Giullio Galarotti

The Limits of International Organization: Systematic Failure in the Management of
International Relations
Author(s): Giulio M. Gallarotti
Source: International Organization, Vol. 45, No. 2 (Spring, 1991), pp. 183-220
Published by: The MIT Press
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The limitsof international
organization:systematicfailurein the
management of internationalrelations
GiulioM. Gallarotti
"Nothing in excess" is the warninginscribedon the Temple of Apollo at

Delphi and echoed in the literatureand mythologyof ancient Greece. Ac-
cording to the logic of excesses, too much of anything-even a "good"
thing-can be detrimental.This lesson appears to be as relevantforinter-
nationalorganization(10) as it is forothersocial contexts.' Justas poorly
managedor "bad" 10 can be harmful,"good" 10 in excess can have adverse
effects.
On the one hand, 10 can be counterproductivewhen managementis of
the wrongkind or is executed poorly. Criticsof the Food and Agriculture
Organization,for example, argue that the institution'sadministrationsup-
portsa modelofagriculturaldevelopmentthatis antitheticalto privatesector
growthand thereforeinhibitsgeneraleconomic developmentin ThirdWorld
countries.2On the other hand, excessive 10 can be bad even when the
managementis apparentlygood. Some have argued, for example, thatthe
provisionof abundantliquidityto debt-riddennationscreates a moralhazard
in thatit gives debtorsfewerincentivesto promotethe economic changes
An earlier version of this article was presentedat a seminarsponsored by the Programon

InternationalPolitics, Economics, and Security(PIPES) at the Universityof Chicago in May
1989. I gratefullyacknowledge the commentsof the seminarparticipantsas well as the sug-
gestionsof Riccardo Fiorito,JeffFrieden,RobertJervis,StephenKrasner,Duncan Snidal, and
the anonymousrefereesof InternationalOrganization.
1. Throughoutthis article,I referto internationalorganization(10) and internationalorga-
nizations(1Os) in keepingwiththe followingdistinctionmade in the mainstream10 literature:
the term"10" refersto both the formal(institutionalized)and informal(noninstitutionalized)
processes of management,whilethe term"1Os" refersto theinstitutions engagedin the formal
processes of management.IOs are thus a subset of 10. See J. MartinRochester, "The Rise
and Fall of InternationalOrganizationas a Field of Study," InternationalOrganization 40
(Autumn 1986), pp. 753-75; FriedrichKratochwil and John Gerard Ruggie, "International
Organization:A State oftheArton an ArtoftheState," InternationalOrganization40 (Autumn
1986), pp. 777-813; and Inis Claude, Swords into Plowshares, 4th ed. (Random House: New
York, 1984).
2. See Roger Brooks, "Africa Is Starvingand the United Nations Shares the Blame," Back-
grounder480, Heritage Foundation,January1986.
InternationalOrganization45, 2, Spring 1991

? 1991 by the World Peace Foundation and the Massachusetts Instituteof Technology

184 InternationalOrganization
thatwould make themless dependenton foreignlending.3In this case, as

with the recent case of savings and loans bailouts in the United States, it
appears thatsafetyhas it price. Similarly,food aid, as traditionally
practiced
withrespect to less developed countries(LDCs), has oftenserved to com-
pound problemsof hungerand food dependencebecause of its "disincentive
effects" on domesticfood production.4And, finally,too much 10 may be
undesirable if it is costly and has no appreciable effecton international
relations.
While 10 can be said to "fail" in any of these ways, it is mostantithetical
to orderlyinternationalrelationswhen its failuresmake internationalprob-
lems worse or generatenew problems-that is, when 10 itselfis a desta-
bilizingforcein world politics. In his firstannual reporton the work of the
United Nations (UN), Secretary-GeneralJavierPerez de Cuellar sensitized
the internationalcommunityto such destabilizingfailingsin the multilateral
managementof interdependenceby citingthe adverse effectsthatUN res-
olutionscan have on internationalsecurityand by admittingthatthe misuse
of the UN has contributedto the global problemsfacingthe organization.5
In lightof thefailuresof 10, bureaucratsand scholarsalike need to reassess
the role of multilateralmanagementand its effectson internationalrelations
withinand across issue-areas. Or, more formally,they need to take into
account the limitationsof 10 when consideringthe optimalscope and level
of multilateralmanagement.6
As Friedrich Kratochwil, John Ruggie, and J. Martin Rochester have
argued,recentscholarshiphas increasinglystrayedfromthe studyof 10 as
distinctfromworld politics and has relinquishedmuch in termsof the nor-
mative foundationsof the traditionalliteratureon 10. A result is that the
processes of 10 and international relationshave been conflatedin a way that
makes the specificassessmentof managerialprocesses and institutions more
difficult.Furthermore,the analytic modes and conclusions generated by
recent work have insufficiently addressed issues that contributeto social
engineeringat the level of multilateralmanagement;thatis, theyhave pro-
vided littlefood for consumptionon the part of internationalbureaucrats
3. General argumentson moral hazard in the internationalmonetarysystem have most

recentlybeen made by Charles Kindlebergerin The InternationalEconomic Order(Cambridge,
Mass.: MIT Press, 1988).
4. See Raymond Hopkins, "Reform in the InternationalFood Aid Regime: The Role of
Consensual Knowledge," InternationalOrganization(forthcoming).
5. JavierPerez de Cuellar, Reportof theSecretary-Generalon the Workof theOrganization,
no. A/3711(New York: United Nations, 1982).
as therangeofissue-specifictasks involved
6. The scope of 10 is definedby neofunctionalists
in a managerialscheme,whilethelevel is definedas the "centralinstitutional
capacityto handle
a particular[issue-specific]task." See JosephNye, "ComparingCommonMarkets: A Revised
Neo-FunctionalistModel," in Leon Lindbergand StuartScheingold,eds., Regional Integration
(Cambridge,Mass.: Harvard UniversityPress, 1971), p. 201; and Philippe Schmitter,"Three
Neo-FunctionalHypotheses About Integration,"InternationalOrganization13 (Winter1969),
p. 162.

Limitsof 10 185
andnationalpolicymakers.7 Historically, thestudyof10 hastoa largeextent

been coterminous withthe studyof the structures, roles,and goals of in-
ternational institutions.The traditional literature has placedmuchemphasis
on institutionaloriginsand developments in theframeworks and objectives
of specificorganizations and has paid considerably less attention to the
effectsof theseorganizations on international relations.Moreover,when
scholarshaveassessedtheeffects, theyhavetendedto offer a ratherbenign
visionin whichtheprocessof multilateral management is characterized as
invariably contributing to thestabilization ofrelationsamongnationsandin
whichthe limitations of management are ignoredor downplayed.Thus,
traditionalcontributions totheIO literature havebeenheavyon thepositive
side(thestabilizing outcomesofmanagement) andlighton thenegativeside
(thefailuresof management), whereastherecentcontributions have been
instrumental in addressingthe negativeside but have takena somewhat
restrictedapproachtoorganizational failure. To use Kratochwil andRuggie's
analogy,whilethe doctorhas morerecentlystoppedvisitingthe patient
altogether, thedoctorhas traditionally visitedthepatientwithoutsystem-
aticallydiagnosing illness.8
In addressing theselimitations in the10 literature, thisarticlepresentsa
typology ofthesystematic (inherent ratherthanmistake-related) failuresof
JO.In doingso, itbringstheprocessesand institutions ofmultilateral man-
agementback intofocusas phenomenathatare sui generisand therefore
distinctfromtheunderlying relationstheyoversee.Whileits conclusions
aboutthenatureof overmanaged relationsand thepartialsolutionsthatit
offersare intendedto serveas potentialnormative guidelines, itsfocuson
theeffects of10 is intended tocomplement thetraditional focuson theroles,
goals,and structures ofinternational institutions. Thus,byemphasizing the
destabilizing effects ofJOand presenting a less benignviewofthemanage-
mentofinternational relations,thearticlemakesa contribution towardfilling
in thenegativeside of themanagerial ledger.In Kratochwiland Ruggie's
terms,thepresententerprise once moreattendsto thepatient,butwithan
emphasison diagnosing illness.
The articlebeginswitha discussionofthemanagerial approachto 10 and
therecentrevisionist It
scholarship. thenconfronts themanagerial visionof
10 by offering a moregeneraltheoretical approachto understanding the
destabilizing effectsof multilateral management thanhas commonly been
takenin the critical10 literature. In presenting a typologyof systematic
failures,it seeks to the
bridge gaps in our understanding of whymanydif-
ferent and
institutions managerial schemes fail.That JO has virtuesand can
7. See Kratochwil
andRuggie,"International andRochester,
Organization"; "The Riseand
Fall ofInternational
Organizationas a FieldofStudy."Regarding
thenormative rationale
for
thestudyof 10, see also JohnGerardRuggie,"The UnitedStatesand theUnitedNations:
Towarda New Realism,"InternationalOrganization39 (Spring1985),p. 345.
8. Kratochwiland Ruggie,"InternationalOrganization."

have a positiveimpacton international relationsis notdenied. Nevertheless,

thearticleconcludes thatitis oftenin thebest interestof stable international
relationsin and across issue-areas to be regulatedby IOs thatare limitedin
theirscope or level of management.In addressingthe general issue of 10
failure,ratherthan addressing why a particularinstitutionor managerial
scheme fails,the analysis is thus intendedto serve both as a focal pointfor
understandingcriticalapproaches to the studyof 10 and as an alternative
rationaleforeliminatingthe excesses of multilateralmanagement.9
The managerialapproach to internationalorganization
Traditional10 scholarshave tendedto take a ratherbenignview of the

management.10For thesescholars,10 at best provides
process ofmultilateral
the necessary managementdictatedby the growingcomplexityof interde-
pendence withinand between issue-areas. At worst,this managementap-
pears as a benignredundancyin functionsinsofaras it is targetedto bring
about orderthatis alreadyexistentin some set of relations.The tone of the
literaturehas forthe most part been uncriticalboth on a systematicand a
generallevel," and any explicitor implicitcritiquesthathave been offered
have tended to be issue- or case-specific."2
9. Regime analysts and neoliberal institutionalistshave argued thatbig governmentcan be

redundantand is unnecessarywhenlimitedformsofmanagementare sufficient. But theviability
of smallergovernmentis all the more compellingwhen big governmentis subject to organi-
zational failure.
10. As Conybeare notes, "Federalists, functionalists,neofunctionalists,and pluralistsall
agree as to the inherentdesirabilityof world government.... It would not be a caricatureto
inferfromthemodern10 literaturethattheworldneeds moresupranationalauthorityto manage
interdependence,public goods, and externalitiesin general." See JohnConybeare, "Interna-
tionalOrganizationand theTheoryofPropertyRights,"InternationalOrganization34 (Summer
1980), pp. 307-8. The criticalfocus of myarticle,however,is not the modern10 literatureper
se but, rather,those strandsin the 10 and internationalrelationsliteraturethat uncritically
professtheneed fortheextensivemultilateral managementofinternational relationsand support
the benignview of 10 fromwhich this prescriptionstems. Some strandsare not overtlyman-
agerial in orientation.And in many cases, as pointed out in my article, the logics of their
argumentsare not antitheticalto the usefulnessand importanceof limitedformsof 10.
11. Critiquesof domesticgovernmenthave been farmoreprevalentand systematicthanhave
general critiques of 10. For a typical example of the former,see Richard Rose, "What If
AnythingIs Wrongwith Big Government?"Journalof Public Policy 1 (February 1981), pp.
5-36. An inquiryinto the reasons forthis neglectwould be speculative. Perhaps it is simplya
matterofspecialization,with10 failingto attracttheattentionoferstwhilecriticsofbigdomestic
governmentwho are specialized in domesticpoliticalissues. Or perhapsthe unpleasanteffects
of 10 are notfelton an individuallevel to the same extentas the unpleasanteffectsof domestic
governmentare. IOs do not conscriptor tax individuals,forexample. Their dues come from
nations ratherthan individuals; theirlaws do not affectindividualsdirectly;and there is no
authoritarianappropriationof human capital and resources. Quite simply,there are fewer
reasons forindividualsto be angrywith10.
12. Thereare, ofcourse, exceptionsto thistrend,notablyintheclassic literatureon integration
and interdependence.But even these show limitations.Early neofunctionalists argued that10
can have adverse effectson specificinterestgroups and elites withinnations but have said

Limits of 10 187
Accordingto the functionalists, the growthof technology,the awareness

ofitspossible adverse and positiveeffects,and thespreadand intensification
of demandsforhighermaterialwelfareplace increasingpressureon nations
to seek what Ernst Haas calls "managerial leadership" at the multilateral
level.13 The growthof "common activitiesand interestsacross nations,"
argues David Mitrany,requires a concomitantgrowthin the "common ad-
ministrative agencies" thatmanage interdependence.Internationalgovern-
mentmustgrow so thatit remains "co-extensive withinternationalactivi-
ties." Hence, like the activitiesit mustoversee, internationalmanagement
must itselfbecome "all-embracingand all-pervasive.""4In this sense, the
growthof 10 is consistentwiththe ongoingevolutionand greatercentral-
ization of functionsin human society. For a workingpeace system,notes
Mitrany,nationsmustcollectively"take over and coordinateactivitieshith-
erto controlledby the nation state,just as the state increasinglyhas to take
over activitieswhich until now have been carried on by local bodies. 15 "
Thus, the goal of global securityis reached througha process involving"a

sufficientaddition" of managerialfunctions,which together"would create
increasinglydeep and wide strataof peace. "16
For neofunctionalists,the causal link between technologicaland welfare
problems on the one hand and internationalmanagementon the other is
mediatedby interestgroups and elites, but the vision of 10 is quite similar.
For them,the process of spilloveris theforcingvariable.17 As the pressures
forintegrationspread laterallyand vertically,the level and scope of inter-
nationalmanagementmustbe expanded. Accordingto Haas, the problems
of internationalsecurity,economic development,and technologicaland sci-
entificinterdependencerequirean "upgradingof commoninterests"among
nations, which is only realizable within"the frameworkof supranational
institutions."The intensification of this "upgrading" in turnrequires"con-
tinuingsupranationalactivity."18For Ruggie, the impact of scientificand
technologicalinterdependenceon international relationsnecessitatesa "col-
muchless about the adverse impacton international orderand relationsbetweennations.Haas

noted that organizationscan sometimesfail to achieve theirgoals, but he did not go on to
explore the possible negativeconsequences of thisfailure.Morse noted that10 can adversely
affectnationsby limitingtheirautonomy,but he did not pursue the manifoldconsequences of
this constraint.See Ernst Haas, The Unitingof Europe (Stanford,Calif.: StanfordUniversity
Press, 1958), pp. 288-89; Ernst Haas, Beyond the Nation-State (Stanford,Calif.: Stanford
UniversityPress, 1964),p. 126; and Edward Morse, Modernizationand the Transformation of
InternationalRelations (New York: Free Press, 1966), p. 100.
13. Haas, Beyond the Nation-State,p. 31.
14. David Mitrany,A WorkingPeace System(Chicago: Quadrangle, 1966), pp. 52, 63, and
97.
15. Ibid., p. 37.
16. Ibid., p. 98.
17. Of course, even for neofunctionalists,spillover is not a given. Integrationhas been
conceptualized as positive, stagnant,and negative.
18. See Haas, Beyond the Nation-State,p. 459; and Haas, The Unitingof Europe, p. 287.

