In my last blogpost, I discussed how the US government could be constitutionally restructured to use arbitration instead of war to conduct foreign policy. If every great power was structured this way, then obviously arbitration would be a practicable alternative to war. But what happens when not all international actors agree to the same norms?
In my article about the moral illegitimacy of war, I applied David Friedman’s ideas about arbitration between protection agencies in a stateless society to the realm of international politics. Friedman agrees that it would be inevitable for said protection agencies to disagree about the legal norms their clients wish to be subject to. His solution is simple: one firm making a payment to another to sweeten the deal. In his stateless society, law is a market function. People pay firms to uphold the law, that is, to protect their rights. It’s only natural that cost considerations would be a critical element of this legal order. People who wish to send out goons to prohibit all alcohol consumption in their community, for example, might find it too costly to implement. Protection firms can pay each other to achieve certain legal norms, reaching a cost equilibrium based on market prices, establishing the market equilibrium law.
In the international realm of today, there’s no market of law per se. States create and enforce the law within their own borders. But there’s no world state which can provide the same function for the whole. States are not directly focused on making money the way market firms are. States paying each other off is not necessary a path to facilitating widespread use of arbitration. However, states are still subject to forms of market forces.
Domestic politics is a form of market force. States have to balance the needs and grievances of their domestic politics with their initiatives internationally. A state might be able to “afford” to concede a grievance that’s very important to domestic political interests, if they achieve cost-savings in other areas. For instance, if a state can get its basic grievances addressed through arbitration, and avoid costly war, that might be preferable.
The cost-savings of avoiding war, I don’t think, are properly quantified in the common understanding. War requires escalation of force, which usually exceeds the costs imposed by grievances. In order to “test” the market, to have an “auction” to determine current “prices” (how big of a military you need), there has to be war. Two completely rational actors can be driven into war merely to prove to each other the mutual will to fight – where the absence of such will would provoke aggression from the other party. War is subject to market forces as well, and substituting it out for something else that achieves the same ultimate purpose – dispute resolution – is the benefit of using arbitration.
I referenced the South China Sea in this regards. China’s rational defense needs require that they resist being totally boxed in and geopolitical neutered by the United States. The United States insists it doesn’t want to conquer China, only contain it. So, if China could be reasonably assured that they can act independently in East Asia, and if America could be reasonably assured that China’s ability to use aggression is limited, then the need for military brinksmanship and the whole game of testing boundaries across the East Asia would be obviated. Arbitration can establish not only diplomatic arrangements to this effect, but it also can establish formal legal norms which both parties can invoke to help guarantee their desired assurances. Moreover, arbitration allows for flexibility as situations or needs change.
