Games of conflict and cooperation in asia

In this volume, we try conse-to show that Asian states play games of conflict and cooperation strategically bycreating, changing, or destroying institutions in the issue realms of securi

The Political Economy of the Asia Pacific

Series editor

Vinod K Aggarwal

Games of Conflict and Cooperation in Asia

123

The Political Economy of the Asia Pacific

ISBN 978-4-431-56464-5 ISBN 978-4-431-56466-9 (eBook)

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International relations in Asia are multifaceted Conflict coexists with cooperationacross various issue realms On the one hand, in the realm of security, North Koreahas been conducting tests of nuclear weapons and medium – and long-range missilesrelentlessly in spite of opposition from many Asian and non-Asian states Territorialdisputes are intensifying between China and neighboring states over islets in theSouth and East China Seas to the extent that, under a high level of uncertainty, asmall miscalculation could precipitate the outbreak of armed conflict To counterNorth Korea or China or both, Japan, South Korea, and Taiwan are strengtheningsecurity ties with the United States In contrast, the North Korean and Chinesemoves, which appear provocative to many, might be strategic responses to theimproved security ties with the external great power that they find inimical to theirown security interests.

On the other hand, both the depth and width of regional cooperation havebeen expanding steadily In the security field, internal wars in Cambodia and EastTimor have been settled through UN peacekeeping operations to which both Asianand non-Asian states have contributed In currency matters, the swap agreementsbetween central banks, which began in 2000 at the bilateral level, have expandedand become multilateral In the area of finance, China has established the AsianInfrastructure Investment Bank (AIIB) to satisfy strong demand for infrastructuredevelopment in a growing Asia, with participation by 56 states In trade matters,bilateral and subregional free trade agreements have been concluded between Asianstates and between states inside and outside the region In general, a multilateralcooperation effort, found in these instances, faces a collective action problem,thus necessitating creative institutional arrangements to solve the problem and takeeffect The abovementioned outcomes indicate that Asian states have been usingvarious arrangements skillfully to facilitate cooperation Yet this does not meanthat Asian states are always successful in attaining regional cooperation Indeed,there are many other occasions in which cooperative efforts have failed due toinformational or institutional defects with the continuation of interstate conflict andthe impairment of states’ security and prosperity

v

Beneath the blend of conflict and cooperation, we perceive goal-oriented ior, which seeks to maximize a state’s preference for security, prosperity, oreven domination A state’s goal-oriented behavior often takes place in reaction

behav-to another state’s similar behavior on an ex ante or ex post basis under variousinformational and institutional constraints The state’s goals may or may not

be realized, depending on constraints and strategic complexity Hence, from ananalyst’s vantage point, it takes an appropriate research method to explain or predictinternational outcomes that cannot be inferred directly from states’ goals

To illuminate the strategic interactions of goal-oriented behavior and the quences, we employ game theory as our research method In this volume, we try

conse-to show that Asian states play games of conflict and cooperation strategically bycreating, changing, or destroying institutions in the issue realms of security, trade,and currency As noted by Robert Keohane, conflict or discord is a precursor tocooperation The creation of appropriate institutions that coordinate states’ actionscan turn present conflict into future stable cooperation Therefore, conflict andcooperation are inseparable phenomena and are integral parts of states’ strategicinteractions under constraints

We believe that instrumental rationality is a principal behavioral guide forhumanity and that there exists no discernible difference in the extent of instru-mental rationality between the East and the West Despite our commitment to theassumption of instrumental rationality, we do not disregard history and culture asdeterminants of international outcomes Rather, we see history and culture either

as influencing states’ preferences and beliefs or as constituting social institutions

to constrain states’ behavior and strategic interactions Accordingly, if a significantdifference is found between the East and the West in the quality of regional relations,

we will argue that a primary source of the difference rests upon variations betweenregions or even within a region in the institutions that are influenced by historyand culture Historical and cultural variations divide contemporary Asia, makingregional institutional cooperation difficult, thus prompting some Asian states to useglobal or interregional arrangements in order to obtain the benefits of cooperation

As a result, Asia has increasingly been an open or porous region

Qualifications are provided for this line of argument in the first chapter, whichalso discusses the affinity of international relations theory and game theory withspecial attention to Japan and Asia The following ten substantive chapters aredeveloped based on the conceptual framework and, for integrity and coherence, aresubgrouped into four parts that correspond to major issues in international relationsscholarship: (1) conflict management, (2) arms control, (3) trade, and (4) currency.Effective institutions in the four realms are crucial to a stable international order Infact, such institutions were found in the medieval China-centric order as well as inthe post-World War II US-led order Each substantive chapter analyzes the nature ofconflict and cooperation in a post-hegemonic era when institutions are in decay

This edited volume, Games of Conflict and Cooperation in Asia, is an outcome

of a truly collaborative work by a research team of Japanese scholars who specialize

in game theory, international economics, international security, or internationalpolitical economy This English volume has vastly expanded and improved on the

Japanese version, titled Kokusai Funso to Kyocho no Geimu (Games of International

Conflict and Cooperation), published in 2013 by Yuhikaku, a superb publisher of

academic books based in Tokyo Through substantial recalibrations, revisions, andthe addition of new chapters (1, 2, 3, and 10), the English version has becomecompletely different from the earlier Japanese version Furthermore, we haveconducted mutual blind reviews to guarantee the quality of each chapter

Our research team has held biannual workshops at Kyoto University every Marchand at Kobe University every September since 2008 The workshops have beenextraordinarily productive and enjoyable because of the team members’ profession-alism and humor We are grateful to Atsushi Ishida (the University of Tokyo) whohad contributed his chapter to the Japanese version but whose administrative dutiesprevented him from doing the same for the English version Our special gratitudegoes to Emeritus Professor Yoshinobu Yamamoto (the University of Tokyo) forhis constructive comments in several workshop meetings and Professor VinodAggarwal (University of California at Berkeley) for allowing our volume to be part

of the Springer Political Economy of the Asia Pacific series under his editorial aegis

M Suzuki is also indebted to T.J Pempel (University of California at Berkeley)and Bill Grimes (Boston University), who visited Kyoto to provide their insightfulanalyses of Asian politics and international political economy We acknowledgethe Japan Society for the Promotion of Science (JSPS) for the grants (#23330053and #26245020) that made our research possible Last but not least, we thank JunoKawakami, an editor in Springer’s Tokyo office who patiently waited for our belatedbook manuscripts during the editorial process and gave birth to her second child atthe time leading up to publication Our book is dedicated to young scholars andstudents committed to systematic analyses of international relations in Asia

1 A Rational Approach to the Study of International

Relations in Asia 1

Motoshi Suzuki

in the U.S.-Japan Alliance 31

Shuhei Kurizaki

Disputes: How China and Japan Communicate 57

Shoko Kohama, Atsushi Tago, and Kazunori Inamasu

Sharing the Burden or Passing the Buck? 83

Yukari Iwanami

at Wars: Aid Conditionality and Reciprocity in Asian

Regional Conflict 117

Atsushi TAGO

A Game Theoretic Perspective 137

Akira Okada

7 An Agenda-Setting Game of the Landmine Ban Treaty 159

Hikaru Hayashi

ix

Part III Trade Cooperation

in Two-Level Games Analysis 183

Kaoru Ishiguro

Compliance in Trade Disputes? 207

Keisuke Iida

with Rival Lenders 227

Motoshi Suzuki, Keisuke Iida, and Shohei Doi

Crisis and Institutional Building 249

Motoshi Suzuki

Index 271

Motoshi Suzuki is a professor of international political economy at the Graduate

School of Law, Kyoto University His Ph.D in international studies was conferred

by the University of South Carolina Before joining Kyoto University in 2002, hetaught at Kwansei Gakuin University and the University of North Texas and alsoserved as a visiting professor of the Institute of Social Science at the University ofTokyo and a program officer of the Research Promotion Bureau in the Ministry

of Education Dr Suzuki has published articles in major international journals,

including the American Political Science Review, American Journal of Political

Sci-ence, British Journal of Political SciSci-ence, European Journal of Political Research, International Relations of the Asia-Pacific, International Studies Quarterly, Journal

of Politics, and Public Choice His most recent book, Globalization and the Politics

of Institutional Reform in Japan, was published by Edward Elgar in 2016 His

current research interests lie in international political economy in the Asia-Pacificand Japanese political economy

Akira Okada is a professor at the Institute of Economic Research in Kyoto

University He received his B.A in 1977 and his Ph.D in 1982, both fromTokyo Institute of Technology He has taught game theory at Tokyo Institute ofTechnology, Saitama University, Kyoto University, and Hitotsubashi University Dr

Okada has served as associate editor of the International Journal of Game Theory,

Mathematical Social Sciences, and International Journal of Economic Theory and

as the editor in chief of the Japanese Economic Review He acted as the president of

the Japanese Economic Association in 2014–2015 He has visited several academicinstitutions, including Northwestern University, the University of Bielefeld (ZiF),the Institute for Advanced Studies (IHS) in Vienna, and the University of Bonn.Akira Okada’s research fields are game theory, bargaining theory, public choice,microeconomics, and experimental economics In particular, he has investigatedeconomic behavior and social order in human society using mathematical andexperimental methodologies of game theory He is currently working on variouscooperative mechanisms such as group formation, bargaining, contract, institutions,and evolution through which goal-seeking interdependent agents can improve their

xi

welfare, overcoming conflicts He has published many articles on game theory

and its applications in academic journals such as the American Economic Review,

Games and Economic Behavior, and Journal of Economic Theory.

