and be fully deployed, only under conditions of universal freedom of entry. (Arrighi, 1982: 92)

Arrighi adds that modern TNCs depend on state support for the "reproduction on an enlarged scale of the economic space of oligopolistic competition," but not, as in earlier periods, for the creation of "political zones of monopolistic exploitation." The general impression of greater stability seems warranted, although this stability could be threatened by major disruptions in the pattern of alliances that comprise the security regime. Stability is also enhanced by the absence of the kind of expansionary, social Darwinist ideas that were prevalent in the nineteenth century. Nonetheless, various tensions have accumulated in the structures that have been built in the postwar period. These are found primarily in the relationship between the technology restructuring race discussed earlier and developments in the trade and monetary regimes. This leads to the now familiar debate over whether U.S. hegemony has undergone significant decline. Some neorealist political economists emphasize the United States return of the United States to "ordinary country" status in the trade regime (e.g., Krasner, 1985). Another group of scholars, inspired by the venerable ideas of the naval historians, emphasize "imperial overstretch" as a major parallel between the U.S. and British cases (Gilpin, 1975, 1987; Kennedy, 1987a). Other scholars have joined the debate with arguments that support the official U.S. government view that the alleged decline has been vastly overstated and that the relative decline from the U.S. artifactually preponderant postwar position, although occasionally accelerated by policy mistakes, has been inevitable and should be regarded as an indicator of success, not failure (Huntington, 1988/1989; Nye, 1988).

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Finally, there is an outsider view that the parallel with Britain is altogether misleading and that the structural power of the United States remains largely intact (Russett, 1985; Strange, 1987; Calleo, 1987). The comparative results tend to confirm this last viewpoint and to lead to the prediction that as long as the security n e t w o r k s and patterns of complex interdependence are not significantly altered, the United States will use its structural power to block major reforms of the world economy. To try to specify further the precise form, as well as the implications, of this stalemate is outside the scope of this chapter, but one can say with confidence that the question of Japan's role will be an important element in any such specification (see Chapter 9). Japan's move into the lead in the technology restructuring race and the persistence of its trade surplus, despite massive appreciation of the yen since 1985, only goes to show that manipulation of exchange rates within the monetary regime cannot negate the effects of different national systems of innovation. But the flow of Japanese finance into the United States is scarcely an indication of rising Japanese hegemony. Rather we will likely see more movement toward U.S.-Japan burden-sharing arrangements, which will entail continued Japanese financing of the U.S. budget deficit, increasing technology transfers from Japan to the United States, and modification of the Japanese stance on rearmament (including more imports of defense goods and technologies from the United States). These developments seem to emerge from a "muddling through" pattern of policymaking in the two countries rather than from any conscious design. Nonetheless, they represent evolution toward a kind of "pluralization" of leadership within the core of the world economy. In conclusion, the interrelations among the three regions within this core are decisive for the fate of the larger world economy. In the short to medium term, we can expect to see more muddling through, which will impede the forces toward a new world economic upturn. But in contrast to the earlier British case, rapid destabilization and escalation to world war are unlikely.

NOTES 1. Space limitations do not allow for a critical survey of earlier comparisons. For such a survey, see Mj0set (forthcoming). 2. Mj0set (forthcoming) provides a comparison of the role of ideological and cultural factors in the British and U.S. hegemonies. 3. These are examined in much greater detail in M0set (forthcoming). 4. Because this essay deals mostly with the international level, comparisons of national accumulation and regulation regimes will not be specified further. For such matters, see works of the regulation school (Boyer, 1986a, 1986b; Aglietta and Brender, 1984). 5. Some early contributions to the discussion of hegemony, particularly by world

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systems theorists (Wallerstein et al., 1979), tried to find a correspondence between fluctuations in the international division of labor (as indicated by changes in the terms-of-trade relations between core and peripheral products) and cycles of hegemony. This heroic approach was never very successful and, as Goldstein (1988: 132-141) has shown, more recent studies by the same scholars (e.g., Wallerstein, 1984) now accept the theory that the cycle of hegemonies—if it exists—has a 150year rhythm, not the 100-year rhythm that would correspond to two Kondratieff long waves. 6. In this respect, even the neo-Schumpeterian tradition has come up with a concept acknowleging different national developments. Freeman's (1987) notion of a national innovation system is an attempt to specify the different institutional settings for absorption of a new technology paradigm. Freeman arrives at a ranking of such systems according to the degree of inertia each displays. It is important to note that high-technology programs—which by now are integral to every country's industrial policy strategy—are not in themselves decisive. Rather, it is the ability of the overall society to respond because the ability to adopt to a new sociotechnical paradigm depends on society as a whole. 7. Ruggie's (1982) concept of "embedded liberalism" does not analytically separate structure and regimes. The concepts of the regulation school (e.g., Boyer, 1986b) are more sensitive to this distinction. 8. On the crisis of 1907, see De Cecco (1976: 126); for the crisis of 1914, see De Cecco (1976: 127) and Keynes (1914/1983: 238; 1923/1971). 9. Kennedy (1985: 32) argues that in 1900 no one could foresee what kind of war scenario was most likely: Anglo-German, Anglo-American, Britain against the dual powers, or Britain alone against a combination of continental powers.

G. John Ikenberry Charles A. Kupchan

The Legitimation of Hegemonic Power "The strongest is never strong enough to be always the master, unless he transforms strength into right and obedience into duty." —Rousseau

One of the most important ongoing tasks of international relations scholarship is to explore the manner in which hegemonic states exercise power over other nations. Although this issue has attracted a great deal of attention and generated a significant body of literature, we are unsatisfied with existing descriptions and explanations of hegemonic power. The dominant conception of hegemonic power specifies material resources as the source of influence within the international system—the hegemon's preponderance of military and economic capabilities is what accounts for order and compliance among states. In this chapter we seek to probe the nonmaterial bases of hegemonic power—the ways in which states use ideology and norms to establish order in the international system. We argue that the notion of legitimate domination is essential to understanding the exercise of hegemonic power. According to our argument, hegemonic nations not only wield power in the conventional sense, but they also articulate conceptions of an international normative order. These conceptions involve principles of order and change within the international system as well as normative claims about the role of the hegemon within that order. Other nations may or may not come to embrace these normative principles, but to the extent that they do, power comes to be manifest as legitimate domination. In this way, hegemonic power is based upon right as well as might. Legitimacy enhances the capacity of the hegemon to lead. Legitimate domination is far more effective than naked domination. The right to lead emanates less from economic and military power as such and more from the willingness of smaller nations to buy into and internalize the norms and principles set forth by the hegemon. Legitimate domination is established

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w h e n the internalization o f the norms and principles articulated by the hegemon becomes sufficiently deep to guide secondary states in choosing h o w to pursue interests and, as a consequence, in shaping their conceptions o f order (Wight, 1977). W e begin by developing the notion o f international legitimacy, drawing on both realist and Gramscian traditions. W e specify what legitimacy is and h o w w e can distinguish it f r o m other dimensions o f power. W e then set forth f o u r m o d e l s describing h o w h e g e m o n i c order m a y c o m e about, placing particular f o c u s on the processes through w h i c h l e g i t i m a t e domination emerges. In the final section, w e present analytic and empirical applications o f our theoretical argument, seeking to ground the notion o f l e g i t i m a c y through t w o case studies. Our aim is to develop a theoretical framework for thinking about the problem o f l e g i t i m a c y in international politics and to assess the value o f this framework by examining historical case studies. T h e chapter lays the analytic foundation for further research into when and how legitimation functions e f f e c t i v e l y as a source o f p o w e r in the international system.

REALIST A N D

GRAMSCIAN

APPROACHES TO HEGEMONIC POWER Realists provide the dominant concept o f hegemonic power: T h e hegemon's ability to create and sustain order and compliance among states is directly related to its command o f material resources. T h e hegemon exercises p o w e r by using material incentives to alter the policies o f elites in secondary states. In this way, the hegemon's source o f influence in the international system is built on its military and e c o n o m i c capabilities. R e f l e c t i n g this position, Keohane (1984: 32) describes h e g e m o n y as a "preponderance o f material resources," where the constitutive elements o f hegemonic power, as they relate to the world political economy, include control o v e r raw materials, markets, and capital, as w e l l as competitive advantages in highly valued goods. A preponderance o f material resources gives the hegemon capabilities to make and enforce order in the international system. Although p o w e r in international relations m a y ultimately rest on the distribution o f military and economic capabilities, f e w realists are satisfied with this formulation. Gilpin ( 1 9 8 1 ) argues that international order is built on moral or normative factors as w e l l as the more traditional forms o f power. In particular, prestige—which embodies the international moral authority of a nation—operates alongside other elements o f p o w e r to ensure that the lesser states in the international system will obey the commands of the dominant state or states. . . . to some extent the lesser states in an international system follow the leadership of more powerful

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states, in part because they accept the legitimacy and utility of the existing order. (Gilpin, 1981: 30)

The willingness of secondary states to accept the hegemonic order is based on the h e g e m o n ' s military and e c o n o m i c capabilities, but it is also conditioned by the h e g e m o n ' s prestige or moral authority. A proper understanding of order and change in the international system, according to Gilpin, requires an appreciation of the distribution of material capabilities and the ideological and normative appeal of the lead state. Other scholars working within the realist tradition also recognize the importance of ideological and normative aspects of power. Morgenthau (1967: 87-88), for example, argues that "while all politics is necessarily pursuit of power, ideologies render involvement in that contest for power psychologically and morally acceptable to the actors and their audience." Throughout Morgenthau's writings one finds a sober understanding of the irreducible force of power politics in international relations. But one also finds a remarkable appreciation of the powerful historical dynamism that emerges from the melding of material capabilities with moral and ideological purpose. Scholars outside the realist school assign greater importance to the role of ideology in establishing hegemonic order. Working within the Gramscian tradition, Cox (1983: 171) argues that hegemony is not simply a political order among states: "It is an order within a world economy with a dominant mode of production which penetrates into all countries and links a dominant mode of production. It is also a complex of international social relationships which connect the social classes of the different countries." Hegemonic structures of power, according to Cox (1987: 172), are sustained by "universal norms, institutions, and mechanisms which lay down general rules of behavior for states and for those forces of civil society that act across national boundaries." According to this view, world hegemony is an outgrowth of the intertwining of social, economic, and political structures, all of which are rooted in a particular mode of production. Gramscian conceptions of hegemony, such as that provided by Cox, stress the interrelationships between ideological and material forces in history. "Ideas and material conditions are always bound together, mutually influencing one another, and not reducible one to the other. Ideas have to be understood in relation to material circumstances. Material circumstances include both the social relations and the physical means of production" (Cox, 1983: 168). International institutions and rules, Cox argues, facilitate the spread of the material and social bases of hegemony. These institutions and rules play a role in legitimating the hegemonic order and coopting the elites from peripheral countries into the system. "They help define policy guidelines for states and to legitimate certain institutions and practices at the national level" (Cox, 1983: 172). Other scholars working within the Gramscian

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tradition also stress that the convergence of material and ideological forces is crucial to the legitimation and perpetuation of ruling socioeconomic structures (see especially Chapter 6). Realist and Gramscian conceptions of hegemony differ substantially as to the relative importance of the material and nonmaterial components of hegemonic power. Realists focus on material capabilities, Gramscians on ideational forces. Both traditions share appreciation, however, of a reciprocal and often mutually reinforcing relationship among ideology, norms, and traditional forms of economic and military power. They acknowledge that hegemony can be an extraordinarily profound form of power and that its grip on economic and political life within the international system is all the more secure when that power is rendered legitimate. These surprisingly similar insights and arguments from otherwise very different traditions lead us to inquire further into the notion of legitimacy in international relations. It is this intersection between realist and Gramscian approaches to hegemony that provides a point of departure for our analysis.

LEGITIMACY AND LEGITIMATE DOMINATION Legitimate domination comes about when a nation's leadership position in the international system is based upon right as well as upon might. Rightful rule emerges if the hegemon is able to induce smaller powers to buy into its vision of international order and to accept as their own—in short, to internalize and to embrace—the principles and norms espoused by the hegemon. We refer to this condition as legitimate domination because the hegemon exercises its power not only through economic and military incentives or sanctions, but also through a process of socialization in which the values and interests of the smaller powers change and more closely reflect those of the dominant state. It is this transmission of norms and reshaping of values that serves as the process through which legitimation takes place. What Is Legitimacy? The notion of legitimacy occupies a prominent position in the study of national systems of power. One formulation stresses the rational-legal foundations of legitimacy. Another stresses the importance of overarching moral or normative principles. We examine both of these notions. The central problem in politics, according to Weber (1978), is that rulers must establish ongoing bases of domination of the ruled. Within systems of political hierarchy and class inequality, relations of domination are inevitable. Systematic incentives exist, Weber argues, for rulers to organize power in ways that establish or preserve the legitimacy of government institutions and decisionmaking. "Experience shows that in no instance does domination

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voluntarily limit itself to the appeal to material or affectual or ideal motives as a basis for its continuance. In addition every such system attempts to establish and to cultivate the belief in its legitimacy" (Weber, 1978: 213). Thus, Weber notes a seemingly universal need for those who wield power to exercise that power as legitimate domination. He maintains that there is a "generally observable need of any power, or even any advantage of life, to justify itself' (Weber, 1978: 953). Weber argues that the modem state has found legal-rational authority to be the most effective method for the legitimation (and therefore also for the organization) of power (Weber, 1978: 212-216). The legitimation of power is dependent upon conformity to formal and legal principles of government and decisionmaking. Rightness of rule (or the legitimacy of power) is thus a function of its legality. In effect, rulers routinize domination by governing through procedures and institutions that conform to generally accepted laws and rules. Although belief in the legality of authority may be the most common form of legitimacy, Weber and other scholars argue that a set of shared beliefs in a larger normative order can also serve as foundation of legitimacy. Winckelmann argues that "the belief in legality does not per se legitimize. Legal positivism requires, rather, a general consensus grounded in a rational orientation to value" (quoted in Habcrmas, 1975: 99). In other words, it is not procedure that confers legitimation upon a decision, but the values and norms that form the substance of that decision. Rulers enjoy legitimacy when the values they espouse and articulate correspond with the values of those they rule. Such values go beyond consideration of maximizing short-term benefits; they reflect principles and norms grounded in rational assessment: If b i n d i n g d e c i s i o n s are l e g i t i m a t e , that is, if t h e y can be m a d e independently of the concrete exercise of force and of the manifest threat of sanctions, and can be regularly implemented even against the interests of those affected, they must be considered as the fulfillment of recognized norms. This unconstrained normative validity is based on the supposition that the norm could, if necessary, be justified and defended against critique. And this s u p p o s i t i o n is not automatic. It is the c o n s e q u e n c e o f an interpretation which admits of consensus and which has a justificatory function, in other words, of a world-view which legitimizes authority. (Habermas, 1975: 101)

It is not the rule of law but the common acceptance of a consensual normative order that binds ruler and ruled and legitimates power (Habermas, 1975: 95-143). In this formulation, actors within a political system come to define and act on sets of interests that are derivative of a larger set of normative principles. The second formulation of legitimate domination is more encompassing than the first and is more useful in the study of international politics. As we

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e x t e n d the c o n c e p t to i n t e r n a t i o n a l r e l a t i o n s , w e c a n d e n o t e t w o b a s i c components of legitimate domination, normative and cognitive. Legitimacy is established normatively w h e n the institutions of political order p o s s e s s a "quality of v o u g h t n e s s ' " ( M e r e l m a n , 1966: 548; see also George, 1980; Trout, 1975). A normative consensus must be based u p o n a set of claims about the desirable m a n n e r in which international order is to be maintained and the role of nations within it. In this sense, w e are referring to the broadest claims that nations can m a k e about order, welfare, and justice in the international system. T h e cognitive c o m p o n e n t of l e g i t i m a t i o n s u g g e s t s that n a t i o n s m u s t e m b r a c e normative principles through a process of learning and socialization, and these principles must influence the types of interests and preferences that those nations c o m e to define for themselves. Legitimate d o m i n a t i o n in i n t e r n a t i o n a l r e l a t i o n s d o e s n o t p r e s u p p o s e a n y " o b j e c t i v e " determination (by the analyst or the actors themselves) that the global order actually works in the way suggested by the norms and principles, but only that states come to believe in the value of these principles. We can link the cognitive and normative components of legitimation by considering h o w the process might occur a m o n g individuals. As theorists of p o w e r relations have noted, one of the most profound forms of the exercise of p o w e r occurs when A is able to influence B's behavior by changing the way that B thinks about his goals and the n o r m s that guide his actions. O n c e these n o r m s have been established, A's p o w e r rests on his ability to shape B's behavior by "activating a commitment"; this variety of power is manifest in " y o u r ability to get s o m e o n e to d o w h a t h e w o u l d not o t h e r w i s e d o b y appealing to a norm that says he ought to obey y o u " (Barry, 1976: 69, 74). Similarly, L u k e s (1974: 24) argues that individuals o f t e n d o not e x p r e s s grievances because the norm- and principle-based f r a m e w o r k in which they shape political opinions and preferences has already been molded through a power relationship: is it not the supreme and most insidious exercise of power to prevent people, to whatever degree, from having grievances by shaping their perceptions, cognitions and preferences in such a way that they accept their role in the existing order of things, either because they can see or imagine no alternative to it, or because they see it as natural and unchangeable? Clearly, this notion of the exercise of p o w e r can take place only through a process of socialization. It must be through B's interaction with A that B comes to change the norms that guide his behavior. If B changes his n o r m s i n d e p e n d e n t l y of this i n t e r a c t i o n , then t h e r e has b e e n n o c o n s e q u e n t i a l exercise of a p o w e r relationship. T h e p r o c e s s of socialization involves a transformation of the way that B thinks about his o w n interests. T h r o u g h example, persuasion, or appeal to the cognitive process of learning, A is able to change B's beliefs and, consequently, to secure compliant behavior.