188 International
Organization
lectiveresponse"based on "mutualaccountability."19 The collectivere-

sponsewillbe manifest in "greateramountsofjointservicesandjointpro-
duction,anda greater degreeofjointregulation ofnationalactivities.
"20 For
EugeneSkolnikoff, thisinterdependence requiresthatnation-states "accept
a degreeofinternationalregulation andcontrolovertheirnominally domestic
activitiesthatgoes wellbeyondthesituation today.''21
Traditionalscholarship in thefieldofmodernization andinterdependence
has similarlyarguedthatthegreaterinterpenetration ofthesocialand eco-
nomicspheresthatoccurswithindustrialization necessitatesa collective
approachto the specificneeds of nations.EdwardMorse, forexample,
indicatesthat"modernization is accompaniedbyincreasedlevelsandtypes
of interdependencesamong societies, which require . . . a high level of
"22 This interdependence,
cooperation. adds Morse,makes "international
coordination
ofpolicieshighlydesirable"becausethe"attainment
ofbasic
domesticpolicygoals" can no longerbe realizedthrough ac-
independent
tions.23
These managerialist strandsin thetraditional on 10 and inter-
literature
dependencehave numerouscounterparts in thegeneralliterature
on inter-
nationalrelations.For example,Seyom Brownand LarryFabian would
addresstheproblemof theglobalcommonswitha comprehensive oceans
authority, an international
scientificcommissionon globalresourcesand
ecologies,a globalweatherand climateorganization, and an outerspace
projectagency.24 StanleyHoffmann, in mainstream fashion,arguesthatthe
futureof theworldorderwilldependon thegrowthof 10 as a meansof
integratinginherentlyconflictual
interestsandrealizingjointgainsbothin a
politicaland an economiccontext.25 In explicatingtheassumptions under-
lyingHoffmann's vision,RichardCooper statesthat"wheretrustis not
complete,someformofinternational organizationmaybe helpfulto police
the rulesand supervisethe impositionof penaltiesforviolationsof the
rules.'"26Regardingtheinternational
politicaleconomy,theexhortations of
FredBlockandRobertSolomonare characteristic. Accordingto Block,"If
19. JohnGerard Ruggie, "InternationalResponses to Technology: Concepts and Trends,"

InternationalOrganization29 (Summer 1975), pp. 557-83.
20. JohnGerardRuggie, "Collective Goods and FutureInternationalCollaboration," Amer-
ican Political Science Review 66 (September 1972), p. 875.
21. Eugene Skolnikoff,The InternationalImperativesof Technology(Berkeley, Calif.: In-
stituteof InternationalStudies, 1972), p. 153.
22. Morse, Modernizationand the Transformation of InternationalRelations, p. 80.
23. Ibid., pp. 85 and 93.
24. Seyom Brown and Larry L. Fabian, "Toward Mutual Accountabilityin Nonterrestrial
Realms," InternationalOrganization29 (Summer 1975), pp. 887-92.
25. StanleyHoffmann,"InternationalOrganizationand the InternationalSystem," in Leland
Goodrich and David Kay, eds., InternationalOrganization: Politics and Process (Madison:
Universityof Wisconsin Press, 1973).
26. RichardCooper, "Prolegomena to the Choice of an InternationalMonetarySystem," in
C. Fred Bergstenand Lawrence Krause, eds., WorldPolitics and InternationalEconomics
(Washington,D.C.: BrookingsInstitution,1975), p. 83.

Limits of 10 189
our goal is the improvementof human welfare,this requires subordinating

marketforcesto conscious humanwill."27Similarly,Solomon argues, "Co-
operationand joint managementare still necessary.... The international
systemhas tendedto followtheevolutionthathas occurredwithinindividual
countries.One of the major lessons learned in the thirties. . . is that the
pursuitof self-interest by individualentitiesin an economy does not nec-
essarilybringabout optimalresultsforthe economyas a whole.'"28 The high
pointof this managerialismin internationaleconomic relationsis embodied
in IrvingFriedman's call fora "new BrettonWoods."29
More recently,scholars have taken a much more systematicallycritical
approach to 10 and have qualifiedthe traditionalargumentsabout the need
for extensive supranationalgovernment.10 has been attacked both from
therightand the leftand bothin theoreticaland nontheoreticaltreatises.On
the right,the ongoingstudies of the Heritage Foundation have expounded
a vision of 10, especially as manifestin the UN, as a destabilizingforcein
internationalpolitics because of the inflammatory way it mediates disputes
(for example, supportingthe positions of guerrillagroups) and the way it
generatesothermanagerialfailures.30A frequentcritiqueof the UN is that
itperpetuatesunderdevelopment because its approachis biased againstmar-
ket solutions.In exploringtheways in whichUN managementin and across
issue-areas makes the worlda more "dangerous place," AbrahamYeselson
and AnthonyGaglionehave adoptedthesame destabilizingview oftheUN.31
Others have underscoredthat deficienciesin the managerialstructuresof
the UN are the sources of its failureand inefficiencies.32
27. Fred Block, The Origins of InternationalEconomic Disorder (Berkeley: Universityof

CaliforniaPress, 1977), p. 225.
28. Robert Solomon, The InternationalMonetarySystem,1945-1981 (New York: Harper &
Row, 1982), p. 379.
29. See Irving Friedman, Toward WorldProsperity:Reshaping the WorldMoney System
(Lexington, Mass.: Lexington Books, 1987), p. 273. More specifically,Friedman calls for a
resuscitationof the managerialinstruments of the BrettonWoods system,whichhe and many
othersbelieved were strong.Actually,the systemreflectedratherweak managementin con-
figuringmonetaryrelations. Relations carried on in a ratherhaphazard way with occasional
multilateral(G-10) and unilateral(U.S.) management.
30. In its journal, Backgrounder,the Heritage Foundation has publishednumerousstudies
thattake a criticalview of UN operations. See especially JulianaGeran Pilon, "The Center
on TransnationalCorporations:How the UN Injures Poor Nations," Backgrounder608, Oc-
tober 1987; Thomas Gulick, "How the U.N. Aids MarxistGuerrillaGroups," Backgrounder
177, April 1982; and Brooks, "Africa Is Starvingand the United Nations Shares the Blame."
See also Charles Lichensteinet al., The UnitedNations: Its Problems and What to Do About
Them (Washington,D.C.: Heritage Foundation, 1986); and BurtonYale Pines, ed., A World
Withouta U.N. (Washington,D.C.: Heritage Foundation, 1984).
31. See the followingworks by AbrahamYeselson and AnthonyGaglione: "The Use of the
UnitedNations in WorldPolitics," in Steven Spiegel, ed., At Issue: Politics in the WorldArena
(New York: St. Martin'sPress, 1981),pp. 392-99; and A Dangerous Place (New York: Viking
Press, 1974).
32. RobertJacksonargued,forexample, thatthe UN could be likenedto "some prehistoric
monster,incapable of intelligently controllingitself.This is not because it lacks intelligentand
capable officials,butbecause itis so organizedthatmanagerialdirectionis impossible." Jackson
is quoted in "The United Nations Agencies: A Case forEmergencyTreatment,"Economist,

The leftistliteratureon 10 has tended to take the same pejorative view

of supranationalstructuresof governancethatleftistsnormallytake of do-
mesticstructuresof governance:bothtypesinstitutionalize class hegemony.
In the case of supranationalgovernment,leftistsspeak of economic (capi-
talist)classes of nations as well as social classes. Most of theirstudies are
targetedat specificorganizations,whilesome contributions exhibita general
orientation.3
On a more theoreticallevel, proponentsof rational choice and public
choice approachesto 10 have arguedthatsupranationalmanagementis either
redundantor the source of inefficienciesin the relationsbetween nations.
JohnConybeare argues thatthe marketcan sufficiently allocate goods and
address internationalproblemsin relationsthatdo not exhibithighlevels of
publicness and that supranationalmanagementin these relationsis unnec-
essary and would only replicatethe outcomes generatedby less centralized
schemes.34JohnRuggie and Per Magnus Wijkmanmarshal similar,albeit
more restrictive,arguments.35 Roland Vaubel sees the collusive and redis-
tributivenatureof international collaborationas inherently imposingwelfare
losses on theinternational systemingeneralas well as on specificsubnational
groups.36
At the same timethatscholars have takena morecriticalapproach to 10,
theyhave also taken a more decentralizedapproach to the possibilitiesfor
order and cooperation in internationalpolitics. This trend is particularly
evidentin the regimeand neoliberalinstitutionalistcontributionsto the in-
ternationalrelationsliterature.Accordingto proponentsof thedecentralized
approach, institutionsserve as facilitatorsof cooperation. This suggests
positive, ratherthan critical,sentimentsabout the role of 10. Where they
2 December 1989,p. 23. See also David Pitt,"Power in the UN Superbureaucracy:A Modern
Byzantium," and JohanGaltung, "A Typology of United Nations Organizations," in David
Pitt and Thomas Weiss, eds., The Nature of UnitedNations Bureaucracies (Boulder, Colo.:
Westview Press, 1986), pp. 23-38 and 59-83, respectively.
33. See, for example, Ismail Abdalla, "The Inadequacy and Loss of Legitimacy of the
InternationalMonetaryFund," Development,vol. 22, Society forInternationalDevelopment,
Rome, 1980, pp. 46-65; CherylPayer, The Debt Trap: The InternationalMonetaryFund and
the ThirdWorld(New York: MonthlyReview Press, 1974); CherylPayer, The WorldBank: A
CriticalAnalysis(New York: MonthlyReview Press, 1982); Teresa Hayter,Aid as Imperialism
(New York: Penguin, 1974); Robert Cox, "The Crisis in World Order and the Problem of
InternationalOrganizationin the 1980s," InternationalJournal35 (Spring 1980), pp. 370-95;
RobertCox, "Labor and Hegemony,"InternationalOrganization31 (Summer1977),pp. 385-424;
and Peter Cocks, "Toward a MarxistTheory of European Integration,"InternationalOrga-
nization34 (Winter1980), pp. 1-40.
34. Conybeare, "InternationalOrganizationand the Theory of PropertyRights."
35. Ruggie and Wijkman,however, are generallypositive about the functionsof 10 with
respect to confronting issues of publicness. See Ruggie, "Collective Goods and Future Inter-
nationalCollaboration"; and Per Magnus Wijkman,"Managing the Global Commons," Inter-
national Organization36 (Summer 1982), pp. 511-36.
36. Roland Vaubel, "A PublicChoice Approachto International Organization,"Public Choice,
vol. 51, 1986, pp. 39-57.

Limits of 10 191
depart fromtraditionalmanagerialapproaches, however, is in theirsensi-

tivityto the conditionalityof management.Since relationsin and across
issue-areas are seen as heterogeneous,ratherthan homogeneous, the re-
quirementsforregulationwill vary in scope and level. Some constellations
of relations (particularlythose with preexistingnorms about appropriate
policies) will require institutionsonly to reduce the organizationor trans-
action costs of cooperation,while otherswill require more carefuland ex-
tensive regulation.37
Althoughthe revisionistliteratureon IO offersa valuable counterbalance
to the traditionalmanagerialview, it neverthelessexhibitslimitationsin its
identification and analysis of organizationalfailure.The existingcriticallit-
erature,for example, tends to be disproportionately specificin its targets
and orientation.While the workof Yeselson and Gaglione, the studiesfrom
the Heritage Foundation,and the literatureon bureaucraticfailureare spe-
cificallytargetedtowardthe UN, theleftistliteraturehas commonlyfocused
on the World Bank, InternationalMonetaryFund, and the UN. Even the
workthatappears to be of a moregeneralorientationis stillquite restricted
and sometimes insufficiently systematicin its identification
of IO failure.
General leftistcritiques,such as those of RobertCox and Teresa Hayter,38
are fundamentally restrictedto the adverse distributionaleffectsof the in-
stitutionalizationof FirstWorldhegemonyand are muchless concernedwith
instabilitieswithinclasses of nations.Conybeare, Wijkman,and Ruggieare
more concernedwithwhy JO mightbe unnecessarythanwithhow and why
JOfails.AlthoughVaubel is bothgeneraland systematicin theidentification
of JO failure,he is more concerned with the inefficienciesthan with the
destabilizingeffectsof JO, and his analysis of inefficienciesis restrictedto
those generatedby the collusive and redistributional natureof JO.
In contrastto the revisionistliterature,which offersa restrictedcritique
37. See the contributionsto InternationalOrganization,vol. 36, Spring1982,a special issue

on regimes.See also RobertKeohane, AfterHegemony(Princeton,N.J.: PrincetonUniversity
Press, 1984); and RobertKeohane and JosephNye, Power and Interdependence,2d ed. (Glen-
view, Ill.: Scott, Foresman, 1985). For surveys of the literatureon regimes and neoliberal
institutionalism,see StephanHaggardand Beth Simmons,"Theories ofInternationalRegimes,"
InternationalOrganization41 (Summer 1987),pp. 491-517; and JosephGrieco, "Anarchyand
the Limits of Cooperation: A Realist Critique of the Newest Liberal Institutionalism,"Inter-
national Organization 42 (Summer 1988), pp. 485-507. For other works that are concerned
with less managed relations,see Conybeare, "InternationalOrganizationand the Theory of
PropertyRights"; Wijkman,"Managing the Global Commons"; W. Max Corden, "The Logic
of the InternationalMonetaryNon-System," in Fritz Machlup, GerhardFels, and Hubertus
Muller-Groeling, eds., Reflectionson a TroubledWorldEconomy: Essays in Honor of Herbert
Giersch (New York: St. Martin's Press, 1983), pp. 59-74; W. Max Corden, "Fiscal Policies,
CurrentAccounts and Real Exchange Rates: In Search of a Logic of InternationalPolicy
Coordination,"Weltwirtschaftliches, vol. 122, 1986,pp. 423-38; Roland Vaubel, "Coordination
or CompetitionAmong National Macro-Economic Policies?" in Machlup, Fels, and Muller-
Groeling,Reflectionson a TroubledWorldEconomy,pp. 3-28; and MartinFeldstein,"Let the
MarketDecide," Economist, 3 December 1988, pp. 21-24.
38. See Cox, "The Crisis in World Order and the Problemof InternationalOrganizationin
the 1980s"; Cox, "Labor and Hegemony"; and Hayter,Aid as Imperialism.

