From Geopolitics to Geo-Economics: Logic of Conflict, Grammar of Commerce

Author(s): Edward N. Luttwak

Source: The National Interest , Summer 1990, No. 20 (Summer 1990), pp. 17-23
Published by: Center for the National Interest

Stable URL: https://www.jstor.org/stable/42894676

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 From Geopolitics to Geo-Economics
Logic of Conflict , Grammar of Commerce

If the players left in the field by the

nate parts of the world where waning importance of military power were
Except nate armed partsarmed
for confrontations of those the world unfortu-or
confrontations or where
civilcivil purely economic entities - labor-sellers, en-
strife persist for purely regional or internal trepreneurs, corporations - then only the
reasons, the waning of the Cold War is logic of commerce would govern world af-
steadily reducing the importance of military fairs. Instead of World Politics, the intersect-
power in world affairs. ing web of power relationships on the inter-
True, in the central strategic arena,national scene, we would simply have World
where Soviet power finally encountered the Business, a myriad of economic interactions
de facto coalition of Americans, Europeans, spanning the globe. In some cases, the logic
of commerce would result in fierce competi-
Japanese, and Chinese, existing military forces
have diminished very little so far. Neverthe- tion. In others, the same logic would lead to
less, as a Soviet-Western war becomes ever alliances between economic entities in any
more implausible, the ability to threaten or location to capitalize ventures, vertically in-
reassure is equally devalued (and by the same tegrate, horizontally co-develop, co-produce,
token, of course, there is no longer a unifying or co-market goods and services. But compet-
threat to sustain the coalition against all divi-itively or cooperatively, the action on all sides
sive impulses). Either way, the deference thatwould always unfold without regard to frontiers.
armed strength could evoke in the dealings of If that were to happen, not only military
governments over all matters - notably includ-methods but the logic of conflict itself -
ing economic questions - has greatly declined,which is adversarial, zero-sum, and paradox-
and seems set to decline further. ical - would be displaced. This, or something
Everyone, it appears, now agrees that the very much like it, is in fact what many seem
methods of commerce are displacing military to have in mind when they speak of a new
methods - with disposable capital in lieu of global interdependence and its beneficial
firepower, civilian innovation in lieu of mili- consequences. 1
tary-technical advancement, and market pen-
etration in lieu of garrisons and bases. But JThe logic of conflict is "zero-sum" since the gain
these are all tools, not purposes; what pur- of one side is the loss of the other, and vice
poses will they serve? versa. That is so in war, in geopolitical con-
frontations short of war, and in oligopolistic
Edward N. Luttwak holds the Burke Chair in competition (as the market share of one oli-
Strategy at the Center for Strategic and In- gopolist can only increase at the expense of
ternational Studies, Washington, D.C. another's); but not in a many-sided ("perfect")

