Hegemonic stability theory
Hegemonic Stability Theory stipulates a number of rules for the maintenance and decline of international monetary and political systems. Owing to significant popularity and widespread diffusion there is significant internal differentiation of focus and fact within the field.
Kindleberger, whose analysis of the 1929 depression is widely accepted as the precursor of the theory, states that for international system of trade and finance to function smoothly, there must be a hegemon. This is so because there is a collective action problem in that regulation and institutionalization of trade and finance is a public good, that is, it benefits the community. To solve the collective action problem, a the hegemon takes the lead and is motivated to do so because of the benefit it gains; for example, the United States benefitted greatly as the reserve currency under the Bretton Woods system.
Kindleberger's theory stems from the historical experience of England. Its manufacturing production surpassed that of France in the 1850s, it took on the leading role as exporter of capital, and used British gunboats to force trade. Britain was a hegemon, and used this power to maintain the international economic system. In the 1930s however, Britain had lost its dominance and when the Great Depression hit, the system broke down because of the absence of a hegemon.
A Hegemon according to Keohane is a state that possesses the following characteristics:
a. the ability to create and enforce international norms,
b. the will to do so,
c. decisive economic, technological, and military dominance.
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Criticism
Numerous critics have voiced concern with the theory.
First, it is not just the hedgemons existance that maintains order, but also some recognition of the hierchy of states by other actors in the international community. As Wyatt Walters argues, it was the Soviet threat that led England, France and Germany to take a secondary role to the U.S.; it was not just the presence of the United States.
Second, it has been argued that the absence of a hegemon during the interwar years was not responsible for the breakdown of the international economic system, instead,it was the harsh reparations imposed on Germany.
Newer Variations of the theory
Neo Realists argue that the hegemon supports the system so long as it is in their interests. The system is created, shaped and maintained by coercion. The hegemon would begin to undermine the institution when it is not in their interests. With the decline of a hegemon, the system descends into anarchy.
Neo liberals argue that the hegemon provides public goods through institutions. It is motivated by enlightened self-interest; the hegemon takes on the costs because it is good for all actors, thereby creating stability in the system, which is also in the interests of all actors. With the decline of the hegemon, institutions don't automatically die; instead, they take on a life of their own (see regime theory). --Ebala 03:36, 25 Apr 2005 (UTC)
Is the U.S. still a Hegemon?
Hegemony demands power, which is defined by Susan Strange as the ability of one party to affect outcomes such that their preferences take precedence over the preferences of other parties. The question of whether the U.S. is still a hegemon is tied into whether or not it has lost power. Keohane sees power as tied into resources and production, and because US GDP is now lower relative to others, it implies a loss of power.
Although resources are an important determinant of power, they are not always determinatve. For example, the German troops that conquered western Europe were actually fewer in number than their opponents. Susan Strange uses this logic to argue that the U.S. is still a hegemon.
One form of power that the U.S. possess is structural power. After the Exxon-Valdez accident, the US passed a domestic law commanding any oil delivery ship to have unlimited liability insurance. Even though most oil shipping companies are located overseas, they nevertheless complied with the law because the US is worlds largest market for oil.
In addition to structural power, the U.S. has many resources. It unilaterally helped Mexico in Peso Crisis, unilaterally helped Russia with economic aid, and almost single-handedly invaded Iraq. The United States has also 'persuaded' many countries to embrace the free market; through institutions such as the IMF, it pushed Latin American nations to undertake economic programs that Washington believed was necessary (see Washington Consensus).
In reality, American dominance varies depending on issue. In trade policy, the US is a free trading nation but is no longer the leader that it used to be, as protectionsit elements from inside the country are holding it back. In finance, the value of the U.S. dollar is being maintained by foriegn holders of the currency, many of which are concentrated in Asia. With investment, the U.S. can promote FDI through treaties, but ultimately, firms and individuals decide where to put their money.
--Ebala 04:11, 25 Apr 2005 (UTC)
External links
Summaries of International Relations Theories, http://www.irtheory.com/know.htm