Even the notion of “international relations” seems obsolete when so many of the interactions that presently sustain world politics do not unfold directly between nations or states.1
As we head toward the end of this millennium, we are witnessing profound changes in the international system. There seems to be a general consensus that the bipolar, postwar era has come to an end. But the contours of the future are far more difficult to discern. There is talk of a new tripolar constellation composed of the Pacific-Rim, North America, and Europe.2 Others suggest a reconfigured bipolar world divided into Pacific and Atlantic regions. American hegemony, once a foundation for the stability of international regimes, can no longer be taken for granted, its power and its purpose increasingly ambiguous in a yet emerging system. Whereas some see an ailing superpower, others see continued American dominance, for better or for worse.3
Indeed, the very future of the sovereign state may be questioned. Global ecological problems, international financial transactions, unprecedented human migration, the potentially disastrous effects of nuclear force, and growing economic interdependence cast doubts upon the sovereign, territorial state as the system of rule most appropriate to deal with such issues.4 If nuclear weapons have made the territorial state less relevant, then the same might be said of financial institutions which move vast amounts of capital worldwide in the blink of an eye. “Modern global banking, and the new international economic realities it has created, challenges the world’s political systems.”5 Such international financial intermediation has multiplied a hundredfold in less than twenty years.6 “Offshore production” and “joint ventures” can barely capture the nonstate centric nature of modern manufacture. Multinationals know no boundaries. Trade has also increasingly become the movement of services rather than exclusively that of material commodities. Such phenomena require social scientists to rethink the nature and causes of change. To what extent can the previous discussion of European history aid us in understanding the consequences of such processes? Specifically, is the decline of the sovereign, territorial state as imminent as some suggest?
I have written this book because I believe that an analysis of the emergence of the state system and its continued existence suggests one way to think about contemporary changes in a systematic manner. Historical analysis indicates that institutional evolution proceeds in two stages. In the first stage a dramatic change in the overall environment leads to new political coalitions. Such coalitions will favor institutional arrangements that correspond to the coalitions ideological preferences and material interests. In the second stage the different types of institutions exert competitive pressure on each other, and particular arrangements will emerge as more effective and more efficient than others. Some forms of organization are also more compatible with others and hence become preferred systems of rule. A brief synopsis of some of the main arguments might be helpful.
In response to the economic changes in the Late Middle Ages, three new modes of organization emerged: the sovereign state, the city-league, and the city-state. The expansion of trade offered opportunities to individuals for new means of livelihood and new possibilities of structuring authority. The growth in commerce also changed the relative power of the towns. Given these new opportunities and given the increase in their relative power, the burghers tried to form political coalitions that better met their interests and belief systems. Depending on the nature of coalitions, different institutional outcomes resulted.
I therefore argue that in its simplest form, expanding trade led to political coalitions that preferred a variety of new institutional types. France, the Hansa, and the Italian city-states were examples of the new systems of rule. Neither changes in military technology nor particular ideological perspectives provide for an adequate explanation of the variation in these three types. All three had access to modern technologies of warfare. All three had access to similar ideas of social order, Roman law, and religion.7
The nature of expanding trade provides the first estimate of the preferences of social groups and political elites. The advanced nature of trade in Italy made a high level of urbanization possible. Towns were of considerable size and did not need to rely on a central actor or league for protection. Moreover, Italian commerce was based particularly on goods of high added value and of relatively small volume. Towns had the motivation and the capability to try to monopolize trade routes by themselves.
Germany was less urbanized than Italy. Consequently, towns had to pool their resources for mutual aid against feudal and ecclesiastical exploiters. The trade of the northern German towns was largely in bulk goods, large in volume but low in added value. To acquire a monopoly on this trade, the Germans thus had to come together or seek assistance of a central actor who could defend their interests and unite them.
France, short of Flanders, was not very urbanized. Trade was largely local in nature and usually of low added value. The French towns thus had similar interests to the German towns. They would benefit from a political organization that could unite their resources, limit feudal exactions, and diminish the effects of feudal particularism.
