State cartel theory
Encyclopedia
State cartel theory is a new concept in the field of International Relations theory
(IR) and belongs to the group of institutionalist
approaches. Up to now the theory has mainly been specified with regard to the European Union
(EU), but could be made much more general. Hence state cartel theory should consider all international governmental organizations (IGOs) as cartels made up by states.
Europe. But additionally these terms have been checked and sometimes adjusted in their meanings to be able to incorporate political and governmental functions as cartel functions of the combined states.
The method of theory creation consists of three steps:
In the final outcome a theory gets build, which – like the cartel theory of economic enterprises – bases on the utilitarian image of man. Thus, state cartel theory is strictly determined by socio-economic factors. Since this approach prevents ideological influences it is not – neither evidently nor in a hidden or subtle manner – connected with the interests of any existing great power.
The philosophical precondition of the specified knowledge transfer from cartel theory is the – one century old – insight, that there are striking analogies between combinations of states and combinations of economic enterprises (i.e. the cartel
s formerly legal and very numerous in Europe). These analogies are both institutionally and functionally.
The cartel concept for closer forms of inter-state cooperation was counteracted by just a range of actors: by Leninism
, American anti-trust policy and European federalists (e.g. Jean Monnet
). This conception was first blamed, then ignored, and by the 1960s increasingly forgotten.
The cartel relationship: The analysis of relations among the combined states is a basic instrument of state cartel theory. The aim is to identify the extent of their cooperation, of common interests on the one hand, and the amount of their competition, the dimension of divergence of their interests on the other hand. This is carried out essentially contrary to existing statements of the conventional theories of IR, e.g. the argument of interstate ‚friendship’ – which is the idealist or functionalist position – or a human drive for power – which is the realist position. This way, the basic relationship between the cooperation seeking capitalist states can be recognized as a quite rational, but also difficult friendship-rivalry, a relationship of cooperation and antagonism. The Franco-German friendship
can be seen as a paradigm for this and many examples of its ambivalence have been quoted.
Hegemony analysis: The supremacy of the greater states – like that of the bigger enterprises – leads to overproportional assertiveness and thus to privileges for these actors. On the other hand integration brings about dependencies to all participants. So there is a structure of symmetric and asymmetric connections, which can be found both inside and outside of the respective state cartels. The analysis of these complex forms of international relations is in the focus of state cartel theory and can lead to a global analysis of state cartels and state cartel effects.
), it has a secretariat, there are operative commissions (e.g. the European Commission
), and there can be an arbitration board/court (e.g. the European Court
). Additional institutions could be developed – in enterprise as in state cartels – according to needs.
On the democratic character of the European Union: The European Parliament
is – according to state cartel theory – a less important, not really indispensable multifunctional communitarian institution of EU: The most obvious function is the orchestration of a European democracy; at this, the democratic pretensions of parties and citizens of the member states are to be served symbolically – meaning: they often get sent to nowhere. Another function is the provision and application of more EU-expertise by the representatives of the single member states, being an additional channel to import national interests into the communitarian system. Finally, the European Parliament is able to influence the EU legislation slightly by its rights of participation: it can actually bias and improve decisions, which otherwise would be made exclusively by the mighty council, and this would often happen according to the notorious principle of the least common denominator. A significant increase in the rights of the parliament would challenge the system and pose the question: cartel or federal state. A process like this, which could really override the cartel-logic, could only develop with the support or at the instigation of a strong dominant group of member states.