Shohei Doi is a Ph.D candidate of International Relations at the Graduate School

of Law, Kyoto University and a research fellow of the Japan Society for thePromotion of Science (JSPS) and studied in the Department of Politics at PrincetonUniversity as Visiting Student Research Collaborator (VSRC) He writes in the field

of international security, international political economy and political game theory

Hikaru Hayashi is an independent researcher (Ph.D., University of Tokyo) He has

been affiliated with several institutions, including the Waseda Institute for AdvancedStudy (WIAS) as an assistant professor, the Research Center for Japanese GeneralSocial Surveys at the Osaka University of Commerce, and the Japan Society forthe Promotion of Science His research focuses on the formation of internationalinstitutions

Keisuke Iida is professor in the Graduate Schools for Law and Politics at the

Uni-versity of Tokyo He holds a Ph.D from Harvard UniUni-versity and has formerly taught

at Princeton University and Aoyama Gakuin University His major publications

include Legalization and Japan (2006) and International Monetary Cooperation

among the United States, Japan, and Germany (1999) His current research interests

include the economy-security nexus in East Asia

Kazunori Inamasu is associate professor of social psychology and vice director of

Research Center for Social Psychology at Kwansei Gakuin University His researchfocuses on the relationship between media and public opinion He published papers

in the journals of social psychology, political science, and communication studies

such as Political Communication, Communication Research, or Japanese Journal

of Social Psychology.

Kaoru Ishiguro is professor in the Graduate School of Economics at Kobe

Univer-sity Before joining the faculty at Kobe, he was associate professor at RitsumeikanUniversity He writes in the fields of international economics, international relations,and international political economy and studies international trade negotiations anddomestic politics in Japan currently in progress

xiii

Yukari Iwanami is associate professor of Osaka City University She received her

Ph.D in political science from the University of Rochester She has been assistantprofessor at Kansai Gaidai University She writes and publishes in the area ofconflict settlement, international institutions with a special focus on the UnitedNations Security Council, and foreign aid

Shoko Kohama is associate professor of political science at Hokkaido University.

She received her Ph.D in foreign affairs from the University of Virginia in 2014

An expert on international security, her research primarily concerns peace andprosperity in post-conflict countries, including issues of recurrent war, socio-economic recovery and hostile communication among former belligerents Her

articles have appeared in Political Communication, the Washington Post’s Monkey

Cage, and several other journals.

Shuhei Kurizaki is associate professor in the School of Political Science and

Economics at Waseda University Before joining the faculty at Waseda, he was apre-doctoral fellow at Harvard University’s Olin Institute for Strategic Studies and

assistant professor at Texas A&M University His work has appeared in American

Political Science Review and International Organization His courses explore the

causes of war and peace, the history of diplomacy, and formal political theory

Atsushi Tago is a professor of international relations at the Graduate School

of Law, Kobe University He is specialized in a scientific study of international

politics His research appears at Journal of Peace Research, Conflict Management

and Peace Science, International Interactions, International Relations of the Pacific, British Journal of Political Science, and Political Communication.

Asia-A Rational Asia-Approach to the Study

of International Relations in Asia

Motoshi Suzuki

Abstract The rationalist research program has increasingly been applied to the

study of international relations in Asia, where the interpretive research program isstill dominant The rationalist program is founded upon objective ontology, contin-gent agent-structure epistemology, and the logic of consequence In this chapter, Iargue that rationality is an integral part of the Asian political tradition, constitutingancient military thought and medieval institutional cooperation in the realms ofsecurity, trade, and currency Thus, the rationalist program has considerable utility

in explaining institutional arrangements and their effects insofar as it is wellinformed of structural constraints and agents’ interests that affect their behavioralchoices and their use of values and ideas to promote their preferences This insightmotivates the game-theoretical analyses of this edited volume’s subsequent tenchapters investigating the problems and prospects of institutional cooperation incontemporary Asia

Keywords Rationality • International relations theory • International

institu-tions • Asia • Game theory

Much like specialists in other regions of the world, specialists of Asian politicsand international relations have employed a plethora of theories and methods.Amid their scholarly discourses, they have engaged in interrelated controversies inmethodology and theory A methodological controversy is concerned with the extent

of rationality in Asian politics One school of thought asserts that Asian politics

is essentially a cultural construct composed of rituals, emotions, and memories

It holds that rationality is essentially a Western idea, premised on the logic ofconsequence and cost-benefit analyses, nurtured through the Enlightenment and theIndustrial Revolution Rationality is not a primary behavioral guide for politics in

M Suzuki (  )

Graduate School of Law, Kyoto University, Kyoto, 606-8501, Japan

e-mail: msuzuki@law.kyoto-u.ac.jp

© Springer Japan KK 2017

M Suzuki, A Okada (eds.), Games of Conflict and Cooperation in Asia,

The Political Economy of the Asia Pacific, DOI 10.1007/978-4-431-56466-9_1

1

Asian states that have imported some outcomes from the Western modernizationmovements, but rejected the underlying beliefs Thus, Asian politics should moreproperly be understood in reference to culture and history, with the use of interpre-tive research methodologies that are based on the logic of appropriateness.1

In contrast, a rival school of thought holds that rationality is universal, unbounded

by time and space Rationality, in this context, means instrumental rationality that

generates goal-oriented behaviors in intelligent human beings under the constraintsimposed by informational uncertainty and transaction costs In any social setting,instrumentally rational behavior transpires at both the aggregate and individuallevels At the aggregate level, rational behavior emerges as endeavors by states ororganizations to pursue survival and prosperity At the individual level, politicalagents behave this way to acquire power and glory, and economic agents do so

to maximize their profits or market shares In the human tendency to pursue interest, no discernible difference exists between people in the East and those in theWest

self-Nonetheless, it is important to note that the instruments employed by oriented states or agents are conditioned by their institutions, and these differacross time and space Thus, by simply looking at the instruments used by states

goal-or agents at one particular time and place, analysts might wrongly judge that theirobserved behavioral patterns are inconsistent with those used at another time andplace and conclude that they are not rational For instance, the absence of robustregional institutions in an increasingly interdependent Asia may appear irrational toanalysts of contemporary European politics, where strong supranational institutionshave existed to constrain the behavior of the interdependent European statesand to support their joint interests However, because their preferences diverge,Asian states often face the immense difficulty of establishing their own regionalinstitutions and thus find it rational to rely instead on global or U.S.-led institutionsfor managing regional interdependence.2

Another controversy in the study of Asian politics hinges on the theoreticalpossibility of stable cooperation in contemporary Asia Despite initial optimismfollowing the Cold War’s end, Asian analysts have become increasingly pessimisticabout the prospects for regional cooperation, for the following structural reasons.First, they typically observe that contemporary Asia is saddled with an absence ofleadership and lacks a pivotal state capable of forging international cooperation.Their observations are a reverse corollary of the theory of hegemonic stability that

1 In the second section of this chapter, I will show an example in which several analysts have applied interpretive methods to comprehend the regional system in medieval Asia, which is known as the tributary system More broadly, the edited volume by Acharya and Buzan ( 2010 ) discusses various non-Western international relations theories with non-rationalist flavors that are largely concerned with Asia.

2 For instance, in the security realm, several Asian states have relied on U.S.-led alliances or implicit U.S defense commitments They opposed the establishment of a regional alliance because they feared that they might be drawn into an unnecessary war See Duffield ( 2001 ) and Hummer and Katzenstein ( 2002 ) for the related discussions.

posits the existence of a hegemonic state as an important prerequisite for stabilityand cooperation in either a global or a regional system of sovereign states (Gilpin

1983; Kindleberger 1981; Krasner,1976) To maintain its position, a hegemonicstate, by definition, has an intrinsic incentive, as well as sufficient capability, toprovide a stabilizing or cooperative mechanism from which lesser states can incurbenefits, in exchange for their allegiance to the system of hierarchy With sufficientincentive and capability, a hegemonic state can solve a collective action problemthat might otherwise become exacerbated under a non-hegemonic system (Olson

1965) However, contemporary Asia lacks hegemonic leadership and is thus bereft

of a crucial stabilizing mechanism To fill such lacunae during the post-World War

II period, the United States provided stabilizing mechanisms in the economic andsecurity realms However, it has recently been in relative decline and at risk of losingits efficacy as a stabilizer Instead, China has been gaining wealth and power, seeking

to overshadow the U.S.-led international institutions Nonetheless, while deepeningeconomic ties with other Asian states through trade and investment, China appearsreluctant to establish a cooperative mechanism, particularly in the security realm,and rather willing to pursue a unilateral expansionist policy, generating fears amongthe neighboring states

