War, trade and justice : a defense of trade justice based on realist assumptions of international relations

War, Trade and Justice

A defense of trade justice based on realist assumptions

of international relations.

Charles Battaglini (10360069)

THESIS GLOBAL JUSTICE: POLITICAL SCIENCE

Supervisor: Enzo Rossi June 2016

Master Thesis Political Sciences

Table of contents

Table of contents

2

Acknowledgments

4

Abstract

5

Introduction

6

Chapter 1 Hypothetical model

13

Hobbes and the state of nature 13

Hypothetical model 15

Justice 21

Rough equality 23

Self-sufficiency 25

Chapter 2 Fair terms of trade

27

Individual trade and war 27

International war and trade 30

Clubs, pariahs and lone wolves 34

Fair clubs 38

Summary 44

Chapter 3 Coercion

47

Nagel’s argument 48

Blake’s argument 50

Trade and coercion 52

Chapter 4 Reciprocity

58

Reciprocity in trade 59

Reciprocity and self-interest 61

Benefits for sovereigns 63

Conclusion

66

What I did not do 66

Summary, part one 67

Summary, part two 69

Acknowledgments

I want to express my deep gratitude to my supervisor, Enzo Rossi, whose help was invaluable not only for my thesis but for other courses as well. I had the privilege of having him as my teacher for several courses, and in each one he took a critical approach that forced us to revise our argumentation and think further. In addition to proving useful for writing this thesis, this way of thinking is something that will stay with me and help me to be an active citizen in general. Enzo was also always available to offer me advice and share articles that gave me new insights into different topics.

Abstract

In this thesis, I defend the position that trade relations raise claims of justice. This thesis thereby argues that trade justice is needed. It further aims to bridge the differences between realist and liberal international relations theories by offering a conclusion that is acceptable for both schools of thought but based on international realist assumptions. This thesis can be divided into two sections. In the first part, I create a hypothetical model based on a Hobbesian international state of nature. I argue that trade is rational and promotes self-preservation for states and sovereigns. Furthermore, I also posit that it is rational to propose fair terms of trade that benefit the least well off. In the second part of the thesis I argue that it is not only rational to have fair terms of trade, but that it is also required. I use the work of Blake, Nagel and Sangiovanni, who aver that claims for justice are limited to pre-existing institutions (such as the state), to argue that trade is one such institution. These authors argue that it is the presence of coercion or reciprocity that precipitates the claims for justice that a state’s citizens make of their government. My argument shows that trade relations create a similarly coercive system and constitute a basis for reciprocity. Therefore, in order to be consistent liberal thinkers, who limits claims of justice to coercive or reciprocal pre-existing institutions, should accept that trade relations create claims for justice.

Introduction

Existing trade institutions, including organizations such as the World Trade Organization (WTO) and the International Monetary Fund (IMF), affect our world in several unfair ways. For example, in our current system, it is possible for groups of nations (such as members of the EU) or individual nations (such as the United States) to impose trade barriers and restriction that impede other countries’ abilities to export products to them. However, due to WTO rules that nations have voluntarily accepted, many developing countries are not allowed to use the same

protectionist regulations to boost their own economies.1 Another example of unequal trade

rules took place in 2001, at a time when 20 percent of the South African adult population was infected by the HIV virus. The virus was no longer fatal in rich countries, since drugs could suppress the infection virtually indefinitely; however, the drugs cost about $10,000 per person per year, which is an amount that is far beyond the reach of almost all infected Africans. The South African government could produce the drugs at a cost of $350 per year, which while still relatively expensive for South Africans was more affordable. Nonetheless, the United States government and the world’s major pharmaceutical corporations took South Africa to court, claiming that it was violating intellectual property rights. These rights are a part of both the WTO’s rules and trade agreements between the United States and South Africa. Even though the legal suits were ultimately dropped, the United States still tried to restrict the way in which African countries could obtain anti-AIDS drugs, promoting its own pharmaceutical industry at

the expense of human lives.2

Organizations such as the IMF have also been harming the poorest of our world by lending money to unelected dictators who have kept the money for themselves. The IMF has always insisted that these loans have to be repaid, not necessarily by the dictator or his cronies (who probably fled the country after the latest revolution), but by the starving population left

behind.3 An explicit example of this is the case of Sese Seko Mobutu, former dictator of Zaïre

(now the Democratic Republic of the Congo). During his violent dictatorship who lasted from 1965 till 1997, Mobutu borrowed money from the IMF several times; of these funds, he took

1

Pogge, 2007: 4, 14.

2 _{Singer, 2002: 71-73.} 3

$200 million for himself and his family. Moreover, he used the borrowed money to enforce his

dictatorial regime.4 Of course, Mobutu himself never repaid the IMF; after a revolution led by

Laurent-Désiré Kabila, Mobutu died in exile in Morocco without having been put on trial. His

legacy was an enormous debt for his country.5

This all appears unjust – but is it? As Thomas Hobbes famously said, “Where there is no

common Power there is no Law: where no Law, no Injustice.”6 Since no common power exists at

the international level and no state is able to rules the others, there is no law and thus no injustice. The blatantly unfair trade system is therefore actually just the natural way in which states interact. Writers who are less pessimistic than Hobbes claim that there is no injustice at the international level because coercion or reciprocity does not exist between states that trade with one another. According to these authors, claims for justice and legitimation only arise at the level of the nation-state because it is only at this level that a case for coercion and reciprocity exists.7

Thesis

In this thesis, I argue that trade does indeed generate a claim for justice, not because trade in itself generates this claim but because trade generates a base for coercion (or something similar) and reciprocity which, in turn, creates a demand for justice. In doing so I create a hypothetical model of states that is similar to what Hobbes thought our international system was like. This model has both a scientific and a methodological purpose. First, it aims to transcend the divide between local ideologies by formulating comprehensible premises that are most acceptable to those who are least expected to accept the conclusion. Because cases and examples are often evasive, self-serving or ideologically contentious, relying on fact is not enough; different groups may describe and interpret the facts differently. The hypothetical model aims to transcend this disagreement by accepting the most pessimistic view of global justice, with the aim that a more optimistic conclusion will then be accepted by everyone – even

4 Van Reybrouck, 2014: 397-399, 420. 5 Van Reybrouck, 2014: 456, 556-558. 6 _{Hobbes, 1959: 66.} 7 Sangiovanni, 2007: 3-4, 8.

the most fervent critics.8 By arguing that it is in a state’s own interest to cooperate and create fair terms of trade agreements, I show that it is not in the nature of states or the international arena to be unjust. In contrast, I demonstrate that security, stability, order, protection, trust and

the conditions of cooperation9 can be created through a just and fair system without a superior

authority.10 As such this model aims to bridge a divide between political theories.

