American Grand Strategy and Political Economy Theory
Summary and Keywords
Nearly everything a state does has distributional consequences, including grand strategy. Societal groups with different stakes in the international economy and defense spending often have conflicting strategic priorities, and these groups pursue their parochial interests by supporting the nomination and election of like-minded politicians. Thus, grand strategy is a product of political economy. An overview of American foreign policy over the last several decades illustrates this logic. In the 1980s, the Democratic and Republican coalitions had conflicting interests over the international economy, so the two parties diverged on grand strategy. The recovery of the Rust Belt in the 1990s and 2000s, however, brought increasing convergence. Political discourse over foreign policy was fiercely partisan, but, with the notable exception of George W. Bush’s decision to go to war in Iraq in 2003, the two parties shared essentially the same view of America’s role in the world. The disastrous outcome in Iraq led the Bush administration back to the middle ground in its second term, and Obama followed the same course. In contrast, the election of Donald Trump augurs change. Trump’s electoral coalition consists of a different balance of interests in the international economy than that of past Republican presidents, so he is likely to pursue different strategic priorities.
The standard model of research in international relations is to identify an empirical puzzle, offer a theoretical logic to explain it, and test that theory against the evidence. Such is the nature of social science: it assumes that the phenomenon under consideration (the dependent variable) is the product of systematic causes (independent variables). Much of the literature on contemporary American grand strategy, however, does not follow this model.1 The typical essay begins by identifying American “national interests” (often posited as self-evident rather than deduced from first principles), then criticizes current practices, and concludes by counseling policymakers to adopt a different course. An implicit premise of such work is that ideas matter and that we freely choose our path forward. In short, it is a matter of choice. About other countries, we make predictions; about our own country, we make prescriptions.
This dualist view of international relations, in which we posit our own free will but assume the causal determination of the environment around us, has no theoretical justification. Indeed, its two halves are based on fundamentally opposed ontologies. On the one hand, poststructural theorists assert that the underlying cause of state behavior is public discourse and intellectual contestation, and therefore is subject to radical reimagination. All actors, not just the United States, are free to redefine themselves and transform their environment. On the other hand, structural theorists, the most prominent of whom are realists, see little room for ideas and culture in state behavior. Realism is a large tent, but not without good reason is it known as the most structural, materialist, and deterministic of international relations paradigms. The United States may be unusually liberal, democratic, and multicultural, but it is no less subject to the laws of nature than any other beast.
In recent years, realists have asserted an exception to this rule. They argue that unipolar great powers, such as the contemporary United States, are uniquely unconstrained by systemic pressures. Having no peer competitors, a unipole faces no existential threat and therefore is free to do as it pleases. This position on its own is logically consistent. However, many of the same scholars also assert that the United States has made critical errors in recent years, is in danger of losing its dominant status, and will suffer grave consequences if it fails to make better choices. So, is it constrained by the system or is it not? One cannot maintain both positions simultaneously. Whenever scholars use realism as a normative theory to criticize American foreign policy, as they have done for more than a century, they tacitly admit to the inadequacy of realism as an empirical theory. If the United States conformed to realism as a positive theory, their prescriptions would be unnecessary.
A more rigorous approach would satisfy three criteria. First, it would provide a persuasive causal account of historical behavior. One cannot confidently use a theory to generate insights about present conditions if it fails to explain past events. Second, it must account for patterns of contestation over foreign policy. If policymakers’ positions are not distributed randomly, but rather are systematically divided between political parties, then the theory must be able to explain that variation. It cannot posit a unitary state; it must account for preference formation and interest aggregation. Third, and finally, it must be able to generalize from claims about the past and present to make positive predictions about future behavior. Its predictions may be contingent, probabilistic, or subject to exogenous perturbations, but they must be derived from the theory itself and not attributed to individual choice.
One approach that may satisfy these criteria is political economy theory. The Political Economy of Grand Strategy (Narizny, 2007) argues that the key to understanding state behavior in general, and American behavior in particular, is to focus on the economic interests of governing coalitions (see also Fordham, 1998; Solingen, 1998; Trubowitz, 1998). This perspective, which has a rich intellectual history (Beard & Beard, 1939; Hobson, 1938; Kehr, 1977), asserts that states do more in the international system than simply secure their borders. Were the United States concerned only about border security, it would not possess a global network of diplomatic alliances and military bases, nor would it intervene in conflicts and start wars on distant shores (Art, 2005; Gholz, 2014; Layne, 2006). Its grand strategy is not a response to systemic imperatives; rather, it is the product of domestic preferences.
Nearly everything a state does has distributional implications. For any action taken, some groups will benefit and others will not. Foreign policy is no different from domestic policy in this respect. Societal groups prefer policies that they expect to provide the greatest benefit to them, and they support politicians who are responsive to their preferences. Thus, state leaders’ views on grand strategy reflect the interests of their electoral coalition (Frieden, 1999; Moravcsik, 1997). Three variables are key to understanding group interests (Narizny, 2007, pp. 16–22). One is the extent to which they depend on income from exports, imports, foreign investment, and defense spending; another is the geographic locus of their economic activity abroad; and the last is their vulnerability to foreign competition. When politically empowered groups have a rising stake in some part of the international economy, the state attempts to expand its diplomatic influence in it. Conversely, when politically empowered groups have a declining stake in the international economy, the state withdraws.