But although both German and French towns desired an actor who could provide protection, reduce transaction and information costs, and establish more standardized jurisdiction, the German and French cases worked out quite differently. The primary explanatory variable, the expansion of commerce, provides for only a partial explanation.
Different institutional results occurred depending on the nature of social bargains that emerged in response to the new economic environment. Environmental change was mediated by the specific interests and calculations of individuals. In France a social coalition emerged between king and towns based on royal taxation, central administration, and a shared conceptual framework. In Germany, by contrast, the king—the Holy Roman Emperor—turned his attention to Italy, which proved disastrous. The king failed in his Italian campaigns, and the result was German fragmentation. Feudal lordships took effective control. Urban leagues formed in opposition to these feudal principalities in order to maintain urban independence and foster a more favorable economic environment.
The Italian case differed from the other two. In Italy, feudalism had never advanced as much as in France and Germany. The Italian towns were older, dating from Roman times, and had always included the aristocracy. Italy, therefore, did not experience the traditional rivalry between town and aristocracy. Instead, the nobility engaged in mercantile pursuits. The danger for urban independence came thus from the pope and the emperor. Combined noble and burgher resistance thwarted such attempts at centralization. City-states were the result.
In the long run, however, sovereign states displaced city-leagues and city-states. States won because their institutional logic gave them an advantage in mobilizing their societies’ resources. Sovereign authority proved to be more effective in reducing economic particularism, which raised transaction and information costs, and it created a more unified economic climate. Central administration provided for gradual standardization of weights and measures, coinage, and jurisprudence. Undoubtedly this was a lengthy process, as the historical development of France indicates. But there existed an institutional arrangement in which the dominant political actor, the king in France, the king-in-parliament in England, had vested interests in limiting defection and freeriding and in furthering the overall economy. The greater autonomy of urban centers in the Hansa and the Italian city-states made such objectives more difficult to achieve.
Internationally, sovereign authorities were also better at credibly committing their members. They provided a clear and final decision-making authority which could bind their subjects. The reverse was true for the city-league. Because of the continual defection of the Hanseatic cities, the league was less attractive as a partner in international treaties.
Finally, states were predicated on a different logic than city-leagues. States explicitly recognized spatial limits to their political authority. The league, by contrast, was a nonterritorial form of organization which sought political control over its entire market. In view of this noncompatibility, states only empowered like-types. This empowerment therefore was not simply based on intellectual affinity but also on solid utilitarian reasons.
Because the state was more successful on these dimensions, it became increasingly attractive to other political entrepreneurs and social groups. Lordships started to mimic sovereign statehood. German princes styled themselves after the French court. Towns started to defect from the league and joined states.
The decline of the city-states was less stark than that of the leagues. Externally, city-states were compatible with a state system because they did define their authority by spatial parameters. City-states thus continued to function within the state system and signed treaties as equals of states. Internally, however, city-states did not transform themselves into full-fledged territorial units with a distinct locus of sovereignty. The dominant cities of the various city-states did not integrate their annexed territory and subject towns. This was due first, to the subjected towns themselves. As formerly independent and powerful, the towns could sometimes only be brought to heel by dominant cities through acknowledgment of their local autonomy. Second, the elites in the dominant cities were reluctant to relinquish their hold on power by granting other elites, from the subject areas, access to government. A striking example was the closed Venetian patriciate.
As a consequence, the dominant cities found it difficult to fully establish a centralized system of government. The dominantes could not override local privileges and law, and the subjected cities had no incentive to be second-rate members of the city-state. Central authority was always contested. There was no political actor who could rise as the logical and uncontested provider of collective goods. In that respect, the city-state resembled the city-league. Whoever held power in the city-state was suspected of furthering particularistic interests rather than the general good.
The evolution of the units in the international system should not be perceived as progress but as adaptation to the environmental demands created at specific critical junctures.8 Although there is selection among the different responses to the new environment, this is not to be understood as a teleologically progressive development across different environments. Instead, selection operates only among the synchronically existing alternatives.9
Borrowing from Stephen Jay Gould’s theory of biological evolution, this book has argued that fundamental change occurs only sporadically.10 At particular critical junctures, the environmental conditions change to such an extent that a reordering of the constitutive units of the international system takes place. Unit change in the international system is inevitably a multidimensional phenomenon. It involves more than simply the reordering of material interests. Individuals put forward rival conceptual perspectives on how social arrangements should be structured and what should count as legitimate order.
