SOURCES OF VARIANCE IN STATE SENSITIVITY TO RELATIVE GAINS

 

        Problem of absolute and relative gains divides the two major approaches to the international relations theory. Neoliberal institutionalism assumes that states are more concerned with their absolute gains. On the other hand neorealists believe that states focus on their relative gains.

        In this essay, I will discuss three different sources of variance in state sensitivity to gaps in gains. I will begin by establishing the roots of the debate on absolute and relative gains in the theoretical settings of realism and liberalism by showing the distinct understanding of anarchy. This point, I argue, causes the distinct understandings of the international environment, so their different perspectives to the evaluation of states’ concern for absolute and relative gains and its implications to cooperation among states. Having the puzzle, how the different understandings of the international environment have led to different perceptions of absolute and relative gains, explained, I will establish my argument on the sources of variance in state sensitivity to gaps in gains. My first point is the effect of perceptions of the state about its partners’ intentions, namely that, uncertainty. Secondly I suggest that the size of the gaps in gains also effect the state sensitivity to gaps in gains. My third argument is that power status of the state compared to its partners’ power status has an effect on how much that state is sensitive to what others also gain from the cooperation. While explaining my points of view, I will test my analysis with the existing literature on the issue.

 

Cause of distinct understanding of relative gains problem

        The issue at the center of the neorealist-neoliberal debate is the meaning and implications of anarchy. Anarchy is often taken to be a fundamental concept in international relations theory. However there are misunderstandings over the issue. The definitions are sometimes made differently or the emphasis on anarchy is misplaced. Neoliberal consideration of anarchy as the major driving force in international relations is often distinct than neorealist definition and this causes mistaken evaluations on the debated issues between neorealism and neoliberalism, in our case on the problem of absolute and relative gains.

 

The meaning of anarchy

        Robert Powell suggests that we should focus less attention on anarchy.(1994:330) However much of the neorealist-neoliberal debate centers on the meaning and implications of anarchy, specifically the relation between anarchy and cooperation. Beginning from the definition of state, the debate goes through the understanding of the structure of the international environment and at the end leads to distinct prospects for cooperation. Neorealists accept state as the only major actor in world politics while liberal institutionalists include supranational authorities, international agencies and other transnational actors.  Anarchy is a major shaping force for state preferences and actions for realists, but liberals accept other forces such as technology and knowledge, as salient. Liberals believe that international institutions are independent forces facilitating cooperation, but realists do not. So, realism is pessimistic about prospects for cooperation, while liberal approach is optimistic. Neoliberal institutionalism has accepted anarchy as a major force for state preferences. However it continues to be optimistic about prospects for cooperation.(Grieco,1988 :123)

        The political realist definition of anarchy emphasizes that, in anarchy, there is no overarching authority to prevent others from using violence or the threat of violence to destroy or enslave them. On the other hand anarchy, in a much more moderate version, is defined by the neoliberals as the lack of a central agency to enforce promises which enables states to cheat under cooperation.(Grieco,1988:126) Namely, by anarchy, realism means lack of a central agency to enforce promises and to provide protection, while liberal institutionalism only means lack of a central agency to enforce promises. For realists, the core interest of state is defined as to enhance prospects for survival not to advance in utility.

        Structural realism generally associates anarchy with a concern for relative gains and a lack of cooperation.(Waltz,1959) Neoliberal institutionalism, however, argues that anarchy in the sense of a lack of government does not imply a lack of cooperation.(Keohane,1984) This approach is accused by the realists for neglecting states’ concern for relative gains. According to political realism, states’ main goal is to achieve greatest gains and smallest gap in gains favoring partners. However, neoliberal institutionalism argues that states try to achieve greatest possible absolute gains without any attention to what their partners gain.(Grieco,1988:132)

This distinct definition and understanding of anarchy, leads neorealism and neoliberalism to an unsolvable debate using the same term as the basis for their argument but meaning differently. For instance Grieco insists that relative gains consideration caused by the anarchical nature of the international relations causes states to cooperate less.(1988:123) However, Snidal defines the anarchical environment as ‘where states seek power or security rather than status or victory’ and concludes that anarchy does not imply any negative implications for international cooperation.(1991:171) So, neither Grieco can convince Snidal nor Snidal can change realists’ belief that cooperation is not possible under anarchy, just because they do not use the same term in the same meaning.

 

Anarchy and Cooperation

        The core problem to be solved at this point is whether cooperation is possible or not in spite of anarchy.

 At first liberals insisted on denying the anarchical nature of the international setting and so any problem on the way to cooperation among states. However with neoliberalism basically, anarchy has been accepted by almost every member of the two major international theory approaches, although distinct definitions of anarchy have been made, as mentioned above.

