Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-27T21:28:06.814Z Has data issue: false hasContentIssue false
  • English
  • Français

The limitations of “structural” theories of commercial policy

Published online by Cambridge University Press:  22 May 2009

Timothy J. McKeown
Get access

Extract

If a “structural” theory is one that purports to explain behavior in terms of environmental conditions and that largely eschews analysis of the internal processes of decision makers, then it is difficult to identify a theory of commercial policy which is not “structural.” Most microeconomic theory is structural; so are most balance-of-power theories. In the realm of theories of commercial policy, hegemonic stability theories as well as some recently developed theories of international tariff levels fit this description. In the latter category Judith Goldstein's work, which attempts to account for American commercial policy in terms of the ideology of American central decision makers, and Charles Kindleberger's ambitious sketch of a general theory of 19th-century tariff changes in terms of the diffusion of liberal ideology constitute lonely examples of nonstructural research strategies.

Type
Articles
Information
International Organization , Volume 40 , Issue 1 , Winter 1986 , pp. 43 - 64
Copyright
Copyright © The IO Foundation 1986

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. The term “structural” is itself perhaps not the most felicitous one to use, since it is employed so frequently and with a wide variety of meanings. However, there exists no better substitute. The leading rival, “microeconomic,” also is not quite satisfactory because it excludes formulations such as balance-of-power theories, which are not part of microeconomics per se. It is also misleading because some research programs within microeconomics do not adopt the orthodox assumptions. See, for example, Katona, George, Psychological Economics (New York: Elsevier, 1977)Google Scholar; Alhadeff, David A., Microeconomics and Human Behavior: Toward a New Synthesis of Economics and Psychology (Berkeley: University of California Press, 1980).Google Scholar

2. Since much balance-of-power writing is not very theoretically self-conscious, it is not clear that all such writings can be described as “structural.”

3. See, for example, Lake, David A., “Beneath the Commerce of Nations: A Theory of International Economic Structures,” International Studies Quarterly 28 (06 1984), pp. 143–70CrossRefGoogle Scholar; “International Economic Structures and American Foreign Economic Policy, 1887–1934,” World Politics 35 (July 1983), pp. 517–43.Google Scholar

4. Goldstein, Judith, “A Domestic Explanation for Regime Formation and Maintenance: Liberal Trade Policy in the U.S.” (Paper presented at the Annual Meeting of the American Political Science Association,Washington, D.C.,September 1984)Google Scholar; Kindleberger, Charles P., “The Rise of Free Trade in Western Europe, 1820 to 1875,” Journal of Economic History 4 (1974), pp. 613–34.Google Scholar

5. Katzenstein, Peter J., “Introduction: Domestic and International Forces and Strategies of Foreign Economic Policy,” in Katzenstein, , ed., Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978).Google Scholar

6. Mesquita, Bruce Bueno de, The War Trap (New Haven: Yale University Press, 1981)Google Scholar; Gilpin, Robert, War and Change in World Politics (New York: Cambridge University Press, 1981)CrossRefGoogle Scholar; Waltz, Kenneth N., Theory of International Politics (Reading, Mass.: Addison-Wesley, 1979).Google Scholar

7. Wicksteed, Philip H., The Common Sense of Political Economy and Selected Papers and Review of Economic Theory (London: Routledge & Kegan Paul, 1949), p. 13Google Scholar; Robbins, Lionel, An Essay on the Nature and Significance of Economic Science (1933; reprint, London: Macmillan, 1940), p. 78Google Scholar; Friedman, Milton, Essays in Positive Economics (Chicago: University of Chicago Press, 1953), p. 41.Google Scholar

8. Koopmans, Tjalling, Three Essays on the State of Economic Science (New York: McGraw-Hill, 1957), p. 142.Google Scholar

9. Friedman, , Positive Economics, p. 18.Google Scholar

10. Alexander, Rosenberg, “Friedman's ‘Methodology’ for Economics: A Critical Examination,” Philosophy of Science 2 (1972), pp. 79–93Google Scholar, offers a useful general critique.