192 International
Organization
ofhow10 canfailwithin issuesandinstitutions,

specific thefollowinggeneral
critiqueofmanagerialism
offersa typologyofsystematic fail-
organizational
ureand suggestshow10 can failacross issuesand institutions.
Critiqueof managerialism:the systematicfailure

of internationalorganization
The failuresof 10, definedhereas thenegativeor destabilizing effectsof

10 on internationalrelations,can generallybe classified
as eitherunsystem-
atic or systematic.Whileunsystematic failuresare relatedto mistakesor
malfunctions in themanagement ofinternationalproblems,systematic fail-
uresare consideredinherent in or endemicto 0.39 Thereis no systematic
reason,forexample,whyone supranational organization wouldmakethe
mistakeofovermanaging relationswhileanotherwouldnot;whyone would
be too extremein demanding adherenceto its ruleswhileanotherwould
not;or,moregenerally, whyone institution or managerial schemewouldbe
characterized byorresultinpoormanagement. Whileunsystematic failures
are stochasticand have a chaoticdistribution, systematic failuresare de-
termined by bias (by theroles,functions, and goals of 10, whichnaturally
encouragefailure)and have an identifiable patternin theirdistribution.10
can failsystematicallyin fourgeneralwaysthatwillbe summarized briefly
hereand discussedin detailbelow.
First,10 can be destabilizingwhenitattempts tomanagecomplex,tightly
coupledsystems.Because management of complexrelationsand issues is
one of thegoals of 10 and because thesecomplexsystemsare difficult to
understand and therefore managesuccessfully, thereare inherent possibil-
itiesfordestabilizingmanagement.40
Second,10 canbe destabilizing whenitssolutions discourage nationsfrom
pursuingmoresubstantive or long-term resolutions to internationalprob-
lems,including disputes,or whenit servesas a substitute forresponsible
39. This dual categorization of managerialfailureis somewhatproblematic because what

someconsider tobe random mistakes ofbureaucratsmaybe seenbyothersas problems endemic
to thebureaucratic structure of10. Similarly,
depending on themanner in whichmalfunction
is defined,10 can be saidto malfunction systematically or unsystematically. Furtherresearch
mayimproveuponthepresenttypology by suggesting a betterdifferentiationbothbetween
andwithin categories. Nevertheless, thedualcategorization is usefulas a first-cut
approachto
thegeneralfailuresin theprocessofinternational management. The alternative presentation
of undifferentiatedfailuredoes littleserviceto thenormative and theoreticalimportanceof
distinguishingendemicfailures fromfailuresthatare morestochastic.
A pointthatdeservesemphasishereis thatwhile10 is bynatureproneto severaltypesof
failure,itdoes notfollowthat10 willinvariably fail.A simpleanalogyis thattheinherent or
geneticpredisposition to diabetesdoes notalwaysmanifest itselfas disease.
40. The mainstream 10 literature
has tendedto offera "complexity"rationaleforsupra-
nationalgovernment: as interdependence becomesmorecomplexandissue-spacesincreasein
density, theneedfor10 to orchestrate relations
also increases.

Limits of 10 193
domesticor foreignpolicy. It is in the natureof supranationalmanagement

to generatesolutionsand resolutions(output)thataddressinternational prob-
lems, and to the extentthatit does so, it reduces the incentivesof nations
to come up withbetteralternatives.
Third, 10 can actually intensifyinternationaldisputes under several cir-
cumstances:when it is used as a weapon of confrontational statecraft,when
it encourages confrontationalsolutions to problems,when it creates road-
blocks to the resolutionof disputes, when it is a source of destabilizing
linkages,when it is a source of predatoryor confrontational collusion, and
when it takes sides in internationaldisputes. In the case of international
disputes, 10 is by nature prone to confergreaterlegitimacyto one of the
competingfactionsand therebyshiftthe moralbalance of power. Like other
instrumentsof internationalcompetition,then, 10 supportcan be an im-
portantinstrument of statecraft.This was evident,forexample, in President
Kennedy's desire to have the approval of the Organizationof American
States beforeconfronting the Soviets on the issue of Cuban missiles.
Fourth, 10 can have destabilizingeffectswhen it is a source of moral
hazard. Supranationalmanagementis fundamentally based on the desire to
preventcrises or provideinsuranceagainsttheuntowardeffectsof potential
crises thatemanate froma state's irresponsiblebehavior. In mitigatingthe
adverse consequences of this behavior, 10 reduces the incentivesfor the
state to eliminatethe underlyingproblem,which is the behavior itself.
The principalelementof failurein the firstcategory-the managementof
complex, tightlycoupled systems-is essentiallya technicalone: coopera-
tionyieldsinferioroutcomes because of the technicaldifficulty of managing
systemsof relationsand issues. The principal element of failure in the other
three categories-which we can label adverse substitution, dispute inten-
sification,and moral hazard-is not technical: a technical basis for coop-
eration does exist, but the political systems act in ways that can make
cooperationdestabilizing.
Managing complex, tightlycoupled systems

Organizationsoftenattemptto manage systemswhose problemsemanate
fromwhatCharles Perrowwould referto as the "complex, tightlycoupled"
natureof internationalrelations.41 As withany cyberneticsystem,the feed-
back effectsof the systems of relations and issues are complicated and
frequentlyunpredictable.And as with any complex chaotic system,these
systemscommonlyexhibitwhatthechaos literaturerefersto as a sensitivity
41. The subject of complex, tightlycoupled systemsis formallyexplored by Perrow in the

contextof accidents which involve nuclear power, chemicals, and otherhigh-risktechnology
and which have adverse effectson the various ecosystems. See Charles Perrow, Normal
Accidents: Living withHigh-RiskTechnologies (New York: Basic Books, 1984).

194 International
Organization
to initialconditions, or a macrosensitivityto developments in microcondi-

tions.Theircomplexity and unpredictabilityare thusa function of thenu-
merousandhighly conditional
connections betweenthemanyvariablesthat
contribute tosystemic outcomes.As Perrowargues,thecomplexity oftightly
coupledsystemsmakesit impossibleto managethemin a waythatavoids
periodiccrises;in otherwords,catastrophes and accidentsare "normal"
and are the ruleratherthanthe exception.42 Not onlyis IO incapableof
avoidingcrises,but IO oftencauses or exacerbatesproblemsby offering
solutionsthathave unpredictable and destabilizing effects.43
Contributors to theliterature
on interdependence, mostnotablyRobert
Keohane,JosephNye, RichardCooper,and JamesRosenau,have essen-
tiallyviewedtheinternational politicaleconomyas a systemwiththechar-
acteristicsnotedabove and have emphasizedthe complexity of interde-
pendenceemanating fromprocessand issue density(the tightlinkageof
different economicprocessesand international issues).44The literaturehas
also highlighted thesimilarities
betweeninternational politicaleconomicre-
lationsand theprocessesof systemstheoryand chaoticsystems:feedback
processesarenumerous andnotfullyunderstood; knowledge aboutprincipal
relationships is oftenindirectand inferred; thereare strongsystemicsen-
to smallchangesin underlying
sitivities conditions; policiesand actionsare
connectedin complicatedconstellations ofrelations;and simplepolicyin-
itiativesoftengenerateunintended systemicoutcomes. 45
The periodfromthemid-1940s to thepresent,forexample,has beenone

inwhichinternational monetary schemeshavebeenaimedat instituting and
managing equilibrium exchangerateswhileeconomists havecontinually ar-
guedthatwe do notknowwhatequilibrium ratesare ex ante and can only
knowwhattheyare ex post. Gottfried Haberler'sstatement on theequilib-
riumvalueofthedollaris representative: "Withall due respect,it mustbe
said thatwe, economistsas wellas ministers and otherofficials, simplydo
42. Ibid.
43. Economists of the Austrianschool have underscoredthispointwithrespect to attempts
at managingcomplex systemssuch as marketsand prices. Centrallyplanned economies, con-
trivedprice systems,and otherformsof control,theyargue,produceoutcomesthatare Pareto-
inferiorand significantly worse than those effectedby a marketapproach. See, for example,
the followingworks of FriedrichHayek: Individualismand Economic Order (Chicago: Uni-
versityofChicago Press, 1948),p. 187;Law, Legislationand Liberty,vol. 1 (Chicago: University
of Chicago Press, 1973), pp. 48-50; and The Fatal Conceit: The Errorsof Socialism (Chicago:
Universityof Chicago Press, 1988), pp. 85-88.
44. See Keohane and Nye, Power and Interdependence;Richard Cooper, The Economics
of Interdependence(New York: Council on Foreign Relations, 1968); and James Rosenau,
Turbulencein WorldPolitics (Princeton,N.J.: PrincetonUniversityPress, 1990).
45. For a discussionof systemsin internationalpolitics,see RobertJervis,"Systems Theories
and InternationalPolitics," in Paul Gordon Lauren, ed., Diplomacy (New York: Free Press,
1979), pp. 212-43. On the subject of chaos, see JamesGleick, Chaos: Making a New Science
(New York: Penguin, 1988).

Limitsof10 195
not knowenoughto say whatthe equilibrium exchangerateis."46 More

generally,WilliamBransonarguesthatthemanagement of exchangerates
is wellbeyondour state-of-the-art methodsofrationalorganization: "With
thisrangeof disagreement on [the]economicanalysis[of exchangerate
equilibration],howare negotiators to reachagreement? The topicis one for
theNationalScienceFoundation,nota newBrettonWoods."47
Thereis significantdisagreement on a plethoraofissues,nottheleastof
whichis whateconomicindicatorsare a validreflection of equilibrium.It
has beencommonly thought thatequilibrium is determined on therealside:
theexchangerateat whichtradebalanceis encouraged.Buteventhislong-
honoredwisdomhas been called to task bothon the empiricaland the
theoreticalside. The U.S. deficitwithJapanbudgedonlyhesitantly from
1985to 1987,whilethedollarlost50 percentof its value vis-a-vistheyen
duringthis period.Japaneseretailpricingtrendsshowedthatthe yen-
denominated pricesof Americangoods in Japanhad remainedalmostun-
changed.Evidently, Japaneseimporters enjoyedthegreater purchasing power
oftheyenbutdidnotpass thesavingson totheJapaneseconsumer. Hence,
the declineof the dollarvis-a-visthe yen effecteda redistribution from
American exporters andJapaneseconsumers toJapanesemiddlemen, rather
thaneradicating thebilateraltradeimbalance.Outcomessuchas thishave
led some economists,JagdishBhagwatiand RobertMundellincluded,to
questionwhether anycontinuedchangein thedollarwillsignificantly dent
thetradedeficit. Theyarguethatbecausecompetition in industrialmarkets
is imperfect and because nationscan counteract an appreciating currency
withmoreprotectionism so as to maintain a tradebalance,exchangerates
are renderedless effective in adjustingtradeflows.48
Attempts at managingthe complex,tightly coupledsystemof political
economicrelationshave createda trailofinternational eventsthatleads to
thegraveyard ofmisguided socialengineering. The LouvreAccordofFeb-
ruary1987,forexample,was negotiatedand adoptedby the G-7 forthe
purposeof strengthening thedollarfollowing its sharptwo-year decline.It
endedup havingjust the oppositeeffectin the shortrunbecause it was
perceivedby themarketas a signalofthedollar'sweaknessratherthanits
strength,and theresulting runagainstthedollarbrought it wellbelowthe
Louvretarget.TheG-7didnotanticipate thisnegative feedback.As itturned
out,theintervention schemeinitiated a destabilizing self-fulfilling
prophecy:
investors,thinking thatthefallofthedollarwas notyetover,tookactions
thatbrought suchan outcomeabout.Iftheaccordhadnotbeenconcluded,
46. GottfriedHaberler, "The InternationalMonetarySystem: Recent Developmentsin Per-

spective," Aussenwirtschaft,vol. 42, 1987, p. 379.
47. William Branson, "The Coordinationof Exchange Rate Policy," BrookingsPapers on
Economic Activity,no. 1, 1986, p. 176.
48. See "Passing the Buck," Economist, 11 February 1989.

Organization
196 International
themarketmighthavebeenpreparedto accepttheLouvretarget.In other

words,less management mighthave brought abouta betteroutcome.49
theLouvrestorydoes notendthere.U.S. authorities
Unfortunately, tried
to counteractthedestabilizing ratesand de-
speculationby raisinginterest
mandingspecificmacroeconomic policiesfromotherG-7 nations.These
actionsdestabilizedfinancial marketsduringtheperiodin whichtheDow
speculativeballoonwas mostinflated. TheOctobercrashfollowed.Haberler
bluntlycalled the Louvre Accord "a striking exampleof how not to fix
exchangerates."50 Pointingout thedangersinvolvedwhenless thanwell
conceivedandorganizedschemesareusedinan attempt tomanagecomplex
systems, hearguedthat"theforeign exchangemarket, likethestockmarket,
is a verydelicateand sensitivemechanism thatdoes notlenditselfto con-
tinuedmanipulation bya looselyorganizedgroupofnations.'"5 In thiscase,
thesolutionmadetheproblemworsebecausetheapproachincounteracting
theadverseeffects oftheinitialmanagerial was essentially
miscalculation a
linearsolutionto a tightlycoupledproblem.Decisionmakersproceededas
ifmoodsindomestic markets
financial wereisolatedfrom policy
international
Theyerroneously
initiatives. assumedthatpoliciesgearedtowardthede-
fenseof thedollarin international forumswouldnotfeedback adversely
ontoperceptions ofprevailing trendsin domesticfinancialmarkets.52
The LouvreAccordwas presentedto thepublicin a way thatreduced
ratherthanincreasedconfidence. "The accord,"notedonejournalist,"fo-
cusedattention on theweakestelementsofcooperation. Everytime[James]
Bakerspokehe offered a newversionofwhattheaccordwas expectedto
49. For discussions of the Louvre Accord and its results,see "The Show Can't Go On,"
Economist, 21 November 1987, pp. 13-14; Haberler, "The InternationalMonetarySystem";
and Yoichi Funabashi, Managing theDollar: From thePlaza to theLouvre (Washington,D.C.:
Institutefor InternationalEconomics, 1988), pp. 187-92. It is not clear thatdefendersof the
Louvre Accord are correctin attributing positive externalitiesto it. The argumentthat even
misalignedrates stabilize trade flows assumes that volatilityfollowingthe impositionof the
exchange rate was less than it would have been if the rate had been allowed to converge by
marketforces. There is more evidence to suggest that, on the contrary,the impositionand
marketreactionto it created more volatilitythan would have otherwiseoccurred.
50. Haberler, "The InternationalMonetarySystem," p. 383.
51. Ibid., p. 381.
52. The directionof swings in response to changes or developmentsin financialmarkets,
currencymarkets,and othercomplex systemsis difficult to predict,as are the perceptionsof
investorsand other actors. This bringsup the question of whetherthese systems would be
more manageable ifactors knew more about the manifoldeffectsof different policies. In some
situations,even supposedlyprudentpolicies may have adverse effectsifactors in systemsare
adaptingto ratherthanpassively acceptingpolicy. (Such adaptive microbehaviortypifiescom-
plex, tightlycoupled systems.) But this could also be the case when actors are cognitively
rigid.For example,givena particularnervousstatein currencymarkets,investorsmayinterpret
any kindofinterestratepolicy(even themostprudentone based on knowledgeof how currency
marketswork) as signalingtroublefora currency.An interestrate hike to prop up the dollar,
for instance, may be perceived as a signal that the dollar is weak. A rate decrease may be
perceived as a signal thatU.S. policymakerswill let the dollar slip. And finally,no change in
the interestrate may be taken as indecisionon the part of U.S. policymakersand perceived
as a sign of trouble.

