32721
The Political Economy of
Trading States: Factor Specificity,
Collective Action Problems, and
Domestic Political Institutions
JAMES E.ALT AND MICHAEL GILLIGAN
In this essay, James Alt and Michael Gilligan contrast Rogowski’s
factor-based approach to political coalitions (see Reading 20) with
a sectoral approach drawn from the Ricardo-Viner, or “specific
factors,” model of international trade. They explain under what
circumstances political coalitions will take the form of broad classes,
as predicted by Rogowski, and under what circumstances they
will organize along the lines of specific industries. The authors
then examine how collective action costs (the costs incurred by
groups in organizing for political action) and domestic political
institutions influence the formation of political coalitions, and they
conclude that these constraints may exert a more important effect
than strictly economic considerations. Alt and Gilligan provide a
broad survey of the most important theoretical concepts used by
contemporary analysts and develop a synthetic approach to the
domestic politics of international trade.I. INTRODUCTION
The fundamental problem that international trade poses for states is this. Trade
typically offers cheaper goods, with more choice for consumers and the greatest
economic output for society as a whole. But at the same time, it is also very
disruptive to individuals’ lives, tying their incomes to the vagaries of international
markets. In so doing, trade affects the distribution of wealth within the domestic
economy, raising questions of who gets relatively more or less, and what they can
do about it politically. Trade also has important effects, naturally, on aggregate
domestic economic welfare and on the distributions of wealth and power among
national societies. Anyone theorizing about “trading states” (states of trading
societies) should consider the state’s problem of how to weigh the aggregate,
external effects against the internal, distributional effects—and indeed against the
costs or disturbances that those internal redistributions may bring.