Secondly, this model has a methodological purpose, namely to eliminate all other factors that could create demands for justice. These factors may include historical relations, such as colonial ties. We instead want to find bases for justice that emerges only from the mere fact that there are sovereign states that can trade with one another. The implication here is that claims of justice that arise in this extremely unfavorable hypothetical model would surely arise in our world as well. Furthermore, the conclusion will not be merely applicable to our actual, contingent world, but to all worlds featuring sovereign states. Indeed, a virtue of abstraction is that principles resulting from it have a wider scope and are applicable to a broad range of situations.11

On the other hand, the argument that trade creates coercion and reciprocity is a necessary addition to the hypothetical model, as it shows that it is not only rational to have just trade rules but also required. If it so happens that in a world with no supreme authority (such as the current international system) it is in the states’ self-interest to create fair terms for trade agreements. It does not mean that the demands for justice should also be present in a world in

8 _{O’Neill, 1987: 65-66.} 9

Williams, 2008: 3-4.

10

Even though my thesis could, in some sense be related to theories of political realism, I will not address their claim that the use of coercion is legitimated if they offer a legitimation that makes sense in a certain time and context provided that the acceptance of the justification isn’t produced by the coercive power which is supposedly being justified (Williams, 2008: 3-6). Following this view the modern trade regime could be legitimated, even though the terms of trade are unfair, because every nation that is subjected to the kind of coercion created by trade accept its justification without its legitimation being produced by coercion. For example it could be possible that every nation member of the WTO is highly convinced that the trade rule are the most efficient and that it is better than thousands of people die from AIDS than to lose this efficient system. This justification of efficiency arises from something else than the coercive power (coercive power to prevent states to create their own drugs), namely from what we could call an neoliberal ideal, and it (could) make sense for every members of the WTO even the one that are heavily affected by the HIV virus. I won’t discuss these thought, because first I think it is an empirical question whether or not this neoliberal thought is created by the coercive power it aims to justify. Secondly, I think that this thesis, whether or not it makes sense for other people on earth, is an attempt to pierce the bubble supporting this justification. For example it aims to falsify theories that legitimate the absence of justice in trade relations.

which the conditions of the hypothetical situation do not apply.12 In other words, someone can easily claim that it is all well and good that a just system of trade will emerge in some hypothetical model in which states have roughly equal power, but there is still no reason to think that there ought to be a fair system of trade in the world. Saying that it would be possible and rational to create fair trade agreements in a hypothetical model thus does not explain why it is bad that there is no justice in our world since it does not share the hypothetical model’s feature. It could be claimed that since the real world’s trade rules are voluntary, despite being

unfair they are not unjust and thus no problem exists.13 However, by arguing that trade in the

hypothetical model creates coercion and a reciprocity basis for justice, I show that besides being rational to adopt justified trade agreements, it is also morally required.

In summary, the primary conclusion of this thesis is that trade between nations creates the basis for a demand for fair terms of trade agreements that are justified in a way that is acceptable for everyone. The reasons are first that it is in states’ own interests to formulate and respect such terms of cooperation when they trade; second, that trade creates a kind of coercion and kind of reciprocity that give rise to demands for justice. This does not pertain so much to global justice (in terms of justice between nations) as to trade justice, which entails one nation’s justice duties applying to another nation on the basis of their trade relations (and not just because they share the same planet). With this kind of trade justice, I neither deny nor affirm that demands for justice should be limited by pre-existing institutions. It could still be possible that we have pre-institutional demands for justice towards each other; this could be consistent with my proposal that we have justice toward one another when we trade, since if we all always have justice duties towards each other these duties extend to trade as well. However, if justice is indeed limited to pre-existing institutions, then my thesis defends that we have to include trade among the institutions that create demands for justice.

Before discussing the arguments, I first explore questions of relevance and present a short overview of this thesis.

12 _{Hampton, 1999: 268.} 13

Relevance

The question is now thus: Why is this thesis relevant at all? There are two main reasons why it is scientifically relevant. First, it aims to combine a debate in two different branches of international relations (IR) theories, namely realism and liberalism. Secondly, it contributes to a debate about global justice, arguing on the side of justice at the international level against writers who claim that justice can only arise at the national level.

The first debate is between realist and liberals.14 Here IR liberals are convinced that it is

possible to create peace and cooperation in the international arena, which is a view that is based on the idea that states have different internal arrangements that affect their behavior. For example, democracies are less prone to war than dictatorships. Moreover, liberals tend to argue that the calculation of power matters less for some states. On the other hand, realists are more pessimistic than liberal thinkers when it comes to international politics. This pessimism is based on their conviction that states’ behavior is mainly influenced by their external environments and not by their internal characteristics. Moreover, they hold that power

calculations dominate states’ thinking and that states compete for power among themselves.15 I

take part in this debate by using realist assumptions to create my hypothetical model and showing that these assumptions lead to a liberal conclusion, namely the possibility of justice between states. I retain the ideas that states are self-interested, that they try to maximize their power and that their internal characteristics do not affect the way in which they behave towards each another.

