Fungibility of Power Resources

A good is fungible if it is of such a nature as to be freely replaceable by another of like nature or kind without decreasing in value. Convertibility and mutual substitutability are hence forms of fungibility. Prime examples of fungible goods are money bills or currencies. In the analysis of power, and in a looser sense, the problem of fungibility refers to the issue whether different types of resources (e.g., military, economic, cultural, diplomatic) have the characteristic of being freely exchangeable or replaceable. This issue has gained prominence for two reasons. If resources are highly fungible—that is, they can be mutually substituted without losing much of their value—this allows them to be aggregated to permit the construction of overall power resource indexes. This is crucial for balance of power theories because they rely on such an understanding of aggregate power for explaining the dynamics of the international system and the options (and behavior) of individual states. Also, this time on the level of agency, if resources are highly fungible, then power could become the equivalent of money in economic theory through which different aims can be weighed on a common scale. This allows a unique value of utility as the maximization of different aims can all be converted into power. Yet, research has shown that the assumption of high fungibility is highly problematic, if not mistaken.

Balance-of-power theories used to focus mainly on military resources. The greatest stability of the system and, hence, the least violent resolution of conflicts is expected when the different states (or coalitions) have roughly equal military capabilities because it would be irrational to wage war in such circumstances. Also, all states wish to avoid being in an inferior position that invites aggression, so their [Page 267]individual security policies will tend to reproduce collective power balances.

As long as purely military resources are sufficient to account for such an equilibrium, the issue of fungibility does not arise too prominently, although some see the advent of nuclear weapons as a qualitative break. But the moment power theory is applied to explain more generally the outcomes of conflicts (with the expectation that the actor with more capabilities will inevitably win), fungibility becomes a crucial issue. First, it makes an ex ante assessment of capabilities difficult: how do we compare different types of resources, such as speaking the international lingua franca and running a major trade surplus (which some would dispute to be a resource in the first place) and how do they add up? Yet without an ex ante assessment of the overall power relation, any outcome can be ex post rearranged to fit an explanation in terms of power differentials (power analysis becomes tautological). Second, such a power relation is usually taking place in different domains. Although military resources may be crucial in a military dispute, how effective are they in an economic one? Finally, power relations do not necessarily take place between some interchangeable actors. Although military means would be potentially useful in a conflict with enemies, they can hardly be used with allies. Indeed, relations of amity or enmity profoundly affect the value of resources in the first place. As David Baldwin has often argued, all this leads by necessity to a power analysis, which is relational, multidimensional, and highly situational and, hence, precisely not able to rely on a fungible power resource assumption. Indeed, attempts to aggregate such resources independent of such factors are prone to the “lump fallacy of power,” in Robert Dahl's felicitous phrase.

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