Once such change has occurred, a period of relative stability sets in. Institutional arrangements follow the paths that were laid out in those times of reordering. Once they have established a particular form of organization, political actors and social groups are reluctant to surrender their positions. Change will only occur if the contenders’ relative position becomes strong enough to allow the formation of new political coalitions that can effectively challenge the old order.
Paths of institutional organization, however, are not irreversible. German lordships started to style themselves after the French court and usurped many of the regalian rights previously reserved for the emperor. Likewise, Italian dukes started to emulate the French court in their city-states and attempted to rationalize adjudication and standardize measures. The Hanseatic towns started to defect from the league, once the league could not effectively press its members’ interests vis-à-vis the territorial states. In short, both political leaders and social actors might switch their institutional preferences.
This discussion, consequently, has implications for understanding institutional learning. From one perspective, institutions are seen as the outcome of individual preferences. Institutions are rational because they are the deliberate constructs of political entrepreneurs and members of social groups that benefit from those institutions. They are efficient because individuals try to choose institutional arrangements that best further their material interests or correspond with their ideological preferences.
From an alternative perspective, institutions are efficient and rational because the inefficient types have been selected out by structural requirements. Efficiency is thus measured not by individual choice but by Darwinian selection over time. This type of account is functionalist in that the institution is perceived to fulfill certain demands of the environment.
Following the previous historical account of European state emergence, it appears that a variation of both processes occurs. In round one, individuals choose particular arrangements, such as states, city-leagues, or city-states, based on their material and conceptual interests and on the political coalitions that are possible. Note that individuals might have preferences, but these need not necessarily be fulfilled. For example, the German towns might have preferred a central provider of public goods, but because of the emperor’s preferred strategy toward Italy, the towns’ desired coalition did not materialize.
In round two, some institutional solutions prove to be more adept at responding to a particular environment. The different institutions exert competitive pressure on each other. Some of these prove to be better at creating a favorable economic climate and credibly committing to international agreements. Moreover, the underlying logic of different organizations need not be mutually compatible. In short, selection by the structural environment occurs.
Simultaneously, political and social actors respond to these successes by switching their allegiances or constructing similar forms of organization. After perceiving the structural success of an institutional type, people then make an instrumental choice for that form of organization. Institutional learning thus has structural as well as instrumental dimensions.
As I suggested at the outset, we should not discount the possibility that the international system is undergoing a major transformation under our very eyes. According to some, the sovereign state is in decline and the changing nature of the international economy may be one cause.
By contrast, other scholars of international relations, and neorealists in particular, have argued that economic interaction is secondary, if not irrelevant, for understanding the international system in a structural sense. They suggest that although contemporary economic interdependence might be high, it is subject to the interests of the state. Their focus remains state centric, and it emphasizes the importance of security and self-help. If states desire, they can extricate themselves from this economic interaction at any time.
This dismissal of contemporary economic interaction is too simple. Economic interdependence now differs in substantial ways from that of the prewar period. In the productive sphere we see an increasing number of microeconomic linkages. Offshore production and joint ventures indicate that it is increasingly difficult to discern where the interest of the multinational producer and that of the state overlap.11 Nor can the transfer of services and know-how, and changes in the provision of services, be perceived as business as usual. The standard mercantilist policies that were used to regulate these international transactions are no longer acceptable.12 Trade no longer seems to follow the flag.
