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The irony of state strength: comparative responses to the oil shocks in the 1970s

  • G. John Ikenberry

Like two gigantic waves, the oil shocks crested over the advanced industrial world during the 1970s. The relatively stable postwar petroleum regime, managed by the large oil firms and protected by American diplomatic and military strength, collapsed. In seven years crude oil prices, adjusted for inflation, increased more than 500 percent. A multitude of national security, economic, and political challenges confronted the advanced industrial states. But unlike war, where the threat is observable and lines of conflict quickly become apparent, the oil shocks cast up problems that were more insidious—problems of energy security, economic adjustment, and industrial competitiveness. These international dilemmas could be defined in various ways, and a host of policy responses could be brought to bear upon them.

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1. Johnson, Ronald A., “The Impact of Rising Oil Prices on the Major Foreign Industrial Countries,” Federal Reserve Bulletin 66, 10 (1980), pp. 817–24.

2. I do not attempt to demonstrate that the various states in question acted autonomously. Rather, I assume that government elites acted upon preferences that at least the officials themselves understood, to advance national or “public” interests. This assumption moves us beyond the debate on “relative autonomy” to explore more interesting questions about how government elites conceive of and attempt to implement state interests. For an overview of the state autonomy debate, primarily among neo-Marxists, see Carnoy, Martin, The State and Political Theory (Princeton: Princeton University Press, 1984).

3. This point is made by Michael Mann: “The state is not merely a locus of class struggle, an instrument of class rule, the factor of social cohesion, the expression of core values, the centre of social allocation processes, the institutionalization of military force (as in the various reductionist theories)—it is a different socio-spatial organization. As a consequence we can treat states as actors, in the person of state elites.…” Mann, , “The Autonomous Power of the State: Its Origins, Mechanisms and Results,” Archives Européennes de Sociologie 25 (1984), p. 201.

4. These two approaches to the state, and the broad research agenda of which this article is a part, are explored in Skocpol, Theda, “Bringing the State Back In: Strategies of Analysis in Current Research,” in Evans, Peter, Rueschemeyer, Dietrich, and Skocpol, , eds., Bringing the State Back In (New York: Cambridge University Press, 1985).

5. See the statement by Emile von Lennep, secretary-general of the OECD, at the Washington Energy Conference, 11 February 1974. See also Yergin, Daniel, “Crisis and Adjustment: An Overview,” in Yergin, and Hillenbrand, Martin, eds., Global Insecurity: A Strategy for Energy and Economic Renewal (Boston: Houghton Mifflin, 1982), pp. 128, especially p. 8, and Tham, Carl, “The Politics of Adjustment,” in Goodman, Gordon T., Kristoferson, Lars A., and Hollander, Jack M., eds., The European Transition from Oil: Societal Impacts and Constraints on Energy Policy (London: Academic, 1981), pp. 319–24.

6. Quoted in Lantzke, Ulf, “The Role of International Cooperation,” in Alm, Alvin L. and Weiner, Robert J., eds., Oil Shock: Policy Response and Implementation (Cambridge, Mass.: Ballinger, 1984), p. 81.

7. Choucri, Nazli, International Politics of Energy Interdependence: The Case of Petroleum (Lexington, Mass.: Lexington Books, 1976), p. 53.

8. The literature on the economic impact of the oil shocks is vast. See, for example, Rybczynski, T. M., eds., The Economics of the Oil Crisis (New York: Holmes & Meier, 1976), and Fried, Edward and Schultze, Charles, eds., Higher Oil Prices and the World Economy: The Adjustment Problem (Washington, D.C.: Brookings, 1975).

9. Cf. Keohane, Robert O., “Foreign Economic Policies of Advanced Capitalist States: The Struggle to Make Others Adjust,” in Oye, Kenneth, Lieber, Robert, and Rothchild, Donald, eds., Eagle Entangled: U.S. Foreign Policy in a Complex World (New York: Longman, 1979).

10. OECD, The Case for Positive Adjustment Policies (Paris, 06 1979).

11. Enders, Thomas O., “The Role of Financial Mechanisms in the Overall Oil Strategy,” Department of State Bulletin, 10 03 1975, pp. 312–17, and Secretary Kissinger's news conference of 13 February, Department of State Bulletin, 4 March 1974, pp. 223–30. See also testimony of James E. Akins and Assistant Secretary of State Enders before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, U.S. Senate, Parts 5 and 11, 11 October 1973 and 14 February 1975.

