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³ The use of the terms “state organization” and “state elite” to define the logical properties of the state is not an inconsistency: the latter term is used metonymically to refer to the former. Beyond that, it is useful to talk about an elite when exploring propositions about the state empirically. Also, because this essay concerns state strategy—or the self-conscious choice of policy by the state—the analyst must ultimately confront the fact that decisions are made by individuals. Nonetheless, those choices flow from the organizational position of the state within larger national and international structures.

⁴ That is what Otto Hintze had in mind in his argument that state elites gain their institutional position and legitimacy from the permanent insecurity of sovereign nations in an international system. See Hintze, , “The State in Historical Perspective,” in Bendix, Reinhard, ed., State and Society (Berkeley: University of California Press, 1973)Google Scholar.

⁵ Tilly, , “Warmaking and Statemaking as Organized Crime,” in Evans, Peter B., Rueschemeyer, Dietrich, and Skocpol, Theda, eds., Bringing the State Back In (New York: Cambridge University Press, 1985), 169–91, at 172CrossRefGoogle Scholar.

⁶ Hirschman, Albert, “Exit, Voice, and the State,” World Politics 31 (October 1978), 90–107CrossRefGoogle Scholar.

⁷ Douglass C. North has spelled out this fundamental double-edged relationship between state and capital, presenting a more elaborate utility-maximizing model. North, See, Structure and Change in Economic History (New York: Norton, 1981)Google Scholar. See also Levi, Margaret, “The Predatory Theory of Rule,” Politics and Society 10 (No. 4, 1981)CrossRefGoogle Scholar, and Conybeare, John A. C., “The Rent-Seeking State and Revenue Diversification,” World Politics 35 (October 1982), 25–42CrossRefGoogle Scholar. The state exchanges the provision of particular services (e.g., the maintenance of property rights) for privately generated revenue. It attempts to structure these services so as to maximize revenue. The state is constrained, however, since there is always the possibility that rivals can provide the same services. North argues, Where there are no close substitutes, the existing ruler characteristically is a despot, a dictator, or an absolute monarch. The closer the substitutes, the fewer degrees of freedom the ruler possesses, and the greater the percentage of incremental income that will be retained by the constituents. (North, 27). This proposition opens up the need for complex analysis of the relative mobility of productive resources and other factors that condition the possibilities for “exit.”

⁸ Tilly, Charles, Big Structures, Large Processes, Huge Comparisons (New York: Russell Sage Foundation, 1985)Google Scholar.

⁹ Gilpin, Robert, War and Change in World Politics (New York: Cambridge University Press, 1981), 13CrossRefGoogle Scholar.

¹⁰ Ibid.; see also Jones, R. J. Barry, ed., Change and the Study of International Relations: The Evaded Dimensions (London: Frances Pinter, 1981)Google Scholar; Holsti, Ole R., Siverson, Randolph M., and George, Alexander L., eds., Change in the International System (Boulder, CO: Westview Press, 1980)Google Scholar; Vasquez, John A. and Mansbach, Richard W., “The Issue Cycle: Conceptualizing Long-Term Global Political Change,” International Organization, 37 (Spring 1983), 257–79CrossRefGoogle Scholar.

¹¹ For a rather abstract discussion of system change and differential response, see Simon, Herbert, “The Architecture of Complexity,” in Simon, , The Sciences of the Artificial, 2d ed. (Cambridge: MIT Press, 1981), 193–229Google Scholar. The issue has also been discussed in terms of inter-national equilibrium and disequilibrium. See Rosecrance, Richard, International Relations: Peace or War? (New York: McGraw-Hill, 1973), 113–14Google Scholar.

¹² A similar conception has been used by, for example, Snyder, Glenn H. and Diesing, Paul, in Conflict Among Nations: Bargaining, Decision Making, and System Structure in International Crises (Princeton: Princeton University Press, 1977), 31Google Scholar.

¹³ See Krasner, Stephen, Structural Conflict: The Third World Against Global Liberalism (Berkeley: University of California Press, 1985)Google Scholar.