Theory of ideology: While national-imperialist ideologies of the pre-1945 era being abolished, international institutions (state cartels) today spread an ideology of interstate cooperation: „Since war and protectionism should fall away as means of policy, a different stile of contact becomes necessary between the partner states. […] The nationalism of former days is repressed by an ideology of international understanding and friendship. The European Spirit gets evoked particularly in context of the European Union. The commandments of international understanding and European Communitarianship are the lubricant in the mechanics of the bargaining process in the state cartel. As ideologies they often make the relations look much better than they really are, but as appeals or instructions they could be eminently valuable. […] The Origin of the communitarian ideology in its pure occurrence are the central institutions of the EU, its commission and its parliament.“
:
The cartel gain: Cooperating within international institutions normally provides the participating states with substantial benefits. „The cartel gain of the EU consists of the various gains in prosperity, which result from economic integration and now make the member states adhere like being glued together. Any far-reaching disintegration, trying to go back to national autarchy, would invariably lead to an economic crisis, for which the Great Depression [in Europe] of 1929/33 should have been just a slight forerunner.“ Transnational corporations and export-oriented national enterprises plus their employees and suppliers constitute a social power, which would hinder a breaking apart of the community. On the other hand, the cooperation in the state cartel is complicated because of distributional conflicts.
Tendencies for crises: According to state cartel theory inter-state organizations typically develop severe problems and crises. The European Union
is seen to be in a permanent crisis. The causes for this are thought to lie in the clashes of increasingly unbridgeable interests between the participating nations. The EU – as a particularly advanced cartel combine – would strike more and more against a systemic barrier of development, i.e. could only be upgraded effectively by a change-over of power, by a federal revolution
, in which the cartel form will be conquered and a federal state – with its considerable potentials for rationalization – will be erected.
Thereby state cartel theory is partially in accordance or in opposition:
International relations theory
International relations theory is the study of international relations from a theoretical perspective; it attempts to provide a conceptual framework upon which international relations can be analyzed. Ole Holsti describes international relations theories act as a pair of coloured sunglasses,...
(IR) and belongs to the group of institutionalist
Institutionalism
Institutionalism can refer to:* Old Institutionalism: An approach to the study of politics that focuses on formal institutions of government* New institutionalism: a social theory that focuses on developing a sociological view of institutions, the way they interact and the effects of institutions...
approaches. Up to now the theory has mainly been specified with regard to the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
(EU), but could be made much more general. Hence state cartel theory should consider all international governmental organizations (IGOs) as cartels made up by states.
Terminology
The term cartel in state cartel theory means – in very short words – an alliance of rivals. It is used in a neutral, strictly analytical way, not as a degradation. The terminology has been predominantly adopted from the old historical cartel theory of pre-World War IIWorld War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
Europe. But additionally these terms have been checked and sometimes adjusted in their meanings to be able to incorporate political and governmental functions as cartel functions of the combined states.
Methodical base and scientific background
State cartel theory is a hybrid design made up of two or more theories, assembled in an adequate way.The method of theory creation consists of three steps:
- 1. The starting material of a state cartel theory is the intellectual corpus of a broad existing theory of international relations. For instance the following theories might be adaptable: the realism, the neofunctionalistNeofunctionalismNeofunctionalism is a theory of regional integration, building on the work of Ernst B. Haas, an American political scientist and also Leon Lindberg, an American political scientist...
Europe-science, or even a Marxist imperialism theoryTheories of New ImperialismThe term imperialism was used from the third quarter of the nineteenth century to describe various forms of political control by a greater power over less powerful territories or nationalities, although analytically the phenomena which it denotes may differ greatly from each other and from the...
. Their statements on the relationships between the industrialized nation states are called into question as these are thought to be ideologically biased and therefore these are marked up for revision and change. - 2. The losses and vacancies are now to be refilled by another theory, the classical cartelCartelA cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
theory of economic enterprises. This theory, made up mainly in Germany, was authoritative in Europe till the end of the World War II and was pushed aside globally by the American anti-trust policy up to the 1960s. The classical cartel theory comprised an elaborate organizational theory of the cartel institution. Its knowledge of the relationships among the cartelized enterprises and between them and the common cartel institutions are now to be applied. Hence, the classical economic cartel theory serves as a tool kit for repairing the ideological deformations and corruptions of the existing theories of IR. - 3. In a third step the transfer results were rechecked in the light of available facts of international relations and they were stated more precisely and with greater differentiation.