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Logic and Grammar not follow a commercial logic that would
ignore their own boundaries.
What logic then do they follow?
BUT simple.simple.
THINGSTheTheinternational
international areisnot quite scene that is
scene • Do they seek to collect as much in revenues
still primarily occupied by states and blocs of as their fiscal codes prescribe - or are they
states that extract revenues, regulate eco- content to let other states or blocs of states
nomic as well as other activities for various
tax away what they themselves could ob-
purposes, pay out benefits, offer services,tain? Since the former is the reality (that is,
a zero-sum situation in which the gain of
provide infrastructures, and - of increasing
importance - finance or otherwise sponsorone is the loss of another), here the ruling
the development of new technologies and logic is the logic of conflict.
• Do they regulate economic activities to
new products. As territorial entities, spatially
rather than functionally defined, states can- achieve disinterestedly transnational pur-
poses - or do they seek to maximize out-
competition, wherein any two sides can bothcomes within their own boundaries, even if
gain (or lose) market shares concurrently. Thethis means that the outcomes are suboptimal
logic of conflict is paradoxical (i.e., governedelsewhere? Since the latter is the predomi-
by apparent contradictions and the coinci-nant, if not exclusive, reality, economic
dence of opposites) because all actions unfoldregulation is as much a tool of statecraft as
in the presence of an adversary that reactsmilitary defenses ever were. Hence, insofar
against whatever is being done. That isas external repercussions are considered, the
why - to give a static example - the worst of logic of state regulation is in part the logic of
approach roads for an attack may be the best,conflict. As such, its attributes include the
if it confers the advantage of surprise (makingtypically warlike use of secrecy and decep-
the bad road paradoxically good and the goodtion for the sake of surprise (as, for example,
road paradoxically bad). Or, to give a dy-when product standards are first defined in
secret consultations with domestic produc-
namic example - involving the coincidence of
opposites - why victorious armies that ad-ers, long before their public enunciation).
• Do states and blocs of states pay out benefits
vance too far advance to their own defeat by
overextension, just as weapons that are tooand offer services transnationally - or (frac-
effective are the most likely to be made inef-tional aid allocations apart) do they strive to
fectual by the enemy countermeasures thatrestrict such advantages to their own resi-
their very effectiveness evokes. This samedents? Likewise, do they design infrastruc-
tures to maximize their transnational utili-
dynamic evolution toward the coincidence of
opposites is operative at every level of strat-ty - or do they aim for domestically optimal
egy: thus the Soviet Union's accumulation ofand appropriately competitive configura-
power eventually resulted in its impotence, astions, regardless of how others are affected?
other states were frightened into forming aSince the latter is the reality, the logic of
coalition against Moscow. In all dynamicstate action is again in part the logic of
manifestations of the logic of conflict there isconflict. (The competitive building of huge
such a culminating point, beyond which ac-international airports in adjacent, minus-
tions evolve into their opposite. In the linearcule, Persian Gulf sheikhdoms is an extreme
logic of everyday life (and economic competi-example of such behavior, but such conduct
tion), by contrast, good is good and bad is is not uncommon in milder forms.)
• Finally, do states and blocs of states pro-
bad, and success can facilitate further success
without any necessary culminating point. Formote technological innovation for its own
a systematic comparison, see my Strategy : thesake - or do they seek thereby to maximize
Logic of War and Peace (Cambridge: Harvardbenefits within their own boundaries? Since
University Press, 1987). the latter is the reality, the logic of conflict

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 applies. (Three obvious examples are the a "geo- economic" substitute for their decaying geo-
obstacles that long delayed the introduction political role.
of Concorde flights into U.S. airports, Jap- There is also a far more familiar phenom-
anese barriers against U.S. supercomputers enon at work: the instrumentalization of the
and telecommunications, and the develop- state by economic interest groups that seek to
ment of rival High Definition Television manipulate its activities on the international
formats.) scene for their own purposes, often by requir-
As this is how things are, it follows that - ing adversarial "geo-economic" stances. No
even if we leave aside the persistence of sphere of state action is immune: fiscal policy
armed confrontations in unfortunate parts of can be profitably used so as to place imports
the world and wholly disregard what remains at a disadvantage; regulations, benefits, serv-
of the Cold War - World Politics is still not ices, and infrastructures can all be configured
about to give way to World Business, i.e., theto favor domestic interests in various ways;
free interaction of commerce governed only and, of course, the provision of state funds for
by its own nonterritorial logic. domestic technological development is inher-
Instead, what is going to happen - and ently discriminatory against unassisted for-
what we are already witnessing - is a much eign competitors.
less complete transformation of state action The incidence of both adversarial bu-
represented by the emergence of "Geo- reaucratic impulses and adversarial manipu-
economics." This neologism is the best term lations of the state by interest groups will
I can think of to describe the admixture of the vary greatly from country to country. But
logic of conflict with the methods of com- fundamentally, states will tend to act "geo-
merce - or, as Clausewitz would have writ- economically" simply because of what they
ten, the logic of war in the grammar of are: spatially-defined entities structured to
commerce. outdo each other on the world scene. For all