The second debate I take part in is between the cosmopolitan and political views of global justice. The cosmopolitan view claims that demands for justice derive from an equal duty of fairness that we owe in principle to all of our fellow human beings. According to this view, states are an unfortunate obstacle to a morally required global justice. In contrast, the political view claims that states are the reason why humans do not sense a duty for justice towards citizens of other states. This view asserts that justice arises from associative obligations; being

14

This is about theories of international relations (IR) so the realist thought mentioned here is not the same as the previously discussed political realism, the latter applies to politics in general and criticize a moral approach towards politics, while IR realist focus only on the international level and don’t need to accept political realist claims at the national level and vice versa (Rossi and Sleat, 2014: 1, 8-9).When I use the term realism in this thesis I refer to IR realism instead of political realism.

part of the same association leads citizens to have certain claims of justice towards one

another.16 I contribute to this debate by showing that associative duties apply to types of

associations beyond those between citizens of a state, namely they also apply within nations that are trade partners. I therefore reject the claim of most associative thinkers that demands for justice apply only at the national level without endorsing the cosmopolitan claims that these

demands should not be limited by pre-existing institutions.17 I only claim that justice should also

apply to the pre-existing institution of trade. For these reasons, my thesis actually constitutes a defense of trade justice rather than of global justice and goes further than the political conception (yet without endorsing a cosmopolitan view). Given the realist assumptions on which I base the hypothetical model and the criterion of the political view of global justice that I use to determine the validity of a claim for trade justice, my conclusion should be accepted by both realists and liberals.

This thesis is thus scientifically relevant, as it contributes to several ongoing debates in political theory and yields a conclusion that should, in my view, be acceptable to both sides. Ultimately my hope is that by contributing to the ongoing scientific debates, it will create change in our international political system. Furthermore, I believe my thesis also has a societal relevance and that its conclusion addresses our world and how it should be. Nonetheless, as it is above all a scientific study, it is written for scientists and not as a policy document. In short, while this article is primarily intended to contribute to the scientific debate, it is also has important implications for society and its ultimate aim to influence our global institutions. Thesis outline

Before I begin my argumentation, I briefly outline the different chapters of this document and the structure of my argumentation. In the first chapter of this thesis, I present the hypothetical model based on the Hobbesian idea of a state of nature, which includes discussing its features and defining relevant concepts. The goal is to present a situation consistent with realist assumption about IR theories. And thus in this model there cannot be one world state or one supreme authority and it is assumed that states are primarily interested

16 _{Nagel, 2005: 119-121.} 17

in maximizing their power and do not have preexisting bonds or connections with each another. In the second chapter I discuss how from this situation with no preexisting cooperation it would be in states’ interest to create a system of trade with fair terms of cooperation that are acceptable for every possible trade partner. Here I argue that it can be rational – and is indeed possible – to create a fair system of trade. In the third and fourth chapters, I not only maintain that it is rational to formulate fair terms of cooperation, but I argue that having such justified terms of cooperation is morally required. In the third chapter I mainly discuss theories of Michael Blake and Thomas Nagel that base demands for justice on the coercive aspects of associations such as states. After presenting core concepts, I argue against these theorists’ claims that merely states can impact autonomy in a way that needs justification. I demonstrate, by using the hypothetical model, that trade relations also affect the autonomy of states in a way that needs justification. In chapter four I discuss the theory of Sangiovanni, who claims that demands for justice arise from actors’ reciprocal relations. I then argue that just like coercion, trade creates relations of reciprocity and through this creates demands for justice. I end my thesis with a conclusion and a short summary of my arguments.

Chapter 1 Hypothetical model

Hobbes and the state of nature

In this part of my thesis, I present a hypothetical model that depicts the world as different sovereign states all living on one round continent. I explain my assumptions that these states are self-sufficient, self-interested and roughly equally powerful. I begin by briefly presenting the ideas of Hobbes and then argue why they are relevant and what they mean.

Hobbes, a 17th century English philosopher,18 is probably best known for his book

Leviathan (which was first published in 1651). In this work, Hobbes aims to describe how states

and government came about and why their rule and coercive power are legitimate. His main claim is that without the coercive power of a supreme authority, such as a sovereign, there cannot be any justice and human beings would be in a state of anarchy and war of everyone against everyone.

According to Hobbes, man is born free. This means that man is not hindered from

undertaking his desired actions and is able to do so according to his strength and wit.19

Moreover, Hobbes claims that men are roughly equal in terms of strength and wisdom, which indicates that one individual cannot defeat all weaker men and that the strongest can always be slain by someone weaker or a group of weaker individuals. Moreover, this equality gives rise to our equal hopes to attain our ends. When two men desire the same thing (and it is something that cannot be enjoyed by both), they thus become enemies and try to destroy each other in order to achieve their end.20 This implies a certain kind of scarcity, since without any scarcity individuals could always enjoy things even if others are enjoying them as well. In the state of nature, there is no law or authority that impedes humans from trying to acquire what they want. As a result, conflict can arise for several reasons, such as desires for gains, safety and reputation. This situation is characterized as war, as a state of war entails every man being against every man. War does not imply actual fighting; Hobbes instead sees it more as a situation in which all individuals lack the assurance that others will not fight them and that interactions between humans will not result in violence. When humans are assured that their

18

Born on the fifth of April 1588 and deceased on the fourth of December 1679.

19 _{Hobbes, 1959: 110.} 20

contracts will be respected and they will not be attacked by other individuals, the situation of peace prevails. However, in a situation of war, without laws there is also no injustice; as such, no violent, treasonous or deceptive act can be called unjust in the state of nature. The life of

man under these conditions is solitary, poor, nasty, brutish and short.21

However, in this state of nature man has the right of nature, which allows him to use all of his power to preserve his own life. This general rule (which is according to Hobbes found

through reason) thus forbids a man from doing that which is destructive to his life.22 A human

therefore has reasons to do things that are likely to promote his own interests, particularly if his

interest is avoiding death and securing a felicitous life.23 In times of peace, individuals have the

assurance that no one would use violence against their lives; as such, peace is the situation in which the lives of individuals are best protected. The law of nature thus requires humans to strive for peace. However, since humans are born in a state of nature in which there is no assurance that their lives will not be threatened, they need to use all of the advantages of war to protect their lives (e.g., by killing a potential adversary). Laying down weapons and refusing to use all of war’s advantages to protect one’s person is only possible provided that every other

man is doing the same; otherwise, an individual becomes helpless prey.24 A contract or transfer

of right is impossible in such state, as the one who transfers his right first is at the mercy of the other (which is a position that the rational rule of self-preservation does not allow). In such a state of nature that is characterized by the constant fear and possibility that someone will break his contract, there thus actually cannot be any contracts or cooperation between human beings. To eliminate this situation of constant fear, Hobbes argue that there is a need for a coercive power that ensures a punishment for those who break contracts; this punishment must be so large that the gain of violating a contract will not outweigh it. This coercive power arises when humans relinquish their rights to a superior authority, such as a sovereign, and create a

commonwealth.25 21 _{Hobbes, 1959: 64-66.} 22 Hobbes, 1959: 66. 23 Beitz, 1999: 29. 24 _{Hobbes, 1959: 67.} 25

According to Hobbes, the international system is somewhat different; even though kings and sovereigns are assumed to be jealous and envious of each other (and therefore to be aiming to acquire what the other has and in a posture of war), this situation does not create misery similar to that in the state of nature. Despite being in a situation of war, nations are still able to

uphold the industry of their subjects and to promote their own interests.26 Moreover, wars and

battles fought by nations against each other do not affect the sovereigns themselves, seeing as they use soldiers to do the fighting instead of risking their own lives.

