Polarity and Free Trade seek security in a multipolar system is indeed more likely to occur in n-power makes alliance formation likely:the frag- than in two-power systems(Duncan and mentation of the system into rival alli- Siverson 1982). ances is much more likely than a tacit or The number of great powers is obvious- explicit general assignment to abstain ly not the only source of variations in alli- from such alliances (Snyder 1984,462). ance durability.In the postwar period,for That a similar dynamic has occurred in example,the stability of the Western alli- the postwar bipolar system is clear. ance is the product not only of shared In principle,neither the alliances of a strategic interests but also of the demo- multipolar,nor those of a bipolar,system cratic polities and mixed economies com- should enjoy an advantage with respect to mon to its members;analogously,the the evolution of a corresponding free Soviet Union's determination to maintain trade coalition:alliances in both systems ideologically compatible states along its render the security externalities that ac- western frontier tightens bonds among crue to a state's trading partners positive members of the Warsaw Pact.But idio- rather than negative.Yet a bipolar system syncratic factors alone do not explain the is advantaged relative to its multipolar postwar alliance configuration:analytic counterpart on two dimensions relevant arguments also predict that bipolar sys- to the conclusion of an agreement to open tems generally will produce more stable intraalliance markets:(1)exit and(2)in- coalitions than will their multipolar centives of the great power members to counterparts. forgo the use of their market power to ex- First,as Snyder argues,bipolar coali- ploit the smaller members of the alliance. tions are the product largely of systemic structure.Alliances in a multipolar sys- tem,however,are not structurally deter- mined but are the result instead of "choice The Costs of Exit among several options"(Snyder 1984, 415).Typically,serious conflicts of inter- The threat that any member can exit or est among the great powers of any given abandon an existing alliance to join an system result from the anarchic character alternative one reduces the likelihood that of international politics.As a conse- allies will open their markets to each quence,the substitutability of great other:exit transforms the external secur- power allies is likely to decline with their ity economies that would otherwise facili- number:the probability of finding tate the conclusion of an accord into another large power as compatible as the diseconomies.As exit opportunities re- existing ally varies directly with the num- create balance-of-power fears and also ber of great powers that exist.Thus,the shorten the "shadow of the future,"pros- great powers of a two-power system are pects for free trade even within interna- less likely than are those of an n-power tional alliances seem dim. world to be close substitutes for each As Snyder observes in his discus- other. sion of the alliance security dilemma, This can be represented spatially, however,the risk of exit varies widely where the distance between any two states across international systems:the risk is is a measure of the conflict of interest be- higher in multipolar than in bipolar inter- tween them.A bipolar system embedded national political systems(Snyder 1984). in an anarchic world is likely to distribute Snyder's hypothesis has been confirmed its constituent great powers 180 degrees empirically:studies of the nineteenth and from each other.Thus,a very sharp dis- twentieth centuries demonstrate that exit tinction is likely to exist between the two 1249
Polarity and Free Trade seek security in a multipolar system makes alliance formation likely: the fragmentation of the system into rival alliances is much more likely than a tacit or explicit general assignment to abstain from such alliances (Snyder 1984, 462). That a similar dynamic has occurred in the postwar bipolar system is clear. In principle, neither the alliances of a multipolar, nor those of a bipolar, system should enjoy an advantage with respect to the evolution of a corresponding free trade coalition: alliances in both systems render the security externalities that accrue to a state's trading partners positive rather than negative. Yet a bipolar system is advantaged relative to its multipolar counterpart on two dimensions relevant to the conclusion of an agreement to open intradiance markets: (1)exit and (2) incentives of the great power members to forgo the use of their market power to exploit the smaller members of the alliance. The Costs of Exit The threat that any member can exit or abandon an existing alliance to join an alternative one reduces the likelihood that allies will open their markets to each other: exit transforms the external security economies that would otherwise facilitate the conclusion of an accord into diseconomies. As exit opportunities recreate balance-of-power fears and also shorten the "shadow of the future," prospects for free trade even within international alliances seem dim. As Snyder observes in his discussion of the alliance security dilemma, however, the risk of exit varies widely across international systems: the risk is higher in multipolar than in bipolar international political systems (Snyder 1984). Snyder's hypothesis has been confirmed empirically: studies of the nineteenth and twentieth centuries demonstrate that exit is indeed more likely to occur in n-power than in two-power systems (Duncan and Siverson 1982). The number of great powers is obviously not the only source of variations in alliance durability. In the postwar period, for example, the stability of the Western alliance is the product not only of shared strategic interests but also of the democratic polities and mixed economies common to its members; analogously, the Soviet Union's determination to maintain ideologically compatible states along its western frontier tightens bonds among members of the Warsaw Pact. But idiosyncratic factors alone do not explain the postwar alliance configuration: analytic arguments also predict that bipolar systems generally will produce more stable coalitions than will their multipolar counterparts. First, as Snyder argues, bipolar coalitions are the product largely of systemic structure. Alliances in a multipolar system, however, are not structurally determined but are the result instead of "choice among several options" (Snyder 1984, 415). Typically, serious conflicts of interest among the great powers of any given system result from the anarchic character of international politics. As a consequence, the substitutability of great power allies is likely to decline with their number: the probability of finding another large power as compatible as the existing ally varies directly with the number of great powers that exist. Thus, the great powers of a two-power system are less likely than are those of an n-power world to be close substitutes for each other. This can be represented spatially, where the distance between any two states is a measure of the conflict of interest be tween them. A bipolar system embedded in an anarchic world is likely to distribute its constituent great powers 180 degrees from each other. Thus, a very sharp distinction is likely to exist between the two