To explain variation in the type of diplomatic influence that a state pursues, it is necessary to draw a distinction between the core and periphery of the international system. Ceteris paribus, it is far costlier to coerce strong states in the core than weak states in the periphery. A great power like the United States can leverage its military power (through not just threats, but also through offers of protection) to gain concessions over trade and investment in the periphery but not in the core. Between great powers, the only cost-effective way to dismantle barriers to trade and investment is through reciprocity and the creation of institutions that facilitate cooperation. Thus, societal groups that derive a substantial proportion of their income from trade and investment to the core tend to favor a grand strategy of internationalism, based on support for international law and multilateral cooperation, whereas societal groups that derive a substantial proportion of their income from trade and investment to the periphery tend to favor a grand strategy of realpolitik, based on coercive force and unilateral interventions. Since realpolitik usually involves greater reliance on military capability, defense industries support it as well. When societal groups with opposing interests over grand strategy divide along partisan lines, it produces the oft-noted rivalry between “nationalist” and “internationalist” coalitions (Lobell, 2003; Nolt, 1997; Solingen, 1998). Of course, both the core/periphery and nationalist/internationalist distinctions are simplifications; finer-grained conceptual categories would yield more accurate explanations.
Sectoral interests have long determined the underlying goals of American engagement with the world (Narizny, 2007). They do not, however, suffice to constitute a “complete” theory of the political economy of grand strategy. Other types of interest group, especially those that are well organized for collective action (Olson, 1971), may exert influence over narrow aspects of foreign policy. American foreign policy toward the Middle East, for example, might be affected by the oil industry (Klare, 2005) and pro-Israel groups (Mearsheimer & Walt, 2007). “Low politics” issues like environmental regulation, foreign aid, and human rights may also be subject to such pressures (e.g., Cutrone & Fordham, 2010; DeSombre, 2000; Milner & Tingley, 2010). It is immensely difficult to determine exactly how and when specific lobbies sway executive decision making (Gowa, 1985; Narizny, 2007, pp. 25–32), and no attempt is made here to do so, but that difficulty is in itself no reason to assume the absence of influence. After all, it is well established that Congressional votes on foreign policy and defense spending correlate strongly with the sectoral interests of members’ constituencies (Fordham, 1998; Fordham & McKeown, 2003; Fordham, 2008a, 2008b, 2008c; Thorpe, 2014; Trubowitz, 1998).
Political economy theory is well established among students of international political economy (e.g., Gourevitch, 1986; Schattschneider, 1935), but it is less prevalent in the field of international security. For its use in international security, potential misconceptions need to be addressed. First, it is not a theory of conspiracies in which a cabal of billionaires manipulates politicians to do its bidding. Every party has an economic constituency, but that constituency consists of a diverse array of interests, and an effective party leader must make compromises between them. In a democracy like the United States, it would not make sense for presidents to take major strategic risks for the benefit of a small subset of their electoral coalition. Instead, parties typically select leaders whose preferred policies reflect the interests of, and compromises between, major party factions. They may choose a “true believer,” with strong personal preferences in policymaking, or a cynical broker, with no greater ambition than political popularity. Either is consistent with the theory, as long as the coalition chooses a leader whom they expect to act in their interests (Narizny, 2007, pp. 25–30).
Second, the political economy perspective is not pure innenpolitik. That is, it does not imagine that the international environment is irrelevant to foreign policymaking. To the contrary, it assumes that interest groups and policymakers pay close attention to external constraints and opportunities in the pursuit of their strategic goals. Suppose, for example, that a faction within a political coalition has a strong interest in imperial expansion. Does that mean that the coalition’s leader will pursue it? Not necessarily. If the international environment is unfavorable, neighboring states might respond in ways that hurt other members of the political coalition. In anticipation of this outcome, the leader would demur from the pursuit of empire. Indeed, the faction with an interest in empire should moderate its own demands. If it undertook imperial expansion unconditionally against powerful adversaries, it would risk defeat in war, which could lead to the loss of its income from abroad and the collapse of its political power at home. Thus, while political economy theory starts with domestic preferences, it must always take international factors into account as a constraint on the pursuit of those preferences.2
Unlike realism, this approach does not provide a normative baseline from which to judge its object of study. It makes no claim about what constitutes the true, objective “national interest” because no such thing exists. In any kind of polity, with any type of regime, foreign policy is the product of compromise between groups with divergent interests. If many such groups exist, there will be several different ways to construct a majority coalition, and therefore several potential compromises over foreign policy. Which one of these represents the “national interest”? The dilemmas of social choice apply to foreign policy no less than to domestic policy. Thus, the political economy perspective asks not “What policy is best?” but rather “What policy is best for whom?”
Such are the basic elements of the theory. Next is an application of the theory to contemporary American grand strategy, beginning with Peter Trubowitz’s incisive account of partisan divisions over foreign policy in the 1980s, continuing with Narizny’s account of how key variables changed in the 1990s and 2000s, and concluding with predictions about the presidency of Donald Trump. Trump’s campaign rhetoric and election returns suggest that his coalition represents a different balance of economic interests than that of past Republican presidents and, therefore, that he will pursue a different grand strategy. Finally, potentially omitted variables and theoretical alternatives are discussed.
Any analysis of contemporary American grand strategy must take a great deal for granted. Over the past century, the United States acquired a global network of diplomatic commitments and military bases, extending its influence to every corner of the world. Today, this situation seems natural. The idea that the United States has a “national interest” in maintaining, even expanding, its role overseas is rarely questioned in public discourse. To explain how all of this came to be requires an analysis of American foreign policy that dates back to the 19th century (Narizny, 2007, Chs. 2–4; Trubowitz, 1998, Chs. 2–3). However, such a task is beyond our purview. Instead, a sensible point of departure is the 1980s.