Limitsof10 197
achieve, and of theroles of thevariouspartnercountries'policies.... Each

newdisagreement withWestGermany . .. madetheLouvreagreement seem
hollowerthanit reallywas."53The April1987communique of theG-7 on
thestateofmonetary relations was an especiallyglaring failure.Bakercalled
theAprilmeeting oftheG-7"quitesuccessful,"butthecommunique failed
to makementionof anyspecificintentions to supportthedollar.A strong-
dollarstatement was necessarytogetthedollaroutofitsbearishstate,given
thattradefigures forFebruary wereannounced inmid-April andweredismal,
causingdismayamongdollarholders.JamesVickofManufactures Hanover
Trustreflected howthemarketin generalperceivedthisomissionandwhat
itindicatedaboutG-7intentions whenhe commented thattheG-7"seemed
tobe accepting thecurrent levelofthedollarandthedownward direction.
"54
Thisperception was reinforced bytheG-7'sapprovalofthenewratearound

"themostcurrent levels. 55 Theseoutcomeswerefurther manifestations of
thestrongsensitivity ofmacroproperties to apparently smalldevelopments
in internationalmarkets.
Themanagerial patterncontinued underJamesBrady.In November1988,
following the electionof Bush, thedollardeclinedsharply.This was met
withintervention bothbytheFederalReserveBankandbyseveralEuropean
centralbanksto keepthedollarfromdeclining to a newlowagainsttheyen.
On theseconddayofthisintervention, Bradymadethefollowing statement:
I
"Marketsgo up and down. reallydon'tworry about it verymuch."556 The
statement was perceivedas signaling that the commitment of the G-7 was
not strongand thatthe dollarmight fall even more. This led to foreign
exchangetradingthatrancounterto theintervention of thecentralbanks
(and,ofcourse,imposedlosses on the banks thathad purchased depreciating
dollars).One New York banker said,"We've had Brady make several state-
mentsearlyon thathavenotgiven the indication that he recognizes has
or
thejudgmentto understand that he has a profound impacton themarket-
place. 57
Inthecases ofboththeLouvreAccordandthePlaza Accordthatpreceded
it,policymakers failedto accepta fundamental lesson:exchangeratesare
notimposedupon markets; they are determined by markets.58 In 1987,after
Louvre rangeswere established and defended, Baker and the G-7 kepttalking
(tellingthe market what equilibrium rates were), but the market failedto
53. See "AlmightyFallen," Economist, 14 November 1987, p. 11.

54. JamesVick, quoted by Funabashi in Managing the Dollar, pp. 189-90.
55. Funabashi, Managing the Dollar.
56. See "Brady AvoidingCriticsas Group of 7 Gathers," The New YorkTimes,2 February
1989, p. D-1.
57. Ibid.
58. Rates were imposed much morefrequentlyunderthe BrettonWoods regimein the 1950s
and 1960s than theyhave been recently.But the size and the sensitivityof exchange markets
were considerablysmallerthan they are now. And, in fact, the destabilizingmoney flowsof
of sustainingrates misalignedwithrespectto the marketrate.
the 1960s attestto the difficulty

198 International
Organization
listen.59In bothcases, agreements were ill-conceivedbecause theywere

attempting to coordinateunstablepolicypreferences.60The outcomewas
thatthe nationsviolatedboththe letterand the spiritof the agreements,
thereby producing amongtheparticipants.6'
bad relations Theseeventsserved
tofurther destabilizefinancial
markets.Investors perceivedthattheG-7was
unableto imposeorderon theinternational monetary system,and thisin
turnfedback domestically and internationally
to createpessimisticinvest-
mentmoods.62Decisionmakerscontinuedto remainout oftouchwiththe
completerangeof reactionsto thenatureand effectiveness of theirmulti-
lateralpolicyinitiatives.
Andthesereactions continued be
to principal sources
ofinstabilityinfinancialandexchangemarkets.63 In sum,forreasonsrelating
to thelimitations ofregulatingcomplexeconomicsystems, theLouvreand
Plaza schemesproducedsome curesthatendedup beingworsethanthe
diseases.
The outcomesofpolicycoordination in recentyearsare quiteconsistent
withrecenttheoretical findingsregardingthe pursuitof collectivemacro-
economicmanagement inthefaceofdisagreements onthefundamental work-
ingsof nationaland international economiesand in theface of limitedin-
formation. Jeffrey FrankelandKatherine Rockett,forexample,haveshown
thatin cases in whichnationsdisagreeon themacroeconomic models(an
expectedsituation, sincemacroeconomies themselvesconstitute complex,
tightlycoupledsystems)andinwhichtheeffects ofeconomicpolicyarenot
perfectly predictablebecause of thecomplexity and tightlycouplednature
ofcausalrelations ineconomicmarkets, macroeconomic policycoordination
59. See Funabashi, Managing the Dollar, p. 190.

60. See ibid., pp. 28, 29, 34, 205-7, 214, and 228.
61. Especially distastefulwere the U.S. threats;the U.S. insistenceon a highyen rate; the
constant changes in negotiatingforums,includingat various times the G-2, G-3, G-5, and
G-7; and the attemptsat unilateralmanagementof the dollar rate, characterizedby "talking
the dollar down" when othersrefusedto accommodate the downwardtrendof the dollar. See
ibid., pp. 53, 182, 217, and 235-37.
62. An alternativeinterpretation of the Louvre and Plaza episodes mightbe thatlarge and
responsivecapital markets,in combinationwithhighmobilityin the flowof goods and capital,
have made it necessary for advanced industrialnationsto coordinatetheireconomic policies
and that failuresare a small price to pay for the necessary long-termmanagement.No one
would argue that coordinationis not valuable or that the marketcan resolve all economic
problems. But the Louvre and Plaza agreementsgeneratedsignificantinstabilitiesthat most
likelywould not have occurredin the absence of intervention.Even the necessityof long-term
coordinationis no excuse forgeneratingmarketinstabilitythathas short-run effectsand might
in turngeneratelastingeffects.Given the adverse outcomes of linear managerialapproaches
taken in the past, it seems all the more inexcusable to turnto them again and again in the
present.
63. For reasons relatingto the unpredictability of internationalreactionsto the construction
of internationalmanagerialschemes in the area of the debt problem, Kindlebergerappears
cautious about thedesirabilityofeven attempting to develop collaborativemultilateral
solutions.
If such attemptswere made and fail,he argues,and ifthisgeneratedpessimisticforecastsabout
developmentsin the issue-area, the problemis likelyto be exacerbated. See Kindleberger,The
InternationalEconomic Order,p. 12.

Limits of 10 199
can almostas likelybe bad fornationsin termsof welfareas it can be good.

In some instances,constellationsof uncoordinatedunilateralactions would
be preferableto cooperation,especially the typeof cooperationfoundedon
linearapproaches to marketinterventions.64
These findingspoint to a common failurefor any organizationsolving
problemsin complex, tightlycoupled systems.There are side effects,many
of which are unforseeable.Withrespectto the problemof economic devel-
opment,Paul Streetennotes that "scientists may have a solutionto every
problem,but developmenthas a problemforevery solution."65Such con-
ditions put a premiumon nonlinearsolutions to the problem of poverty.
"Single actions which look technicallycorrect," he emphasizes, "can be
worse thanuseless iftheyare notaccompaniedby supplementary actions."66
This is especially trueabout managingnationstowardhigherlevels of eco-
nomic development. According to Streeten, "Development is . . . like a
jigsaw puzzle. To be effective,several actions must be taken together,in
the rightorder; rural education has to be combined withthe improvement
of ruralamenitiesor the educated will leave the countryside.The new seeds
have to be applied withfertilizersand waterat the righttime;theremustbe
extensionservices and roads to get the food to the markets."f67
Adverse substitution
Nations are continuallyfaced with difficultdomestic and international
problemswhose resolutionentails political,economic, or social costs. Al-
thoughIO can alleviate short-runpressures and provide nations with an
"out" frommorecostlysolutions,doingso can be counterproductive in that
it discourages nations fromseekingmore substantiveand longer-term res-
olutionsto theirproblems.To the extentthattimehorizonsare short(which
is certainlythe case in domesticpoliticalsystemswherepoliticalsurvivalis
predicated on short-runimperatives)and national leaders are sensitive to
differingdomesticcosts of competingsolutionsto domesticand international
problems(whichalso appears to be the case), nationswill be encouragedto
substituteless costly and less viable multilateralschemes for more costly
and substantivesolutions.68The problemof substitutionis systematicbe-
64. See Jeffrey Frankel and KatherineRockett, "InternationalMacroeconomic Policy Co-

ordinationwhen PolicymakersDo Not Agree on the Model," AmericanEconomic Review 78
(June 1988), pp. 318-40.
65. Paul Streeten,"The United Nations: Unhappy Family," in Pittand Weiss, The Nature
of UnitedNations Bureaucracies, p. 187.
66. Ibid.
67. Ibid.
68. It has, in fact, been a long-standingcharacteristicof internationaleconomic summitry
for leaders to use internationalagreementsto reduce some of theirdomestic economic and
politicalcosts. See Robert Putnamand Nicholas Bayne, Hanging Together:Cooperation and
Conflictin the Seven-Power Summits (Cambridge,Mass.: Harvard UniversityPress, 1987);
and Vaubel, "A Public Choice Approach to InternationalOrganization."

200 International
Organization
cause itis in thenatureof10 to solveinternational anddomesticproblems.

But because of jurisdictional limitations and the bargaining process,the
solutionsoffered by IO are oftennotsubstantive.
Secretary-General Perezde Cuellarpointedto one ofthelargestandmost
prevalent drawbacksofIO substitution inhisfirstannualreporton thework
oftheUN: "Thereis a tendency in theUnitedNationsforgovernments to
act as thoughthe passage of a resolutionabsolvedthemfromfurther re-
sponsibility forthesubjectinquestion."69 Particularlyinthecase ofdispute
resolution, thetendency has beento offerflimsy "patchjob" solutionsthat
reducetheincentives fordisputants to finda betterway ofresolvingtheir
differences. This pointwas emphasizedby JamesStegengain his 1968as-
sessment oftheeffects ofUN efforts inCyprus:"UNFICYP [theUN Peace-
keepingForce in Cyprus]is vulnerable to thechargethatit mayverywell
be inhibiting settlement. By helpingto protectand thusconsolidatethe
abnormalstatusquo andbyreducing thesenseofurgency feltbybothsides,
the Force mayactuallybe makinga negativecontribution to whatin the
longrunis themostimportant requirement, a viablepoliticalorder.''70 Ye-
selson and Gaglionehave questionedwhetherthe UN EmergencyForce
(UNEF) efforts in the MiddleEast have had the same negativeeffectby
providing an inferior substitutefora viableresolution in theregion.71
PatrickGarrityhas recentlyarguedthatUN peacekeepingefforts have
allowedU.S. policymakers to postponecrucialsecurity decisionsthateven-
tuallymustbe made.72In thisregard,we mustquestiontheeffectsof the
UN in generaland its solutionsin particular on therelationsbetweenthe
superpowers. In theUN GeneralAssembly, majorities havealwaysfavored
one superpower overtheother,offering moresupportto theUnitedStates
in the earlydecades and moreto the SovietUnionin laterdecades. His-
theUN hasprovideda rational
torically, incentiveforoneofthesuperpowers
to tryto marshallcollectivesupportfora UN resolution againsttheother
and therebyextractsome desiredactionor policythrough collectivecon-
frontation ratherthanthrough directnegotiations thatwouldinvolvesome
formof concessionsor quid proquos. In short,giventhetendency of UN
membersto automatically sidewiththeappropriate superpower, collective
confrontation via the UN has providedthe superpowers witha relatively
costlesssubstitute formorecostlydirectbargaining. As Yeselsonand Gag-
lionehaveobserved,"Victoriesat the[UN] werecheap.Theyinvolvedno
69. Perez de Cuellar, Report of the Secretary-Generalon the Workof the Organization,
p. 3.
70. JamesStegenga, The UnitedNations Force in Cyprus(Columbus: Ohio State University
Press, 1968), p. 186.
71. See Yeselson and Gaglione, A Dangerous Place.
72. See PatrickGarrity,"The UnitedNations and Peacekeeping," in Pines, A WorldWithout
a U.N., p. 155. See also Ruggie's response to Garrity,"The United States and the United
Nations," p. 348.

Limits of 10 201
cost in blood and verylittlein treasure,and theylentan aura ofrighteousness

to . . . foreignpolicy."73
For the same or similar reasons, the diversion of importantissues or
controversiesinto IOs thatare mainlyceremonialforums(whichmanyare)
is oftencounterproductive.Nations may perceive negotiationsin interna-
tionalforumseitheras viable substitutesformorefruitful negotiationsat the
bilateralor multilaterallevel or as viable substitutesforreal cooperation.74
The result,as Robert Rothsteinpointedout in his studyof the UN Confer-
ence on Trade and Development(UNCTAD) is that"the situationmay get
worse simplybecause livingwithan increasinglyceremonialprocess is much
easier than tryingto reformit.... And, of course, the most obvious con-
sequences oughtto be reemphasized:problemsget worse, timeis lost, and
resources are expended."7
Critics of 1O-orchestrateddevelopment schemes argue that the public
funds of IOs are inferiorsubstitutesfor private investmentsin the Third
World and tend to generatenegativeexternalities.JO fundsare oftentied
to governmentplanningthat is antitheticalto marketprocesses. Because
regulatedeconomies are less attractiveto internationalinvestors,this has
the effectof drivingout privateinvestment,which is especially bad given
thelinkbetweeneconomic developmentand thegrowthof theprivatesector
in underdevelopednations.76Roger Brooks makes a related point withre-
spect to agriculturaldevelopmentin Africa.77
Food aid, as commonlypracticedbeforethe 1970s,has encouragedLDCs
to substitutefood transfersfor domestic agriculturalproduction.This has
served to reduce agriculturalself-sufficiency in the long run throughdisin-
centiveeffectson local food production,thuscompoundingthe problemsof
hungerand food dependence in underdevelopednations. Moreover, food
73. Yeselson and Gaglione, A Dangerous Place, p. 178.

