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'Hegemonic Stability Theory' postulates a number of rules for the maintenance and decline of international monetary and political systems. Its leading exponents are the political scientist Stephen D. Krasner and economic historian Charles P. Kindleberger. Owing to significant popularity and widespread diffusion there is significant internal differentiation of focus and fact within the field.
Charles Kindleberger, whose analysis of the 1929 depression is widely accepted as the precursor of the theory, states that for an international system of trade and finance to function smoothly there must be a hegemon. This is so because there is a collective action problem in that regulation and institutionalization of trade and finance is a public good, that is, it benefits the community. To solve the collective action problem, a hegemon takes the lead and is motivated to do so because of the benefit it gains; for example, the United States benefitted greatly as the reserve currency under the Bretton Woods system.
Kindleberger's theory stems from the historical experience of the United Kingdom. Its manufacturing production surpassed that of France in the 1850s, it took on the leading role as exporter of capital, and used British gunboats to force trade. The UK was a hegemon, and used this power to maintain the international economic system. In the 1930s however, the UK had lost its dominance and when the Great Depression hit, the system broke down because of the absence of a hegemon.
A Hegemon, according to Keohane, is a state that possesses the following characteristics:
#the ability to create and enforce international norms,
#the will to do so,
#decisive economic, technological, and military dominance.
A hegemon is now commonly referred to as a superpower, a term used to describe the United States and, prior to its collapse, the Soviet Union.

Contents

Criticism

Newer variations of the theory

Is the U.S. still a hegemon?

External links

Criticism

Numerous critics have expressed concern about the theory.
First, it is not just the hegemon’s existence that maintains order, but also some recognition of the hierarchy of states by other actors in the international community. As Wyatt Walters argues, it was the Soviet threat that led the UK, France and Germany to take a secondary role to the U.S.; it was not just the presence of the United States.
Second, it has been argued that the absence of a hegemon during the interwar years was not responsible for the breakdown of the international economic system, instead, it was the harsh reparations imposed on Germany.
The existence of Bi-Polarity (at least militarily) suggests two hegemon-like powers may be able to coexist and diffuse and destabilize each other.
Lastly, hegemons do not last very long due to internal decline, external decline and sometimes due to the shift of power within a state.

Newer variations of the theory

Neorealists argue that the hegemon supports the system so long as it is in their interests. The system is created, shaped and maintained by coercion. The hegemon would begin to undermine the institution when it is not in their interests. With the decline of a hegemon, the system descends into instability.
Neoliberalists argue that the hegemon provides public goods through institutions and works in the best interests of everybody. It is motivated by ‘enlightened self-interest’; the hegemon takes on the costs because it is good for all actors, thereby creating stability in the system, which is also in the interests of all actors. With the decline of the hegemon, institutions don't automatically die; instead, they take on a life of their own (see regime theory).

Is the U.S. still a hegemon?

Hegemony demands power, which is defined by Susan Strange as the ability of one party to affect outcomes such that their preferences take precedence over the preferences of other parties. The question of whether the U.S. is still a hegemon is tied into whether or not it has lost power.
Keohane sees power as tied into resources and production, and because US GDP is now lower relative to others, it implies a loss of power.
Although resources are an important determinant of power, they are not always determinatve. For example, the German troops that conquered western Europe were actually fewer in number than their opponents. Susan Strange uses this logic to argue that the U.S. is still a hegemon.
One form of power that the U.S. possess is structural power. After the Exxon Valdez accident, the US passed a domestic law commanding any oil delivery ship to have unlimited liability insurance. Even though most oil shipping companies are located overseas, they nevertheless complied with the law because the US is world’s largest market for oil. This non coercive or attractive form of power is key to Keohane and Nye's concept of Soft Power.
In addition to structural power, the U.S. has many resources. It unilaterally helped Mexico in the Peso Crisis and unilaterally helped Russia with economic aid. The United States has also 'persuaded' many countries to embrace the free market; through institutions such as the IMF, it pushed Latin American nations to undertake economic programs that Washington believed was necessary (see Washington Consensus).

External links

★ 'US Hegemony, Global (In)Stability, and IR Theory' - Allan Noble - April 17, 2006

★ Summaries of International Relations Theories