In the final outcome a theory gets build, which – like the cartel theory of economic enterprises – bases on the utilitarian image of man. Thus, state cartel theory is strictly determined by socio-economic factors. Since this approach prevents ideological influences it is not – neither evidently nor in a hidden or subtle manner – connected with the interests of any existing great power.
The philosophical precondition of the specified knowledge transfer from cartel theory is the – one century old – insight, that there are striking analogies between combinations of states and combinations of economic enterprises (i.e. the cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
s formerly legal and very numerous in Europe). These analogies are both institutionally and functionally.
History of the state cartel conception
The conception of international relations as potential cartel phenomena has a long tradition:- John Atkinson Hobson, a left-liberal British economist, suggested between 1902 and 1938, imperial antagonisms could be pacified in a system of ‘inter-imperialism’, if the great powers would “learn the art of combination” (‘combination’ or ‘combine’ were at those times used to designate cartels).
- Karl KautskyKarl KautskyKarl Johann Kautsky was a Czech-German philosopher, journalist, and Marxist theoretician. Kautsky was recognized as among the most authoritative promulgators of Orthodox Marxism after the death of Friedrich Engels in 1895 until the coming of World War I in 1914 and was called by some the "Pope of...
, the leading theoretician of social democracySocial democracySocial democracy is a political ideology of the center-left on the political spectrum. Social democracy is officially a form of evolutionary reformist socialism. It supports class collaboration as the course to achieve socialism...
before World War I, hoped since 1912, the great powers – beginning with the British Empire and the Deutsche Reich – would unite into a 'state cartel' giving them organization and reconciliation within an ultra-imperialismUltra-imperialismUltra-imperialism, or occasionally hyperimperialism and formerly super-imperialism, is a potential, comparatively peaceful phase of capitalism, meaning "after" or "beyond" imperialism. It was described mainly by Karl Kautsky...
– an idea, that was an illusion at that time. - Early Commentators of the European unification described the organizational system of the Schuman Plan in 1950 as ‘cartel-like’; the Corriere della Sera, a respected Italian newspaper, understood the aim of the proposal as to build a cartello anticartello, i.e. a states’ cartel to eliminate the private cartels in the coal and steel sectors.
The cartel concept for closer forms of inter-state cooperation was counteracted by just a range of actors: by Leninism
Leninism
In Marxist philosophy, Leninism is the body of political theory for the democratic organisation of a revolutionary vanguard party, and the achievement of a direct-democracy dictatorship of the proletariat, as political prelude to the establishment of socialism...
, American anti-trust policy and European federalists (e.g. Jean Monnet
Jean Monnet
Jean Omer Marie Gabriel Monnet was a French political economist and diplomat. He is regarded by many as a chief architect of European Unity and is regarded as one of its founding fathers...
). This conception was first blamed, then ignored, and by the 1960s increasingly forgotten.
Central conclusions and basic instruments
The breakthrough phase: The historical origin of a wider political cartelization is identified in the crisis of the capitalist system after World War II. The breakdown of the anarchic – or imperialistic – world system in 1945 marks the beginning of the comprehensive inter-state cartelization of the western world. The extreme material, political and human losses and sacrifices led the nations – or more precisely: their ruling classes – to the conclusion that war and protectionism should not be used any more as weapons against each other to assure the survival of the free western world.The cartel relationship: The analysis of relations among the combined states is a basic instrument of state cartel theory. The aim is to identify the extent of their cooperation, of common interests on the one hand, and the amount of their competition, the dimension of divergence of their interests on the other hand. This is carried out essentially contrary to existing statements of the conventional theories of IR, e.g. the argument of interstate ‚friendship’ – which is the idealist or functionalist position – or a human drive for power – which is the realist position. This way, the basic relationship between the cooperation seeking capitalist states can be recognized as a quite rational, but also difficult friendship-rivalry, a relationship of cooperation and antagonism. The Franco-German friendship
Franco-German cooperation
The relations between France and Germany is embodied in a cooperation called Franco-German Friendship . This came about after 1945, when a French-German enmity between the two countries ended....
can be seen as a paradigm for this and many examples of its ambivalence have been quoted.