74. The literatureon collective action suggeststhat sometimesit is to the benefitof a com-
munityas a whole forpeople not to have privatesubstitutesforpoor public services. The fact
thatthey have such substitutesencourages themto exit (vote withtheirfeet) ratherthan use
theirvoice to contributeto the improvementof those services. For example, communitieswill
be less likelyto have poor public schools if privateschools do not exist. This will encourage
thewealthiestand mosteducated to contributeto collectiveactionschemesdesignedto improve
the school system.Collective action is enhancedto the extentthatprivatesubstitutesforpublic
goods are unavailable. One could make an interestingargumentabout the destabilizingnature
of the "star wars" programon these grounds.The program'stechnologywould increase the
risk of war among the superpowersbecause if developed (even by both) it would representa
substituteforfurthercooperation. For a discussion about the adverse effectsof privatesub-
stitutes,see Russell Hardin, Collective Action (Baltimore, Md.: Johns Hopkins University
Press, 1982), p. 73.
75. Robert Rothstein,Global Bargaining: UNCTAD and the Questfor a New International
Economic Order (Princeton,N.J.: PrincetonUniversityPress, 1979), p. 20.
76. Data show thatdevelopmentis positivelycorrelatedwiththegrowthof theprivatesector.
See Edward Erickson and Daniel Sumner,"The U.N. and Economic Development," in Pines,
A World Withouta U.N., pp. 1-22. See also Pilon, "The Center on TransnationalCorpora-
tions."
77. See Brooks, "Africa Is Starvingand the United Nations Shares the Blame."

transfershave disruptedlocal systemsof food productionand distribution,

generated extremelyexpensive subsidy programs,created administrative
nightmares,and encouraged corruption.78
It is interesting,Inis Claude notes, that some of the fiercestenemies of
10 have been strongproponentsof world government(federalists).79This
animosityis not surprising,however, accordingto the federalistlogic. As
an unsatisfactorysubstitutefor more comprehensivemanagerialarrange-
ments, IO serves as a "palliative" that reduces the fervorfor real world
government.In this sense, 10 is more antitheticalto internationalgovern-
mentthananarchyis. Agreeingwiththisassessment,Claude has arguedthat
worldgovernmentrequiresan existingcommunity.IO can delay or prevent
thatcommunityfromarisingbecause it reduces the sense of urgencyforreal
and substantivecommunitybuilding.80Consistent with this same line of
argument,Adam Robertsand Benedict Kingsburyhave arguedthatthe UN
has actually worked against internationalsecurityin its functionas a per-
ceived potentialsubstituteforarms control."By presentinga mythological
alternativeto armaments,"theyargue, "it maydistractattentionfromother
possibly more fruitful approaches to the urgentproblemof controllingand
limitingmilitaryforce."81
IO sometimes functionsas another kind of substitute:a substitutefor
responsible domestic policies. In this function,JO can be destabilizingin
the long runnot only at the nationallevel but also at the internationallevel
if domestic disorderspills over into internationalrelations. In the case of
thePlaza Accord,forexample,theUnitedStates was givena way ofescaping
necessary and costly adjustmentsin governmentspending:bringingdown
the dollarthroughintervention was preferredto bringingdown the dollarby
cuttingthe budget, which would have broughtinterestrates down.82De-
fendersof the conditionality policies of multilaterallendinginstitutions
have
used thesubstitution logictojustifytheirargumentthatunconditionallending
would only make loans a substitutefor responsible macroeconomic and
foreigneconomic policy management.83 In the case of the BrettonWoods
78. Hopkins identifiesthese problemsas centraltargetsfor multilateralfood aid reformin

the 1970s and 1980s. See Hopkins, "Reformin the InternationalFood Aid Regime."
79. See Claude, Swords intoPlowshares, pp. 417-19.
80. Ibid.
81. Adam Robertsand BenedictKingsbury,"The UN's Roles in a Divided World," in Adam
Roberts and Benedict Kingsbury,eds., UnitedNations, Divided World(Oxford: OxfordUni-
versityPress, 1988), p. 11. The problemis not a matterof nationsbelievingthatthe UN is a
real and significantinstrumentof world peace and that they thereforeavoid other means of
addressingglobal securityissues. Rather,the problemis that any positive perceptionsof the
security-enhancing potentialof the UN may altertheirincentivesto apply theirfullresources
to other strategies.This suggests an elementof moral hazard, a subject discussed in a later
section of my article.
82. See Funabashi, Managing the Dollar, p. 41.
83. It is impossible to definitively
state that in the absence of 10, nations would act more
responsiblyor make the necessary hard choices requiredforlong-runstabilityin theirecon-

Limits of 10 203
system,liquiditybecame a substitutefor adjustment.External adjustment

was constrainedby means of fixedexchangerates and rules governingtrade
policy, while internaladjustmentwas no longeraccepted as a viable means
of eradicatingexternalpaymentimbalances.84In anothercontextof adverse
substitution,Vaubel argues that as a forumfor collusion, 10 can make it
easier forgovernmentsto pursue unstableeconomic policies. Monetarycol-
laboration,for example, can shield policymakersfromcriticismover high
inflationby bringinginflationrates into conformity.85
JanTumlirand othershave arguedthatit should be a principalgoal of 10
to limitthissubstitution and enhanceresponsiblepolicies at home. According
to Tumlir,10 should "help nationalgovernments. .. dischargethose basic
domesticfunctionson whichtheeconomic stabilityoftheirsocietiesdepends
in the long run."86 If nationswould all followresponsiblepolicies at home,
then10 would be less necessary. Certainlythisargumentis commonin the
contextof internationaleconomic relations.As a recentarticlein the Econ-
omist noted, economic ministerscould "think of cooperation as a boring
means to an end, not as a gloriousgoal in its own right.Because if theyall
stayedhome and adopted sensibledomesticpolicies therewould be precious
littleneed for cooperation on trade or exchange rates."87 A similarview
was offeredby Max Corden: "It can be argued thatif countriesmake ad-
equate use of the policy instruments available to them,thereis no need for
coordinationofpolicies. . . . One can thusimaginecountriesreactingquickly
and atomisticallyto the events fromoutside them, includingthe conse-
quences of other countries' stabilizationpolicies. And if theirpolicies are
omies. Certainly,nations mightseek otherways to avoid makinghard choices. However, to

theextentthatIO providesadditional"outs" or, alternatively, failsto close offless responsible
avenues, it augmentsor maintainsthe possibilitiesfordestabilizingpolicy choices in the long
run.
84. Some mightargue that this tendencytoward substitutionwas not as apparent to the
foundersof the BrettonWoods system,since theirprincipalgoal was to provide nationswith
(promptedby balance-of-payments
liquidityas a way to avoid marketintervention disequilibria)
in the shortrun and thus give themthe opportunityto develop more incrementaladjustment
policies in the long run. Furthermore,the fixed exchange rates and the circumscriptionof
internaladjustmentwere a reactionto the problemsthatprevailedduringthe interwarperiod.
The pointto be made here is thatthe opportunitiesforadverse substitutionwhich 10 provides
can as likelybe unintendedas intended.For a discussion of the earlyobjectives of the Bretton
Woods system,see Richard Gardner,Sterling-DollarDiplomacy: Anglo-American Collabo-
rationin the Reconstructionof MultilateralTrade (Oxford: Clarendon Press, 1956), chap. 5.
85. In "A Public Choice Approach to InternationalOrganization," pp. 47-49, Vaubel cites
evidence thatinflationtends to be higheramong nationsthatexhibitmoreconvergentinflation
rates.
86. See JanTumlir,Protectionism:Trade Policy in Democratic Societies (Washington,D.C.:
AmericanEnterpriseInstitute,1985),p. 12. On a relatednote, criticsof super-301and strategic
Americantradepolicy arguethatthese initiativesrepresenta destabilizingsubstitutefora long-
term resolutionto the trade deficit,which would require the eliminationof the underlying
microeconomicand macroeconomiccauses. See "The Snit List," Economist,3 June1989,pp.
30-3 1.
87. Economist, 26 September 1987, p. 56.

204 International
Organization
and speedy,theywillachievewhateverstabilization
intelligent theywishto
achieve."88
The argument forresponsibledomesticpoliciesreflectsthe beliefthat
domesticproblemshave a tendency to spilloverand becomeinternational
problems.In theeconomicrealm,excessiveinternaldeficitsand inflation
alterexchangerates,and thisin turninfluences externalpositions.Differ-
entialratesof inflation
in a fixedexchangeratesystemredistribute trade
surplusesto nationswithlow inflation.Whiletheseeffects areunintentional
thereare also intentional
(externalities), actions(policies)thatareinstituted
toredistribute
externalsurpluses-forexample,tariff barriers andexchange
controlskeep importsdownand capitalin. Bothexternalities and policies
can thereforebe quitedestabilizinginternationally.89
Similarly,in thepolit-
ical realm,domesticproblemscan becomeinternational problems.For ex-
ample,oppressiveauthoritarian regimesmay findforeignadventurism a
necessaryremedyto quelldomesticunrest.
Dispute intensification
IO can be a destabilizingforcewhenit intensifies
disputes.Because IO
can lendmoralforceto theforeignpolicypositionsof nations,it has the
tendency to be used bythemas a meansofstatecraft to furthertheirglobal
interests.
To theextentthattheseinterests createconfrontationalbehavior,
JOgeneratesutility notonlyas a forumin whichaccusationsare madeand
brinkmanship is practicedin frontofthecommunity of statesbutalso as a
vehiclethrough whichcollusionand alliancebuildingare effected.
In general,scholarshave tendedto underplay theseand othernegative
uses ofJOthatinterfere withnegotiationsand makeagreements difficult
to
achieve.Ratherthanservingas vehiclesto resolveconflict, IOs are often
used to promoteor magnify conflict.
As Claudehas noted,theyfrequently
functionas arenas"fortheconductofinternational "90The
politicalwarfare.
UN, forexample,has historically servedas a forumto embarrassnations.
In 1956,Westernnationsbrought up theHungarian issueforthepurposeof
embarrassing theSovietUnion.The Sovietsvindicated themselves in 1965
whentheybrought uptheDominicanRepublicissuetoembarrass theUnited
States. As Yeselson and Gaglionehave pointedout, "Real negotiations
88. See W. Max Corden, "The Coordinationof StabilizationPolicies AmongCountries," in

AlbertAndo, Richard Herring,and Richard Marston, eds., InternationalAspects of Stabili-
zation Policies (Boston: Federal Reserve Bank of Boston, 1977), pp. 139-40.
89. See Giulio M. Gallarotti,"Toward a Business-Cycle Model of Tariffs,"International
Organization39 (Winter1985), pp. 155-87. The success of GATT in loweringtariffsmay be
counterproductive, giventhefactthatnationsoftensubstitutenontariff barriers.These barriers
are more protectionistand more distortingof trade flows,since producerscannot compensate
forthemby managingprices and costs. This illustratesthe factthatIO can channelpolicy into
less stabilizinginstruments.
90. Claude, Swords into Plowshares, p. 446.

Limits of IO 205
require that the parties definedifferencesas narrowlyas possible, avoid

recrimination, and exclude extremistsfromdiscussions. At the UN, issues
are widened,insultsare common,and themostviolentspokesmenfrequently
dominatethe debate. The effectsof such deliberatelyprovocative discus-
sions is to contaminateeffortsto achieve peaceful settlements. "91
The "safety valve" rationaleforIO, which reflectsthe famous Churchill
quote "better to jaw, jaw than war, war,"92 is based on the erroneous
assumptionthatbattle among diplomatsis a perfectsubstituteforbattlein
the fields.In fact,however, "war jaw" in the UN merelycompounds con-
flicts,as Maurice Tugwellhas pointedout.93For example,theverbalaggres-
sion traditionallymarshaledtoward the United States by the Soviet Union
and involvingthe use of terminologysuch as "racist," "imperialist,""anti-
peace," and "neocolonial" served to compound confrontations outside of
the UN both directlyand indirectly,since it promptedas well as justified
the arms buildups and supportedthe extremistviews of Cold Warriorsin
domestic debates over foreignpolicy. In this respect, Jeane Kirkpatrick,
formerU.S. Ambassador to the UN, was probablyjustifiedin sayingthat
she has "never believed thatthe release of aggressionis healthyor thera-
peutic" and that "it is a sorry state of affairswhen the United Nations,
which was conceived as an instrumentfor the buildingof peace, is now
justifiedas an instrumentforthe release of aggression."94She was also at
least partiallycorrectin callingthe UN a "dangerous place."95
The UN was historicallyused as an instrument of Cold War competition,
witheach superpowermarshalingvotingalliances againstthe other.Claude
underscoredthe point that the superpowers competed for control of the
organizationand viewed it as theultimateally in the Cold War, whileRuggie
added thatthe Soviets consideredit "a vehicle to delegitimizethe postwar
internationalorder constructedby the capitalistnations."9i6 Yeselson and
Gaglionehave notedthatwhatmanyhave seen as UN failuresin cooperation
are in fact successful instances of the organization's use as a weapon to
embarrassnations.97Accordingto them,muchcan be understoodabout the
UN ifit is seen as a tool of statecraftin the Cold War. To say thatthisuse
has substitutedfor more direct confrontation assumes thatthe marshaling
of alliances which occurred earlier outside the UN was subsequentlyre-
91. Yeselson and Gaglione, "The Use of the United Nations in World Politics," p. 396.
92. See Maurice Tugwell, "The UN as theWorld's SafetyValve," in Pines, A WorldWithout
a U.N., pp. 157-74. The Churchillquote is fromhis speech on 26 June 1954 in Washington,
D.C.
93. Tugwell, "The UN as the World's SafetyValve," p. 157.
94. Jeane Kirkpatrick,speech before the Anti-DefamationLeague on 11 February 1982 in
Palm Beach, Fla., pp. 11-12.
95. Kirkpatrick,quoted by the Associated Press, 29 October 1982.
96. See Claude, Swords into Plowshares, pp. 89-94; and Ruggie, "The United States and
the United Nations," p. 354.
97. Yeselson and Gaglione, A Dangerous Place, pp. 31-43.

Organization
206 International
placed by theformation of votingblocs withintheUN forum.This is not

thecase, however,sinceconfrontations withintheUN weremerelyadded
to confrontationsoutsideit. In thissense,accordingto Tugwell,insteadof
actingas a "safetyvalve," theUN became"a threatto peace."98This is
also evidentin the factthatthe organization has activelytakenpartin
conflictsand eitherescalatedthem,as in theKoreanWar,or intervened to
suppressthem,as in thesidingwithKasavubuin theKatanganrevoltled
by Tsombe.In thelattercase, BelgianPrimeMinisterPaul HenrySpaak
citedtheintervention in theCongoaffairs as a "UN waroperation."99
In additionto thesedirecteffects, IO has had indirectinternationaland
domesticeffectsthatruncounterto theidealsof multilateral cooperation.
The constantattacksoftheUN on Israel,SouthAfrica,and Rhodesia,for
example,have had the unfortunate effectsof strengthening the political
positionof"hawks"inIsraelandofproviding racialextremistsintheAfrican
nationswitha weaponto use againstmoderates.100 For thisreason,nations
have becomereluctant to bringdisputesor problemsto IOs thathave his-
toricallybeenmobilizedagainstthem.Israel,a victimofEgyptian andSyrian
attackin 1973,chose notto bringtheproblemto theUN SecurityCouncil
because of theanti-Israelisentiment there.The SovietsbypassedtheUN
oftenduring theearlierperiodinwhichtheWesterncoalitiondominated the
organization,andtheUnitedStateshas doneso following theorganization's
shiftto Sovietand ThirdWorlddomination. Claudeunderscored thispoint
withrespectto the earlierperiod:"To the degreethatthe UnitedStates
succeededin usingthe[UN] as a pro-Western device,itreducedtheutility
oftheorganization as an agencyofconciliation intheCold
and stabilization
War." 101
98. Tugwell, "The U.N. as the World's SafetyValve," p. 158.