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This serves as a point of departure for the development of a substantive notion of legitimate domination within an international context. We propose that legitimate domination comes about when smaller powers, through the influence or example of the hegemon, experience a shift in value orientation that induces them to buy into and accept as justified and principled the normative order espoused by the hegemon. It is essential that the process involve change in norms, and not simply a shift in practices. 1 The state is still capable of rationally pursuing its own interests, but new norms guide the choices states make to advance those interests. The process of legitimation is thus one in which states internalize these new norms and become socialized in the community formed by the hegemon and those states that accept its leadership position. Because of this shared corpus of values and norms, legitimation should lead to the consolidation of the hegemon's position and to cooperation among the states participating in the system. MODELS OF HEGEMONIC ORDER We can sharpen our model of legitimate domination by contrasting it with other models that attempt to account for order within a hegemonic system. The models elaborated upon below attempt to characterize competing conceptions of how hegemonic orders come about; all focus on instances in which secondary states acquiesce to the preferences of the hegemon, but each provides a different explanation for this acquiescence. The first two are not models of power as such—orderly participation in the system comes from a preexisting consensus on norms. The coercion/inducement and legitimation models do involve the explicit and purposeful exercise ,of power. These models are summarized in Table 3.1. Table 3.1 Models Of Hegemonic Order Model

Reason for Norm Change

Reason for Participation

Endogenous learning

Coincidence or common reaction to structural setting

Voluntary

Emulation

Influence

Voluntary

Coercion/ inducement

No norm change

Manipulation of incentives by hegemon

Legitimation

Normative persuasion Positive inducement

Socialization

The Endogenous Learning Model In this model, secondary states independently arrive at a set of norms and practices similar to those of the hegemon. The correspondence of policies

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and norms may legitimate the hegemon's leadership, but such legitimation is incidental to the power relationship. We believe situations of this sort are very rare, but nations can, in principle, come to embrace similar norms and practices through a strictly internal learning process that is not dependent upon interactions with other states in the international system. Agreement between the hegemon and smaller nations is either a historical accident or the result of circumstances in which the nations generate similar reactions and policies in response to similar structural problems. For e x a m p l e , n a t i o n s m i g h t i n d e p e n d e n t l y arrive at liberal trade practices through internal processes unrelated to the trade posture of the leading state. The policies emerge purely from domestic reactions to the structure of the international economy. In such a case, the appearance of common trade practices would be incidental to the exercise of interstate power relationships.

Emulation Model Here the secondary states adopt norms and policies that conform to those of the hegemon because they seek to emulate the success of the lead country; behavior that benefits the hegemon can also benefit them. The expectation of future benefits, independent of external inducements or sanctions, leads to a change in nonms and policy practices. Emulation is a process whereby elites monitor policy changes abroad and, seeking similar successes, import the appropriate policies. What emerges is a sort of "policy bandwagoning." 2

Coercion/Inducement Model In this model, which captures the essence of the realist notion, the hegemon forces secondary states to change their practices through sanctions and inducements. The hegemon can coerce secondary states to cooperate by threatening or imposing sanctions, thereby raising the costs of noncompliance. Or it can offer rewards or side payments for cooperation, raising the benefits of compliance. Through its predominance of economic and military resources, the hegemon is able to manipulate the incentive structure of secondary states and induce cooperative behavior. The normative orientation of the hegemon and of secondary states may diverge widely. Nonetheless, the secondary states make rational calculations about the expected costs of noncompliance. Although the smaller states have not altered their normative orientations, they have shifted their preferences either in advance of or as a result of the use of coercion or inducements by the hegemon. Cooperation is thus the result of adjustments and concessions undertaken in light of the expected costs of future interactions.

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Legitimation M o d e l A power relationship constitutes legitimate domination when secondary nations come to embrace the principles of international order and leadership espoused by the hegemonic nation. In effect, power is manifest through a process of socialization. This process of legitimation can take two forms: one involves normative persuasion and the other involves positive inducement. In the normative persuasion case, the hegemon is able to alter the normative orientation and practices of secondary elites without sanctions, inducements, or manipulation. Rather, the hegemon engages in a process of socialization and ideological persuasion in which legitimacy emerges through the osmosis of norms and values from dominant to secondary elites. Elites in smaller states learn and internalize such values and adopt new policy practices that are compatible with those of the hegemon. In its strongest formulation, then, l e g i t i m a t e domination c o m e s about w h e n changes o c c u r in the value orientations of elites in secondary states that are independent of and prior to changes in the policies of those states. The causal chain is as follows: NORMATIVE P E R S U A S I O N ~ • NORM CHANGE - • P O L I C Y CHANGE

In more concrete terms, citizens and/or elites in secondary states come to believe in the virtues of the normative order articulated by the hegemon, to define their nation's interests in terms of that normative order, and then to move to bring policy practices into accord with those normative principles. This normative persuasion case reflects "belief before acts." In the positive inducement case, the hegemon initially uses economic and military power to induce elites in smaller states to change their policies, but the process eventually leads to legitimation. At the outset of the interaction, hegemonic power is exercised, as realists would expect, through coercion and inducements. The hegemon uses traditional power resources to induce compliance with its principles of order and leadership. Elites in secondary nations, with fewer resources at their disposal, adjust their policies accordingly. It is only later that the n o r m a t i v e order, into w h i c h the secondary nations have been forced or induced to participate, comes to be embraced as rightful. The causal chain is as follows: COERCION/INDUCEMENT-*- POLICY CHANGE

NORM CHANGE

The conformity of secondary nations begins only hesitantly. Elites in those nations may have very different views concerning the organization of international relations. It is only after a time that beliefs in the normative

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virtues of the system emerge. This may be due to a variety of material and nonmaterial factors. This positive inducement case reflects a case of "acts before belief." Two factors provide the impetus for legitimation in the positive inducement model. First, entering into a subsidiary relationship with a hegemon requires compliant behavior and, consequently, a diminution of de facto political sovereignty. Participation in the system thus threatens to undermine a regime's domestic legitimacy. This problem can be mitigated if the public of the secondary state sees the hegemon as legitimate. In other words, elites may embrace and espouse the norms articulated by the hegemon in order to enhance their own domestic legitimacy. 3 Second, elites in secondary states may face a degree of cognitive dissonance because the policies they implement may not correspond with their b e l i e f s . 4 This dissonance can be reduced if the norms that guide policy come to correspond more closely to practice.

CONSTRUCTING A THEORY OF LEGITIMATE DOMINATION We now look at the analytic applications of this notion of legitimate domination and assess its contributions to the study of hegemonic power. Assessing the role that legitimation plays in the exercise of hegemonic power involves two basic tasks: First, we need to show both that the leaders of a hegemonic nation have in fact been aware of the need to legitimate their dominant position in the system and that they have undertaken steps to do so. Second, we need to find evidence that that these efforts actually do lead to some form of legitimate domination. In other words, we need to identify cases in which the norms and interests of secondary states change by virtue of their interaction with the hegemon. This change must be associated with a process of socialization in which secondary states come to believe in and internalize the norms articulated by the dominant state (in either of the two ways sketched above). Providing evidence that the elites of hegemonic powers are concerned with legitimating their rule presents few difficulties. The papers, memoirs, and policy memoranda of British officials in the nineteenth century and U.S. officials in the twentieth century contain frequent allusion to the need to legitimate their international role. Although elites have not always expressed this concern in terms of legitimation per se, they have been conscious of the need to articulate a broader normative virtue in their designs for international order and to socialize other states into a community bound by shared norms and values. We will show that elites acted on this concern, taking initiatives and introducing policies intended primarily to further the process o f legitimation. Identifying and measuring the process of legitimation within secondary

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states is a far more difficult task, which faces numerous obstacles. The normative orientation of nations is not often clearly articulated by a state's leaders, either in planning documents or in public speeches. Even if we are able to show that norms and practices change over time, it is very difficult to identify and characterize a process of socialization. And even under ideal conditions of controlled experimentation, recognition and description of the process o f socialization and learning present serious methodological problems. 5 These problems loom even larger when dealing with societies and international systems. Given these obstacles, we do not presume to be able to build a rigorous, air-tight case for the notion o f legitimate domination. T h e difficulties involved in reading the minds o f decisionmakers and the conceptual ambiguities that surround the process of socialization suggest that we must be satisfied with an argument that gives us reasonable cause to believe that legitimate domination is an important component of hegemonic power. We will build this argument through the following three steps. First, we will show that the norms of secondary states in hegemonic systems do change over time in a manner that is not coincidental with their participation in the system. S e c o n d , we will examine the timing and substance of this change to determine whether it constitutes socialization by normative persuasion or positive inducement. Socialization by positive inducement refers to a situation in which norms change before practices or in which norms and practices are at odds. As noted above, this constitutes the purest form of legitimation, in which the process is not linked to the coercive power o f the hegemon. Legitimation by positive inducement occurs when preferences change before norms. In this second type of legitimation, a tactical shift of policy practice brought about by the economic or military power of the hegemon leads over time to a change in normative orientation. Third, we will determine whether norm changes are isomorphic with the rise and fall of static indices of military and economic power to assess the extent to which norm change alone can affect the functioning of hegemonic systems. A shift in norms that affects the system but does not correspond to a shift in power resources strengthens the argument that legitimation is a crucial and (at least relatively) independent component o f hegemonic control.

HISTORICAL CASE STUDIES We now apply this analytic framework to two case studies. We first examine U.S. efforts to construct a new postwar order in the aftermath of World War II. The United States articulated and sought to proliferate throughout Europe a set of normative principles based on the notion of liberal multilateralism. These principles were embodied in a wide range o f policy initiatives and

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organizations. Even though the order that eventually emerged was the product of significant compromise between the United States and Western Europe, U.S. elites did succeed in reshaping the normative orientation of European elites and, consequently, in establishing legitimate domination. The second case study focuses on British rule in India. By coopting a new political elite and remodeling India's education and judicial systems along British lines, Britain succeeeded in infusing Indian political culture with a new set of liberal norms. The importation and proliferation of liberal principles at least to some extent legitimated British rule. Britain only temporarily enjoyed legitimate domination, however, as the norms that initially consolidiated British rule were the same ones that eventually gave rise to o v e r w h e l m i n g forces of nationalism and a n t i c o l o n i a l i s m . Nevertheless, both case studies illustrate the importance of norms and ideas in the establishment of hegemonic order. Liberal Multilateralism in Europe after World War II During the war and in its immediate aftermath, the United States articulated a variety of norms and principles to guide the construction of a postwar international order. In their initial formulation, as articulated by the Roosevelt administration, these norms represented a vision of political and economic order organized around the ideas of liberal multilateralism. In the political realm, great power cooperation, embodied in the charter of the United Nations, would replace balance-of-power politics. In the economic realm, a system of liberal, nondiscriminatory trade and finance, embodied in the Bretton Woods agreement and the proposals for an International Trade Organization, would be established.6 We argue that the attempt by the United States to construct a postwar hegemonic system was based as much on international acceptance of a particular set of norms and principles as on the then preponderant U.S. material capabilities. Moreover, in the attempt to legitimate its power, the United States was largely successful in inducing other nations (particularly in Western Europe) to buy into this normative order. A process of socialization, furthered by the modification of these normative principles and the cooption of a variety of European domestic groups, did result in the legitimation of hegemonic power. In building postwar order, the United States did exercise power through coercion and inducements. But it also articulated norms of international order that, in combination with the provision of material resources, came to be embraced by European elites. These shifts in the normative orientation of European elites, and the legitimation of U.S. hegemonic power that it entailed, helped provide the foundation for postwar order. The normative order that the United States began to articulate during the war drew on the ideals of liberal multilateralism. These ideals had long

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historical roots that could be traced to John Hay's "Open Door" and to the third of Woodrow Wilson's Fourteen Points: "the removal, so far as possible, of all economic barriers." The Atlantic Charter, signed by Roosevelt and Churchill during World War II, also represented U.S. efforts to elaborate a set of ideals around which to construct a postwar order. The importance that U.S. officials attached to spreading liberal ideals resonated with the broader belief shared by many U.S. citizens that their country was a model other nations should seek to emulate. Henry Luce expressed this idea in a memorable 1942 article: Because America alone among the nations of the earth was founded on ideas which transcend class and caste and racial and occupational differences, America alone can provide the pattern for the future. Because America stands for a system wherein many groups, however diverse, are united under a system of laws and faiths that enables them to live peacefully together, American experience is the key to the future. . . . America must be the elder brother of the nations in the brotherhood of man (quoted in Gaddis, 1972: 46).

The conviction held in the United States that it should use its power to promote particular normative goals is also revealed in the government's deliberations over the postwar fate of Germany and Japan. In early 1945, President Roosevelt agreed to the State Department's recommendation for " a s s i m i l a t i o n — o n a basis of e q u a l i t y — o f a r e f o r m e d , p e a c e f u l and economically nonaggressive Germany into a liberal system of world trade" ( q u o t e d in Dallek, 1983: 147). The e m p h a s i s was on " n o r m a t i v e " rehabilitation and not punishment. Several years later, with the rise of cold war tensions, the plan for a reconstructed and "assimilated" Germany also made good geopolitical sense. But the fact that U.S. officials were planning to promote liberal political and economic institutions in Germany well before U.S.-Soviet hostilities emerged is an indication of the importance the United States attached to the spread of liberal norms. A similar view emerged in regard to postwar Japan. In a major statement of postsurrender policy on September 6, 1945, the Truman administration e m p h a s i z e d the i m p o r t a n c e of political r e h a b i l i t a t i o n . A J a p a n e s e government would need to result from the "freely expressed will of the people," and the regime would need to conform "to principles of democratic self-government." Reflecting the view that the Japanese would need to import U.S. values, the Truman administration argued that the Japanese people were to "be encouraged to develop a desire for individual liberties and respect for fundamental human rights, particularly freedom of religion, assembly, speech, and the press." Most importantly, the Japanese were "to become familiar with the history, institutions, culture, and the accomplishments of the United States" and, by so doing, turn themselves into a New Deal-style democracy (quoted in Dallek, 1983: 149). Compliance with the

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precepts of a liberal multilateral order, in the view of U.S. officials, must begin with liberal reforms at home. Only with these economic and political reforms could the nations of the industrial world, victors and vanquished alike, abide by U.S.-inspired norms. Among the democratic nations, the search for agreement on norms and principles was facilitated by the common Western economic and social values that they shared. Yet in 1945, U.S. normative ideas for liberal multilateral order had few enthusiastic proponents in Europe. Watt (1983: 29-30) summarizes these obstacles as follows: whatever the underlying realities of power, Britain and France started from the assumption that their own pre-war spheres of influence would be maintained or restored to them. Britain still believed in its destiny in the Empire, in the Middle East, in the Eastern Mediterranean and initially in Germany itself. France, in the person of de Gaulle, had spent most of the war years attempting to demonstrate total independence, and had every intention of asserting an equal right to impose a repressive settlement on Germany as well as to repossess its patrimony in Africa, Indo-China and the Middle East. These ambitions did not fit in very easily to a framework of American tutelage or dominance.