11. Friedman, , Positive Economics, p. 18.Google Scholar

12. See, for example, George, Katona, “Rational Behavior and Economic Behavior,” Psychological Review 60, no. 5 (1953), pp. 307–18Google Scholar; Simon, Herbert A., “Theories of Decision-Making in Economics and Behavioral Science,” American Economic Review 49 (06 1959), pp. 253–83.Google Scholar

13. Kahneman, Daniel and Tversky, Amos, “Prospect Theory: An Analysis of Decison Under Risk,” Econometrica 47 (03 1979), pp. 263–91CrossRefGoogle Scholar; Nisbett, R. E. and Ross, L., Human Inference: Strategies and Shortcomings in Social Judgement (Englewood Cliffs: Prentice-Hall, 1980)Google Scholar; Daniel, Kahneman, Paul, Slovic, and Amos, Tversky, eds., Judgement under Uncertainty: Heuristics and Biases (Cambridge: Cambridge University Press, 1982).Google Scholar

14. The notion of reference level is similar to but broader than that of an aspiration level.

15. Shoemaker, Paul J. H., “The Expected Utility Model: Its Variations, Purposes, Evidence and Limitations,” Journal of Economic Literature 20 (1982), p. 556.Google Scholar

16. Gilpin, , War and Change, p. xi.Google Scholar

17. A situation in which the precise nature of the decision-making process is unimportant would likely be one in which a goal-seeking entity exists in a relatively placid and simple environment.

18. Zeev, Maoz, “The Decision to Raid Entebbe,” Journal of Conflict Resolution 25 (12 1981), pp. 677–708Google Scholar; Larry, Berman, Planning a Tragedy: The Americanization of the War in Vietnam (New York: Norton, 1982), pp. 138–41Google Scholar; Anderson, Paul A., “Decision Making by Objection and the Cuban Missile Crisis,” Administrative Science Quarterly 28 (06 1983), pp. 201–22.CrossRefGoogle Scholar

19. For example, it might be the case that decisions concerning the application of military force are more suited to analysis in terms of orthodox maximization frameworks than are other decisions where the requirements for following an orthodox maximization process are not met so well. (These requirements at a minimum would seem to consist of actors possessing a clear sense of the possible outcomes; preferences defined over the set of outcomes; a clear sense of available alternatives.)

20. Friedman, , Positive Economics, p. 18.Google Scholar

21. Simon, Herbert A., “Rational Decision-Making in Business Organizations,” American Economic Review 69 (09 1979), pp. 495–513Google Scholar; Becker, Gary, “Irrational Behavior and Economic Theory,” Journal of Political Economy 70 (02 1963), pp. 1–13.CrossRefGoogle Scholar

22. Cyert, Richard M. and Simon, Herbert A., “The Behavioral Approach: With Emphasis on Economics,” Behavioral Science 28 (04 1983), pp. 95–108CrossRefGoogle Scholar. The empirical performance of the neoclassical theory of the firm seems particularly relevant to an assessment of the efficacy of modeling the behavior of states as if they were firmlike entities. Given that their existence in a capitalist system subjects firms to institutional “rules of the game,” and given the calculational advantages of frequently being able to attach monetary values to outcomes, we may expect expected-utility models to predict the behavior of firms more accurately than they predict the behavior of nations. The less than impressive results actually obtained after decades of work by economists do not bode well for the success of a corresponding effort applied to states.

23. Moreover, for simple navigational problems, a geocentric model of the cosmos is used even today, because it is accurate enough for the purpose at hand, and because it is a much simpler theory than the Copernican theory. See Kuhn, Thomas S., The Copernican Revolution (Cambridge: Harvard University Press, 1957), p. 38Google Scholar. Thus, if our purpose were limited to this application, we would have no reason to abandon the geocentric model. Only if the domain of prediction were enlarged or the requirements for accuracy strengthened would we have any reason to question the geocentric system or to develop a more accurate account of the processes generating outcomes of interest.

24. Mesquita, Bueno de, War Trap, p. 21.Google Scholar

25. Winter, Sydney G., “Economic ‘Natura1 Selection’ and the Theory of the Firm,” Yale Economic Essays 4 (Spring 1964), p. 232Google Scholar. Students of the history and philosophy of science may find it interesting that Friedman articulated his position only after empirical work began to appear which suggested that conventional microtheory offered an unsatisfactory description of firms' actual decision-making processes. Gordon, Robert A., Business Leadership in the Large Corporation (Washington, D.C.: Brookings, 1945).Google Scholar

26. Lakatos, Imre, “Falsification and the Methodology of Scientific Research Programmes,” in Lakatos, and Alan, Musgrave, eds., Criticism and the Growth of Knowledge (Cambridge: Cambridge University Press, 1970), p. 118.CrossRefGoogle Scholar

