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Book Reviews

It is possible that a few readers might feel that there are concepts of economics to derive a set of behaviour patterns
a few missing threads in the book. For instance on page 4, that can arise as a result of the end of a hegemonic era.
Bagchi has spoken of a case when a person from India These patterns of behaviour seek to derive the conditions
landed up in Germany and fell in love with his supervisors under which cooperation can be achieved. He applies the
daughter but could not marry her. The reader might like to concepts of maximising behaviour and self-interest to
know the underlying reasons due to which the worker achieve that. The net result is that we have a framework in
could not get married in Germany; sadly the reasons have which cooperation is derived as a self-sustaining possibil-
not been explored in the work under review. ity. Later on, some of the unrealistic assumptions are
It would do the reader considerable good to apprise relaxed. Relaxing these assumptions only reinforces these
himself/herself with terms such as capitalism, Helicopter conclusions. It is important to recognise, though, that these
parenting, venture capitalist, market-oriented economy, things have been analysed only in the context of advanced
as these terms have been used without much explanation in capitalist market economies. Some of the conclusions
the book. derived here may not apply to developing countries. These
At a personal life, I feel that the essence of the lives of have been pointed out at appropriate places while review-
great people has been distilled by Robert Frost in his poem ing the different chapters of this book.
Stopping by Woods on a Snowy Evening
Chapter 1Realism, Institutionalism
The woods are lovely, dark and deep,
But I have promises to keep, and Cooperation
And miles to go before I sleep, This gives a brief introduction on the realism and institu-
And miles to go before I sleep. tionalism and their take on international cooperation. The
author asserts that under conditions of interdependence
implying distractions will always exist, but we have to some cooperation is necessary for achieving optimal levels
understand our responsibilities and realise that it is impera- of welfare; but it is not sufficient, and more cooperation
tive to be determined and stay focused. This old wisdom may not necessarily be better than less. This however has
has been epitomised in the lives of great men and literary not been elaborated anywhere in the book. It also gives the
works with only the characters, situations and dates chang- plan of this book.
ing. Nonetheless, the book under review will be of great
help to the champions of management practices. The book Chapter 2Politics, Economics
provides refreshing reading in these days when many
and the International System
important people are washing dirty linen in public (one
only has to watch a few TV channels and read a few news- The author starts with Robert Giplins definition of world
papers) and words such as corruption, scams and scandals political economy as the study of reciprocal and dynamic
are resonating and reverberating across the globe. The interaction in international relations of the pursuit of
book is a must-read for the champions of change manage- wealth and pursuit of power. He then goes on to describe,
ment and the people in fiefdoms of power as it depicts the in some detail, what wealth and power mean. Wealth is the
ground realities which are often sidelined. marketable means of want satisfaction. It is complemen-
tary to power. He cites the example of mercantilists in
Wallace Jacob seventeenth and eighteenth centuries as well as the use of
Tolani Maritime Institute American power in twentieth century to design the eco-
Induri, Pune, Maharashtra nomic framework of the world. Again a short-run trade-off
exists between the pursuit of power and wealth. The source
of this trade-off is the choice between investment con-
Robert O. Keohane, After Hegemony: Cooperation sumption of power and wealth, which the author contends
and Discord in the World Political Economy, 1984, is similar to choice between consumption and investment
Princeton: Princeton University Press, pp. 320, of wealth. The power is thus build up over a long run. The
`2,450 (Imported Edition), ISBN: 9780691122489. power can be consumed as well. But this erodes the basis
DOI: 10.1177/2319510X14536257 of influence and creditworthiness in the long run. He has
not given any specific example of this, so it is not clear
This book focuses on the important aspect of international how this idea works out in practice, for example, did
cooperation when no hegemonic power is available. The Americas consumption of power during invasion of Iraq
main contention of the author is that cooperation is not in 1991 erode its influence? This case is not borne out of
only desirable but also eminently possible. For this, he uses subsequent events. He has also not described how a sudden