U.S. officials were aware that the reconstruction of the international p o l i t i c a l e c o n o m y w o u l d r e q u i r e a c h a n g e in the n o r m s of order. Furthermore, such norm change would require the United States to refrain from the direct and coercive use of power. The more indirect approach, with the United States encouraging European leaders to embrace U.S. normative objectives, would be necessary (if only for tactical reasons) to insure the successful birth of a new order. U.S. efforts to overcome these obstacles and to induce European acceptance of a more liberal order went through several phases. The initial efforts to use material inducements, reflected most strikingly in the British loan of 1945-46, largely failed. It was at this juncture that U.S. officials, backed by Congress, attempted to use financial assistance to Britain as a means of forcing a British pledge to lift discriminatory controls and dismantle the Imperial Preference System. Reflecting the attitude of Congress at the time, a congressional report argued that "the advantages afforded by the United States loans and other settlements are our best bargaining asset in securing political and economic concessions in the interest of world stability" (quoted in Gardner, 1969: 198). Although the British were forced to accept the terms of the loan, the actions led in only a matter of weeks to a m a s s i v e drain on British reserves, and forced suspension of convertibility (see Edmonds, 1986). Beginning in 1947, the Marshall Plan became the central vehicle not only for Europe's economic renewal, but also for its political reconstruction along lines congenial with U.S. normative designs. Using financial assistance

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as entré, U.S. officials promoted alternatives to economic nationalism and t h e e m p i r e (see H o g a n , 1987). U.S. e f f o r t s to d i s c o u r a g e n a t i o n a l and imperial alternatives to liberal multilateralism operated on many levels. At one level, Truman administration officials publicly and covertly supported n o n - C o m m u n i s t political alternatives in Western Europe. In Italy, these e f f o r t s were extensive, channeling aid to n o n - C o m m u n i s t parties in the crucial 1948 elections (Miller, 1986: 243-249). In the end, with covert aid and threats of the cutoff of Marshall Plan aid, the Christian Democrats won a commanding victory and a majority in Parliament. U.S. officials also used their presence in Italy as providers of aid to educate government leaders in the virtues of liberal and Keynesian economic policy. The Marshall Plan provided the institutional means for the transmission of a range of liberal economic ideas. 7 The gradual process by which European elites came to embrace liberal multilateral norms (and downplay national and imperial alternatives) was sustained by the massive flow of money and resources to Europe. The rapid growth in European economies during the Marshall Plan years also gave e n c o u r a g e m e n t to norm change as those norms b e c a m e associated with economic success (Maier, 1978). In the language of our analytic framework, the shift by Europeans to a liberal multilateral order was driven by positive inducement. Although efforts, reflected in Roosevelt's push for an Atlantic Charter, were made to convince Churchill and other European leaders (prior to and independent of policy change) of the normative virtues of liberal multilateralism, the process was more gradual and highly dependent on U.S. provision of material resources. L a r g e r f o r c e s also stood b e h i n d t h e g r a d u a l s h i f t t o w a r d l i b e r a l multilateralism. The emergence of Soviet-U.S. hostilities stimulated a strong interest in Europe in a direct security relationship with the United States. Indeed, it was the Europeans that actively sought to extend the U.S. military presence to the continent (see Lundestad, 1980; Calleo, 1987; Ikenberry, 1989c). Cold war struggles and the consolidation of the NATO alliance obscured some of the sharper differences between Europe and the United States over international economic rules and institutions. At the same time, the rapid expansion of economic growth and trade in the Atlantic area by the 1950s also allowed differences to go unattended (Maier, 1978). Nonetheless, agreement did emerge over the desirability of a loose system of liberal multilateralism. Several specific processes facilitated the emergence of a new normative order. One process involved the reworking of the normative ideas themselves. Although not framed as an explicit shift in international economic objectives, a modified set of liberal designs was gradually accepted by the United States. For the most part this took the form of e x e m p t i o n s and a b r i d g e m e n t s in trade and f i n a n c i a l a r r a n g e m e n t s . Together, these compromises allowed a larger measure of national economic autonomy and a stronger state role in pursuing full employment and social

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welfare. The discipline of liberal multilateralism would be softened by the welfare state. These compromises between multilateralism in international economic r e l a t i o n s and state i n t e r v e n t i o n in the d o m e s t i c e c o n o m y and society constitute what Ruggie (1982) has termed "embedded liberalism." He argues, "The task of postwar institutional reconstruction [was to] devise a framework which would safeguard and even aid the quest for domestic stability without, at the same time, triggering the mutually destructive external consequences that had plagued the interwar period" (Ruggie, 1982: 393). In other words, rules would be devised to allow for nondiscrimination in commercial and monetary relations, but those rules would also insure the viability of the welfare state. The various efforts to protect domestic economic and social obligations of the state came primarily from Britain and the other European countries. T h e Europeans themselves were crucial in recasting the terms of liberal multilateralism by resisting, modifying, and circumventing U.S. proposals. In negotiations over the International Trade Organization, these concerns were manifest in safeguard and escape clauses, in the removal of agriculture from the framework, and in transition periods to multilateralism. As one British official noted in discussions over trade arrangements, "There must be in the international settlement which we are now devising sufficient escape clauses, let-outs, special arrangements, call them what you like, which will e n a b l e t h o s e c o u n t r i e s w h i c h are a d o p t i n g i n t e r n a l m e a s u r e s for full employment to protect themselves" (quoted in Gardner, 1969: 277). A loose c o n s e n s u s on the n o r m s of international e c o n o m i c order e m e r g e d . The British and French moved slowly to multilateralism, and the United States came to accept the primacy of the welfare state in the organization of the international political economy. Another process that served to yield a consensus on modified liberal multilateralism w a s m o r e directly associated with d o m e s t i c politics in Britain, France and Italy. Much of the resistance to U.S. ideas after the war came from both the Left and Right within Western Europe. Right-wing parties sought to protect the fragments of the Empire. The effort was to protect the great power status of these nations that liberal multilateralism would necessarily undermine. On the Left, the initial U.S. agenda was a challenge to national autonomy and independent economic planning. Leftist groups were most vocal in seeking to protect and extend programs of full employment and social welfare. 8 European movement toward a loose liberal multilateral system involved the gradual decline of these positions. On the Right, the ravages of war had severely weakened the capacity of Britain and France to maintain the remnants of a colonial empire. Indeed, this weakness was in part responsible for their willingness to invite the United States into a security relationship with Western Europe. Likewise, the dilution of the liberal multilateral agreements with provisions to protect the prerogatives of

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the welfare state served to undercut the impact of the Left. In summary, the United States, realizing that the system would work more efficiently than if it were based on coercion or material inducements, was clearly interested in finding agreement on the norms of postwar order. Behind the U.S. attempt to project liberal multilateral norms was an effort to i n f u s e the system with a set of v a l u e s that w o u l d allow it to f u n c t i o n smoothly. By the mid-1950s, U.S. h e g e m o n i c power was established as legitimate domination. A set of modified n o r m s were embraced by the United States and European nations. Importantly, the process of legitimation was driven by positive inducements offered by the United States. U.S. capital and material resources helped bolster the political fortunes of moderate European elites who gradually came to embrace the modified norms of a l i b e r a l m u l t i l a t e r a l order. O u r m o d e l of l e g i t i m a t e d o m i n a t i o n d r a w s attention to both the shifts in U.S. policy, as U.S. officials sought to build a n o r m a t i v e c o n s e n s u s on postwar order, and the s h i f t s in the n o r m a t i v e orientations of European elites, as they came to associate themselves with U.S. political and economic designs.

Britain in India The process of legitimation in a core-periphery context differs significantly from that described in the last section. In the core, the hegemon and secondary states share fundamental political and cultural values. A foundation therefore exists upon which legitimacy can be built: the hegemon makes use of these shared values to induce secondary states to buy into specific norms and conceptions of international order. In the periphery, by contrast, little by way of common culture or values ties hegemon to lesser actors. Without exception, a necessary condition for the emergence of both informal and formal empires is the explicit, physical penetration of peripheral society by metropolitan agents. Whether soldiers, traders, financiers, or missionaries, these agents establish the initial contact through which a core-periphery relationship develops. 9 The central concerns of this case study are how and to what extent the metropole is able to structure this relationship so as to legitimate its rule. Legitimate domination decreases the need for coercive instruments of control and dampens nationalism and other forms of indigenous resistance that raise the costs of the empire. In this section, we study the substance and process of legitimation in the periphery by examining British rule in India. During the middle decades of the nineteenth century, Britain was relatively successful in legitimating its position in India. T h e e m e r g e n c e of legitimate d o m i n a t i o n contributed significantly to the longevity of British rule in India, to the relatively low costs of maintaining the empire in South Asia, and to the lasting effect of the British presence on Indian political culture. It was not until 1813 that the British Crown extended formal sovereignty

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to the areas of the subcontinent that had gradually come under the control of the E a s t India Tea C o m p a n y since the seventeenth century. T h e principal responsibility of this community was to govern India effectively, but it was clear that British intentions went far beyond efficient administration. T h e writings of Brigadier G e n e r a l John J a c o b illustrate the extent to w h i c h the British b e l i e v e d that i n f l u e n c i n g social and m o r a l values w a s central to governing India: Let us establish our rule by setting them a high example, by making them feel the value of truth and honesty, and by raising their moral and intellectual powers. . . . The more the natives of India are able to u n d e r s t a n d us, and the more w e i m p r o v e their c a p a c i t y for so understanding, the firmer will become our power. . . . Whatever. . . . raises the European character in the eyes of the natives of India, and in reality, must greatly add to our security and power, (cited in Hutchins,

1967: 2 6 - 2 7 ) A s o n e observer of the period put it, the British Empire "has for its end the larger f r e e d o m , the higher justice whose root is in the soul not of the ruler but of the r a c e " (L.A. Cramb, cited in Hutchins, 1967:149). This commitm e n t to effect a deeper change in Indian society was driven not only by a desire to consolidate British p o w e r but also by the increasing strength of utilitarianism and evangelicism within Britain itself. T h e f o r m e r provided impetus for the improvement of living conditions and education in India. T h e latter brought missionaries to India seeking to propagate Christian morality. A s Charles Grant expressed in an article contained in a parliamentary report o n India f r o m 1832, British rule is a question "not merely of increasing the security of the subjects and prosperity of the country, but of advancing social happiness, of meliorating the moral state of men, and of extending a superior light" (cited in Hutchins, 1967: 5). To what extent did the British succeed in changing the n o r m s and values shaping Indian political culture? During the nineteenth century British rule deeply influenced the structure and normative orientation of Indian political life. B e f o r e the British presence, Indian politics was dominated by religious a f f i l i a t i o n a n d p r a c t i c e , the caste s y s t e m , and s t r o n g local and regional a l l e g i a n c e s . B y the end of the 1800s, Western notions of a d m i n i s t r a t i v e efficiency and justice had led to the gradual secularization of politics. T h e British suppressed human sacrifice and other religious practices, which they d e e m e d i m m o r a l . T h e i m p o r t a n c e of the caste s y s t e m d e c l i n e d and the spread of the English language helped to overcome the political regionalism that had b e e n perpetuated by linguistic diversity (some 179 distinct l a n g u a g e s and 5 4 4 d i a l e c t s h a m p e r e d c o m m u n i c a t i o n ) . B r i t i s h political values and practices c a m e to replace the traditional norms that were eroding u n d e r the p r e s s u r e of c o l o n i a l i s m . N e w educational and j u d i c i a l systems w e r e e s s e n t i a l l y i m p o r t e d f r o m Britain (Spear, 1978: 2 0 5 - 2 0 8 ) . A s the

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Oxford History of India puts it: " T h e widespread k n o w l e d g e of English provided an ideological bridge; ideas flowed over in the persons of British lawyers and officials, missionaries, and disinterested men of learning. . . . The essential fact is that these ideas did begin to take root." (Spear, 1978: 137). These changes were possible largely because of the emergence of a new political elite within India. British administration of India took place through a n e w class of c o l l a b o r a t o r s c o n s i s t i n g of E n g l i s h - s p e a k i n g , Westerneducated professionals. Trained within an education system introduced by the British, these i n d i v i d u a l s — b u r e a u c r a t s , l a w y e r s , d o c t o r s , and teachers—quickly rose to prominent positions within Indian society. Induced by the opportunities for advancement and indoctrinated by Western education, this new political elite came to believe in and espouse the values and norms articulated by the Raj. These collaborators served as the progressive medium through which British values seeped into Indian political culture and thus provided the mechanism through which the legitimation of British rule was to occur. Given the principles embodied in the liberal notions imported into India, it is not surprising that the same educated elite that m a d e possible the legitimation of British rule also led to the eventual erosion of Britain's position. By the late 1800s, the osmosis and spread of Western political values and teachings had stimulated an increasingly strong movement for democracy and Indian independence. 1 0 The collaborative medium that had originally served to consolidate British rule, when infused with nationalism, was a key force behind the delegitimation of imperial d o m i n a t i o n (see Hutchins, 1967: 190-191). Yet even after the opposition m o v e m e n t grew strong, the depth of British penetration of Indian political culture was evident. Indians in increasing numbers called for the end of British rule. But the "new politicians were impeccably constitutional. . . . These men spoke highly of British justice. They asked God to bless the British Queen. They had friends inside the British parliament" (Seal, 1968: 14-15). These considerations suggest that the trajectory of British rule in India was shaped by the power of ideas as much as by military and economic might. The consolidation of British rule during the 1800s was due, at least in part, to the legitimation of British domination. T h e c h a n g e s in political values that constituted legitimation came about through policy coercion, that is, the transmission of ideas followed the forcible importation of Western political institutions and practices. Nevertheless, India's political elite came to believe in Western values, and did not simply mouth acquiescence because of British coercion. So, too, was the rise of Indian nationalism and the consequent delegitimation of the British presence associated with changing beliefs, not with a changing constellation of military and economic power. In summary, it is clear that the legitimation and delegitimation of British hegemony in India occurred independently of static measures of military and

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economic power. Military force and economic opportunity were responsible for Britain's initial penetration of Indian society, but it was the transmission of Western ideas and practices to India that both consolidated Britain's position and led to its eventual demise.

