Analysis of The Hegemonic Stability Theory

HST has successfully proved its point regarding the rise and fall of the worlds known hegemons; however, todays it seems as the world is heading a different way. The rise of China since 1979 has increasingly influenced the world economy to the point of directly affecting the hegemon’s power, yet China is far from becoming a possible future hegemon.
States have adapted to a world where a new war would not be an opportunity to create a new hegemon but only the end of civilization. The United States might therefore be eroding their power under an HST point of view, but are still the world’s number one power thanks to the tools it created during its hegemonic period which reflect its liberal policies.

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This paper will analyze HST in order to understand whether the United States hegemony is over or not and whether this is caused by the rise of a contender. Subsequently, by using GPE main perspective, this paper will demonstrate that HST future resides in the thoughts of Keohane; he has proved that cooperation is not only possible, but also effectively increasing in a world with no hegemon.
Hegemonic Stability Theory
Overview
In defining Hegemonic Stability theory (HST) it is necessary to understand the meaning of hegemonic. Hegemonic comes from the Greek word “hegemon”, meaning leader. A Hegemonic state is one which is powerful enough to be capable of influencing the events throughout the world. A hegemon in IR is a state that has the capacity and also the will to lead in the international arena. Historically, the most recent hegemons are composed by the British Empire until the 19th century, and then taken over by the United States.
HST is a theory developed and argued by many important political and economic figures such as Charles Kindleberger, Robert Gilpin, Robert Keohane, Stephen Krasner, Abramo Fimo Kenneth Organski and George Modelski. HST includes various disciplines: economics, history, politics, and law. The combination of the latter, implemented in HST, gives birth to the basic claim that the international system is the most stable only when there is a main actor, an hegemonic state, capable of influencing major events.
Charles Kindleberger and Robert Keohane are considered as the fathers of HST. Kindleberger main though and research, was to relate the causes of Great Depression of 1929 as a consequence of the absence of a global leader, of a prevailing economy and therefore proposing the concept of HST for the first time. Kindleberger research brought him to assume that the leading states are obliged to provide the public goods in order to keep their stability in the global system. In this context the state is a rational actor pursuing its own self-interest, aiming to achieve all is possible. According to Kindleberger, in a liberal economy, a hegemonic power is not only necessary, but must also be supportive over an extended limit of time by enforcing its economic, political and military supremacy in order to form global norms.
HST proves that powerful states are able to change the global system. This situation is stable until there is an heterogeneous development of power between states which adds up to an unsatisfied state able to match the present hegemonic power. On the other side, the hegemonic state in order to achieve the maximum level of global stability must hold the largest and clearest concentration of power; concordantly, if states can’t agree regarding their power in comparison to the hegemon, then conflicts may take place.
Subsequently, Robert Keohane developed Kindleberger’s theory – a nomenclature created by him – under a strictly economic point of view, relating it between the economy of a hegemonic state and its international trade system. According to Keohane in fact, HST structure is:

“dominated by a single country, are most conducive to the development of strong international regimes whose rules are relatively precise and well obeyed […] the decline of hegemonic structures of power can be expected to presage a decline in the strength and corresponding international economic regimes.” (Keohane 1980, p132)

Evidence of this quote could be the decline of British Empire from 1875. The Empire had heavily contributed to free trade during the 19th century, yet as soon as weakness was shown, global free trade also declined. The absence of a hegemonic power from that point on, right until WWII caused major increase in protectionism which eventually transformed into the Great Depression.
As mentioned before, Robert Gilpin is also a HST expert, mainly in contrast with Keohane liberal concepts, and elaborates a realist HST. Gilpin claims that the presence of a liberal economic state as a hegemonic actor is a required condition in order to develop international economy; however, Gilpin is strongly convinced of the fact that a hegemonic state is the center of international order and international economy, accordingly always if the state is capable and desires to hold the international order to which it provides the public goods which enhance and ensure stability. This scheme apparently works until all states gain in the unipolar hegemonic system.
Keohane drops a list of requirements out of his research necessary in order to achieve the status of hegemon, such as:

“must have control over raw material, control over sources of capital, control over markets and competitive advantages in the production of highly valued goods” (Keohane 1984, pp34).