Given this change in economic milieu, there is no a priori reason why social actors and some political entrepreneurs would see the organization of international relations through a system of states as their most preferred institutional arrangement.13 Multinational corporations and financial institutions might have very good incentives to seek new forms of organizing international behavior in response to new economic opportunities. Likewise, political entrepreneurs might benefit from, for example, increased authority for supranational organizations. If increased global competition has made traditional protection harder to sustain, then supranational organizations might provide political leaders a convenient means to extricate themselves from sheltering these domestic constituencies—“blame Brussels.” Alternatively, political entrepreneurs might use such organizations to distribute costs over a larger electorate while at the same time benefiting domestic interest groups.14
Similarly, there is no reason to assume that social actors, for example, multinational companies, believe that a territorial state is the optimal way of organizing economic behavior. Indeed, by some accounts such actors are one of the driving forces behind current European integration. Conversely, the integrative effects of some political forces seem to be counterbalanced by the disintegrative effects of forces such as ethnicity and religion. Even relatively successful regional organizations, such as the European Community, sometimes appear to be mere extensions of state interests rather than true supranational bodies.
What expectations might we have for contemporary challenges to the state system in view of the argument of the past chapters? Let us first look at two scenarios that might evolve because of changes in the overall economic environment. I then ask whether a third scenario might emerge, in which reidentification with ethnic and religious communities challenges the principle of sovereign, territorial authority.
One possibility is that there will be relatively little change in the nature of formal political institutions but considerable change in how social actors order international transactions themselves. Private actors might place a greater reliance on self-help mechanisms.15 Medieval traders, faced with a plurality of political authorities, placed considerable stock in their own means of curtailing defection and reducing transaction and information costs. The new alliances between transnational companies, which are based on division of production and involve transaction-specific investments on both sides, are based on similar calculations. That is, whereas translocal production and commerce previously involved a greater measure of state intervention, modern contracts—based on mutual hostage taking, self-enforcing agreements, and an even share of transaction-specific investments—should require less political oversight.
No doubt many transactions, such as global financial flows and joint ventures, fall outside the direct purview of the state. But although this diminishes the scope of state authority, it has not yet altered the formal institutional arrangements of international activity. As David Held points out, too often general environmental shifts are presented as causes for the decline of the state without distinguishing the de iure and de facto sides of sovereignty.16 Although the abilities of the state vis-à-vis society might have changed, the institutional principle of sovereign, territorial rule as the foundation of the international system has not. As I have argued at the outset of this book, from an international relations perspective, the question is how the emergence of the sovereign, territorial state has altered international conduct, not how the role of government has changed. In short, the growth of self-help might be a precursor to alternatives modes of institutional structure, but as of yet it posits no challenge to the sovereign state system.
Arguably the greatest deviation from sovereign rule has come in regional associations, particularly in the European Community (EC). Although the EC does not present a move away from a territorial conceptualization of authority, it cannot be simply construed as a larger sovereign entity. That is, the EC recognizes territorial, legal limits to its authority—the borders of its member states. However, in the sense that there is a move toward a crosscutting set of jurisdictions at the national and supranational levels, there is a change in the locus of authority. Sovereignty is no longer defined as a strict external delimitation from other claims to authority. The European Court, for example, has handed down decisions against certain policies practiced by national governments. The EC is thus sui generis.17 It is neither the simple extension of states nor is it a full-blown alternative that can completely act against state preferences.
Developments in the EC square quite well with our observations about change in general. Change in the EC has not been a continual process. After a dramatic start in the late 1950s, European integration slowed down in the 1960s and reached a virtual standstill in the 1970s. Then in the mid-1980s, with the publication of the White Paper, there was a sudden flurry of support for European integration on some issue areas.
This has not been a purely functional response. As Geoffrey Garrett points out, one cannot simply argue that European trade as a percentage of Gross Domestic Product has increased from 40 to 60 percent and that hence integration was inevitable.18 Particular institutional types need to be explained by political preferences. European integration can thus be partially understood by focusing on elite bargains, both at the intergovernmental level and between social groups. Sandholtz and Zysman, for example, attempt to explain recent inroads in European integration by the political bargains struck by community institutions, industrial elites, and governments.19
Consequently, integration has varied per issue area. The presence or absence of transnational coalitions has depended on the nature of the good in question. Within the EC, domestic control over tax issues has remained intact, whereas on some other issues, such as trade policy, states have been more inclined to surrender their control.20
It is therefore incorrect to argue that the EC is nothing but the extension of state preferences. In regard to some matters, states cannot extricate themselves easily from the EC process. Indeed, EC members might construct international agreements in such a way that national governments cannot defect too easily. Institutions may thus be deliberately designed to prevent actors from wavering, which thereby may provide both credibility to group commitments as well as protection to individual governments from irate domestic constituents.
