Bring back the visible hand
| Published date | 01 February 2019 |
| DOI | 10.1177/1369148118791736 |
| Author | Jack Snyder |
| Date | 01 February 2019 |
| Subject Matter | Breakthrough Commentaries |
research-article2018
Breakthrough Commentary
The British Journal of Politics and
International Relations
Bring back the visible hand
2019, Vol. 21(1) 71 –79
© The Author(s) 2018
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https://doi.org/10.1177/1369148118791736
DOI: 10.1177/1369148118791736
journals.sagepub.com/home/bpi
Jack Snyder
Keywords
institutional design, liberal democracy, liberal world order, libertarianism, market economics,
social responsibility
After Victory has served as an indispensable touchstone for understanding the role of
liberal democracy in organising and sustaining the United States–led international order
after 1945. With liberalism now facing challenges from illiberal great power rivals abroad
as well as illiberal populist movements at its very core, it is timely to revisit this seminal
work to assess how much it can contribute to diagnosing contemporary ills.
John Ikenberry (2018b) has already turned his hand to this task in the introductory
essay to this symposium and in a valuable essay in International Affairs (Ikenberry,
2018a). Ikenberry analyses the current crisis of liberalism in terms of two contemporary
challenges that echo the theses of two earlier masterworks on the turmoil of the 1930s.
The first is the crisis outlined in Karl Polanyi’s (1944) The Great Transformation: the
contradiction between unregulated markets and mass democratic politics. The second is
the dilemma pondered by E. H. Carr (1946) in The Twenty Years’ Crisis: how incumbent
leading powers can best manage assertive, rising great powers that demand a larger share
of the international pie.
After Victory’s main contribution was to explain the role of liberal institutions in solving
Carr-type problems, by facilitating credible commitments between stronger and weaker
states, especially when their future relative power is expected to be in flux. What After
Victory might have emphasised more is that the Carr problem, both in the 1930s and now,
is mainly caused by the underlying Polanyi problem. That is, unregulated markets unleash
waves of ‘creative destruction’ through technological change, differential rates of growth,
and the unchecked business cycle, sparking popular demand for state action politically to
control the socially disruptive effects of the ‘invisible hand’ of the market. The response
could take the form either of military expansion to directly control resources and markets
in an autarkic empire – a particular temptation for rising great powers – or a democratic
welfare state providing a social safety net to buffer the social consequences of free mar-
kets. Without Polanyi’s dynamic to roil markets and mass politics, the Carr problem of
Germany’s rise in power relative to Britain would have been far easier to manage.
Political Science Department, Columbia University, 1327 International Affairs Building, 420 W. 118 Street,
New York, NY 10027, USA
Corresponding author:
Jack Snyder, Political Science Department, Columbia University, 1327 International Affairs Building, 420 W.
118 Street, New York, NY 10027, USA.
Email: jls6@columbia.edu
72
The British Journal of Politics and International Relations 21(1)
In an era in which an illiberal great power – China – is rising towards strategic parity
with a liberal hegemonic power – the United States – the stakes in maintaining the insti-
tutional solidity of the liberal international bargain described in After Victory are huge.
Liberal democracy is the only system yet invented that has demonstrated its ability to
sustain modern society at a high level of economic performance and political stability.
Except for parasitic petro-states and the Singaporean city-state, only liberal democracies
with full civic rights, rule of law, and democratic accountability have successfully navi-
gated past the middle-income trap. Until developing states reach middle-income status—
about one-fourth of US GDP (gross domestic product) per capita— their cheap labour and
authoritative allocation of resources by the government can generate rapid growth with or
without democracy, especially if the state enjoys access to international markets and capi-
tal. To get beyond that benchmark, however, history shows that states must introduce
dramatic institutional changes towards liberal democracy to sustain growth and stability
(Dollar, 2015).
Despite this track record, authoritarian middle powers repeatedly try and fail to sustain
their rise without full liberal reforms. They typically borrow parts of the package of lib-
eral modernity – administrative meritocracy, selective marketisation, high-tech militaries,
and mass public relations strategies – while trying to substitute appeals to nationalism for
law-based accountability to voters (Gerschenkron, 1943; Snyder, 2017).
Whether rising semi-modern powers can be weaned away from this dangerous
course depends on the capacity of liberal institutions to reconcile mass political partici-
pation in the nation-state with the turbulence of global markets. As After Victory shows,
this task is not just a matter of throwing money at the problem, but of institutional
design. The Dawes and Young plans shovelled about as much money from the US to
Europe in the 1920s as did the Marshall Plan in the late 1940s, but produced opposite
results (De Long and Eichengreen, 1991). The reason was the latter’s better design
concept for liberal institutions.
The institutional design strategy of post-1945 liberalism
The crucial institutional innovations after 1945 were not mainly aimed at the Carr prob-
lem of mollifying rising states. The United States contained rising Soviet power rather
than appeasing it. Nor was the key task for institutions mainly to lock the international
system into rules that would assure weak states that the United States would not be preda-
tory. If anything, the middle powers were more worried that the United States would
abandon them (Trachtenberg, 1999: 119). The root problem in post-war institutional
design was not so much the credibility of commitments as the functional capacity of lib-
eral institutions to manage open markets in a way that would satisfy mass publics.
In the 1920s, orthodox economics under the gold standard left finance and trade vul-
nerable to market failures. The political consequences of the economic collapse in 1929
brought down fragile democratic arrangements in Germany and Japan. After victory in
1945, the Western powers devised and institutionalised a far more effective formula for
reconciling free markets and mass politics. First, the democratic welfare state would com-
pensate the losers from openness to international trade and establish a robust safety net of
social insurance in hard times. Second, Keynesian countercyclical fiscal policy would
even out the swings in the business cycle while simultaneously funding spikes in demands
placed on the welfare state during recessions. Third, the Bretton Woods international
financial institutions, principally the...
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