The 3 I’s: Ideas, Interests, & Institutions

The 3 I’s: Ideas, Interests, & Institutions Ronald Rogowski Lecture 5 – Tuesday, 21 September 2009 J A Morrison Doug North Doug Irwin

Agenda: The 3 I’s • Institutions “After Hegemony” • Looking within States • Interests (Rogowski) • Institutions (North) • Ideas (Irwin) • The Relationship between the 3 I’s • Conclusion

Last time, we discussed HST.And we found that it could only explain the period since the 1970s with some contortions…American relative economic power has declined; and, yet, the global economy has becomed increasingly open.

Led by Robert Keohane, a group of scholars (sometimes called neoliberal institutionalists) questioned whether it was possible to have openness after hegemony.(Note the title of Keohane’s book!)

What explains the persistence of openness after hegemony?  International Regimes.

International regimes: "sets of implicit or explicit principles, norms, rules and decision-making procedures around which actors' expectations converge in a given area of international relations. Principles are beliefs of fact, causation, and rectitude. Norms are standards of behavior defined in terms of rights and obligations. Rules are specific prescriptions or proscriptions for action. Decision-making procedures are prevailing practices for making and implementing collective choice” (Keohane, 57)

What Regimes Do • Define obligations  convergence of expectations • Provide information  monitoring & compliance • Reduce transaction costs  more likely to cooperate again • Ensure “repeated play”  increase importance of reputation • Enforcement through denial of “carrots” (and sometimes use of “sticks”)

So, IPE scholars are particularly interested in the variation in the level of economic integration observed over the last several centuries.That is one of the biggest DVs of interest.

Hegemonic stability theorists (Krasner & Kindleberger) think that the concentration of power in the hands of one state is enough to overcome states’ latent hesitancies to open markets.

Scholars like Robert Keohane (“neoliberal institutionalists”) argue that it is possible to achieve cooperation without hegemony by using international regimes.

Despite their differences, all of these theorists offer systemic explanations.

Systemic theories hold that the structure of the international system—which may be more or less institutionalized—is the key IV that shapes states’ foreign economic policies.

The notion is that the pressures of the international system are so great that the internal, individual characteristics of states matters less than the environment in which they find themselves.

But does the structure of the international system really explain all of states’ foreign economic policies?

Today, we consider those explanations that privilege state and individual-level variables, the things that happen within states.We’ll consider interests, institutions, and ideas.

“It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers whose interest has been so carefully attended to; and among this latter class our merchants and manufacturers have been by far the principal architects.” (Smith WN IV.viii.53)“The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers.” (Smith WN, IV.iii.c.9)

Adam Smith vigorously insisted that most of Britain’s foreign economic policy was the direct result of interest-group pressure.Ronald Rogowski (RR) follows in that tradition.

What RR Offers • General framework for understanding FEP • Specific understanding of the relationship between economic interests & trade policy

We’ll talk more about No. 2—the substantive specifics—later in the term.For now, we’ll get the quick & dirty.

RR uses Stolper-Samuelson Theorem • Factors: Capital & Labor • Liberalization benefits relatively abundant factor • Factor Specificity: Factors are specific to certain industries • Cleavages are between factors (rather than industries) • Class Conflict • Urban-Rural Conflict

What does RR try to explain?  political cleavages & coalitions (not necessarily FEP)

RR’s 3 Assumptions • Your Factor + Its Relative Abundance = Economic Interests  Political Preferences • Δ Political Power is Correlated with Δ Wealth • Intensity of Political Interests Correlates with Ease of Overcoming Collective Action Problem

What does this say about RR’s general framework?What is the role of ideas? institutions?

Locke emphasized the importance of institutional innovations: the invention of money and the creation of political society.“afterwards, in some parts of the World, (where the Increase of People and Stock, with the Use of Money) had made Land scarce, and so of some Value, the several Communities settled the Bounds of their distinct Territories, and by Laws within themselves, regulated the Properties of the private Men of their Society, and so, by Compact and Agreement, settled the Property which Labour and Industry began.” (Locke ST §45)

Locke contrasted societies on the basis of their institutional arrangements: “Thus we see, that the Kings of the Indians in America, (which is still a Pattern of the first Ages in Asia and Europe, whilst the Inhabitants were too few for the Country, and want of People and Money gave Men no Temptation to enlarge their Possessions of Land, or contest for wider extent of Ground, are little more than Generals of their Armies.”(Locke ST §108)

Doug North (DN) also focuses on the role of domestic institutions.

What are institutions?(DN, 50)

What is impersonal interchange, and why does it matter? (DN, 52)

What is the role of institutions in facilitating impersonal interchange? (DN, 52-53)

How does North explain the divergent paths of political & economic development in Spain & England?

Do you think this explains the development patterns in North America?

Alternative Explanations • Politics: Pre-Existing Political Structures • Aztec Empire versus Iroquois Confederation • Economics: Production Patterns • Farms versus Mines • Ideas: Views of the “Others” (the Natives) • Assimilable?

JM Keynes’ final words in the General Theory (1936)emphasized the power of ideas…

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.” (JMK, GT, Ch 24.)

Doug Irwin has focused on changing ideas to explain the momentous repeal of the Corn Laws in 1846.

(Remember, of course, that Krasner explained this decision as part of a broader trend in trade liberalization, which followed as a part of Britain’s economic ascendance.)

Irwin focuses on ideas.What’s his story?

How does Keynes’ formulation compare to Irwin’s findings about Peel?

Recognizing that all 3 of the I’s matter, we are left wondering about the relationship between these important variables.The “Holy Grail of politics:” what is the relationship between the 3 I’s?

Possible Relationships • 3 I’s produce cross-cutting effects, and they “compete” to influence policy • 3 I’s combine together to influence policy • 3 I’s interact and mutually determine one another

We’ll take each in turn…

VI. 3 I’s Relationship Competing Explanations Multi-causal Explanations Mutually-Determining Variables

First, what is the relative weight of each factor? In a given situation, which variable played the largest role in determining an outcome?Over the long run, which variable bears the greatest influence?

The traditional perspective holds that ideas, interests, are independent, mutually-exclusive explanations…

The 3 I’s: Ideas, Interests, & Institutions