In the 1980s, the coalitional basis of the two major political parties in the United States had recently changed. Peter Trubowitz, in his seminal book Defining the National Interest (1998, Ch. 4), demonstrates that the electoral realignment of the 1960s and 1970s had transformed the Republicans into the party of the “Sun Belt,” shifting its electoral base from the Northeast to the South and West. One of the most important causes of this transition was Richard Nixon’s “southern strategy,” which used opposition to the civil rights movement to attract voters to the Republican Party. Coalition formation is exogenous to the theory; it need not be driven by economic interests. However, in this case, like most, economic interests were also important. Sun Belt states had in common two critical characteristics: they were booming economically, due to high-technology sectors like aerospace and advanced electronics, and a disproportionate share of military bases and defense industries were located there. The economic success of this region gave it a strong interest in export and foreign investment, and the regional concentration of the military-industrial complex gave it a strong interest in defense spending.
The same dynamic that pushed the Republican Party to the Sun Belt caused the entrenchment of the Democratic Party in the “Rust Belt”—the states of the old Midwest, the mid-Atlantic, and New England that had developed heavy industries early in the 20th century, prospered in the 1940s and 1950s, then collapsed economically in the 1960s and 1970s. The Rust Belt was highly urban, heavily unionized, and badly suffering in the 1980s. Unlike the Sun Belt, it was not benefiting from exposure to the international economy. Rather, it was devastated by competition from American allies such as Germany and Japan. Whereas Sun Belt states had an interest in grand-strategic expansion, Rust Belt states had an interest in grand-strategic contraction. Military rearmament and diplomatic commitments were a waste of resources; revenue would be put to better use in social welfare programs.
These conditions render a clear set of predictions for the United States in the 1980s: the party of the Sun Belt, the Republicans, should have supported an active, expansionist grand strategy with increased military spending, whereas the party of the Rust Belt, the Democrats, should have advocated a more passive, contractionary grand strategy with either cuts in military spending or a slower rate of increase. Of course, this is exactly what happened. The Republican president in 1981–1989, Ronald Reagan, came to office pushing for substantial increases in defense spending and a more assertive grand strategy. One could argue that this position was a reaction to changes in the external environment, but none of those changes affected the security of the United States. It had all it needed to defend itself from any plausible threat: a powerful military, easily defensible borders, and deferential neighbors. The external environment did not dictate a need for anything more than that. A Democratic president could, and almost certainly would, have acted less aggressively; imagine a second term for Jimmy Carter in 1981–1985 or Walter Mondale as president in 1985–1989. The partisan divide over grand strategy persisted through the end of the Cold War and the presidency of George H. W. Bush in 1989–1993.
The 1990s, 2000s, and 2010s
Trubowitz’s account ends in the 1980s, but the argument can easily be extended. Narizny (2007, pp. 315–322) argues that the strategic interests of the two party coalitions converged substantially in the 1990s (contra Kupchan & Trubowitz, 2007, pp. 32–33). In much of the Rust Belt, new sectors arose from the ashes of manufacturing. Services like finance, health care, and software played a key role in urban renewal. After nearly a decade of sustained economic growth, the regional divide faded. The Northeast still had pockets of poverty and blight, but it was no longer a cohesive rust belt (Hobor, 2013, Ch. 2; Safford, 2009). Though income inequality was on the rise, this was a national issue, not a regional one.
These economic changes were accompanied by a political shift. In the 1980s, the Democratic Party was divided on economic issues between two main factions. On the left wing of the party were labor unions, a major contributor to Democratic campaigns and get-out-the-vote efforts. They supported old-school “liberals” like Walter Mondale and Tom Harkin, who sought to raise barriers to trade in sectors hurt by foreign competition. On the other side were white-collar workers in the rising service and technology sectors. This set of interests was represented by the Democratic Leadership Council, the self-described “progressive” wing of the party. Its members, including Bill Clinton and Al Gore, advocated a “Third Way” economic policy that included trade liberalization (Hale, 1995, p. 224). Over the course of the mid-1980s and early 1990s, these “New Democrats” gained the upper hand. The old left was discredited by Mondale’s dismal performance in the election of 1984, but most critical was the decline of the manufacturing sector, which eviscerated employment in unionized industries and consequently weakened the unions themselves (Farber & Western, 2001). Democrats continued to depend on their support, and they provided it (Dark, 1999; but cf. Glasgow, 2005), but party leaders like Bill Clinton and Barack Obama turned a deaf ear to their demands on trade. A final piece in the puzzle was the conversion of the West Coast states, which did a brisk business in trade with East Asia, to the Democratic coalition. From the nomination of Bill Clinton in 1992 to the nomination of Hillary Clinton in 2016, the party represented the sectoral interests of the prospering majority in its electoral base of the Northeast and coastal West, not that of the minority set back by globalization.
During this time, the United States became more integrated into the international economy. Manufacturing was a mixed bag, but exports of services and income from foreign investments increased steadily from the late 1980s to the late 1990s (Narizny, 2007, pp. 316–317). This expansion was global, not confined to particular markets in the core or periphery of the international system. Thus, it did not create different constituencies for different approaches to grand strategy. In such circumstances, and in light of the changes in the American political economy described earlier, the theory renders a clear prediction: convergence. As the country became more homogeneous economically, the two parties’ sectoral constituencies came to look more and more alike, with the same exposure to the international economy. Consequently, they should have had the same interests with regard to grand strategy. The sharp divide between Democrats and Republicans in the 1980s should have given way to greater agreement in the 1990s and 2000s.
