The Challenge of Hegemony: Grand Strategy, Trade, and Domestic Politics

The Challenge of Hegemony: Grand Strategy, Trade, and Domestic Politics

by Steven E. Lobell

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The Challenge of Hegemony explains how international forces subtly influence foreign, economic, and security policies of declining world powers. Using detail-rich case studies, this sweeping study integrates domestic and systemic policy to explain these countries' grand strategies. The book concludes with a discussion of the implications for the future of American foreign policy.

"His conceptually rigorous and tightly reasoned study . . . reminds us that power is never value neutral but organizes commercial systems in liberal or imperial terms."
---Perspectives on Politics

"Lobell's book is tightly written, nicely argued and thoroughly researched to a fault. He seems to delight in historical detail. The complexity of his approach is refreshing."
---International Affairs

"The Challenge of Hegemony is a pleasure to read. It is both theoretically sophisticated and empirically rich."
---International Studies Review

"The Challenge of Hegemony offers a compelling reinterpretation of key historical cases and provides wise guidance as to how the United States should wield its power today."
--Charles A. Kupchan, Council on Foreign Relations

"Lobell demonstrates clearly how the international environment confronting great powers interacts with their domestic political coalitions to produce different grand strategies. Through a masterful sweep of history, Lobell shows us the alternative trajectories before the United States today."
--David A. Lake, University of California, San Diego

Product Details

ISBN-13: 9780472024759
Publisher: University of Michigan Press
Publication date: 12/14/2009
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 256
Sales rank: 949,903
File size: 377 KB

About the Author

Steven E. Lobellis Associate Professor of Political Science, the University of Utah.

Read an Excerpt

The Challenge of Hegemony: Grand Strategy, Trade, and Domestic Politics

By Steven E. Lobell

University of Michigan Press

Copyright © 2003 Steven E. Lobell
All right reserved.

ISBN: 0472113127

CHAPTER 1 - Introduction

Why did Britain pursue a cooperative grand strategy prior to World War I, emphasizing freer trade, reducing defense spending, signing arms limitation agreements, and retreating from empire, but then, prior to World War II, punish contenders by adopting imperial preferences and closer ties to the empire, enacting colonial quotas, and increasing defense spending? The existing literature on grand strategy either black boxes the state, making the assumption of a unified nation, or focuses on the influence of domestic politics. Neglected in this literature is the effect of international politics on altering a hegemon's domestic constellation of interests and power, and the subsequent ramifications for the hegemon's grand strategy. For Britain, between 1889 and 1932, the foreign commercial policy of the rising contenders shifted from a preponderance of liberal contenders before 1914 to a preponderance of imperial contenders in the 1930s. Within Britain, this shift in the commercial composition had the domestic effect of ratcheting-up the strength of the members of the economic nationalist coalition (while weakening the supporters of the entrenched free trade coalition). Empowered economic nationalists pushed London from a cooperative grand strategy to a strategy of punishment, while advancing their own faction's interests.

This book develops a second image reversed plus a second image argument or from the outside-in and then the inside-out argument. What distinguishes this argument is that it focuses on how the nature of and changes in the hegemon's international environment will enable a domestic policy coalition to advance its preferred grand strategy. The first factor in this argument is the foreign commercial policy of the rising contenders. A declining hegemon will confront commercially liberal contenders, imperial contenders, or some mix of these states. The primary distinction is that a liberal foreign commercial policy entails an open door commercial order in any locale that the state comes to dominate, while an imperial commercial strategy translates into an exclusive or autarkic sphere, whether the current trading arrangement is open or closed door.

The second factor in this argument is the internal competition within the hegemon between the members of the free-trade coalition and the supporters of the economic nationalist coalition. Each broad and logrolled faction will lobby for the grand strategy that will advance its desired agenda, under certain conditions over the national interest. The free traders' policy preference calls for cooperating with liberal contenders (and in some instances imperial contenders) in order to reduce the costs of hegemony by means of freer trade, retreat from empire, fiscal orthodoxy (including reduced government allocation for defense spending), low-cost defense arrangements, and international arms limitation and disarmament agreements. Economic nationalists prefer punishing contenders (even liberal states where cooperation is possible) through tariff protection, greater military preparedness, offensive military operations, and closer economic and military links to the empire.

