States, Nonstate Actors, and Global Governance

Projecting Polities

Ed Fogarty

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9781138830424
• eBook ISBN: 9781135102005
• Topic: Politique et relations internationales
• Subtopic: Politique

This book addresses whether and how multilateral economic regimes can successfully transition from international institutions—cooperation among states—to global governance—cooperation among states and nonstate actors.

The unprecedented era of peace and prosperity since World War II has been underpinned by multilateral economic regimes, yet in recent years the rise of nonstate actors has intensified international conflicts regarding fundamental questions of how to govern. This book asks whether and how multilateral regimes will be able to adapt. Based on an analysis of multilateral regimes for trade, investment, and poor-country debt, the author concludes that all multilateral regimes—including those in the security, human rights, and environmental areas—face an increasingly existential challenge of reconciling the diverse 'polity preferences' of an ever-growing constituency of state and nonstate actors. This book's key contribution is a single model of state and nonstate actor preference formation, which offers the reader a new way to understand the dynamics of twenty-first century global governance.

States, Nonstate Actors, and Global Governance will be of interest to students and scholars of international relations, economics, international institutions, global governance and international political economy.

1 Argument

The postwar liberal international economic order (LIEO), which encompasses multilateral regimes for debt, trade, and investment, has provided the framework within which states have ceded some control over their national economies in exchange for a more open and ordered international economy from which all, in theory, can benefit. The design of these multilateral regimes, however, has never been simply an exercise in “getting the policies right”; it was and is a highly political process. This is particularly true in an age of globalization, in which global economic governance is increasingly necessary, controversial, and crowded. Multilateral economic regimes are struggling to adapt to the changing landscape.

Some newer strands of IR (International Relations) and IPE (International Political Economy) theory—particularly those focusing on norm diffusion, transgovernmental networks, and private regimes—offer clues as to new global governance forms emerging to meet these challenges and the resources actors can draw on to influence them, but do not directly address the fate of “old” multilateral regimes like those centered on the WTO or IFIs (international financial institutions). More longstanding realist and liberal (and to some extent constructivist) traditions do address the old multilateralism, but each with a theoretical apparatus that is also struggling to adapt to a changed world—in particular, to account for both the full range of benefits and costs multilateral regimes entail and the role nonstate actors play therein.

This book’s argument starts from a particular premise: that negotiating multilateral agreements is an act of building a global polity, an act with profound implications for actors’ own status as polities.¹ State and nonstate actors have a variety of incentives to project their polities—i.e., to try to increase the similarities between the rules of multilateral regimes and those of their own internal regimes. Following from these premises, the book’s polity projection hypothesis claims that multilateral agreements reflect a central tendency in their constituents’ polity preferences, skewed toward those that offer the greatest capacities to contribute to the provision of global public goods. Over time, multilateral regimes must adapt to a changing population of actors and their respective polity preferences or face increasing instability and/or irrelevance.

This chapter explicates the polity projection hypothesis and its underlying premises, drawing on a heuristic Legro (1996) called the international cooperation two-step. The first step involves preference formation. The book’s central claim relates to state and nonstate actor preferences over multilateral rules, which, it argues, derive from underlying instrumental and normative motivations to protect and promote the integrity of their internal regimes. The second step involves multilateral bargaining, in which actors, on their own or in league with others with similar preferences, shape potential agreements in proportion to their capacities to contribute resources and to mobilize a coherent bargaining position. The chapter establishes the foundations first for polity preferences and second for actors’ influence over bargaining outcomes, concluding with a restatement of the central hypotheses.

Preference formation: adjustment, proselytizing, and alignment

What do actors want from global governance? It depends. Governments have a variety of substantive goals depending on their particular political, economic, cultural, or ideological commitments and circumstances; IOs’ and NGOs’ goals depend on their particular missions; and multinational firms’ goals depend on their particular market positions and corporate cultures. The multilateral economic regimes addressed in this book relate most directly to actors’ interests and goals regarding international economic liberalization. Nevertheless, the essential variation in actors’ specific, substantive goals vis-à-vis multilateral economic regimes is such that, although they must be considered within the context of specific cases, it is difficult to establish theoretical assumptions about them.

