November 7 2012 Trade
Realist conception of Trade, and how basically there is an analogy between prisoner’s dilemmas. Trade has a
situation of uncertainty.
There are a couple issues here: Relative gains—ultimately cause that money is …
There is no guarantee that states will stay true. Expect states to defect, and not cooperate. Especially regarding
those areas of industries that are tied to security.
Liberalism takes on all of this: they acknowledge importance of security dilemma. They point out that there are
areas of economic activity—my success does not come in your? They look at trade as a variable sum game.
Cooperation simultaneously and mutually benefits everyone. States compete between how big the piece you’re
going to get is going to be.
We have the opportunity to make many pies; we’re not constrained by the limit. The obsession with the size of
the piece—it misses the point. The issue is not relative gains (biggest piece), there will more opportunities for
We need to approach cooperation with a zero-sum attitude.
Realists have the idea that his might be the case but they revert back to the idea that my benefit reverts back to
We need to work on fostering the means of cooperation—where there is mutual advantage for everyone. Rather
than obsessing about the size of the piece of pie, focus on distribution of gains. Wealth is not fixed, wealth
grows over time. This is how we allocate it with this idea that it will continue over time. The issue concerned
with different interpretations of uncertainty. Rather than highlight how self- interest leads to defection, they
want to support conditions of cooperation, and fostering the conditions of uncertainty. What liberals think is that
we can address and fix the issue of uncertainty. Uncertainty does not necessarily need to want cooperation in a
liberal perspective. Along these lines, they focus on several different ideas and aspects of the topic: issue of
relative gains in cheating, they highlight importance of reciprocity, focus on the role of international law and
international institutions (international regimes), and focus on the idea of interdependence.
Reciprocity, deals with the ongoing and integrated relations between states. The idea is that if states expect to
deal with each other more than once; then they have an incentive to reciprocate in their relations (treat them
fairly) engage in what’s called “good faith behaviour,” and for Liberals this better highlights the conditions of
trade (how trade unfolds). Trade is not a one shot deal—you engage in it once. It’s ongoing. Given the
economic conditions we have, trade is ongoing and the conditions of the ongoing patterns of behaviour—we
have incentives to basically trust one another by engaging in reciprocity. Along these lines, the state’s actual
behaviour when it comes to trade is actually cooperation and when it’s not, when states engage in
protectionism, that’s when everybody (states) are worse off. In this respect, the realist take on trade from a
Liberal’s perspective, this proves disadvantageous for everyone. This hurts actors, does not help them.
In terms of gain theory, we usually refer back to the tit for tat strategy—basically imitate what intraocular
gain—he cooperates, they cooperate. Reciprocity escapes the issue of relative gains so it relates back to issue of
relative gains. Basically, this is a difficult issue because there is theoretical and mathematical proof of this as
well as empirical proof and disproof, this is controversial: ongoing cooperation actually decreases overtime, the
way relative gains approve of states, the advantages of relative gains decrease overtime through extended
cooperation. This is controversial. For example, I get two, you, get one. If this were a one-shot game, I’d be at a
disadvantage. Over time, this difference proves negligent—over time the absolute gains are what are becoming
important. If we continue this, the relative gain at the starting point—it’s still there (negligent)—the relative
disadvantage, becomes less meaningful. That's the relative gain stays sort of static—the relative gain changes over time. It changes proportionately—obviously this is a problem. In the event, there’s this idea that the
reciprocity makes relative gains less important over time, this providing absolute gains for both actors.
Nonetheless, cheating creates (and remains) a problem in international institutions of law—basically Liberals
argue that international institutions such as WTO and the WTF; were set up to help states coordinate their
activities as international institutions are set up to coordinate our engagement trade. In this respect, it helps
Along these lines, they help states protect cheaters—so the sorts of norms or rules that are part of international
institutions help make it easier to identify the __ taking place—the amount a nation is defective. In this extent,
the rise of incentive to cheat and international institutions want this incentive to make us get caught. Along
those lines, international institutions provide a mechanism for potentially sanctioning offenders; basically,
international institutions will offer the possibility of penalizing cheaters—again that’s a disincentive to cheating.
The idea is that to set rules and regulations, or some sort of oversight procedure of the body, that alters states
preferences. (More likely to be more cooperative) It does so by decreasing the advantages of not cooperating
and increasing the rewards of cooperating.