A second reason for pessimism in contemporary Asia lies in its economic heterogeneity Asian states vary politically, from liberal democracies tosingle-party authoritarian states, and economically, from market-capitalist to state-capitalist states Hence, they have divergent interests and expectations, makingintra-regional cooperation extremely difficult This pessimistic view hinges onthe interest-based theory of international relations, positing that states’ externalrelations are determined by the interests they derive from their internal political, eco-nomic, and social processes (Moravscik1997) In general, a democratic governmentseeks to satisfy popular interests, while an authoritarian government pursues eliteinterests, because of the distinct selection processes for public officials Likewise,market-capitalist beliefs formulate a causal mechanism by which public officialsrely on markets for achieving their policy goals, whereas state-capitalist beliefspromote the use of government fiscal or regulatory tools In both cases, governmentswith different arrangements face immense difficulty in establishing a cooperativeframework for coordinating their preferred policies

political-In contradistinction to a contemporary Asia plagued with the first and secondstructural problems, medieval Asia is said to have achieved regional cooperationsince the Sino-centric Confucian order brought it leadership and homogeneity Thismedieval regional cooperation has received various kinds of theoretical analysis.Most prominent are the constructivists who attribute it to the sharing of Confucianvalues and norms embedded within the tributary system that was established andmaintained by the Chinese empire in concert with other lesser states Alternatively,rationalists ascribe medieval cooperation to a creative institutional engineeringwithin the tributary system, as shown later in this chapter If this rational explanationholds, regional cooperation in the contemporary era, if any, may also be understood

as an outcome of rational calculus

In our edited volume, we seek to analyze the problems and prospects ofinstitutional cooperation in contemporary Asia by employing game theory as amethodological tool to operationalize the rationalist research program.3We intend

to do so, given that the demands for building secure institutional cooperation arehigh and given the complex and strategic interdependence characteristic of theregion We focus on institutions for the following reasons First, it is hard tochange structural factors, such as the distribution of power and state interests inshort to intermediate time frames However, institutions are practical instrumentsfor achieving cooperation in the short term and can be created through formalintergovernmental negotiations or informal dialogue Second, creating institutions

is the least interventionist measure available, and this measure can be agreedupon by sovereign states, based on the principle of voluntary consent This isimportant for Asian states that value their independence and autonomy highly,given their experiences of colonialism and great-power intervention that formexpectations about external powers’ exploitative motives We acknowledge thatmultifaceted policy approaches, including not only the institutional approach, butalso the structural approach that attempts to alter power distribution and interests,are desirable for securing stable cooperation in the long run Nonetheless, theestablishment of regional cooperation is widely regarded as an imminent short-term proposition, which should be secured using institutional means suitable for anincreasingly prosperous and potentially destructive Asia, with plenty of economicopportunities, as well as intensifying interstate rivalries and dangerous arms Tothis end, rational institutionalism can provide the best single theoretical perspectivefor comprehending the problems and prospects of building regional institutionalcooperation Hence, we employ it to guide our analyses

The structure of this introductory chapter is as follows: in Sect.1.2, I compareand contrast the rationalist research program with the interpretive one and evaluatethe tributary system that has been understood mainly by constructivist scholars.Then I suggest that the system is explicable also by the rationalist program andargue further that the rational account can provide a meaningful implication forconsidering cooperation in contemporary Asia, where values and norms are morediverse across states than in the medieval era In Sect.1.3, I offer a preview of theindividual chapters that follow this introduction and apply game-theoretical analysis

to examining the prospects for, and limits of, cooperation in the policy realms ofsecurity, trade, and currency Section1.4concludes this chapter

3 See Keohane ( 1984 ) for a prominent analysis of rational institutionalism Similar to our edited volume, Aggarwal and Koo ( 2008 ) focus on institutional architecture for contemporary Asia in the realms of security, trade, and finance However, the authors of their edited volume do not employ explicit analytical methodologies.

1.2 Medieval Cooperation from Rival Perspectives

1.2.1 Two Research Programs

In the early twentieth century, Weber (1978, pp 2225) provided a taxonomy of

social action that is composed of instrumentally rational (zweckrational), rational (wertrational), affectual, and traditional action, with a caveat that the

value-boundaries among the four ideal types are often unclear and crosscutting ForWeber, rationality concerns the first two Yet the study of rationality is much olderand goes back to the ancient Greek philosophers, such as Pythagoras, Plato, andAristotle, who considered it in terms of moral rationalism They linked rationality

to normativity and morality with regard to Dianoia (discursive thought), Nous (intellect), Logos (reason), and Phronesis (practical wisdom) (Webel 2013, pp.47–49) Having integrated Christian values into medieval theology, the study ofrationality took a different turn with Enlightenment philosophers who secularized

it by emphasizing empiricism and individualism Indeed, David Hume, AdamSmith, Jeremy Bentham, and John Stuart Mill advanced the notions of self-interest, utilitarianism, and comparative efficacy of means Their tendency to stressinstrumental rationality over value rationality has led to the development of themodern rationalist research program to explain purposive human behavior and itsconsequences in the fields of economics, law, and political science (Gintis2009).4

In contradistinction to the Western rational tradition, Asia is said to represent thecultural tradition within which agents behave under constraints of social discourseand historical memory, characterized as affectual and traditional types in Weber’staxonomy.5For instance, Geertz (1973) argues that one can analyze such behavior inthe cultural domain through the interpretive research program, holding that agents’goals depend on a culturally unique set of values and that “irrational” beliefs serve

as a crucial behavioral determinant Geertz continues that there is no culturallyindependent way of characterizing the needs that persons are postulated to seek tosatisfy He expresses skepticism about the project of explaining social phenomena

on the basis of an abstract theory of means-end rationality and a materialisticaccount of goals and beliefs The interpretive research program, to which Geertzrefers, entails varying schools of thought that take distinct positions on relative

4David Hume was a key opponent of moral rationalism In Book 3 (Part 1, Section 1) of A Treatise

of Human Nature and An Enquiry Concerning the Principles of Morals, Hume argued that reason

and emotions (or the “passions,” as he often called them) are quite distinct faculties and that the foundations of morality lie in sentiment, not reason (i.e., rationality) Hume’s psychological analysis shows that moral judgments have an essentially emotional, sentimental, or otherwise non- rational or cognitive character.

5 Edward Said ( 1978, pp 6567) argues in Orientalism that Western writing about “The Orient”

depicts Oriental culture as an irrational, weak, and feminized “Other,” an existential condition greatly contrasted with the rational, strong, and masculine culture of the “West.” Said says that this artificial binary relationship derives from the European psychological need to create a “difference”

of cultural inequality between “The West” and “The East.”

ontology and subjective epistemology, ranging from postmodern extremism toconstructivist moderationism.

Indeed, the international relations theory of constructivism, advanced by Wendt(1999), Katzenstein (1998), and Ruggie (1998), takes a moderate position and viewsstate agents as cognitively interconnected entities with shared ideas or identities

In other words, the theory sees agents as an integral part of the structure (e.g.,domestic or international society) to which they belong, meaning that their behavior

is constitutive of the ideas and identities embedded in the structure Thus, analystscan interpret agents’ behavioral patterns and their outcomes as derivatives of theideas and identities through intersubjective rather than objective lenses with the aid

of social science methods, such as thick descriptions, abduction, or hermeneutics.6

In contrast, the rationalist research program takes the positions of positivisticontology and objective epistemology and considers individuals, groups, or states,

all of which are labeled players, as the basic units of analysis Players’ goals

or interests, defined as a set of priorities or well-ordered goals with regard toanticipated outcomes, are central to the rationalist research program (Lake andPowell1999, p 9) With interests defined, the assumption of instrumentally rational

or goal-oriented human behavior helps explain these players’ actual behaviors,and their outcomes Players’ interests, which lie at the core of the explanation,are influenced by their experiences and beliefs, but are still independent of thehistorical, institutional, and social environments that surround them That is,agency is differentiated from, and is constrained by, structure This assumption

of a contingent agency-structure relationship is characteristic of methodologicalindividualism and is in stark contrast to a contiguous and mutually constitutiveagency-structure relationship assumed in the constructivist theory reviewed above.7From the contingent assumption, it is possible for rationalists to analyze how aplayer’s goal-oriented behavior interacts with another player’s similar behaviorunder institutional constraints In other words, the rationalist research programgenerates an analysis of strategic interdependence, to establish causal explanationsthat relate behavioral outcomes to interests via the intermediary of institutions.8Despite its individualistic premise, instrumental rationality does not mean beingasocial or atomistic, and it can sustain interpersonal and interstate cooperation Inother words, rational behavior in an interdependent society could produce mutuallybeneficial outcomes, cooperation, or even altruism (Skyms1996; Taylor 1975) It

6 Indeed, several analysts, including Acharya ( 2009 ), Acharya and Johnston ( 2007 ), Berger ( 2003 ), Johnston ( 1995 ), and Katzenstein ( 1997 ), have applied the constructivist theory to interpret conflict and cooperation in contemporary Asia.

7 See Ferejohn ( 1991 ) and Fearon and Wendt ( 2002 ) for comparison between the rationalist and the interpretive or constructivist research program.