The major role of a central agency or overarching government, according to neoliberalists is to enforce promises. In this way cooperation will be possible through decreasing the risks of defecting or cheating. Yet according to realists, states do not believe that a lack of a common government only means that promises will not be reliably enforced. Instead from a different point of view, realists stress, in anarchy states recognize that there is no authority to  prevent others from violent use of force, or even to destroy and enslave them. In anarchy, realists argue, wars occur because there is nothing to prevent them from violence.(Waltz 1959:232) So from a realist perspective anarchic environment is always open to wars and  so the danger of war cause all states to be motivated by distrust. Taking survival as the key interest, states perceive existence of other states as a potential threat. For neoliberal theory, if states fail to cooperate, the worst result will be a lost opportunity, but for realist theory the worst outcome of a cooperation is to loose independence or security. This is why anarchy and its implications against cooperation are so much emphasized in realism. Because it is vital, not a matter of individual well being as neoliberals stress it.

At this point E. H. Carr’s suggestions should be mentioned. He assumes that wars are made to achieve military strength compared to another state. Namely, that to be stronger in military terms or prevent another from becoming stronger. (1964:111, emphasis added) The emphasis in his assumption, in relation to the subject, can be put on the comparative evaluation of military strength. Strength in absolute terms does not mean much thing, since it is achieved to take the upper hand among states. Deterrence in military terms, needs a minimum size of military strength to prevent the other states from attacking.[1] So the relative position of the military strength of a state to the others’ is the crucial point, not the absolute strength of one state. Waltz also suggests that the first concern for states is not to maximize power but to maintain their position in the system.(1979:126) Grieco draws the conclusion that states are positional. Positionality engenders a fear that state’s partners will achieve relatively greater gains. Although when relatively greater gains seem to be secure, not to be used against the state itself (the partner may be an ally state), in the future minds can be changed, balance of powers may change, new leaders may come to power, new dangers may arise.(Jervis, 1978:168)

On the other hand, neoliberal assumptions and neoliberalist criticisms against realist assumptions seem to be weak and unconvincing.

Snidal argues that relative gains do not provide a sufficient response to the institutionalist claim about cooperation.[2] (1991:170) He bring about the term constant returns instead of relative gains. Constant returns imply an equal division of costs and benefits among states. So states will prefer to cooperate. He limits relative gains considerations to the case of two state interactions with high concern for relative gains and near disregard for absolute gains. He emphasizes the importance of the number of states engaged in cooperation. As the number increases, the concern for relative gains will decline sharply.

Although he seems to approach the problem from a different point of view (number of the cooperating states) he has contradicting arguments. His employment of the assumption that states receive constant returns from cooperation is both inappropriate and contradicting. At first he assumes that relative gains and absolute gains may occur at the same time. By this assumption he seems to accept the existence of relative gains. However with establishing his argument on constant returns, he tends to deny the effect of relative gains before cooperation. Besides he himself accepts that if constant returns does not follow, asymmetric gains will induce relative gains and so impair cooperation.[3] So he at first does not follow the definition and implication of anarchy. In an anarchical international environment, states seek to maintain their positions. However Snidal emphasizes in a misleading manner that under anarchy states seek absolute power or security.[4] He states wrongly that relative gains are at stake whenever goods are positional. However international environment is anarchic and positional. Positionality is the outcome of anarchy by definition. As Snidal himself accepts, under positional circumstances and considerations, states seek relative gains. Again as he states in a footnote, concern for relative gains diminishes the incentives of one side to cooperate.

An even weaker theory or relation between anarchy and cooperation and how relative gains affect the relation, comes from Lipson.(1984) After distinguishing cooperation on economic issues from security matters, he points out that cooperation on security matters is most likely if firstly the future is not highly discounted, secondly if the penalty for unreciprocated cooperation is not devastating.

Analysis of only these two conditions for cooperation shows the weakness of his arguments. In his both assessments he tries to be in the same line with the definition of anarchy. However, he declines to follow a much core principle: rationality of states. It is obvious that a rational actor considers past and present together with future. Future aims, prospects for future, fears and hopes directs the actor’s behaviors, attitudes and short and long term decisions. So to set a condition for cooperation as not to discount the future is meaningless. I argue that this does not constitute a condition for cooperation. As to the second condition, Lipson applies anarchy and means that in an anarchical environment, there is no overarching institution to punish unreciprocated cooperation. States will tend to cooperate if they recognize an opportunity of defection which will enable them to rain relatively more. However the danger of defection will be recognized by the other state and states will remain reluctant to cooperate unless they can secure the minimization of possibility of defection. Again to set such a condition for coordination is meaningless.

Neorealism and neoliberalism offer markedly different views concerning the effects of international anarchy on cooperation and how relative gains considerations intervene into this relation. Compared to realist theory, neoliberal assumptions are less convincing and less following a logical order. Hence, realism provides a more comprehensive theory of the problem of cooperation than does neoliberalism.

