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DOMINO EFFECTS

A military encounter, whether peaceful or forceful, yields a result that can be consequential to the interactions and the outcomes that take place in other domains. This result, which I term the "spill-over effect," is too often forgotten. Military-to-military encounters do not produce only military results—cities laid waste, armies defeated, enemies subdued, attacks prevented, allies protected. They also bring about political effects that significantly influence events in other domains. Military power achieves much of its fungibility through this effect: the political shock waves of a military encounter reverberate beyond the military domain and extend into the other policy domains as well. The exercise of successful deterrence, compellence, or defense affects the overall political framework of relations between two states. Because all policy domains are situated within this overarching framework, what happens in the latter affects what happens in the former. Spill-over effects define with more precision why force acts akin to a gravitational field.

A spill-over effect can be understood either as a prerequisite or a byproduct. As a prerequisite, the result produced by the act of force checking force creates something that is deliberate and viewed as essential in order to reach a given outcome in another domain. As a by-product, the encounter produces something in another domain that may be beneficial but is incidental or even unintended. Of course, what is by-product and what is prerequisite hangs on what outcomes are valued in that other domain. Two examples will illustrate how the spillover effect works and how it manifests itself either as a prerequisite or a by-product.

Examples: banking and cold war interdependence. The first example has to do with banks; the second with recent history. The banking example demonstrates the role force plays in solvency; the historical example, the role that U.S. military power played in creating today's economic interdependence.

First, the banking example. Begin with this question: why do we deposit our money in a bank? The answer is: we put our money in a bank because we think we can take it out whenever we want. We believe the money is there when we want it. In short, we believe the bank to be solvent.

Solvency is usually thought of solely in economic terms: a bank is solvent because it has enough assets to meet its financial liabilities if they are called. Solvency, however, is a function, not simply of finances, but of physical safety. A bank's solvency depends on the fact both that its assets exceed its liabilities (its balance sheet is in the black) and that its assets are physically secure (not easily stolen). Physical security is therefore as important to a bank's solvency as its liquidity, even though we generally take the former for granted when we reside in a stable domestic order. If the banks within a state could be robbed at will, then its citizens would not put their money in them. A state makes banks physically secure by using its military power to deter and defend against would-be robbers and to compel them to give back the funds if a robbery takes place (assuming they are caught and the funds recovered). Through its use of its legitimate monopoly on the use of force, a state seeks to neutralize the threat of forcible seizure. If the state succeeds in establishing the physical security of its banks, it produces one of the two prerequisites required for a bank's solvency.

In sum, in a well-ordered state, public force suppresses private force. The effect of this suppression is to create a generalized stability that sets the context within which all societal interactions take place. This effect spills over into numerous other domains and produces many manifestations, one of which is confidence about the physical security of banks. This confidence can be viewed as a by-product of the public suppression of private force, as a prerequisite to banking solvency, or, more sensibly, as both.

A good historical example of the spill-over effect of military power is the economic interdependence produced among the free world's economies during the cold war. In a fundamental sense, this is the banking analogy writ large. The bank is the free world economies, the potential robber is the Soviet Union, and the provider of physical safety is the United States.

During the cold war era, the United States used its military power to deter a Soviet attack on its major allies, the Western Europeans and the Japanese. American military power checked Soviet military power. This military to- military encounter yielded a high degree of military security for America's allies, but it also produced several by-products, one of the most important of which was the creation of an open and interdependent economic order among the United States, Western Europe, and Japan. Today's era of economic interdependence is in no small part due to the exercise of American military power during the cold war. A brief discussion will show how American military power helped create the economic interdependence from which much of today's world benefits.

America's forty-year struggle with the Soviets facilitated economic integration within Western Europe and among Western Europe, North America, and Japan. Obviously, American military power was not the sole factor responsible for today's interdependence among the major industrialized nations. Also crucial were the conversion of governments to Keynesian economics; their overwhelming desire to avoid the catastrophic experience of the great depression and the global war it brought in its wake; the lesson they learned from the 1930s about how noncooperative, beggar-thy-neighbor policies ultimately rebound to the disadvantage of all; the willingness of the United States to underwrite the economic costs of setting up the system and of sustaining it for a time; the acceptance by its allies of the legitimacy of American leadership; the hard work of the peoples involved; and so on. Important as all these factors were, however, we must remember where economic openness first began and where it subsequently flourished most: among the great powers that were allied with the United States against the Soviet Union.

How, then, did the Soviet threat, and the measures taken to counter it, help produce the modern miracle of economic interdependence among America's industrial allies? and how, exactly, did America's military power and its overseas military presence contribute to it? There were four ways.

First, the security provided by the United States created a political stability that was crucial to the orderly development of trading relations. As I discussed at the outset of this article, markets do not exist in political vacuums; rather, they work best when embedded in political frameworks that yield predictable expectations. American military power deployed in the Far East and on the European continent brought these stable expectations, first, by providing the psychological reassurance that the Europeans and the Japanese needed to rebuild themselves and, second, by continuing to provide them thereafter with a sense of safety that enabled their economic energies to work their will. Indeed, we should remember that the prime reason NATO was formed was psychological, not military: to make the Europeans feel secure enough against the Soviets so that they would have the political will to rebuild themselves economically. The initial purpose of NATO is the key to its (and to the U.S.-Japan defense treaty) long-lasting function: the creation of a politically stable island amidst a turbulent international sea.

Second, America's provision of security to its allies in Europe and in the Far East dampened their respective concerns about German and Japanese military rearmament. The United States presence protected its allies not only from the Soviets, but also from the Germans and the Japanese. Because German and Japanese military power was contained in alliances that the United States dominated, and especially because American troops were visibly present and literally within each nation, Germany's and Japan's neighbors, while they did not forget the horrors they suffered at the hands of these two during the Second World War, nevertheless, were not paralyzed from cooperating with them. The success of the European Common Market owes as much to the presence of American military power on the continent of Europe as it does to the vision of men like Monnet. The same can be said for the Far East. America's military presence has helped "oil the waters" for Japan's economic dominance there.

Third, America's military presence helped to dampen concerns about disparities in relative economic growth and about vulnerabilities inherent in interdependence, both of which are heightened in an open economic order. Freer trade benefits all nations, but not equally. The most efficient benefit the most; and economic efficiencies can be turned to military effect. Interdependence brings dependencies, all the greater the more states specialize economically. Unequal gains from trade and trade dependencies all too often historically have had adverse political and military effects. Through its provision of military protection to its allies, the United States mitigated the security externalities of interdependence and enabled the Germans and the Japanese to bring their neighbors (America's allies) into their economic orbits without those neighbors fearing that German or Japanese military conquest or political domination would follow. With the security issue dealt with, the economic predominance of the Germans and Japanese was easier for their neighbors to swallow.

Finally, America's military presence fostered a solidarity that came by virtue of being partners against a common enemy. That sense of solidarity, in turn, helped develop the determination and the good will necessary to overcome the inevitable economic disputes that interdependences bring. The "spill-over" effects of military cooperation against the Soviets on the political will to sustain economic openness should not be underestimated, though they are difficult to pinpoint and quantify. Surely, however, the sense of solidarity and good will that alliance in a common cause bred must have had these spill-over effects. Finally, the need to preserve a united front against the common enemy put limits on how far the allies, and the United States, would permit their economic disputes to go. The need to maintain a united political-military front bounded the inevitable economic disputes and prevented them from escalating into a downward-spiraling economic nationalism. Political stability, protection from potential German and Japanese military resurgence, the dampening of concerns about relative gains and dependencies, and the sense of solidarity—all of these were aided by the American military presence in Europe and the Far East.