8 The rationalist research program has entered into the study of Asia, reinvigorating a much-needed inter-paradigmatic controversy and contributing to its scholarly diversity and enrichment (Little,

1991 ) Applications to comparative politics include Popkin ( 1976 ), and Ramseyer and Rosenbluth ( 1997 ) See Johnson and Keehn ( 1994 ) for a critique of the rational-choice approach to Asian studies.

must be accompanied by specific institutions, known as commitment devices or

relational contracts, because utility maximization alone may not produce a stable

cooperative equilibrium directly (Sen1983) Such commitment devices or relationalcontracts entail appropriate beliefs that are embedded within social structures orinstitutions (Greif2006; North1990) Thus, instrumental rationality is essentiallycompatible with the social or cooperative aspect of Asian politics stressed by theconstructivist theory

I argue further that instrumental rationality underpins institutions in Asia, wherelogic and reason have abounded across time, contrary to some prevailing wisdom.Indeed, ancient Chinese strategic thinking captured by Sun Tzu in “the Art ofWar” described military concepts—strategic ambiguity, preponderance, flexibleresponses, and intelligence—that have been used to conduct historical and modernwarfare and design military institutions in the East and the West Rational thoughtdescended on medieval Asia, thereby constituting the basis of what was an important

regional institution at the time, known as the tributary system The medieval

tributary system is an authentic Asian institution that was subject to limited externalinfluences It thus can serve as a testing ground for the instrumental rationality ofAsian international relations In contrast, nineteenth-century Asia was subject to thetreaty port system and colonial pressures from the West, and twentieth-century Asiawas subject to U.S.-led economic and security institutions For our analysis of Asia

in the early twenty-first century, when Western influence is in decline, the medievalregional institution may provide significant theoretical and empirical implicationsfor considering institutional cooperation

1.2.2 Constructivist Perspective

At the medieval apex of its civilization, the Chinese empire developed and

main-tained a tributary system that hinged on relational contracts and ensured its suzerain

authority over the Confucian area of Asia, which included Korea, Japan, Vietnam,Ryukyu, Taiwan, Laos, and northern Burma (currently Myanmar) The Chineseempire established indirect governance or suzerain authority by providing localkings with official titles as legitimate rulers of the territories.9 With this imperialinvestiture, the local kings could maintain substantive sovereign control over theirterritories, while paying allegiance to the Chinese emperor for fulfilling the orderlyand peaceful governance of the universe with the “Mandate of Heaven.” Thishierarchical governance system created a radial order of which the Chinese empireconstituted the core, surrounded by its provinces and the tributary or vassal states.Outside the order were peripheral areas inhabited by nomads who occasionallycaused border disruptions and even invaded the tributary areas

9 The Qing Dynasty internalized governance over Tibet, Inner Mongolia, and Uyghur as their

provinces (gun) by placing regional administrative offices in these regions.

The tributary system embraced the Chinese worldview and its foreign policy

outlook The Asian region in Chinese eyes was Tianxia, literally, “all under Heaven,” of which China perceived itself to be the center China’s name, Zhongguo,

denoted “the central country” or the Middle Kingdom that contained the wholeworld known to it Such Chinese perception is what Western historians have called

“Sino-centrism,” the term used to characterize traditional Chinese foreign relations(Li2002, p 25) The Chinese world order meant the universal preeminence of theSon of Heaven in which all other non-Chinese nations had to be submissive andobedient, and were expected to accept their inferior status through the medium ofthe tributary system if they wished to have relations with China

The Sino-centric belief was coupled with Confucianism to constitute the

cog-nitive core of the tributary system Confucianism is not a religion, but a school

of political and ethical philosophy founded by Confucius (551479 B.C.) andhis disciples As Confucianism was reinstated in the Western Han Dynasty (206B.C.A.D 24) as the state ideological orthodoxy, its cosmopolitan outlook becameintegrated into the practical aspects of social and political life in China and formedthe most dominant political and cultural force (Li 2002, p 36) What madeConfucianism serve as the principle and practice of the tributary system were its

values of peace (ping) and harmony (he) and its norms of humanity, righteousness,

proper rites, and filial piety, respectively

The above observations are consistent with the general constructivist tion that shared ideas are a basis of interpersonal or interstate cooperation TheConfucian ideational ties that bounded the Chinese empire and vassal states werecritical to their mutual obedience to the system For Zhang and Buzan (2012p 35),this represents an Asian variant of Gramsci’s theory of super-national hegemony—

proposi-a form of power composed of “proposi-a combinproposi-ation of coercion proposi-and consent.” In thisregard, Confucian culture performed two interrelated functions: it constituted theideological glue that bound the regional system together, and it fostered consentamong the lesser units of the system with respect to Chinese dominance in theregion Thus, constructivists argue that Confucian precepts created a widely sharedbase of cultural, economic, and political practices that bound people throughout theempire Beyond the empire’s immediate borders, people across the tributary areasfelt a shared coexistence under a common set of Confucian values despite manydifferences (ethnic, linguistic, and religious)

Constructivists problematize the apparent anomaly of continuous stability and

cooperation by stressing that the Chinese hegemony was not firmly established in

either material or political terms, and, worse still, the Chinese empire’s military strength fluctuated in the wake of dynastic cycles According to Zhang andBuzan (2012, pp 3132), the tributary system was poorly institutionalized withoutprecise and binding behavioral rules, although it was flexible and ambivalent

politico-so that it could deal with a variety of contingencies and maintain the tributaryrelationship between its empire and lesser states for a long time Given theseobservations, neither realism nor rational institutionalism can explain the apparentoutcomes of stability and cooperation Zhang and Buzan (2012, p 15) attributestability and cooperation to the shared values and norms, arguing that, while they

remained sovereign in retaining their domestic autonomy with some restrictions

in conducting their foreign affairs, participants in the system inter-subjectivelyaccepted or acquiesced in this rank-ordered social hierarchy, as well as Chineseritual practices and norms of procedural justice For Zhang and Buzan (2012,

p 33), the shared values and norms made the system stable and protected it fromchange: “the moral purpose of the state, arguably the most important component

in the constitutional structure, is rarely challenged, if at all.” They continue that itconstrains institutional redesigning and legitimizes the tributary system as the “onlyacceptable social order.”

Viewing the medieval Chinese hegemonic system from a perspective similar tothe ancient Greek theory of moral rationalism, constructivists focus explicitly on thecultural and normative aspects of the tributary system Kang (2010, p 71), for one,characterizes social status in this hierarchy as “a function of cultural achievement,not economic wealth or military power.” Kang argues that, because of the ideational

ties, balance-of-power politics was absent from medieval Asia, which made it

qualitatively different from Europe, where balance-of-power politics was widelyused by lesser states as a rational instrument to prevent great-power dominance, inattempts to maintain their independence and autonomy in both domestic and foreignaffairs In his view, adversarial balance-of-power politics was absent from Asia’smedieval hierarchical systems, because the Confucian moral state reduced lesserstates’ fears about Chinese hegemony

1.2.3 Rationalist Perspective

An alternative to the above constructivist account is the view that the tributarysystem is a rational institution North (1990, p 3) provides a rational definition asfollows:

Institutions are the rules of the game in society or, more formally, are the humanly devised constraints that shape human interaction In consequence, they structure incentives in human exchange, whether political, social, or economic.

According to Greif (2006, p 9), incentives include “expectations, beliefs, andinternalized norms.” The beliefs shared by players motivate equilibrium play orinstitutional cooperation in our case From this definitional perspective, vassal statesfollowed the tributary system based on the belief that they could obtain benefits bybeing subservient to the Chinese empire, whereas the Chinese empire maintainedthe system based on the belief that it could stay at the apex of the world order byproviding vassal states with such benefits The inclusion of beliefs into the definition

of institutions does not mean that the underlying theory that guides our analysis isconstructivist Rather, the concept of beliefs is used here in regulatory rather thanconstitutive terms, as incentives that motivate players to abide by the institutions inquestion

Similarly, Zhou (2011) treats the tributary system as a set of rational institutionswithin which “the Middle Kingdom and the periphery states engaged in ongoingstrategic interactions” (p 151) Using a game-theoretical approach, Zhou attempts

to construct a model that explains the dynamic equilibrium of the tributarysystem, which represents, in his words, “a spontaneous order, an endogenous andself-reinforcing institutional arrangement of East Asia, which appeared and wasreproduced as an outcome of continuous strategic interactions among actors withinthe region” (Zhou 2011, p 150) This view is a basis of my discussion on thetributary system as a microcosm used to illuminate the rational aspect of Asianpolitics From the abovementioned definitional perspective, the medieval systementailed three informal institutions outlined below

1 Security: Regardless of whether the medieval or modern era is being discussed, security is essential to a state’s survival, but it is by no means a fait accompli

under the anarchic system of sovereign states What this means is that stateshave to independently acquire and maintain their own security However, in

an anarchic system, one state’s defensive action often produces a negativeeffect or negative externality on another state’s security, because, suspicious oftheir rivals’ intentions, states overreact with offensive countermeasures (Waltz

1979) This reciprocity of action and reaction creates and escalates a securitydilemma into an increasing likelihood of direct warfare (Jervis1978) Rationalinstitutionalism claims that, to prevent the security dilemma from escalating,states should establish a mechanism for exchanging information about theirdefensive intents for preserving the status quo and coordinating their choices(Haftendorn et al.1999) It can be argued that the tributary system entailed thefollowing security arrangements, consistent with this conjecture

A first arrangement concerns mutual recognition between the Chinese empire

and the local kingdoms As noted above, the Chinese empire issued investituresfor local kings who were legitimate rulers of the territories, in exchange for theirrespect for the Chinese emperor as the protector of the universe Although theseexchanges were merely formalities, the arrangement ensured that tributary statescould maintain direct control over their territories, with suzerain authority beingguaranteed for the Chinese empire,10and effectively establish an informal sovereignstate system in Asia Fairbank (1968) equates the investiture of a claimant by theMiddle Kingdom to the throne of a vassal state in Europe that had been recognized

by the concert of powers In medieval Europe, the formal parity of all sovereignnations had been acknowledged, which prevented the emergence of a continentalempire and ensured stability in interstate relations

10 A one-sided abrogation of the tributary relationship was fatal For instance, the Qing Dynasty sent an expeditionary mission to compel Korea’s Chosen Dynasty to accept the tributary request it had rejected because of the Qing’s Mongolian heritage that evoked the history of interference in Korean politics.

