Although the global financial crisis of 2008 wreaked havoc on the economies and governments of countries worldwide, it did not cause many scholars to reassess long-held beliefs concerning finance, economics, and international relations. For Peter J. Katzenstein, Government, the events that led to the financial crisis caused him to look again at important aspects in world politics. Eventually, this helped him develop a new conceptualization of power in world politics.
Events began with the American brokerage company Bear Stearns on the brink of collapse in the spring of 2008. The Monday after Bear Stearns’ bailout by JP Morgan and the Federal Reserve Bank of New York, Katzenstein found himself reminded of Black Monday 1929, when the United States financial markets crashed and much of the rest of the world followed. Growing up in Germany, Katzenstein was very aware of the financial and political disaster that befell Germany in the wake of those events. “I walked into class and told my students I never thought I would experience a Black Monday in my life time,” he remembers. “Bad things are bound to follow.”
The United States’ 2016 Presidential Election
Then came the election of Barack Obama, which Katzenstein viewed as a good development. “But Obama only won because Senator McCain was so inept when the crisis hit,” he says. “Obama mobilized a coalition on the Left of people who had not participated in electoral politics before. Soon after, the Tea Party began to mobilize on the Right, outraged by a financial crisis that cost 7.4 million people their jobs and made many millions lose their homes without a single banker standing trial for criminal conduct. Mobilization and counter-mobilization on both Left and Right shaped the election of 2016.”
Against all expectations, in that election Donald Trump beat Hillary Clinton. Like the fall of the Berlin Wall—an event Katzenstein is often asked by his students to explain—the outcome of the United States’ election of 2016 was unforeseen. Faced with these black swans, rare events that are extremely difficult to predict and don’t fit into normal statistical distributions, Katzenstein found himself asking if social scientists—those who study economics, political science, and international relations in particular—need to change their models.
To explore his ideas further, Katzenstein began a book project, which he co-edited with former PhD student Lucia A. Seybert, Power in Uncertainty: Exploring the Unexpected in World Politics (Cambridge University Press, 2018). The book includes writings by Katzenstein and by other scholars applying his theory to a wide range of issues from human rights to environmental concerns to arms control.
“Society has become a risk society, and risk is manageable. We believe that we can manage it all, but that is not how it works. The world often mixes risk and uncertainty.”
“The question for the project was, how can we better understand surprise,” Katzenstein says. “I began by writing about uncertainty and the financial crisis. Financial markets are about uncertainty, but over the past 50 years, economists have run uncertainty out of town. Most models that inform investment are risk-based models. Society has become a risk society, and risk is manageable. We believe that we can manage it all, but that is not how it works. The world often mixes risk and uncertainty.”
Katzenstein’s Theory: Control and Protean Power
Katzenstein’s contention that both risk and uncertainty govern society has led him to the theory of the existence of two types of power: the power to control in a risk-based world and a chaotic power of surprise, which he calls protean power. “Protean power appears in the moment, and that moment is unpredictable,” he says. “It’s contingent. That’s when agency matters, and that’s when the wheels of history turn.”
Neither power is better than the other, Katzenstein says. “It’s not that there is a normative presumption: bottom-up people’s power is good, top-down state power is bad. Not at all. Jihadists blowing up a nightclub in Paris is protean power in action, and it is morally reprehensible mass murder. Cornell, as an institution, exemplifies control power, but I happen to think that it is for good ends.” He explains the players in the 2016 American election in light of his theory: Hillary Clinton represents the technocratic and managerial power of control; Donald Trump is protean power incarnate. “Clinton is a crisis manager,” he says. “She manages risk. She’s very predictable. Hillary is the extreme on one side; Trump is the extreme on the other. He shows the unpredictability of power. He rules by chaos. It is a method, perhaps mad, but very effective. He unsettles his opponents by being unpredictable.”
The Fall of the Berlin Wall
Applying his theory to the fall of the Berlin Wall, Katzenstein explains that both protean power and the power of control played a part. The usual story about the fall focuses on a press conference given by Günter Schabowski on November 9, 1989, during which the East German spokesman was handed a note concerning a change in East German travel policy. Schabowski misinterpreted the note and announced that East Germans could now freely leave the country. By the end of the day, East Germans were streaming into West Berlin and the wall was being dismantled. “It’s a beautiful story,” Katzenstein says. “Contingency, human failures, a people’s revolution, no blood. But it’s only half of the story.”
The other half is that East Germany was running out of money. “The GDR had taken on a lot of debt it couldn’t service,” Katzenstein says. “We have archival material that shows the travel policy would have changed by the end of December 1989. The GDR would have opened up the wall to get more money from West Germany. Capital markets, the banks, the International Monetary Fund were all saying, ‘You’ve got to service your debt or you’re bankrupt.’ That’s control power in action, and a very important part of the story.”
The Cold War
The two types of powers together ultimately brought about the end of the Cold War. Something that Katzenstein says was thought to be impossible. “There was one unanimous view, shared by everyone in international relations, that if either the United States or the Soviet Union collapsed, we wouldn’t survive to write about it, because the world would have blown up. Everyone agreed on this. So the peaceful end of the Cold War was a total surprise.”
Over the past four years, Katzenstein has shared his theory with many colleagues and has seen them reject it again and again. “They have had a very strong emotional reaction to it because for a generation now, they have lived with the belief that the world is one of risk only and thus, susceptible to prediction and management—a belief the world undercuts daily,” he says. “These days, the big innovation in the social sciences is to run controlled experiments as if the world is like a laboratory—a closed system. The argument I’m making insists that the world is an open system. Most of science now is based on open system models and on a chaotic view of the world. But economists and scholars of international relations believe the world is a closed system seeking its equilibrium. They are contradicting modern science. They are simply behind the times, and they may have to adapt their views.”