Hypothetical model

How can we apply this information about the state of nature to our hypothetical model? Here I present the model’s features based on several core ideas on the international state of

nature. The actors in this model are states27 that are self-sufficient, self-interested and roughly

equally powerful. These conditions should create a state of anarchy in which no individual state can independently become a leviathan and impose a coercive system of justice. Moreover, all contingent factors are eliminated, as they affect the possible emergence of a leviathan and could create arbitrary claims for justice. As noted previously, we want to find bases for justice that emerges from the mere fact that there are sovereign states that can interact with one another, and not from other factors. In the rest of this chapter I develop further the features of the hypothetical model starting by explaining who the primary actors in the model are.

The first feature of the model is that the actors within it need to be states and the sovereigns ruling over those nations. To take states instead of individuals as primary actors in the hypothetical model is consistent with Hobbes’ view on the international arena because he assumes that individuals transfer their rights to their states. As a result, the actions of states – even those that are created by one sovereign – are attributable to all members of the commonwealth. States express themselves (and through their citizens act) as though they have one will. According to Hobbes, an individual who refuses to do what the sovereign wants is actually violating what he himself wants; citizens’ private preferences and ambitions are thus

26

Hobbes, 1959: 65.

27 _{In this thaesis I will use the concept of nation, state and common-wealth interchangeably as meaning the same}

meaningless, since they ought to be the same as the will of the state.28 Therefore, we can indeed see states as the primary agents in the international arena. We can also assume that citizens’ personal situations do not influence the manner in which states treat each other. In other words, we can assume that the fact that some individual falls in love with people from other countries will not matter when it comes to states deciding to go to war.

A second feature of the IR arena is that states are self-interested, which is in line with

the realist notion of treating states as competitors for power.29 Like humans, states are ruled by

the idea of self-preservation and thus aim to maintain their sovereignty; moreover, they try also to maximize their power and acquire more wealth. States also fight for gains, safety and

reputation, which again mimics human behavior.30 However, sometimes the gains and

reputation are contrary to safety; moreover, a pure rational behavior that is merely directed towards safety can make the sovereign redundant in an individual state of nature. The questions then relate to how rational human beings are, how much they try to promote their own interests and how conflict arises in the state of nature.

At the core of Hobbes’ psychology is the desire for self-preservation, which entails securing one’s life as well as the biologically intrinsic desire for personal advancement. Humans are also global maximizers instead of local maximizers, which means they are capable of undertaking actions that will negatively affect their current personal advancement in order to promote it more significantly later. In order to do so, they can use an expected utility calculation that entails choosing the option in which utility multiplied by the probability of an outcome

occurring is the highest.31 Humans behaving in this way are rational, as they are using the most

efficient means available to achieve their self-preservation. However, Hobbes claims that people who willfully endanger their lives are irrational – not because they are not trying to

achieve what they desire, but because they desire something false.32 Someone who does not

use his means as efficiently as possible to achieve his own self-preservation is thus not necessarily irrational, although he could be demonstrating a lack of capacity. In other words,

28 _{Hobbes, 1959: 90; Hampton, 1999: 127.} 29 Mearsheimer, 2001: 23-24. 30 Hobbes, 1959: 64-65. 31 _{Hampton, 1999: 14-17.} 32

someone who is achieving (or trying to achieve) something other than self-preservation would thus be irrational, even though he is using his means effectively to achieve his ends.

This aim for preservation confronted Hobbes with a paradox. On the one hand, self-interested human beings need to be uncooperative enough to make the state of nature an extremely unpleasant place that everyone wants to leave. But on the other hand, human beings should not be so uncooperative that their cooperation is impeded once a commonwealth has been created under a leviathan. In essence, if humans are too cooperative there is no need for a sovereign, since they could decide to cooperate in order to promote their self-interest instead of having a coercive power to ensure cooperation. At the same time, however, if human nature

is too uncooperative war will continue to emerge even in the commonwealth.33

This problem of whether humans are to rational or not enough to cooperate has been addressed by Jean Hampton. She presented textual evidence to account for the natural behavior that is responsible for the state of war. The first is the rationality account, in which humans are engaged in a kind of prisoner’s dilemma (PD) with each another. In such dilemmas, cooperating is on the aggregate better for both parties, but not cooperating is better individually. Even if A knows what B is going to do (i.e. cooperate or not), it is most advantageous for A to not cooperate. This is because if B refuses to cooperate, A would be his prey by cooperating; furthermore, if B agrees to cooperate, A can take advantage of him by defecting. The problem with this situation is that it is never advantageous to cooperate, not

even in a commonwealth; as such the creation of a commonwealth is impossible.34 However,

the state of nature could also entail an indefinitely35 iterated chain of games. In such a situation,

instead of having to deal with each other only once, we do not know when our interaction will stop. This is a good analogy for human life, since we never know when we will die and thus do not know how long we have to share the same environment. In these kinds of repeated PDs, cooperation is easier since one has an ability to punish an uncooperative player by not

33

Hampton, 1999: 79.

34

Hampton, 1999: 62

35 _{Both partners cannot know when their games would end in order to make cooperation with this kind of games}

possible. If the partners would know when the game would end, it would be rational for a player to defect in the last round. With this knowledge, it is rational for the other partner to defect in the one but last round. Again knowing this, it would then be rational for the second partner to defect in the second to last game and so forth, this will result in defection already in the first game (Binmore, 2005: 71-73, 77; Hampton, 1999: 77).

cooperating in the following game and reward a cooperative player with subsequent

cooperation.36 The problem here is that cooperation can emerge without a sovereign, since

cooperation is in the interest of both partners and the model has an intrinsic control mechanism

(namely refusing to cooperate in later games).37 In this situation, cooperation is thus rational

even without a sovereign. Because a single PD fails to create any cooperation while multiple PDs fail to create the need for a sovereign, Hampton concludes that the rationality account for conflicts in the state of nature fails.