Whether such a form of organization is viable in the long run is an open-ended question. The nonsovereign logic of the Hansa proved to have serious flaws. To some extent we might see the contours of such problems re-emerge in the EC. For example, the foreign decision-making power of the EC administration will inevitably be questioned as long as individual member states claim the right to defect from EC agreements.21 It remains to be seen whether supranational institutions within the EC can credibly commit their members and whether the EC can prevent freeriding.22 There are incentives for state elites within the EC to prevent the uncertainty of divided sovereignty, and there are incentives for the other actors in the international system to force the EC to resemble a sovereign logic of organization.
In short, in certain respects the EC has diminished the sovereign state as the locus of decision making. Although this erosion has been tentative, as EC organs have obtained final decision-making authority only on specific issue areas, the EC is certainly not just an extension of state interests. Conversely, it is also not simply a state writ large, and it seems unlikely that the EC will form a superstate in the near future. Nevertheless, we cannot dismiss the possibility of such organization, composed of an internally fragmented sovereignty but which is essentially territorial, because of our lack of historical imagination. The move toward more supranational decision making within the EC seems quite compatible with the overall methodology for understanding unit change which I advanced in respect to the feudal-state transition. Political entrepreneurs and social elites have formed coalitions to create new institutional arrangements to respond to the growth of intra-European trade and the increase in global competition. Two possibilities exist. First, if the EC is successful, this form of organization may yield similar arrangements elsewhere because of institutional mimicry and competition. Or the EC will be forced to take on a more consolidated logic, because it currently lacks a clear focal point through which to conduct international affairs.
The establishment of sovereign, territorial authority involved a resolution of the struggle between that mode of authority and the translocal rule claimed by the church.23 Religious organizations base their rule on the community of the faithful—wherever they may reside. The king’s assertion of secular and sovereign power over the church achieved its first measure of success by the close of the thirteenth century. But the principle that the secular ruler determines the public character of religion was only resolved by the Treaty of Augsburg in 1555. Through the adage Cuius regio eius religio, political elites established the principle that the territorial unit would publicly adopt the religion of the ruler. This principle was again affirmed at the end of the Thirty Years War.
But although the state system has spread globally, the tension between transnational religious affinity and territorial rule has not been resolved everywhere.24 One of those tensions appears in Islamic religion. By some accounts, the Muslim community of faith is fundamentally at odds with the Western concept of sovereign, territorial rule. Bernard Lewis, for example, notes how the principle of dividing the Islamic world (Dar al-Islam) from the non-Islamic (Dar al-Harb) suggests an incompatibility with the principle of sovereign territoriality. But other Islamicists argue that the tension between the two might be overstated. Both in theory as well as practice, Islamic doctrine and the modern nation-state have proven quite compatible.25
Nor have ethnic movements eroded the state system in any fundamental way. It is true that they have destabilized existing sovereign, territorial states, but successful secessionist efforts have subsequently reconstituted themselves as new states. Ethnic movements have not essentially been at odds with the principles of territorial demarcation of rule and of a final locus of authority in external affairs.
What ethnic movements have changed is the chronological order of state and nation. European states claimed sovereignty and territoriality, although fully aware that they were hardly homogeneous ethnic units. Medieval France consisted of Acquitanians, Bretons, Normans, and other descendants of the great migrations at the end of the Roman Empire. It was centralized authority that installed vernacular French against translocal Latin. States made nations. Contemporary claims reverse that order. But as new sovereign, territorial units, they are not antithetical to the state system.
The foregoing analysis of unit change in the international system provides reasons to expect that in many respects the contemporary state system is becoming more firmly entrenched rather than declining, save perhaps in the case of the EC. The causes of the longevity of the state system should be noted. I argue, in particular, that a system based on territorial demarcation and mutual recognition actually creates a systematized pattern of interaction in international affairs.