12. I discuss the reasons for this failure in “The State and International Strategies of Adjustment” (mimeo, 1984). Other analysts give more weight to cooperative action by industrial oil-importing nations, particularly as instituted in International Energy Agency plans and programs. See Keohane, Robert O., “The International Energy Agency: State Influence and Transgovernmental Politics,” International Organization 32 (Autumn 1978), pp. 929–51; Walton, Ann-Margaret, “Atlantic Relations; Policy Coordination and Conflict: Atlantic Bargaining over Energy,” International Affairs 52 (04 1976), pp. 180–96; Willrich, Mason and Conant, Melvin A., “The International Energy Agency: An Interpretation and Assessment,” American Journal of International Law 71 (1977), pp. 199223; and Cowhey, Peter, The Problems of Plenty: Energy Policy and International Politics (Berkeley: University of California Press, 1985), chap. 8.

13. Choucri, , International Politics, p. 62.

14. My interpretations of West German, French, and Japanese energy adjustment are based on secondary, English-language sources. The U.S. case is based on primary and interview materials as well.

15. Wade, Nicholas, “France's All-Out Nuclear Program Takes Shape,” Science 209 (22 08 1980), pp. 884–89.

16. Turner, Louis, “Politics of the Energy Crisis,” International Affairs (London) 50, 3 (07 1974), and Mendershausen, Horst, Coping with the Oil Crisis (Baltimore: Johns Hopkins University Press, 1976). On the general rise of state oil trading see Parra, Aliro A., “The International Role and Commercial Politics of National Oil Companies,” OPEC Review 6 (Summer 1982).

17. Murakami, Teruyan, “The Remarkable Adaption of Japan's Economy,” in Yergin, and Hillenbrand, , Global Insecurity, p. 142.

18. Murakami, , “Remarkable Adaption of Japan,” p. 143.

19. Samuels, Richard, “The Politics of Alternative Energy Research and Development in Japan,” in Morse, Ronald A., ed., The Politics of Japan's Energy Strategy (Berkeley: Institute of East Asian Studies, University of California, 1981); Albota, Robert, “Japan's Varied Responses to Energy Vulnerability,” International Perspectives, 0708 1981; Shibuta, Hirofumi, “The Energy Crises and Japanese Response,” Resources and Energy 5 (1983); and Sakisaka, Masao, “Energy Alternatives: Present State and Future Problems,” Journal of Japanese Trade and Industry, 1112 1983.

20. Zysman, John, Governments, Markets, and Growth (Ithaca: Cornell University Press, 1983), p. 251; see also Krapels, Edward N., Pricing Petroleum Products: Strategies of Eleven Industrial Nations (New York: McGraw-Hill, 1982), pp. 131–35.

21. Schmitt, Dieter, “West German Energy Policy,” in Kohl, Wilfrid L., ed., After the Second Oil Crisis: Energy Policies in Europe, America, and Japan (Lexington, Mass.: Lexington Books, 1982), p. 140.

22. U.S. Department of Energy, Office of International Affairs, Energy Industries Abroad, September 1981, p. 73.

23. OECD, Case for Positive Adjustment.

24. See 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, 1983).

25. Esser, Josef and Fach, Wolfgang with Dyson, Kenneth, “‘Social Market’ and Modernization Policy: West Germany,” in Dyson, and Wilks, , Industrial Crisis.

26. Vernon, Raymond, Two Hungry Giants: The United States and Japan in the Quest for Oil and Ores (Cambridge: Harvard University Press, 1983), pp. 3233; Grayson, George W., The Politics of Mexican Oil (Pittsburgh: University of Pittsburgh Press, 1980), pp. 177–79; and Wu, Yuan-Li, Japan's Search for Oil: A Case Study in Economic Nationalism and International Security (Stanford: Hoover Institution Press, 1977).

27. Albota, Robert, “Japan's Varied Responses,” p. 18.

28. Pelham, Ann, “Seven Years after Embargo, U.S. Has an Energy Policy,” Congressional Quarterly, 25 10 1980, pp. 3207–12.

29. Gourevitch, Peter Alexis, “Breaking with Orthodoxy: The Politics of Economic Policy Responses to the Depression of the 1930s,” International Organization 38 (Winter 1984), p. 99; see also Gourevitch, , “International Trade, Domestic Coalitions, and Liberty: Comparative Responses to the Crisis of 1873–1896,” Journal of Interdisciplinary History 8 (Autumn 1977).

