States in a World of Anarchy
According to the realist tradition of international relations theory, anarchy is the most basic and fundamental feature of the international system. That is, the international system is composed of sovereign states where there is no ultimate authority to govern the actions of these states. A main implication of anarchy is insecurity: no state is guaranteed security in the system of competitive sovereign states. This climate of insecurity can influence states to act in ways that buffer them from potential threats.
States' behaviors are guided by complex goals and capacities. Though often simplistically perceived as a unitary actor at the international level, the state is, by Max Weber's definition, the political organization that asserts rulership over the territory inhabited by a more or less cohesive group of people, otherwise known as society. Its relations with the domestic society underlies its relations with the world at large, giving the state a "double-faced" character. The state-society relations is significant in that it creates certain enduring conditions, such as bureaucratic effectiveness, social stability, and access to resources, that together determine the capacities of the state to operate within the anarchic international system.
It is axiomatic in the study of political economy that economic wealth and political power go hand in hand. “The power of the state will depend on the wealth of the society that it commands,” a state invariably promotes economic growth and capacity in an attempt to enhance state power and resources (Grieco and Ikenberry 99). Therefore, as the state engages in interstate competition, it draws upon its policy-making ability as well as military power to promote wealth creation. How much importance the state attributes to the protection of domestic industries, for example, has real effect on the state's openness to international trade.
A state also has an incentive to protect its economic autonomy. Being too dependent on another state can present a security risk, which may manifest itself as decrease in domestic social stability. However, the tradeoff between interdependence and autonomy is not a simple one and the decisions state leaders make will be based on careful calculations about the state’s sensitivity to disruptions in trade. After all, interdependence brings with it the rewards associated with specialization and comparative advantage. States want to benefit from the economic gains of open trade but must ensure that doing so does not create dependency vulnerabilities. The crucial difference between being sensitive to asymmetric trade dependence on another state and being vulnerable lies in the availability of substitutes for the imported resources when the trade relationship is suddenly severed.
In addition to the first two implications of the anarchic international system, a state will care about its relative standing compared to other states. Because power is relative, a state will consider decisions in light of how much it has to gain compared to the potential gains of other states.
Grieco & Ikenberry, Ch 4: “The Political Foundations of the World Economy.” Pages 97-105.