American Political Science Review Vol. 95, No. 1 March 2001 Governance in a Partially Globalized World Presidential Address, American Political Science Association, 2000 ROBERT O. KEOHANE Duke University acing globalization, the challenge for political science resembles that of the founders of the United States: how to design institutions for a polity of unprecedented size and diversity. Globalization F produces discord and requires effective governance, but effective institutions are difficult to create and maintain. Liberal-democratic institutions must also meet standards of accountability and participation, and should foster persuasion rather than rely on coercion and interest-based bargaining. Effective institutions must rely on self-interest rather than altruism, yet both liberal-democratic legitimacy and the meaning of self-interest depend on people’s values and beliefs. The analysis of beliefs, and their effect on institutional outcomes, must therefore be integrated into institutional analysis. Insights from branches of political science as diverse as game theory, rational-choice institutionalism, historical institutionalism, and democratic theory can help political scientists understand how to design institutions on a world—and human—scale. alk of globalization is common today in the press interdependence include war. As international rela- and increasingly in political science. Broadly tions “realists” have long recognized, interdependence T speaking, globalization means the shrinkage of and lack of governance make a deadly mixture. This distance on a world scale through the emergence and Hobbesian premise can be stated in a more positive thickening of networks of connections—environmental form: Globalization creates potential gains from coop- and social as well as economic (Held et al. 1999; eration. This argument is often seen as “liberal” and is Keohane and Nye [1977] 2001). Forms of limited associated with Adam Smith and David Ricardo, but it globalization have existed for centuries, as exemplified is actually complementary to Hobbe’s point. The gains by the Silk Road. Globalization took place during the of cooperation loom larger relative to the alternative of last decades of the nineteenth century, only to be unregulated conflict. Both realists and liberals agree reversed sharply during the thirty years after World that under conditions of interdependence, institutions War I. It has returned even more strongly recently, are essential if people are to have opportunities to although it remains far from complete. We live in a pursue the good life (Hobbes [1651] 1967; Keohane partially globalized world. 1984; Keohane and Nye [1977] 2001). Globalization depends on effective governance, now My second premise is that institutions can foster as in the past. Effective governance is not inevitable. If exploitation or even oppression. As Judith Shklar it occurs, it is more likely to take place through (1984, 244) expresses it, “no liberal ever forgets that interstate cooperation and transnational networks than governments are coercive.” The result is what I will call through a world state. But even if national states retain the governance dilemma: Although institutions are many of their present functions, effective governance of essential for human life, they are also dangerous. a partially—and increasingly—globalized world will Pessimistic about voluntary cooperation, Hobbes firmly require more extensive international institutions. Gov- grasped the authoritarian horn of the governance ernance arrangements to promote cooperation and dilemma. We who are unwilling to accept Hobbe’s help resolve conflict must be developed if globalization solution incur an obligation to try to explain how is not to stall or go into reverse. effective institutions that serve human interests can be Not all patterns of globalization would be beneficial. designed and maintained. We must ask the question It is easy to conjure up nightmare scenarios of a that Plato propounded more than two millenia ago: globalized world controlled by self-serving elites work- Who guards the guardians? ing to depress wages and suppress local political au- Clearly, the stakes are high: no less than peace, tonomy. So we need to engage in normative as well as prosperity, and freedom. Political science as a profes- positive analysis. To make a partially globalized world sion should accept the challenge of discovering how benign, we need not just effective governance but the well-structured institutions could enable the world to right kind of governance. have “a new birth of freedom” (Lincoln 1863). We My analysis begins with two premises. The first is need to reflect on what we, as political scientists, know that increased interdependence among human beings that could help actors in global society design and produces discord, since self-regarding actions affect the maintain institutions that would make possible the welfare of others. At worst, the effects of international good life for our descendants. In the first section of this essay I sketch what might Robert O. Keohane is James B. Duke Professor of Political Science, be called the “ideal world.” What normative standards Duke University, Perkins Library 214, Durham, NC 27708-0204 should institutions meet, and what categories should ([email protected]). we use to evaluate institutions according to those For comments on earlier versions of this address, I am grateful to Ruth Grant, Stanley Hoffmann, Peter J. Katzenstein, Nannerl O. standards? I turn next to what we know about real Keohane, and Joseph S. Nye, Jr. For insights into the issue of institutions—why they exist, how they are created and accountability, I am particularly indebted to Professor Nye. maintained, and what this implies about their actual 1 Governance in a Partially Globalized World March 2001 operation. In the concluding section I try to bring ideal objectives for which liberal democracy, or polyarchy, is and reality together to discuss institutional design. Are designed at the national level. there ways by which we can resolve the governance dilemma, using institutions to promote cooperation Consequences and create order, without succumbing to exploitation or tyranny? We can think of outcomes in terms of how global governance affects the life situations of individuals. In DESIRABLE INSTITUTIONS FOR A outlining these outcome-related objectives, I combine PARTIALLY GLOBALIZED WORLD Amartya Sen’s concept of capabilities with Rawls’s conception of justice. Sen (1999, 75) begins with the Democratic theorists emphasize that citizens should Aristotelian concept of “human functioning” and de- reflect on politics and exercise their collective will fines a person’s “capability” as “the alternative combi- (Rousseau [1762] 1978), based on what Jurgen Haber- nations of functionings that are feasible for her to mas (1996, 296) has called “a culturally established achieve.” A person’s “capability set represents the background consensus shared by the citizenry.” Gov- freedom to achieve: the alternative functioning combi- ernments derive their just powers from the consent of nations from which this person can choose” (p. 75). the governed, as the American Declaration of Inde- Governance should enhance the capability sets of the pendence proclaims, and also from their reflective people being governed, leading to enhancements in participation. their personal security, freedom to make choices, and To the potential utopianism of democratic thought I welfare as measured by such indices as the UN Human juxtapose what a former president of this association, Development Index. And it should do so in a just way, who was also my teacher, called the liberalism of fear which I think of in the terms made famous by Rawls (Shklar 1984). In the tradition of realistic liberalism, I (1971). Behind the “veil of ignorance,” not knowing believe that the people require institutional protection one’s future situation, people should regard the ar- both from self-serving elites and from their worst rangements for determining the distribution of capa- impulses, from what James Madison ([1787] 1961) in bilities as just. As a summary set of indicators, J. Federalist 10 called the “violence of faction.” Madison Roland Pennock’s (1966) list holds up quite well: and Shklar demonstrate that liberalism need not be security, liberty, welfare, and justice. optimistic about human nature. Indeed, at the global scale the supply of rogues may be expected to expand Functions with the extent of the market. Institutional protection from the arbitrary exercise of coercion, or authoritative The world for which we need to design institutions will exploitation, will be as important at the global level as be culturally and politically so diverse that most func- at the level of the national state. tions of governance should be performed at local and The discourse theory of Habermas restates liberal national levels, on the principle familiar to students of arguments in the language of communicative ration- federalism or of the European Union’s notion of ality. Legitimacy, in this view, rests on institutionalized “subsidiarity.” Five key functions, however, should be procedures for open communication and collective handled at least to some extent by regional or global reflection. Or, as Habermas (1996, 304) quotes John institutions. Dewey ([1927] 1954, 208), “the essential need is the The first of these functions is to limit the use of improvement of the methods and conditions of debate, large-scale violence. Warfare