In integrating these variables, I argue that the declining hegemon's grand strategy is driven by the environment in which it finds itself; the commercial orientation of the contenders will affect the domestic balance of political power. The empowered coalition will use the political and economic gains to advance its preferred grand strategy. If the hegemon faces mostly liberal contenders, this will strengthen members of the free-trade faction who will push for cooperation, which will have the domestic consequence of boosting efficient industry, the financial sector, consumers, and fiscal conservatives (while weakening the opposing economic nationalists). If the hegemon encounters mostly imperial contenders, this will enable constituents of the economic nationalist coalition who will lobby for punishment, which will have the internal result of bolstering inefficient and state industry, settler organizations and empire-oriented institutions, state bureaucrats, the military-industrial complex, and trading companies (while weakening the contending free traders). In capturing the distributional benefits from cooperation or punishment, the empowered coalition will apply pressure on the government to adopt a more accommodative or belligerent international posture. Under certain circumstances, these external pressures will push the entrenched faction that is under threat of being rolled back to respond by advancing a grand strategy that will ratchet-up its own relative coalitional power--even though such actions will erode the hegemon's productive strength or undermine its military security. The consequence can shorten the leader's great power tenure. Any subsequent reversals in the foreign commercial policy of the rising states can again alter the domestic balance of power, the distributional gains and losses, and ultimately the hegemon's grand strategy. Thus, the domestic consequence of the contenders' foreign commercial policy adds to our existing understanding of the factors that guide the formation and the reformulation of grand strategy.


This book argues that the grand strategies of declining hegemons have exhibited an identifiable pattern. The specific puzzle is how a declining hegemon selects which states to punish, where to cooperate, and how to allocate its national resources between its productive capacity and military security. Addressed in the conclusion of this book is the policy question of why some states are more successful in managing their decline than others. The bulk of the literature on grand strategy ignores the influence of domestic politics on international relations, treating the state as a unitary and rational actor. Other scholars have tried to bring domestic politics back in to explain international relations. Neglected in this literature is the effect that international affairs has on domestic actors and interest groups.

Grand strategy incorporates several components. First, grand strategy is not only military, but also fiscal and political in nature. Second, grand strategy does not cease at the end of a war or start at the beginning of a war but is about balancing ends and means in both peacetime and wartime (Kennedy 1991, 4). Finally, grand strategy involves long-term planning, over decades and perhaps centuries. The dilemma for a declining state is how to balance its capabilities and global commitments without eroding its economic staying power through prolonged resource extraction or endangering its national security interests by accommodating revisionist contenders. As Walter Lippmann summarizes, "Foreign policy consists in bringing into balance, with a comfortable surplus in reserve, the nation's commitments and the nation's power" (1943, 9).


For long cycle and power transition theorists, a hegemon's decline (and its rise) is an undifferentiated event that occurs globally, rapidly, and simultaneously across its formal and/or informal empire. Differential rates of growth allow a competitor to encroach on the hegemon's primacy. This is attributed to prolonged and sustained military spending by the hegemon to defend its extensive interests in the core and periphery that diverts resources from "wealth creating" domestic investment, erodes its productive strength, and ultimately undermines its ability to finance a modern military. For Organski (1968) and Organski and Kugler (1980), the challenger comes from the ranks of the rapidly industrializing states that are powerful yet dissatisfied with the current system. For Modelski (1987) and Modelski and Thompson (1988), the challenger is a territorial state. The hegemon's response to this challenge is to punish everywhere. According to Dale Copeland (2000), the declining hegemon will initiate a preventive war because it fears worsening power differentials in the future. A contender also fears that the hegemon will attack and push it down the power trajectory. Woosang Kim and James Morrow (1992) maintain that a risk-averse challenger will strike prior to the power transition while a risk-acceptant challenger will wait. As a result of a hegemonic war, the hegemon will lose global leadership to the rising contender in a single instance. Domestic and individual idiosyncrasies will have no effect on the hegemon's rate of decline, allocation of national resources, or response to the challenger.

