Jean-Christian Lambelet

Dynamics of Arms Races: Mutual Stimulation vs. Self-Stimulation:

The analysis of arms races has become dominated by two increasingly divergent schools of thought. On the one hand, there is the Richardsonian tradition’. While the possibility of self-stimulation is not altogether ignored in the work of Richardson and his followers, the emphasis is clearly on the mutual-stimulation (action-reaction, positivefeedback) mechanism in arms races. On the other hand, there is what might be termed the incrementalist school2. Depending on individual Weltanschauungen, the main stress may be on bureaucratic inertia, technological momentum, economic and political vested interests, autistic perceptions, or some broad, sociological concept such as the military-industrial complex’. The common strand is that arms races are self-feeding processes, that is, really not races at all. In this paper we argue that this dichotomy is IargeIy artificial and that both mutual stimulation and self-stimulation can be integrated within a unified theory which includes pure self-stimulation and pure mutual stimulation as limiting cases. We also argue that these two extreme types of behavior can be ruled out on apriori grounds. The analysis of arms races, as viewed here, becomes a primarily empirical matter, in that the exact “mix” of mutual stimulation and self-stimulation must be

The Swiss recipe: conservative policies ain't enough!

The Swiss case Jean-Pierre Danthine and Jean-Christian Lambelet The success of the Swiss economy relies on a blend of conservative policies, cooperative labour relations and a geographically diversified economic structure. The lesson that Switzerland offers other countries is a microeconomic, supply-side one, with little evidence for any particular macroeconomic recipe. Is the Swiss experience really an economic success? In terms of growth, the Swiss record may look poor but inflation is very low. The unemployment rate is, and has always been, at very low levels, but there was a massive reduction of the foreign labour force in the early 1970s. While the ‘guest-worker story’ is part of the explanation, there is much more to it. Three key factors characterize Switzerland. First, macroeconomic policies are not actively used. Fiscal policy focuses more on balancing the budget than on counteracting business cycles. Monetary policy is preoccupied with a stable growth path for its chosen target, although short-run policy is pragmatic rather than rigid. Second, the labour market is best described as a vast number of bilateral monopolies, mostly at the firm level. Bargaining is therefore cooperative, and this is reinforced by the legal threat of binding arbitration. Finally, the industrial structure is geographically well diversified. This makes job search and mobility relatively costless. It also means that local or regional pressures for subsidies or macroeconomic support are weak, with little temptation to deviate from the principle of non-intervention.

Conflicts, Arms Races and War: A Synthetic Approach

This chapter elaborates basic elements for an integrated formal approach to conflicts, arms races, and war in an attempt to remedy the inadequacies we see in similar theoretical efforts. Starting from a rational actor perspective in international politics, the paper presents three interconnected models of arms races or resource allocation processes, diplomatic conflict and war initiation by nations that are based upon either general optimising principles through time or differential game theoretic considerations. All these principles are defined as adjustments between actual and target values of key variables of resources devoted to defence, diplomatic conflictual efforts, and evaluations of each side’s deterrent capabilities by the other. In addition, time constraints play a crucial role in the representation of the war initiation submodel. An analysis of these three interconnected formulations shows that our conception can account for several types of war initiation. On the one hand, we can emphasise a situation that we label the paradox of the weak where the nation with the least effective deterrent has an incentive to attack first. On the other hand, our model can also represent more classical types of confrontations where either deterrence works or where the strong attacks the weak.

Should systems like LINK be used for long-range forecasts and simulations?☆

Abstract Systems like LINK should not generally be used for long-range forecasts and simulations because they eschew many significant long-term issues. World-wide fluctuations in the division of labour should be endogenous, and similarly the various momentous, but partly induced, international ‘shocks’ like the energy crisis and the breakdown of world monetary order. The same applies for several aspects of the national macroeconometric models making up systems like LINK. Consequently, if such systems are used mechanically to churn out long-range forecasts and simulations, the results will generally be misleading and the inflationary impact of the policy simulations is likely to be underestimated.

DO ARMS RACES LEAD TO PEACE

[The last contribution to this book brings to bear on the subject the perspective of a European, a resident of a “neutral” country, who over the years has conducted some of the most rigorous analysis of arms races. The significance of the question he asks needs no comment. (eds.)]