Analysis of Gilpin’s Hegemonic Stability Theory

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Robert Gilpin has played a significant role in the development of the hegemonic stability theory and this is based on his opposition to the balance of power theory. He suggests that the international system tends to go towards equilibrium automatically, and does not require the actions of great powers in order to do so. He further proposes that in order for the development of a new system to come about, it is essential for a hegemonic war to take place, and this process involves the rise of a new power to take the place of the current one. Under such circumstances, the new hegemon seeks to ensure that it maintains an order where it remains dominant, meaning that they set up institutions aimed at the attainment of this objective. For example, the United States has sought to maintain its order through the establishment of such institutions as the World Bank, a military alliance (NATO), and promoting democratization. In this paper, there will be an analysis of the hegemonic stability theory with the aim of finding out whether it offers insights into the stability of the global economy.

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The hegemonic stability theory is one that promotes the idea that it is critical for there to be the presence of a hegemon in order for stability to be achieved within the international system. Thus, a hegemon is often the most powerful state within the international system and has access not only to raw materials, a large market, and a competitive advantage when it comes to the goods that it places in the market because they ensure that it gains massive profits. The hegemon has to have a large economy and the political power to make sure that it is able to exert its influence over the international order. The size of its economy also has to be massive because it ensures that it has greater control over capital flows within the international system while at the same time establishing its dominance over the collective actions of all other states with lesser power. This situation can be considered critical for the international order because it promotes a situation where the hegemon is able to exert its will in a manner that not only creates stability, but also discourages other states from either seeking to disrupt the system, or making a direct challenge against the hegemon. The economic size of a hegemon is also critical because it makes it possible for this state to not only purchase a considerable amount of goods and services from other states, but also produce the goods that are needed by the latter in order to survive. Under such circumstances, it becomes possible for the hegemon to make sure that it promotes economic and political stability because it the ability to not only promotes the circulation of public goods, but also sustains the economic system through the provision of liquidity in case of economic crises.

It is also essential to consider that the hegemonic stability theory is one that seeks to promote the idea that the structural factors of the international system are dominant. This is especially the case considering that all states tend to be concerned by a diversity of interests within the international trade structure, and these include the following; the achievement of economic growth, social stability, as well as the enhancement of national income and political power. Thus, it becomes necessary to make sure that there is a hegemon that dominates the structure in such a way that there is a reduction of conflicts by the states within it. Without a hegemon, it is likely that the various large states will end up competing against each other for fairly modest gains that, rather than promoting the stability of the international political and economic system, would create an environment of instability. The less developed states under such a system would be worse off because these states would not have a say in any of the most critical matters that affect them. The presence of a hegemon ensures that there is the establishment of a fairly stable system where even smaller states are able to benefit. The latter have access to a large export market that is not influenced by the conflicts of interests of great powers. It will also become more difficult for there to be a level of stability that might negatively affect the smaller states in terms of their economies or their exports because there is little chance of a hegemon being overtaken at a political level. Thus, the presence of a hegemon is critical to the international order because it not only brings about political stability, but also economic stability, which has the ability to promote reducing the competitive aspects of great states to the disadvantage of smaller ones.

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The hegemonic stability theory promotes the idea that the hegemon has a crucial role to play when it comes to the generation of cooperation between states within the international system. This cooperation can be seen through the role that the hegemonic power plays in the stabilization of the financial system in such a way that ensures that it provides liquidity during crises. Furthermore, the hegemon is able to promote free trade because of its sheer economic size, and this is done in such a way that ensures that there is the institutionalization of cooperation between states in the development of means through which to bring about a sustainable economy at the international level. Hegemons have the ability to coerce states that are weaker than them towards the establishment of cooperative ventures that enable them to significantly reduce their costs of transactions, and make sure that there is the development of stability in their expectations concerning their economic interactions with other states. Under such circumstances, the hegemon can promote the stability of the political and economic aspects of the international system through the identification of common interests with its allies, and developing initiatives aimed at furthering these interests through a reduction of some of its expectations when it comes to the outcomes of the cooperative efforts. In the latter process, the hegemon makes sure that it invests its resources towards the development of institutions that make the achievement of common interests possible. These institutions have the ability to impact on the sustainability of the international economic order even in situations where the hegemon is undergoing a decline. Therefore, even in a scenario where the hegemon is undergoing a decline, because it has invested in the construction of a cooperative economic order, the system remains stable, while also offering the hegemon an opportunity to cooperate, rather than go to war with, a rising hegemon.