The second account for conflict presented by Hampton is passion. This account arises because many people are driven by vainglory, which makes them undertake irrational actions such as invading their neighbors even though they know these neighbors’ lives will probably be

lost.38 This is irrational in the sense that an individual is failing to realize a state of affairs that

promotes his self-preservation and thus desiring the wrong thing instead of using his means

ineffectively.39 A full passion account cannot work for Hobbes, first because it contradicts his

view of rational human beings (namely that if every human is irrational, then irrationality is

perhaps more a part of human nature than merely a disease).40 This means that this conflict will

exist in the commonwealth, since humans do not react rationally towards the threat of coercion in order to preserve their own lives. A more subtle form of the passion account states that only some humans are irrational; most are rational. Cooperation then becomes impossible for two reasons: first, because anyone can fail to cooperate for irrational motives; second, because the majority will fear the irrational actors and thus be reticent to cooperate with anyone (as mistakenly cooperating with an irrational actor could soon cost the rational person his life, the costs are too high for a rational person to risk initiating cooperation). However, in accordance with this view, an irrational actor would essentially show his irrationality by acting in a way that would signal to others that cooperating with him is not a good idea. At the same time, cooperation between other rational individuals would still be enabled, making a sovereign both

36

Binmore, 2005: 77, 81-82; Hampton, 1999: 74-78.

37

This is called the Tit-for-Tat strategy, and has shown most efficient under certain conditions. The conditions are that there are no errors of communication or information and that the partners care enough about the future (Binmore, 79-82).

38

Hampton, 1999: 64.

39 _{Hampton, 1999: 37.} 40

unnecessary and incapable of making laws that would be respected by the irrationals.41 This account also fails, since it does not formulate a human nature violent enough to make the state of nature unpleasant but cooperative enough to make it escapable.

Hampton presents her own account, namely the shortsightedness account, to accomplish what the rational and passion accounts fail to do. She uses the iterated PD as the basis for interaction in the state of nature. However, she argues that some people could be shortsighted and thus fail to see the dilemma as an iterated game and instead act as if they

were in a single PD.42 This mistake of reasoning could occur because some people are not

intelligent enough or, more plausibly, because they see the benefits of cooperating as too

remote to merit accepting cooperation.43 The belief that the advantages of cooperation are too

distant is also reinforced by the fact that repeated interactions do not obviously occur in the

state of nature.44 For instance, it is easy for a sole individual to accept exchanging a cow for a

horse and then just run away with both animals; it will not matter to that person that his former neighbor is running after him with a pitchfork, since without a horse the neighbor will not be able to catch up and without a cow he will not have the milk he needs to support a prolonged chase. Cooperation is thus risky in the state of nature, even more so in situations in which one’s life depends on a good outcome. Shortsighted people are not irrational in the sense that they have wrong desires; they still have a desire to preserve their lives, but they preserve them in an inefficient way. The shortsightedness account has an advantage over the full passion account of being consistent with Hobbes’ psychology, namely some people can be diseased while it does not require that the whole population have irrational desires.

However, how does this shortsightedness account compute with the need for and possibility of having a sovereign? It could be possible that short- and farsighted individuals work together under a sovereign if that sovereign makes it beneficial for everyone to cooperate in the short term. Using his power, the sovereign can make it clear to even the shortsighted individuals

41

Hampton, 1999: 67-68.

42 _{Hampton, 1999: 81.} 43

In order for cooperation to be rational for the partners in multiple PD games, the partners need to care enough about the future so that it is worth their while to value long-term relationships and cooperate in the present game (Binmore, 2005: 82).

44

that violating a contract is not in their individual interests by harming them (almost)

immediately when they violate a contract.45 The question here is whether short- and farsighted

individuals would be able to choose a sovereign who could ensure short-term benefits for cooperation. According to Hampton, choosing a leader is quite problematic and will yield a

sovereign who is more Lockean than Hobbesian.46 Nonetheless, the shortsighted account offers

an explanation as to how people could cooperate in a commonwealth when the state of nature is really an unpleasant and violent place.

The international arena is a place with a possibly undetermined number of iterated games; the exception is if an invasion occurs, in which case the invaded country disappears (as it becomes part of its conqueror’s territory). This possibility of iterated games does not mean that nations are necessarily continually interacting; however, it means that the number of partners is finite and known. As a result, nations cannot try to take advantage of partners without fearing having to possibly interact with them again. There are several reasons why it would be less clear to individuals than to countries that they are in indefinitely iterated games. First, it is sensible to assume that the planet will not be destroyed (at a minimum, nations do not know if or when it will be destroyed and thus act like it will not); as such, nations will have to share their world for their entire existence (so until they are themselves conquered or conquer the whole world). Secondly, unlike humans, nations do not have legs and cannot just walk away. A nation has a certain territory and population that resides on it, which means that it cannot just abandon a trade deal and goes live on the other side of the world; this is especially true for an agrarian society that depends on the land that it lives on. Furthermore, if the whole world is divided into territories that are occupied by countries, nations cannot displace themselves without triggering conflicts and violence. Of course, communication and information problems could still exist; however, they are contingent factors and thus we need to assume that cheating or cooperating are always well perceived and thus that those problems will not arise. Moreover, the earth is a smaller place for countries than for individuals, since countries take more space and are fewer in number. But do those limitations also count for the sovereign of a country, if he wants to

45 _{Hampton, 1999: 132-133.} 46

keep power over his commonwealth, he is bound and limited in his movements, just like his nation.

This hypothetical model thus rejects the single PD rationality account, since states are not in a single interaction but rather in an indefinitely iterated game. We also have to reject the purely irrational account of states, since it is inconsistent with our basic idea of states (namely that they try to promote their own good). The rationality account is acceptable even though it makes the international state of nature extremely peaceful. The semi-passionate account closely resembles the shortsighted account; the latter is more consistent with our view of rational states, and, as I argue, it yields the same results in the international state of nature. We will thus view states according to the shortsightedness account, which means that while some states are shortsighted, most are farsighted; it also means that states are playing in an iterated PD.