It divides rules, behaviours by forms in lawful negotiation that supports nations aspects and that is meant as
some sense the law for cooperation. It provides some mechanism of arbitration, some way of trying to find a
more peaceful method. Some institutions, in some sense determine the responsibilities and some sense the right
to transparency—which the prisoner’s dilemma does not have. It undercuts the prisoner’s dilemma, un-cuts the
issue of uncertainty in terms of trade. Ultimately, this leads to the idea #4 of interdependence. The idea is pretty
straightforward trade itself solves/creates ties between nations. The issue of comparative advantage and absolute
advantage—these things are meant to explain how these ties arise, specialize in what you’re good at or engage
in an exchange with others who want the same thing. These create ties between nations as this goes wrong. We
have interdependence, and all this in some sense is meant to undercut the issue of uncertainty and mediate the
condition of anarchy. Basically what happens is interdependence is ultimately meant to promote the
establishment of common interest in some sort of common interest that in some sense is meant to override and
dilute the national interests or the states’ individual interest. It’s good or us to engage in trade and cooperate and
in some sense, some mutually shared interests is more important than…
Realists have a response to this: the response takes the form of hegemonic stability theory. Basically want to
point out that these institutions—International institutions facilitate and help trade, historically, they require a
powerful actor to implement them. They do not set themselves up or instruct/create themselves. Along these
lines, there are such international institutions that facilitate trade and cooperation. They are a result of
intentional affords (“hegemon=greek word for leader”), so the intentional actions of some powerful nations that
assume the leadership role. The rational for this, hegemons have specific interests in providing these
institutions. Yes, they are mutually advantageous for everybody: we set them up; everybody gets something out
of this, there is some sort of common shared—a public good. That said, one of the things that hegemonic
stability theorists want to highlight is that hegemons benefits more than everybody else, there is still the issue of
ultimate gains. It’s in the interest of the hegemons to establish the institutions. They gain more, a little more
than everyone else. 17:38 That’s why they’re providing leaders. In some sense, they admit that the liberals
were right, there is some sort of mutually shared common interest that lies in trade The conditions of it require a
powerful state, because at the end of the day it gets more than everyone else.
Britain near 19 century was a hegemon, the pound sterling—Britain wanted people to use it so they would
US assumes same role, WTO…US is benign and they profit more from this.
Rules are constructed for the benefit of the powerful.
Hegemonic stability theorists highlight how they relate back to economic strategic. Strategic calculations. If
they’re benefitting more from it…
Liberals have a response to this: idea that the self-interested act of the hegemon nevertheless continues to help
others. At the same time, the conditions that they have constructed are helping everybody else. The institutions still help everyone. Zero zum (me vs. you mentality). They point that relative self-interest has to remain
compatible with mutually shared interests within this context. Both are looking at same phenomenon,
highlighting one aspect and saying I’m right!
How the idea of hegemonic stability theory relates to war?
Rules that are established by the hegemon differ from who the hegemon is. So, during the cold war, you have
two regional hegemons; the US, and the Soviet Union. Are their economic borders the same? NO.
One of the things that liberals do is : when wars are fought, who’s rules are going to carry the day? In this
respect, WW2 is a war for hegemony between Nazis, Soviets and the US. Nazis lose, their leadership is gone,
and divided between the two.
Constructivism: constructivists approach to this is to highlights how ideas perceive actions. Interesting points to
make this out: the type of economic border reflects the beliefs of the actors or reflects their values or relative
understanding of things. If we’re liberals, orders are established due to the way in which we have industrialized.
So along these lines since ww2, the west is pushed towards a liberal economic border. In terms of a managed
liberalism, Soviets developed a socialist system. What we find after the fall of the Soviet Union is a movement
away from managed liberalism and a promotion of neoliberalism. A movement towards a movement of absolute
free trade; this is what we are pushing for. Who are the leaders towards the ends of the cold war? Look at it;
towards end of cold war, we end up with Reagan and Thatcher. These are huge proponents of economic
liberalism. After cold war, they were left with alternatives: neoliberalism or socialism. Everyone turned to a
neoliberal perspective. In this respect, what constructivists point to are the way ideas shape the outcome. If we
want to be socialists, we can do that…along these lines, constructivists affirm the ideas that there are different
concepts of uncertainty. Different approach—no necessary reason for a liberal order to look like it does. We
have the institutions we have because we made them like that. Ideology underlines the economic order that
ATL, trade practices whether these things are considered valid.
System that defines colonialism: productionism—it’s acceptable. You want a captive market. Productionism is
fine. Mercantilism is no longer what we pursue. Ideas push material interests.
Terrorism is best understood as a criminal activity or a political activity. Or is a politically strategic act. How
should we approach t
The idea of human rights is that the universal conception of human rights is often discussed in the study of
international relations—it’s a fairly recent phenomenon. I’m talking about first-second world war recent.
Usually it’s associated with the advent of the United Nations; there is a sort of a peace settlement that arises
after WW2 specifically in Europe.
That said, the conception of rights itself, dates back to pretty much the Roman Republic so this is a very bold
idea. Thing about this is that in terms of rule of legacy, on the idea of rights, Ro