In contrast, medieval Asia did not develop along the Western lines of formalequality among nations and a substantial plurality of power Rather, it displayed a

unipolar and hegemonic structure A neo-Confucian system of hierarchy reinforced

the impossibility of international intercourse based on terms of legal equality.Indeed, whoever wished to enter into relations with China was expected do so asChina’s vassal, officially accepting the hegemony of the Chinese emperor Thismeant that vassal states signaled their unwillingness to upset the status quo’sasymmetric power relations, whereas the hegemonic state had disincentives toinvade or annex the backward areas militarily, based on the belief that direct controlwould be costly, without much wealth or tax revenue collected from the areas.11The security implications of the imperial-vassal relationship were vindicated

by the foreign policy dictum of Korea, the most loyal vassal state to the Chinese

empire The dictum, known as sadae/kyorin, was framed by Yi T’aejo, the founder

of the Yi dynasty, and was followed more or less by successive Korean rulers(Clark 1998) Sadae means, “serve the great,” or, more precisely, “acknowledge the manifest superiority of China.” Kyorin means “friendly contact with neighbors

(i.e., with Japan and Manchuria) on an equal basis within the tributary system.” Inpractice, while the Koreans did tolerate abuse and maltreatment over the years, intheir position of subservience to China, they succeeded in their main objective of

preserving the kingdom’s autonomy So long as they practiced sadae, they posed

no threat to China, and the Chinese had no intention of withdrawing investituresfrom the Korean Kingdom.12 Thus, the arrangement of mutual recognition played

an important role of reassurance in reducing uncertainty about states’ intentions and

ensured that their relations remained immune to a serious security dilemma,

A second security arrangement hinged on conflict management To sustain the

Sino-centric order, Ming and Qing policymakers had far greater confidence inmilitary force than in the Confucian notion of international rectification—“notfighting and subduing the enemy” (Wang2011, p 4; Johnston1995).13 In effect,

11 The Hongwu Emperor of the Ming Dynasty or Ming Taizu made the following statement in the Ancestral Injunctions It clearly shows that rationality was central to his governing principle: the various small countries of the southern man [barbarians] are separated from us by mountains and seas and far away in a corner Their lands would not produce enough for

us to maintain them; their peoples would not usefully serve us if incorporated [into the empire] If they were so unrealistic as to disturb our borders, it would be unfortunate for them If they gave us no trouble and we moved troops to fight them unnecessarily, it would

be unfortunate for us I am concerned that future generations might abuse China’s wealth and power and covet the military glories of the moment to send armies into the field without reason and cause a loss of life May they be sharply reminded that this is forbidden (quoted

in Wang 1998 , pp 311312).

12 Zhou ( 2011 , p 166) argues that a spirit of independence or denial of Chinese superiority might have provoked a repressive Chinese response, which would have been destructive to Korea in the

long run Thus, a major function of sadae was to preserve Korean autonomy.

13 There were instances in which the Chinese empire apparently acted in the spirit of the Mercian dictum For instance, in 1479, Dai Viet launched an attack against the Laotian Kingdom

Confucian-the cultivation, preservation, and application of military force became a means

to secure the hegemon’s credibility in defending the order In particular, the

Ming’s hegemonic order was grounded in four main military achievements: theextermination of the former Mongol Yuan rulers, the campaign against Annam,Cheng Ho’s maritime voyages, and the defense of Korea from Japanese invasions

in the late fourteenth century While noting these military campaigns as exceptions

to the passive foreign policy, Li (2002, pp 31–32) argues that the main objective

of the military operations was to extend and consolidate the tributary system, ratherthan to annex these countries into the Chinese territory Furthermore, the ImperialCourt magnified such accomplishments skillfully in the official documents it sent

to foreign countries.14Credibility, once firmly established through the adept use ofmilitary force and coercive diplomacy, could endure in spite of small perturbations

in material power Thus, the apparent stability in medieval Asia was derived

from the credibility of force, no less than from the shared Confucian values of

state morality (Feng2007) The Chinese empire’s pursuit of its own hegemoniccredibility suppressed lesser states’ acts of balancing, making Humean individualrationality observationally equivalent to moral rationalism

However, the security regime was vulnerable to internal and external threatsthat upset the hegemonic equilibrium An internal threat was derived from theempire’s own territorial ambitions over vassal and nomadic regions that mighterupt in the absence of checks and balances against a powerful emperor Indeed,

through his expansionist ambitions, Ming Emperor Yongle (1360–1420) sought to

expand the empire’s direct influence into Confucian Vietnam in the south, as well

as the northern and western nomadic regions Yongle weighed a chance for militaryincursion into these regions and seized on internal chaos in Vietnam, toppling theTran Dynasty After dominating Vietnam for 20 years, the Ming retreated from

Vietnam when the indigenous people rebelled against its oppressive rule Externally, the infusion of destructive arms into Asia from the West upset the asymmetric

distribution of power that underpinned the hegemonic system In the late nineteenth

of Lan Xang, capturing its capital and killing its ruler The Laotian envoys applied to China for assistance China responded with a strong warning against Dai Viet, demanding its withdrawal from Lan Xang However, the Laotian request for Chinese forces was turned down It was the Tai Kingdom of Lan Na that eventually offered military support to Lan Xang Together, they drove Dai Viet out of the country The Ming promptly rewarded Lan Na for its action (Stuart-Fox 2003 , p 92; Wang 1998 , p 329).

14 As the Veritable Records show, a mere two years since his accession, the first Ming Emperor was already engaging in this policy of building credibility: “All under Heaven is now at peace, but I

fear that the yi [peoples] in the four directions have not heard of this Thus, I have sent envoys to

report this to the various countries.” The Yung-lo Emperor’s readiness to use force was even more manifest, as can be gathered from the following letter, which was sent, presumably with Cheng Ho’s 1407 fleet, to reprimand the king of Java for his massacre of several Chinese envoys: “You should immediately send 60.000 ounces of gold to redeem your crime, so that you may preserve your land and people Otherwise, we cannot stop our armies from going to punish you The warning example of Annam is there.” See http://epress.nus.edu.sg/msl/entry/300 , last accessed on June 15, 2016.

century, the modernizing Japanese state, which acquired arms from Europe, annexedthe Ryukyu Kingdom and launched a direct military attack on the Qing Dynasty,paving the way for the demise of the last Chinese dynasty in 1911.

In sum, the discussion in this subsection supports a general proposition that ahegemonic order remains at a stable equilibrium through the preservation of bothhegemonic self-restraint and asymmetric power distribution The arrangements ofmutual recognition and conflict management were the instruments to preserve thetwo properties for a stable hegemonic equilibrium and prevent the worsening of asecurity dilemma that could destabilize the order However, the order was vulnerable

to internal and external threats that undermined self-restraint and power asymmetry.The order involved not just security, but economic regimes, to which I turn next

2 Trade: Economic growth is another important state objective We now know

from the modern theory of international trade that, to promote growth, the flow

of trade between states should stay open However, during the Ming and Qing

dynasties, maritime trade was under tight controls imposed by the imperialcourt.15 The rate of exchange with vassal states was informally fixed by courtofficials, not by market supply and demand With some exceptions, Chineseemperors customarily returned tributary gifts several dozen times greater in valuethan those that they received from the local kings.16These asymmetric terms oftrade were necessary to enable vassal states to obtain expensive sophisticatedgoods from China at reasonable rates Li (2002, p 56) argues that vassal stateswere motivated by the substantial commercial value of the tributary systemand accepted the system, only superficially or tacitly, at least in part, as amatter of expedience to advance trade benefits For the Chinese empire, therestrictive trade regime was instrumental in obtaining stable support from thevassal states and punishing their disobedient behavior In the seventeenth century,the Qing strengthened trade restrictions against the anti-Qing Tungning Dynasty

in Taiwan, by claiming that it was profiting from “illegal” trade (Keller et al

2011) In 1683, impoverished Taiwan fell to the Qing’s rule, which lasted forthe next 200 years These imperial-vassal arrangements made tributary trade anequilibrium institution, as Lee (2007) argues

In addition, the restrictive regime served three other domestic purposes: (i) toobtain tariff revenues for the dynasty, (ii) to control the development of coastalcities and regional feudal lords to the advantage of the inland capital city and theimperial court, and (iii) to prevent piracy and corruption With these purposes,the trade regime contained a dilemma that made it difficult to navigate On theone hand, a loosely regulated regime would expand trade and stimulate economic

15The Inspector’s Office of Merchant Ships (shihakushi) had the tasks of regulating piracy,

corruption, and other irregular trade practices, effectively discriminating between the “good” and

“bad” merchants Earlier, the Ming permitted some private trade but banned it in 1374.

16 There were cases in which the terms of tributary trade favored the Chinese empire, contradicting the norms of Confucian filial piety Vietnam requested the reduction of its mission to Beijing because it felt a loss from tributary trade (Tsiang 1971 , p 13).

growth in both China and vassal states, while allowing coastal cities and feudallords to grow quickly, at the expense of the imperial court (Lee,2007, pp 21–23).