30. Cf. Zysman, John, Political Strategies for Industrial Order: State, Market and Industry in France (Berkeley: University of California Press, 1977). I share with Zysman a focus on the historically unique and institutionally circumscribed character of state intervention in the economy. Zysman explores these constraints across industrial sectors within France, where he finds that government's organizational capacities least efficacious in support of firms producing for technologically sophisticated and quickly changing international markets. More recently, in Governments, Markets, and Growth, Zysman shifts to a focus on crossnational variations in the state's role in national economic adjustment. Here he finds decisive limits and possibilities for state direction of economic adjustment in the institutional structure of national financial systems. While I differ on the nature and implications of these constraints, I share Zysman's conceptual orientation.

31. Gourevitch, , “Breaking with Orthodoxy,” p. 99.

32. International Energy Agency, Energy Balances of OECD Countries, 1971/1981 (Paris: OECD, 1983), pp. 70, 158, 169.

33. Canada, Department of Energy, Mines and Resources, An Energy Strategy for Canada: Policies for Self-Reliance (Ottawa: Minister of Supply and Services, 1976), and The National Energy Program (Ottawa, 1980), pp. 47, 87.

34. Darmstader, Joel and Landsberg, Hans H., “The Economic Background,” in Vernon, Raymond, ed., The Oil Crisis, special issue of Daedalus, Autumn 1975, pp. 3032.

35. See Heclo, Hugh, Social Policy in Britain and Sweden (New Haven: Yale University Press, 1974), pp. 9192.

36. Cf. Hall, Peter A., “Policy Innovation and the Structure of the State: The Politics-Administration Nexus in France and Britain,” Annals 466 (03 1983), p. 44.

37. See Lukes's, Steven discussion of “structural constraints” in “Power and Structure,” Essays in Social Theory (New York: Columbia University Press, 1977).

38. Tilly, Charles, ed., The Formation of National States in Western Europe (Princeton: Princeton University Press, 1975); Bendix, Reinhard, Kings or People: Power and the Mandate to Rule (Berkeley: University of California Press, 1978); Moore, Barrington, Social Origins of Dictatorship and Democracy (Boston: Beacon, 1966); Poggi, Gianfranco, The Development of the Modern State (Stanford: Stanford University Press, 1978); Anderson, Perry, Lineages of the Absolutist State (London: NLB, 1974); and Zolberg, Aristide P., “Strategic Interaction and the Formation of Modern States: France and England,” International Social Science Journal 32, 1 (1979). See also Skocpol, Theda, ed., Vision and Method in Historical Society (New York: Cambridge University Press, 1984).

39. Nettl, J. P., “The State as a Conceptual Variable,” World Politics 20 (07 1968). For an extension of this analysis see Katznelson, Ira and Prewitt, Kenneth, “Constitutionalism, Class and the Crisis of Choice in U.S. Foreign Policy,” in Fagen, Richard, ed., Capitalism and the State in U.S.-Latin American Relations (Berkeley: University of California Press, 1979).

40. Katzenstein, Peter J., “International Relations and Domestic Structures: Foreign Economic Policies of Advanced Industrial States,” International Organization 30 (Winter 1976); Katzenstein, , ed., Between Power and Plenty: The Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978); Krasner, Stephen, Defending the National Interest (Princeton: Princeton University Press, 1978), chap. 3. For an overview of this institutional analysis see March, James G. and Olsen, John P.. “The New Institutionalism: Organizational Factors in Political Life,” American Political Science Review 78 (09 1984), pp. 734–49.

41. Levi, Margaret, “The Predatory Theory of Rule,” Politics and Society 10, 4 (1981), p. 438.

42. Theoretical explanations for changes in state structure can be found in the literature on state-building cited above and in literatures on political development. See the discussion in Skowronek, Stephen, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920 (New York: Cambridge University Press, 1982), pp. 1012.

43. Katzenstein, Peter J., Small States in World Markets: Industrial Policy in Europe (Ithaca: Cornell University Press, 1985).

44. Skocpol, Theda, “Political Response to Capitalist Crisis: Neo-Marxist Theories of the State and the Case of the New Deal,” Politics and Society 10, 2 (1981); Skocpol, and Ikenberry, John, “The Political Formation of the American Welfare State in Comparative and Historical Perspective,” Comparative Social Research 6 (1983).