American Political Science Review Vol.83 great powers of any bipolar system.As a uncertainty over time,they are more like- consequence,each is likely to appeal to a ly to occur in an n-power world than in a very different set of potential allies,and two-power world. the allies themselves will be highly con- Finally,exit risks are likely to be lower strained both with respect to their initial in a two-power system because realign- choice of an alliance partner and with ment is impossible for either great power. respect to their ability to shift alliances By default,alliance stability is also the ex- thereafter. clusive responsibility of each:neither of The addition of one or more states to the two great powers in such a system can the system automatically increases the expect any other state to prevent the range of choice available to allies.Because defection of an ally from within its bloc this change necessarily reduces the dis- (Snyder 1984).In a multipolar system,the tance between states relative to a bipolar interest in preserving alliance stability and system,it also increases the range of alli- the incentive to do so can be distributed ance choices and the opportunities for across more than one great power.As a alliance shifts relative to a two-power consequence,each may seek to transfer world.As a result,coalitions in an the burden of maintaining the alliance to n-power system,unlike alliances in a bi- the other. polar world,tend to be"unstable and vul- Thus,a strong analytic argument,as nerable to policy disagreement"(Snyder well as empirical data,supports the hy- 1984,415). pothesis that the risk of exit varies across A second reason that different exit risks international systems.This variation,in exist is that the distribution of informa- turn,induces variation in the discount tion about potential allies is likely to vary rates of alliance members.Allies in a across systems.The industrial organiza- multipolar system will tend to discount tion literature distinguishes between the future benefits accruing from open search goods and experience goods.Ap- markets among them more heavily than plied to international alliances,this dis- will their bipolar counterparts.The rela- tinction illustrates the impact of varia- tively lower value they place on the future tions in information on coalitional stabil- relative to the present reflects their recog- ity.In economics,consumers have com- nition of the "likelihood that the future plete information about the characterist- will not come"(Levi 1988,13).The dis- ics of search goods before purchase (a count factors of allies in a bipolar system, dress,for example);experience goods are in contrast,are not subject to the same products whose characteristics become downward bias:the greater stability of bi- fully known to consumers only after pur- polar coalitions allows the value of future chase(a restaurant's quality,for example) to approximate present benefits more (Tirole1988,106). closely. Because the amount of reliable informa- An analysis of relative exit risks sug- tion about potential great power allies is gests that the security externalities of any likely to be inversely related to their num- free trade agreement are more likely to re- ber,alliances are more likely in a bipolar main internalized within the alliances of system to resemble search goods and in a bipolar systems than they are within alli- multipolar system to resemble experience ances of multipolar ones.As a result,both goods.Thus,the passage of time leads to the economic and political benefits of in- greater learning about alliance partners in traalliance free trade are likely to be dis- a multipolar world than it does in a bi- counted less heavily in a two-power than polar world.To the extent that alliance in an n-power world.Thus,the dimension shifts are a function of the reduction of of exit advantages a bipolar system with 1250
American Political Science Review Vol. 83 great powers of any bipolar system. As a consequence, each is likely to appeal to a very different set of potential allies, and the allies themselves will be highly constrained both with respect to their initial choice of an alliance partner and with respect to their ability to shift alliances thereafter. The addition of one or more states to the system automatically increases the range of choice available to allies. Because this change necessarily reduces the distance between states relative to a bipolar system, it also increases the range of alliance choices and the opportunities for alliance shifts relative to a two-power world. As a result, coalitions in an n-power system, unlike alliances in a bipolar world, tend to be "unstable and vulnerable to policy disagreement" (Snyder 1984, 415). A second reason that different exit risks exist is that the distribution of information about potential allies is likely to vary across systems. The industrial organization literature distinguishes between search goods and experience goods. Applied to international alliances, this distinction illustrates the impact of variations in information on coalitional stability. In economics, consumers have complete information about the characteristics of search goods before purchase (a dress, for example); experience goods are products whose characteristics become fully known to consumers only after purchase (a restaurant's quality, for example) (Tirole 1988, 106). Because the amount of reliable information about potential great power allies is likely to be inversely related to their number, alliances are more likely in a bipolar system to resemble search goods and in a multipolar system to resemble experience goods. Thus, the passage of time leads to greater learning about alliance partners in a multipolar world than it does in a bipolar world. To the extent that alliance shifts are a function of the reduction of uncertainty over time, they are more likely to occur in an n-power world than in a two-power world. Finally, exit risks are likely to be lower in a two-power system because realignment is impossible for either great power. By default, alliance stability is also the exclusive responsibility of each: neither of the two great powers in such a system can expect any other state to prevent the defection of an ally from within its bloc (Snyder 1984). In a multipolar system, the interest in preserving alliance stability and the incentive to do so can be distributed across more than one great power. As a consequence, each may seek to transfer the burden of maintaining the alliance to the other. Thus, a strong analytic argument, as well as empirical data, supports the hypothesis that the risk of exit varies across international systems. This variation, in turn, induces variation in the discount rates of alliance members. Allies in a multipolar system will tend to discount the future benefits accruing from open markets among them more heavily than will their bipolar counterparts. The relatively lower value they place on the future relative to the present reflects their recognition of the "likelihood that the future will not come" (Levi 1988, 13). The discount factors of allies in a bipolar system, in contrast, are not subject to the same downward bias: the greater stability of bipolar coalitions allows the value of future to approximate present benefits more closely. An analysis of relative exit risks suggests that the security externalities of any free trade agreement are more likely to remain internalized within the alliances of bipolar systems than they are within alliances of multipolar ones. As a result, both the economic and political benefits of intraalliance free trade are likely to be discounted less heavily in a two-power than in an n-power world. Thus, the dimension of exit advantages a bipolar system with