Constructivism and the politics of international trade
The origin ot the material—rationalist Open Economy Politics approach, as Lake notes (2009: 225), lies in political scientists’ efforts to understand variation in countries’ trade policies. Analysts in this research tradition started by assuming, in line with Becker’s (1983) model ot the “marketplace” for regulatory policymaking, that political influence was increasing in the level of material resources controlled by a particular interest group. Further, they assumed that societal groups would act rationally in calculating the costs and benefits of expending resources to try to push their country’s trade orientation toward openness or closure: once the marginal costs of lobbying effort exceeds the marginal (material) benefits resulting from efforts to influence the government’s policy agenda, the group would give up and let other groups steer the trade policymaking process. One avenue for research in the OEP tradition focuses on interest groups’ varying capacities for engaging in costly collective action to sway trade policy in their favor (Alt and Gilligan 1994).
To answer the question ot why some groups preferred trade openness rather than closure (and vice versa) researchers in the OEP tradition returned to economic theory. In Ronald Rogowski’s (1987) classic analysis, variation in factor abundance predicts political coalition-formation and can account for variation in countries’ trade policies. Building on Wolfgang Stolper and Paul Samuelson’s foundational economic model, Rogowski argued that pro-trade coalitions would coalesce around the users of the relatively abundant factors of production within a country’s borders, and anti-free trade sentiment would be strongest among the users of the country’s relatively scarce resources; in settings where labor and land were abundant and capital was scarce, for example, one should observe a “red—green” coalition of urban industrial workers and rural farmers and peasants pushing in favor of openness, aligned against a protectionist bloc of (scarce- factor-owning) capitalists spanning different industries. Others built models ot the trade policymaking process on different microeconomic foundations: the so-called Ricardo—Viner model assumes, contra Stolper—Samuelson, that the main factors of production could not be costlessly switched from their current usage to a different one (e.g., the workers and machines in a shoe factory could not quickly be retrained and redesigned to turn the factory into a production site for airplane tires), and thus the Ricardo—Viner model predicts not the cross-class coalitions of the Stolper—Samuelson model but rather within-class cleavages (capitalists and workers pitted against each other) based on sectors’ proximity to the national comparative advantage. Hiscox’s (2001) study found supportive evidence for both approaches, depending on the degree ot factor mobility at a given point in time (when factors of production were highly mobile, trade politics looked like the Stolper—Samuelson world and when they were relatively fixed trade politics fell in line with the Ricardo—Viner model).
The politics of international trade looks very different when viewed through the constructivist lens, however. Preferences over an issue as complex as the government’s international trade agenda are unlikely to be solely informed by self-interest rooted in the direct economic effects of the policy. Instead, constructivist-oriented scholars suggest, we need to look at how individuals come to understand what trade weans for them and for the communities in which they are embedded — and this requires paying due attention to meaning-making forces in social and political life, such as shared belief systems and cultural frames. Indeed, a good deal of evidence has piled up in the last decade showing that individuals’ attitudes toward trade do not seem to line up with the predictions from the material—rationalist approach to trade policy. For example, in Mansfield and Mutz’s (2009) widely read study, Americans’ attitudes toward trade were largely unrelated to indicators of their economic self-interest; instead, the strongest predictors of positions on trade were symbolic attachments and cultural values, such as partisan identity and, in particular, ethno-nationalist predispositions. “Trade preferences,” Mansfield and Mutz conclude, “are driven less by economic considerations and more by an individual’s psychological worldview” (2009: 451).
While much of the recent wave ot survey-based research on trade policy attitudes has yielded findings that undermine the materialist bent of the OEP/HIM-style approach in 1PE and fit better with the assumption that preferences over international economic policies are socially constructed, the new work in this vein has, with few exceptions, retained an individualist orientation. Another major contribution of the constructivist approach has thus been to connect the collective identities that develop in the context of an international system composed of nation-states to the question of how those collectivities make sense of and select from the menu of trade policy choices. Abdelal’s (2001) National Purpose in the World Economy exemplifies this line of research. Motivated by the puzzling variation in how Central and Eastern European countries managed their trade relations after the collapse of the Soviet empire, Abdelal identifies the variants ot nationalism that emerged in the post-communist environment as the key driver of countries’ trade strategies with respect to Russia. Keith Darden (2009) pursues a similar puzzle in his study of post-communist countries’ foreign economic policy choices: given that “the collapse of the USSR left 15 states with remarkable historical and institutional commonalities” (2009: 4), why did these countries take such different routes to membership in international trade-promoting institutions? (Some countries rapidly moved toward membership in the General Agreement on Tariffs and Trade (t) and its successor institution, the World Trade Organization (WTO), while others dragged their feet or resisted accession altogether.) Like Abdelal, Darden sees a large role for collective beliefs — though in Darden’s case the animating beliefs are not strictly nationalist but rather are causal beliefs about the nature of trade relations and the likely effects of openness on national wealth (Darden identifies three main types of shared economic belief systems hewed to at different points in time by states in the region, which he calls Soviet integralist, liberal, and mercantilist beliefs).
