The Price of Prestige

20 chapter one

assume that they are independent of each other, that is, if we assume that

actors are not in any way affected by the consumption decisions of oth-

ers (Morgenstern 1948 , 175 ; Liebenstein 1950 , 183 ). If individual demand

curves are interdependent, it becomes very difficult to estimate the gen-

eral demand for a specific good. In the context of international relations,

an assumption of independent demand curves is implausible. It would be

akin to stating that the Athenian decision to build the Long Walls should

have had no effect on the consumption patterns of Sparta, or that the

American decision to invest in moon landing was completely independent

of the Soviet space program.

Accordingly, the assumption of independence is especially problematic

for international relations, where almost all key concepts and motivations

are defined in relative terms. While welfare, wealth, and perhaps security

can, to some extent, be defined in absolute terms, power, influence, and

prestige cannot. Power, influence, and prestige are relational concepts;

they cannot be measured or understood independently of other actors

(Mercer 1996 , 27 ; Baldwin 1980 ). Consequently, while economists, focus-

ing on wealth and welfare, can by and large maintain the assumption of in-

dependence of demand curves for theoretical convenience, international

relations theorists cannot. In the context of international relations, the as-

sumption of independence is unacceptable even as a theoretical simplifi-

cation because it defies the most basic principles of international relations

theory. We cannot simply add individual utility curves in order to assess

the overall demand for aircraft carriers or space programs, because actors’

consumption patterns are interdependent. Once we allow for interactions

between individual demand curves, we need to be sensitive to a set of effects

such interdependence is likely to introduce.

Interdependence of demand curves generates consumption externali-

ties.^40 Consumption externalities highlight the way in which one actor’s

consumption decisions affect the consumption preferences of other ac-

tors. For example, if more Latin American countries decided to purchase

aircraft carriers, the increase in aggregate demand for carriers in the re-

gion would have a negative effect on the utility Brazil gets from its carrier.

Owning a carrier would no longer be a distinguishing mark of Brazil’s

regional preeminence. Liebenstein ( 1950 ) formalized a typology of con-

sumption externalities by differentiating between bandwagon, snob, and

Veblen effects.

Bandwagon and snob effects refer to the ways in which individuals

try either to join general consumption patterns by emulating them or to