CONCLUSION These cases confirm that international relations scholars must widen the scope of inquiry into the nature of hegemonic power. As noted above, other scholars have recognized the need to distinguish between material and nonmaterial components of power. We have developed a notion of legitimacy as it applies to hegemonic power and have used this notion to explore several important historical cases. We have argued that legitimate domination emerges when elites in secondary states buy into and internalize norms and value orientations articulated by the hegemon. Our case studies suggest that legitimacy has indeed played an important role in the functioning of hegemonic systems and that it is not simply isophormic with traditional military and economic measures of power. The power to articulate and spread particular sets of normative ideas is related to, but not reducible to, economic and military capability. The goal of this chapter has been to develop a framework for studying international legitimacy and to generate a research agenda allowing further inquiry into its relationship to hegemonic order. The challenge is to give this d i m e n s i o n of p o w e r more c o n c e p t u a l clarity and to investigate its relationship to material configurations of power. In this rcspect, three sets of questions are of particular importance. First, when and under what conditions does legitimate domination come about? What factors induce the hegemon to articulate a new normative order, and what circumstances induce secondary elites to embrace this new order and the principles it embodies? It is important to determine whether legitimate domination is more likely to emerge as a result of crisis and war or as the gradual outgrowth of routinized contacts and interactions. Second, at what level level or location in society does the legitimation process take place? Do norms take root principally among elites or does legitimation come about only through the diffusion of these norms among the public at large? The nature of domestic politics and the dynamics of coalition building are likely to be important variables in determining the timing and extent of legitimation. Third, what is the relationship between material configurations of power and legitimation of hegemonic leadership? Can legitimacy emerge solely through normative persuasion or are coercion and material incentives necessary to induce elites and/or the public to buy into new norms? Answers to such questions will determine whether legitimacy is primarily an

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extension of more traditional notions of power or whether it is fundamentally distinct from military and economic coercion. These questions are not only of theoretical importance but also may help us understand the evolution of the contemporary international system. With rapid shifts now occurring in the distribution of military and e c o n o m i c power, it is important to understand the contribution of ideological and normative forces to maintaining international order. Norms may survive even if the material configurations of power that gave rise to them do not. In contrast, norms may erode independently of the distribution o f material power, thereby affecting the functioning of the system and the willingness of secondary states to participate in it. If, indeed, the period of U.S. hegemony is coming to a close, w e must probe these questions and ask from whom and under what conditions new conceptions o f order can emerge and become legitimate.

NOTES 1. These terms require precise definition. By norms we mean fundamental principles and suppositions on which a conception of order or a world view is based. By practices we mean policies adopted and pursued by states within ihe international arena. For further discussions of elite beliefs and how to measure them, see Kupchan (1989). 2. This notion is further developed in Ikenberry (1989a, 1989b). 3. For a discussion of the way in which concerns about domestic legitimacy can strain foreign policy decisions, see Kupchan (1989). 4. This point is made with respect to domestic legitimacy by Merelman (1966: 551). 5. For a review of the literature relevant to these problems and their application to international relations, see Jervis (1976: chaps. 6-7). 6. These ideas are summarized in Gardner (1969); see also Calleo and Rowland (1973). 7. For the story of the migration of Keynesian ideas to Italy, see Baffi (1985). 8. See Gardner (1969: 31-35) for a more detailed discussion of the role of these groups in Britain. 9. For an insightful study of the dynamics of metropolitan penetration, see Doyle (1986a: 141-231). 10. The consolidation and gradual legitimation of British rule in the mid-1800s by no means removed all resistance to the colonial presence. The mutiny of 1857, which came as a great surprise to the British, demonstrated the latent resentment to be mobilized. It was not until the last two decades of the century, however, that an organized nationalist movement began to systematically undermine British rule.

Mark E. Rupert

4

Power, Productivity, and the State: The Social Relations of U.S. Hegemony In recent years, the state-centric vision that lies at the heart of orthodox international relations (IR) theory—as well as its theoretical stepchildren in international political economy (IPE)—has drawn fire from critical theorists representing a variety of differing orientations toward social theory (e.g., Ashley, 1983, 1984; Cox, 1981, 1982, 1983, 1987; Walker, 1984; Wendt, 1987). These various critiques converge upon the observation that the "sovereignty/anarchy" model that forms the basis of much orthodox IR/IPE analysis presupposes the existence of states as actors. Thus, by abstracting these actors from the context of social relations in which they develop capacities for action, the orthodox vision reifies state power to the extent that it appears as little more than an inventory of putatively power-bearing resources, or capabilities. In short, the existence of state actors is simply taken for granted, and their capabilities for action are assumed to be directly observable, quantifiable, and comparable across space and time. According to critics of this world view, these premises constitute an unsound basis for social knowledge and harbor a profound, if not always explicit, conservatism. Instead, these critics suggest an examination of the politically problematic and historically contingent bases of state power in social relations and practices. In the spirit of these critical analyses, this chapter uses a "relational" conception of power to begin to interpret critically some of the social bases of American global hegemony in the twentieth century. Underlying these discussions is the notion that hegemony has involved much more than the simple quantitative preponderance of power resources at the disposal of the American state; and that its decline is not reducible to the relative diminution of these "capabilities", or resource inventories. Instead, U.S. hegemony is better understood as the construction of a complex of social relations, in which global and local relations are linked together into a more or less coherent system of power mediated by the American state.1 In this view, U.S. hegemony has been premised upon the problematic extension of state power to encompass potentially contradictory 71

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structural sites 2 (both global and local) previously outside of its purview. The following description of the complex of power relations underlying U.S. global hegemony suggests that the much discussed waning of U.S. global power might be rooted not in dynamics endogenous to the U.S. or world e c o n o m i e s , but rather may d e r i v e f r o m c o n t r a d i c t o r y social r e l a t i o n s i n t e r n a l i z e d w i t h i n the s t r u c t u r e of the A m e r i c a n state. In s h o r t , the contextually variable capacity of the state itself to undertake social action m a y underlie the rise and fall of the U.S. world order of the twentieth century. However, before such questions can be meaningfully posed, some preliminary remarks about the nature of p o w e r and the methodology of political inquiry are in order.

POWER, DOMINATION, HEGEMONY: A HISTORICAL-STRUCTURAL VIEW In his provocative critique of prevailing conceptions of power in American political science, Isaac (1987) sketches an alternative perspective, which might fruitfully be studied by scholars of IR. Isaac argues that orthodox behavioral approaches to power have typically constructed it as a causal conjunction, in which the behavior of one party is observably altered when the power of another is present (see especially Isaac, 1987: chap. 1). If this "empiricist" view of power as a behavioral regularity is adopted, inquiry is then directed t o w a r d the tangible, apparently p o w e r - b e a r i n g r e s o u r c e s deployed as an external force by one party against another in order to secure compliance. Indeed this is the logic underlying mainstream IR analyses of power as possessed and wielded by sovereign states. This approach to the problem of power, argues Isaac (1987: chap. 3), is profoundly impoverished by its inability to conceive of the underlying social relations that define the parties in a p o w e r relationship and m a k e their interaction possible. In short, the empiricist approach forecloses inquiry into those structural preconditions of social action that enable the exercise of power. In order to emphasize these preconditions, Isaac (1987: 80) defines social power as "those capacities to act possessed by social agents by virtue of the enduring relations in which they participate." Viewed in this light, power is distinct from domination and represents the e n a b l i n g a s p e c t of all o n g o i n g social r e l a t i o n s h i p s . W h e r e t h e s e " c a p a c i t i e s to a c t " are a s y m m e t r i c a l a m o n g agents, e n a b l i n g s o m e to circumscribe the practices of others, a relationship of domination may be said to exist (Isaac: 1987: 83—87).3 Relations of power (including domination) thus embody some (possibly unequal) potential for action on the part of all parties involved. A necessary requirement for this potential to be actualized is the practical and purposive activity of the parties. Thus, the exercise of neither power nor domination is automatic; rather these are the outcomes

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of complex interactions between concretely situated human agents and their historical-structural circumstances. As a consequence, "The reproduction of practices, and of powers, is always problematic" (Isaac, 1987: 93). Historically reproduced, altered, or transformed by the actions of human agents, concrete relations of power (and of domination) are continuously contested in practice, and may become the objects of explicit political struggle. A similar view of power as embedded in historical social relations (rather than as a behavior or attribute specific to individuals or groups) is a central theme in the political economy of Cox (1981, 1982, 1983, 1987). In his critique of "neorealist" orthodoxy in IR, Cox suggests that we question the presupposition of states as sovereign actors and wielders of power resources, and instead approach them as aspects of larger historical structures. States, for Cox, are historically constructed (and continually reconstructed) in the nexus between global and domestic social relations, with political, economic, and ideological aspects integral to each: The world can be represented as a pattern of interacting social forces in which states play an intermediate though autonomous role between the global structure of social forces and local configurations of social forces within particular countries. This may be called a political e c o n o m y perspective of the world: power is seen as emerging from social processes rather than taken as given in the form of accumulated material capabilities, that is as the result of these processes. (Paraphrasing Marx, one could describe the latter, neorealist view as the "fetishism of power"). (Cox, 1981: 141)

From this standpoint, state power is the capacity for action in historically specific structural contexts (for our purposes, defined in terms of state/ society complexes, classes, and world orders). Domination, then, is an asymmetrical capacity to shape this historical-structural site of social action, and ought not to be conflated with the inventories of material resources wielded by states. In accordance with this processual view of power, Cox adapts to IR Gramsci's view of hegemony as entailing those aspects of power relations in which domination commands consent and in which, as a consequence, coercive forms of domination become less obtrusive (Cox, 1981: 153, fn. 27; 1982: 38; 1983: 163-164; 1987: 7-8). Attention is thus directed toward the bases of domination in those socially self-constructive practices in which people engage more or less routinely, chief among which are their productive activities. 4 Hence, the complex of social relations enabling those practices, necessarily including political and ideological as well as economic aspects, are seen to be central to the analysis of hegemonic power. In contrast to the neorealist understanding of international hegemony as a preponderance of material resources one state may deploy in its attempts to secure the compliance of others, Cox points to the social organization of production as

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it operates o n a global scale, and to the relations of power, domination or h e g e m o n y that m a y inhere in such a historical structure (see especially Cox, 1983: 171-172; 1987: 4 - 9 ; see also Cardoso, 1977). C o x ' s u n d e r s t a n d i n g of s o c i a l l y b a s e d p o w e r and h e g e m o n y at t h e global level guides inquiry toward historical investigations of the processes b y which state p o w e r is constructed in the n e x u s between global and local production. Viewed f r o m this historical-structural perspective, h e g e m o n y represents a dynamic complex of relations and hence defies description in terms of a mechanical model. Nonetheless, it is both possible and useful to o u t l i n e the g e n e r a l c o n t o u r s of its m a j o r structural c o m p o n e n t s and the m a n n e r of their mutual interrelation at the apogee of U.S. world-historical p o w e r . S u c h an i n t e r p r e t i v e m a p p i n g m a y s e r v e a h e u r i s t i c p u r p o s e by sketching the social relations underlying U.S. global power, the contradictory nature of that social power complex, and the kind of research agenda that could reveal the possibilities for political action in the late twentieth century. THE POLITICS OF PRODUCTIVITY A N D T H E S O C I A L BASES O F U.S. H E G E M O N Y By mid-twentieth century, political struggles in a myriad of overlapping sites had converged to constitute a more or less coherent system of power, which included within its scope social relations from the shop floor to the world s y s t e m . T h e d i s t i n g u i s h i n g f e a t u r e of t h i s s y s t e m of r e l a t i o n s , w h i c h congealed its various elements into an identifiable structure of domination was a peculiar ethos emergent from the world-historical experience of the U n i t e d S t a t e s . T h i s u n i f y i n g e l e m e n t — t h e b a s i s of g l o b a l - s t r u c t u r a l continuity, the ideology of U.S. h e g e m o n y — i s well expressed in M a i e r ' s (1978) marvelous phrase, "the politics of productivity." In the aftermath of World War II, M a i e r argues, the U.S. w a s able to establish a "consensual h e g e m o n y " over the great powers of the interstate system and the industrial core of the world economy. Consensual' can be used because European [and Japanese] leaders accepted Washington's leadership in view of their needs for economic and security assistance" (Maier, 1978: 46). However, this h e g e m o n y entailed a great deal more than a convergence of interests and attitudes among international elites. Underlying the perceived legitimacy of explicit U.S. political dominance was a reconstruction of the sociopolitical bases of the m a j o r states devastated by the war. T h e principle that formed the foundation for this reconstitution w a s a vision of the politics of productivity firmly grounded in the American historical experience, and particularly in that of the interwar years when the shape of the m o d e r n U.S. political economy was at issue. M a i e r ' s summary statement merits full quotation: United States objectives are usually described in terms of enlightened idealism or capitalist expansionism. But much of the way policy makers

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envisaged international economic reconstruction derived from the ambivalent way in which domestic economic conflict had been resolved before and during the New Deal. In the inconclusive struggle between business champions and the spokesmen for reform, Americans achieved consensus by celebrating a supposedly impartial efficiency and productivity and by condemning allegedly wasteful monopoly. Looking outward during and after World War II, United States representatives condemned fascism as a form of monopoly power, then later sought to isolate Communist parties and labor unions as adversaries of their priorities of production. American blueprints for international monetary order, policy toward trade unions, and the intervention of occupation authorities in West Germany and Japan sought to transform political issues into problems of output, to adjourn class conflict for a consensus on growth. The American approach was successful because for almost two decades high rates of growth made the politics of productivity apparently pay off. (Maier, 1978: 23)

The American vision of social harmony through productivity, growth, and prosperity was the ideological basis for externalizing the domestic sociopolitical relations of the United States, 5 reshaping those of its major partners in the postwar world and the structures of the larger world system. Empowered by their predominance in the global division of labor, the United States sought to foster economic recovery and interdependence among the major capitalist powers as part of an explicit strategy of global order. In the decades after the war, U.S. economic powers would be used to construct a stable, multilateral world economy; in the immediate postwar years, the politics of productivity would facilitate the crystallization of a Western European community of liberal capitalist states and thus resolve the central geopolitical problems of this century by harnessing Germany to the West and containing the Soviet Union. It was this productivist vision, then, along with the underlying social relations and corresponding institutional frameworks in which it was embedded, that may be said to constitute the U.S. world order of the twentieth century. The various aspects of this world order—the sites in which the American productivist vision was to various degrees realized—defy exhaustive enumeration. In the pages which follow, therefore, I will concentrate upon those aspects which I believe were most central to the globalization of the politics of productivity. Accordingly, the first subsection below deals with the relationship between American dominance in the global division of labor and the social character of capitalist production. It argues that American global hegemony necessarily entailed a transformation of the Social Structure of Accumulation (SSA) within which the capitalist production process was embedded, and that this in turn entailed processes of political struggle in a number of structural sites, prominent among which was the point of production itself. The second subsection outlines the implications which this transformation held for the articulation of state and society in the United States, and for the manner in which the state mediated between

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domestic and international structures and processes.

Dominance in the Global Division of Labor and the Social Structure of Accumulation in the United States U.S. h e g e m o n y reshaped the social organization of production on a global scale. It entailed relations of p o w e r between classes at the point of production as well as the articulation of state and society in the United States. In turn, these structures of state and class created a social context in which the people of the United States, more than other peoples, were able to define for themselves the position they were to occupy in the global division of labor (DOL).6 In the era of U.S. hegemony, structural power within the global D O L w a s b a s e d u p o n p r o c e s s e s of m a s s p r o d u c t i o n . T h e basic l o g i c of m a s s production involves high output of standardized goods over long production runs. In return for a huge increase in fixed costs (relative to variable costs), m a n u f a c t u r e r s were able to take advantage of economies of scale, spread fixed costs o v e r vast production runs, and suppress unit costs to u n p r e c e dented low levels. U . S . c a p i t a l i s t s w e r e p i o n e e r s of m a s s p r o d u c t i o n , and b y t h e first decades of this century newly consolidated U.S. coiporations were e n j o y i n g a leading position in markets worldwide. 7 Foreign producers, facing loss of their domestic markets to cheap U.S.-made goods, thus also faced p o w e r f u l incentives to adapt U.S.-style mass production methods to local conditions. 8 Furthermore, U.S. industrial might had recently been brought to b e a r in two global wars, decisively demonstrating the significance of mass production for twentieth century great powers and consolidating the advantage of U.S. p r o d u c e r s and f i n a n c i e r s in g l o b a l m a r k e t s . In this m a n n e r , the r a p i d l y expanding commercial, financial, and military presence of the United States worldwide pressed competitors to reorganize their own systems of production, and the upper tiers of the global D O L were restructured with the United States and its v a s t transnational firms at the head of an e m e r g e n t multinational industrial c o m p l e x (see especially Piore and Sabel, 1984: chaps. 2 - 6 ; see also T h o m p s o n , 1986; Reich, 1983: chaps. 2 - 6 ; Sabel, 1982: 2 9 - 3 0 , 3 2 - 3 4 , 4 3 - 4 5 ; M a d d i s o n , 1982: 3 9 - 4 2 ; Hymer, 1979). Chandler (1981: 166, 169) summarizes in the following terms the effects of the n e w U.S. b u s i n e s s p r a c t i c e s on the r e l a t i o n s h i p of the A m e r i c a n e c o n o m y to the global division of labor, and the ethos characteristic of that relationship: The organizational innovations stimulated by the American system of manufactures in both factory and corporate management had almost as great, if less direct, an impact on the European economies as they did on the economy of the United States. By the turn of the century they were

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enabling Americans to undersell Europeans in their own countries. But the "American invasion" involved more than just the sale of American products abroad. It soon led to a large direct investment in plants and personnel. As they were creating their sales networks at home, the new mass-producing, mass-distributing firms set up branch offices abroad. Soon, to meet the demand generated by these branch offices, they erected overseas factories and organized purchasing units to buy for these works. . . . By World War I, the American multinational corporation had become a significant institution in the world economy. . . . the new metal-working industries—particularly the machinemaking industries—played a major role in the development of modern management in the United States. The success of the new methods of machinery making in turn permitted American industry to contribute to industrializing abroad (both in advanced and less developed economies) and to making the processes of mass production by the fabrication and assembling of interchangable parts a basic symbol of American culture.