A few differences should have remained. Each region of the United States tends to favor the overseas markets nearest to it: the Northeast has somewhat closer ties to Europe, the West Coast to East Asia, and the South to Latin America (Narizny, 2007, pp. 319–320). The core of the international system is defined as the parts of the world in which great powers reside, so it currently consists of Europe and Northeast Asia. Thus, the Democratic coalition, with its base of electoral support in the West Coast and Northeast, is more dependent on income from markets in the core, and less dependent on income from markets in the periphery, than the Republican coalition, with its base of support in the South. Furthermore, the South remains distinct for its disproportionate dependence on defense spending. This is not only about the location of industries and bases, but also employment in the armed forces, because southerners enlist in the military at higher rates than individuals from other parts of the country (Bender, Kiersz, & Rosen, 2014). These two factors, the South’s greater interest in the periphery and its reliance on defense spending, suggest that the party of the South, the Republican Party, should have advocated a more unilateral, assertive, and coercive grand strategy than the Democratic Party in the 1990s and 2000s. Nevertheless, such differences must not be overplayed: the dominant trend should have been convergence.
The evidence for this prediction is mixed. In 1993–2001, many Republicans voiced sharp criticism of President Bill Clinton. A particular point of contention was how the United States should react to the civil war and ethnic cleansing in Yugoslavia. Republicans disclaimed the idea of humanitarian intervention, arguing that American national interests were not at stake, but it is not clear that a Republican president would have acted differently in the same situation. This was typical: the opposition frequently criticized the details of administration decisions without proposing an alternative vision of grand strategy. They raged against the supposed incompetence, pusillanimity, and perfidiousness of the Clinton administration, and they complained bitterly about arms control negotiations and cuts to defense spending, but substantive differences were all on the margin. Neither of the Republican nominees who ran for office against Clinton, George H. W. Bush, and Bob Dole, disagreed with him about the fundamentals of his strategy: to maintain the vast network of diplomatic commitments and military bases acquired during the Cold War, and to extend the reach of American power wherever the collapse of the Soviet Union left a vacuum. All of this is consistent with the prediction of convergence. So, too, are the terms of political debates. Though the two parties were not far apart, Republicans stood on the side of more unilateralism and perhaps higher defense spending, and Democrats on the side of more multilateralism and perhaps lower defense spending.
This trend continued through the first nine months of the presidency of George W. Bush. During the election campaign of 2000, Bush insisted that the United States should have a more “humble” foreign policy, with less frequent humanitarian intervention, but the overall difference between the two parties on grand strategy was slight. Bush signaled continuity with his father’s foreign policy by choosing former Secretary of Defense Dick Cheney for vice president and former national security advisor Condoleezza Rice for Secretary of State, as well as Donald Rumsfeld, who had worked in the Nixon, Ford, and Reagan administrations, for Secretary of Defense. The first nine months of the presidency were uneventful from the perspective of grand strategy, which supports the prediction of convergence.
Then came the Al Qaeda attacks of September 11, 2001. Bush’s initial response, to take the fight to Afghanistan, was neither surprising nor controversial. War on Al Qaeda and its state sponsor, the Taliban, had broad support from both domestic and international audiences. What came next, however, defies common sense. Administration officials decided to take advantage of this unique opportunity for a radical shift in foreign policy to rid the world of anti-American “rogue states.” Bush identified Iraq, Iran, and North Korea as the foremost targets for regime change, states whose aggressive behavior and support for terrorism were made all the more ominous by their efforts to acquire nuclear weapons. None of these states posed any direct threat to the United States, and none of them had anything to do with Al Qaeda. Nevertheless, they became the focus of American grand strategy, beginning with Iraq.
The Iraq War of 2003, as well as the protracted counterinsurgency and nation-building that followed, is not consistent with the theory. This is the case even if the war was motivated by oil or the military-industrial complex. It makes little sense that Bush would have drained American society of trillions of dollars (Stiglitz & Bilmes, 2008), causing serious harm to his supporters in the broader business community, for the sake of narrow interests in the oil and defense sectors. The political economy perspective did not predict the Iraq War, nor does it explain it in retrospect. Given the historical importance and high costs of the war, one might be justified in using it to question the utility of the theory.
However, other factors must be considered. First, no international relations theory anticipated the Iraq War. Realists, liberals, and constructivists alike condemned the decision (Jackson & Kaufman, 2007); never before had the field been so close to consensus on the foolishness of American foreign policy.3 Foolish decisions may be explicable in retrospect, but they are exceedingly difficult to predict. Thus, the political economy approach is no more compromised by the Iraq War than any other international relations theory.
Second, the surprise of 9/11 produced a failure in interest aggregation. Once Al Qaeda felled the World Trade Center, it became the defining issue of the time. Yet, in the elections of 2000, candidates were not asked how they would respond to a major terrorist attack on American soil. In the language of Donald Rumsfeld, 9/11 was not a “known unknown,” like most foreign policy crises; rather, it was an “unknown unknown,” an entirely novel type of situation. Saddam Hussein was an ongoing concern, a “known known,” but none of the candidates proposed to resolve the problem with a military invasion of Iraq. Moreover, Bush was a novice in foreign affairs, lacking any sort of record from which one could make inferences about his views on counter-terrorist and counter-proliferation strategy. Thus, the societal coalition that supported Bush in the Republican Party nomination process and the general election did not vet his position on it. When interests are not aggregated, politicians are more likely to act in ways that diverge from the expectations of political economy theory, perhaps in favor of the more fine-grained variables of bureaucratic politics theory.