Hegemony analysis: The supremacy of the greater states – like that of the bigger enterprises – leads to overproportional assertiveness and thus to privileges for these actors. On the other hand integration brings about dependencies to all participants. So there is a structure of symmetric and asymmetric connections, which can be found both inside and outside of the respective state cartels. The analysis of these complex forms of international relations is in the focus of state cartel theory and can lead to a global analysis of state cartels and state cartel effects.
Institutions and theory of ideology
The organizational structure: In enterprise cartels the members’ assembly was always the historically first and main institution of the combination. All further institutions had serving functions (secretary, bodies for market regulation, arbitration board) and were the result of the will and the needs of the members. This structure can be found alike in the combinations of states: the council of ministers or delegates is the members’ assembly of the participating states (e.g. the Council of the European UnionCouncil of the European Union
The Council of the European Union is the institution in the legislature of the European Union representing the executives of member states, the other legislative body being the European Parliament. The Council is composed of twenty-seven national ministers...
), it has a secretariat, there are operative commissions (e.g. the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
), and there can be an arbitration board/court (e.g. the European Court
European Court
European Court could mean:* the European Court of Justice , an institution of the European Union for the resolution of disputes under EU law, based in Luxembourg....
). Additional institutions could be developed – in enterprise as in state cartels – according to needs.
On the democratic character of the European Union: The European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...
is – according to state cartel theory – a less important, not really indispensable multifunctional communitarian institution of EU: The most obvious function is the orchestration of a European democracy; at this, the democratic pretensions of parties and citizens of the member states are to be served symbolically – meaning: they often get sent to nowhere. Another function is the provision and application of more EU-expertise by the representatives of the single member states, being an additional channel to import national interests into the communitarian system. Finally, the European Parliament is able to influence the EU legislation slightly by its rights of participation: it can actually bias and improve decisions, which otherwise would be made exclusively by the mighty council, and this would often happen according to the notorious principle of the least common denominator. A significant increase in the rights of the parliament would challenge the system and pose the question: cartel or federal state. A process like this, which could really override the cartel-logic, could only develop with the support or at the instigation of a strong dominant group of member states.
Theory of ideology: While national-imperialist ideologies of the pre-1945 era being abolished, international institutions (state cartels) today spread an ideology of interstate cooperation: „Since war and protectionism should fall away as means of policy, a different stile of contact becomes necessary between the partner states. […] The nationalism of former days is repressed by an ideology of international understanding and friendship. The European Spirit gets evoked particularly in context of the European Union. The commandments of international understanding and European Communitarianship are the lubricant in the mechanics of the bargaining process in the state cartel. As ideologies they often make the relations look much better than they really are, but as appeals or instructions they could be eminently valuable. […] The Origin of the communitarian ideology in its pure occurrence are the central institutions of the EU, its commission and its parliament.“
Functions and results of integration
The functional typology: The enterprise cartels of former times framed markets according to their interests, state cartels frame policies. While the aims of the standardization activities can be different, the methods and instruments of private and state cartels are often similar and always analogically comparable. Thereby the functional typology of the classical enterprise cartels is applicable also for interstate regulative communities. This typification by the purpose of the cartel can be demonstrated by means of the example of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
:
- the European common agricultural marketCommon Agricultural PolicyThe Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
has instruments similar to a – normally forbidden – production cartel typically controlling prices and outputs. - the miscellaneous market regulationsRegulation (Brussels)For other uses of the term regulation, see: Regulation.Regulation in Belgium refers to legislation passed by the Brussels Parliament in exercise of its agglomeration competences and by the Common Community Commission in certain cases....
of EU, but also its health care and environmental standards, can be seen to correspond to standardization cartels, partially also to conditions cartels. - the settlements on maximum prices for cell phone calls within Europe constitute a supranationally decreed calculations cartel.