On the other hand, a tightly regulated regime would help earn dynastic revenuesand control coastal development, while stifling trade and growth.17 To amelioratethe dilemma, the Chinese empire either tightened or loosened maritime traderestrictions, depending on its own fiscal health, domestic stability, and the severity ofpiracy In general, the more intense the Chinese empire’s internal concerns, the moreseverely it would tighten trade restrictions A restrictive regime would help domesticstability in the short run, but would produce long-run negative consequences asfollows

First, tightening the trade restrictions meant a loss of commercial opportunities tounlicensed merchants, prompting them to embark on unofficial private trade Some

of them fled the Middle Kingdom to pursue free commercial opportunities in otherparts of Asia and became successful expatriated Chinese merchants by creatingprivate networks Because of the networks, by the second decade of the nineteenthcentury, many areas in Asia, formerly known in Chinese annals as “tributaries,”became “trading states,” reducing the relative importance of the Chinese empire inregional trade (Andornino 2006, p 33)

Second, the Zhejiang province in coastal China flourished by trading with land and Japan in the mid-eighteenth century Yet another major coastal province,Guangzhou, where Manchurian merchants engaged in tributary trade, suffered fromlost commercial opportunities and asked the sixth Emperor Qianlong of the orig-inally Manchurian Qing to strengthen the trade restrictions In 1757, the emperor

Eng-responded affirmatively by monopolizing merchants, cohong, in Guangzhou (Lee

2007, p 29) This alienated Han merchants and feudal lords in Zhenjiang and othercoastal provinces who became dissatisfied with the restrictive trade regime andeven more attracted to private trade The European states that had been shut out

of trade with China found opportunities to join forces with these local interests andestablished the treaty port systems to expand commercial opportunities (Hamashita

2003, p 26) In effect, the capitalist treaty port system weakened the legitimacy

of the feudal tributary system and led to a substantial decrease in official tributarytrade, and, ultimately, to its demise (Andornino 2006, p 26)

These narratives run counter to Kang’s (2010, p 71) characterization of tributarytrade as a “cultural achievement” as well as to the account by Fairbank andGoldman (1998, p 139) that the Chinese empire sacrificed maritime trade for anti-commercialism and xenophobia The narratives suggest instead that the empireacted not out of such affectual motives, but out of the instrumental motives formaintaining its political positions in both internal and external domains through

strong trade restrictions Without a proper mechanism of mediation, the dissatisfied

domestic and international traders created separate trade regimes that reducedofficial tributary trade and led to the economic decline of the Chinese empire

17 The slowdown of Asian economic growth in comparison with phenomenal European industrial growth is often attributed to the restrictive tributary trade regime.

3 Currency: In general, an efficient currency regime is an integral part of a regional

economic system Given that different states use different currencies based ondifferent valuations, commodity trade needs an efficient mechanism of currencyexchange Although no formal regional currency regime developed in medievalAsia, informal currency standards evolved over time through rational calculus

By the early fifteenth century, silver coins dominated the Chinese economy,replacing the copper and iron coins that had circulated in the preceding Tong andSong Empires Although Japan had discovered rich reserves of silver, copper,and gold, until the middle of the sixteenth century, it did not have the necessaryminting technology and transferred ores to China via tributary trade, where thenecessary sophisticated technology was available Again, through tributary tradenetworks, silver coins minted in China spread throughout East Asia, and becamethe primary medium of regional commerce In effect, states in the region adoptedinformal silver standards that helped improve both the efficiency of commodity

trade and the speed of their growth insofar as they maintained trustworthiness

(von Glahn1996, p 89; Hamashita1990)

However, the trade-embedded currency regime had an innate weakness: once theinterstate trade flow was disrupted for the political reasons noted above, the regionalcurrency regime could crumble as well As already stated, the Chinese empire oftenstrengthened the maritime trade restrictions to impoverish rivals, reducing first theflow of trade and then the flow of silver, the most liquid asset to underpin the Asianeconomies Indeed, when restricting private trade sharply to destroy the Tungning

in the late seventeenth century, the Qing unintentionally reduced silver trade andgenerated severe deflation (Keller et al.2011) Earlier, the Ming circulated papermoney untied to silver, and often paid for tributary goods with paper money thatwas acceptable only within the Middle Kingdom, preventing the outflow of silver forits own fiscal health Increasingly, however, it met with foreign missions’ requestsfor silver, which was also usable beyond China’s imperial boundaries (Andornino

2006, pp 27–28) Worse still, the silver-based Asian currency regime suffered from

a chronic credibility decline, when the exploitation of rich silver mines in SouthAmerica by Spain gradually increased the supply of silver in world markets (Flynnand Lee,2013) In the late nineteenth century, the shift from a monetary systembased on silver to a monetary system based on the gold standard in Europe and NorthAmerica reduced the value of silver even further and depreciated Asian currenciesagainst the gold-based European currencies, worsening Asian terms of trade withEurope.18

In sum, the informal currency regime, which had evolved as an equilibriuminstitution based on joint interests of the empire and vassal states, provided liquidityfor regional trade and growth However, without a central control mechanism, thecurrency regime was susceptible to the adverse influences of changes in the empire’spriorities and external environments and eventually lost its trustworthiness

18 Another factor that worsened the Chinese terms of trade was the British East India Company’s trade of exorbitantly priced opium for Chinese silk.

My discussion in this section has buttressed the conclusion by Fairbank and Teng(1941, pp 140141) that the tributary system served material values in the minds

of the tribute bearers, as defined above Fairbank and Teng also argue that the moralvalue of the system was more important in the minds of the rulers of China Itcan be said from the instrumentally rational perspective that the moral value couldinclude peace and harmony that was derived from the presence of subservient states

in the vicinity, implying that the Chinese empire’s incentive to build and maintainthe tributary system might rest on the protection of its security.19Stated differently,the security, trade, and currency regimes of the medieval tributary system were notmerely a function of cultural achievement, but rational institutions that facilitatedinstitutional cooperation between the Chinese empire and the vassal states, throughthe promotion of their material interests This line of argument corroborates thegeneral claim of rational institutionalism that, although their interests are givenand are a priori selfish and asocial, states could achieve cooperation through theinstitutional arrangements that subsume the interests

Of course, I am aware that a similar hegemonic system is unlikely to reemerge incontemporary Asia, where power and wealth are more dispersed, and ideas are moreheterogeneous than in medieval Asia Given these structural conditions, I argue thatinstitutional building may be the sole remaining approach to regional cooperationand peace Institutions can help forge agreement between states with different ideasand interests, by providing interpretative frameworks that describe and systemati-cally account for complex problems, and propose blueprints for solutions This is

a reason why I have argued that even though the tributary system is explicable byboth the rationalist and constructivist theories, the rationalist account has a greaterpractical application for institutional cooperation in the policy realms of security,trade, and currency in contemporary Asia, where ideas and interests are more diversethan in medieval Asia In addition, I have suggested that the tributary system,like any other institution, was susceptible to the adverse influences of changes instates’ priorities and external environments and thus underwent its eventual demise.The medieval experience provides clues for analyzing contemporary institutionalcooperation by deducing the following key arrangements:

1 security arrangements for mutual recognition, self-restraint, conflict ment, and arms control;

manage-2 trade arrangements for openness and dispute mediation, and

3 currency arrangements for liquidity and trustworthiness

In the remainder of this edited volume, the authors will examine whether andhow these arrangements have developed in contemporary Asia to support interstatecooperation However, as noted in the opening section of this chapter, the institu-tional building efforts are likely to encounter major difficulties, since the structural

19 Hsu ( 1991 , pp 165166) argues that, during the twelfth century, gifts for security were made by the Sung Dynasty to appease a non-Confucian nomadic state, the Khitan, which became a fierce challenger in the northern peripheries This practice was inherited from tributary trade.

factors needed for cooperation are in short supply Hence, the establishment ofthe arrangements depends on high levels of institutional creativity and strategicrationality.

Overview

The remaining chapters in this book analyze conflict and cooperation in specificareas of importance to the strategic management of international relations in Asia,using the concept of instrumental rationality In each chapter, instrumental rational-ity is operationalized by employing game theory to illuminate the conditions andconsequences of strategic interdependencies between players (individuals or states)who try to maximize their discrete interests or expected utilities through institutionalstrategies As is commonly known, institutional analysis is twofold (Lake andPowell 1999) In this volume, several authors view institutions exogenously andanalyze how institutions influence the players’ choices and outcomes They areconcerned mainly with how the players use existing institutions strategically tomaximize their expected utilities In contrast, other authors regard institutions asendogenous and analyze how and why new institutions are created in relation to theplayers’ preferences, despite the constraints inherent in informational uncertaintyand transaction costs In both cases, states’ institutional behaviors can be viewed

as strategic and analyzed in game-theoretical terms In what follows, I provide anoverview of each chapter

1.3.1 Security Cooperation and Conflict Management

In medieval Asia, the Chinese empire established an informal security regime taskedwith mutual recognition and conflict management based on the values espoused inthe Mandate of Heaven As argued in the preceding section, the viability of thesecurity regime depended on the empire’s credibility and self-restraint as well asthe allegiance of the vassal states By contrast, in modern times, regional securityrelies in large part on the U.S.-led system of bilateral alliances in Asia, commonlyknown as the hub-and-spoke system The alliance system is formal and highlyinstitutionalized but has some resemblance to the medieval security regime inrequiring a mechanism of self-restraint and the credibility of force In addition,from the vantage point of lesser Asian states, the skillful use of hegemonic securityguarantees within the asymmetric alliance system is of vital importance to pursuingtheir own protection and regional stability As the hegemonic state’s influencedeclines, a post-hegemonic alliance system has to reinvent conflict managementstrategies that are the topics of the following three chapters