 

Sources of variance in state sensitivity to gaps in gains

        I suggest that there are three sources of variance in state concern for relative gains: The uncertainty, size of the gaps and value of the gains and relative power status of the partner state.[5] I draw these points basically from Waltz’s description of concern for relative gains and will support my point with the arguments of the realist writers.

        Kenneth Waltz summarizes the relative gains perspective as such: “When faced with a possibility of cooperating for mutual gain, states that feel insecure must ask how the gain will be divided. If an expected gain is to be divided, say in the ratio of two to one, one state may use its disproportionate gain to implement a policy intended to damage or destroy the other. Even the prospect of large absolute gains does not elicit their cooperation so long as each fears how the other will use its increased capabilities.” (1979:105, emphasis added) By the second emphasis on ‘may’, I express the factor of uncertainty as a source of variance in state sensitivity to relative gains. Persistence of uncertainty in international relations, produces the state position and the relative gains problem for cooperation. States are uncertain about one another’s future intentions. So they pay close attention to how cooperation might affect relative capabilities in the future. However in an anarchical environment uncertainty can never be removed. Even if the partner is an ally today, no one and no institution can guarantee that it will not turn into a threat under appropriate circumstances. Even if the certainty originates from the cultural identity of a nation, or from the domestic settlements[6], minds can be changed; beliefs can be regulated so that a nation may become culturally an ally or a threat in a very near future. So taking uncertainty as a constant reality of international anarchical environment, I also argue that relative gains problem is always at stake. However the degree of the concern may change as the degree of uncertainty changes. Future research on the factors of uncertainty will clarify when and how the degree of uncertainty changes.

        I suggest the character of the gaps in gains as the second source of variance in relative gains consideration. As I emphasize ‘the ratio’ in Waltz’s description, I argue that firstly the size of the gap affects the relative gains considerations in case of cooperation. Relative gain of the partner state may not be large enough to constitute a future threat. Secondly the value of the relative gains may be high enough to be convertible into a military use of force which will form a threat or the value may be so low that (despite a big size in the gaps) it cannot change the existing position of the state compared with its partner. States will be more concerned with the relative gains problem if the value of the excess gain and the size of the gap between the gains of the parties are enough to constitute a threat in the future. The question asked here is not: “Who will gain more?” but “What will the partner gain?” So the absolute gain of the partner affects the relative gains considerations of the cooperating state because achievements of gains affect relative capabilities.

        My third suggestion is the relative power status of the other state should be considered as a factor leading to the variance in state concern for relative gains. Very big and very small states will likely to have lower concern for relative gains than middle sized states. From the point of very big states, for whom already there is almost no direct threat, the own absolute gains will be more important than what the smaller state gains. On the other hand for very small states, independence and security are already under threat. So while engaging in cooperation with bigger states, concern for relative gains will make no sense. As I quoted from Waltz, “even the prospect of large absolute gains for both parties does not elicit their cooperation so long as each fears how the other will use its increased capabilities.” This fear is less for very big states and already exists for very small ones. So prospect for large absolute gains may lead to a less concern for relative gains when cooperating states are very big and very small.

        On the issue of state sensitivity to gaps in relative gains, Grieco discusses six different sources of variance: experience with partner, existence of a common, external threat, the domain in which cooperation occurs (economic, security), state’s power trajectory, convertibility of gaps, current power status of the state.(1990:43-44) He is successful in bringing the point of the current power status if the state into consideration. So I use that factor in my assumption. Besides convertibility of gaps can be considered under my assumption that size of the gaps and the value of the gains affect concern for relative gains. However his first suggestion seems to be in conflict with the realist assumption of anarchy and uncertain nature of the international relations. In an anarchical environment no state can be specified as a long-term ally. Everything may change at any time. So suggesting, “state sensitivity to relative gains will be lower if a state’s partner is a long term ally” is conflicting with the core assumption of anarchy. Besides his argument that presence of a common threat will increase state'’ tolerance for gaps in gains, is also weak. Today'’ ally may be tomorrow's threat. States will try to decrease the gaps in gain even when a common threat exits. Existence of a common threat neither decreases the uncertainty of the partner’s future behavior nor increases the reliability of the partner’s promises.[7]

        Powel formulates sources of variance in state sensitivity to gaps in gains by expressing the possibility of use of force within the system constraints. However I argue that there is no need to mention the possibility of use of force as a distinct factor, because it is a natural and an obvious consequence of anarchy.

        Keohane, on the other hand, emphasizes that both neorealism and neoliberalism presume that the concern for relative gains is conditional in his appraisal of the neorealist and neoliberal debate, but does not set any sources of variance in state sensitivity to relative gains.

        In sum, before discussing any further issue, the definition of the concepts should be clarified. No discussion will end in an agreement, when key concepts are used in different meanings. Meaning distinct definition of anarchy, neorealist - neoliberal debate cannot solve the relative gains problem. However leaving aside the debate, it should be marked that concern varies and “explaining”[8] the sources of variance will also help us solve (or clarify) the problems of international relations theory such as coordination.