99. The ultimateoutcome in this interventionwas markedlydifferent fromthe originalin-
tention"not to take any action whichwould make [the UN] a partyto internalconflictsin the
country." See UN SecurityCouncil, OfficialRecords, meetingno. 872, 7 July1960, p. 5.
100. See Yeselson and Gaglione, A Dangerous Place, p. 203. With respect to the indirect
effectsof IOs on Africanpolitics,Jacksonand Roseberg see a quite different deleteriouseffect.
By accepting Africannations as membersregardlessof theirpolitical regimes,IOs serve to
legitimizeoppressivepoliticalsystems.See RobertJacksonand Carl Roseberg, "Why Africa's
Weak States Persist: The Empirical and Juridicalin Statehood," WorldPolitics 35 (October
1982), pp. 1-24.
101. See Claude, Swords into Plowshares, p. 130. Some analysts mightinterpretthe 1990
involvementof the UN in the Iraq-Kuwait crisis as a breakdownin the deleteriousCold War
use of the organizationand argue thatwith superpoweragreementthe UN can be a positive
force in abatingand preventingcrises in global security.There are several problemswiththis
interpretation. The firstand most obvious is that it is prematureto draw conclusions, given
thatthe crisis is stillin progressat the timeof the writingof thisarticle.The second is thatwe
have to question whetherthe UN initiatedor followedthe U.S. lead in attemptingto resolve
the crisis. The United States, defendingits geopoliticaland resource-security interestsin the
Middle East, played themajorrole withregardto constructing a unifiedresponseto theinvasion
of Kuwait. Insofaras the 1990 UN resolutionscalled foractions thatthe United States and its
allies had already committedthemselves to, the organizationmerely served as a stamp of
approval or vehicle forlegitimating the actions. The European Communityhas, in fact,at the

Limitsof10 207
In resolvingsmallercontroversies or contentious issues, 10 has often

createdroadblocksto theresolution ofmoreimportant issues.Forexample,
the1948Security Councilresolution endorsing self-determination inKashmir
drovea majorwedgeintoIndian-Pakistani relations,whileresolutions fa-
voringSouthKorea fueledbad North-South Koreansentiment. The result
was thatsubstantive relationimprovements wereimpeded.In thegreater
schemeofinternational itmayhavebeenbetterfortheresolutions
relations,
notto havebeenmade,regardless oftheirshort-run successesinaddressing
injustices.
102
Furthermore, of issue linkage,10 has oftenhad negative
as a facilitator
ratherthanpositiveeffects. Scholarshavearguedthatlinkageleadstogreater
possibilitiesfor exchange and bargainingand thus enhances the po-
tential
forsubstantive agreements. "Clustering ofissues,"according toKeo-
hane,"facilitatesside-payments amongtheseissues: morepotentialquids
are availableforthequo."103 Althoughlinkagecan be stabilizing ifit en-
couragescooperation,it can have destabilizing effectsif it insteadfuels
In 1974,theArabstatestradedvoteswiththeBlackAfrican
conflict. nations
in theUN: theformer pledgedtheirvoteto silencetheSouthAfricandel-
egationinexchangeforthelatter'svoteinsupport ofthePalestineLiberation
Organization (PLO). Thisnotonlyintensified old disputesbutalso brought
newparticipants intothedisputes.In 1Os,votingallianceswhosepurposes
revolveprincipally aroundconfrontation are quitetheruleratherthanthe
exception.104
Alongthisline of logic,it is notthe case that10 alwaysenhancesthe
conditionsfavorableto cooperationor disputeresolution.In the case of
disputemediation, 10 mayrestrict, ratherthanexpand,thenumberofme-
diators.Therestriction occursas a resultofnationsbeingidentified as biased
eitherbecause theytooka particular positionon an issue in 10 debatesor
becausetheyfailedto takesides.For example,India'sabstinenceon a UN
time of the writingof this articlemade a collective request to the SecurityCouncil to pursue
air blockade in additionto naval and groundcoverage. Criticsof theconfrontational stylewithin
the UN forummightargue that since nations are committedto a confrontational response to
the invasion outside this forum,it would behoove the UN to expend its energies toward
engineeringa diplomaticresolution.This would reduce thepossibilitiesof pan-Arabantagonism
(especiallyfromIraq, Iran,Yemen, and Jordan)towardtheUN and wouldplace theorganization
in a betterpositionto fulfillits role withrespectto resolvingotherdisputesin the Middle East.
Given the factthatHussein has threatenedwar in response to the UN resolutions,we have to
question whetherconfrontational resolutionsare counterproductiveand whetherthe UN has
served as a positive force.
102. See Yeselson and Gaglione, "The Use of the UnitedNations in WorldPolitics," p. 396.
103. Keohane, AfterHegemony, p. 91. See also Robert Keohane, "The Demand forInter-
nationalRegimes," InternationalOrganization36 (Spring 1982), pp. 325-56; and RobertTol-
lison and Thomas Willett,"An Economic Theory of MutuallyAdvantageous Linkages in In-
ternationalNegotiations," InternationalOrganization33 (Autumn1979), pp. 425-50.
104. See Yeselson and Gaglione, "The Use of the UnitedNations in WorldPolitics," p. 397.

208 International
Organization
voteregarding Sovietintervention in Hungarydiscredited India as a Cold

Warmediator in theeyes oftheUnitedStates.The potentialforsuchout-
comesis high,giventhat10 normally putsnationsina positionofappearing
to choose sides on divisiveissues whether theyelectto vote or not.This
destabilizing can manifest
transitivity itselfalso in termsof the effectsof
inner-1Oconfrontations on outer-1Onegotiations. In 1973,forexample,
Americanswerequiteapprehensive aboutChinese-SouthKoreaninterac-
tionin theUN, givenitspotential effects on Chinese-U.S.rapprochement.
Thistendencyof "leaning"international supportto one side or another
is notpeculiarto 10 butis a characteristicofsuchsocialfunctions ingeneral.
When10 takes sides, however,it can have adverseeffectson boththe
longevity and the intensity of a dispute.As Yeselson and Gaglionehave
observed,"Victoriousstatesare emboldenedby the vindication of their
policies,and losersare embittered by injustice."105 Takingsides without
regardtoconsequences-evenintheformofcondemning whatis considered
an illegitimateuse offorce,as inthecases oftheIsraelioccupationofArab
territoriesin 1967,theFalklandsinvasionof 1982,and Sovietintervention
in Afghanistan in 1979-encouragestheuse ofcounterforce.106 Criticshave
oftenlamented theovertUN supportofgroupssuchas thePLO, theSouth-
westAfricanPeople's Organization (SWAPO), theAfricanNationalCon-
gress(ANC), and the Pan-African Congress(PAC) and have arguedthat
thesegroupsuse UN supportas a legitimization ofviolentmethods.107 The
following statement byPLO spokesman Massuronthemurder oftwoIsraelis
bya PLO terrorist groupin 1975is revealing:"We sponsoredtheoperation
becauseitis ourrightto fight forourrights, andthewholeworldsponsored
it ... because the [UN] General Assembly has approved the rightof the
topursuetheirstruggle
Palestinians withall meanstogainusurpedrights.
"n108
In the Falklandscase, it is difficult
to separatethe aggressiveArgentine
foreignpolicyofthelate1960sandthe1970sfromthefactthattheFalklands
problemhad been linkedto decolonization by the UN after1965.Great
Britainasserteditssovereignty overtheislandsthroughoutthecentury,but
105. Ibid., p. 395.

106. See Roberts and Kingsbury,"The UN's Roles in a Divided World," p. 19.
107. See Gulick, "How theU.N. Aids MarxistGuerrillaGroups." It appears thatthissupport
has been uneven in a most destabilizingway, given the recent UN decision to allow South
Africato break Resolution435 and confrontSWAPO rebels in Namibia.
108. Massur, quoted in ibid., p. 4. The argumentthat10 is supposed to promotechange and
thatthe PLO and ANC are therefore justifiedin theiruse of the UN to promoteconflictin the
Middle East and Africapresentssome problems. First, it assumes thatpeople thinkit worth
includingdeath and destruction,to promotechange. Many
the costs of conflictintensification,
would not thinkso. Second, it assumes thatany partiesadvocatingchanges to some statusquo
are justifiedin usingIOs to promoteconflict.In fact,nationshave historicallybeen encouraged
to bringtheirdisputes to IOs as a way of avoiding conflict.Finally, there are both peaceful
and conflictualavenues to change. Some thinkit a bad precedentforIOs to expend resources
in anythingbut peaceful solutions. Certainlythe traditionalspiritof 10 suggests diplomatic
approaches to resolvingconflictsof interests.

Limitsof10 209
it was notuntilafter1965thatArgentine terrorism became

and militarism
pronounced.109 The problemwas probablycompoundedwhentheGeneral
Assemblypasseda resolution inDecember1976praising theArgentine gov-
ernment for"facilitat[ing]the processof decolonization"and thuslegiti-
mizeditsconfrontational methodsofusingverbalandmilitary aggressionin
resolving theproblem.110
Finally,and mostobviously,10 can be destabilizing by stimulatingco-
operation inthenegativeformofpredatory collusion.Whennationscollude
forthepurposeofexploitation, redistribution, collectiveac-
or aggression,
tionis bad,just as itis bad foreconomicefficiency whenfirms withmarket
powercolludeto restrict output.Nationsperceiveconfrontational alliances
as bad,just as consumer-nations perceiveinternationalcommodity cartels
as bad. Dependingon thegoalsofcooperation, itis sometimesintheinterest
of peacefulinternational relationsforcollectiveactionand prisoners'di-
lemmaproblemsto exist.
Moral hazard
Situationsinvolvingmoralhazardare thosein whicha nationis relieved
oftheobligationofincurringthefullcostsofitssocial,economic,orpolitical
actionsbecausesomeprotective schemeallowsittoimposethosecostsonto
othernationsthrough risksharing.The problemofgenerating moralhazard
hasbeenmostextensively discussedinthecontextofthesocialinefficiencies
of insurance.An inherent problemof insuranceis thatit encouragesindi-
vidualsto be morerecklessin the management of theirpossessionsand
consequently raisestheriskoflosses, whichin turnimposesgreatercosts
an inherent
on society.Similarly, problemof 10 is thatby helpingto ward
offcatastrophesor byinsuringnationsagainstthem,itdiscouragesindivid-
uallyresponsiblebehavioron theirpart.
Thereare numerous examplesinwhichIOs havefunctioned as providers
EnergyAgency(IEA) has traditionally
of insurance.The International in-
suredagainstenergyshortagesthrough resource-sharingschemes.The es-
109. OperationCondor in 1966 and the immediatereceptionof thisterrorist operationon the

part of the Argentinemasses suggest a sharp turningpoint in Argentinepolicy toward the
Falklands in the mid-1960s.See W. Michael Reisman and AndrewWillard,eds., International
Incidents(Princeton,N.J.: PrincetonUniversityPress, 1988), pp. 121-22.
110. In 1974,the newspaperCronica began a campaignforthe invasionof the Falklands. In
January1976, the Argentineforeignministerpredicteda head-on collision withGreat Britain.
Justone monthlater,an Argentinedestroyerfiredon the Britishresearchship Shakleton. See
ibid., pp. 122-27. UN involvementmay have contributedto the Falklands episode by exac-
erbatingthedomesticantagonismtowardGreatBritainand drivingpolicytowarda moremilitant
response. While thisis somewhatspeculative,one thingis certain:in its resolutionsand other
involvementin this matter,the UN provided sources of legitimacythat could be used by
Argentinaas justificationforconfrontational approaches to the problem.This in itselfviolated
the traditionalspiritof the UN objective to encourage peaceful diplomaticresolutionof inter-
nationaldisputes.

210 International
Organization
cape clausesoftheGeneralAgreement on Tariffs and Trade(GATT) have

providedpartialinsuranceto domesticindustries in distressand alleviated
balance-of-payments The FinancialSupportFund,agreedto by
difficulties.
membersoftheOrganization forEconomicCooperationand Development
(OECD) butneverinstituted, was meantto serveas a lenderoflastresort
thatwouldspreadtheriskofloansgivento nationsin economicdifficulty.
The compensatory and contingency financefacilitiesof the International
MonetaryFund(IMF) wereinstituted as insuranceagainstsud-
specifically
den economicdisruptions thatnegatively affectthebalanceof payments.
And the Lome Convention'sCompensatory FinanceSchemeforExports
(STABEX) was instituted as insuranceagainsta suddendeclinein thekey
exportsoftheAfrican,Caribbean,and Pacificnations.
In theirvariousprotectiveor safeguardfunctions, theseand otherIOs
havefrequently generated adverseeffects inencouraging nationstobe reck-
less in the management of theirdomesticeconomies.As CharlesKindle-
bergerhas arguedwithrespectto thedebtproblem,last-resort and crisis
lendersreducetheincentives ofnationsto maketheinternal economicad-
justmentsnecessaryforlong-term domesticstability.The factthattrade
deficitscan be financed through externalfundsallowsnationsto overinflate
withoutworrying about the adverseeffectsof highpriceson theirtrade
balances.The guaranteeofexternalsourcesofliquidity also allowsnations
to increasegovernment spending, toprolongorexpandtheirbudgetdeficits,
to smoothoverexchangeratemismanagement, and, worstof all, to com-
poundtheirforeigndebt.1"'These domesticproblems,spreadover many
nations,havethecapacityto spilloverand becomeinternational problems.
For optimalstability in the internationaleconomicsystem,Kindleberger
thusprescribes a lenderwhosecommitment is uncertain:
"Because ofmoral
hazard,thereshouldbe someambiguity aboutwhether therewillor willnot
be a lenderof last resort."1112 Shrinking the safetynet would encourage
nationsto managetheirexternalaccountsandmacroeconomies ina manner
thatmakesthemmoreself-sufficient inthelongrunandis conducivetoboth
domesticand international stability.
The logicof moralhazardsuggeststhatmanagerialschemescan create
conditions thatcutagainstthespiritoftheiroriginalpurposes.In thecase
ofthePlaza Accord,forexample,cooperation provideda multilateral sub-
stituteforaddressing U.S. economicproblems.Insteadofencouraging U.S.
policymakers to bringinterestratesdownby instituting domesticmeasures
to reducetheirbudgetdeficit, theG-7 steppedin to managethedollar.In
theshortrun,thisredistributed someof thecostsof thelargeU.S. deficit
111. Historical limitationsin the demands and enforcementof conditionalityhave given

nationsmore leeway than is good fortheirown long-runeconomic stability.
112. See Kindleberger,The InternationalEconomic Order,p. 39. See also Charles Kindle-
berger,"The InternationalMonetarySystem," in InternationalMoney: A CollectionofEssays
(London: Allen & Unwin, 1981), pp. 297-300.

