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After Hegemony I

Explore the rise and fall of international hegemony through historical cases from 19th and 20th-century Britain, the United States during the Great Depression and after WWII. Evaluate the dynamics of hegemonic power, public goods theory, and collective action in international cooperation, considering challenges like protectionism, regime creation, and decline. Delve into how hegemonic power affects global systems using examples such as the Bretton Woods Agreement and the OPEC regime shift. Examine theoretical dilemmas like motivating the hegemon and addressing temptations when controlling public goods. Understand how collective action and small group cooperation factor into maintaining global order and economic stability.

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After Hegemony I

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  1. After Hegemony I Robert O. Keohane

  2. Overview I. The concept of hegemony II. Repeated prisoner’s dilemma, regimes, and international cooperation III. Assessment

  3. International cooperation as a public good NC C Payoffi K group n Equilibrium? All free ride

  4. The case of hegemony NC C Payoffi n Equilibrium? • Hegemon contributes • All others free ride

  5. After hegemonic decline NC C Payoffi n Equilibrium? Everyone free rides

  6. Implications • International hegemony is beneficial • Property rights • Security • Transaction costs • The “weak” exploit the “strong” • Burden sharing in NATO • MFN in GATT • Hegemonic decline threatens the system

  7. Cases: Britain 19th Century • Repeal of the 1815 Corn Law in 1846 • Market opening strategies • Bilateral MFN negotiations with Scandinavia, France & U.S. • Imperialism • Market creation • Protection for property • Reduction of risk for investors

  8. Cases: Britain 19th Century • Financial system • Gold standard, international reserve currency • Free capital market • Lender of last resort

  9. Cases: Britain 20th Century • Decline after WWI • Abandon the gold standard • Protectionism • Imperial preferences as a discriminatory trade bloc

  10. Cases: United States during the depression • Smoot-Hawley Act of 1930 • Reluctant lender of last resort • J.P. Morgan and the New York Fed • Abandon the gold standard (1934)

  11. Cases: United States after WWII • 1944 Bretton Woods • International Monetary Fund (IMF) • World Bank (IBRD) • Trade: ITO  GATT • Marshall Plan (ERP)  OECD • Oil producers’ regime • Low prices • Price stability

  12. U.S. decline? • Rise of OPEC • Departure from the gold standard 1971 • Triffin’s paradox • Vietnam War • Protectionism, NTBs, VERs Just two cases?

  13. Theoretical problems • How do you motivate the hegemon? • The U.S. was a potential hegemon before WWII • Wrong or tautological? • Only the crude theory makes predictions’ • The nuanced theory is tautological • Hegemonic temptations • Impose optimal tariffs • Unilateral macroeconomic policy • Exploit reserve status of the currency

  14. Public goods • Non-rival • Non-excludable

  15. Public goods • GATT/WTO • Members only • MFN status is a public good by design • IMF • Members only • But, benefits to net contributors are public: • Systemic stability, free trade, capital flows • Oil • Suez crisis of 1954

  16. Public goods • In any regime, enforcement is a public good • Temptations to cut a deal • Need a threat to punish the punishers • Exclusion itself may be the public good

  17. Collective action in repeated games • Small groups substitute for hegemons • There is more “cooperation,” in Keohane’s terms—mutual adjustment • Cooperation may improve because hegemons can more credibly threaten to defect after decline • U.S.-Japanese trade in the ‘80s • U.S.-EC on NTBs  Uruguay Round

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