In the last article we had a look to the factors conditioning the capacity of supranational organization to reach better decisions than national institutions. We explained that due to the fact that the institutional architecture, the individuals that compose it and the environment they face are not the same as national institutions, the decisions are likely to be different. In short; we were concerned about the relative decision making efficiency. However this while this source of enhanced efficiency can explain many cases of supranational -namely, development programs in countries with weak institutional structures- it is only a very incomplete rationale for supranational governance in the developped world- I am thinking in NATO or the EU.

In this cases the source of enhanced efficiency of supranational governance has to deal with the benefits of intergovernmental coordination. This is the usual rational pointed to integration, more concretely in the European context. When issues with potential efficiency gains -such as trade liberalization, harmonization of standards, defence, exchange rates- have a scope larger than that of the nation state, it is advantageous for countries to coordinate themselves in order to reach a supranational solution.

This is the typical economic argument; when individual (in this case, national) actions have effects on third parties –externalities- it is useful to coordinate them in such a way to internalize these effects. For instance, countries will not be able to harmonized their standards unless they negotiate a common standard at the supranational level, they will not be able to coordinate their exchange rates unless they have organize it at the supranational level, etc…

In principle, the role of supranational institutions is also epistemic; they try to reach the best solution together, but since this solution will not by the best one unless there is some coordination, the identification of a “focal point” is in the advantage of most of them. Once this focal point –the common solution- is identified, the outcome will be self-enforcing since it is in the interest of all states to apply it. The epistemic role and the advantages of coordination are in this case the sources of enhanced efficiency of supranational decisions.

A clear example of this is that of the pillar of Justice and home affairs in the EU and, more concretely, Schengen. Given the fact that borders between countries generate social costs, it is advantageous to abolish them. However, once the borders have been abolished, there is a need to manage the external border, and especially, to organize migration fluxes under common criteria. This is the reason why member states coordinate their policies in this area.

However, most outcomes are not self-enforcing. On the contrary, many present the features of a prisoner dilemma: it is in the individual advantage of each state to avoid to implementing the measure –to free ride- as long as other countries collaborate, but is collectively sub-optimal that no one collaborates. For example, while economic theory teach us that unilateral market opening is in principle advantageous, political economy points that given self interested governments -usually captured by specific interests)-trade liberalization presents in fact the structure of a prisoner dilemma where it is better to have foreign markets opened for national producers but protect national market from foreign competition.

In addition, it also possible that collectively optimal outcomes generate net losers. New trade theory teaches for instance that market opening generates a process of international cross border reorganization where only better equipped producers are able to survive. It is perfectly possible for one country to see its national industrial structure permanently damaged by a insensible market opening.

In both cases, the benefits of supranational coordination come from making possible the outcome that is only feasible under some kind of coordination. In this case, the role of supranational institutions is not only or not fundamentally epistemic –identifying the correct outcome- but especially a source of credible commitments.

In the first case -with a prisonner dilemma structure but no net losers-, the role is that of organizing a commitment technology, usually under some form of delegation (like in the case of the European commission, the European court of justice) that supervises the process; monitoring compliance and punishing free riders. In the second case, -with net losers- supranational coordination will not be possible unless we organize some kind of transfer or compensation mechanism –a case in point is that of structural funds. The role of supranational institutions is to organize this transfer mechanism and to manage it in order to avoid net losers.

The factors that determinate whether or not supranational governance will be efficiency enhancing or not are the existence of benefits from coordination. When there are substantial externalities or collective action problems, supranational governance will be more efficient than decentralized unilateral action. On the other hand, when these effects are modest or secondary, the cost coming from bureaucratization will outweigh the benefits of coordination.

The point is, in fact, important when we talk about issues such as international peace and conflict. The current view on international affairs is divided between the optimists and the pessimists -both positions will be exagerated but we are trying to illustrate it. Pessimists usually have a view of the world characterized by geopolitical priority. The international environment as they understand it, is characterized by the competition between antgonic and potentially irreconciliable interests,where cooperation is impossible or extremely difficult. Those who believe in international cooperation and world federalism are labeled as “naive internationalists”. The result of the actual process of globalization will be one of regionalization as pictured by huntintong in his clash of civilization; trading blocks struggling for supremacy. Optimists, on the other hand, consider that cooperation has large gains coming from crossing interdependence and international actors will be engaged in stronger cooperation in order to capture its potential gains. The process will, in the long (very) run, lead to some form of kantian world federalism and perpetual peace.

The point that interest us here is that the relative perception of the gains coming from cooperation is different for each of these groups. Of course, there are problems concerning the reach of an agreement on cooperation and the division of the surplus that results from it -transaction costs- and there are also problems in perceiving reality -incompleteness of information- but if the gains from cooperation are sufficiently high, cooperation will be much more likely to arise in the medium run. However, this article is only concerned with the efficiency, not with the likeliness of supranational governance and thus we will not talk about these topics here.

The title of this article reveals that the opinion of the author is, in fact, closer to the second view. Am I a naive internationalist? Well, maybe, but “je ne suis pas fou tout seul” actually;

Tags: cooperación, cooperation, European Union, Federalismo mundial, game theory, ONU, positive sum, supranational, Union Europea, UNO, world federalism, world government

This entry was posted on Lunes, Junio 9th, 2008 at 12:01 and is filed under English Version, Metropóli, Nación Europea, Supranational governance, ciencia recreativa, globalización, internacional . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.