Justice

Before we continue, I want to return to the idea that actors at the international level are states. Now that I have discussed the idea of rationality and self-interest, I have to address the fact that the interests of the sovereign are not necessarily the same as those of his population – which means it is not always rational for the sovereign to promote the interest of the state as a whole. We therefore cannot plainly conflate the interests of a state’s population with its sovereign’s interests, although I argue that these interests are linked in a way that makes states relatively just. In the hypothetical model, states should be just for several reasons. First, we have to assume that they are in order to reject the claim of general skepticism. This thesis is not about challenging the claim that something like justice may exist, but about whether terms of trade should be submitted to those claims for justice. We thus already assume that we demand just rules and institutions at the national level. The question is then whether we can consistently uphold the demand at this level without having a corresponding demand at the international level.

A second reason why states and sovereign should be just comes from Hobbes’ own theory. Hobbes acknowledges that the obligation to obey the law of the sovereign was limited by the individual right to self-defense, the right to not kill oneself and the sovereign’s ability to

protect his subjects.47 But who decides whether the sovereign is adequately protecting his subjects? As by obeying the orders of their sovereign the subjects are granting him an ability to

protect them, the subjects are in the end determining the sovereign’s adequacy.48 Indeed, the

only reason for self-interested individuals who are aiming to protect their own lives to surrender their rights to an absolute sovereign would be if they had a possibility to take those rights back (i.e. they are loaning and not surrendering their rights to the sovereign). If subjects completely surrender their rights to the sovereign, they have no assurance that their lives will be protected; as such, even if the state of nature is a bad place, it would be against their own interest and irrational for them to do so. However, if there is a significant dissatisfaction of large group of citizens with their sovereign, a dissatisfaction significant enough that a part of the population could eventually refuse to obey his orders, rebel and take his coercive power away. Such dissatisfaction can come from the belief that even the state of nature is better than a tyrannical sovereign; nonetheless, if the state of nature is a really bad place, it is likely that citizens will think that someone else would make a better leader. Both sources of dissatisfaction would result in the sovereign having too little coercive power to protect his citizens, which in turn

would negate their obligation to obey him.49

An unjust or unfair sovereign could thus create too much dissatisfaction within his own population and thereby lose his coercive power, while a sovereign proposing fairer and better rules would be endorsed. This means that, while the interests of the sovereign and his population differ, the sovereign still has to take his citizens’ interests of being well ruled and having their lives protected into account in order to promote his own interests and remain in power. Nonetheless, the interests of the sovereign and the population still cannot be conflated together. Even in a democracy where the institutions are organized to facilitate withdrawing a sovereign’s support, the sovereign can keep his power provided he is backed by a broad enough portion of the population. He could thus harm some of the population’s interest (e.g., by waging war and violating the interest of soldiers’ self-preservation), as long as he maintains support among the rest of the population. The sovereign therefore does not have to be fully fair or to

47

Hobbes, 1959: 114-117.

48 _{Hampton, 1999: 201-202.} 49

fully share the ends of his population so long as he shares their ends enough to be supported more than other potential leaders.

Rough equality

A third condition stipulates that, like individuals in the state of nature, states are roughly equally powerful. This condition is necessary since if a state would be significantly more powerful than others it could act as a leviathan. This means that a state has so much power that no other state can conquer it and it has the ability to conquer the entire world. If a leviathan exists, there are also conditions for justice; this is because as noted before, this supreme power can use coercion in order to implement rules and justice.

However this feature yield high constraint for how the hypothetical model would look like because the equality of power between states depends, among other things, on the physical shape of the world. First, rough equality also means that all countries are roughly equally in terms of both number of inhabitants and territory. According to John Mearsheimer, a large population implies more potential workers, who can in turn produce more wealth and military

power.50 In addition, a larger territory provides more space for inhabitants, which also facilitates

having more citizens and thus more wealth and military power. This equality additionally implies that nations perform more or less the same in relation to innovation and economic growth creation. All nations have roughly equally valuable resources, although this does not mean that they have the same resources (this fact may not seem important now, but later I discuss why it is relevant). Every nation also has about the same capacity to efficiently transform economic wealth into military power; as such I treat economic and military power as the same throughout the remainder of this thesis. Even through Mearsheimer acknowledges that wealth is necessary for military power, he only considers military power (and not wealth) when measuring power. He does this for three reasons: first, states convert varying portions of their wealth into military might; second, the efficiency of that transformation varies from case to case; and third, he claims that great powers buy different kinds of military forces and that these choices also have

implications for the military balance.51 Nonetheless, all of these differences imply a basic

50 _{Mearsheimer, 2001: 48.} 51

inequality that is intrinsic to a nation and not to the way it deals with others. Furthermore, even if the differences are small, in the long term they are high enough to make some countries much more powerful than others; the most efficient nation could namely become a leviathan.

Mearsheimer rejects this conclusion of a possible IR leviathan, primarily due to geographical factors. He claims that bodies of water, especially large ones such as oceans,

profoundly limit the power projection of great nations.52 However, these geographical factors

are precisely the contingent factors that we want to eliminate. The hypothetical model should thus consist of one large round island that features nations that are roughly equal and no contingent factors (such as efficiency or rare resources) that could give any country a significant (long-term) advantage over others and may enable it to emerge as a leviathan. if justice rules arise, they will thus not stem from a supreme coercive power but from voluntary agreements made between countries (e.g., trade agreements). Because we want to eliminate contingent factors, all of Mearsheimer’s grounds for separating military and economic power are precisely the reasons why I should not separate these two concepts.

The way in which countries wage war is also an unpredictable variable that can significantly influence power relations in the world. Many different non-material, strategic and

geographical factors can provide one combatant with a decisive advantage over another.53

These contingent factors also need to be controlled. However, an even more important question related to war is what determines its outcome. Can nations that are roughly equal in power conquer others without any costs? Even if fighting between nations destroys the lives of a sovereign’s soldiers and subjects and not the sovereign himself, combat also entails danger for him. Furthermore, even if a commonwealth is successful militarily, the power it loses through fighting costly wars against equally strong opponents may cause it to become prey for a third country. The rule of self-preservation would thus dictate that countries all engage in real

fighting when they are (almost) sure to emerge as the victor at a relatively low cost.54

52

Mearsheimer, 2001: 37, 63.