the other functions that states have acquired

as providers of individual benefits, assorted
The Nature of the Beast services, and varied infrastructures, their rai-
son d'etre and the ethos that sustains them still
WITH still STATES
still ininexistence,
existence, and blocs
it could not it could of states not derive from their chronologically first func-
be otherwise. As spatial entities structured tion: to provide security from foes without (as
to jealously delimit their own territories, to well as outlaws within).
assert their exclusive control within them, Relatively few states have had to fight to
and variously to attempt to influence events exist, but all states exist to fight - or at least
beyond their borders, states are inherently they are structured as if that were their
inclined to strive for relative advantage dominant function. Even though most of the
against like entities on the international existing 160-odd independent states have
scene, even if only by means other than never fought any external wars, and most of
force. those that have fought have not done so for
Moreover, states are subject to the inter- generations, the governing structures of the
nal impulses of their own bureaucracies, modern state are still heavily marked by
whose officials compete to achieve whatever conflictual priorities, the need to prepare for,
goals define bureaucratic success, including or to wage, interstate conflict. In how many
goals in the international economic arena that major countries does the Minister for Tele-
may as easily be conflictual as competitive or communications, or Energy, or Trade out-
cooperative. Actually much more than that is rank the Defense Minister? Only - appropri-
happening: As bureaucracies writ large, states are ately enough - in Japan, where Defense
themselves impelled by the bureaucratic urges of (Boecho) is a Cho or lesser department (trans-
role-preservation and role-enhancement to acquire lated as agency), as opposed to a Sho or

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ministry, as in Tsusansho, the Ministry of threat, that threat must now be economic.
Trade. The Boecho1 s head, while a minister, Such a reordering of modalities is already
does not hold cabinet rank. fully manifest in the expressed attitudes of
It is true, of course, that, under whateverother Europeans to the new undivided Ger-
name, "geo-economics" has always been an many, and even more so in American atti-
important aspect of international life. In the tudes toward Japan. Gorbachev's redirection
past, however, the outdoing of others in the of Soviet foreign policy had barely started
realm of commerce was overshadowed by when Japan began to be promoted to the role
strategic priorities and strategic modalities.of the internally unifying Chief Enemy, judg-
Externally, if the logic of conflict dictated theing by the evidence of opinion polls, media
necessity for cooperation against a commontreatments, advertisements, and congres-
enemy while, in contrast, the logic of com-sional pronouncements.
merce dictated competition, the preservation Should we conclude from all this that the

of the alliance was almost always given pri-world is regressing to a new age of mercan-
ority. (That indeed is how all the commercialtilism? Is that what "geo-economics" identi-
quarrels between the United States and fies, quite redundantly? Not so. The goal of
Western Europe- over frozen chickens, mi- mercantilism was to maximize gold stocks,
crochips, beef, and the rest - and between whereas the goal of geo-economics (aggran-
the United States and Japan - from textiles in dizement of the state aside) could only be to
the 1960s to supercomputers in the 1980s -provide the best possible employment for the
were so easily contained during the pastlargest proporion of the population. In the
decades of acute Soviet-Western confronta- past, moreover, when commercial quarrels
tion. As soon as commercial quarrels became evolved into political quarrels, they could
noisy enough to attract the attention of polit- become military confrontations almost auto-
ical leaders on both sides, they werematically; and in turn military confrontations
promptly suppressed by those leaders - oftencould readily lead to war.
by paying off all parties - before they could In other words, mercantilism was a sub-
damage political relations and thus threaten
ordinated modality , limited and governed by
the imperative of strategic cooperation.) In-
the ever-present possibility that the loser in
ternally, insofar as national cohesion was
the mercantilist (or simply commercial) com-
sustained against divisive social and economic
petition would switch to the grammar of war.
tensions by the unifying urgencies of external
Spain might decree that all trade to and from
its American colonies could only travel in
antagonisms, it was armed conflict or the
threat of it - not commercial animosities -
Spanish bottoms through Spanish ports, but
that best served to unite nations. British and Dutch armed merchantmen could
still convey profitable cargoes to disloyal col-
onists in defiance of Spanish sloops; and, with
NOW, vance vance
HOWEVER, of military
of military as threats the rele- and
threats and war declared, privateers could seize outright
military alliances wanes, geo-economic prior- the even more profitable cargoes bound for
ities and modalities are becoming dominant Spain. Likewise, the Dutch sent their frigates
in state action. Trade quarrels may still be into the Thames to reply to the mercantilist
contained by the fear of the economic conse- legislation of the British Parliament that pro-
quences of an action-reaction cycle of puni- hibited their cabotage, just as much earlier
tive measures, but they will no longer simply the Portuguese had sunk Arab ships with
be suppressed by political interventions on which they could not compete in the India
both sides, urgently motivated by the strate- trade.

