Trading Butter for Guns

The international relations literature largely presumes that leaders engage in foreign policy substitution but does not provide a compelling theoretical explanation or convincing empirical evidence that substitution occurs. This article offers a theory of foreign policy choice based on the differences between private and public goods. It assumes that private goods and public goods are useful under different circumstances and conditions. Leaders select a policy based on political needs, so private- and public-goods approaches are employed alternatively depending on domestic situations: policies are substituted one for another. The trade-off between aggressive unilateral economic behavior and military conflict as the United States conducted foreign policy during the cold war is examined. Results show that leaders facing economic concerns and/or domestic opposition prefer trade aggression, a patently private-good-like policy, and substitute such policies in response to changing domestic stimuli.