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Book Reviews 169

burst of power can be achieved, for example, USSRs mony, but the question here is of a preponderant, though
detonation of nuclear bomb in 1950s increased its infrequent use of military power.
power and eroded US power without its consumption. The chapter ends with a discussion on the Marxian
These one act generations of power have been missed by notion of hegemony. Marxism takes class struggle and
the author. uneven development as fundamental forces that affect
He stresses on the need for systems analysis both to world political economy. The capitalist system shapes the
give a background and the further progression of actors world political economy according to its own functional
in the unit level analysis of world politics. States try to requirements. The preponderance of financial capital in
secure wealth and power and seek to devise and apply the world proves this. These Marxist theories are partial
rules and regulations to secure these objectives in the long in the sense that they do not explain the changes in the
run. This explains the behaviour of system as a whole. contradictions facing capitalism. Wealth and power are
This model, however, has its own set of problems. First and complementary in Marxian thinking. In fact, control over
foremost, this model comes from economics, but not from means of production is the source of all superstructure of
politics. Another is the assumption of rational-egoistic power in the society. At the world level, contradiction
behaviour, leading, as it does, to situational determinism. among capitalists cannot be resolved by taking recourse to
It is important to keep these things in mind. class analysis. The ideological hegemony (in Gramscian
terms) is not necessarily enduring. The opponents may
invent some new ideology or use some existing ideology
Chapter 3Hegemony in the to counter ideological hegemony of the hegemonic power,
World Political Economy for example, the current use of Islam as a counter ideology
This chapter begins with an analysis of the theory of to Western liberal capitalism. Thus, hegemony cannot be
hegemonic stability. It makes two central propositions the only source of cooperation in the world political
that only a single dominant power can create order in the economy.
world politics; and that perpetuation of world order needs
continuity in that order. A hegemonic world order does
Chapter 4Cooperation
not exactly conjure up a figure of cooperativeness in the
world. Certainly, the colonised countries in nineteenth and International Regimes
century were not cooperating with colonial countries. This chapter belongs to Part 2 which forms the core of the
The hegemon needs to have control over four sets of book. It starts with the question of how cooperation can
resourcesraw materials (e.g., oil), sources of capital emerge after hegemony. For this, the author develops a
(IMF, IBRD), markets and competitive advantage in the conceptual background of harmony, cooperation, discord
high value products market. Perpetuating the hegemony and international regimes. Cooperation is a situation in
thus needs the perpetuation of control. The author contends which the actions of separate actors are brought into
that existence of hegemony is neither necessary nor conformity with one another through a process of negotia
sufficient for the emergence of cooperative relationship tion, often referred to as policy coordination. It is to be
in world political system. In a cooperative system, the distinguished from harmony. In harmony, each actors
need for control vanishes. In an oligopolistic world politi- policies pursued in the self-interest automatically facilitate
cal economy (the current world order seems to be moving the attainment of others goals. There are no negative
in that direction), there can be cooperation without a externalities. Cooperation implies that conflicts have been
hegemon. successfully overcome. The conflicts can be real or
The question of military power forms an important potential. Lack of cooperation leads to discord.
critique of hegemonic stability. The hegemonic state needs International regime is another concept developed in
to possess enough military power to deter adversaries and this chapter. A regime is defined as set of implicit or
protect its hegemony. Enough in the sense that it does not explicit principles, norms, rules and decision making
have to be absolute. Britain in nineteenth century was not procedures around which actors expectations converge
an absolute world powerit faced active competition from in a given area of international regimes. These four
France and Germany and later from Japan. The hegemon components are specific enough that their violations
may use its military power directly in pursuit of economic are identifiable; and significant enough that they make a
resources, for example, US invasion of Iraq for oil. The difference in the behaviour of agents. The boundaries
author has not analysed this point with empirical detail. of international regime correspond to the issue-areas
He has just given a discussion at an abstract level. He of the world political economy. These issue-areas are
talks about military power not being only source of hege- fluid.