¹⁴ In some respects, the difference between international offensive and defensive strategies is captured in Keohane's distinction between “control-oriented” regimes and “insurance” regimes. Control-oriented regimes seek to prescribe and regularize behavior among participants within the regime, by which members gain a high measure of control over the behavior of the other actors. Insurance regimes are less ambitious and seek to pool risks of specific international economic change among regime participants. While control-oriented regimes at-tempt to go to the source of deleterious international change, insurance arrangements aim to soften the impact of that change. See Keohane, Robert O., “Demand for International Regimes,” International Organization 36 (Spring 1982), 325–55CrossRefGoogle Scholar.

¹⁵ See the discussion of Japanese “anticipatory adjustment policy” in Schmiegelow, Michele, “Cutting Across Doctrines: Positive Adjustment in Japan,” International Organization 39 (Spring 1985), 261–96CrossRefGoogle Scholar. A variety of categories of adjustment have been developed by the O.E.C.D. to characterize national patterns in the 1970s and beyond. See O.E.C.D., , Positive Adjustment Policy — Managing Structural Change (Paris: O.E.C.D., 1983)Google Scholar.

¹⁶ Lukes, , “Power and Structure,” in Lukes, , Essays in Social Theory (New York: Columbia University Press, 1977), 12–13CrossRefGoogle Scholar.

¹⁷ An alternative (but not antithetical) argument not developed here is that some problems lend themselves to international solution more than others. For present purposes, I assume that there are important reasons to attempt international cooperative solutions regardless of their substantive nature.

¹⁸ Keohane (fn. 14).

¹⁹ Gruhn, Isebill V., “The Lomé Convention: Inching toward Interdependence,” International Organization 30 (Spring 1976), 242–62CrossRefGoogle Scholar.

²⁰ Crouch, Colin, “The State, Capital and Liberal Democracy,” in Crouch, , ed., State and Economy in Contemporary Capitalism (New York: Macmillan, 1979), 40Google Scholar.

²¹ Not all offensive international strategies seek to place national economics in a more efficient relationship with the international system. The New International Economic Order (N.I.E.O.), for example, seeks to place developing nations in a more stable and competitive relationship with the international system. In general, however, the programmatic ideas of the N.I.E.O. are antithetical to market and efficiency measures of that relationship.

²² The political costs of domestic defensive and offensive policies are not equal, of course. A defensive strategy is likely to have fewer immediate governance costs than an offensive one. But similar domestic offensive initiatives will have different costs in different countries. Because of national differences in the organization of industrial production and the political institutions that surround the state and the economy, domestic restructuring can proceed more smoothly and with less resistance in some countries than in others. These factors themselves have been explained in terms of long-term historic differences in the necessity of domestic change. See Katzenstein, Peter J., Small States in World Markets (Ithaca, NY: Cornell University Press, 1985)Google Scholar. These variations in the flexibility and adaptability of domestic institutions do not allow for a strict specification of strategic preferences. A state with little domestic adapt-ability may seek an international adjustment strategy with more persistence and vigor, or it may move more quickly to accept a domestic defensive response. At this point the model reaches its heuristic limits, and a more historical case-by-case analysis becomes appropriate.

²³ The notion that there is a “national preference frontier” for adjustment outcomes is less controversial than the attendant argument that the four strategies are fixed in relation to each other on that frontier, and that all states share that fixed preference function. In an alternative argument, the point would be that the four strategies may not embody uniform and fixed summations of efficiency and governance costs. Although the optimal strategy may still be offensive international adjustment, the other three strategies may vary in their relationships to each other along an indifference curve. Thus, even if structural constraints allowed the state to pursue any one of the remaining three strategies, it might not necessarily seek a defensive international strategy over the other two, or it might favor the offensive domestic strategy over the defensive domestic strategy. More contingent relations between the three strategies would make the model more complex by raising the differential costs of the various options to greater importance. Structure remains important at a more basic level. In this refined model, there may be no a priori way of ascertaining which of the three strategies would be preferred over the others without knowing more precisely the costs of governance that are unique to each country. The variables that move one strategy or another off the indifference curve are proximate national circumstances, such as the stability of governing coalitions, the strength of the bureaucracy, and so forth. In a sense, this alternative puts more refined and contingent variables into the rational constraints on states; my more simple model moves those variables to the level of structural constraints.

²⁴ Shepherd, Geoffrey, Duchene, Francois and Saunders, Christopher, eds., Europe's Indus-tries: Public and Private Strategies for Change (Ithaca, NY: Cornell University Press, 1983), 4Google Scholar.