We can, however, establish theoretical foundations regarding actors’ preferences over outcomes—ordinal (outcome A is better than B in relative terms) and cardinal (how much better is outcome A than B)—as well as their motivations—the inherent drives that compel them to act. This section establishes the microfoundations of the polity projection hypothesis, beginning with a critique of the prevalent “two-level game” heuristic and subsequently locating this book’s premises regarding actors’ motivations and preferences over outcomes in multilateral regimes.

The two-level game model: strengths and weaknesses

IR theory entered the twenty-first century with surprisingly little to say about preference formation. Structural variants of realism and liberalism did not explore internal sources of variation in state preferences; they simply assumed states seek to maximize material gains from cooperation, whether in relative or absolute terms, in the face of various structural constraints. Constructivism has tended to treat preferences as a dependent variable, examining how states are socialized toward conformity with prevailing norms. By contrast, more recent “second image” variants of realism (e.g., Drezner 2007; Moravcsik 1998), liberalism (e.g., Lake 2009; Milner 1997), and constructivism (e.g., Legro 1996) do address preference formation by utilizing the two-level game model pioneered by Putnam (1988). Its basic logic is that states’ executive officials enter international trade or other negotiations intent on attaining benefits (e.g., market access) to bestow upon winning coalitions of domestic interests. This two-level game approach has a particular model of the state: executive officials are privileged as the only players in both domestic and international political arenas; and the state has no inherent preferences, only those derived from interest groups that successfully capture it.

A key strength of the two-level game model is that it acknowledges that nonstate actors’ preferences matter in institutional bargaining. Drezner (2007), for one, makes effective use of this model to show how states and their domestic interest groups (businesses in particular) work to develop international regulatory regimes that closely resemble their home country’s own domestic regulatory status quo. Those working in the “open economy politics” (OEP) or “open polity” strand of liberal theory have developed rigorous models built on the premise that domestic interests mobilize to shape states’ foreign economic policies toward liberalization or protectionism based on their own position in the international distribution of labor.² This book’s case studies confirm that lobbying national governments was a major focus for both firms and NGOs, whether as members of advisory committees or through more informal access to policymakers. Such lobbying played a powerful role in shaping the positions of the United Kingdom and United States in particular: The UK position on poor-country debt was heavily influenced by NGOs like Oxfam and Christian Aid; the US position on investment and trade agreements was deeply influenced by industry groups like the US Chamber of Commerce—though in the 1990s it shifted significantly in response to NGO mobilization.

However, the two-level game model suffers from two significant shortcomings. The first involves the pluralist model of the state. States vary in how they intermediate interests, and the assumption of a highly penetrated, pluralist state that might be applicable to the United States or United Kingdom is less appropriate to France or Japan, not to mention nondemocracies. Indeed, domestic interests’ impact on governments’ bargaining positions in multilateral economic negotiations varies specifically because some states are more easily accessed by interest groups than others. Some in the OEP school have begun to account for cross-national variation in internal structures of interest intermediation (see Lake 2009), but most work using the two-level game model elides this crucial variation in the name of parsimony.

The pluralist model assumes individuals in government seek to retain power, but denies that either bureaucratic officials or the state apparatus as a whole (the regime) has abiding interests or beliefs regarding international institutions. Yet international institutions can affect the distribution of authority among domestic institutions, typically accreting national, executive power at the expense of legislative and/or subnational authorities.³ This fact proved particularly troubling to the US Congress and states regarding multilateral trade and investment rules, which required permanent delegation of authority to the federal executive. Many European countries have been similarly wary of more delegation of authority to Brussels, despite prospective gains in economic efficiency (e.g., harmonized taxation) or global influence (e.g., coordinated defense). Adhering to multilateral rules affects the quality and scope of national sovereignty, an essential element of preference formation absent in the two-level game model.

