A Toy Model of the Indo -Asia Pacific

Like Paul Krugman part of what originally drew me into Economics was the premise behind Asimov’s Foundation books. This premise was a far future where a discipline had managed to formalise and model human society, shed light on what would happen and create preconditions for a better society to develop. It’s an absurd conceit, and even in the confines of fiction Asimov was compelled to say it could only work in populations numbering in the Quadrillions, so the peculiarities of individuals would be as unimportant as the idiosyncrasies of individual molecules of air in the laws of thermodynamics.

Economics tends to attempt to do something similar, albeit with agents rather than masses.  The results are mixed of course, but it’s a pleasure to create a few simple rules, and see how closely it approximates observed behavior in a market. It’s also true in non market settings.

This comes up because of the announced US Marine base in Darwin. Some crude simplifications of security policy might be fun even if the conclusions are not novel. I shouldn’t be posting on International Relations again, but I’m starting a new economics job soon, and I’ll have to feel out how much blogging on the topic of economics policy is appropriate. Until then more IR (or food, political theory, transport etc.).

Here’s some simplifications for behaviour.

1/ Let’s start by defining agents as sovereign states.

2/ States are primarily loss averse and seek mainly to preserve the status quo.

  • a) They seek to first to limit the chances of being invaded
  • b)to preserve existing lines of import and export (particularly goods with inelastic supply such as oil).

3/ Limiting the chance of invasion is pursued thus.

  • a) Identifying the greatest external threat and allying with it’s greatest threat. This makes invasion less attractive in accordance with 2. My enemy’s enemy is my friend.
  • b) Securing potential platforms for invasion away from the greatest threat (except where this conflicts with 2/)

Culture, ideology, personalities, domestic politics, economics (except as a factor in military power) etc. are all relegated to the residual/error term or treated as exogenous shocks[fn2]. Agents react to their initial conditions, and subsequently react to the conditions created by the reactions of other agents.

This is a toy model, so the residual will be quite large. Nonetheless I find when I apply it to the experience of sovereign states over the past 300 years, the model better than expected (with caveats about the degree of path dependence [fn1] or what initial conditions are adopted.) I think it captures pre WW1 Europe and its alliances without need to reference things like “Prussian militarism” or Leninist conceptions of Capitalist Imperialism. The weakest point is the proliferation of non sovereign agents, but by tweaking the first assumption to include sub sovereign actors it does well explaining the actions and shifting alliances of the Chinese GMD and CCP in the era 1920-1949.

We can apply this to the Indo-Asia Pacific. The initial conditions will be those in 1993 following the exogenous shock of Soviet Collapse.

What is immediately notable is there are two large powers. One in the region, and one across the Pacific. Then there are a mass of smaller powers surrounding the large power. The gorilla next door is more scary than the gorilla across the street, even if neither looks particularly threatening. It’s easier to attack from nearby and the neighbour is more likely to invade you in accordance with 3.b. Subsequently they’ll be likely to align with the power’s main threat, in this case the power across the ocean.

In the Asia Pacific a large number of countries were already allied with the US (Australia, Japan, South Korea, Taiwan, much of SE Asia etc.). This would not change much. Even if they hold little fear of China, it is still the largest existing threat for all these, except perhaps North Korea. The absence of the USSR, the end of the Cambodian war andterritorial disputes in the South China sea would lead Vietnam to assess China (it’s most recent invader) as the greatest potential threat and move closer to the US. India might be split between identifying Pakistan or China, both of whom they have fought wars with. But Pakistan would identify India as the threat and ally with China, making the decision simple for India.

This looks quite similar to what has been observed in the past 20 years. In fact, going through all the smaller states, only North Korea would not identify China as the largest existing threat [fn3]. The intriguing story is in Burma then. It would be interesting to see if the putative return of civilian government and other recent developments are a precursor to a strategic realliance away from China.

Then we look at China. What it previously identified as the greatest threat, the USSR, is gone. The alliance with the US is no longer necessary, and the US is now the largest existing threat. There are few potential allies apart from North Korea and Pakistan. There are however many unsecured platforms for invasion; Taiwan, Korea, Japan, Vietnam and the disputed Himalayan region with India. China therefore feels more threatened and less likely to see 3.b in conflict with 2. Each of the other states recognise this and strengthen their individual alliances with the US. This makes China even less likely to see conflict between 3.b and 2. Like Germany in 1914 and Israel in 1967 they may decide that 3.b directly serves 2. Invasion is the only way to prevent invasion. Minor tensions can escalate quickly and everyone feels threatened. Eventually security may only be achieved through Mutually Assured Destruction.

This is very interesting. It’s a co-ordination problem, like the Tragedy of the Commons or the Paradox of Thrift, that economists love. Each individual state pursues it’s own security and strategies to limit invasion, but feedback loops create dynamics  that increase the chance of invasion for all parties. We can have a situation where a very minor threat turns into a large threat by everyone following simple rules simply because it is the largest of a small set of threats.