The initial advantages enjoyed by U.S. machinery manufacturers as a result of their comparatively vast domestic market, and the consequently low unit costs attainable through mass production and large-scale marketing, translated into a lasting structural advantage for the giant U.S. firms. They were able to institutionalize the relationship of science and industry and hence to predominate in the innovation of new products and processes for the world economy (Chandler, 1981: 168-169; Noble, 1977). Thus, U.S. producers asymmetrically shaped the manner in which economic activity was organized on a global scale. Externalizing its culture of mass production, the United States defined the standards of efficiency and affluence by which other societies would come to measure themselves. But the global division of labor was not the only site in which U.S. firms were significant historical actors. Indeed, the global-structural dominance of U.S. corporate capital was based upon a system of production that entailed c o n c r e t e forms of sociopolitical organization within the hegemonic state/society complex, its SSA, and its characteristic factory regimes.

Mass Production and the Bureaucratized SSA An unprecedented level of interdependence and systematic social organization was implicated in the historical emergence of mass production in the United States. Extension and intensification of bureaucratic planning and control mechanisms (both public and private), as well as an expansion of the scope of social relations routinely g o v e r n e d by rule of law, was a fundamental characteristic of the SSA that underlay U.S. h e g e m o n y . 9 This was reflected in the structure of state/society relations, and in the social organization of productive activity. By the early decades of the twentieth century, a dramatic transformation

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of the production processes in the manufacturing heart of U.S. economy w a s well under way. A system of m a s s production, c o m b i n i n g standardization with m e c h a n i z a t i o n , w a s b e c o m i n g the d o m i n a n t f o r m of m a n u f a c t u r i n g activity. Its guiding principle was that the cost of making any particular good could be dramatically reduced if only machinery could be substituted for the human skill needed to produce it. Its aim was to decompose every handwork task into simple steps, each of which could be performed faster and more accurately by a machine dedicated to that purpose than by a human hand. The more specialized the machine—the faster it worked and the less specialized its operator needed to be—the greater its contribution to cutting production costs, (Piore and Sabel, 1984: 19) This recasting of the process of production could not be accomplished w i t h o u t a c o r r e s p o n d i n g c h a n g e in the social o r g a n i z a t i o n of e c o n o m i c activity. A historian of this t r a n s f o r m a t i o n d e s c r i b e s it in the f o l l o w i n g general terms: The dominant themes of this process, the substitution of formal, centralized controls for ad hoc, decentralized controls and the increasing influence of the management over the factory and its labor force, were the bases of the "new factory system," which in turn became the foundation of modern industrial administration. (Nelson, 1975: ix) T h e direct, personal, and idiosyncratic authority of the entrepreneurial capitalist and his sometimes tyrannical foremen was thus superceded over a period of several decades by a complex, hierarchic organization of managem e n t , w h i c h c o o r d i n a t e d and c o n t r o l l e d e v e r y a s p e c t of the p r o d u c t i o n process, including the recruitment, deployment, discipline, and dismissal of personnel. Corresponding to this bureaucratization of production was a n e w emphasis on systematic, large-scale marketing. M o d e r n corporate capital—in the f o r m of the m u l t i n a t i o n a l , m u l t i d i v i s i o n a l f i r m — e m e r g e d in l a r g e measure as a response to these twin organizational imperatives of orchestrating and making more predictable both the production and sale of standardized c o m m o d i t i e s (see e s p e c i a l l y N e l s o n , 1975; N o b l e , 1977; Chandler, 1981; P i o r e and S a b e l , 1984: c h a p . 3; H o u n s h e l l , 1984; J a c o b y , 1985; Gordon et al., 1982: chap. 4; see also Hawley, 1979: chap. 5; Reich, 1983: chaps. 2 - 6 ) .

Mass Production and Hegemonic Factory Regimes As m a s s p r o d u c t i o n supplanted c r a f t - b a s e d m a n u f a c t u r e — i n w h i c h individual craftsmen had exercised multifarious skills in the creation of complete products, and hence enjoyed a substantial measure of control over their o w n

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labor process—the shop floor as a site of political class struggle was also transformed. Integral to the orchestration of production on a mass scale was the problem of coordinating and controlling large numbers of semiskilled and unskilled workers brought together to perform, ad infinitum, tasks minutely specified within a highly interdependent production system. In such a context, the participation of all workers in the system was necessary for the generation of but a single finished product. Hence, a minimal requirement was that management be able to secure at least the tacit cooperation of workers, for even sporadic and uncoordinated resistance by small, informal work groups could (and did) disrupt or completely shut down giant industrial complexes. To maintain their control over the production process and to maximize the productivity of the labor actually performed for wages paid, U.S. capitalists experimented with a wide variety of organizational schemes (tried individually or in various combinations), ranging from direct and often brutal control by authoritarian foremen (i.e., the "drive system"), to Taylorism (i.e., "scientific management"), company unions, and corporate welfare services. Through decades of class struggle, varying in intensity and involving an ongoing dialectic of power and resistance, systems of structural control emerged in major industries. The organization, coordination, and assignment of work tasks became embedded in a larger structure of work. The pace of work, along with the specific direction of work tasks, emanated from this structure. . . . The firm's overall structure, being both more comprehensive than the immediate workplace and having been imposed from a higher level, removed control over the flow of work from the foreman's hands. The foreman's role in the production process became one of merely enforcing a prestructured flow of work activities. Rather than being exercised openly by the foreman or supervisor, power was made invisible in the structure of work. (Edwards,

1979:110) In various combinations, technical control, embedded in the physical organization of the labor process, and bureaucratic control, deriving from hierarchic corporate organization and the corresponding institutionalization of industrial unions, together served to displace explicit class conflict from the point of production and to delimit it within the bounds of bureaucratic contractual baragaining (see especially Edwards, 1979; Gordon, et al. 1982: chap. 5; Green, 1972, 1980: chaps. 3-6; Brecher, 1972: chaps. 4-7; see also Montgomery, 1979, 1987; Brody, 1980; Lichtenstein, 1980, 1982, 1983; Gartman, 1986). Thus, in the corporate manufacturing sector of the U.S. economy, class struggle was enveloped within sets of hierarchic organizations, relating to one another in terms of complex administrative and legal frameworks.

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Mark E. Rupert The workers' right to strike, insofar as it was formally conceded, was itself placed within the tight confines of rule and procedure. By so agreeing, companies and unions revealed what was, at rock bottom, the common interest of their encompassing contractual relationship—the containment of spontaneous and independent shop-floor activity. (Brody, 1980: 204) At the point that workers began to accept the underlying premise—if it was not in the contract, it was not a right—half the battle was over. It only remained to persuade workers that disputes arising under the contract were properly settled by adjudication rather than by job actions. (Brody, 1980:

202) The institutionalization of hierarchic industrial unions as agents and enforcers of collective bargaining agreements went far toward satisfying the second of Brody's conditions; and so it was through the cooption of the industrial union movement into the emergent bureaucratic organization of mass production that relative labor peace, sustained output, and high profits were attained in the postwar decades.

Mass Production and the American State/Society Complex The cooption of industrial labor, however, was not the outcome of selfcontained class dynamics. Rather, this outcome was in large measure attributable to the active intervention of the state in the realm of production. Burawoy (1985) finds such structural mediation to be a common feature of advanced capitalist societies, and argues that these societies may be meaningfully distinguished according to their relative emphasis on two f o r m s of s t a t e i n t e r v e n t i o n w h i c h break the ties b i n d i n g t h e reproduction of labour power to productive activity in the workplace: . . . First, social insurance legislation guarantees the reproduction of labour power at a certain minimal level independent of participation in production. . . . Second, the state directly circumscribes the methods of managerial domination which exploit wage dependence. Compulsory trade union recognition, grievance machinery and collective bargaining protect workers from arbitrary firing, fining and wage reductions, and thus further enhance the autonomy of the reproduction of labour power. (Burawoy, 1985: 125-126) 10

The net effect of such interventions, then, is to lessen the dependence of workers on wages, and to reduce the extent to which capitalists confront workers with naked power at the point of production. For Burawoy, this change marks a fundamental alteration in the expression of capitalist power within the production regime. Now management can no longer rely entirely on the economic whip of the market. Nor can it impose an arbitrary despotism. Workers must be

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persuaded to cooperate with management. Their interests must be coordinated with those of capital. The despotic regimes of early capitalism, in which coercion prevails over consent, must be replaced with hegemonic regimes in which consent prevails (although never to the exclusion of coercion). Not only is the application of coercion circumscribed and regularized, but the infliction of discipline and punishment itself becomes the object of consent. (Burawoy, 1985: 126)

In the United States, state intervention has been relatively less concerned with the provision of extensive welfare services, and more directly preoccupied with the regulation of the political apparatus of production (see Burawoy, 1985: chap. 3; Piore and Sabel, 1984: chap. 4; Skocpol and Ikenberry, 1983). Hegemonic factory regimes have been constructed in the United States by encompassing collective bargaining agreements within the rule of law and the purview of bureaucratic administration. Unlike its British counterpart, the U.S. trade union is a legal entity subject to legal provisions: it is legally responsible for the actions of its members. The law is one mode through which the state can shape factory politics, one expression of the state regulation of factory regimes. (Burawoy, 1985: 137) 11

As a consequence of this characteristic articulation of state and capitalism, industrial relations in the United States have been distinguished by the extent of their bureaucratization, and by the importance and intricacy of contractual bargaining. "The contract was sacrosanct; it circumscribed the terrain of struggle" (Burawoy, 1985: 135; see also pp. 128-148; Davis, 1986, 112-117). Within this framework, unions were able to secure remunerative benefits from the corporate industrial giants, contingent upon their acquiescence in capitalist control of the production process, and in the governance of that process by the imperative of corporate profits. Capital has been able to extend concessions to labour without jeopardizing its own position. . . . Through the concessions and higher living standards associated with an advanced capitalist economy, the interests of capital and labour are concretely coordinated. (Burawoy, 1985: 28) By increasing "efficiency" of production, capitalism has been able continually to increase the standard of living of large sectors of the labour force without threatening its profitability. (Burawoy, 1985: 70, fn. 20)

In the corporate manufacturing sector of U.S. economy, then, higher general wage levels—linked to aggregate productivity and to the cost of living—combined with new benefit packages to purchase a more orderly and predictable system of industrial relations. In this politics of productivity, overt coercion by capital and the state faded into the background, as bureau-

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cratized industrial unions became brokers of consent (see Brecher, 1972: chap. 7, esp. 254-262; Aronowitz, 1973, esp. chaps. 3^4; Brody, 1980: chap. 5; Green, 1980: chap. 6; Milton, 1982, esp. chaps. 7 - 8 ; and Davis, 1986, esp. chaps. 2 - 3 ) . In the United States, hegemonic factory regimes have been premised u p o n the institutionalization of industrial unions as collective bargaining agents, legal certification and administrative regulation of unions by the state, and the circumscription of class conflict within a framework of contractual negotiation centering on p r o c e d u r a l and distributive issues (Brody, 1967, 1980; Lichtenstein, 1980, 1982, 1983; Milton, 1982; Vittoz, 1982; Harris, 1985; Tomlins, 1985). More fundamental than simple bribery was the extent to which workers were effectively individuated by the pervasive bureaucratization of their working lives. The systematization of authority within the firm—the creation of elaborate j o b ladders, wage structures, and "internal labor m a r k e t s " — evolved out of shop floor struggles and the attempts of corporate capitalists to reassert control over the production process in the face of an increasingly apparent commonality of interest among industrial workers (Edwards, 1979; H a r r i s , 1982; G o r d o n et al., 1982; J a c o b y , 1985; G a r t m a n , 1986). In combination with the emergence of hierarchic industrial union bureaucracies, these developments d e f u s e d the potentially revolutionary h o m o g e n i z i n g effect of mass production upon the industrial working class. Underlain by classical liberal assumptions of abstract individualism, these bureaucratic structures embodied n o r m s of procedural justice and individual opportunity. Thus, they have served to disguise the substantive injustice of class d o m i n a t i o n and the systematic relationships b e t w e e n capitalist authority in the workplace and the larger social structures in which it is embedded. Insofar as industrial unions came to define themselves in terms of this vision of p r o c e d u r a l j u s t i c e and individual w e l f a r e , they e m b r a c e d the i d e o l o g y of a b s t r a c t i n d i v i d u a l i s m and b e c a m e l a r g e l y incapable of strategic, class-based political struggle. In this way, the cultural hegemony of liberal individualism permeated the complex of social relations upon which U.S. global power has been based. As mass production was becoming the dominant mode of e c o n o m i c activity in the United States, the character of the American state/society complex was significantly altered. The rearticulation of state and society that accompanied the institutionalization of the new SSA entailed the presence of the state in structural sites where it had not previously been active. T h e formal separation of state and economy, which is a distinguishing characteristic of capitalist social formations 1 2 was maintained, but grew indistinct at its margins. As the social organization of production became more complex and interdependent, U.S. capitalism came to be increasingly dependent upon the state apparatus for adjustment of structural imbalance and the masking or mediation of social conflict. The bureaucratized system of industrial relations fostered by the state

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during the New Deal and consolidated during World War II became a central part of the macroeconomic stabilization mechanism. Cooption of industrial unions within hegemonic factory regimes boosted the buying power of a large segment of the U.S. work force. T h e increased purchasing p o w e r enjoyed by workers in the postwar decades not only helped to elicit their consent to capitalist control in the workplace, it also helped to generate the (more or less) consistently high levels of demand required to support the apparatus of mass production and keep industry operating somewhere near capacity. The presence of the state at the point of production—in the form of legally defined and administratively regulated frameworks for hegemonic factory regimes—was thus crucial to securing the domestic political and economic conditions necessary for operation of the mass production SSA (see especially Piore and Sabel, 1984: 79-103; see also Gold, 1977; Wolfe, 1981; Weisskopf, 1981; Bowles and Gintis, 1982; Bowles et al„ 1983, 1986; Weisskopf et al., 1985). In sum, sustaining the SSA of mass production, including production regimes capable of securing the routine cooperation of industrial w o r k e r s , e n t a i l e d a r e c o n s t r u c t i o n of the U.S. s t a t e / s o c i e t y complex. This process of reshaping the social organization of production was essential to the global p o w e r s exercised by U.S. state m a n a g e r s in the postwar era.