It is necessary to note that the hegemonic stability theory is one that provides insights into the stability of the global economy, especially when it comes to its influence in cooperation on exchange rates. While states may be politically, economically, and socially different, they require a stabilizing factor to make sure that these differences are overcome and that there is the establishment of cooperation between them. These states have such heterogeneous preferences towards exchange rates that it is extremely difficult for them to be brought round to having the similar objectives. This is the case when it comes to individual states where domestic actors tend to not only have a considerable number of interests, but these interests are reflected in their views concerning the international economic system. Those with an interest in the export economy tend to prefer a highly stable exchange rate, which their counterparts in the import sector prefer variability in the exchange rate because it ensures that there is a stimulus in the monetary policy of the state. Because of the size of its economy, the hegemon has considerable influence over the international economy, which also includes the exchange rates. The domestic actors within the hegemon seek to make sure that there is the promotion of monetary policy which ensures that there is relative stability within the international monetary system. Exchange stability makes it possible for the international economy to remain stable, meaning that the hegemon has to influence other states towards the adoption of policies that act towards making sure that the international monetary system remains stable; preventing policies that can cause exchange volatility. The circumstances in the prevailing international economy tend to determine the monetary policy that is adopted the hegemon, meaning that it is the hegemon, through its influence and the size of its economy, which determines the direction that the global economy is going to take.

The hegemonic stability theory is one that is extremely relevant when it comes to explaining the relative stability that the global economy has had since the end of the Second World War. Following the Second World War, the United States emerged as the most powerful nation in the world and it sought to make sure that it exercised its hegemony effectively. However, this process required that there was the establishment of a new economic order which was not only more stable, but also capable of being adjusted in such a way that it was also beneficial to the United States and those nations that supported the new system. The United States, as the global hegemon, sought to establish an internationally integrated economic order to ensure that its domestic preferences were achieved, while at the same time promoting its primacy at the international stage. The United States made use of its massive economic resources following the war to make sure that it creates conditions that were favourable to ensure that it continued its political and economic engagement with other nations in the world. The United States was able to establish its hegemony over the rest of the world, especially in the economic sector, because it faced very little competition from the economies of the other great powers, which had been devastated during the war. In the immediate aftermath of the war, it also ended up becoming the only creditor country in the world because it sustained a considerable part of the global import markets 28. In this way, the United States, as the hegemon, was able to spearhead the global economic recovery while at the same time creating conditions that made it possible for it to continue its economic dominance for decades.

The stability of the global economy has come to be heavily reliant on the presence of a global hegemon with the economic size to exert its influence. The presence of the United States has made it possible for economic stability to be achieved since the end of the Second World War, and this has especially been the case considering the primary role of this nation when it comes to minimizing the damage caused by the various economic crises that have come about since then. Its role in the creation of a number of international institutions whose major role is to govern the global economy cannot be underestimated because it has made sure that there are structures available to bring about greater stability even as the United States itself is in decline. This is in line with the hegemonic stability theory, because despite the latter situation, the position of the United States within the global economy has remained fairly stable. It is also pertinent to acknowledge that despite some disagreements between them, the rise of China has been one that has involved the economic cooperation with the United States; showing the effectiveness of the economic structures that were established by the latter.

In conclusion, this paper has posited that the hegemonic stability theory is one that provides an insight into the stability of the global economy. This is based on a study of the United States’ exercise of its political and economic power, which has been critical to the stability of the global economy. Thus, the hegemonic power has the ability to make use of the size of its economy to exert its influence over the global economy in such a way that there is the promotion of a stable international economic regime.

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  1. Clavin, Patricia. The Great Depression in Europe, 1929-1939. St. Martin’s Press, 2000.
  2. Frenkel, Jacob A, and Assaf Razin. “The Mundell-Fleming Model a Quarter Century Later: A Unified Exposition.” Staff Papers 34, no. 4 (1987): 567-620.
  3. Frieden, Jeffry A. “Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45, no. 4 (1991): 425-51.
  4. Gilpin, Robert. “The Theory of Hegemonic War.” The Journal of Interdisciplinary History 18, no. 4 (1988): 591-613.
  5. Keohane, Robert O. After Hegemony: Cooperation and Discord in the World Political Economy. Princeton University Press, 2005.
  6. Krasner, Stephen D. “State Power and the Structure of International Trade.” World Politics 28, no. 3 (1976): 317-47.
  7. Ruggie, John Gerard. “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order.” International organization 36, no. 2 (1982): 379-415.
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