One shortcoming in the long cycle and power transition literature is the assumption that the hegemon's descent is global, rapid, and uniform. These theorists also assume that there are only two major states in the international system, the hegemon and the contender. This framework oversimplifies the declining hegemon's dilemma. A hegemon is likely to confront several competitors that rise at uneven rates and challenge its leadership in disparate parts of its empire. The more geographically encompassing the hegemon's empire (formal and informal), the more contenders it is likely to confront. Consequently, the hegemon's loss of leadership over one locale rarely translates into a global loss of leadership as long cycle and power transition theorists suppose. The import of this differentiated view of world politics is that it is possible for the hegemon to moderate its rate of decline. By discriminating among protagonists, the hegemon can tailor its responses across locales. The dilemma for such a hegemon becomes whether it can respond without eroding its fiscal health through excessive military spending or undermining its national security by accommodating a revisionist challenger.

Second, hegemonic decline is not always associated with great power war. For long cycle and power transition theorists, a hegemon in its decline phase will punish the rising contender. Yet, a declining hegemon's war proneness can be affected by domestic politics. As discussed in the next chapter, the ruling coalition in the declining state (and the rising states too) will lobby the government for a grand strategy that will empower its members while rolling back the opposing faction's. In part, whether a conciliatory or belligerent grand strategy is advocated will depend on whether the dominant coalition consists of outward-looking free traders or inward-looking economic nationalists.


For neorealists, relative power and geostrategic worth drive the hegemon's grand strategy. Because they assume that the hegemon is a unitary and rational actor, realists ignore the influence of domestic politics on international relations. Instead, operating in a frictionless environment, the hegemon will respond by increasing its rate of resource extraction for military spending or reducing its global commitments as necessary. In the core, the hegemon will punish all contenders because the loss of a vital region could tip the global balance against the leader, at the same time strengthening an aspiring hegemon. The hegemon will even punish an emerging ally (since today's ally might be tomorrow's enemy), by discouraging it from developing independent military capabilities (Posen and Ross 1996-97, 32-42; Mastanduno 1997). On the other hand, in the periphery the hegemon will disengage. The assumption is that even significant losses (by the hegemon) or gains (by the challenger) in the periphery will have little effect on the global balance of power. Thus, for such realists, cooperation among states, especially in vital locales, is rare.

How a hegemon manages its decline matters. The way such neorealists prioritize global commitments ignores the role of grand strategy in safeguarding a hegemon's economic strength. Grand strategy involves bringing into balance the declining state's military and economic capabilities with its overseas commitments. As many realists emphasize, insufficient military spending risks undermining the state's national security, leaving it weak and vulnerable to attack. Yet, in punishing potential allies, neorealists neglect the danger of undermining the leader's economic capacity for future military security due to prolonged and heightened levels of military spending and missed opportunities to lower the cost of hegemony without strengthening a rival (Brooks 1997).

Deterrence theory suggests that a declining hegemon will not distinguish among contenders, but will punish all challengers, in both the core and the periphery, in order to establish a reputation for predation. Such a reputation will discourage potential contenders from mounting a challenge. According to deterrence theorists, the danger of a grand strategy of accommodation is that it will encourage potential contenders to challenge the leader for hegemony in disparate parts of its empire. As Harold Sprout and Margaret Sprout note, "It will be interesting to ask whether a government can relinquish territories, liquidate colonial responsibilities, withdraw from alliances, reduce obligations to allies, or otherwise retrench without starting chain reactions that accelerate the decline of its international potential" (1963, 661). There is a temporal component to this strategy. In the early stages, the deterrence strategy will be costly for the hegemon. Once the hegemon establishes a reputation for predation, it should not need to repeat the demonstration of resolve often. Thus, a "predation period" will lead to a "reputation period."


