Part Four: The Theory of Hegemonic Stability and Regime Change. The theory of hegemonic stability and regime change is associated with several scholars, the most important being Stephen Krasner, Robert Keohane, and Joseph Nye. In the history of the rise and relative decline of Great Britain and the rise and relative decline of the United States (see Parts Two and Three of this series), one can see a pattern and that pattern represents the theory of hegemonic stability and regime change. Remember that a hegemonic power is a state that creates, controls, implements, and maintains global laws, rules, standards, norms, and procedures that major states tend to follow in both economic and political interactions. The laws, rules, standards, norms, and procedures that states tend to follow are referred to as an international regime. The hegemonic power also provides global public goods that enable the regimes to work such as an international currency, international contract guarantees, and alliances and corrections to regional balances of power.
In its essence, the theory says that hegemonic powers create and maintain liberal (capitalism) global economic regimes coupled with political/security regimes among the major powers. It facilitates these regimes by providing global public goods. But, if the hegemonic power is in relative decline the laws, rules, standards, norms, and procedures of the liberal regime will change or adjust (note the move from the Bretton Woods system fixed exchange rate regime to a market based monetary regime in 1971 – see Part Three of this series) and if the relative decline is great enough, states will begin to pursue mercantilist policies. Hegemonic powers bring stability and the prevention of war among the major powers to the international economic and political regimes in the form of liberal laws, rules, standards, norms, and procedures. The lack of a hegemonic power or the relative decline of a hegemonic power brings instability and conflict among the great powers to the international economic and political regimes in the form of mercantilism and political conflict or war.
From 1648 to 1815 there were, at the beginning, 10 to 12 relatively equal major states. Political outcomes included many wars between major powers, competition among the states, and the first wave of colonialism. The economic outcome was mercantilism and economic interactions were viewed from a zero-sum game perspective. From 1815 to 1870 we witnessed the rise of the first global hegemonic power, Great Britain. Its economy grew because of lead sectors such as cotton textiles, iron, water power, steam power, and railroads. The political outcomes were stability and relative peace among the major powers which included Prussia, Russia, France, Austria/Hungry. The economic outcome was the establishment of a liberal, global economic regime by Great Britain. From 1870 to WWII we witnessed the relative decline of Great Britain as a hegemonic power. The political outcomes were major wars and competition between the major powers and the second wave of colonialism. The economic outcome was the return of mercantilism and a global depression (see part two of this series of essays).
From WWII to 1971 we witnessed the rise of the US as the global hegemonic power in the west. The rise of the US was due to the destruction associated with WWII and the leading economic sectors of automobiles and the oil industries. The political outcomes were cooperation in security matters related to the Soviet Union. The US created a liberal (capitalist), global economic regime through the General Agreement on Trade and Tariffs and the Bretton Woods monetary system. From 1971-1991, we witnessed the relative decline of the US in relation to Western Europe and Japan. The political outcomes continued to be cooperation in security matters related to the Soviet Union. While the liberal global trade regime was maintained there was a change in the global monetary regime from the gold standard to a market based regime initiated by the US. This was due to the relative changes in the value of the dollar to the currencies of the western European states and Japan. There were some violations of the global trade regime that appeared in the 1980s in the form of the use of non-tariff barriers to trade but liberal policies still characterized most the regime. From 1991 to today, we witnessed a resurgent US in the 1990s due to lead economic sectors such as computers, digitization, microelectronics, integrated circuits, embedded intelligence, information technology, and artificial intelligence.
Yet, Western Europe, Japan, and China continue to narrow the relative power differential with the US (see part three of this series of essays). The theory predicts that under these circumstances there will be some violations of the liberal international regimes. President Trump, an isolationist and economic nationalist/mercantilist, rejected the Trans Pacific Partnership and placed tariffs on goods from China and some of our closest allies. He viewed global trade as a zero sum game. Those targeted states retaliated with tariffs on US goods. He antagonized our closest, major power allies and interpreted those security alliances, such as NATO, as a zero-sum game. All of these actions are a rejection of the global, liberal economic and political regimes established since 1945. President Biden has yet to address the tariff issue and faces a western European political and security alliance that is much less trustful, more willing to reject US initiatives, and less willing to follow the lead of the US. The questions that have yet to be answered concerns President Biden’s view of the role of the US in the world which has yet to fully be defined and the outcome of the continued competition with China in the development of leading economic sectors such as artificial intelligence, 5G networks and beyond, virtual and augmented reality, biotechnology and genetic engineering, and green energies. Finally, there is the issue of growing right-wing nationalism throughout much of Europe and the US. Nationalism sees the world as a zero-sum game and is a primary source of mercantilist policies.
Despite these violations and the turn away from global liberalism, the liberal international regimes are still in place as of today and there is still no state able and willing to replace the US as the global hegemonic power. As and if the US continues its relative decline the world will see less predictability in the behavior of states, less global wealth being created, a more competitive and conflict oriented global economic and political environment, and greater conflict among the major powers of the world.
Another implication of global hegemony is the vast differences in wealth between rich states and poor states. I will address that in Part Five of Understanding Global Hegemony and its Implications.
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