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170 Book Reviews

Chapter 5Rational Choice governments. The enforcer here is not some supra-authority
and Functional Explanation but mutual expectation of a stable behaviour pattern.
Transaction costs can be reduced by elevating injunc-
The author begins by analysing problem of collective tion to the levels of rules and principles; furthermore
action. The framework used comes from Game Theory. regimes can construct linkages between issues thus reduc-
The set up is prisoners dilemma. The conclusion derived ing the transaction costs of bargaining. The example of
here is that it is always a dominant strategy for an actor to GATT is quite appropriate. Once a regime is established
defect rather than cooperate, even though cooperation is the marginal transaction costs are reduced.
better for both players. The idea here is to develop a theory Uncertainty and Information has three dimensions.
of cooperation from this basis. The first is the asymmetrical information about other
First of all there is a discussion on limitations of rational actors trying to build a reputation of behaviour. The second
choice models. They ignore the power relations and assume is moral hazard. It may result from agreements which
that choices are voluntary. This need not be so. Power insinuate less cooperative behaviour from its comeup-
relations may affect how the choices of actors imbibe the pance. The third is irresponsibility. Actors may fail to
preferences of the most powerful. Second limitation is that keep their commitments. International regimes deal
they equate the premise of rationality with an atomistic with all these aspects. A pointed observation by Loius
assumption about the role of an individual in the society. Henkin almost all nations observe almost all principles
But the actors may be affected by the environment in of international law and almost all of their obligations
which they operate. And last, rationality could be confused almost all of the time. The example given though is
with egoism. At an ethical level, individuals might value a let-down.
cooperation and censure action harmful to others. This will Existing regimes are also importantboth per se as well
reduce individualistic pay-offs to egoism. To thus counter as for furtherance of cooperation. They develop communi-
this lack of collective action, an oligopolistic collaboration, cation which increases adherence to group goals. The
where each actor monitors the behaviour of others, can be environment that builds up as a result is stable. Considerable
effective. The example given to bolster the argument is changes are required to alter that. The international regimes
about General Agreement on Tariffs and Trade (GATT). that build up allow governments to reduce uncertainty
It is not clear how that can be so. In a crises situation, it and transaction that builds up reputation which forms the
may be profitable for a state to go back on its agreements base for further cooperation. A network of regimes may
owing to domestic pressure. It may behave rationally. prevent governments from pursuing myopic self-interests
The controls given above by the author may not work at and develop far-sightedness. Multiple issues can create
the level of a state. The emergence of the oligopolistic multiple regimes which affect each other. Thus, a loss on
system depends on the existence of shared interests. The one side may be compensated by a gain on other. This idea,
existence of international regimes also reduces the density while true does not really reflect what happens within a
of the policy space. state on these issues. Suppose the loss is distributed widely
enough in a state. The lack of cooperation may yield enough
gain to a group that a government will go ahead with this.
Chapter 6A Functional Theory In fact, the single biggest issue with this book is that it
of International Regimes does not analyse the domestic aspects of a states foreign
This chapter is the core of the core. The issues addressed
are: why political market failure happens; and how inter-
national regimes might help to overcome it. The base Chapter 7Bounded Rationality
of analysis is Coases theorem. It states that presence of and Redefinition of Self-interest
externalities does not necessarily preclude effective coor-
dination among independent actors. The only needs are a This chapter is meant to make the assertions and conclu-
legal framework and low cost availability of information. sions of the previous arguments more realistic. The
The author inverts the Coases law to derive the conditions decision-maker is limited to the extent to which he can cal-
under which international regimes help to generate coop- culate as well as foresee the consequences of his decisions.
eration in the world political economy by generating the They may thus satisfice rather than maximise and use rules
expectations of anticipated effects. of thumb to make and implement decisions effectively.
Legal liability does not imply the existence of some Classical rationality cannot be applied here. The nature of
supra-structure ruling the world. But bits and pieces of governments as large and complex systems hinders the
law can be generated as quasi-agreements that bind the possibility of governments making classically rational

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Book Reviews 171

decisions. International regimes provide these rules of The first issue is the limited canvas of the book. It covers
thumb for the decision-making. only the industrialised market economies. That certainly
Another aspect is to protect against changes in prefer- reduces the value of its conclusions. The second problem
ences. International regimes can impose constraints on the is that it has taken the internal aspects of actors as given.
freedom of action to prevent that. Empathic behaviour can It has not analysed; for example, how internal politics
dilute the assumption of egoism in the definition of self- affects the actors response to external issues. It cannot,
interest. The actors may behave in four different ways vis- thus, account for the reasons why WTOs Agreement on
-vis othersindifference, instrumentally interdependent, agriculture is not moving forward.
situationally interdependent and empathetic interdepend- The reasons are the domestic compulsions of US and
ence. Again treating rules as moral obligations can reduce the intransigence of its agriculture interests groups. It is a
uncertainty about others behaviour and facilitate the coor- major flaw as well. It is needless to repeat the criticisms
dination of behaviour. Unbalanced exchange, where one already given in review of each chapter. In spite of these
party provides more in tangible resources than other can shortcomings, it is an important contribution and highly
also be facilitated by international regimes. relevant in todays world where a structure towards ending
Part 3 is devoted to the empirical application of these of unilateral US hegemony is developing.
concepts in post-war era. It contains a lot of detail which
may be useful. The book ends with brief conclusions Imtiyaz Ahmad Bhat
and review. Alumni of CESP
In conclusion, we can say that while author has done a Jawaharlal Nehru University
great job in elaborating his ideas, there are still some flaws. New Delhi, India

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