Sunday, March 6, 2011

After Hegemony by Robert Keohane

After Hegemony: Cooperation and Discord in the World Political Economy (Princeton Classic Editions)After Hegemony
By Robert Keohane
Copyright 1984

In After Hegemony, Robert Keohane puts forth the theory that provides an alternative to realist hegemonic theory. Rather than suggesting that countries act only in their own interest, and therefore international cooperation can only occur when it is imposed by a hegemon, he suggests that there are other forces that allow cooperation even when there is no hegemon.

Keohane suggests that international cooperation occurs, even among purely self-interested states, when there are mutual interests. This type of situation can be modeled using the ‘prisoner’s dilemma’ framework from game theory. If this game is played repeatedly, even a rational actor may choose cooperation. He argues that cooperation is particularly likely to occur within existing international regimes. These regimes are difficult to build, and are often put into place by hegemonic states. However, contrary to the idea that these cooperative regimes will fall apart when the hegemon declines in power, Keohane argues that the regimes will remain and cooperation will continue.

He states that international regimes help to reduce transaction costs among states – they allow a framework in which cooperation can take place. The repeated interactions allow states to build a reputation and to build mutual trust. Thus, when they make decisions about whether to ‘defect’ from an agreement, they must consider not only the myopic costs and benefits of that decision, but also how that action will affect cooperation on other subjects as well as cooperation in the future. Therefore, even using realist assumptions (that each country acts only in its own self-interest) you still get cooperation.

The theory of bounded rationality – the idea that individuals (and states) are not capable of processing all information to make perfectly rational decisions, but instead use methods such as ‘satisficing’ - increases likelihood of cooperation. If bounded rationality is in place, it may be even more beneficial for states to rely on existing rules and agreements, and to benefit from existing international regimes. These regimes allow states to follow standard operating procedures or ‘rules of thumb,’ rather than trying to exert resources to reconsider actions and decisions in each case of possible international cooperation.

If you also relax the assumptions of realist theory to allow the idea that countries may care about other countries’ well-being, then cooperation is even more likely, because this increases the common interests among states.

Keohane then provides examples of declining U.S. hegemony and the concurrent events in international cooperation in the monetary policy regime, trade regime, and oil regime. He suggests that hegemonic theory has good descriptive power for the years after World War II when the U.S. is the main hegemonic power – cooperation increases and the U.S. creates international regimes according to its interests and ideals. However, as American hegemony declines in the 1970’s, Keohane notes that cooperation does not disappear completely, and that a number of regimes remain, contrary to what realist hegemonic theory would suggest. He argues that this supports his cooperative theory, the idea that existing regimes provide benefits that allow countries to continue to cooperate even without a hegemon.

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