The cartel gain: Cooperating within international institutions normally provides the participating states with substantial benefits. „The cartel gain of the EU consists of the various gains in prosperity, which result from economic integration and now make the member states adhere like being glued together. Any far-reaching disintegration, trying to go back to national autarchy, would invariably lead to an economic crisis, for which the Great Depression [in Europe] of 1929/33 should have been just a slight forerunner.“ Transnational corporations and export-oriented national enterprises plus their employees and suppliers constitute a social power, which would hinder a breaking apart of the community. On the other hand, the cooperation in the state cartel is complicated because of distributional conflicts.
Tendencies for crises: According to state cartel theory inter-state organizations typically develop severe problems and crises. The European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
is seen to be in a permanent crisis. The causes for this are thought to lie in the clashes of increasingly unbridgeable interests between the participating nations. The EU – as a particularly advanced cartel combine – would strike more and more against a systemic barrier of development, i.e. could only be upgraded effectively by a change-over of power, by a federal revolution
Federalism
Federalism is a political concept in which a group of members are bound together by covenant with a governing representative head. The term "federalism" is also used to describe a system of the government in which sovereignty is constitutionally divided between a central governing authority and...
, in which the cartel form will be conquered and a federal state – with its considerable potentials for rationalization – will be erected.
Compatibility with other theories of International Relations
State cartel theory suggests:- an intense rivalry among the developed industrialized states for socio-economic reasons,
- a partial (not complete) resolvability of these contradictions within the framework of international institutions or – in other words – by the cartel method,
- the power of the nation states as the crucial force within international political relations.
Thereby state cartel theory is partially in accordance or in opposition:
- to the neofunctionalistNeofunctionalismNeofunctionalism is a theory of regional integration, building on the work of Ernst B. Haas, an American political scientist and also Leon Lindberg, an American political scientist...
Europe-science and the communitarian method of Jean MonnetJean MonnetJean Omer Marie Gabriel Monnet was a French political economist and diplomat. He is regarded by many as a chief architect of European Unity and is regarded as one of its founding fathers...
: The belief in the resolvability of the inner-European divergences of interests, in the feasibility of an efficient and conciliable Europe, is criticized by state cartel theory as naíve-idealistic. On the other hand both integration theories agree with regard to the importance they attach to institution-building in state communities. - to Leninist imperialism theoryTheories of New ImperialismThe term imperialism was used from the third quarter of the nineteenth century to describe various forms of political control by a greater power over less powerful territories or nationalities, although analytically the phenomena which it denotes may differ greatly from each other and from the...
: The allegation of antagonistic rivalry between the developed capitalist states should be wrong, certainly since World War II. These states could definitely cooperate enduringly and abstain from open violence in their relationships. But state cartel theory and imperialism theory accord in the belief that societal interests are caused by socio-economic factors, thus eventually depending on the economy. - to theories of International Relations with a pro-American bias: In the hegemony analysis of a state cartel theory it is always the look at the most powerful nations (i.e. globally the USA) which is most important. – Whitewashing of America as ‚good strong power’ as done in realism (by MorgenthauHans MorgenthauHans Joachim Morgenthau was one of the leading twentieth-century figures in the study of international politics...
: the USA were not in a consistent pursuit of hegemony) or the methodical deferment of the power aspect as in the mainstream of both regime theoryRegime theoryRegime theory is a theory within international relations derived from the liberal tradition that argues that international institutions or regimes affect the behavior of states...
and global governanceGlobal governanceGlobal governance or world governance is the political interaction of transnational actors aimed at solving problems that affect more than one state or region when there is no power of enforcing compliance. The modern question of world governance exists in the context of globalization...
approach would be contrary to a state cartel theory.