Second, even as the two-level game model emphasizes nonstate actor interests, it is resolutely state-centric in assuming states remain the only actors operating directly in international institutional contexts. This premise is not without foundation: only sovereign states retain the legal authority to vote on formal multilateral agreements. But it conflates states’ monopoly on legal authority with a monopoly on direct influence. Multinational firms and NGOs do not confine their political activities to lobbying national governments—indeed, given their transnational organizations and operations, it is not clear which is the “home” government of Friends of the Earth International or Halliburton. Inside the European Union, the European Commission has been active in creating transnational business, labor, and other groups that lobby it and other EU-level institutions rather than member-state governments.⁴ In the commercial regimes discussed in the book, and even more so in international environmental and humanitarian regimes, nonstate actors participate directly in multilateral bargaining. The two-level game model, which treats nonstate actors as interest groups that only their home governments can satisfy (or not), cannot account for this direct influence.

More generally, the two-level game model starts from the premise that we can neatly separate “national” and “international” politics, with national governments as the only actors bisecting these separate planes of politics. This premise ignores the transnationalization of politics in an era of globalization, in which state boundaries are weak constraints on mobile nonstate actors such as Google and Greenpeace (as well as al Qaeda and Triad gangs) and the flows of goods, services, capital, people, and ideas they catalyze. States are not powerless in the face of these flows, but they are enmeshed in webs of interdependence and governance with nonstate actors, sharing and contesting authority in a world in which national–international boundaries are growing fainter.⁵ This empirical reality must be accounted for in theories of global governance, even those concerning ostensibly “intergovernmental” multilateral regimes.

Motivations: egoism and integrity

As they form preferences over multilateral rules, both states and nonstate actors are motivated by self-interest. But how one defines self-interest matters. American IPE theory primarily defines it as uniformly acquisitive: states as well as MNEs are motivated by the prospect of appropriating material benefits. Firms’ competitive position depends on whether international regulatory standards provide cost advantages and which firms bear costs of adjustment; states seek gains from international cooperation both to enhance their security internationally and reinforce their political position domestically. States, firms, or IOs might give aid to poor countries, or NGOs offer services in poverty- or conflict-stricken areas, but these acts have at least some instrumental motivation, whether for reputational benefits or expectations of future reciprocation.

This conception of self-interest reifies an excessively narrow conceptualization—even within a rationalist ontology—of states and nonstate actors as existing solely to appropriate, and internally distribute, rents.⁶ This premise is problematic, if not fatally flawed, with respect to states and firms, for which acquisitive functions are central. But its limits become obvious when we consider international organizations and NGOs. Neither the IMF nor the World Bank, nor Human Rights Watch nor Oxfam, is motivated primarily by the desire to appropriate material benefits; they have missions.⁷ They may seek reputational benefits or task expansion, but as a means to further non-acquisitive goals. Unless we ignore these two categories of actors, we require a richer conception of self-interest as it relates to multilateral regimes. Acquisitive self-interest alone is conceptually insufficient: it lacks depth and exhaustiveness in accounting for all relevant actors’ motivations.⁸

Closing this gap requires a different premise: States, IOs, NGOs, and MNEs see in multilateral rules not only a source of surplus, but also of order. They have not only a material stake in this order, but also a “governance stake”: multilateral rules can affect how their internal regimes treat, and distribute power among, their own constituents. Self-interest drives them to minimize the costs multilateral rules impose on their internal order. When forming preferences over multilateral rules, actors are motivated not only to promote their particular substantive goals and to acquire a surplus, but also to assure the integrity of their internal regimes.⁹