Moreover, since the generation of units depends on political entrepreneurs and social groups to form new coalitions which can unseat the dominant ones, unit transformation is an infrequent process. Political elites in power have few incentives to alter existing institutions and experiment with new systems of rule. What held true for the medieval nobility, which was reluctant to surrender its powers to emerging burghers and centralizing kings, holds equally true for political leaders today. African leaders, for example, who have inherited a state system that was clearly imposed, have shown relatively little desire to reconstitute their authority on grounds other than sovereign territoriality.26
Institutions are also unyielding because change involves considerable investments in learning and start-up costs.27 After political institutions formed in the thirteenth and fourteenth centuries, the process of selection, adaptation, and mimicry took a considerable amount of time. But once the state system had established itself, experimentation with new institutional forms of organization became incredibly costly. Network externalities thus create obstacles to unilateral attempts at institutional innovation.
Finally, given that the state system has also been produced by mutual empowerment, there are barriers for any nonsovereign form of organization that wishes to be recognized as a legitimate participant in international relations. Disaffected ethnic and religious groups seldom claim that they wish to create a form of organization that is universalistic or based on translocal affinity. Instead they wish to form a territorial and sovereign state of their own. That is, they wish to become states. New forms of identification, or previously neglected ones, may be recast within the mold of the system to become accepted within the larger community and its corresponding pattern of interactions.28 Consequently, I agree with Giddens that international organizations strengthen rather than weaken the existing state system. The extension of the European state system to a truly global one has only enhanced this process. De iure the state system is alive and well.
Nevertheless, we should not predict the probability and direction of change from this set of observations. In the long run, history sides with no one. If there is one lesson to be drawn from this book it is that all institutions are susceptible to challenges and that existing institutions are not necessarily the most efficient responses to such challenges. The sovereign, territorial state emerged because it happened to be better than its alternatives, not because it was the result of some necessary unilinear process. We should furthermore recall that the fullest articulation of feudal organization and the church, both in a theoretical and practical sense, occurred shortly before their demise. Such articulation seems to occur exactly when institutional challenges arise. Changes in communications, economics, and the environment challenge the scope of state authority and thus create incentives for actors to alter the existing institutional arrangements.
Thus far, new institutional arrangements have only emerged in a modest fashion. Of all regional organizations, the EC has been most manifest as an alternative institutional form. Yet even its development is sometimes abruptly halted by state interests, as occurred during the French walkout in 1965 and as evident in the difficulties of implementing the 1992 project. But the EC is perhaps less important as an example of an alternative institutional arrangement than as an example of how the process of institutional change might occur. John Ruggie is right.29 The medieval trade fairs in themselves did not create novel structures of political authority. But in introducing and facilitating trade, they helped monetarize exchange relationships and struck at the core of a feudal society largely centered on in-kind transfers. Economic and environmental forces in and of themselves thus do not indicate the nature of future institutional evolution. Indeed, I agree that there are serious impediments to changing the de iure nature of the state system. But such forces do provide incentives and sets of ideas for actors who are unwilling to make do with the present.
Many arguments within the international relations literature focus on the issue of order in the system. For neorealists, the system is anarchical and order is derivative of the distribution of capabilities. Scholars of the Grotian school argue, by contrast, that the system is permeated with shared rules and principles between states. Anarchy is mitigated by the existence of an international society. Neoliberal institutionalists share elements of both views. Although they concede that state interests drive international affairs, international institutions can affect conduct beyond a purely short-run utilitarian calculus.
We forget that the character of the units in the system creates patterns of conduct.30 Transnational claims of jurisdiction by church and empire differ from sovereign, territorial organization which recognizes other states as juridically equivalent. Fragmented sovereignty and crosscutting jurisdictions raise the costs of international transactions and divide loyalties in unpredictable ways. I have attempted, therefore, to supplement the focus on governance between sovereign states with an analysis of why it is that states do the governing. As in all social sciences, the account provided here is only a partial one. Across history and in different locations, a variety of contextual changes and political coalitions need to be taken into account to adequately explain how different institutions have emerged at different junctures. What I have done is suggest a method for examining such processes. Although the answers may only provide a partial look at a complex reality, no doubt this is an era in which we must continue to ask such questions.