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Lake: Anarchy, hierarchy, and the variety of international relations

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Lake. 1996. Anarchy, hierarchy, and the variety of international relations. International Organization 50 (winter): 1-34.

PUZZLE

The focus on systemic anarchy within international relations has led us to forget that dyadic relations are hierarchic, not anarchic. Lake begins with a puzzle: why did the US and USSR (two great powers in similar circumstances after WWII) choose such different means of security in the post war years? The US opted for an (anarchic) alliance, and the USSR opted for an (hierarchic) informal empire.

VARIABLES AND THEORY

Y: The form of dyadic cooperation, ranging from anarchic relations to hiearchic ones (alliances, protectorates, informal empires, formal empires).

X1: Expected costs of opportunism. This is the product of (a) the risk that your partners will behave opportunistically and (b) the actual costs to you if they do so. This risk falls as relations become more hierarchic. Opportunistic behavior can involve shirking, entrapment (partner starts a war), abandonment, or a hold-up (forcing a change in the contract).

X2: Governance costs. More hierarchic systems entail higher governance costs, for a few reasons. First, monitoring costs rise when you have more to monitor. Second, you'll have to make greater side payments to get a state to voluntarily submit. Third, if states don't voluntarily submit, you'll have to use coercion, which is costly.

Figure 2 (page 16) illustrates how X1 and X2 determine the form of cooperation.

ANALOGY

This entire analysis is rooted in a central analogy: state cooperation in anarchy is like firm development in markets. Two parties in a market can either interact with spot transactions (anarchy), make a long-term contract (alliance), or vertically integrate (empire). The difference between these levels of integration is there different residual rights of control. No contract is perfectly specified. In more anarchic forms of cooperation, each party retains the right to decide what to do in situation not covered by the contract. In more hierarchic forms, however, the dominant partner has more residual rights of control to make decisions in such situations.

EMPIRICAL DIFFICULTIES

Lake notes that this theory will be exceptionally difficult to test scientifically for three main reasons (see page 22). First, the variables are not easily operationalized. Second, both variables are defined as probability distributions; states estimate the expected costs of opportunism and the expected costs of governance. Third, we can observe only the relationship a particular dyad actually chooses, not the costs and benefits associated with the counterfactual relationships that it could have chosen.

CASE STUDY (ILLUSTRATIVE)

Instead of a scientific test, then, Lake uses an illustrative case study comparing the US and the USSR. The economic and military dependence of Western Europe on the United States meant that the US did not fear that its European partners would abandon it. Thus, the expected costs of opportunism for the US were low. At the same time, the governance costs to the US would have been high. Besides the costs of running an occupation from across the ocean, the US would have had to establish its control by turning on its allies.

The USSR, on the other hand, fought on the eastern front alone. Thus, it already had its soldiers (and only its soldiers) all over the eastern countries. Its governance costs were much lower because it had already established control as part of fighting Germany. Moreover, the USSR managed to extract considerable resources from eastern Europe until 1956, making its governance costs even lower. At the same time, the USSR had a high risk of opportunism; its Warsaw Pact "partners" generally feared the USSR more than the West, and many had actually saw the Third Reich as a welcome balance to the Soviet threat.

Thus, the US used a more anarchic alliance and the USSR selected a hierarchic informal empire.