Therefore, the size of its market is extremely important for the hegemonic state. A large market is equal to a major influence in the global economy. A strong currency is clearly also very influential, giving power to the financial and monetary sector. The flexibility of its economy is also a great advantage over the other actors. Many could argue that China does today, to some extent, positively reflect some of these characteristic , especially market dimension and flexibility; however its RMB is virtually pegged to the Dollar and even though it is now freer than ever, it still isn’t a major hegemonic currency.
Krasner, on the other hand, has a much more empirical approach which leads him to the idea that the existence of an hegemonic state in the international system, pushes the other actors to confirm global trade openness, a contribution necessary in an era of speeding globalization.
In fact, a hegemon must maintain a stable international economy in order to be called so. Much like the United States after WWII which had to confirm being the Hegemon, it uses its influence to establish an international regime, composed of rules promoting liberal economy and subsequently it enforces it. The Hegemonic power must be the perfect example of the benefits acquired via the market and show how their richness will grow proportionally to the hegemon’s imports.
China vs. USA: a race to hegemonic power?
A hegemon may decline; it is in fact the case of the United States which has lost international economic power due to the recent financial crisis and to the rise of other state, mainly in the Asian continent. The decline of a hegemon, according to HST, follows specific causes and must comply with either domestic or external issue, or in worst case scenario the combination of the two.
Domestic reasons usually include deficit and state debt caused by public, private and defense cost, which overlap the states savings. However, it is usually an external issue which creates the ultimate instability of the hegemon. After having promoted free trade for the long term in a period where many others could barely survive, the hegemon feels as if the rise of other countries in “their” system is the result of a decline of the latter, or an improved exploitation of the system by the other rising actors. The hegemon constantly observes its economic partners gain of power by exploiting the liberalized trade; its growth is affected by this new element in the game: competition.
There are two scenarios in a dispute between the hegemon and the opposing state: (1) there is a small gap of power between the two, which means that there is no “agreement” on who is the hegemonic state and (2) when an opposing state overlaps the hegemon in particular key areas. Eventually the combination of the two is possible, creating between China and the United States, a debate over to what extent the United States are still the hegemonic power. Classic HST shows how this concept preferably works on a unipolar system; therefore a very powerful hegemonic power which stabilizes the international arena is the only answer.
Concordantly, according to HST, the declining process clearly includes the presence of a rising power which exceeds the hegemon in a number of areas, predominantly in efficiency and competitiveness. These issues reduce the hegemon’s power in the global economy, cutting its surplus and therefore its employed funds, necessary to maintain its status of world biggest economy. To some extent, most of the key issues which determine the collapse of a hegemon are present in contemporary context; however, in contrast to HST, the world has not slipped into another world war. How is today’s situation different to the typical HST scenario?
Likely to the fall of the British Empire, we see today in the relations between the United States and its competitors, China above all, a similar hegemonic decline scenario: protectionism, currency war, financial crisis and internal discontent in the hegemonic state. According to Keohane, American hegemon is eroding from around half of the ’60, and has ever since tried to acquire power via the institution it created after WWII. In particular he claims that:

“Whichever date between 1963 and 1971 were chosen, it would still be clear that one of the most important features of American hegemony was its brevity.” (Keohane, pp169)

For decades, the US has had no rival demanding for its position. Today two strong challengers have showed up: the EU and China. However, on one hand, the EU is a civilian union, deeply tied to transatlantic economy and has no willing of challenging the US in its “hegemon” position, exception made possibly regarding the Euro, being today’s only real rival to the Dollar. On the other hand, China is a rising power, which since 1979 is the fastest growing economy in the world, undergoing massive modernization in military and industry and, of course, it supports the dollar and the current US debt by financing it. The United States do indeed have a large economy, but it is dependent on Chinese low cost import, which seem to have kept in recent years the medium-low American class away from poverty. The US dollar is slowly ceding the place to Euro and their energetic independence is unstable.
The situation between US and China is unclear. The US still has an economic and military ambitions and it is trying to find its way in the world economy. In order to do so it must communicate with China. What is unclear is whether the US will continue treating China as a partner, therefore seeking maximum cooperation, or as a competitor therefore trying to block or slow down its growth. One thing is certain, US engaging China in a race would likely promote unification with Russia, probably in response to the threat of dominance. Under this point of view, it seems that the US will have to be at least neutral to the inevitable rise of China.
China has some major advantage to which the United States simply can’t answer: a major source of labor for the world economy, a work force of over 800 million people, it combines a huge population to a very open economy. It has had the fastest growth rate of total GDP ever seen and a huge growth of TFP. It has benefited of free trade with a controlled currency which outpaced American exports. It has grown even during the latest recession.
However, despite all this impressive data, China is not the world leading economy nor a future hegemon. China has certainly shown the world that a country who opens to trade and investment can have astonishing result in very little time; yet, China’s brilliant result are essentially economic, not political. The monopoly created by the People’s Liberation Army and the CCP is so strong that still today they handle the terms of relation in the international markets and control state power. China has certainly changed since 1979, its communist ideology is today somehow disappeared in favor of national unity and economic performance, but these aren’t certainly an ideal preamble for a future hegemon. There is no guarantee that China will be able to manage the huge social and political changes brought by their own economic policy benefits. According to John Mearsheimer:

“it is clear that the most dangerous scenario the US might face in the early twenty-first century is one in which China becomes a potential hegemon in Northeast Asia (However) China is still far away from the point where it has enough latent power to make a run at regional hegemony.” (John Mearsheimer, 2001)

Moreover, China is unwilling to accept the initial cost and sacrifice its prolific growth in order to create and support the structures and institutions which are necessary to implement international trade.
As a conclusion, on one hand it seems that the US, even though it could still be consider the hegemon, will sooner or later step down from its position, and on the other hand, the other two contender are excluded from the game. The EU is unwilling and knows it is counterproductive for them right now. China is also unwilling but also incapable.
Analysis of modern HST
Realism, Marxism and Liberalism

” If international relations are conceived as a struggle for power, international political economy is a struggle for power and wealth” (O’Brien, p16)

In absence of a “global government” the only possible scenario is a unipolar hegemonic state stabilizing the globe. Kindleberger seemed to be particularly close to this thought. Yet, today this seems as an option which is likely to fail. Not only the 21th century context seems less unipolar than ever, but also it doesn’t seem as a contest to the hegemonic seat is run only by the United States. Kindleberger himself had also contemplated the possibility of two or more hegemons providing leadership. Keohane went even further and concluded that cooperation was also possible without a hegemon.
So where is HST heading? It is difficult to predict what will be the future of the United States and if a rethinking of HST is necessary. However, this paper will now present the three main GPE perspectives and relate them to HST. The goal is to understand whether a possible future HST based on GPE perspective could lead to cooperation with or without an hegemon, state control or conflict.
Realism: economic nationalism
HST has its origins in Realism. Realists place the state or the nation on top of everything. In GPE, realist are called economic nationalist, underlining the importance of the state. The origins, which are the same for both, go back to the concept of nation-state as seen in the 15th century, right until the 19th century, when mercantilists proposed their idea of the global system. The vision was that the globe only offered a limited stock of assets, and therefore, the race to earn as much as possible and the necessity of blocking the other from doing so, would be the core goal. A typical mercantilist measure to advantage the state was not to permit free trade outside the colonies. The result was medieval; states tended to adopt protectionist policies, i.e., blocking access to foreign firms to national market or laying obstacles for capital to flow freely.
Modern Economic Nationalists base their thoughts on the fact that states must protect their interest and the latter stands as the pillar of political life. As a conclusion, the state must feed their citizens of the necessary tools for them to achieve their goals, which of course are related to the states interest.
By no means, for an economic nationalist, the market is shaped by anything else which isn’t the state. In contrast to liberalism, according to economic nationalists, the market doesn’t form itself naturally and doesn’t self-regulate, or is even governed by the freedom of the individual to produce and invest. However, realists are aware of the presence of market actors, yet they also claim that these actors are merely subordinates of the state’s political power. Economic nationalist consider global economy as dependent to international politics and not as an element born from the intersection of the two.
According to economic nationalist an economy should not entirely depend on the import of a certain good, due to the possibility of a future scarcity during a conflict, or in economic terms, during a crisis or any collateral reasons. There are also unnecessary imported goods that are considered as bad for the national economy, as a threat to national consumers and producer, which includes their culture and values. The latter worringly recembles to Gramsci idea of ideological hegemony.
As a conclusion, according to economic nationalist, HST must remain unipolar, with a great imbalance of power towards a strong hegemon with a large economy, sufficient resources and strong currency. Cooperation to the Hegemon is only a tool necessary to seek for self-interest across the globe, such as protecting its hegemony, but also in promoting development yet always keeping an eye on national goals.. The goal is to reduce conflicts while promoting development, and according to economic nationalist only a single power is expected to reduce global or regional conflicts among the other actors. Because inequalities in power are realistically wide, conflicts between two or more equivalent forces are highly improbable.
More specifically, under a realist and economic nationalism point of view, the United States can be considered as a declining hegemon; however, China is far from being a rising hegemon. and the only other world nation that could aspire to this position is actually a union, which most certainly finds itself in a similar situation as the US did in interwar period: not willing. Therefore, according to realism the only solution is either a strong come back of the United States or a shift to a different hegemon, yet it seems like the “unipolarity” of the system will change in the future.
Marxist perspectives
The main ideas were first proposed by Marx and Engles; the inevitable seize of power by the workers due to the conflict with capitalism. Marxism, in contrast to liberalism, “embraces the collectivist approach of realist.”. In Marxism, firms are nothing more than an instrument of exploitation and the workers are the exploited. Markets are obviously categorized also as an exploitive tool. Globalization is even considered by few as either a myth or just a modern version of imperialism. This eventually all adds up to depency theory, a theory concerned in proving that underdeveloped nations have been so exploited that the West progress is proportional to the South’s underdevelopment. This theory has seemed to have lost some grip, after that in the 80s liberal policies were introduced in many underdeveloped and developable countries, creating growth regardless of western progress.