Why do states and nonstate actors care about this integrity? Their internal regimes are routines—deeply ingrained rules and procedures actors institutionalize for both instrumental reasons (as an efficient means to achieve goals) and normative ones (as an appropriate means to achieve goals).¹⁰ State and nonstate actors socialize their internal constituents—citizens, societal groups, staff, and/or affiliates—to this internal order. The European Union socializes policymakers to its procedures of intergovernmental bargaining and the “community method,” and new member states to the acquis communitaire (Checkel 2005). The IMF socializes staff to its particular macroeconomic models and standard operating procedures for dealing with borrowers (Evans and Finnemore 2001). The World Wildlife Fund (WWF) socializes affiliates to its global brand through strict by-laws and annual conferences. Google socializes employees and affiliates to its particular corporate ethos. These internal constituents shape their individual interests and worldviews to the rules of this routine, thereby reproducing and reinforcing it.

This book’s central micro-level assumption is that fealty to routines shapes actors’ preferences over multilateral rules. Routines have sunk costs—material and political—and even Pareto-improving adjustments promise difficulties in adaptation (Williamson 1985). But actors’ routines also shape their cognitive frame: multilateral rules deal with familiar governance problems—how to treat different constituents, how to distribute authority among them—for which internal rules already provide particular solutions. So, just as EU member states have incentives to “upload” their existing policy regimes to the EU level (Börzel 2002), state and nonstate actors have an interest in establishing solutions to global governance problems requiring minimal adjustment and reinforcing their own routine as “best practice.” As such, they are motivated to limit internal change away from, and maximize external change toward, their existing routine—even if externally-induced internal changes promise material benefits (e.g., lowering barriers to trade) or more normative ones (e.g., enhancing internal accountability).

Underlying the claim of actors’ concern with their integrity is the assumption that they exist in a world of bounded rationality, in which their behavior may stray from utility maximization. Assumptions of bounded rationality once played a central role in theories of international security (e.g., Jervis 1978; Allison 1971) and the “new economics of organization” (e.g., North 1990), but have largely disappeared from IPE theories—especially those drawing heavily on neoclassical economics. The polity projection hypothesis hews closer to the foundations of behavioral economics, in which individuals and other actors are risk-averse and biased: risk aversion leads them to be reluctant to abandon existing routines even if adjustments would enhance their interests in material or other terms; and bias leads them to perceive the world, often myopically, through the lens of their own experience and worldviews.¹¹ Underpinning this book’s argument, then, is an assumption that actors’ governance routines are deeply embedded, if not entirely static, and that actors’ concern for the integrity of these routines exerts a strong influence on their preferences over outcomes in multilateral regimes.

This discussion begs an obvious question: Are actors motivated more by concern for integrity than by material gain? There is no simple answer to this question, though as the ensuing argument and case study analysis suggest there is some predictable variation across actors and contexts. Some actors are proselytizers, with a particularly strong attachment to the integrity of their internal regimes. Structurally, increases in the intensiveness of globalization and intrusiveness of global governance increase sensitivity to routine integrity. As interdependence becomes more complex and the number of parties to possible agreements grows, it becomes harder even for rational actors to calculate the expected material gains of any given agreement (Keohane 1998; Wendt 2001). Meanwhile, as interdependence and agreements reach further behind the border—affecting, for example, the status of labor or environmental regulations in states and/or practices of firms—the costs of integration become clearer. Thus the more necessary global governance becomes, the more controversial it becomes in its effect on actors’ internal regimes—and the more intense their motivation to project their polity.

Preferences over outcomes: adjustment, projection, and alignment

If both state and nonstate actors are motivated to preserve their internal governance forms, how do these external encroachments affect their preferences over multilateral rules? The broad consensus in the IPE literature is that states and firms rank-order different possible agreements according to their expected net utility—that is, total benefits in terms of public goods (e.g., lower information and transaction costs) and private gains (e.g., access to particular markets of ...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of tables and figures
• Preface
• List of abbreviations
• Introduction
• 1. Argument
• 2. A typology of regimes
• 3. The poor-country debt regime
• 4. The multilateral investment regime
• 5. The multilateral trade regime
• Conclusion
• Notes
• Bibliography
• Index