27. Winter, Sydney G., “Optimization and Evolution in the Theory of the Firm,” in Day, R. H. and T., Groves, eds., Adaptive Economic Models (New York: Academic, 1975), p. 95.Google Scholar

28. Keohane, Robert O., “Theory of World Politics: Structural Realism and Beyond,” in Finifter, Ada and Lipset, Seymour Martin, eds., The State of the Discipline: Political Science (Washington, D.C.: APSA, 1983)Google Scholar; Waltz, , Theory of International Politics, p. 137.Google Scholar

29. Koopmans, , State of Economic Science, p. 140.Google Scholar

30. Paul, Samuelson, “Maximizing and Biology,” Economic Inquiry 16 (04 1978), pp. 171–83.Google Scholar

31. Winter, , “Optimization and Evolution.”Google Scholar

32. Waltz, , Theory of International Politics, p. 137Google Scholar; Ibid., pp. 137–38; Starbuck, William H., “Organizational Growth and Development,” in Starbuck, , ed., Organizational Growth and Development (Middlesex, England: Penguin, 1971), p. 31.Google Scholar

33. Nelson, Richard R. and Winter, Sydney G., An Evolutionary Theory of Economic Change (Cambridge: Harvard University Press, 1982), pp. 134–36Google Scholar. Skinner, B. F., Shaping of a Behaviorist (New York: Knopf, 1979), p. 319Google Scholar, has noted that the extinction of individual behaviors via operant conditioning is a process analogous to the extinction of creatures via natural selection.

34. Winter, , “Economic ‘Natural Selection’”Google Scholar; and Waltz, , Theory of International Politics, pp. 121–22.Google Scholar

35. Simon, , “Theories of Decision-Making.”Google Scholar

36. Nelson, and Winter, , Evolutionary Theory, pp. 165–69Google Scholar. An example of a model of a system based on an Allison-style Model II assumptions about actors is Cyert, R. and March's, J. duopoly model in chapter 5 of their Behavioral Theory of the Firm (Englewood Cliffs, N.J.: Prentice-Hall, 1963)Google Scholar. See also their discussion of the general problem of modeling oligopoly in chap. 8.

37. Winter, , “Economic ‘Natural Selection,’” p. 243Google Scholar; Winter, , “Optimization and Evolution,” pp. 97–98Google Scholar; Gilpin, , War and Change, pp. 147–55.Google Scholar

38. Axelrod, Robert and Hamilton, William D., “The Evolution of Cooperation,” Science 211 (1981), pp. 1390–96.CrossRefGoogle ScholarPubMed

39. Waltz, Kenneth N., Man, the State and War (New York: Columbia University Press, 1959)Google Scholar; Singer, J. David, “The Level-of-Analysis Problem in International Relations,” World Politics 14 (10 1961), pp. 77–92.CrossRefGoogle Scholar

40. Rosenberg, Hans, Grosse Depression und Bismarckzeit Wirtschaftablauf, Gesellschaft und Politik in Mutteleuropa (Berlin: Walter de Gruyter, 1967).CrossRefGoogle Scholar

41. Scitovsky, Tibor, “A Reconsideration of the Theory of Tariffs,” in Ellis, H. S. and Metzler, L. S., eds., Readings in the Theory of International Trade (1938; reprint, Homewood, Ill.: Irwin, 1950).Google Scholar

42. Ibid., p. 379.

43. Ibid., p. 389.

44. Johnson, Harry G., “Optimum Tariffs and Retaliation,” Review of Economics Studies 21 (1954)Google Scholar; Ibid., p. 153; Schelling, Thomas C., “Hockey Helmets, Concealed Weapons, and Daylight Saving: A Study of Binary Choice with Externalities,” Journal of Conflict Resolution 17 (09 1973), pp. 381–428CrossRefGoogle Scholar. This latter conclusion points to the danger of attempting to generalize from the two-country to the n-country world, as Scitovsky attempted to do in his sketch. The defection of a few countries from free trade might not be a sufficient condition for the defection of all countries.