gic imperative of preserving alliance cooper- "Geo-economics," on the other hand, is

ation against a common enemy. And if inter- emerging in a world where there is no superior
nal cohesion has to be preserved by a unifying modality . Import-restricted supercomputers

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cannot be forcibly delivered by airborne as- waning of the imperatives of geopolitics,
sault to banks or universities in need of them, those political clashes must be fought out
nor can competition in the world automobile with the weapons of commerce: the more or
market be assisted by the sinking of export less disguised restriction of imports, the more
car ferries on the high seas. That force has or less concealed subsidization of exports, the
lost the role it once had in the age of mercan- funding of competitive technology projects,
tilism - as an admissible adjunct to economic the support of selected forms of education,
competition - is obvious enough. But of the provision of competitive infrastructures,
course the decay of the military grammar of and more.

geopolitics is far more pervasive than this,

even if it is by no means universal.2
Students of international relations may
Playing the New Game
still be taught to admire the classic forms of
realpolitik , with its structure of anticipatory THE cused DISCUSSION
cused on the on theandactual
actual so and far prospec- has fo-
prospec-
calculations premised on the feasibility of tive role of states and, by implication, of blocs
war. But for some decades now the domi- of states engaged in "geo-economic" conduct.
nant elites of the greatest powers have
But what happens on the world economic
scene will not of course be defined by such
ceased to consider war as a practical solution
for military confrontations between them, conduct; indeed the role of "geo-economics"
because non-nuclear fighting would onlyin the bedoings and undoings of the world
inconclusively interrupted by the fear economy
of should be far smaller than the role
nuclear war, while the latter is self- of geopolitics in world politics as a whole.
inhibiting. (In accordance with the always First, the propensity of states to act
geo-economically will vary greatly, even
paradoxical logic of conflict, the application
of the fusion technique meant that nuclear more than their propensity to act geopoliti-
weapons exceeded the culminating point cally.of For reasons historical and institu-
utility, becoming less useful as they becametional, or doctrinal and political, some states
more efficient.) will maintain a strictly laissez faire attitude,
For exactly the same reason, military
confrontations were themselves still consid- 2In the train of history, the last wagons, such as
ered very much worth pursuing - and rightly the fragile states of sub-Saharan Africa, are
so, for war was thereby precluded through- still prebellic: they cannot yet wage war on
out the decades of Soviet- Western antago- each other, because regimes sustained only by
nism. More recently, however, the dominant the direct force of their armies cannot send

elites of the greatest powers appear to have those armies away to remote frontiers. The
concluded that military confrontations be- wagons at the head of the train by contrast are
tween them are only dissuasive of threats that now postbellic because their ruling elites have
are themselves most implausible. It is that become convinced that they cannot usefully
new belief that has caused the decisive deval- fight one another. Only the wagons in the
uation of military strength as an instrument middle - countries such as India, Israel, Iran,
of statecraft in the direct relations of the Iraq, and a few others - are still capable of
greatest powers. war with each other. But of course the train of

Hence, while the methods of mercantil- history can not only stop but reverse its
ism could always be dominated by the meth- direction: in the second century B.C. the
ods of war, in the new "geo-economic" era Romans already categorized prebellic societ-
not only the causes but also the instruments of ies (tribes too loosely organized to resist them)
conflict must be economic. If commercial and advanced postbellic societies (of the Hel-
quarrels do lead to political clashes, as theylenized east) for which war could not be
are now much more likely to do with the profitable. Things changed.

