Source of Value Enabling Instrumental Agency

Offensive realism and game theory both presuppose the existence of raw value, or sources of power in the world that are both necessary for manifesting purposive action and have value prior to and independent from institutions and social practices.11⁹ This approach to value is appealing in international relations because the idea of anarchy among nations builds on the assumption that instrumental efficacy is independent of qualities of relationships between

¹¹⁷ For discussion, see Philip Green, Deadly Logic: Theory ofNuclear (Ohio State University Press, 1966), 213-253.

¹¹⁸ Note that international relations neoliberal institutionalists and defensive realist theorists declare that the bright-line distinction between their position and that of offensive realists is their focus on “absolute gains” versus “relative gains.” Robert Powell, “Absolute and Relative Gains in International Relations,” in Baldwin, ed., Neorealism and Neoliberalism, 1993, 209­233; Duncan Snidal, “Relative Gains and the Pattern of International Cooperation,” in ibid., 170-208. However, I dispute that this is a sufficient criterion to defend classical liberalism. Even a focus on absolute gains in a PD game accords to actors the predilection to seek unilateral gain at others’ expense, and the determination of the PD payoff structure will be deduced from preferences tracking fungible sources of value, e.g., Andrew Kydd, Trust and Mistrust in International Relations (Princeton, NJ: Princeton University Press, 2007), 1-12.

¹¹⁹ This game theoretic presupposition for standard operationalization is most evident in Roger Myerson, Game Theory: Analysis of Conflict (Cambridge, MA: Harvard University Press, 1991), 3, 22-26; it is outrightly stated by Shaun Hargreaves Heap and Yanis Varoufakis, Game Theory, 2nd ed. (New York: Routledge, 2004), 209.

This standpoint is also incorporated into the foundations of game theory. The original understanding of games anchoring the mathematics of its prodi­gious founder, von Neumann, was that payoffs reflect an ontological property of the world. Interpersonally transferable utility is necessary for zero-sum games, the original focus in Theory of Games and Economic Behavior.^[325] Von Neumann’s perspective presumes that payoffs reflect a quality such as temperature in physics, suggesting that utility as the source of value is similar to energy states that are the underlying cause of temperature. In zero-sum games, the payoffs are intersubjectively precise and are not a function of indi­vidual’s subjective interpretation.^[326] Many games of interest in international relations and political economy identify payoffs relying on a direct statement of tangible resources.^[327] If actors compete over scarce resources conveying the instrumental power to achieve goals, then any encounter with another actor potentially has the Prisoner’s Dilemma structure in which every actor has the first preference for suckering the other and taking all the disputed resources.

The other avenue of defining utility, permitting it to be subjective, such that the payoffs to games are a psychological property of actors that does not necessarily track any specific ontological feature of the world, renders that uncertainty about the intentions of the other actor is perpetual. However, expected utility theory must be applied, and this theory will default to tracking fungible value.^[328] Here, again, offensive realism and game theory reach the same conclusion.^[329] Even if there is a good objective reason, based on inter- personally transferable utility, to model a security dilemma as an Assurance Game, it is wise for the security strategist to accept that actors may interpret the significance of outcomes according to some idiosyncratic means of judgment that is forever opaque to each actor. This is Schelling’s argument that permitted the nuclear security dilemma, which he assumed best resembled a Stag Hunt, to be translated into a Prisoner’s Dilemma game on the basis of irreducible uncertainty, which he quantified as 80 percent risk.

The initial and crucial step in understanding the difference in approach between offensive realism and defensive realism is to see that the latter is confident that there are potential sources of value and power to act that transcend those raw resources that are available in an anarchic state of nature. The argumentative move taken by classical liberals is to note the common ground all actors have in confronting the proverbial state of nature; this offers as much epistemological confidence as does instrumental rationality’s accep­tance of cause and effect.¹²⁶ Whereas for the rational strategist, the only inter- subjectively accessible and causally efficacious value is interpersonally transferable utility, for the classical liberal, value is created on the basis of finite resources by establishing practices predicated on mutual toleration and shared expectations that depend on relinquishing the intent to harm others.¹²⁷

The first of these sources of value is the prospect dividend, or the value of resources to their owner who can be confident in their possession, which results from the mutual tolerance facilitating self-preservation. Whether or not it is agreed that mutual toleration is a viable practice, it is at least possible to agree that, in principle, if actors did not threaten each other, then the classical liberal world carved into distinct property rights would yield value over and above the value of the extant raw resources.¹²⁸ Security in possession is worth more than simple possession. Actors would pay more to keep what they already own than its fungible value, which means that no actor has the ability to pay for the conditions of his livelihood as subjectively valued with all of his resources actually on hand. Prospect theory reveals that goods in hand are worth more than their replacement cost. Therefore, security in possession is worth more than the fungible value of all the resources available to purchase replacement and supersedes its base material resource value.

Already then the classical liberal sees a source of value that is not available to the offensive realist: security of possession. Another source of value is that gained through sociable forms of interaction, either in institutions or through normative conduct. Maritime law, finance, aviation, science, and technological innovation provide sources of value that are not possible in a state of nature.¹²⁹

¹²⁶ Hobbes, Leviathan, Chapter 13.

¹²⁷ Note the temptation for international relations theorists to presume that a devotee of realism and realpolitik must track sources of value commensurate with the laws of physics; see, for example, Randall Schweller, Maxwell's Demon and the Golden Apple: Global Discord in the New Millennium (Johns Hopkins University Press, 2013).

¹² Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica (1979) 47:2, 262-292.

¹²⁹ This is a central point for Hobbes in Leviathan, Chapter XIII in passage with phrase, “life of man solitary, poore, nasty, brutish, and short.”

The neoliberal school of international relations makes the case for the value of institutions and the possibility of cooperation but tries to derive this social capital from the purely strategic considerations of rational choice.^[330] However, as I argue, it is ultimately impossible to rescue classic liberalism from within the confines of game theoretic strategic rationality. On this point, the offensive realist school agrees, arguing that liberalism necessarily tends toward some form of idealism or passivism.