Organizations, such as firms, trade unions, and consumer advocacy groups, lie at a level of aggregation below the nation-state but above the level of the average individual. Recall that the OEP tradition sees trade policy contests among groups as being fought purely along self- interested lines — the groups that expect to lose from a shift toward openness duke it out for control ot the agenda with groups that expect to win from the trade policy change, and all the groups in the contest are reasonably predictable in their expectations and consistently rational in their strategies for winning the battle. The pressure imposed on profit-seeking firms in competitive marketplaces should, material—rationalists suggest, weed out aberrant beliefs and inefficient strategies that may be observed at the level of individual. But that perspective hinges, crucially, on the assumption that groups are formulating their strategies in decision environments characterized chiefly by risk.
Constructivists in IPE, like Cornelia Woll (2008), question that assumption: if firms are fundamentally uncertain about the distributional consequences ot trade liberalization — that is to say, they have too few prior episodes upon which draw to be able to forecast with any degree of accuracy who will win and who will lose from the policy change — then they cannot rationally optimize. Instead, Woll suggests, “firms will rely on social devices to reduce uncertainty, such as traditions, networks, institutions, and the use ot power” (2008: 12). Woll shows how the changing nature of production (shifting from primarily national to global, via supply chains that span many countries) and the changing nature of cross-border exchange (trading not just physical goods but also services) moved many firms out ot the world of quantifiable risk and plunged them into the world of uncertainty. She asks: “How would we predict the policy preference of a large French textile company engaged in an integrated production chain beyond European borders or a small American software company with no international operations?” (Woll 2008: 29). Drawing on detailed case studies of American and Western European firms’ lobbying activity on the issue of liberalizing trade in services, Woll convincingly shows that business’ interests in this domain are not given by their material environment but rather are shaped by their perceived identities; and, further, she demonstrates that companies’ strategies are shaped principally by what they learn from the national regulatory policymakers with whom they frequently interact.
The role of pervasive uncertainty — and the social strategies that actors adopt in order to cope with it — emerge as key themes in constructivist work on the design, behavior, and effects of international organizations (IOs) that write and enforce rules governing international trade.
This is a distinctive contribution of the constructivist agenda, given that material—rationalist approaches tend to share some core assumptions regarding how lOs operate: actors within and outside of IOs are rational optimizers; formal “authoritative rule structures” are the key factors shaping agents’ strategies (Nielson and Tierney 2003: 251); and the rule structures within which IO actors operate are strongly influenced by the distribution of material power among the members of the international system. Non-material factors like organizational cultures play a peripheral role in what Barnett and Finnemore (1999) call the “economistic” approach to the study ot IOs. In this approach IOs are conceptualized as contractual arrangements among rational, materially oriented actors, varying in their capabilities, seeking to maximize their interests subject to the enduring environmental constraints and opportunities that inhere in their domains of operation.
Research focusing on “legalization” as the key form ot variation of international rules illustrates how these material—rationalist assumptions have informed non-constructivist theorizing about the design of IOs. The “legalization” perspective focuses on three dimensions of international rules and rule-making bodies: obligation (the degree to which actors are legally bound to adhere to the rules), precision (the degree of ambiguity in the conduct specified by the international rules), and delegation (the degree to which authoritative interpretation and enforcement of the rules is delegated to third parties, such as an international court) (Abbott et al. 2000). Issue areas are subject to “hard law” when the legal institution governing that area features high values on all three dimensions (exemplified by the WTO’s Dispute Settlement System). From the legalization perspective the most important issue is whether law in a given area is soft/weak or hard/strong. The actors that produce legal instruments, in this perspective, can (at least in principle) adjust the three dimensions to “produce an institution exactly suited to their specific needs” (Abbott et al. 2000: 404). International law is conceptualized as a problem-solving device, the terms of which are negotiated by materialist, rational actors. Variation in the strength/ firmness ot law in different issue areas in world politics is usually explained as an outcome ot the struggle between states, whose interests and material capabilities vary, to extend or restrain the force ot law, and the competing demands of domestic interest groups whose interests are affected by legalization (Kahler 2000). There’s little scope, in this image ot global rule-making, for the kinds ot social norms and shared beliefs that, as in the constructivist perspective, are necessary for anchoring actors’ expectations in the face of uncertainty.