45. I acknowledge the limitations of this explanatory relationship. First, as the type of structure moves from the rather remote and gross features of state and society to the more proximate features of state administration and policy instruments, the structures become more tractable. We call a structure a structure because it does not change very quickly. But the specific features of structure (e.g., the placement of particular agencies) are more likely to change than the gross features (e.g., a federal system). I attempt to control for this by looking at the responses to an international crisis rather than responses to less pressing circumstances and events, and by looking primarily at the short and medium term rather than the long term. Specific features of structure are more likely to have an impact in the short term than in the long term. Thus the limitations of the rather proximate specification of the explanatory variable are mitigated by the framing of the empirical events to be explained.

46. An illuminating survey of the forces behind state enterprise and entrepreneurship is Feigenbaum, Harvey B., The Politics of Public Enterprise: Oil and the French State (Princeton: Princeton University Press, 1985). See also Laux, Jeanne Kirk, “Expanding the State: The International Relations of State-Owned Enterprises in Canada,” Polity 15 (Spring 1983); Holland, Stuart, ed., The State as Entrepreneur (London: Wiedenfeld & Nicolson, 1972); and Walters, Kenneth D. and Monsen, R. Joseph, “The Spreading Nationalization of European Industry,” Columbia Journal of World Business, Winter 1981, pp. 6272.

47. Laux, , “Expanding the State.”

48. Zysman, John, “The French State in the International Economy,” in Katzenstein, , Between Power and Plenty; Zysman, , Political Strategies of Industrial Order; and Evans, Peter, Dependent Development: The Alliance of Multinational, State and Local Capital in Brazil (Princeton: Princeton University Press, 1979).

49. Samuels, Richard J., “State Enterprise, State Strength, and Energy Policy in Transwar Japan” (Cambridge: International Energy Studies Program, MIT, March 1983).

50. Feigenbaum, , Politics of Public Enterprises, pp. 5658.

51. Lucas, N. J. D., Energy in France: Planning, Politics and Policy (London: Europa, 1979).

52. U.S. Department of Energy, Office of International Affairs, Energy Industries Abroad, 09 1981, p. 83; de l'Industrie, Ministere, The Energy Policy of France (Paris, 1978), p. 17.

53. Samuels, , “State Enterprise, State Strength.”

54. Lucas, , Energy in France, pp. 8590.

55. Spivak, Jonathan, “France Pursues Drive to Replace Oil Imports with Nuclear Energy,” Wall Street Journal, 29 02 1980.

56. de l'Industrie, Ministère, Energy Policy of France, pp. 5657, 58.

57. U.S. Department of Energy, Office of International Affairs, “French Nuclear Program,” 4 December 1979 (unpublished document).

58. Spivak, , “France Pursues Drive,” p. 28.

59. Fagnani, Jeanne and Moghi, Jean-Paul, “The Politics of French Nuclear Development,” Journal of Policy Analysis and Management 3, 2 (1984), pp. 264–75. On the more generic aspects of this argument see Hall, , “Policy Innovation and the Structure,” pp. 4359.

60. Grayson, Leslie E., National Oil Companies (New York: Wiley, 1981), p. 36. On institutionalized elite links see Suleiman, Ezra N., Politics, Power, and Bureaucracy in France: The Administrative Elite (Princeton: Princeton University Press, 1974).

61. Zysman, , Governments, Markets, and Growth, pp. 7172, 76, 99–169. Zysman finds more similarity in the French and Japanese financial systems than I do. While the Japanese government has used monetary flows and selective credit policy for purposes of encouraging industrial adjustment, the process since the 1970s is much more pluralistic and negotiated than in France. In a recent study of the Japanese credit allocation process, Kent Calder argues that prominent party politicians as well as government bureaucrats are engaged in credit control and both respond to an array of interest-group pressures. As in France, banks play a substantial role in industrial finance. Nonetheless, Japan has a larger private banking system, and the negotiated allocation of credit provides fewer opportunities for direct targeting of funds. See Calder, , “Politics and the Market: The Dynamics of Japanese Credit Allocation, 1946–1978” (Ph.D. diss., Harvard University, 1979).

62. Zysman, , Governments, Markets, and Growth, p. 72.

63. Vernon, , Two Hungry Giants, p. 87.

64. Ibid., p. 95; U.S. Dept. of Energy, Energy Industries Abroad, p. 224.

65. De Marchi, Neil, “The Ford Administration: Energy as a Political Good,” in Goodwin, Craufurd D., ed., Energy Policy in Perspective: Today's Problems, Yesterday's Solutions (Washington, D.C.: Brookings, 1981), pp. 517–20.