Finally, and most importantly, the decision for war was based on cost estimates that were more than an order of magnitude too low. Secretary of Defense Rumsfeld intended the operation to serve as an example of how the United States could intervene successfully against hostile regimes with light, mobile forces. He believed that the mission could be accomplished with tens of thousands of troops, not hundreds of thousands (Brooks, 2008, p. 240). Based on this information, as well as the belief that American allies would provide side payments, the Office of Management and Budget projected that the war would cost only $50–60 billion (Stiglitz & Bilmes, 2008, p. 7). It was conceived as a smaller, nimbler version of the Persian Gulf War, not a radical departure from the grand strategy of previous presidents. It was expected not only to convert Iraq from a stubborn adversary to a dependent ally, but to catalyze the transformation of an entire region that was holding out against the post–Cold War trend of political and economic liberalization. American influence in the Middle East would durably expand, and American firms would make a windfall in the reconstruction of Iraq. Had the administration’s cost-benefit calculus been correct, the war would have been consistent with political economy theory.
Once Bush made the decision for war, the Republican Party fell in line behind him. Whenever a president initiates military action, it creates strong pressures for conformity, as long as politicians expect the venture to succeed at moderate cost (Schuessler, 2015). Within the party of the president, those pressures are even stronger (Schultz, 2001). One cannot conclude, however, that a Republican president other than Bush would have done the same. Indeed, it is difficult to imagine even that his father would have done the same. The apparent dominance of neoconservatism during the Bush administration was the consequence, not the cause, of decisions made by the president after 9/11. It did not even last through Bush’s second term in office (Gordon, 2006). As the situation worsened in both Afghanistan and Iraq, Bush drew back from the aggressive unilateralism advocated by neoconservatives and returned to the internationalist middle ground. When Barack Obama became president and sought to disengage from Afghanistan and Iraq, all he needed to do was to execute the withdrawal agreements already negotiated by Bush.
Obama’s grand strategy held few surprises (Brands, 2016, pp. 101–109). He maintained America’s enormous network of diplomatic commitments and military bases around the world, and he assured allies that the United States would continue to work with multilateral institutions. He reduced the American footprint in the Middle East, but this was a return to the norm, not disengagement. The administration bombed the Islamic State in Iraq and Syria, and it intervened to overthrow the regime of Muammar Gaddafi in Libya. Meanwhile, its “pivot to Asia” and its “reset with Russia” amounted to little more than rhetorical flourish on a middle-of-the-road attempt to both engage with and contain its geopolitical rivals. Republicans attacked Obama’s every move, but, just as with Clinton, their criticism never amounted to much more than a demand that he “be tougher” on various adversaries. Obama’s first electoral adversary, John McCain, might well have been more hawkish than Obama, but he was nevertheless part of the same consensus. Mitt Romney, who challenged Obama in his second election, was an establishment moderate. In short, the available evidence, as well as counterfactual consideration of alternative scenarios, supports the theory’s predictions in the Obama years.
The Trump Coalition
What does the future hold? The economic structure of the United States has not changed substantially since the 1990s. No new rust belt has arisen; the regions are still economically converging. On this basis, it would be easy to predict continued strategic convergence. However, to do so would be premature. The economy is only half of the “political economy”; it interacts with politics. Politics determines how coalitions are formed, and therefore it affects what sectors are represented in political parties. These dynamics, which are exogenous to the theory, can produce dramatic change in short order, even in a stable economic environment. In 2016, the rise of Donald Trump constituted such a dramatic change. It shook the foundations of the American political system; will it do the same to American grand strategy?
To answer this question, it is necessary to return to the deductive core of the theory. To this point, it has been argued that the key to understanding American grand strategy is to focus on economic differences and similarities between regions of the United States. This is not because regions are the fundamental unit of political-economic analysis; they are not (Fordham, 2008b). The fundamental unit of any political economy theory is the group, or set of groups, with an economic interest in the dependent variable. In the study of grand strategy, the most important type of group is that which derives income from the international economy (exporters, importers, and foreign direct investors), competes with imports, or supplies the military with goods, services, and personnel. Also relevant are sectors with little connection to the international economy. They have an interest in the provision of security, but nothing further, since anything further is a waste of their taxes.
Regions have become salient to a theory of sectoral interests because of the regional basis of the American party system. The dominant political cleavage in the United States has almost always been regional. The 1970s was a time of transition, but the transition was from one regional system to another. The formerly Democratic South became solidly Republican, and the formerly Republican Northeast became solidly Democratic. In the 1980s, the decline of unions, the rise of the Democratic Leadership Council, and the conversion of the trade-dependent West Coast to the Democratic Party, as discussed earlier, ensured that the Democrats continued to represent the sectoral interests of regions rather than the interests of the nationwide population of blue-collar workers hit hard by import competition. Since the 1930s, the parties have also been divided on class lines, but this cleavage has had a limited impact on foreign policy (cf. Narizny, 2003). The key to preference formation is sectoral interests, and they have been aggregated on a regional basis. If this situation were to change, such that one or both parties were to form an electoral coalition that represented sectoral interests on some basis other than region, then the analysis would have to change to reflect that shift.