The transformation ot the GATT agreement during the Uruguay Round ot multilateral trade negotiations (1986—1994), which gave birth to a successor agreement and its institutional embodiment, the WTO, marked a breakthrough tor “hard” trade law at the international level. Through the material—rationalist lens it is “reasonable,” writes Leslie Johns, to assume that the new WTO agreement and (in particular) “the resulting dispute settlement system was designed by mostly (if not completely) rational actors with an eye to the system’s expected effect on international trade” (Johns 2015: 10). The international trade negotiators were operating rationally in the world ot risk, in this view.
But the historical narratives ot the Uruguay Round negotiations paint a very different picture: none of the key players in the discussions initially came to the bargaining table with clear, unambiguous interests related to the redesign of the system, nor did any ot the negotiators expect that the end result would be a radically redesigned dispute settlement system involving an appellate body that could issue binding, enforceable judgments (Croome 1999; Preeg 1995). Manfred Elsig’s interviews with trade negotiators suggest, “the ambitious outcomes [ot the Uruguay Round negotiations] could not have been predicted at the outset ot the process” (2017: 305). Rather, the “legalization leap” that produced the new WTO agreement and its strengthened adjudication system was a product of processes of mutual learning and trust building, conducted against the backdrop of pervasive uncertainty, that evolved over nearly a decade of negotiations.
Francesco Duina (2006) turns to the role that non-material cognitive schemas play in shaping another important set of rule-making bodies in trade — regional trade agreements. Duina focuses on variation in the design and functioning of three regional trade agreements (RTAs — the North American Free Trade Agreement (NAFTA), the EU, and Mercosur). His study identifies two major distinctions between RTAs: (1) the development ot different legal systems to address harmonization among participants; (2) differences in the way in which interest groups responded to integration. Duina explains the emergences of these differences in two steps: first, he argues that the creation of RTA requires the construction of “cognitive guidebooks” to standardize disparate definitional and nonnative understandings of trade; second, the variation in the “cognitive guidebooks” designed by officials in each RTA is shaped by domestic legal institutions and customs (namely, common versus civil law traditions) and politics (the interplay ot interest groups and elected officials in member countries of RTAs). The key point is that the beliefs underpinning these institutional arrangements — and the ways in which domestic groups and policymakers come to understand those arrangements — cannot be deduced from material conditions.
Beyond the design of international arrangements governing trade, there is a divide between the material—rationalist and constructivist perspectives over the putative effects ot international rules and institutions. In the OEP tradition, the international rules and institutions structure the nature of bargaining between self-interested states and provide “credible commitments” to assure others (states and market players) that governments will follow through on their policy promises (to refrain from “defecting” from a codified agreement to refrain from raising tariffs, for example) (Lake 2009). States are strategic in designing international rules and the lOs that embody them, and they are strategic in using the rules — but the rules and rule-makers within IOs do not construct states’ interests, preferences, or identities in a social learning process. States come to these interactions with their interests and strategies already determined by the rewards and punishments of the material environments in which they operate.
Michael Barnett and Martha Finnemore’s (1999, 2004) constructivist-oriented work gives us a very different lens through which to view IOs. They point out that IO autonomy comes in different forms. IOs may have wide discretion when states are relatively indifferent to their activities, but they also exercise discretion when they avoid following states’ directives, when they directly challenge powerful principals’ interests, and when, crucially, they “change the broader normative environment and states’ perceptions of their own preferences” (Barnett and Finnemore 2004: 27—9). The discretion of IOs like the WTO, in this perspective, is a function of the institution’s dual roles: it is in authority because it has been formally delegated tasks by its members; it became an authority in world politics thanks to its rational—legal bureaucratic procedures and the specialized knowledge possessed by its staff and management. The constructivist lens allows us to see IOs as purposive actors in global governance using “their authority to expand their control over more and more of international life” (Barnett and Finnemore 2004: 44). IOs do more than just structuring the bargaining between states that have conflicting interests or supplying opportunities for states to credibly commit to a course ot action (thus helping members realize their interests); they also work to construct boundaries between “legitimate” and “illegitimate” economic policies for their members. “In this sense,” Abdelal observes, “international norms define the boundaries of choices. International organizations play an important role in fixing the meanings, thereby constituting the legitimate boundaries of policymaking” (Abdelal 2009: 72).
While constructivist-oriented research on the politics ot international trade has not supplanted the material—rationalist perspective that continues to inform much empirical work in the field, the constructivist approach has generated important new insights. I highlighted three key constructivist claims in this brief overview: first, we need to look at how average individuals and elite policymakers alike come to understand what trade means for them and for the communities in which they are embedded (and over which they govern); second, the expectations of groups that are involved in trade policymaking may be formed in the presence of “radical” uncertainty, which requires an understanding of the socially constructed nature of those groups’ interests and preferences; and finally, uncertainty shapes the design of international rules and institutions governing cross-border trade, and, further, those rule-making bodies, once in place, may produce the “scripts” that define how member states come to understand and internalize the boundaries between legitimate and illegitimate types of foreign economic policies.