Limitsof 10 211
to thecommunity nations.Butbecauseitalso reducedthe

ofindustrialized
incentivesfortheU.S. government to manageits deficitmorecautiously,
potentialsourceofinter-
thedeficitworsenedand has becomea significant
nationaleconomicinstability.
organization
A betterapproach: limitedinternational
Managerialprescriptions for10 and proscriptions againstderegulating re-

lationshaveledtoa predilectionforbigsupranational government. However,
as Keohaneand Nye have pointedout,supranational institutions"are not
desirablefortheirown sake."113 Nor does a highlevel or largescope of
internationalmanagement ensureoptimalresults.Morelimitedformsof10
are infactpreferable in manycases, particularlythoseinwhich10 is prone
to managerialfailuresof the typesnotedabove and those in whichthe
interactivepatternsamongnationsare less conflictual and thusmorerep-
resentativeofcoordination gamesthanof staghuntor prisoners'dilemma.
Contributors to therevisionist on 10 and theliterature
literature on coop-
erationhave recognizedthenegativeeffectsand conditionality of manage-
mentand have provideda partialsolutionto theseproblemsby recom-
mending morelimitedmanagerial functionsfor1Os.
In determining the properlevel and scope of 10, we shouldbeginby
questioning to whatextentstableinternational relationsin the past have
beentheresultofextensivemanagement. Contrary tocommonassumptions,
history showsthatextensivemanagement ofinternationalrelationsin both
orderlyand disorderly periodshas been moretheexceptionthantherule.
IOs have rarelybeen constructed to manageanyissue-areaextensively or
even effectively. The constitutionsof 1Os, like mostotherconstitutions,
have commonly been so vagueas to toleratea widerangeof behavioron
thepartofactorsbothclosetoandfarfromimplicit principles.Rulebreaking
has been tolerated,escape mechanisms have alwaysbeen pervasive,and
theproblemsofcompliancehave been compounded by thelack or general
underdevelopment ofenforcement instruments.114
The callsforan escape fromthepresent"nonsystem"(nonmanagement)
ofmonetary relationsand an adoptionof a new BrettonWoods systemon
thepartof managerialists suchas IrvingFriedmanare rathercuriouscon-
sideringthatsomehavequestionedwhether management undertheoldBret-
113. Keohane and Nye, Power and Interdependence,p. 274.

114. Interestingly,Puchala has arguedthatduringthefirsthalfof theEuropean Community's
existence, much of its success was actually attributableto weaknesses in gettingnations to
follow rules. The Communityhas, however, shown itselfto be much strongerin the second
half of its existence in both generatinglegislationand encouragingadherence. See Donald
Puchala, "Domestic Politics and Regional Harmonizationin the European Communities,"
WorldPolitics 27 (July1975), pp. 496-520.

Organization
212 International
RobertSolomonhas observed
tonWoodsplanwas extensiveor strong."15
thatundertheold BrettonWoods system
therewereno acceptedrulesto governchangesin parvalues,yetsuch
changeswerenecessaryas economicpoliciesand conditions diverged
amongnations.Furthermore, therewas no systematic
meansforin-
creasingcountries'reservesin a growingworldeconomy.The growth
ofreserveswas thehaphazardresultoftheoutcomeoftheU.S. bal-
ance ofpayments, whichthen,as now,dependedon developments in
othercountriesas wellas in theUnitedStates.For thesetworeasons
alone,it maybe concludedthatthenostalgicdesireto getawayfrom
thepresent"nonsystem"is a productofemotionratherthancareful
analysis.
116
Furthermore, thosewhounequivocally professtheevilsof decentraliza-

tionand thesuperiority ofextensiveregulation ("biggergovernment is bet-
ter") are sometimesguiltyof overestimating thedestabilizing elementsin
internationalrelationsand theireffectson international politics,underesti-
matingthoseforceswhichnaturally inhibitnationsfrombehavingpreda-
toriallyin anarchicenvironments, and overestimating thecapacityof10 to
solveproblems. Commonrationales forextensive supranational management
have centeredaroundthe convictionthatinternational relationsare per-
meatedby prisoners'dilemmas,staghunts,security dilemmas,and public
goods problems.Undersuch conditions,even the least expansionist and
aggressivenationswouldbe rationally drivento participate in destabilizing
behaviorsuchas armsraces,tradewars,andcompetitive depreciation. The
resultof the "pursuitof self-interest by each," Keohane and Nye have
argued,wouldthusbe a "disasterforall."117But as thegrowing literature
on cooperation suggests,theincidenceand theadverseeffects ofpredatory
gameshave been overstated.The gamesthatnationsplayare muchmore
variedthanthetraditional literatureon international relations has suggested,
and the effectsof conflictual games can vary in their level of adversity.
Moreover,evenunderconditions thatare potentially destabilizing, suchas
relativegainsmaximization, cooperative outcomes are still
possible. Inter-
actionalpatterns,accordingto thisliterature,are notso inherently unstable
thattheycannotoftenconvergetowardorderly equilibria undermorelimited
internationalmanagement. As Keohane and Nyenote, "Issues lackingcon-
flictsofinterestsmayneedvery little
institutional structure."118
115. In "Fiscal Policies, CurrentAccounts and Real Exchange Rates," p. 426, Corden sees
the post-BrettonWoods period as a period of decentralizedmonetaryrelations,"an interna-
tional laissez fairesystem."
116. Robert Solomon, "Issues at the IMF Meeting," Journalof Commerce, October 1979,
p. 4.
118. Ibid., p. 273. For other contributionsto this literature,see JohnConybeare, "Public
Goods, Prisoners' Dilemmas and the InternationalPolitical Economy," InternationalStudies

Limitsof10 213
The fearsofless centralized management, whichare frequently founded

on themisconception thatprisoners' dilemmas andstaghuntsareubiquitous
in international relations,systematically discountthe costs of predation.
Imposingsuckers'payoffsontoothernationsincurssignificant costs that
areindependent ofthosecostsincurred as a resultofretaliation.
Thisis not
to say thatexploitation does notpay; rather,thepointis thatit does not
pay as muchas manybelieveand that,moreover,managerialists tendto
mistakeothergamesforprisoners'dilemmaand staghunt.Withtariffs, for
instance,thereareobviousdeadweight losseswithrespectto socialwelfare.
Tariffs are conduciveto inflation, whichbearshigheconomicand political
costs. They raise the cost of domesticproduction as well as reducethe
efficiency of a nation'scapitalstockin thelongrunby shielding domestic
industries fromcompetition and makingitdifficult to importforeign capital
and inputs.Decliningcapitalefficiency will also have adverseeffectson
wagesin thelongrun.Finally,tariffs can adverselyaffecta nation'scapital
balanceifinvestorsperceivethemas a signofexternaldifficulties or mer-
cantilistic 119Competitive
policystyles. depreciation causesnotonlyinflation
butcapitalflight. Depreciation can also adverselyaffectcurrent balancesif
a nation'sdemandforimportsand others'demandforits exportsare in-
elastic.120Brinkmanship and warscan incurpreponderant politicalas well
as economiccosts,as theCubancrisis,theVietnamWar,andtheFalklands
Warhave demonstrated. The moreprolongedand unsuccessful theadven-
turism, thegreaterare thecosts.
Thefearsofdecentralization arealso fueledbya propensity tosee disorder
whereit maynotexist.For example,externalimbalancesare notin them-
selves a signof economicdisorder,any morethantradersexchanging re-
sourcesare a signofmarket disorder.Muchdependson thestructure ofthe
imbalances.In thepresentexternalimbalancebetweenthe UnitedStates
andJapan,theformer is running a current deficitagainstthelatter,and the
latteris runninga capitaldeficit
against the former. Therearesomeimportant
Quarterly28 (March 1984), pp. 5-22; Conybeare, "InternationalOrganizationand the Theory

of PropertyRights"; ArthurStein, "Coordination and Collaboration:Regimes in an Anarchic
World," InternationalOrganization36 (Spring 1982), pp. 299-324; Duncan Snidal, "Coordi-
nationVersus Prisoners' Dilemma: ImplicationsforInternationalCooperationand Regimes,"
AmericanPolitical Science Review 79 (December 1985), pp. 923-42; Duncan Snidal, "Relative
Gains Don't PreventInternationalCooperation," paper presentedat the annual meetingof the
American Political Science Association, Atlanta, Ga., 31 August 1989; TimothyMcKeown,
"Hegemonic StabilityTheory and 19thCenturyTariffLevels in Europe," InternationalOr-
ganization 37 (Winter1983), pp. 73-92; R. HarrisonWagner, "The Theory of Games and the
Problemof InternationalCooperation," AmericanPolitical Science Review 77 (June1983),pp.
330-46; and Robert Axelrod, The Evolutionof Cooperation (New York: Basic Books, 1984).
119. The conventionalargumentabout the advantages of optimaltariffsassumes thatother
nationswill not retaliate.
120. In "The Logic of the InternationalMonetaryNon-System," p. 65, Corden impliesthat
these predatorycosts increase on the margin,thus suggestingthatthe restraintsagainst pre-
dation will rise as predationincreases.

Organization
214 International
gainsfromtradein thisreciprocalimbalance:Japanis helpingfinancethe

U.S. budgetdeficit in exchangefortheexportation ofgoods.121
Variousformsoflimited10 have been suggestedin therecentliterature
on cooperationand thecriticalliterature on 10 as a partialsolutionto the
problemsof managerial failureand theconditionality of internationalman-
agement.122 The transaction costsapproachto 10, forexample,has modest
aspirations forthefunctions of institutions.Keohaneand Nye specifically
citethemas facilitators "of bargaining amongmemberstatesthatleads to
mutuallybeneficialcooperation."123In thissense, orderis institutionally
assistedratherthanmanaged.Institutions, theyargue,can "set theinter-
nationalagendaand act as catalystsforcoalitionformation and as arenas
andlinkagebyweakstates."124Theprincipal
forpoliticalinitiatives function
of IOs in thiscase wouldbe thereductionof organization costs,such as
thosederiving fromasymmetric information, deception, un-
irresponsibility,
certainty,risk,and unstableexpectations, all of whichare potentialim-
pediments to stablerelationsand exchangepatterns. Cost reduction can be
effectedthroughlimitedfunctions relevantto the roles of gathering and
disseminating data and information aboutthepreferences ofnations,facil-
itatingside-payments andcommunication, andreducing thecostsofdecision
making.In general,in cases in whichtheconstruction of extensivemana-
gerialschemes(whatKeohanerefersto as "control"schemes)is fraught
withproblemsor is unnecessary, less ambitiousschemesbecome desir-
able.125
Theliterature onregimes hasalso suggested substitutes
forcontrol schemes.
According to thisliterature,preexisting normsandprinciples can reducethe
need forextensivemanagement in severalways.126First,theycan render
strategicinteractional patternsless conflictual by altering payoffs.For ex-
ample,theycan makedefectionmorecostly.Second, theycan facilitate
intertemporal cooperationby generating expectations of reciprocity or, in
morestaticgames,byenhancing expectations of"nice" moves.And,third,
in specificissue-areaswherecoordination gamespredominate, as described
byArthur Stein,or wherespontaneous regimesexist,as describedbyOran
Young,the preexisting normsand principleseitherobviatethe need for
121. See Corden, "Fiscal Policies, CurrentAccounts and Real Exchange Rates," p. 436.
This is not to say thatthe imbalance cannot be politicallydestabilizing.
122. Even those contributorsto the literatureon cooperationwho are quite sympatheticto
the role of 10 in world politics note that limitedformsof multilateralmanagementcan be
desirable and effectivegiven the properunderlyingconditionsin relationsamong nations. See
especiallyKeohane and Nye, Power and Interdependence,pp. 274-76; and Ruggie,"Collective
Goods and Future InternationalCollaboration," p. 888.
124. Ibid., p. 35.
125. Ibid., pp. 35 and 274. See also Keohane, AfterHegemony; and Keohane, "The Demand
forInternationalRegimes."
126. See the special issue of InternationalOrganization,vol. 36, Spring 1982.

Limitsof10 215
extensiveregulation or eliminate theneedforformalinstitution building. 127

The stablepatterns ofinteraction in specificissue-areas,DuncanSnidalhas
argued,can be maintained through moremodestfunctions concernedwith
"codificationand elaboration ofan existingor latentconvention"and with
"providing information andcommunication tofacilitatethesmoothoperation
oftheconvention."128In otherwords,byperforming limited functions with
regardtopreexisting focalpoints,management canfacilitate theconvergence
ofexpectations aboutinternational behavior. 129
Ruggiehas notedthatepistemic communities can be viablesubstitutes for
extensivecontrolschemes.130 Theyare capable,forinstance,ofgenerating
stablestructures of expectations thatare conduciveto nonconflictual rela-
tions.Someofthelimitedmanagement functions inthecase ofcommunities
concernedwithtechnology, forexample,relateto facilitating efficientex-
changethrough consensusabouthowand underwhichconditions transac-
tionscan be effected.
As Keohaneand Nye havepointedoutandas thepublicchoiceliterature
on 10 hasdemonstrated, incases inwhichnationscanagreeuponreasonable
entitlement rules,an institutionally assistedmarketsolutionis superiorto
an extensivemanagerialscheme.131 The conventionalminimum-support
functionsinthesecases arethedefinition, adjudication, andenforcement of
property rights;the dissemination of information about preferences; and
otherfunctions relatedto theelimination of marketdistortions suchas ex-
Conybearehas notedthatininternational
ternalities. environmental law,for
example,therehas beenan impressive evolutionthat"illustrates theability
of statesoperating in a marketexchangeenvironment to developa system
of property rightsand liabilityrulesconsistent withglobalwelfare,in the
absenceof any overarching supranational 10 directly intervening to force
127. See Stein, "Coordination and Collaboration"; and Oran Young, "Regime Dynamics:
The Rise and Fall of InternationalRegimes," InternationalOrganization36 (Spring 1982), pp.
277-98. See also Wagner, "The Theory of Games and the Problemof InternationalCoopera-
tion"; and Snidal, "Coordination Versus Prisoners' Dilemma."
128. Snidal, "CoordinationVersus Prisoners'Dilemma," p. 932. Even withmoreconflictual
payoffstructures,such as thatof prisoners'dilemma,notes Wagner,functionsrelatingto the
disseminationof information about preferencesand potentialchoices can play an essentialrole
in bringingabout cooperative outcomes. Furthermore,in cases in which conflictualgames
generatehorizontalproliferation (interissuelinkagein games), modestmanagerialassistance is
requiredto arriveat mutuallybeneficialequilibria.Snidal arguesthatto theextentthathorizontal
propertiesemerge,the game "becomes embedded in a broadersocial context,and cooperation
is increasinglypossible with less centralized enforcement."See Snidal, ibid., p. 939; and
Wagner, "The Theory of Games and the Problemof InternationalCooperation."
129. For a discussion of the role of focal points in generatingmutuallybeneficialoutcomes
in games, see Thomas Schelling, The Strategyof Conflict(Cambridge,Mass.: Harvard Uni-
versityPress, 1980).
130. Ruggie, "InternationalResponses to Technology."
131. See Keohane and Nye, Power and Interdependence,p. 274; Conybeare, "International
Organizationand the Theory of PropertyRights"; Vaubel, "A Public Choice Approach to
InternationalOrganization"; and Wijkman,"Managing the Global Commons."

