Lake: Anarchy, Hierarchy and the Variety of International Relations

Lake, David A. (1996). "Anarchy, hierarchy, and the variety of international relations". International Organization, 50(1), 1. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=9602295562&site=ehost-live

Lake posits that realist theory can not fully explain the inconsistent actions of various super-powers historically. He uses an approach taken from economics: he compares countries to firms that produce security. These security production firms then engage in interactions with other nations. These interactions can either be more mutually accepted or more hierarchical. “The choice between these alternatives, I posit, is a function of two main variables: the expected costs of opportunism, which decline with relational hierarchy, and governance costs, which rise with relational hierarchy” (2).

He then examines alliance formation, with an eye towards the literature on this subject. He finds that the literature has been relatively poor at coalescing and finding commonalities in different independent variables. He also explicitly takes the position that it could be the result of countries. “…the range of possible variation in strategy--the dependent variable--commonly is abridged” (3).

Lake then defines security as the ability of a country to use their own wealth as they see fit without the constraints of use being imposed by another nation or group. For Lake, informal empire clearly exists. States exercise control over the actions of other states that are in their sphere of influence. Not only is there the positive aspect of empire, where the strong state imposes its will on the weak state, but there is a more coercive and invasive aspect. Informal empire also means that the subsumed country must anticipate the whims and wishes of the powerful.

Contract theory is then explored to determine the nature of the relationships in that states engage. Because his initial assumptions are economist and rational in nature, his approach is not surprising: “The central hypothesis of the contracting approach is that parties choose relations to economize on resources-in other words, to maximize benefits from exchange and minimize transaction costs. In short, actors choose the relationship that is most efficient for conducting the transaction. By doing so, the parties maximize the resources that can be used for other valued purposes; for firms, this implies profit maximization and for states…cost minimization” (10-1).

Lake then explains his assumptions. He begins by assuming rationality, which he acknowledges is heavily criticized. He defines this as, “…I mean simply that actors possess transitive preferences and act purposively” (12). Secondly, security only represents one aspect of policy, and the government acts perfectly in the interests of the selctorate. Thirdly, states have no preference whether or not their foreign relations are wealth seeking, power maximizing or something else. Imperialism may be used by a state and the selctorate understand this as a means to an end. “Together, these first three assumptions imply that states choose the relationship that minimizes their costs of producing a desired level of security” (12). Fourthly, threats faced by state dyads are exogenous. Fifthly, if there is a disagreement between groups as to which policy is preferred, the stronger nation will prevail.

States take part in opportunistic behavior. This can, at time, be costly and is a reflection of a system that does not possess an ultimate leader. “In anarchic relations, ceteris paribus, the probability that the partner will behave opportunistically is comparatively high. In an empire, at the other extreme, states merge their formerly autonomous decision-making processes and transfer rights of residual control to the dominant member. The dominant state now decides-to continue with the same example-who is the victim of any attack…who is the aggressor, and how many resources its partner
must mobilize” (14).

Supply/Demand curves are used to illustrate the relationship between opportunism, governance cost and the degree to which the international society is anarchical or hierarchical. “In equilibrium, we should observe anarchic relations most commonly when the expected costs of opportunism are low or governance costs are high, and hierarchic relations when the expected costs of opportunism are high or governance costs are low. These equilibrium conditions reconcile the apparent contradiction revealed in the discussion of opportunism in the literatures on alliance formation and imperialism above” (21).

Lake then claims that it is nearly impossible to operationalize his construction. Firstly, his independent variables are nearly impossible to find proxies for. Secondly, these variables must necessarily be defined probabilistically, as states can not ever know exactly the costs of governance or opportunity. Finally, the theory can observe the chosen decisions made by actors, but it is impossible to fully understand the full range of their choices. However with the observation of some case studies, further information my become available. He goes on to examine the US/USSR relationship after WWII understanding that it is both abridged, and limited, but hoping that it will show that this approach is applicable.

He finds that the relationship between the US and its interests in Europe as well as the USSR’s relationship with their interests in Eastern Europe are fully consistent with his approach that focuses on the costs of informal empire being determined by the relative interaction of opportunity costs and governance levels. He sees this as being validation of his theoretical approach.