Several recent books have argued that comparative case studies of crises demonstrate the failure of rational-deterrence theory; they have offered certain empirical generalizations as substitutes. This paper shows that such contentions are unwarranted. First, the empirical generalizations are impressive as historical insights, but they do not meet the standards for theory set out by the most sophisticated case-study analysts themselves. Second, the “tests” of rational deterrence used in the case studies violate standard principles of inference, and the ensuing procedures are so biased as to be useless. Rational deterrence, then, is a more successful theory than portrayed in this literature, and it remains the only intellectually powerful alternative available.

Case studies are essential to theory building: more efficiently than any other methods, they find suitable variables, suggest middle-range generalizations for theory to explain, and provide the prior knowledge that statistical tests require. Their loose constraints on admissible propositions and suitable evidence are appropriate and even necessary for these tasks. These same characteristics, however, inevitably undermine all attempts to construe case-study generalizations as bodies of theory or tests of hypotheses.

Achen and Snidal's deductive theory of deterrence contributes very little to an understanding of the uses and limitations of deterrence strategy as an instrument of foreign policy. Lacking operationalization, their “rational deterrence theory” is incapable of predicting the outcome of individual cases. Furthermore, it has not yet addressed the need (i) to reconceptualize the problem of deterrence for different levels of conflict; (2) to refine the assumption of “rationality”; (3) to deal with the phenomenon of equifinality; (4) to develop a framework of strategic interaction between Initiator and Defender acknowledging that an Initiator often has multiple options for challenging the status quo from which to choose an action that meets his cost-benefit criteria; (5) to find a way of taking into account decision-making variables that, as case studies have demonstrated, often affect deterrence outcomes; and (6) to broaden the conceptualization of deterrence strategy to encompass the possible use of positive inducements as a means of discouraging challenges to a status quo situation.

The causes and effects of the use of force raise crucial questions of substance and method. Issues are multiple and often are confused with each other. Thus, while many case-study findings contradict “second-wave” deterrence theory, they are consistent with some rational deterrence theories. Many findings, however, cannot be squared with the assumptions of rationality. Policies are suboptimal and behavior is often inconsistent. Furthermore, the actor's values, beliefs, and calculations are exogenous to rational theories and can only be supplied by empirical analysis.

Deterrence theories purport to supply the auxiliary assumptions rational choice theories need to predict rational strategic behavior. They generally assume that would-be initiators are (i) instrumentally rational; (2) risk-prone gain-maximizers; (3) free of domestic constraints; and (4) able to identify themselves correctly as defenders or challengers. These assumptions are contradicted by empirical studies that indicate that risk-prone, gain-maximizing initiators are relatively uncommon; that leaders at times calculate as deterrence theories expect, but behave contrary to their predictions; and that the calculus of initiators generally depends on factors other than those identified by deterrence theories. Deductive theories of deterrence are also inadequate because they do not define their scope conditions. Nor can they accommodate deviation by initiators from processes of rational calculation. Rational deterrence theories are poorly specified theories about nonexistent decision makers operating in nonexistent environments.

Although there are important differences between the rational theory of deterrence and the theory of deterrence that is emerging from the psychology and case-study literatures, it is necessary for adherents of both to appreciate the ways in which they complement each other and the problems they share. For example, rational deterrence theory will not describe the way the world works until certain heuristics and biases that can only be discovered through case studies and other inferential methods are either eliminated or integrated into the theory. On the other hand, psychologists and case-study researchers will find it difficult to trace through the implications of their discoveries for strategic behavior until they adopt some relative of formal methods.

It has been persistently demonstrated that militarily superior states that are engaged in wars with militarily inferior ones may end up on the losing side. Unlike the processes by which military capabilities are converted into control over resources, the so-called “paradoxical conflict outcomes” phenomenon is more severe than a lack of correspondence between control over resources and control over outcomes. The paradox of power involves cases in which increased control over resources actually causes reduced control over outcomes. Several of the theoretical examples of this paradox are taken from social choice theory. These examples are applied to the analysis of the outcome of the Balkan Wars of 1912–1913 and of the Israeli invasion of Lebanon in 1982. The implications of the power paradox for theories of international politics are briefly discussed.

Studies of state institutions in socialist countries demonstrate the inadequacy of current paradigms of the state. Political reforms within these states—like those examined in the works on Yugoslavia that are under review—present opportunities to develop new approaches. Arguments about the democratizing pressures of economic reform or the attempts to legitimize the state by resolving the national question are contrasted to a view of the state as primarily managing its international boundary. Leaders respond to changes in foreign finance, trade, and security with policy shifts that are institutionalized by altering budgetary jurisdictions and rules about spending decisions in both state and economy. The ensuing political conflicts are bounded by the leaders' Marxian project to socialize the state as well as capital, in effect reducing the scope of the federal budget.