A modern alliance system hinges on the principle of collective self-defense(CSD) and takes advantage of capability aggregation to strengthen its extendeddeterrence However, it has the drawback of worsening a security dilemma andupsetting prudent crisis management through the automaticity of joint retaliation,which is known as a “chain gang” (Christensen and Snyder1990) In Chap 2,Shuhei Kurizaki develops an incomplete-information game model to analyze howthe extent of a constitutional constraint on CSD influences external securitysituations by signaling the level of the state’s unwillingness to embark on jointretaliation against a third-party military attack The model produces multipleequilibria in which the relaxation of the CSD constraint probabilistically worsens

a security dilemma and enlarges the likelihood of military conflict, despite thestate’s defensive intent This analytical result implies that a security dilemma mayworsen in contemporary northeast Asia, because of Japan’s reversal of its postwarcommitment not to use CSD under the war-renouncing constitution and Americansecurity guarantees The reversal has been undertaken as a credibility-enhancingstrategy to strengthen the alliance with the United States and deal with a risingChina and nuclear North Korea Similar instability occurred intermittently in themedieval Sino-centric regional system and was derived from the use or threat offorce by the Chinese empire responsible for maintaining its hegemonic credibility,

as noted in the previous section In the post-hegemonic situation of the early first century, a credibility-enhancing strategy rests on allies’ joint responsibility andneeds prudent intra-alliance management to lessen instability

twenty-In Chap 3, Shoko Kohama, Atsushi Tago and Kazunori Inamasu analyze apost-hegemonic conflict management strategy by focusing on an early stage ofinternational crisis in reference to the Japan-China dispute over the East ChinaSea As in this event, pre-crisis environments typically involve a mixture of correctand incorrect information because government officials have innate incentives tomisrepresent their true intents to their own bargaining advantage To deepen anunderstanding of pre-crisis bargaining, the authors develop a game-theoretic modeland empirical analysis through which they show that an exogenous agency, such asinternational news media, provides verifiable messages with which disputing gov-ernment officials are willing to share their private information Conversely, a countrysurrounded by hostile international media and relatively uncontrollable domesticmedia is inclined to issue noisy signals that worsen a security dilemma To illustratethe media’s role, the authors analyze the aircraft scrambling incidents that occurredbetween China and Japan in 2014 using the quantitative text analysis (QTA) method.The results show that international media plays a pre-crisis mediating role throughthe promotion of information sharing

In contemporary Asia, as the influence of an external great power recedes, themanagement of regional conflicts has increasingly met with United Nations (UN)peacekeeping operations that rely on contributions by a coalition of states willing

to send troops, materials, and money to conflict zones However, the multilateraloperations are prone to a collective action problem that reduces states’ incentives

to contribute to regional peace as a public good To ameliorate the problem, the

UN peacekeeping framework enables contributing states to control the distribution

of burdens and benefits among them Yet it still faces a difficult political choice.

On the one hand, states’ capabilities determine the extent of the burdens they canaccept and are fixed by nature On the other hand, the distribution of benefits isnegotiable and turns out to be the key institutional variable that influences theirincentives to participate in a peacekeeping coalition To find the optimal distribution

of benefits, in her Chap.4, Yukari Iwanami uses a two-stage complete-informationmodel in which states choose to participate or not and, if they do, determine theextent of efforts they put into the coalition She finds that a major state has tosacrifice some of its own benefits in order to secure the reluctant participation oflesser states This implies that conflict management, which is internalized withinthe major state under a hegemonic system, becomes internationalized under a post-hegemonic system The finding has empirical value in accounting for the successfulmissions in Cambodia and East Timor and the less successful ones in Kashmir,Aceh, and Moro

1.3.2 Security Cooperation and Arms Control

In medieval Asia, piracy created serious disruptions to international commerceand national governance Between the thirteenth and sixteenth centuries, groups

of pirates, composed of mixed nationalities, navigated the East China Sea, andsmuggled money, goods, and jewelry taken from official tributary missions andregistered merchants They were heavily armed, with martial arts training, swords,and hundreds of boats, and they were capable of destroying port cities and even afeudal regime Both the Chinese empire and vassal states sought police protectionfrom piracy However, because piracy control was a public good for the region, itwas subject to a failure of collective action To rectify the problem, the Chineseempire gave incentives, or the highest possible investiture titles, to local kings wholed vigorous piracy control efforts.20The analytical results of the following threechapters help us understand creative institutional engineering needed to implementarms control under modern hegemonic and post-hegemonic conditions

In Chap.5, Atsushi Tago focuses on a hegemonic state’s role in controlling arms.During the Cold War, in an attempt to prevent an outbreak of war, the United States,

as a guardian of global peace, sought to maintain a balance of power between rivalstates, using foreign and military policies Another policy instrument at its disposalwas the calculated disbursement of military aid to frontline states According toTago, the United States often made the disbursement conditional on a recipient’scompliance with international law, regarding the right to self-defense, and the

20 The Ming gave the Japanese Shogun, Ashikaga Yoshimitsu, the highest title in appreciation for his effort at piracy control The title, equivalent to that given to the king in the innermost vassal state

in Korea, can be viewed as a rational incentive to draw a vassal state’s contribution to navigation safety, an important public good for tributary trade.

obligation to report the use of self-defense to the United Nations (UN) SecurityCouncil These legal obligations were instrumental at clarifying an aid recipient’sintent, which was necessary to lessen a security dilemma with its rival state.Tago analyzes the India-Pakistan War, and explores the reason behind thecombatants’ breach of their reporting obligations He uses a game of prisoners’dilemma and finds that the breach was prompted in part by the U.S Congress’sdecision to terminate military aid, in spite of the Eisenhower Administration’sintent to continue providing aid For both India and Pakistan, the congressionalreversal of the aid commitment would reduce the cost of violating international lawand increase incentives to make a preemptive attack This finding indicates that ahegemonic state internalizes the task of arms control for regional stability and faces

a stiff domestic constraint imposed by the system of checks and balances that makesexecutive-congressional policy coordination difficult To promote regional stability,the hegemonic state needs skillful internal coordination

By contrast, in a post-hegemonic era, arms control relies on external multilateralcoordination that is the subject for the authors of the next two chapters Armscontrol in a non-hegemonic system represents the provision of public goods by agroup of heterogeneous states with varying preferences Under such circumstances,

it is difficult to reach agreement on how a public-good institution should be builtand then on how the restrictions it imposes should be implemented In Chap.6,Akira Okada provides a game-theoretical analysis of an N-state two-stage process(institution building and implementation) His sophisticated analysis shows that thefirst negotiating stage for building an arms-control institution serves as a “screeningdevice” to identify those states that are willing to implement the institution’sbehavioral rules and exclude potential free riders who will disrupt collective action.Thus, Okada’s analysis reveals the possibility of building an institution andsecuring implementation by a preponderance of the states This result has an impli-cation for the nuclear disarmament of North Korea The most secretive dictatorialregime in the world has built nuclear weapons in violation of the nonproliferationtreaty (NPT) it signed To stop the weapons program, the Six Party Talks—multilateral negotiations between South Korea, Japan, China, the United States,Russia, and North Korea—are aimed at building an institutional mechanism thatwill prohibit economic and technological aid to the regime and collect contributionsfor a quid pro quo side-payment for its compliance with the NPT rules At the time

of writing, the Six Party Talks are deadlocked, but they are still considered as thebest available institutional mechanism for the denuclearization of North Korea

In Chap.7, Hikaru Hayashi focuses on the Anti-Personnel Mine Ban Treaty thatbecame effective in 1999, after being ratified by 162 states This treaty should benefitpeople in Asia, as well as those in other regions of the world, because it has thepotential to reduce the risk of tragic postwar landmine explosions harming civiliansand thus minimize regional animosities In the international conferences held tonegotiate the treaty, pivotal players used a supermajority rule, rather than the usualconsensus rule, to overcome veto attempts and then successfully obtained sufficientratifications for the treaty to take effect Hayashi’s analysis uses an incomplete-information game model within which a pivotal state extends an equilibrium treaty

proposal to obtain sufficient ratifications via a supermajority rule The model alsoaccounts for a low level of treaty ratification in a heterogeneous region such asAsia In sum, both Okada and Hayashi indicate difficulties controlling arms in post-hegemonic environments.

