Strategic Interaction in an Era of Complex and Deep Interdependence

The global system can be understood in terms of complex and deep interdependence created by rising levels of tightly coupled, complementary and functionally differentiated interdependencies among nations and firms. This leads to strengthening effects from the “shadow of an adaptive future,” as well as rising systemic turbulence, with each effect requiring greater cooperative management by states and firms. What is the structure of strategic interaction in such an environment? We treat this issue in terms of game theory, framed around two forms of defection: 1) systemic defection, or rejection of the system of global economic and strategic cooperation and withdrawal into autarky; 2) partial defection, or defecting from some of the common norms that organize the global economy, thereby reaping special gains, while still retaining most of the gains from cooperation. Strategic interaction in a world of complex and deep interdependence involves engaging in partial defection without slipping into systemic defection. This framework is applied to Chinese maritime conflict with its neighbors and Russian annexation of Crimea.