53 _{Mearsheimer, 2001: 46-47.} 54

Self-sufficiency

A fourth feature of the hypothetical model is that states are self-sufficient. This stems from the idea that despite a situation of war at the international level, an individual’s life is not short, unpleasant and brutish. Because states can uphold both the industry of their subjects (thereby enabling them to create food and products without constantly fearing for their lives) and a coercive system of justice, there can be peace at the national level while there is war at

the international level.55 The problem here is that if states are fully self-sufficient, they will not

envy each other. Hobbes’s idea that states are continually jealous implies some form of

scarcity.56 If one covets something, it means he does not have it himself. If everyone had

everything, the state of war would no longer exist, as no one would have an incentive to try taking what another has away. As stated before, countries not all having the same resources is thus a necessary condition for the states of war and envy. In order to make the independence and jealousy claims meet, we can argue that all states have the basic need to be independent of other states and have something unique that others could desire. For example, nations could produce enough food for their citizens without producing a large variety of food. If one country produces wine and another whiskey, each country does not necessarily need the resource of the other to survive; nonetheless, it could still covet this resource that they cannot themselves produce. This is consistent with the claim of Hobbes that no country produces everything that it

may desire and could acquire through war, trade or labor.57 In the hypothetical model, all states

are thus self-sufficient enough to survive without necessarily having to conquer or trade with others, although such activities can still yield valuable gains and advantages.

It is useful to review the hypothetical model at this juncture. This model is a place where nations are self-interested; are roughly equally powerful; do not have any contingent geographical, strategic or demographical advantages; and are self-sufficient without having everything. Moreover, it is a situation of war in which peace is lacking, which means that no nation can be assured that it will not be attacked by another. Every sovereign state has its weapons, guns, forts and garrisons in the fear that another country could try to invade and

55 Hobbes, 1959: 65. 56 _{Hobbes, 1959: 65; Hampton, 1999: 59-60.} 57 Hobbes, 1959: 130.

conquer it were it to diminish its vigilance. There are no coercive powers above the nation-state that can create laws and therefore there is no justice or injustice, contrary to the ways in which citizens interact with one another within their states. This is also a situation wherein nothing changes: no nation becomes strong enough on its own to be able to conquer all other states. There can be economic growth and the industry of a state’s subjects can go on unhindered, but the equilibrium of rough equality remains unchanged given that every nation can grow as

efficiently as the others.58 However, that everything remains stable without interaction between

states does not mean that everything can remain stable when states do interact with one another. As I already mentioned, interaction between states in the form of actual fighting is improbable, because the costs and risks of being attacked, after having used all one’s resources in a first war, by another nation are too high. Moreover, without interaction the assumption of rough equality remains valid, combat remains improbable and thus the equilibrium remains stable. However, war is not the only kind of interaction that states can have; as briefly mentioned above, states can appropriate new resources through conquest, labor or trade. Since conquest is improbable and labor arises equally efficiently within all countries, only trade

remains as an interaction that can possibly destabilize the equilibrium of rough equality.59 In the

next chapter, I discuss the effects of trade and how it can create fair terms of cooperation.

58 _{Hobbes, 1959: 65.} 59

Chapter 2 Fair terms of trade

This chapter shows how we move from a situation without any cooperation to a situation with the necessary fair terms of cooperation. I start by explaining how situations of war (here viewed as real fighting, not merely the absence of peace) and trade differ at both the individual and international levels. I argue that interaction through trade is a low(er)-risk situation than interaction through war, which means that individuals and states will engage in trade faster than in military actions. These differences between trade and war are all the more salient at the international level. I argue that for the individual, state of nature trade entails a higher risk for the life of one’s partners, which makes it more dangerous and thus less rational to engage in trade. At the international level, the risks bound with total war are much higher than those bound with trade, which results in it being more rational to engage in trade than in war. This explains why cooperation and trade are possible at the international level while impossible in the Hobbesian state of nature. It also makes the international state of nature a much less unpleasant place than the individual state of nature, which removes the absolute need for a sovereign in the international arena. Finally, I show how trade creates cooperation based on fair terms that are acceptable for everyone.

Individual trade and war

Before discussing the international arena, I want to focus briefly on the difference between trade and war (as fighting) in the individual state of nature. The main difference is that in a situation of real fighting, the costs are significantly higher and the benefits are different than in a situation of trade. In the state of nature, someone deciding to fight someone else can have two results: if he wins, he kills his opponent; if he loses, his opponent kills him. With trade, if someone loses his goods through a bad deal, it does not directly mean that he is finished; if he has lost all of his possessions it means he may not be able to do anything (perhaps even not to feed himself and thus to live), but he will not immediately be dead. While fights are thus always high risk (i.e. killed or be killed), trade has a lower risk. Moreover, risk can be minimized in trade by starting with trading lower-risk goods. If an individual starts trading low-values goods such as

a slice of bread, he can gauge the rationality of his partner and create an iterated game. It is always possible that when more valuable things start to be traded, such as cows, one’s partner will suddenly defect. However, maintaining incremental trade relations enables the trader to also preserve the balance of power and thus not be at the mercy of his partner. For example, if instead of directly trading a cow against a horse an individual had worked up to that level by trading chickens, sheep and other items, one’s partner may still defect at the moment of the cow-horse trade – but the trader will still have gained enough from previous transactions to survive and keep the rough equilibrium stable.

For the sake of clarity, it is important to underline the difference between a low-risk and untrustworthy bargain and a high-risk bargain with a trustworthy partner. In the first scenario, the risk that one’s partner will defect is high given his untrustworthiness; however, since the losses are low, it is a low-risk bargain despite the high risk of being cheated. The contrary is true with the other scenario, where the chance of someone else cheating is low but the costs of that cheating are high. The difference between trading a horse for a cow and trading a slice of bread for a piece of cheese is thus the difference between low- and high-risk bargains.