FROM LIBERAL CAPITALISM TO GLOBAL POWER: THE CONSTRUCTION OF U.S. HEGEMONY In the twentieth century, U.S. state managers have sought to secure the politics of productivity on global scale, pursuing the establishment of a system of global order consistent with the U.S. vision of social harmony t h r o u g h liberal d e m o c r a c y and c a p i t a l i s t e c o n o m i c g r o w t h . T h i s understanding of the national interest became the basis of state policy in the 1930s, propagated by a hegemonic bloc comprised of Wilsonian liberals, especially in the State Department, and those fractions of the capitalist class that were i n t e r n a t i o n a l l y o r i e n t e d , e s p e c i a l l y m a j o r b a n k s and t e c h nologically advanced corporations engaged in the manufacture of machinery, equipment, and motor vehicles, as well as the rubber, mining, and petroleum industries (Block, 1977; Frieden, 1988). In its struggles with traditional protectionists and isolationists, as well as New Deal economic planners, this internationalist bloc came increasingly to associate peace with prosperity and to define U.S. national security in terms of a liberal world o r d e r - w i t h a stable, p r o s p e r o u s , and o p e n E u r o p e as its sine q u a n o n ( C a l l e o and Rowland, 1973; Gardner, 1976, 1984; Hawley, 1979; Maier, 1978, 1981; Hogan, 1984, 1985, 1987; Frieden, 1988). The social vision of fascism, characterized by an autarkic, militaristic,

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profoundly antiliberal capitalism, was decisively defeated/ in World War II. The remaining alternative to a multilateral capitalist world economy became the object of a policy of containment and isolation when it became clear that the Soviet Union would not cooperate in the emergent U.S. world order, and that its occupied territories in Eastern Europe would become an exclusive Soviet sphere of influence (Block, 1977; Gaddis, 1982; Pollard, 1985). Even before the war had ended, U.S. state managers had begun to plan the creation of an international institutional infrastucture to support their soon-to-be-won preeminence in the capitalist world. They sought to mediate between the relations embodied in the domestic mass production SSA and the postwar world system in such a way as to sustain world demand for U.S. manufactures, enable U.S. investment abroad, and generally to reintegrate the advanced industrial states into the world economy on terms as favorable as possible for the United States and its distinctive vision of a vibrant liberal world. The long-term goal of U.S. state managers was to foster a stable and prosperous world system in which U.S. capital could enjoy access to markets worldwide, and in which U.S. leadership would be widely recognized. A prerequisite of such an outcome was an international financial system that would prevent another downward spiral of competitive devaluations (the specter of the 1930s loomed large), as well as sustain U.S. exports to, and investments in, recovering core economies. Representing something of a compromise between regimes of fixed and flexible exchange rates, the Bretton Woods monetary system was based upon a gold-dollar standard (with the convertible U.S. dollar fixed at a specified gold price) and an adjustable peg: some liquidity would be provided to finance short-term deficits, but provision was made for devaluation (relative to the dollar) should trading partners experience chronic deficits (see, e.g., Block, 1977: chap. 3; Willett, 1980: 8 - 2 4 ; Ruggie, 1982). Changing the pegged dollar value of a country's currency as a last resort would obviate the need for painful and politically delegitimating macroeconomic deflation, imperative under a fixed rate system. 13 Instead, devaluation would alter the relative prices of imported and domestic goods and thus boost international competitiveness and improve a country's payments position without either sacrificing too much discretion over macroeconomic conditions or—the other horn of the dilemma and probably the greatest fear for the United States—precipitating a resurgence of mercantilist trading practices. Moreover, because the dollar was the key currency, the United States was privileged in relation to its trading partners: in the area of trade balances it faced no immediate adjustment imperative (although over the long-term such problems would prove formidable), and because dollars were "as good as gold," U.S. capital could flow anywhere throughout the system with minimal transaction costs. Thus the Bretton Woods system would provide international financial stability and, at the same time, allow correction of

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gross international imbalances without directly affecting macroeconomic conditions in the U.S., threatening the political stability of United States trading partners, or constraining the foreign investment opportunities of U.S. capital. T h e n e w w o r l d f i n a n c i a l order, it a p p e a r e d , w o u l d f a c i l i t a t e the reconstruction of advanced capitalist state/society c o m p l e x e s on liberal terms, and the reintegration of these into the U.S.-led world system with minimal friction, but maximal advantage to U.S. capital. It would, in short, provide the institutional infrastructure for the globalization of the politics of p r o d u c t i v i t y and the social relations of d o m i n a t i o n e m b o d i e d in that formulation. However, the original U.S. vision of the Bretton Woods system as the institutional cornerstone of a vigorous world economy proved too good to be true. By the winter of 1946-1947, early signs of European recovery had been supplanted by deepening trade deficits with the United States, and Europe was in the grips of a severe economic crisis. The major capitalist countries were foundering and appeared vulnerable to external coercion or internal subversion by forces hostile to liberalism. Indirect expression of U.S. power through the formulation of postwar "rules of the g a m e , " it now seemed, would not be sufficient to reconstitute the players. More active engagement would be necessary if liberal capitalism and exports of U.S. products were to provide the basis of reconstruction. A systematic and comprehensive effort to c o n s t r u c t an integrated E u r o p e a n e c o n o m y w a s p e r c e i v e d by 1947 as essential to realizing the U.S. vision of a peaceful and prosperous postwar world. In the face of European e c o n o m i c malaise and a w o r s e n i n g dollar shortage, full-blown multilateralism was clearly impractical in the immediate postwar years. Hence, U.S. state managers came to accept the necessity of systematic (and hopefully temporary) departures from the ideal of a liberal international e c o n o m y governed by i m p e r s o n a l m a r k e t forces. N o n r e c i p r o c i t y , v a r i o u s t r a d e and f i n a n c i a l c o n t r o l s , and E u r o p e a n r e g i o n a l i s m w e r e t o l e r a t e d , e v e n e n c o u r a g e d , in o r d e r to f a c i l i t a t e a c c u m u l a t i o n in the c o r e e c o n o m i e s and p r e p a r e t h e m f o r u l t i m a t e reintegration into a more vital world economy. Also, the Marshall Plan pumped dollars into the core when the institutional features of Bretton Woods proved inadequate to supply international liquidity requirements and finance European and Japanese trade deficits with the United States (Calleo and R o w l a n d , 1973: chaps. 1 - 4 ; Block, 1977: chaps. 3 - 6 ; Gold, 1977: 139-140; Pollard, 1985: esp. chaps. 4 - 7 ; Hogan, 1985, 1987). But reconstruction was much more than a matter of money. Maier (1978, 1981) and H o g a n (1985, 1987) describe a pattern of m o r e direct U.S. interventions in Europe and Japan designed to submerge class conflict, isolate extremists of both L e f t and Right, and create the political prec o n d i t i o n s f o r a l i b e r a l c a p i t a l i s t c o r e . O f f i c i a l and u n o f f i c i a l U . S .

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representatives (e.g., CIA, AFL, CIO) sought to consolidate non-Communist trade union movements in Europe (especially in Italy and France), to exclude radicals from postwar governments, and generally to reinforce tendencies toward social-democratic centrism. The economic integration of Europe assumed central importance in this sociopolitical scheme, for it would create the large, unified market necessary to support mass production and realize economies of scale, increase the intensity of competition and foster the most efficient use of resources, and generally raise standards of living. In an environment of increasing affluence, in the U.S. view, cooperation might displace conflict and the threats to liberalism posed by indigenous radicalism or communist subversion would be minimized. In pursuit of this vision, various sorts of transnational networks—including governmental, business, and labor organizations—were fostered as part of the Marshall Plan strategy of economic coordination. By forging such links, American Marshall Planners hoped to build a transnational alliance behind the ERP [Economic Recovery Program], equip participating countries with American production skills, fashion American patterns of labor-management teamwork, and, in these and other ways, maximize the chances for economic integration and social peace on the Continent. (Hogan, 1987: 136) 1 4

Not surprisingly, the construction of a politics of liberal capitalist hegemony was most successful in the occupied countries (where U.S. control was most direct and where the power of radical labor organizations had been most completely crushed by fascism), and they led the way to a world more hospitable to U.S.-style capitalism. "The whole thrust of Washington's effort in the emerging Federal Republic [of Germany], the new Japan, and the members of the Organization for European Economic Cooperation (OEEC) . . . was to ensure the primacy of economics over politics, to de-ideologize issues of political economy into questions of output and efficiency" (Maier, 1978: 44-45; see, in general, pp. 39-46; Maier, 1981). By creating an environment favorable to such an outcome, U.S. state managers moved toward the vision of a vigorous, liberal world economy upon which, they believed, the prosperity and social stability in the United States ultimately depended. Although there were manifest economic benefits to be had from generalizing the politics of productivity in this way, for U.S. state managers it served simultaneously as an instrument of national security policy. Through the reconstruction of the advanced capitalist economies, U.S. policy not only laid the basis for a more open, interdependent, and prosperous world economy, but also resolved the single most troublesome geopolitical problem of the early twentieth century: Germany was integrated into a viable,

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cooperative and essentially liberal West European community (Hogan, 1984, 1985, 1987; Pollard, 1985). Furthermore, as the cold w a r developed, it was h o p e d that this c o n s t e l l a t i o n of l i b e r a l c a p i t a l i s t d e m o c r a c i e s , b r o u g h t together under U.S. aupices, would form a bulwark that would protect the w o r l d ' s "rimlands" from the expansion of Soviet influence outward from the Eurasian "heartland" (Gaddis, 1982; Pollard, 1985). In s u m m a r i z i n g the p e r c e p t i o n of n a t i o n a l security that g u i d e d U.S. p o l i c y m a k e r s after the war, Pollard uses the term " e c o n o m i c security" to d e n o t e t h e f u s i o n of t h e U . S . v i s i o n of g l o b a l l i b e r a l o r d e r w i t h t h e geopolitical concerns of classical statecraft, and evaluates realization of this larger vision: The United States had achieved its main economic security goals in Europe by 1950: the reconstruction of Western Europe in an American-centered multilateral system, the alignment of Germany with the West, and the containment of Soviet power in Europe. Significantly, the Truman administration realized these objectives chiefly through the use of economic instruments, rather than military power. (Pollard, 1985: 167) 15 U.S. state managers, then, sought to reconstruct the core of the world e c o n o m y along lines consistent with the new S S A of m a s s production, its c o n s e n s u a l l y based capitalist class p o w e r , and the liberal e c o n o m i c infrastructure required to open world markets before it. Foreign demand for U.S. m a n u f a c t u r e s w o u l d be sustained t h r o u g h a n o u t f l o w of d o l l a r s in reconstruction aid, direct and portfolio investment, and military assistance. Simultaneously, Europe and Japan would be integrated into the U.S. world o r d e r t h r o u g h g r o w i n g e c o n o m i c i n t e r d e p e n d e n c e , t r a n s n a t i o n a l capital flows and organizational linkages, and a network of strategic relationships which would ultimately b e c o m e an explicit system of interstate alliances. In these w a y s the United States h o p e d to construct f o r itself and its liberal capitalist allies a secure world of social stability, peace, and prosperity.

CONCLUSION To this point, I have attempted to use a relational f r a m e w o r k to reconstruct some of the central aspects of a global power c o m p l e x — t h e U.S. h e g e m o n y of the mid-twentieth century. I will n o w summarize this discussion and draw from it some implications for a historical-structural research agenda. A central aspect of U.S. global p o w e r in this century has been the social o r g a n i z a t i o n of m a s s p r o d u c t i o n , e n t a i l i n g b o t h l o c a l and g l o b a l social relations. This global order rested upon a basis of sociopolitical relations in the United States, including a social structure of accumulation, an articulation of state and society, and a political apparatus of production, w h i c h

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brought the state into the formal administration of a bureaucratized class struggle and involved it in active mediation between domestic politicaleconomic relations and those of more global scope. Reshaping its own production practices enabled the United States to exercise a degree of dominance in the global division of labor. Giant U.S. firms introduced and perfected mass production and marketing and, through their global operations, propagated standards of efficiency and affluence associated with the new social organization of production. Hence, the United States of the mid-twentieth century was able—to a much greater extent than other nations—to define its own role in the global DOL, to influence the position and role of others, and to affect the shape of the larger structure. This asymmetric assignment of powers within a social relation corresponds to the definition of domination adopted above. But the heart of the U.S. power complex was constructed upon a special form of domination—that which commands the tacit assent of the subjugated and their participation in the process of their subordination. Through the ideology of a politics o f productivity and the limited generalization of affluence made possible by mass production, the central political practices o f the U . S . world order were circumscribed within consensually established boundaries. Politics came to be understood in terms of distributional conflict within established sets of social relations, rather than as a historical process of social self-creation, contextually situated within concrete, but essentially open-ended, sets of social relations (class, nation, etc.). In this hegemonic politics, people were abstracted from their concrete situations within antagonistic classes or nations and redefined as individual consumers whose political and productive activities were but instruments toward the ultimate end of consumption. Under these h e g e m o n i c s o c i a l r e l a t i o n s , c a p i t a l i s t s were to an unprecedented degree empowered to orchestrate and control a complex subdivision of tasks in the workplace, and to reap profits from the worldwide sale o f the commodities thus produced. Correspondingly, j u s t as they increased the power of capitalists, so these relations disempowercd workers to exercise control over their own labor process. Although materially rewarded as producers/consumers in the highest tiers of the global DOL, workers in the U.S. corporate sector were subsumed within hegemonic factory regimes, systems o f structural control in the workplace, and hierarchic industrial unions. The combination of these constraints reduced to a minimum the workers' capacity for class-based political action and encouraged them to identify themselves as individual consumers for whom politics was alien to the workplace. In the postwar years, the United States provided the framework o f international economic stability necessary for growth to resume on a liberal capitalist basis and for a centrist political accommodation to emerge in the core. Marshall Plan agencies sought to recreate in Europe the conditions of

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growth, the networks of economic coordination, and the institutions of structural control required for transplantation of the U.S. productivist vision and its politics of consent. In this way, the socially creative (and hence intrinsically political) aspccts of the production process were contained within the sphere of the economic, and implicitly denied any latter significance. The social power of capital—embodied in the formal separation of the economic and the political spheres of social life—was reproduced in the liberal capitalist democracies under the hegemony of U.S. productivist ideology. Efficiency, economic growth, and generally high standards of living became enshrined as social values, whereas economic democracy and self-development (values reflected in various workers' movements of the early twentieth century) were marginalized. In the postwar decades of economic growth, the global power of U.S. capitalists and state managers would not be undermined by working class insurrection in the core; and competition among core capitalists would occur on terms largely defined by the United States. In the interstate system, the major geopolitical conflicts of the era were addressed by harnessing U.S. economic powers to the destruction of fascism, integrating Geimany and Japan into a community of liberal capitalist states, and containing the perceived threat to that community from the Soviet Union and its allies. In short, postwar reconstruction strengthened transnational linkages between the United States and other advanced capitalist states, and reinforced the power of moderate, centrist forces in the core. Fundamentally antiliberal world views were crushed or isolated, and the consensual reign of U.S.-style productivism was established. But its continuing hegemony was hardly assured. Directions for Future Research On the basis of this historical-structural sketch, we might suspect the U.S. global power complex to be problematic on a number of specifically political grounds, and these suspicions may suggest fruitful avenues for further research. First, this hegemony has been based upon a limited generalization of affluence and a self-limiting definition of politics. That is, it excludes from its bounty vast numbers of people in its peripheries (both within the hegemonic state/society and globally) and simultaneously presents them with a vision of politics that denies them any capacity to affect their social situation. That counterhegemonic ideologies and political challenges might arise from these peripheries should not be surprising. An important avenue of research would seek to reconstruct the attempted extension of United States hegemonic power into various peripheral contexts, the struggles generated thereby, and the effects that this dialectic of domination and resistance has had on global structures.