Just such a shift appears to have occurred in 2016. Donald Trump ran a campaign for president like no other Republican, past or present. He showed little interest in satisfying the “establishment,” the elites whose interests and compromises had long shaped the party platform. Instead, he ran directly against them. What made this strategy viable, especially in the primaries, is that he was able to fund his campaign without appealing to traditional “big donors.” Instead, contributions came from two sources outside the party elite: first, Trump himself, who lent his campaign millions of dollars, and second, individuals who donated $200 or less (Federal Elections Commission, 2016; Goldmacher, 2016).
This financial independence gave Trump an unprecedented degree of political independence. Normally, successful candidates for president hew closely to established party positions, proposing changes only at the margins. Instead, Trump took positions that alienated key members of the Republican coalition. Most relevant to grand strategy was his stance on trade. Since the end of World War II, under the influence of exporters and foreign direct investors, Republicans have sought to reduce barriers to international trade. The realignment of the 1970s and 1980s, which shifted the Republican base to the economically rising “Sun Belt” states, further entrenched the Republicans as the party of free trade. In 2016, Trump broke hard from this position. He demanded the renegotiation of the North American Free Trade Agreement; alienated Mexico, the United States’ second-largest export market (United States Census Bureau, 2016); denounced the Trans-Pacific Partnership; and called for action against “unfair” Chinese trade practices (Donald Trump for President, 2016).
By appealing to a different audience, Trump built a different electoral coalition. It was not tailored to the interests of multinational corporations and the regional economy of the South; rather, it was designed to attract support from individuals who had lost out from the globalization of the American economy (Yglesias, 2016), the same voters who had lost out from the ascendance of the Democratic Leadership Council faction of the Democratic Party in the 1990s. Exit polls suggest that they were critical to Trump’s victory. Voters who thought trade hurt the economy favored Trump by a margin of two to one (Luhby, 2016), and Trump “far outperformed” Clinton “in counties where more jobs are threatened by automation or offshoring” (Kolko, 2016; see also McQuarrie, 2016; Tankersley, 2016). In a systematic statistical analysis, Cerrato et al. (2016; see also Autor, Dorn, Hanson, & Majlesi, 2016) find that, “[o]n average, a one-point increase in the indicator of import competition from China is associated with a 2.9 percent increase in support for Donald Trump vis-à-vis the county’s average support for Republican candidates over the past 20 years.” Consider union members, a group adversely affected by trade. In 2012, Obama won them by a margin of 18%, whereas in 2016, Hillary Clinton won them by only 8%. In the swing state of Ohio, Obama beat “Romney in those households by 23 percentage points,” whereas “Clinton actually lost Ohio’s union households to Trump by 9 points” (Hesson, 2016).4 It was with the support of these voters that Trump managed to take Michigan and Pennsylvania, states that should have been safely Democratic. The United States in 2016 was still divided along regional lines, but Trump’s break from the Republican orthodoxy on trade created an additional sectoral cleavage, one based on economic anxiety and import competition.
In The Political Economy of Grand Strategy, Narizny (2007, pp. 16–22) deduces hypotheses about sectors that do not derive income from foreign markets or defense spending. These sectors have little interest in engagement with the international system, aside from the defense of national borders. Their preferred grand strategy should be for the United States to withdraw from its vast network of international commitments. They have three reasons to take this position. First, the United States is the most secure great power in the history of the modern state system. It faces no direct threat to its own territory or any prospect of one in the foreseeable future. A few countries could threaten the United States with nuclear weapons, perhaps through nuclear terrorism (but cf. Lieber & Press, 2013); however, none of them has any incentive to do so unless the United States aggressively challenges their vital interests. A grand strategy of withdrawal would render such a scenario moot.
Second, sectors that do not derive income from foreign markets or defense spending would benefit from the lower cost of a grand strategy of withdrawal. Friedman and Logan (2012, p. 187) estimate that it would save taxpayers $400 billion over 10 years. This figure captures the normal expense of American engagement, but one must also consider its extranormal expenses, such as the trillions of dollars incurred by the Iraq War (Stiglitz & Bilmes, 2008). The United States has formal and informal commitments to defend allies in many dangerous parts of the world, and it cannot expect to manage all challenges to these commitments peacefully. Occasional small and medium-sized wars are part of the cost of maintaining its hegemonic position.
Finally, a grand strategy of withdrawal would be consistent with a trade policy of protectionism. Many elites and policymakers believe that the vast network of American overseas military bases, defense treaties, and informal commitments is the cornerstone of American global economic influence. If the United States were to dismantle this network, they argue, its commercial interests would be jeopardized. The extent of this relationship is debatable (Maass, Norrlof, & Drezner, 2014; see also Fordham, 2008c), but it suggests that protectionism and strategic withdrawal go hand in hand. Voters who believe that the United States is getting a “bad deal” from its economic partnerships should have no interest in subsidizing those partnerships with diplomatic commitments.
The foregoing analysis generates straightforward conclusions. Trump’s electoral coalition consists of the regional base of the Republican Party, the South, and a substantial number of voters elsewhere who do not benefit from, or have been harmed by, the integration of the United States into the international economy. The hypothesized strategic preference of the first group is a high level of engagement in the international system to ensure the dominance of the United States. Southerners might have cause to be more hawkish than Northeasterners or Westerners, as explained earlier, but their overarching goals and means of pursuing them should not be substantially different. The hypothesized strategic preference of the second group, in contrast, is withdrawal. Foreign entanglements are a waste of their tax dollars and serve to prop up an international economic order toward which they are either indifferent or hostile.