Everyone would be better off without alliances by creating a public good of passivity. But there is no overarching government to address co-ordination problems, like we have with the two economics examples above. It is in the collective interest to create a concert such as that envisaged by Hugh White, but the mechanisms to create one are too weak to overcome each individual interest.

In the absence of government? One would be to enforce norms in the society of states that discourage alliances that hem in China, in the same way norms might promote greenhouse gas abatement. This is being pursued in a fashion by Indonesia – these comments suggest a fear of escalation rather than a fear of the Darwin marines base itself. Another way is the ersatz government of summits and international groupings (which themselves act as a society with norms). This would help explain the proliferation of summits and the efforts Australia and other countries like South Korea put in finding new ways to get China and the US at the same big table.

This toy model doesn’t suggest anything that isn’t already recognised, or any tactics that are not already being pursued. It’s certainly very crude and omits a great deal of what’s important. But I find it interesting nonetheless. It also provides a crude way to model future exogenous shocks. A collapse of North Korea or North Korean belligerence, a renewed interest by Russia in its Far East  or a Revolutionary France/Hitler style rogue sovereign agent.

It’s a toy nonetheless.


[fn1] Random outcomes that change the probabilities of future random outcomes.

[fn2] In an honours seminar I had a heated exchange with a politics student who was disregarding all these in an analysis of the Taiwan straits tensions during the Chen Shuibian administration, so I clearly think they all matter. But this is a toy model.

[fn3] Simpliying the calculus of Japan and South Korea.

About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.
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Paul Frijters
Paul Frijters
10 years ago

national pride needs to be in this mix. Without it, WWI nor WWII wouldn’t have happened. National expansion and hurts to national pride form independent drivers.

The big choices to make are thus less the game of making as many alliances as possible (which is the logic of our 1-3), but when to give up particular strategic alliances because the national pride of the other party is too closely alligned with a particular outcome. Hence the US should not make an alliance with Tibetans, nor should it be too committed to Taiwan. By the same token, China should take it easy in places like Cuba.

Paul Frijters
Paul Frijters
10 years ago

without nationalism you miss the driver for that conflict. There would be no wish amongst anyone to invade anyone else, so you end up with a model in which you dont need alliances to defend yourself from an event that will never happen.

As to history and nationalism, it matters less to a nationalist who angered it in the past. What matters more is what can be done to wipe out the affront. What matters even more is a sense of what is rightfully theirs in term of territory.

I can see why you find nationalism a difficult beast to get your head round, but you have a model of diddely-squat without it: you only have defense motivations, not offensive ones. This goes for China/US as much as it did for 1870.

Paul Frijters
Paul Frijters
10 years ago

:-) stop squirming. The heart of most simple micro models is the equilibrium point between two opposing forces. You only have one force (defense) but no counter-force (offense). Moreover, without the opposing force, you dont actually have a motivation for the first one. Why defend is there is no attacker?

If you are going to assign a pivotal role to crises as the surrogate offensive force, it needs to be one of your central points.

Paul Frijters
Paul Frijters
10 years ago

I only read the foundation trilogy recently. I didn’t overly like it, not so much because of the implausibility of long-term predictions, but rather because of the assumption that all the members of the second foundation remained true to its goal throughout the centuries, despite all the temptations and upheaval in the galaxy (including a 99% death rate). As soon as you allow for some group to be incorruptible over long periods of time, you always get the same answer in terms of what should happen: the incorruptible ones should be in charge of everything, as they indeed are in the Asimov series. In economic lingo, Asimov allows for the ultimate pre-commitment device.

I get irritated whenever I see that dangerous illusion rear its head, be it in classical fascism, the ultimate market regulator, the social planner, an infallible emperor, or the idea that we should hand over all natural resources to a world council run by trusted scientists. It tickles our personal fancy to think we too would be incorruptible. A dangerously hubristic idea.

10 years ago

I agree with Paul here — I imagine that when creating useful models of these sorts of things, it’s important to have the main factors in there — so whether you need nationalism or not I guess depends a lot on how much variance it accounts for. I tend to think that in terms of conflicts at least, it really is the biggest factor in many instances. This is because I don’t see any point at all in China fighting for anything excluding for nationalistic reasons, since they can just buy what they want for a tiny smidgeon of the price — how much would all the oil under the Spratleys be worth compared to the cost of a war there? And with India, most of the disputed border region (which I seem to remember they resolved a bit of a few years back), is basically on land that isn’t especially economically useful for either side so there really is no non-nationalist need to fight over it at all (I also imagine the people that actually live there are probably self sufficient enough that they could happily live without either government — a bit like Kashmir with India and Pakistan).