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In addition to struggles in the peripheries of this global power complex, t h e r e c o n s t r u c t i o n a b o v e s u g g e s t s that U . S . h e g e m o n y is p o l i t i c a l l y problematic and historically fragile even in its core relations. The argument of this chapter suggests that a central feature of U.S. hegemony has been the extension of state p o w e r to e n c o m p a s s various sites—ranging f r o m the global division of labor to the shop floor—previously outside of its scope. I wish to suggest in conclusion that this extension involved a stretching of the state itself, both as an organization and as a social relation, or structure; further, this stretching may generate tensions as the complexity of the state's relational basis and activities of social mediation are multiplied. These p r o b l e m a t i c a s p e c t s of t h e e x t e n s i o n of s t a t e p o w e r m a y u l t i m a t e l y undermine the state and the global power complex it has constructed. This points toward other potentially interesting lines of inquiry. First, we might adopt a modified Weberian perspective on the state, viewing it in its aspect as an instrument of social action, as an organization or bureaucracy (see Weber, 1946). From this perspective, "the existence of an extensive, internally coherent bureaucratic machinery is the first prerequisite for e f f e c t i v e state a c t i o n " ( R u e s c h e m e y e r and E v a n s , 1985: 50). S u c h machinery cannot be easily or quickly created, but is the result of long-term processes of state-building. The institutional capacity of the state, then, is historically problematic and cannot be taken for granted. Rapid extension of state p o w e r into n o v e l r e a l m s w h e r e little b u r e a u c r a t i c e x p e r i e n c e o r expertise has been acquired can encounter intensified levels of social conflict and become engulfed in myriad local social struggles. "As a consequence of state intervention, then, the antinomies of civil society tend to reproduce themselves within the state, undermining the state's capacity for coherent corporate action" (Rueschemeyer and Evans, 1985: 60). In the abscnce of state o r g a n i z a t i o n s with historically high capacity f o r a u t o n o m o u s and coherent action, state policy initiatives that attempt far-reaching social reorganizations are not simply unlikely to enjoy long-term success, but may actually disrupt the "corporate" identity of the state itself. In its institutionalization of U.S. h e g e m o n y , the United States has undertaken to regulate activity from the shop floor to the world monetary system, and has fostered transnational linkages of great complexity. U.S. h e g e m o n y has depended upon the regular and predictable execution of a range of state f u n c t i o n s unprecedented in A m e r i c a n history. Given the American tradition of minimalist, "low-overhead" state machinery (see, e.g., Huntington, 1968: chap. 2; Skowronek, 1982: esp. chap. 2), it may be that the U.S. state was bureaucratically ill equipped to sustain management of a global p o w e r c o m p l e x . This line of reasoning p o i n t s t o w a r d historical investigations of the state-building processes entailed in institutionalizing U.S. hegemony, the social conflicts imported into the state apparatus as a consequence, and the effects of such struggles upon state coherence, autonomy, and capacity to maintain its global power.

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Another approach, more Marxian than Weberian in inspiration, would suggest that underlying the state as bureaucracy, or as instrument, is the state as a substantive social relation. Only apparently separate, the political and the economic spheres of modern social life are at a deeper level internally related such that neither has meaningful existence outside of this historical relation (see, e.g., Wood, 1981; Sayer, 1987: esp. chap. 4). On this view, the very nature of the political state is determined by the historically specific set of social relations of which it forms an integral part. The contradictions and conflicts of its larger social context are necessarily reflected within the state itself. In the construction of a global hegemony, the relational basis of state power was extended in novel ways. The new powers of the U.S. state were based upon a restructuring of the nexus between global and local social relations in such a way that mass production and the ideology of a politics of productivity adjourned explicitly political struggles at the level of domestic sociopolitical relations and in the upper tiers of the global division of labor. At both global and local levels, then, the structural tension between the economic and political spheres of social life was apparently dissipated by the hegemonic system of order. This line of reasoning points toward investigations of (1) the concrete historical conditions under which the state was able to employ the ideology of productivism to supercede conflicts of class and nation; (2) the qualitative transformation of the U.S. state that resulted from this broadening of state power; and (3) the potentially contradictory social relations internalized within the structure of the state as a consequence of these historical processes. Explanations of hegemonic decline might then focus upon the "transportation of practices" (Bowles and Gintis, 1982, 1986) f r o m one area of the hegemonic p o w e r complex to another, structurally incompatible site and the effects this may have on the reproduction of hegemonic relations. In these ways, the problematic politics of global order might be made a c e n t r a l c o n c e r n of i n q u i r y in i n t e r n a t i o n a l p o l i t i c a l e c o n o m y . If t h e arguments of this chapter have any merit, the contemporary problem of relative U.S. decline cannot be reduced to a matter of economic policy. Stimulating entrepreneurship, balancing the federal budget, or more actively managing its bilateral trade balances will not address the basis of the United States' problems. Rather, the United States faces the quintessentially political problem of reconstituting itself as a (self-) producing society and, in the process, restructuring the nexus of relations encompassing classes, states, and world order.

NOTES 1. In the context of IR/IPE, this approach implies a distinctly unorthodox conception of the state. Rather than taking states as directly given, empirically

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observable entities (and, following Weber, identified with their organizational characteristics as instruments of territorial rule), the approach adopted here calls for inquiry into the underlying social relations that generate the possibility of such specialized organizational forms. From this perspective, the most important such condition in the postfeudal era has entailed the division of social reality into apparently separate spheres of economic and political activity (cf. Weber, 1946; Marx, 1964: esp. 3-31; Wood, 1981; Sayer, 1985). This structural condition enables the differentiation of a sphere of private, economic activities from one of public, political action, and hence entails the possibility of the modem form of state. The characteristics of particular states are not directly given by this relation, however, but are the result of open-ended processes of historical construction linking institutional state-building, capital accumulation, and interstate competition and warfare. States and state powers are thus viewed as socially produced, and hence as historically mutable. 2. By structural site, I mean the historically specific social situation in which underlying social structures are realized, reproduced, challenged, or changed by real people in the actions of their everyday lives. They are at once the context and the product of social activity. It is at the level of sites that we may reconstruct historically the interaction of agency and structure and, hence, the social production of historical process. It is in this broad sense of structured social process, connecting past and future in a particular historical context, that Abrams (1982: esp. chap. 7) speaks of "events" as a proper object of explanation for historical sociology: "An event is a moment of becoming at which action and structure meet" (1982: 192). Yet, as an object of explanation, "events, however detailed, are constructed not observed" (1982: 193). That is, they are the product of a theoretically informed reconstruction of history. Sites, then, are the historical contexts within which events of structuring are produced, and are therefore a necessary part of the historical-structural inquiry that attempts to reconstruct that process. Other very useful discussions of the open-ended and hence historically concrete relation between structure and agency are provided by Cardoso (1977), Isaac (1987), Sayer (1987), and Wendt (1987). Bowles and Gintis (1982, 1986) emphasize that the practices characteristic of a specific site are not necessarily consistent with those of other sites, and may be a source of contradiction, conflict, and radical structural transformation if practices are transported across sites. Because particular actions or events may take place in overlapping sites, implicating several sites simultaneously (e.g., shop floor and global division of labor), these events may contribute to the transportation of practices and the transformation of structure. A m o n g the c a t e g o r i e s that I will a d o p t in this c h a p t e r as p o t e n t i a l l y contradictory sites of social action are the state/society complex (Cox, 1981); the social structure of accumulation, or SSA (Gordon, 1980); and the factory regime (Burawoy, 1985). In sum, my purpose here is to use these notions to begin to reconstruct a potential object of explanation, an event—the rise of a hegemonic power complex in the United States. 3. This conceptual distinction between power and domination is very important for the possibility of critical social inquiry, for once these notions are distinguished it becomes conceivable that social powers might be exercised and developed in the absence of domination. Insofar as social relations are continually reconstructed

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through social activity, the emancipation of human self-creative powers from encapsulation within structures of domination may then become a goal of political action. Further, the extent to which such free exercise of human powers, and the social self-development this entails, is violated or negated in a concrete historical context—that is, the degree to which our social powers are alienated or estranged from us in our social relations—may become a standard for criticism (Marx, 1964, 1967). On the centrality of concepts of "self-estrangement" to critical social science, see Fay (1987). The problem of free social self-creation has long preoccupied the humanist strains of Marxist theorizing sometimes referred to as Western Marxism. Jay (1984) provides an excellent overview of this tradition of dialectical theory. For a now classic study of the dialectic of human powers and human needs, see Oilman (1976). Gould (1978) takes a subtly but significantly d i f f e r e n t view of the problem. Burawoy's (1985) discussion of "the politics of production and the production of politics" places this philosophical problem in a concrete sociological context. Another important work that centers on the politics of social self-creation is Bowles and Gintis (1986). Without attempting to justify it here, I will simply inform the reader that I take the central axis of alienation in the modern world to be the separation of the economic and the political into two distinct but internally related spheres of social activity (on internal relations, see Oilman, 1976: 12-40, 256-276; Gould, 1978: 1-39, 184n22). This social organizing principle has been operative both at the level of states/societies (see, e.g., Wood, 1981; Sayer, 1985) and at the global level (Wallerstein, 1984). It is this form of alienation that makes possible the formal separation between state and society characteristic of capitalist social formations, and it generates the possibility of a system of sovereign states in which explicit political authority is not coextensive with the global organization of production. This premise forms the political and theoretical background of the current project. 4. T h e locus classicus of such a r g u m e n t s is G r a m s c i ( 1 9 7 1 ) . U s e f u l commentaries on Gramsci's writings and their relationship to his political practice include Adamson (1980) and Boggs (1984). Jay (1984: esp. chap. 4) situates Gramsci's thought in relation to the intellectual tradition of Western Marxism. 5. It is possible to argue that this productivist vision had its roots in the transformation of capitalist production around the turn of the century and in the political struggles attendant upon this process. Montgomery (1987) demonstrates that Frederick Winslow Taylor and the other founders of the productivity doctrine believed their shop floor innovations had social implications beyond simple quantitative increases in efficiency. In short, the new ideology believed class conflict (understood entirely in terms of distributive struggle) could be overcome through the increased regimentation of production and the absolute increases in living standards this would make possible. Although the direct i n f l u e n c e of Taylor and his disciples on industrial organization in the United States was very modest (see esp. Nelson, 1975: chap. 4), a number of observers see the significance of scientific management in a broader political context. Burawoy (1985: chaps. 1, 3) views Taylorism as having profound effects in the sphere of ideology, legitimating the newly bureaucratized power of capitalists and the more active presence of the state in the transition to corporate "monopoly" capitalism. Palmer (1975) offers further support for this more political

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view of scientific management as an ideology of class power emergent at a crucial historical conjuncture for U.S. capitalism. Taylor's ideology of scientific management may have been a harbinger of the productivist society of the twentieth century, but his social vision could not be realized without the marriage of mass production and mass marketing pioneered by Henry Ford in the second decade of this century. "Ford had given the world the first system, in the fullest sense of the expression, of mass production: single-purpose manufacture combined with the smooth flow of materials; the assembly line; largevolume production; high wages initiated by the five-dollar day; and low prices" ( H o u n s h e l l , 1984: 263; see also S a b e l , 1982: 3 2 - 3 4 ; G a r t m a n , 1 9 8 6 ) . By simultaneously standardizing and mechanizing production, boosting wages, and driving down prices, Ford began to create a vast market for consumer durables, which had not existed previously. Following his lead, U.S. manufacturers could generate the more or less steady and predictable demand that is the prerequisite of a workable system of mass production. Only then could Taylor's vision of a highly regimented p r o d u c t i o n p r o c e s s be a c t u a l i z e d through the i n t e n s i v e m e c h a n i z a t i o n and s p e c i a l i z a t i o n of tasks c h a r a c t e r i s t i c of m a s s p r o d u c t i o n . T h i s q u a l i t a t i v e transformation of the production process and its larger social context distinguishes Ford's legacy from that of Taylor, his ideological precursor (Sabel, 1982: 236; Hounshell, 1984: 9-13, 250-255, 329-330). Maier (1981: 334-339) discusses the significance of this U.S.-born "Taylorite" ideology in the European class struggles of the interwar years. On the role of the American ethos of mass production and the politics of productivity in European reconstruction after both world wars, and the geopolitical implications of resolving the "German problem" through incorporation of Germany into a revitalized, liberal capitalist Europe, see Maier (1981) and Hogan (1984, 1985, 1987). Pollard (1985) and Gaddis (1982) emphasize the crucial role of U.S. productive powers in the early cold war strategy of economic containment. Clearly, the implications of these changes in the production process were not limited to the shop floor, nor to social relations in the United States. 6. Note that I am here adopting the fundamental Wallersteinian insight that the world economy is an important locus of alienation and a medium for the realization of political dominance relations. However, I dissent from the Wallersteinian view inasmuch as power relations, from the perspective adopted here, inhere not in market exchange per se but in the underlying organization of (socially self-creative) productive activity. Hence, "unequal exchange" is far less significant for me than is the ability of hegemonic states to shape asymmetrically the process by which social relations are produced on a global scale. Moreover, conceived of as a dialectic of power and resistance, this hegemonic relation is essentially problematic, and therefore cannot be adequately explained except in terms historically concrete, particular, and open. This contrasts starkly with Wallerstein's structural and teleological formulations. For able critiques of this latter tendency, see Skocpol (1977) and Wendt (1987). 7. U.S. innovations in mass production were especially significant for leading sectors of core production, such as the automobile industry. For discussions of changes in the labor process and struggles for shop-floor control in auto production, and of their implications for the industrial heart of the U.S. economy more generally, see Gartman (1986) and Lichtenstein (1980, 1982, 1983).

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8. In addition to these imperatives of competition in the global DOL, European capitalists also faced class-based political challenges to their authority in the workplace, and to the social power of capital in general, especially in the years after World War I (see, e.g., Maier, 1981: 333-339; Adamson, 1980: chap. 2; Boggs, 1984: chap. 3). Taylorism/Fordism not only promised to enable them to resist the encroachments of U.S. products into their markets but, by upholding the legitimacy of capitalist authority, could simultaneously help them to ameliorate the most overtly political symptoms of class conflict. The attraction that U.S. productivist ideology held for European capitalists was thus twofold, and its adaptation to European contexts was hardly the resultant of impersonal and more or less automatic world market forces. The concrete political struggles through which U.S. hegemonic power was to varying degrees realized in European locales (or for that matter in any number of other contexts), although an essential concern of historical-structural research, lie beyond the scope of this chapter. My purpose here is not to outline the social totality of global hegemony, but the more modest and feasible task of sketching out the intersection of local social relations in the United States with global structures such as the DOL and the interstate system. Such a descriptive account of a central power complcx is admittedly one-sided, but this need not exclude the possibility of other studies seeking to reconstruct the problematic extension of hegemonic power into the reaches of various local and global peripheries. For the time being, we might accept as a provisional statement Cox's (1987: 150) argument that "hegemony, though firmly established at the center of the world order, wears thin in its peripheries." 9. I should note, however, that this bureaucratization was not a universal feature of U.S. economic organization. Indeed, as Gordon et al. (1982, esp. chap. 5) emphasize, a struggling sector of smaller, less bureaucratic, more cyclical and competitive sorts of enterprises, along with segmented labor markets, was integral to the larger SSA in which the new bureaucratic structures were embedded. Workers in secondary labor markets have had but few of the institutionalized protections extended to primary workers, and have been subject to capitalist power and exploitation that is much more direct and intense. This peripheral sector, although hardly insignificant in the development of capitalism in the United States, was not directly implicated in the establishment of U.S. hegemony worldwide, and hence receives little attention here. Excellent existing treatments include Edwards (1979), Gordon et al. (1982), Sabel (1982), and Piore and Sabel (1984). 10. See also Davis (1986: chaps 2, 3) and Bowles and Gintis (1982, 1986). At this point, the reader may find helpful a brief recapitulation of the theoretical basis of traditional Marxist analysis. According to Marx's analysis of the twofold character of commodities in capitalist society, "labor-power" denotes the abstract, commodified form of labor—that is, the capacity to work—which is sold at its "exchange value" for wages. This is rigorously distinguished from "labor," which denotes the actual work performed for the wages paid by the capitalist. Labor is then the "use value" that the capitalist may derive from his purchase of labor-power. In Marx's theory of value, human labor-power is unique among commodities in that the value of labor (i.e., of the commodities it generates) is potentially much greater than the value of labor-power (i.e., of the commodities socially necessary for reproduction of the capacity to work). That is, the use value of labor-power is greater (by some variable magnitude) than its exchange value. It is this difference—known as

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"surplus value" in the Marxist lexicon, the product and in turn a precondition of the process of alienated labor—that serves as the centerpiece of Marx's theory of exploitation in capitalist society and represents the daily reality of political class struggle (see Marx, 1967, 1964, esp. 120-188). The variable magnitude of surplus value, and the class struggles that determine that magnitude, constitute a central problem of Marxist studies of the labor process (see, e.g., Edwards, 1979). It is in this theoretical field that Burawoy's (1985) notion of the politics of production becomes a conceptual advance of great significance, illuminating the political apparatus of production as both context and outcome of class struggles, and situating these processes of struggle in the nexus of relations linking the point of production to the state and to capitalism on a world scale. 11. See also Tomlins (1985) and Harris (1985). 12. Wood ( 1 9 8 1 ) o f f e r s a b r i l l i a n t d i s c u s s i o n of this b a s i c s t r u c t u r a l characteristic of capitalism. Her work upholds the centrality of class struggle in Marxist theory but dispels various sorts of reductionist and determinist tendencies commonly encountered in those literatures (see especially Mouzelis, 1980; Sayer, 1987). 13. As Willett (1980) makes clear, however, changing the pegged dollar value of a nation's currency was not painless, either economically or politically, and hence would ultimately fail to provide the effective adjustment mechanism Bretton Woods planners hoped they had constructed. 14. Of particular interest in this regard are the efforts, organized under Marshall Plan auspices to share with the Europeans what the United States perceived to be its uniquely efficacious approach to efficiency in production and amelioration of class struggle on the shop floor. This entailed helping the Europeans to implement more fully the methods of bureaucratic and technical control of the labor process perfected in the United States (Hogan, 1987: esp. 143-145.) 15. See also Hogan (1987: 429, 442^*43).

