(Page 9 of 28) - Economic Power, Postwar International Finance and the Original Use of �Conditionality� authored by Xenias, Anastasia.

men’s ineradicable lust for power. The struggle for power arises simply because men want
things, it is a natural result of competition for scarce resources. Spinoza finds that states are
natural enemies and as such must constantly be on guard, one against the other. Waltz tells us
the major causes of war are to be found within man, within the structure of the separate states,
within the state system—in other words in every level of analysis, the causes of war are
everywhere.

Most interesting in international relations is that no one questions that this is in fact the

environment in which we live, even if some would like to see ways for changing this
environment (whether through ideas or institutions) and cast hope on an otherwise bleak picture.
How, then, can we presume that a state operating in such a system would only be concerned with
relative military gains of others and not relative economic gains? To say that man acts in ways
contrary to his nature is prima facie absurd, yet this is exactly what liberal arguments of Bretton
Woods present. To use another example from political theory, Machiavelli, points out the high
value men attach to wealth, “for men will sooner forget the death of their father than the loss of
their patrimony.”

If this description is correct, then we might expect to find more concern with

relative gains in economics rather than less. Cooperation then would be as much a result of
coercion as mutual gain incentives.

Relative Gains. Relative gains are prevalent in economics. In a condition of anarchy

relative gain is more important than absolute gain. So why would states cooperate if they know
that all involved would gain in absolute terms? This, it is argued, is the ultimate challenge to
realism in international political economy. But what if the participants anticipate relative gains
as compared to a rival or as compared to states outside the cooperating group? If the members of
the group expect to gain relative to some ‘other’, the issue of relative gains holds and realism is
not challenged. In order to agree to a form of cooperation which would limit state action for the
greater good of the group states must expect to improve their relative position. For example, I
will play well with my team because if we win I will be in a better relative position than every
member of the losing team. I will work well with my coworkers because if we do well I too will
get a larger salary than every employee in the unit we surpass (in attendance, production, sales,
etc.). I will save money with my spouse because together we will have a bigger house than the
Jones’s (or bigger than my rival sibling). In real life we join groups or create groups, not only to
make ourselves better off than before but also to make us relatively better off than some other
people than we would have been on our own. The point here is that relative gains are always
central to economic considerations.

Consider now a financial and monetary regime that facilitates capital flows to its

members but inhibits capital flows to nonmembers. It may be argued that those included will be
relatively better off than those excluded. The International Monetary Fund and World Bank
created at the Bretton Woods conference were not universal. Member states committed to
specific economic reporting requirements that served to exclude those states preferring to
maintain secrecy in their economic data. Also, consider financial cooperation in terms of
lending. If two states are in need of funds but only one gets them, the recipient will be relatively
better off than the non-recipient, while both are relatively worse off than the creditor who will
regain principal plus interest and any conditions demanded in exchange for this generosity.

Survival. Concerns about survival do not stop at the economics border. Security

analysis provides two broad reasons underlying state concerns for survival, both based on the
notion of power struggle. First, that struggles for power arise in competitive situations and force
is introduced in the absence of an authority that can limit the means used by the competitors.
Second, struggles for power arise because men are born seekers of power. As Hertz

defined it,

states look to their comparative power positions because of the ‘security dilemma’, born of a