²⁵ The use of the term international structure, rather than international system, is meant to convey a stronger sense of the unplanned and unchanging nature of international political and economic realms. This point, and the variety of international structures, is discussed by Strange, Susan, “Structures, Values, and Risk in the Study of the International Political Economy,” in Barry Jones, R. J., ed., Perspectives on Political Economy (London: Frances Pinter, 1983), 213–19Google Scholar.

²⁶ Without a prior and independent specification of structures, the framework remains a model and not a theory. This type of heuristic model can effectively guide empirical investigation and generate substantial hypotheses. This is the approach used by North (fn. 7), chap. 3. The model cannot directly predict outcomes, however, and consequently falls short of a theory. On models and theories, see Snidal, Duncan, “The Game Theory of International Politics,” World Politics 38 (October 1985), 25–57CrossRefGoogle Scholar.

²⁷ See Hesselman, Linda, “Trends in European Industrial Intervention,” Cambridge journal of Economics 7 (1983), 197–208CrossRefGoogle Scholar.

²⁸ O.E.C.D., , The Case for Positive Adjustment Policies (Paris: O.E.C.D., 1979)Google Scholar.

²⁹ Ibid., 3–8, 71.

³⁰ Schmiegelow (fn. 15).

³¹ Krasner (fn. 13).

³² Akins, James E., “The Oil Crisis: This Time the Wolf is Here,” Foreign Affairs 51 (No. 3, 1973). 487CrossRefGoogle Scholar.

³³ U.S. Department of State, Bureau of Public Affairs, address by Henry Kissinger, November 14, 1974.

³⁴ Choucri, Nazli, International Politics of Energy Interdependence: The Case of Petroleum (Lexington, MA: Lexington Books, 1976), 61–75Google Scholar.

³⁵ U.S. Department of State, Bureau of Public Affairs, address by Henry Kissinger, February 3, 1975.

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³⁷ New Yorkk Times, December 14, 1976.

³⁸ Ghosh (fn. 36), 151.

³⁹ The importance of domestic capacity to the hegemonic behavior of a dominant international power has been noted by others. See Stein, Arthur A., “The Hegemon's Dilemma: Great Britain, the United States, and the International Economic Order,” International Organization 38 (Spring 1984)CrossRefGoogle Scholar; and Robert O. Keohane, “The Theory of Hegemonic Stability and Changes in International Economic Regimes, 1967–1977,” in Holsti, Siverson, and George (fn. 10).

⁴⁰ Vernon, Raymond, Two Hungry Giants: The United States and Japan in the Quest for Oil and Ores (Cambridge: Harvard University Press, 1983), 105–6CrossRefGoogle Scholar; Edward Boyer, “How Japan Manages Declining Industries,” Fortune, January 10, 1983.

⁴¹ O.E.C.D. (fn. 28).

⁴² Wilks, Stephen and Dyson, Kenneth, “The Character and Economic Context of Industrial Crises,” in Dyson, and , Wilks, eds., Industrial Crisis: A Comparative Study of the State and Industry (New York: St. Martin's Press, 1983)Google Scholar.

⁴³ Josef Esser and Wolfgang Fach with Kenneth Dyson, “‘Social market' and Modernization Policy: West Germany,” in Dyson and Wilks, ibid.

⁴⁴ Markovits, Andres, ed., The Political Economy of West Germany: Modell Deutschland (New York: Praeger, 1982)Google Scholar.

⁴⁵ Esser and others (fn. 43).

⁴⁶ Murakami, Teruyasu, “The Remarkable Adaption of Japan's Economy,” in Yergin, Daniel and Hillenbrand, Martin, eds., Global Insecurity: A Strategy for Energy & Economic Renewal (Boston: Houghton Mifflin, 1982)Google Scholar.

⁴⁷ Ibid., 143.

⁴⁸ Waltz, Kenneth, Theory of International Politics (New York: Wiley, 1979) 168Google Scholar.

⁴⁹ The variety of state initiatives suggests a further possibility. Because I have invoked a conception of the state as an actor making choices that maximize particular economic values and minimize political costs, it is possible to argue that states will pursue more than one strategy, embracing each in turn until the marginal costs of the policy equals the marginal returns. Thus, states will attempt to change domestic and international structures until the costs equal the benefits. They will also attempt to hold on to existing domestic and international structures until the costs equal the benefits.