Another advantage of trade is that it yields a higher return than the costs of the trade and a higher total aggregate utility. As a result, even if both individuals possess the same objects after the trade transaction, utility is higher than before the trade. Following the rule of marginal utility, the more I have of something, the less extra units of it are worth to me. This means that if A trades a slice of his large loaf of bread for a piece of B’s large wheel of cheese, there is still the same amount of bread and cheese in the world but the aggregate utility is higher than before the trade. However, if A kills B for his cheese, even though A has more total utility (given that he now has a great deal of both cheese and bread), the utility is still less than the aggregate utility they would have if they traded. Trade is thus on the aggregate more efficient than war.

Finally, a low-risk contract can yield some advantages; even if one is cheated, it can be useful for discerning trustworthy from untrustworthy partners. The latter reveal themselves to be irrational or shortsighted, while the former are farsighted and rational player of multiple PD games. With a low-risk contract, the loss suffered by the trustworthy party (i.e. the one who honors the contract) are low enough to make his position preferable to one in which both

parties renege.60 As a result, even if the trustworthy person was cheated and lost a slice of bread without receiving a piece of cheese, he is still seen as trustworthy; at the same time, the other is revealed to be shortsighted. In future games, other people will thus prefer to cooperate with the trustworthy individual and exile the cheater; even if the cheated has lost a slice of bread, he has thus gained the trust of potential allies or trade partners (unlike the other individual, who has been unmasked as a fraud). High-risk situations are different because the

high losses suffered by the contract keeper make that position least preferable.61 The cow-horse

trade example is relevant here: the individual who was cheated has lost everything necessary for his survival, including his most prized asset; even though others now see him as a trustworthy trade partner, he has nothing left to trade.

Hampton proposes using an expected-utility calculation to determine if it is rational to renege or keep a contract. If the probability that one’s partner will defect is high enough, the expected utility calculation dictates that A should renege. However, the damaged suffered by A

if B reneges is equally important.62 Trustworthiness and assurance that the other will uphold his

end of the bargain is thus as important as the possible risk of harm that results from a failed deal. When someone’s trustworthiness is unknown, individuals therefore prefer to make low-risk trade deals. High-low-risk cooperation, such as enabling someone else to keep watch while one sleeps, only occurs when the person sleeping really trusts the watchman. In the next section, I explain how the expected utility and risk of treason affect the possibility of trade differently at the individual and state levels.

The problem with individual trade is that it occurs between two individuals who are trying to promote their own lives. Even though the keeper of a contract’s losses are low when the cheater does not give his due, the possibility of his life being harmed still makes trade a highly risky operation in the state of nature. When setting out to trade or exchange resources, individuals put their lives on the line; a cheater could as well put a dagger in one’s back or knock one out, beyond not showing up with his due. Cheating can thus resolve a less frontal kind of war; while it is not an aggression that is intended primarily to result in someone’s death, it is still

60 Hampton, 1999: 70 61 _{Hampton, 1999: 71.} 62 Hampton, 1999: 71-72.

an interaction that results in real violence that could be lethal for the person being cheated. As a result, trade in the individual state of nature is still a highly hazardous business that fearful individuals would hesitate to engage in.

International war and trade

Now that we have discussed the advantages and disadvantages of trade and war at the individual level, I discuss them at the international level. The main difference is that in comparison to the individual level, trade is less risky while war is more dangerous and costly.

As at the individual level, it is possible for states to trade without having high risks. States learn if other states are farsighted or not by trial and error, which is easier to do at the international level for several reasons. First, with states, low-risk transactions are truly low risk; since the state does not have to do the trade itself, it does not have the possibility of being stabbed in the back after a trade deal. When individuals have to trade, they interact with one another, which is a situation that can always transform into real fighting and a total loss of life. For states, the worst-case scenario is that they lose some merchants; the balance of power will not be extremely affected and a state’s survival will not be threatened. War (as actual violence) can emerge from cheating on trade, but it is not total war; it is instead merely directed at changing bargaining power in the trade discussion and ends in agreements being reached. This means that while some soldiers or merchants may die, the sovereign does not put himself in a life-threatening situation (unlike during total war, which we discuss later). As in the individual state of nature, trade thus still entails the possibility of conflict war and violence; however, in contrast to the individual state of nature, the sovereign and actors who try to promote their own preservation are not in a life-threatening situation. As a result they are less fearful about engaging in trade.

A second reason why trade is less hazardous in the international state of nature lies in the fact that states are self-sufficient, which means their survival does not depend on the success of a trade deal. At the individual level, if someone defects on a trade-deal with someone else by just refusing to honor his part of the bargain (without fighting), the loser’s ability to feed himself and preserve his life could be in danger. In contrast to such individuals, states are assumed to produce enough to feed their citizens even without trade. Trade is thus overall a

much riskier interaction at the individual level than at the state level. However, the primary reason that states trade in the international arena while individuals in the nature state do not relates to the fact that even shortsighted states use actual fighting and total war less frequently than individuals.

In the international arena, total war or violent conflict with the purpose of annexing or destroying another state yields lower gains than at the individual level and is more costly in the short term for both citizens and their sovereign. At the individual level, fighting someone is a one-time event that does not really have costs in the long term. At the individual level, killing someone does not make it harder for an individual to defend himself against a second opponent; if anything it makes it easier, as he can use the weapons of his first opponent in latter conflicts. For states it works somewhat differently. As explained above, a state’s power is defined by their economic and military powers, which are seen as being similar. However, waging war is costly; since every state is assumed to be roughly equally powerful, a state will sacrifice many resources to conquer even a slightly weaker opponent – which means these resources are not available to fight a second enemy.

It is useful to consider a short example. Let us assume that in terms of units of power, state A has six while states B and C both have five. State A is shortsighted and does not want to wait to benefit from trade; instead it decides to immediately invade state B. Because A has six units of power and B merely five, A wins the fight and conquers B. Assuming that all units of power are equal, it could be that defeating the weaker B would be easier for A and A would lose less than 5 units of power; for the sake of the argument, however, we will reject this possibility. Instead we will assume that A will lose five units and keep only one. Because A has just conquered B, it gains more economic power in the next round than normally. Instead of gaining one unit, it may thus gain two units. At the same time, B will not get any units (given that it has been annexed by A) but C will gain one. This means that A now has three units, B has zero and C has six. In a subsequent round, C can thus conquer A and annex the territory of B while