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simply refusing to act "geo-economically." intense positive interaction between politi-
Both the very prosperous and the very poor cally weighty businesses in need of state
might be in that category, just as both support on the world economic scene, and
Switzerland and Burma have long been geo- the bureaucracies or politicians that they seek
politically inactive. In other cases, the de- to manipulate for their own purposes. Or,
sirable scope of geo-economic activism by going the other way, there is the equally
the state is already becoming a focal point of intense and equally positive interaction that
political debate and partisan controversy: occurs when states seek to guide large com-
witness the current Democratic-Republican panies for their own geo-economic purposes,
dispute on "industrial policy" in the United or even select them as their "chosen instru-
States. In still other cases, such as that of ment" (a specialized form of coexistence that
France, the dominant elites that long in- dates back at least to the seventeenth-century
sisted on a very ambitious degree of geopo- Elast India companies, Dutch and Danish as
litical activism (ambitious, that is, in terms well as, most famously, British).
of the resources available) are now easily Even more common, no doubt, are the
shifting their emphasis to demand much cases of reciprocal manipulation, most nota-
more geo-economic activism from the bly in the remarkably uniform dealings of the
French state. And then, of course, there are largest international oil companies - whether
the states - Japan most notably - whose geo- American, British, or French - with their re-
economic propensities are not in question. spective (and otherwise very different) state
Second, there is the much more impor- authorities. In each case, the state has been
tant limitation that states and blocs of states
both user and used, and the companies both
acting "geo-economically" must do so withininstruments and instrumentalizers.
an arena that is not exclusively theirs, in Negative state-private sector interactions
which they coexist with private economic are not likely to be common, but they could
operators large and small, from individuals to be very important when they do occur. Geo-
the largest multinational corporations. Whileeconomically active states that oppose rival
states occupy virtually all of the world'sforeign states will also obviously oppose pri-
political space, they occupy only a fraction of vate foreign companies that are the chosen
the total economic space, and global political-instruments of those rivals, as well as private
economic trends such as privatization areforeign companies that simply have the mis-
reducing that fraction even further. (On thefortune to stand in the way. An era of intense
other hand, the role of states is increasing"geo-economic" activity might thus become
precisely in the economic sectors whose im-an era of unprecedented risk for important
portance is itself increasing, sectors definedprivate companies in important sectors. If
by the commercial application of the most they invest Y million of their funds to develop
advanced technologies.) X technology, they may find themselves ir-
Of the different forms of coexistence remediably overtaken by the X project of
between geo-economically active states and country Z, funded by the taxpayer in the
private economic operators, there is no end. amount of 2Y million, or 20Y million for that
Coexistence can be passive and disregarded, matter. Or private companies may find them-
as in the relationship (or lack of it) between
selves competing with foreign undercutters
the state and the myriad of small, localized determined to drive them out of business,
service businesses. With neither wanting and amply funded for that purpose by their
state authorities. As public funding for such
anything from the other - except for the taxes
that the fiscal authorities demand - the two purposes is likely to be concealed, a victim-
can simply coexist without interacting or company may enter a market quite unaware
communicating. of its fatal disadvantage. In such diverse ways
At the opposite extreme, there is the
the international economy will be pervasively

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affected by that fraction of its life that is still leaves room for far more important weap-
geo-economic rather than simply economic in ons: the competitive development of commer-
character (just as in the past the geopolitical cially important new technologies, the pred-
activity of the few greatest powers decisively atory financing of their sales during their
conditioned the politics of the many). embryonic stage, and the manipulation of the
Perhaps the pan-Western trade accords standards that condition their use - the geo-
of the era of armed confrontation with the economic equivalents of the offensive cam-
Soviet Union - based on the original General paigns of war.
Agreement on Tariffs and Trade - may sur- Today, there is a palpably increasing
vive without the original impulse that createdtension between the inherently conflictual
them, and may serve to inhibit the overt use nature of states (and blocs of states) and the
of tariffs and quotas as the geo-economic intellectual recognition of many of their lead-
equivalent of fortified lines. And that inheri-ers and citizens that while war is a zero-sum
tance of imposed amity may also dissuade the encounter by nature, commercial relations
hostile use of all other "geo-economic" weap-
need not be and indeed rarely have been. The
ons, from deliberate regulatory impediments outcome of that tension within the principal
to customs-house conspiracies aimed at re-countries and blocs will determine the de-
jecting imports covertly - the commercialgree to which we will live in a geo-economic
world.
equivalents of the ambushes of war. But that

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