That two members of the same coalition have opposing preferences over grand strategy is not historically unprecedented (e.g., Narizny, 2007, pp. 55–64), nor is it a problem for the theory. As already noted, political leaders often make compromises between the divergent interests of factions within their coalition. One should expect Trump to be no different. On the one hand, he will retreat from some of the diplomatic commitments in which the United States is entangled, and he will make fewer concessions to multilateral institutions and international law than even George W. Bush. On the other hand, he will not go nearly as far down this road as he could. The more that his actions threaten the commercial interests of traditional Republican constituencies, such as agricultural exporters in the South and Great Plains, the more pushback he will encounter from his own party and the more compromises he will make for their benefit. At the end of his term, the United States will still be the global hegemon, and its diplomatic commitments will still undergird the international economic order. It will be less engaged but not disengaged. Finally, this behavior will not be a response to systemic imperatives. Rather, it will be particular to Trump and his new coalition, and it will be abandoned if a new leader with a different coalition should rise to office.
It is too early to draw any conclusions about the accuracy of these predictions. They are, however, consistent with Trump’s campaign rhetoric. Over the course of the election season, Trump often questioned the value of commitments overseas. He opined that NATO “may be obsolete” and proposed that the United States should renegotiate the alliance to “to pay a lot less” of its cost (Gore, 2016); he questioned the value of the U.S.-Japan defense treaty and suggested instead that Japan should acquire nuclear weapons (Haberman & Sanger, 2016); and, in the primaries, he broke hard from the party line by sharply criticizing the 2003 decision for war in Iraq. Within his own party, at least, these positions were taken seriously. In an open letter, 122 “loyal Republicans” in the foreign policy establishment declared themselves “unable to support a Party ticket with Mr. Trump at its head” (War on the Rocks, 2016).
Of particular interest is Trump’s stance on Russia. At the end of the Cold War, American and Western European foreign policymakers sought to extend their market access and political influence deep into Eastern Europe. Their approach was highly internationalist: it was based on the idea that Eastern Europe could be brought into the West through democratization, economic liberalization, and institutional membership. They hoped that Russia would fall in line behind this program, but they could not force it to reform, and their expansion of NATO to its borders provoked a backlash. Under Vladimir Putin, Russia became increasingly authoritarian, economically nationalist, and geopolitically assertive. For internationalists, it is now a classic bad actor, a powerful “rogue state” that pushes back against liberalism and Westernization (cf. the internationalist reaction to Nazi Germany in Narizny, 2007, pp. 147–148, 151, 295–298). Some European countries depend on oil and natural gas from Russia, so they have an incentive to accommodate it, but the United States has almost no economic connection to it (Shleifer & Treisman, 2011, pp. 132–133). Thus, both Democrats and Republicans have treated Russia as a strategic adversary, varying only in their degree of hawkishness toward it.
Trump’s stance on trade puts him in a different position. His campaign exhibited far more concern for import competition than export promotion, which implies a shift away from internationalism. Internationalism is a strategy designed to expand market access in the core of the international system; it increases American interdependence with Europe. If this outcome is no longer desirable, then internationalism loses its rationale, and so does hostility toward Russia. A United States that is less interested in promoting democracy, market access, and Western institutions on Russia’s borders will have fewer conflicts of interest with Russia. Many observers have speculated that Trump’s apparent comity with Putin stems from his personal financial ties with Russia or a shared authoritarian temperament, but the underlying cause might be more mundane: the two leaders’ coalitions’ economic interests, and therefore strategic goals, do not conflict. In contrast, the Trump administration’s relationship with China, an economic competitor, is likely to be fraught.
In political economy theory, the flag follows trade. When the governing coalition consists of sectors of the economy that derive, or expect to derive, an increasing share of their income from overseas markets, the government will seek to expand its influence abroad. This is what occurred for the United States after World War II (Fordham, 1998; Layne, 2006). The opposite also holds true: consider the isolationism of the Republican Party during the Great Depression (Narizny, 2007, Ch. 3; Trubowitz, 1998, pp. 64–67, 107–110, 145–150) or the sagging support for overseas engagement in much of the Democratic Party in the 1970s and 1980s. The election of Donald Trump suggests a return to the latter pattern, strategic contraction. For the first time since the 1970s, economic sectors that have been hurt by, or are indifferent to, international trade are represented in the executive office. Political economy theory therefore predicts significant change in American grand strategy in the transition from Obama to Trump.
Of course, these predictions could be incorrect. First, no theory is perfect. In Narizny’s (2007, Chs. 3–4) analysis of American grand strategy between 1865 and 1941, the theory is contradicted by 4 out of 32 observations. Most recently, it fails to explain the Iraq War of 2003. Its record in the future will surely be no less imperfect than its record in the past. Second, a theme that emerged from the study of 1865–1941 is that presidents who are not career politicians are more likely to generate predictive failures (Narizny, 2007, p. 305). Such individuals come to office without experience in coalitional politics; they are therefore more likely to make decisions that alienate their supporters. It would be no great surprise if Trump, a novice politician, were to make political missteps. Third, and related, political outsiders often have scant record from which the consistency and sincerity of their views can be judged. They may therefore choose to appeal to low-information voters with grand promises that they have no intention of fulfilling. If Trump does not believe his own campaign rhetoric, and if he is willing to risk a backlash among his most ardent supporters in 2020 (or if he does not intend to run for a second term), he might simply renege on his platform. Even if he does not, congressional leaders might attempt to stymie his ambitions. However, the executive office has sufficient power over foreign policy that it should be possible for Trump to make significant changes in grand strategy without their support.