Alan W Cafruny

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A Gramscian Concept of Declining Hegemony: Stages of U.S. Power and the Evolution of International Economic Relations "The conclusion is still incontestable that U.S. dominance in the global production structure, though it may be shifting its base sector ally and geographically, is substantially unchanged." —Susan Strange "It seems unlikely that the United States will reassume the dominant position that it had during the 1950s. . . . It is probably safe to say that hegemony will not be restored during our lifetimes." —Robert Keohane

During the 1970s, the concept of hegemonic stability came to dominate academic thinking about the U.S. role in the global political economy. Yet, in recent years the concept has generated more confusion than clarity. No consensus has emerged over whether U.S. hegemony has declined, nor whether the contemporary international economy can be characterized as stable or cooperative. Keohane (1984) and many other scholars (Kindleberger, 1987; Gilpin, 1975; Wallerstein, 1982) assert that hegemony has vanished. Strange (1982b, 1987) and Russett (1985), documenting U.S. financial muscle and continuing ability to impose its will in the international arena, contend that it has not. Pointing to the resilience of liberal international regimes, Keohane (1984: 182-216) suggests that cooperation is possible even after hegemony has waned. Conversely, Calleo (1982), focusing on the harsh external repercussions of U.S. fiscal and monetary policies, concludes that the present system is characterized by a glaring lack of cooperation, caused by the prolongation of U.S. hegemony. The storm of controversy surrounding Kennedy's The Rise and Fall of the Great Powers (1987a; see also 1989) demonstrates that the thesis of U.S. hegemonic decline resonates in political as well as academic circles and touches a raw nerve among conservatives. And the statements by Strange (1988b) and

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Keohane (1984) cited at the beginning of this chapter indicate, even as astute Europeans witness with profound misgivings the more forceful use of U.S. power in international economic affairs, U.S. scholarship in large measure remains preoccupied with the alleged demise of that power. In this c h a p t e r I s e e k to s h o w that A n t o n i o G r a m s c i ' s c o n c e p t of h e g e m o n y provides a basis for resolving the controversy concerning the nature of the global role of the United States. In particular, Gramsci's notion of hegemony helps to make sense of the seemingly contradictory perspectives and interpretations about U.S. power that have frequently issued from each side of the Atlantic during the last two decades: each of these conflicting interpretations, it will be suggested, conveys important but incomplete truths concerning the nature and extent of U.S. power. As the next section of this chapter will show, numerous problems have arisen over attempts to define, operationalize, and measure hegemony. Many of these problems can b e attributed to limitations inherent in realist or "neorealist" assumptions that provided the starting point for most of the work on hegemony. Important questions about the nature and degree of U.S. power cannot be answered simply by devising more rigorous methods of m e a s u r i n g p o w e r or by c o n d u c t i n g a d d i t i o n a l case studies of s p e c i f i c regimes, but rather by establishing a more satisfactory conceptual framework for characterizing changes in global power relations. In the second section of this chapter, I propose an alternative to the realist approach to hegemonic stability. Recent attempts to apply the Gramscian concept of hegemony to the international arena have focused primarily on the ideological underpinnings of hegemony, emphasizing the limitations of neorealist or objective accounts of power by pointing to the importance of belief systems (Cox, 1981; see also Chapters 3 and 6). This chapter seeks to apply the concept of hegemony with a greater degree of empirical specificity. In his commentaries on Italian history, Gramsci elucidated three basic forms of hegemonic power (Gramsci, 1971; Femia, 1981: 4 6 - 4 7 ) , which may be termed integral, declining, and minimal hegemony. These forms constitute ideal types of authority relations characterized by distinctive economic processes and methods of political rule. In this chapter I apply these ideal types to phases in the international political economy since 1945, and I conclude by noting some implications of the Gramscian perspective on hegemonic stability for subsequent empirical studies.

THE C O N C E P T OF H E G E M O N I C STABILITY T h e concept of hegemonic stability was derived mainly f r o m influential books published by Kindleberger (1973/1986) and Gilpin (1975) in the mid1970s. Although neither author actually used the term "hegemony," each identified a causal relationship between U.S. power and the stability and liberality of the p o s t - W o r l d War II e c o n o m i c order, and believed that a

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similar relationship existed prior to World War I, marked by British ascendancy and stewardship. Kindleberger (1973), using the language of public choice, argued that the relative stability of the pre-World War I economy rested on Britain's willingness to provide collective goods, mainly by lending abroad and maintaining open markets. Writing at a time when the collapse of the dollar-gold standard and signs of deepening protectionism seemed to portend a dramatic resurgence of mercantilism, Kindleberger attributed these tendencies to the decline of U.S. p o w e r and leadership. Like Kindleberger, Gilpin (1975) emphasized the similarities between the rise and decline of Great Britain and the United States. In each case the hegemonic leader pursued policies that hastened the diffusion of power, eventually undermined its own position, and generated growing instability and perhaps war (Gilpin, 1981). T h e thesis of h e g e m o n i c decline has b e e n criticized f o r its AngloAmerican bias (Calleo, 1982: 51; Strange, 1987: 551). In emphasizing the benevolent and sacrificial elements of hegemonic leadership, the thesis tends to o v e r l o o k a s p e c t s of d o m i n a t i o n and s e l f - i n t e r e s t , m i n i m i z i n g t h e contribution that Great Britain and the United States both m a d e to international economic disorder as their power began to wane. Casting the issue in terms of the problem of cooperation among equals serves to obscure the great power that the United States continues to enjoy—a power unavailable to Britain during its long imperial retreat. Whereas the interwar system could plausibly be described as plural, the contemporary system remains highly asymmetrical. The pathbreaking analyses of Kindleberger and Gilpin have inspired many books, articles, and doctoral dissertations. The common denominator of most of these efforts has been the attempt to introduce a greater degree of methodological rigor; hence, the emergence of the "theory of hegemonic stability," which hypothesizes that periods of stability coincide with the existence of a state that possesses a preponderance of material resources. In the process of testing, however, much of the work has lost the subtlety and s o p h i s t i c a t i o n of the o r i g i n a l t h e s i s . U n f o r t u n a t e l y , t h e e m p h a s i s on measurement has encouraged scholars to oversimplify, thereby neutralizing much of the conceptual richness of the theory. A number of studies have investigated the theory of hegemonic stability as applied to limited time periods and particular sectors or regimes. Most have claimed that changes in international p o w e r relations have influenced r e g i m e s to at least some degree, but in general the claims have been quite modest (Krasner, 1976; Keohane, 1980).

The Decline of Hegemony? Keohane (1984) presents a viewpoint, shared by many U.S. scholars and policymakers, that the precipitous loss of U.S. p o w e r over the last t w o decades has increased the potential for international economic disorder. He

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asserts that although U.S. hegemony has eroded, the world economy has not broken apart: "discord has not triumphed over cooperation; instead, they coexist" (Keohane, 1984: 184). The continuation of the system thus poses a problem for the theory of hegemonic stability. Keohane develops a modified neorealist theory, which specifies a more limited causal role for the international power structure. The post-World War II regimes were constructed on the basis of U.S. hegemony, but these regimes might survive even after hegemony has waned. Regimes produce strong vested interests in cooperation by facilitating recognition of mutual interests and by providing normative incentives to cooperate in the absence of a hegemon. Keohane's conception of power as a "basic force" that is visible in terms of bargains struck between actors is consistent with the standard realist approach. This conception, however, makes him less sensitive to the ways in which regimes limit the range of choices open to actors and to the possibility that some actors' preferences are in fact shaped by other, more powerful actors. 1 Keohane's concept of power thus leads him to define cooperation and discord in terms of the presence or absence of overt conflict. He stresses the significance of the apparently high level of international economic cooperation that has survived the alleged decline of U.S. hegemony, but he defines cooperation primarily in terms of the existence of formal agreements. This definition is problematic in view of such phenomena as the consequences of the debt crisis for Third World economies and societies, and the global ramifications of the U.S. budget deficit. International Monetary Fund (IMF) programs, for example, have elicited an astonishing degree of coordination and compliance, despite their harsh impact. Yet the existence of such agreements strains the meaning of the term cooperation. The governments comprising the IMF may formally agree on a set of policies, but agreement at this level may obscure deeper conflicts and unequal power relations both within and among nations. In sum, although Keohane demonstrates that U.S. power has diminished to some extent, the argument that cooperation is the predominant trend in contemporary international economic affairs rests on controversial normative and theoretical assumptions. 2

The Continuation of Hegemony? Although few scholars would dispute the fact that the relative power position of the United States has eroded to some degree, the assumption of significant hegemonic decline no longer commands widespread acceptance. Russett (1985) argues that although it is possible to document a loss of power in terms of a basic force model, a number of theoretical and empirical problems make it difficult to sustain any argument about the decline of hegemony simply on the basis of trends in the possession or control of basic resources. Conclusions concerning the decline of hegemony will depend on what

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indicators or material resources are included; the t i m e f r a m e , which will determine the steepness of the slope of declining hegemony; and the inferences to be made from statistical trends. For example, what does the relative decline, but still high ratio, of U.S. G N P to Western European and Japanese G N P s signify? Does the growing dependence of the United States on foreign t r a d e portend a loss of U.S. power, as m a n y scholars of r e g i m e s h a v e assumed, or does it in fact endow the United States with greater influence, as Albert Hirschman (1981) might argue? Perhaps the best indicator of the erosion of U.S. h e g e m o n y is the declining relative productivity of U.S. i n d u s t r y (Kennedy, 1987a: 433). Yet U.S. c o r p o r a t i o n s o c c u p y pivotal positions on a global scale, and it is not clear that domestic accounts of GNP or productivity are sufficient indicators of overall national economic power ( O h m a e , 1985; Ishikawa, 1988). As R u s s e t t ( 1 9 8 5 : 2 0 9 ) w r i t e s , " T h e standards against which to measure the American decline are seldom made clear." Part of the difficulty stems from a lack of agreement about how much " p o w e r " is necessary to produce "hegemony." In material or basic force terms, U.S. power has declined, but it still remains very great. In most key areas, including those in which the link between possession of resources and influence is direct, the United States continues to dominate the international economy. The U.S. G N P is two and one-half times that of Japan and five times as large as that of West Germany. Since 1983 U.S. growth rates have kept pace with those of Japan and greatly exceeded those of most Western European countries, including West Germany. The role of the United States as consumer, financier, or owner of global natural resources dwarfs that of any other country. O P E C ' s troubles have shown that power limited to a particular commodity or regime is transitory, as Mexico, Nigeria, and even Britain have discovered. Rebuttals to the thesis of hegemonic decline have tended to emphasize the importance of the structural position of the United States in the global economy (Strange, 1982b, 1987). The size of its marketplace for goods and capital bestows special privileges on the United States. To be sure, the invasion of the U.S. internal market for consumer goods underscores the softness of U.S. industry, especially in the smokestack regions. In the context of the underlying strengths of the United States, particularly in the monetary sphere, the dramatic surge of imports during the last decade has in some ways actually enhanced its power by establishing a trade dependency on the U.S. marketplace. The extraordinary power of the United States is particularly conspicuous in international monetary affairs (Strange, 1982b; Parboni, 1981). As a result of President Nixon's decision to remove the dollar from its gold standard, U.S. influence in global financial markets has actually increased, rendering the analogy between the processes of British and U.S. decline misleading (see Chapter 2). Precisely because the dollar's power is largely structural,

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and not always evident in bargaining over international monetary policies, it has been underestimated, at least in the United States. For example, U.S. fiscal and monetary policies played a key role in the stagnation of Western European economies during the early 1980s. 3 The substantial residue of power available to the United States and the limitations of a conception of power based on formal bargaining processes have been recognized by U.S. policymakers. As Nau (1985a: 21-22) argues, Twice during the 1970s the United States tried unsuccessfully to achieve international consensus on economic issues through diplomatic bargaining. But both times America squandered its diplomatic bargaining power by pursuing inflationary domestic economic policies that weakened its power in the marketplace. In the 1980s, domesticists [the Reagan administration] urged for a reversal of this approach: an assertive use of U.S. economic power in the marketplace. This power when exploited effectively remains much greater than its power at the bargaining table—a fact which frequently irritates U.S. allies.

Thus we are left with a diversity of views. Whereas standard interpretations assume that U.S. hegemony has declined, Russett (1985: 211) contends, "The basis of American hegemony may have declined, but it has hardly vanished." He buttresses his argument that the postwar balance of power has remained relatively stable by pointing to apparent continuities in international economic affairs since World War II, the stability of the balance of military power, the resilience of liberal capitalist norms, and the continuing ability of the United States to obtain desired outcomes. Figure 5.1 depicts the axes of scholarly disagreement over the claim of hegemonic decline and over the relationship between hegemony and cooperation. Keohane (1984) celebrates the emergence of cooperation in the context of a plural international distribution of power. Gilpin (1975, 1981, 1987), Kindleberger (1981, 1987), Wallerstein (1982), and Krasner (1976) also assume the emergence of a more plural structure, but they are less optimistic about the possibilities for cooperation. Calleo (1982) and Strange (1982b, 1987), on the other hand, have challenged the assumption of declining U.S. hegemony, emphasizing the "extraordinary" degree of U.S. power and the contributions of the United States to global economic instability and conflict. Although Russett (1985: 213) concludes that "any truly scientific assessment" of the decline of hegemony must await "more rigorous measurement," the central problem is conceptual—the inability to distinguish between various forms and applications of power. As argued above, Gramsci's method enables one to distinguish between power-as-preponderance and power-as-hegemony. If this distinction is given sufficient weight, then it is possible to employ a model of hegemonic stability that reconciles two opposite approaches in the existing literature: as "leadership" in the public choice tradition, and as "domination" in power politics.

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Figure 5.1 Axes of Scholary Disagreement Regarding the Balance of Power in the International Economy Type of System (dependent variable) s o* Pu o

-9 .2 'S "