216 International
Organization
statesto internalize theeffects ofexternalities.'

"132 Wijkman, whonotesthat
environmental problems havehistorically beendealtwiththrough themarket
approachof subdividing internationally sharedresourcesinto"nationalin-
heritances,"has arguedthatthisapproachwouldbe viablewithregardto
thedeep seabed and thecontinental margin(whichare less costlyto sub-
dividethanotherenvironments) and possiblywithregardto the orbital
spectrum as well.133
Even thetraditional literatureon 10, whichhas a strongmanagerial ori-
entation, exhibitsstrandsoflogicthatattestto theutility oflimited10. The
functionalist conceptof "technicalself-determination" suggeststhatthe
natureof technological problemswilldictatethescope and levelof supra-
nationalregulation. Although themainstream visionof functional interde-
pendenceforeseesa growingneed fortheintegration and management of
technicalissues,thereis nothing in thelogicto suggestthatdecentralized
solutionsin whicheach nationaddressesa problemindependently ofother
nationscannotsometimes be viable.If autarkicsolutionsto technicaland
welfareproblemsdo notsuffice, 10 can serveminorfunctions infacilitating
stablerelations.Moreover,limitedtechnicalintegration neednotspillover
intogreaterpoliticalintegration.134 Neofunctionalists acknowledge that10
is sometimes ineffective inachievingspecified goals.135Ifthisis becausethe
goalsare settoo high,as inthecase ofgrandcollaborative schemes,itmay
be preferable to moderatethe targetedlevel of cooperation,sincefailure
mayserveto delegitimize cooperationnotonlyin theshortrunbutalso in
thelongrun.136EdwardMorsehas arguedthatin somewaysmodernization
breedsconditionsthatabate conflict and tensionin international politics,
therebyreducingthe need forinternational management. In bringing low
politicsto thefore(forexample,makingissuesrelating to welfareandtech-
nologyas important as thoserelating to powerand status),thecontentof
foreign policiesbecomesless threatening becauseconflicts are divertedinto
thepositive-sum contextsof economicsand technology.137
The literatureon collectiveactionsuggestsanotherreasonthatlimited10
can be viable.RussellHardin,forexample,has arguedthatit is easierto
eradicatepublic"bads" thanto procureor createpublicgoods,sincethe
goalofcollectiveactionintheformer is morefocusedand sincenationsare
likelyto experiencemore"disutility" frombads thanutility fromgoods.138
In cases inwhichtheelimination ofbads is theprimary goal,limited10 can
132. Conybeare, "InternationalOrganizationand the Theory of PropertyRights," p. 314.
133. Wijkman,"Managing the Global Commons," p. 527.
134. See Mitrany,A WorkingPeace System,pp. 28 and 73.
135. See, forexample, Haas, Beyond the Nation-State,p. 126.
136. In Power and Interdependence,p. 276, Keohane and Nye make a similarpoint with
respect to viable moderatedmanagementof crisis versus nonviable controlmanagement.
137. See Morse, Modernizationand the Transformation of InternationalRelations, p. 85.
138. See Hardin, CollectiveAction, pp. 62-65.

Limitsof 10 217
be effective.Moreover,theclassicOlsoniantreatment of collectiveaction
suggeststhatIOs withlimitedmembership aremoreeffective thanlargeIOs
in botheliminating bads and procuring goods.139Historically,however,the
targetof10 has tendedtobe themanagement ofgoodswithlittlepublicness.
As Ruggiehas pointedout,it has been "the production of [private]goods
and serviceswhichaccountsformostof theactivitiesof international or-
ganization."140 This essentiallymeansthat10 has historically been redun-
dantin itsmanagerial functions and has expendedmoremanagerial capital
thanis necessary,sincerelationsinvolving privategoodsrequiretheleast
supranational regulation.141
Thatlimited10 can be effective, however,does notmeanthatitwillbe.
For10 tobe a viablemeansofcontributing toorderininternational relations,
theenvironment inwhichitfunctions mustbe conducivetotheeffectiveness
of supranational management in general.It appearsfromthelogicin this
articlethat10 willbe moreeffective inthemanagement ofrelatively simple
constellations of intra-or inter-issuerelationsthanin the management of
complexchaoticsystemsin whichrelationsbetweenrelevantvariablesare
difficult
to understand and forecast.Withrespectto thecomplexity of the
twomajorissue-areasofinternational economicand security itis
relations,
interestingto notethatmanagement willmostlikelybe effective whereitis
leastlikelyto emerge.The processesinvolvedin economiccooperation are
muchmorecomplexaccordingto Perrow'sdefinition thanthoseinvolved
insecurity cooperation, butcooperation insecurityrelationshas historically
been muchless visiblethanthatin economicrelations.142
Moreover,10 will be moreeffective whenit facilitates or encourages
substantive and long-term solutionsto problemsthanwhenit offersshort-
runand ad hoc approachesto them.UN peacekeepingfunctions, forex-
ample,havehistorically specializedin thelatterapproachesto abatingcon-
As valuableas thesemaybe ininsulating
flict.143 anddesensitizing conflict,
theyneed to be bolsteredby viable schemesthatraise and maintainthe
incentivesfornationsto continuepursuingsubstantive and lastingsettle-
139.See MancurOlson,TheLogic of CollectiveAction(Cambridge, Mass.: HarvardUni-

versityPress,1965).
140.Ruggie,"CollectiveGoodsand FutureInternational Collaboration,"p. 888.
141.See ibid.;Conybeare, "InternationalOrganizationandtheTheoryofProperty Rights";
and Wijkman, "ManagingtheGlobalCommons."
142.Jervisarguesthatcooperation is morelikelyto occurin economicrelationsthanin
securityrelationsbecausetheunderlying strategic oftheformer
structure is positive-sum, while
thatofthelatteris closerto zero-sum.See RobertJervis, "SecurityRegimes,"International
Organization 36 (Spring1982),pp. 357-78.Ofcourse,a disaggregationofeconomicrelations
wouldshowa significant variationin thecomplexity ofthevariousforms, ranging fromcom-
modity agreements, whicharerelatively
simple, tomacroeconomic coordination,whichishighly
complex.
143.See BrianUrquhart, "International Peace andSecurity,"
ForeignAffairs 60 (Fall 1981),
pp. 1-16.

218 International
Organization
mentsto theirforeign relationsproblems.144Economiccooperationamong

theG-7 has also had a historyof ineffectiveness because it has remained
opento and oftenencourageddomesticand foreign policiesthatare incon-
sistentwiththeintentions and spiritof substantive economicpolicycoor-
dination.Economicsummitry has exhibiteda tendency to be a legitimator
ofnationaleconomicpoliciesas wellas an instrument ofdomesticpolitics,
ratherthanservingexclusivelyas a forumforsubstantive negotiations.145
WhiletheUnitedStateswas able to use macroeconomic coordination inthe
1980sas a meansofescapingtoughbutnecessaryadjustments inspending,146
futureeffectivenessincoordination willdependon theresolveofnationsto
limitsuch domesticpolicyresponses.Similarly, withregardto the debt
problem, strengtheningconditionalitywillmakeinternational monetary man-
agementmoreeffective in thelongrun.Greaterconditionality can be even
moreeffective ifaccompaniedbysomeuncertainties regarding theprovision
ofcrisisliquidityintheinternational system,as suggested by Kindleberger.
Absoluteguarantees notonlygenerateexcessivemoralhazardin theman-
agementofdebtbutalso makeconditionality moredifficult to maintain.
Finally,10 is morelikelyto be effective whenit does notputitselfin a
positionto be a vehicleof international competition. In managing interna-
tionalconflicts
anddisputes,theUN hashadmixedresults.Notwithstanding
itsvalueas a forumforpositiveinteractions, ithas (evenwhensidingwith
a positionthatseemsmorallycorrect)added fuelto international firesby
intentionally
or unintentionally producing instruments ofconfrontation and
competition. By discouraging confrontational rhetoric and debateandmak-
ingotheradjustments in styleor function, theUN mightbe moreeffective
in reducinginternationaltensions.The argument thata worldwithan im-
perfectUN is preferred to a worldwithout a UN does notsufficiently justify
thecontinuation of a styleof disputesettlement thatexhibitsdestabilizing
characteristics.
Conclusions
Contributorsto the 10 literature

have traditionally
been overlyoptimistic
abouttheabilityof multilateral
management to stabilizeinternational
rela-
tionsand havegenerally ignoredthefactthat10 can be a sourceof,rather
144.Theseschemesrequireneither extensive scopenorextensivelevel.Theireffect

depends
on theirabilityto addresstherightissuesintheright ways.Depending on underlyingstrategic
structuresin specificrelationalcontexts,institutions
thatassistcooperationmaybe more
substantivemeansofgenerating positiveoutcomesthaninstitutionsthatmanagecooperation.
Often,as has beensuggested in thisarticle,bigandbroadfunctions makeit moredifficult
to
substantivelyaddressissues.
145.See PutnamandBayne,Hanging Together.
146.Criticsofsuper-301 wouldidentifya similarmotivebehindtheU.S. tradepolicytoward
Asia.

Limitsof 10 219
thana remedyfor,disorderin and acrossissue-areas.Although recentre-

visionistscholarshaverecognizedthedestabilizing effectsof10, theyhave
takena somewhatrestrictive view of organizational failure.In addressing
thegeneralissueofthewaysinwhich10 canfailandoutlining theconditions
underwhichmorelimitedandless centralized modesofregulation are pref-
erable,thisarticlehas soughttodevelopa setofguidelines thatarepertinent
to decisionmakingand serveas a rationaleforeliminating theexcessesof
10. The findingsofthearticlehave implications notonlyforpolicymaking
butalso fortheoryand researchin thefieldofinternational relations.
According to conventional theoriesofcooperation andconflict, thesources
ofinternationaldisorderare theunderlying strategic structures ofrelations
betweennations.However,thefindings presented heresuggestthatdisorder
springs frommoreheterogeneous sources.Important sourcesofdisorder-
sourcesthatareseemingly unlikelyandhavethustendedtobe overlooked
are the solutionsproffered by 1Os. Whilethesesolutionsare intendedto
moderate oreliminatethedisorder createdbystrategic structures,theyoften
have theoppositeeffectofexacerbating existingproblemsor creating new
ones. Theoriesthusneedto endogenizetheseoriginsofdisorder.Theyalso
need to expandtheirmenuofdependentvariables,whichhas traditionally
been limitedto theroles,goals, and functions of 1Os. Far moreattention
needsto be paid to theeffects(impact)of management in shapinginterna-
tionaloutcomes.The finding emphasizedherewithregardto impactis that
10 has thepotentialfornegativeas well as positiveresults,a finding that
supportstheviewthatconflict and cooperationcoexistin close proximity
and evenoverlapin international relations.147
Recentresearchhas tendedto blurthedistinction betweeninternational
relationson theone handand theschemesand institutions thatare created
to managetheserelationson theotherhand.In otherwords,it has failed
theforestfromthetrees.By focusing
to distinguish on theprocessesof10,
thisarticlehas attempted to avoid thispitfall.Moreworkin thisdirection
is needed,however,particularly withregardto betterdifferentiating the
impactas wellas theroles,goals,andfunctions of10.148 WhichspecificIOs
are morelikelyto generatemoralhazard?149Whichare morelikelyto gen-
erateinferiorsubstitutes? Questionssuchas theseonlypartially reflect the
theoreticaland empirical issuesthatneedto be addressed.
Finally,international bureaucrats and nationalpolicymakers, like schol-
147.Nowhereis thismoreevidentthanin alliancerelations.See Paul Diesingand Glenn

Snyder,ConflictAmongNations(Princeton, N.J.:Princeton Press,1977),chap.6.
University
148.Jervis, betweensecurity
forone,has differentiated andinternational
economicregimes
intermsofviability See Jervis,"SecurityRegimes."
and stability.
149.Discussionsofmoralhazardininternational politicshavegenerally
focusedon monetary
formoralhazardappeartobe morefar-reaching.
butthepossibilities
relations, andNye,
Jervis
forexample,makeinteresting formoralhazardinsecurity
albeitbriefallusionsto possibilities
relations.See Jervis,"SecurityRegimes,"p. 368; and JosephNye, "NuclearLearning,"
InternationalOrganization41 (Summer 1987), p. 390.

220 International
Organization
ars,needto be moresensitizedto thecomplexity oftheeffectsof10 when

consideringoptimalresponsesto international problems.The problems
themselvesshouldnotcomprisethesole criteriaaccordingto whichman-
agerialschemesare constructed butmustinsteadbe carefullyconsideredin
conjunction withthe likelyeffectsgeneratedby theseschemes.In other
words,thespecificroles,functions,andgoalsof10 shouldbe dictatedboth
bythenatureorunderlying strategic
structuresoftheinternational
problems
and by thepotentialpositiveand negativeeffectsof possiblemanagedso-
lutions.Sucha "conditionalorientation"towardorganizational
designseems
bestadaptedto therealitiesof10 failureandtheunderlyingrelations
among
nations.


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our goal is the improvementof human welfare,this requires subordinating

27. Fred Block, The Origins of InternationalEconomic Disorder (Berkeley: Universityof

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The leftistliteratureon 10 has tended to take the same pejorative view

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depart fromtraditionalmanagerialapproaches, however, is in theirsensi-

37. See the contributionsto InternationalOrganization,vol. 36, Spring1982,a special issue

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ofhow10 canfailwithin issuesandinstitutions,

Critiqueof managerialism:the systematicfailure

The failuresof 10, definedhereas thenegativeor destabilizing effectsof

39. This dual categorization of managerialfailureis somewhatproblematic because what

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domesticor foreignpolicy. It is in the natureof supranationalmanagement

Managing complex, tightlycoupled systems

41. The subject of complex, tightlycoupled systemsis formallyexplored by Perrow in the

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to initialconditions, or a macrosensitivityto developments in microcondi-

The periodfromthemid-1940s to thepresent,forexample,has beenone

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not knowenoughto say whatthe equilibrium exchangerateis."46 More

46. GottfriedHaberler, "The InternationalMonetarySystem: Recent Developmentsin Per-

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themarketmighthavebeenpreparedto accepttheLouvretarget.In other

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achieve, and of theroles of thevariouspartnercountries'policies.... Each

Thisperception was reinforced bytheG-7'sapprovalofthenewratearound

53. See "AlmightyFallen," Economist, 14 November 1987, p. 11.

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listen.59In bothcases, agreements were ill-conceivedbecause theywere

59. See Funabashi, Managing the Dollar, p. 190.

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can almostas likelybe bad fornationsin termsof welfareas it can be good.

64. See Jeffrey Frankel and KatherineRockett, "InternationalMacroeconomic Policy Co-

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cause itis in thenatureof10 to solveinternational anddomesticproblems.

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cost in blood and verylittlein treasure,and theylentan aura ofrighteousness

73. Yeselson and Gaglione, A Dangerous Place, p. 178.

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