A fourth possible reason for the theory to make incorrect predictions is that it is based on an incomplete analysis of the American political economy. It has argued that the most important unit of analysis is sectors and that sectors’ interests over grand strategy derive from their exposure to the international economy and defense spending. Yet, this is not the only potentially relevant source of distributional conflict. For example, Narizny (2003) argues that a major rearmament program, of such a size that generates severe macroeconomic distortions, causes class conflict over grand strategy. At present, this seems an unlikely prospect, but other possibilities exist. The rural–urban divide, which was as sharp as ever in 2016 (Evich, 2016), might affect societal preferences in an unanticipated way. Trubowitz (1998) finds that it contributed to partisanship over foreign policy in the 1930s, and Thorpe (2014) argues that it affects congressional votes over military spending.
Finally, the foregoing analysis might be missing something more fundamental: noneconomic sources of societal preferences. Powerful ideological beliefs might override economic interests, or at least interact with them. The most sophisticated research on the topic does not simply assert that “ideas matter” but rather deduces actors’ views on foreign policy from their views on domestic policy (Rathbun, 2004; Haas, 2007). Less theoretical, but of particular relevance to the present discussion, is the work of Lieven (2012, 2016; see also Mead, 2001). He argues that American civic culture has long been divided between two different sets of values: optimistic, universalist internationalism, on the one hand, and pessimistic, ethnocentric nationalism, on the other hand. Republicans have flirted with the latter position in recent years, but Trump represents it “to the point of caricature” (Lieven, 2016, p. 7; see also Cha, 2016). Based on this diagnosis, Lieven makes predictions about Trump’s grand strategy that are similar to those of political economy theory.
Such an account might be persuasive if it could be shown that ideologies are unconnected to economic interests. Unfortunately, Lieven does not attempt to disentangle the two variables. To the contrary, he attributes the rise of Trump, as well as Putin and other “nativist and populist parties in Europe,” to a “reaction against the negative effects of globalization” (19). In other words, it is about economic interests. What need, then, is there for ideology as the independent variable? His answer, that the “two positions [in civic culture] represent old, and even fundamental, traditions of US nationalism” (19–20), is unpersuasive. If the same cleavage exists in Europe, and if European ethnocentric nationalism rises and falls under the same material conditions, then it makes little sense to insist on American exceptionalism. The political economy perspective has broad comparative applicability, and it explains change in preferences over grand strategy that ideational accounts cannot (Narizny, 2001, 2007, pp. 307–308, 312–313).
What, then, of realism? Most realists argue that the United States, the unipolar great power, is uniquely unconstrained by systemic pressures. Since realism is a theory of systemic pressures, realists are limited in what they can claim about the case. They can opine about what they would like the United States to do, but they cannot use realism to render predictions about what it will do. For this to occur, realists would have to both deny that the current international system is unipolar and assert that the United States faces some prospect of an existential threat. The former claim may be debatable (e.g., Mearsheimer, 2001, pp. 380–383); the latter is not. The United States could choose to act so aggressively as to push Russia or China to the brink of nuclear war, but no existential threat compels it to do so. It is invulnerable to conventional military attack from outside the Western Hemisphere, and no state presents any meaningful challenge to it therein.
Given the analytic limitations of realism, it is not surprising that there is no normative consensus among self-identified realists about the future of American grand strategy. Their range of opinion spans from “offshore balancing,” which, in the current environment, is functionally equivalent to isolationism (Layne, 2006, p. 160), to “deep engagement,” which entails an open-ended commitment to enforce order around the world (Brooks, Ikenberry, & Wohlforth, 2012). Neither side presents any plausible scenario in which the survival of the United States, its territorial integrity, its command of the Western Hemisphere, or its status as a great power is at risk—quite the contrary (Brooks & Wohlforth, 2008, pp. 181–186; Layne, 2006). Furthermore, neither side argues that the current American grand strategy is the product of security motives alone (Brooks et al., 2012, pp. 29–36; Layne, 2006, p. 10). To make sense of the past, present, and future of American grand strategy, it is necessary to look beyond realism.
The impulse of academics to weigh in on current affairs is strong; experts naturally want their opinions to be heard. However, normative arguments are no substitute for empirical theory. Critique is no substitute for explanation; indeed, critique without explanation is simply shouting into the wind. Those who find American foreign policy to be lacking must be able to account for why the United States does what it does. The political economy perspective provides a powerful tool for explaining state behavior, past and present. Furthermore, it generates straightforward predictions about the future. Whether or not these predictions prove to be correct, it deserves to be considered a vital perspective on American grand strategy.
I am grateful to Arman Grigoryan and Bill Thompson for their comments and advice.
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(2.) One of the most important of such external constraints is relative power, but its importance can vary considerably, including in the aforementioned example of imperial expansion. Consider the case of Belgium in the late 19th century, a small state surrounded by great powers: its king acquired an enormous overseas colony, the Congo, in 1885, and it retained control over that territory until 1960.
(3.) A number of “liberal hawks” supported the war, but they did so mainly on humanitarian grounds without claiming that it was necessary for national security.