Finally, there are two versions of arguments that emphasize the primacy of domestic influences on grand strategy (responding to neorealism's state-centric approach). While these scholars have tried to bring domestic politics back in to account for international relations, they largely ignore the influence of international forces on domestic actors and interest groups. The first version argues that domestic and individual idiosyncrasies will impair the hegemon's adjustment (from increasing extraction for defense or reducing commitments as necessary), resulting in self-defeating and nonrational foreign and domestic policies. For instance, according to Aaron Friedberg (1988, 299-300), London prematurely surrendered its worldwide naval supremacy around the turn of the century because decision makers clung to ill-founded economic beliefs that Britain could not simultaneously increase government expenditure for defense and raise taxes without damaging the economy. For Miles Kahler (1984), Britain was able to decolonize more easily than France because empire-oriented political parties, economic actors, and colonial and military administrators were less implanted. One implication is that there is an incentive for pressure groups with regional interests to become entrenched in the political process of a hegemon while the state is in its ascent phase in order to influence the hegemon's foreign policy in the retrenchment phase. Domestic political constraints can contribute to a condition of underextension too (Stein 1993a). Other domestic constraints include regime type (Lake 1992; Wallander 1992), state-society relations and the political cost of extracting societal resources (Barnett and Levy 1991; Lamborn 1991; Barnett 1992; D'Lugo and Rogowski 1993), and domestic institutions and entrenched images, such as embedded "strategic culture" and "myths" of national security (Friedberg 1988; Goldstein 1993; Kupchan 1994; Brawley 1999). Unfortunately, these arguments ignore the positive role of domestic constraints in restraining a hegemon from adopting suboptimal policies such as excessive peacetime defense expenditure.

A second approach seeks to revive domestic politics explanations for international relations. These scholars maintain that competition among logrolled coalitions, interest groups, and state institutions with opposing preferences will shape a state's economic and military foreign policy (Kehr 1977; Gaddis 1982; Milner 1988, 1997; Snyder 1991; Simmons 1994; Lawson 1996; Solingen 1998). These arguments build on a model of narrow interest groups that capture the state to advance their particularistic agenda (Hobson 1938; Lenin 1939). For Jack Snyder (1991), parochial interest groups with a stake in expanding the empire will pool their resources to muster societal support for their policies, resulting in greater expansion than any group desired. For Etel Solingen (1998), internationalist and statist-nationalist-confessionalist coalitions will compete to advance their preferred domestic, regional, and international agendas. Where the former coalitions dominate, cooperative regional orders will appear, and where the latter rule, zones of militarized disputes will arise. Historians such as William Appleman Williams (1972, 237-38) account for U.S. postwar foreign policy by examining a free-trade coalition whose members included farm leaders, labor, corporate executives, and the state. The unifying concern was that the United States could not maintain full production at home without free trade overseas. Michael Hogan (1987, 3-25) contends that after World War II, logrolling in the United States among members of an international block (public and private elites) prompted the U.S. government to propose the Marshall Plan for European reconstruction.

One shortcoming in this literature is its inability to account for changes in the domestic distribution of political power. These scholars neglect the reverberations that international politics will have on domestic political struggles; the extant international setting can enable or disable actors and interest groups, leading to shifts in foreign policy. Thus, while domestic politics arguments open the black box of the state, they ignore the effect of the international environment on the outcome of this internal coalitional competition.


Excerpted from The Challenge of Hegemony: Grand Strategy, Trade, and Domestic Politics by Steven E. Lobell Copyright © 2003 by Steven E. Lobell. Excerpted by permission.
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Table of Contents

Contents Acknowledgments 1 Introduction 2 Second Image Reversed Plus a Second Image 3 Liberal Contenders and Britain’s Grand Strategy of Cooperation 1889-1912 4 Imperial Contenders and Britain’s Grand Strategy of Restrained Punishment, 1932-1939 5. Imperial Contenders and Spain's Grand Strategy of Punishment, 1621-1640 6 Great Power Tenure Appendix Notes Bibliography Index

What People are Saying About This

Charles A. Kupchan

By examining how systemic and domestic forces interact in shaping economic policy, Lobell makes an innovative and important contribution to the literature on grand strategy. The Challenge of Hegemony offers a compelling reinterpretation of key historical cases and provides wise guidance as to how the United States should wield its power today.
Senior Fellow, Council on Foreign Relations

David A. Lake

Lobell demonstrates clearly how the international environment confronting great powers interacts with their domestic political coalitions to produce different grand strategies. Through a masterful sweep of history, Lobell shows us the alternative trajectories before the United States today.
University of California, San Diego

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