Theoretical Puzzle
Small States in the Global Political Economy

"A charging elephant can smash down large obstacle, but it cannot thread a needle." -Karl Deutsch

Dev Raj Dahal, NEPAL

There are a number of inconsistencies in the conceptual ordering of states—mega states, major states, small states and macro-states—in terms of their qualitative dimensions. In many cases, their functional hierarchies are common. Small states often offset their traditional hierarchy based largely on size and military might by seeking competitive advantages in a number of functional issue areas. Singer puts four basic components for the analysis: power and wealth (human and material), organization (formal and informal), status (ascribed and acquired) and will (conscious and subconscious) on how nations influence others (1976:263-92). The impact of globalization on the state, however, rendered the state structurally inappropriate as non-state actors—MNCs, NGOs and civil societies—equally compete in pursuing public goods.

One highly valued principle today is that all states—big and small—are legally equal and their sovereignties well recognized. Does this equality pertain only to small state or also for the small –big state relationship? The answers have oscillated between the two extreme poles of realism and idealism. Thomas Hobbes, Hans J. Morgenthau, Raymond Aron, Henry Kissinger and Kenneth Waltz defined the world system in term of market and power competition. Choices, calculations and interests condition the behavior of states and farms. The international system, says Hedley Bull, "anarchic" because of the absence of supranational sovereign to govern the behavior of nation-states. For political realists security is largely derived from power. This view holds that peace and stability in the world system is achieved only through the balance of power among the major states. Since power is their prime unit of analysis they tend to ignore the considerations of liberty, social justice, caring and integrity.

A contrary view, therefore, comes from the idealist thinkers such as Gautam Buddha, Gandhi, W. Wilson, Willy Brandt and Q. Wright whose prime consideration is the creation of a just and legitimate national, regional and global order committed to a set of common rights and responsibilities. For idealists, security is the end product of peace. It is difficult to escape from the fundamental dilemma posed by both poles on the use of means states and farm applies for the maximization of their profits. The uneven level of interaction between power and wealth poses an impediment in the achievement of legal equality. This implies that in terms of the operation of power, inequality is less likely to disappear in inter-state relations. The demand for the equality and justice has, therefore, become a weapon of the small states to project themselves in the comity of states.

The neo-Marxist school of political economy represented by Immanuel Wallerstein, Raul Prebish, Johan Galtung, James Petras and Andre Gunder Frank argue that dependence-oriented development of small states creates disparity between ‘industrialized core’ and ‘agrarian periphery’ in term of territory, knowledge, culture, wealth, political power and technological innovation. This disparity eventually perpetuates the domination of an integrated form of external capitalism in the decentralized and exploited periphery and semi- periphery by unequal form of center-satellite ties, exchange and similar outcome thus marginalizing small states in vital economic and political decision making. But this argument does not apply everywhere. Generally small states of periphery depend on the export of raw materials and manpower and lag behind in industrial development. The diffusion of geo-economics has pluralized the economic blocs of the core creating three major trade blocks such as East Asian, North American and Europeans and offering option for small state for diversification, innovation, competition and even high value production.

Some small states are better developed, highly involved in the world state system and are seriously taken by big states. Norway, Switzerland, Israel, Sweden, Korea and Singapore are good examples while others are deprived of these qualities and, therefore, called as backward. Afghanistan, Bhutan, Ethiopia and Nepal are such cases. Neil Amstrup calls this anomaly "Small State Paradox." What is common among varying levels of state is that there is usually a Stag Hunt game for scarce goods and powers in which all of them are interested more in absolute gains than in comparative advantages. Market failure had formerly been limited largely to public goods and externalities bringing risks for the internal cohesion of small states. This suggests that the small states have also used economic power as of the trump card in the power game and maintained the tradition of colonialism. Countries like Nepal, Afghanistan, Mongolia, and Holland are examples that had enjoyed the status of colonial power. Small states have array of variables that determine their strength and weakness: small states are small in many dimensions compared to the big powers.

The most common definition is: "The small power is not defined by specific qualities it possess (or lacks) but rather by a position it occupies in its own and others’ eyes" (Rothstein, 1968:127). Perception of each other’s self-image, intention, character and capabilities has no doubt a critical bearing on foreign policy behavior of small states. They derive their security with the aid of other countries. Keohane says: "A small power is a state whose leaders consider that it can never, acting alone or in a small group, make a significant impact on the system" (1969:295-7). Both these definition present a single factor analysis known as a perception and ignore several objective factors. In the changing global political economy perception, however, often leads to a wide gap between what reality is and how it is perceived. National leaders perceive only what their experiences have taught them to perceive and realities are conveniently modulated to fit their perception. In this sense, Varynen’s definition, too suffers from the same inadequacies when he says: "A small power is a state which has a low objective and/or a perceived rank in the context where it is acting" (1971:91).

Many scholars define small states with some sense of relative weakness and so of the security problems created by that weakness. Others lay emphasis on rank, behavior, opportunity and interests for determining the degree of smallness. Still, others equate smallness with limited population, lack of vital natural resources and economic potential. No matter how developed a state is if it has a small population and relatively small size lacks critical weight to exert influence and stalk a claim to regional and global leadership. Size and population increase the chance of the range of natural resource, industrial capabilities and military invulnerability essential to the struggle for survival, freedom and identity.

Heavy penetration of international system into small states reduces their foreign policy effectiveness because of its critical bearing on the domestic power struggle among political parties and interest groups. The syndrome of small power is provided by James N. Rosenau who argues it as: "Dependency puzzle ‘focusing on the qualities of survival that result when the institutions and norms of small states are either locked into international economies (market dependency) or are highly sensitive to and/ or penetrated by large states (power dependency); and ‘defiance’ or ‘autonomy puzzle.’ Which is mainly concerned with the survival consequences for small states that manage to defy or otherwise maintain a high degree of autonomy with respect to larger neighbors and/or distant superpowers" ( 1981:107). Despite certain weak spots the collective action problem is more easily solved in small states than mega ones, free riding is easily detectable, transaction costs are lowered, information flow easily due to flexible nature of social and system integration and fewer principal-agent problems exist in their societies.

Headline | Editorial | Letter | 2nd Impression | Views | International | Past