1.3.3 Trade Cooperation

In the medieval era, expanded tributary trade contributed to intra-regional merce, making East Asia the most prosperous region in the world In essence,tributary trade promoted bilateral exchanges of commodities between the Chineseempire and vassal states through informal rules and rituals, while imposing andcontrolling restrictions based on various political considerations Centuries later,trade is still the primary engine for prosperity in contemporary Asia As in manyother regions of the world, Asian states have to turn to free trade agreements(FTAs) for trade expansion, against the backdrop of global trade negotiationsthat have been deadlocked for years While nested institutionally in the WorldTrade Organization’s (WTO) system, FTAs depend on individual states for theirconclusion and implementation, thus providing a good testing ground for buildinginstitutional cooperation in Asia

com-Unlike tributary trade, an FTA is a highly institutionalized formal agreementinvolving precise and legally binding rules on tariff and nontariff barriers, productstandards, market access, rules of origin, and dispute resolution Precision andbindingness are needed to make the agreement implementable, credible, andeffective In addition, FTAs have considerable scope, covering the non-trade realms

of investment, intellectual property rights, and labor standards, and they entailprecisely written clauses to prevent irregular interpretations on an ex ante basis.This contrasts with the closed tributary trade system that was essentially non-legaland regulated on a discretionary basis in order to provide distributive benefits to therulers and their clients in the Chinese empire and vassal states

Much like medieval tributary trade, a contemporary legally binding FTA wouldgenerate a distributive effect and evoke a severe domestic conflict between efficientand inefficient sectors The former tries to promote an FTA, while the latter tries toveto it In the medieval era, as noted earlier, the central political authority sought tocontrol a similar distributive conflict, by monopolizing the trade licenses and tradeearnings for itself and its clients at the expense of rivals In the contemporary era,while state monopolies are much reduced, restrictive measures are still an integralpart of international trade, catering to special interests that are critical to maintainingthe governing coalition, irrespective of democratic or authoritarian political systems

In Chap 8, Kaoru Ishiguro analyzes the flexible or abusive formation of anFTA in the context of domestic politics driven by interest groups and bureaucraticorganizations More specifically, Ishiguro analyzes two-level games in whichthe government’s political leadership conducts international negotiations with itsforeign counterpart to form an FTA, while engaging in internal negotiations

with a bureaucratic organization to obtain domestic consent Presumably, politicalleadership promotes national well-being and majoritarian consumerist interest,while the bureaucracy protects a sectoral interest Ishiguro shows that the extent

of liberalization in the FTA depends on intergovernmental negotiations that areconstrained by the interactions between leadership and bureaucracy, but which can

be facilitated by strategic side-payments to the sectoral interest In effect, Ishiguro’sgame-theoretical analysis explains an FTA as being endogenous to international anddomestic negotiations and the institutional arrangements to keep trade as open aspolitically possible

A precise and binding trade agreement needs to be backed up by strong domesticregulatory agencies that can ensure interpretive and procedural accuracy, as well

as policy transparency and compliance Such agencies need to operate on the basis

of rules, rather than discretion, and should be staffed with skilled regulators andlawyers Once such agencies are in place, compliance becomes self-enforcing: theydissuade other government agencies and interest groups from advocating for policytransgressions

However, legalized arrangements raise considerable difficulties for some Asiangovernments with limited legal and regulatory capabilities Worse still, such regu-latory weaknesses are often ascribed (erroneously) to Asian values of informality,voluntarism, and consensus Because of their cultural predispositions, Asian govern-ments may not comply strictly with international legal obligations Such regulatoryweaknesses are said to be impediments to permitting several Asian states to utilizesophisticated intergovernmental agreements and international dispute settlementsystems

In the medieval era, the tributary system used the informal rules of the Inspector’sOffice of Merchant Ships to prevent cheating and corruption but favored theimperial court and licensed merchants, reducing official trade By contrast, in thecontemporary WTO/FTA era, Asian governments indeed have been using the highlylegalized international procedures to settle their trade disputes and keep trade openand fair For instance, several Southeast Asian states and India compiled a successfullawsuit against the United States, for an alleged violation of the most-favored-nationprinciple on shrimp imports However precisely written, almost all trade agreementscontain some behavioral ambiguity, generating interstate disputes and compellingdisputants to act under informational uncertainty with regard to their contents Theinseparability of legalism from rationality is a major issue inherent in the study ofinternational relations (Goldstein et al.2001), and it is increasingly so in the field ofinternational law (Guzman2008)

In Chap.9, Keisuke Iida analyzes how states behave within the WTO disputesettlement system, viewing the system as exogenous Iida creates an incomplete-information game-theoretical model that approximates a legalized WTO disputesettlement procedure The model includes a pre-panel bargaining stage, in which

a defendant offers a settlement proposal to a plaintiff, as well as a post-panelimplementation stage, in which the defendant has a choice between complianceand noncompliance with regard to a panel ruling Iida finds that Asian states (Japan)acted in accordance with the behavioral hypothesis derived from the rational model

1.3.4 Currency Cooperation

Interest heterogeneity, another prominent source of difficulty in institutionalizinginternational relations, is particularly serious for the realm of currency Asianstates have to develop a regional currency regime capable of supplying short-termliquidity for balance-of-payment equilibria and long-term funding for economicdevelopment, under their varying levels of national incomes and foreign reserves

to manage regional interdependence problems In medieval Asia, as noted earlier,

an informal currency regime existed but was often handicapped by problems ofliquidity and trustworthiness that lay in Chinese officials’ discretionary choice ofmedium for tributary goods and generated fluctuations in vassal states’ profits andwillingness to stay in the regime The contemporary regime faces similar problems

of liquidity and trustworthiness and thus requires institutional solutions, as shown

in the following two chapters

In Chap.10, Motoshi Suzuki, Keisuke Iida, and Shohei Doi analyze long-terminternational developmental loan markets, in which multiple lenders compete tosupply credits More precisely, this chapter deals with an issue of financial ratherthan currency cooperation As stated earlier, the terms of medieval tributary tradefavored vassal states friendly to the Chinese empire, leaving them large profits inreward for their allegiance to the system of hierarchy This mimics modern-dayforeign economic aid or loans disbursed by a developed state to promote growth in

a developing area Like the medieval Chinese empire, a modern developed state, as

a lender (principal), has a political objective, namely maintaining good diplomaticrelations with a developing state as the borrower (agent), to protect its nationalsecurity interest, as well as to maintain access to natural resources in the developingarea The borrower, on the contrary, tries to acquire additional loans for much-needed infrastructure building with some risk of excessive borrowing The riskworsens if multiple lenders compete fiercely for a single borrower

Lenders with homogenous objectives can control the borrower’s behavior, byestablishing a common international financial institution as an intermediary to sortout their distinct interests and offer coordinated loans to the borrower In contrast,

if their objectives are highly heterogeneous, lenders fail to establish an institutionand instead exacerbate excessive lending Without an institutional intermediary, theborrower can exploit the multiplicity of lenders and draw additional loans fromthem strategically, via diplomatic double-talk This mimics the situation that wasprevalent in the late stage of the tributary system, when European states penetratedAsia to weaken the Qing’s monopolistic position, by providing lesser statesand local merchants with alternative economic opportunities through the treatyports systems The results also have significant implications for the contemporaryfinancial contestation in which the Asian Infrastructure Investment Bank (AIIB),led by China, vies with the Asian Development Bank (ADB), led by Japan and theUnited States

In Chap.11, Motoshi Suzuki shifts attention from developmental loans to term liquidity The author postulates that states try to build a regional financial

short-regime to supply short-term liquidity and to help them maintain favorable balances

of payments, under conditions in which they have different financial capabilitiesand information Suzuki uses a cheap-talk game-theoretical model in which stateshave to communicate with one another to build a mutually beneficial regime underconditions of asymmetric information In this model, a high-income state withrelatively greater capability and information prefers a non-autonomous regimewith a strong institutional link to a stringent global regulatory institution (i.e., theInternational Monetary Fund [IMF]), in order to maintain prudential financial order

in the region Alternatively, it may have to settle on an autonomous regime withless regulatory stringency This is because a low-income state prefers a regime thatcan supply ample short-term liquidity under the generous conditions in times offinancial stress The two sides have to agree on the necessary level of stringency,

in order to construct a regional financial regime The larger the capability gap,the greater the high-income state’s burden for supplying liquidity, and the moreurgent it becomes to build a stringent regime for moral hazard prevention The gamehas multiple equilibria that depend on the size of the capability gaps between thestates The analytical results account for the Chiang Mai Initiative (CMI) created

in the aftermath of the 1997 Asian currency crisis, which entailed an institutionallink to the IMF’s stringent surveillance mechanism This CMI-IMF link represents

a generalized characteristic of the Asian regional regimes—“porousness”—withwhich Asian states can exploit global institutions, to establish and maintain a goodregional order (Grimes2009)

In this introductory chapter, I have discussed the logical foundations that underpinthe rationalist research program motivating the game-theoretical analyses of theten substantive chapters in this edited volume The rationalist research program,founded upon objective ontology, contingent agent-structure epistemology, and thelogic of consequence, has seen increasing cases of application to the study of Asiawhere the interpretive research program is still dominant In this chapter, I haveargued that rationality is an integral part of the Asian political tradition, indeed,constituting military thought in ancient Asia and driving the medieval tributarysystem that influenced the realms of security, trade, and currency in large parts ofAsia The careful application of the rationalist program has explanatory utility forhistorical Asian politics insofar as it is informed of local interests and structuralconstraints that define agents’ behavior and social institutions

The authors in this edited volume have applied the rationalist research program

to game-theoretical analyses of conflict and cooperation in modern Asia Theiranalyses summarized in the preceding section indicate prospects and limits ofinstitutional cooperation in Asia saddled with ideational heterogeneity and weakleadership The analyses focus on the micro-foundations of state behavior andevaluate international outcomes, while avoiding sweeping generalizations and sim-

plistic views of institutions What this means is that cooperation is context-bound,and can transpire in contemporary Asia through creative institutional engineeringwithout relying on favorable structural factors that are hard to come by The chaptersoutlined above offer useful strategic analyses and policy prescriptions to assist inthese endeavors.

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