As a conclusion, Marxist see global capitalism as conflictual, the context of class struggle. Marxism all considered, views the world as a new form of Imperialism where a dominant state, or hegemon, not only opposes but also oppresses weaker states and therefore weaker class. This context is the result of a conflict; based, and driven by, profit. A hegemonic power, for a Marxist, is therefore only a tyranny which aims to self-interest and the search of profit and resources.
As a result, Marxism stands very far from the principles of HST; however, Marxist have actually often used the idea of hegemony, replacing class focus with distribution of wealth and exploitation: they called it Dominance. The goal is either conflict or anarchy, or both in random order, and of course the race to power of the workers. In a more international point view, an hegemon, according to Marxist, is only the ultimate tool to justify exploitation of weaker states; not only economically weaker but also culturally, what Gramsci called Ideological Hegemony. HST is pro-free trade and markets therefore opposite to Marxist theory. Since these policies increase the gap between workers and capitalist or Western states over weaker states, and since they give an advantage to key capitalist states, it seems like Marxists would prefer conflict before even arguing whether or not the United States are in decline. Marxist probably dream of a crisis of hegemony, as this would also be a crisis in capitalism.
Liberal perspective
In GPE, the liberal perspective focuses on individuals and on numerous important actors such as the State or a corporation. Liberals concentrate on the behavior of firm and individuals and claim the latter to be the key. The assumption is that the individual is led by self-interest which will inevitably maximize its position and therefore increase economic exchange. Firms are the result of maximization and the source of wealth.
In contrast with the other main GPE perspective, the state is seen as an actor which is affected and influenced by various events and factors in a context where conflict is solved with cooperation. By many seen as an enemy, the state is accused of mixing politics to economics by altering the latter with its intervention, and therefore, blocking the individuals freedom to intervene in the economy. The market is in fact created by the free interaction of individuals in economy to maximize their self-interest. This is one of the main aspects which render the liberal prospective essential for a modern HST vision. A context where the United States, willing or not, must cooperate with countries such as China who hold 30% of their public debt, yet are also heavily dependent on American imports. They are clearly intertwined and trapped in a very delicate situation.
In a world dominated by liberal principles such as free trade and simplified capital flows, cooperation is the wise thing to do. Even though there are different liberal thoughts such as what Keohane calls “Institutionalist”, which are very illusive about cooperation and interdependence. They claim that cooperation isn’t always going to work even though they are aware of the fact that the metamorphosis of state interest in the world economy can easily change any cooperation scenario.
In contrast to economic nationalist, liberals think there can be cooperation without hegemony. In fact today, there is probably much more cooperation than HST had considered, even though the hegemon is in decline. Keohane (1986) claims that “when the regime already exist, they can be maintained even after the original condition for their creation have disappeared.” There clearly is a persistence of international regimes even though American hegemony has been eroding now for decades.
In the international arena, liberal perspective is probably the best answer to today’s context. There seems to be no future for a massive hegemon as in the past, at least as it has been viewed by realist. Today power is ever less in military and much more in economy and trade. Firms are the extension of the states across their borders and dominance in language and lifestyle is essential. The United States, even though they might be in decline in HST terms, are still the world’s first superpower. Their firms are well eradicated in the world economy and so is their lifestyle that everybody seems to want to buy.
Conclusion
In essence, according to Krasner, free trade works globally only if a unipolar hegemonic system is operative. The hegemon assumes leadership and absorbs the initial cost of the process. In fact, according to HST, the hegemon should provide leadership; however, unlike an imperialist power, it can’t impose its rules and interest without some kind of support from the other actors of the international arena. Therefore cooperation is promoted by the hegemon, which in turn, requires cooperation in order to scatter its rules and interest across the globe.
However, in a context where the hegemon has lost power and no new rival has effectively tried to take his place, combined by an increased cooperation throughout international regimes in a declining context, shows a partial failure of HST. Its seems as tomorrow hegemon might as well be nobody and that the worlds necessity for cooperation has systematically ignored HST and pursued its own interest via international regimes, in part created by the hegemon. Keohane theory has proved true; cooperation has increased while hegemony has reduced.
Perhaps HST needs some rethinking. Kindleberger had thought about it himself; a unipolar system might not be possible in future. Yet, even so, HST seems to accommodate only the realist. However, while the Marxist hope for destruction and only really use HST in realist terms and adapt it to their concerns, liberals perspective is focused on cooperation , the key improvement of HST.