66. Horwitch, Mel, “The Convergence Factor for Large-Scale Programs: The American Synfuels Experience as a Case in Point,” MIT Energy Laboratory Working Paper (8 December 1982), p. 23.

67. New York Times, 1 July 1980.

68. Benjamin, Milton R., “Synfuels Dreams Evaporating as Oil Prices Fall,” Washington Post, 1 05 1982.

69. Cf. Tilly, , Formation of National States, and Tilly, Charles, Big Structures, Large Processes, Huge Comparisons (New York: Russell Sage Foundation, 1985).

70. Schultze, Charles L., The Public Use of Private Interest (Washington, D.C.: Brookings, 1977), pp. 5, 20; see also Rees, Albert, Striking a Balance: Making National Economic Policy (Chicago: University of Chicago Press, 1984).

71. Schmitt, , “West German Energy Policy.” See also International Energy Agency, Workshop on Methods of Formulating Energy Policy (Paris, 1984), pp. 4761.

72. See Dickerson, David and Noble, David, “By Force of Reason: The Politics of Science and Technology Policy,” in Ferguson, Thomas and Rogers, Joel, eds., The Hidden Election: Politics and Economics in the 1980 Presidential Election (New York: Pantheon, 1981).

73. Griesbach, Bernard, “The German Policy on Competition within the Scope of General Economic Policy,” Antitrust Bulletin 14 (Summer 1969), pp. 449–72; Braunthal, Gerard, “The Struggle for Cartel Legislation,” in Cristoph, James B. and Brown, Bernard E., eds., Cases in Comparative Politics (Boston: Little, Brown, 1969).

74. Walters, Robert S., “Patterns in U.S. Domestic Economic and Foreign Trade Politics: Industrial Crises in Steel and Automobiles” (mimeo, 1982); Zysman, John and Tyson, Laura, eds., American Industry in International Competition (Ithaca: Cornell University Press, 1983).

75. Kalter, Robert J. and Vogely, William A., “Introduction,” in Kalter, and Vogely, , eds., Energy Supply and Government Policy (Ithaca: Cornell University Press, 1976), p. 11.

76. Wright, Arthur W., “The Case of the United States: Energy as a Political Good,” Journal of Comparative Economics 2 (1978).

77. State of the Union Message, 13 January 1975.

78. Michael Mann refers to state capacity as “infrastructural power,” by which he means “the capacity of the state to actually penetrate civil society, and to implement logistically political decisions throughout the realm.” See Mann, , “Autonomous Power of the State,” p. 189.

79. Katzenstein, Peter, “Conclusion: Domestic Structures and Strategies of Foreign Economic Policy,” in Katzenstein, , Between Power and Plenty, pp. 308, 311.

80. Krasner, , Defending the National Interest, pp. 5657.

81. See Evans, Peter and Rueschemeyer, Dietrich, “The State and Economic Transformation: Towards an Analysis of the Conditions Underlying Effective Intervention,” in Evans, , Rueschemeyer, , and Skocpol, , Bringing the State Back In.

82. See, for example, Udy, Stanley H. Jr., “Administrative Rationality, Social Setting, and Organizational Development,” in Cooper, William W. et al. , eds., New Perspectives in Organizational Research (New York: Wiley, 1964). The general point was made by a British civil servant quoted by Beer, Samuel H.: “There is a general belief, as Government intervention expands, the power of the Government (Ministers and civil servants together) actually diminishes; that is to say the ratio between the responsibilities the government has taken on and its power to discharge those responsibilities becomes less favourable.” Britain against Itself: The Political Contradictions of Collectivism (New York: Norton, 1982), p. 14.

83. Lucas, N. J. D., “The Role of Institutional Relationships in French Energy Policy,” International Relations 5 (11 1977), pp. 93, 120.

84. Ibid., p. 110, and Feigenbaum, Politics of Public Enterprise.

85. Zysman, John and Cohen, Stephen S., “The Mercantilist Challenge to the Liberal International Trade Order” (Paper prepared for the Joint Economic Committee of the U.S. Congress, 1982), p. 12.

86. Offe, Claus, “The Attribution of Public Status to Interest Groups: Observations on the West German Case,” in Berger, Suzanne D., ed., Organizing Interests in Western Europe (London: Cambridge University Press, 1981).

87. See Hofheinz, Roy Jr., and Calder, Kent E., The Eastasia Edge (New York: Basic, 1982).

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