45. Kuga, Kiyoshi, “Tariff Retaliation and Policy Equilibrium,” Journal of International Economics 3 (11 1973), pp. 351–66CrossRefGoogle Scholar; Otani, Yoshiko, “Strategic Equilibrium of Tariffs and General Equilibrium,” Econometrica 48 (04 1980), pp. 643–61.CrossRefGoogle Scholar

46. Johnson, Harry G., “An Economic Theory of Protectionism, Tariff Bargaining, and the Formation of Customs Unions,” Journal of Political Economy 73 (1965), pp. 256–83CrossRefGoogle Scholar. It is not necessary to Johnson's argument that industrial products be the sole objects of this preference; it could just as well apply to commodities such as grain in Imperial Germany.

47. Becker, Gary, The Economics of Discrimination (Chicago: Aldine, 1957).Google Scholar

48. Johnson, , “An Economic Theory,” p. 273.Google Scholar

49. McKeown, Timothy J., “Hegemonic Stability Theory and 19th-Century Tariff Levels in Europe,” International Organization 37 (Summer 1983), pp. 73–91CrossRefGoogle Scholar; Conybeare, John, “Public Goods, Prisoner's Dilemmas and the International Political Economy,” International Studies Quarterly 28 (Spring 1984), pp. 5–22CrossRefGoogle Scholar; Keohane, Robert O., After Hegemony (Boston: Little, Brown, 1984), pp. 31–46.Google Scholar

50. While Gilpin has presented an embryonic theory of hegemonic rise and decline, the argument contains no feedback loop running from the opening of the trading system to the strength of the hegemonic state—except perhaps the implicit argument that the leader's technological advantage diffuses more rapidly in an open system than in a less open one. However, if diffusion of technology proceeds via such mechanisms as direct foreign investment and university training of foreigners, then the nature of the trade regime may not be very important. Nor does Gilpin's argument attempt to relate the appearance of new hegemons to a certain set of international “structural” conditions.

51. A related difficulty in modeling global tariff changes is that showing that some nations will gain from free trade is not sufficient to “explain” tariff reductions; conversely, showing that some nations will lose from free trade does not explain tariff increases. Since world imports equal world exports, if some country is experiencing increased exports (hence, a greater interest in lowering trade barriers), some other country or countries must be experiencing increases in imports (hence, more resistance to liberalization is likely in these countries). Unless the gaining country has more political influence than the losing country, one has no basis for predicting changes in overall tariff levels simply as a result of shifts in export surpluses.

52. Conybeare, John, “A Comparative Study of Selected Trade Wars: Anglo-Hanse, Late 19th Century European, Hawley Smoot, Chickens and Steel” (Paper presented at the Annual Meeting of the American Political Science Association,Washington, D.C.,September 1984)Google Scholar; Keohane, , After Hegemony, pp. 135–81Google Scholar; Katzenstein, Peter J., Corporatism and Change: Austria, Switzerland, and the Politics of Industry (Ithaca: Cornell University Press, 1984).Google Scholar

53. Kindleberger, Charles P., “Group Behavior and International Trade,” Journal of Political Economy 13 (1951)Google Scholar; Lavergne, Real P., The Political Economy of U.S. Tariffs: An Empirical Analysis (Toronto: Academic, 1983)Google Scholar, provides the most useful summary of economists' empirical work.

54. Gourevitch, Peter Alexis, “International Trade, Domestic Coalitions, and Liberty: Comparative Responses to the Crisis of 1873–1896,” Journal of Interdisciplinary History 8 (1977)CrossRefGoogle Scholar; Ferguson, Thomas, “From Normalcy to New Deal: Industrial Structure, Party Competition and American Public Policy in the Great Depression,” International Organization 38 (Winter 1984)CrossRefGoogle Scholar; Cassing, James, McKeown, Timothy J., and Ochs, Jack, “Firms, Regions, Business Cycles and the Demand for Tariffs” (Paper presented to the Annual Meeting of the American Political Science Association,Washington, D.C.,September 1984)Google Scholar; Gallarotti, Giulio M., “Toward a Business-Cycle Model of Tariffs,” International Organization 39 (Winter 1985).CrossRefGoogle Scholar

55. McKeown, Timothy J., “Firms and Tariff Regime Change: Explaining the Demand for Protection,” World Politics 36 (1984)CrossRefGoogle Scholar. Another intriguing alternative to unitary utility-maximization treatments not discussed in this article is provided by the rapidly expanding area of artificial intelligence models of the foreign-policy decision-making process. For an introduction to this literature, see Sylvan, Donald A. and Steve, Chan, eds., Foreign Policy Decision Making: Perception, Cognition, and Artificial Intelligence (New York: Praeger, 1984).Google Scholar