Kindleberger Trap

Joseph Nye has coined the term the ‘Kindleberger Trap’. He states this take place when an established, or rising, power is unable to assume a leading role in global leadership.

The closet to a definition Nye provides comes from an article published firstly in Project Syndicate in 2017. Nye wrote, ‘Charles Kindleberger, an intellectual architect of the Marshall Plan who later taught at MIT, argued that the disastrous decade of the 1930s was caused when the US replaced Britain as the largest global power but failed to take on Britain’s role in providing global public goods. The result was the collapse of the global system into depression, genocide and world war. Today, as China’s power grows, will it help provide global public goods?’ (Nye 2017). He states that the US should worry more about a China that is too weak rather than too strong.

Nye writes that ‘[i]n domestic politics, governments produce public goods such as policing or a clean environment, from which all citizens can benefit and none are excluded. At the global level, public goods — such as a stable climate, financial stability, or freedom of the seas — are provided by coalitions led by the largest powers. Small countries have little incentive to pay for such global public goods. Because their small contributions make little difference to whether they benefit or not, it is rational for them to ride for free. But the largest powers can see the effect and feel the benefit of their contributions. So it is rational for the largest countries to lead. When they do not, global public goods are under-produced. When Britain became too weak to play that role after World War I, an isolationist US continued to be a free rider, with disastrous results.’ (Nye 2017).

To avoid the Kindleberger Trap, Bahi argues cooperation must be strengthen between the US and China, in particular in period of global crisis as it was during the pandemic in 2020: “The Kindleberger argument applies to economic crises, emphasizing the functions performed by the hegemon to provide global economic stability and the benefits it gains by doing so” (Bahi 2021).