Neoliberalism in international relations

Neoliberalism in international relations

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In the study of international relations
International relations
International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...

, neoliberalism refers to a school of thought which believes that nation-states are, or at least should be, concerned first and foremost with absolute gain
Absolute gain (International Relations)
As a part of liberal international relations theory, absolute gain is a term used to describe how states will act in the international community. The theory says that international actors will look at the total effect of a decision on the state or organization and act accordingly...

s rather than relative gain
Relative gain (international relations)
Relative gain, in international relations, describes the actions of states only in respect to power balances and without regard to other factors, such as economics. In international relations, cooperation may be necessary to balance power, but concern for relative gains will limit that cooperation...

s to other nation-states. This theory is often mistaken with neoliberal economic ideology, although both use some common methodological tools, such as game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...


Activities of the International System

Neoliberal international relations thinkers often employ game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...

 to explain why states do or do not cooperate; since their approach tends to emphasize the possibility of mutual wins, they are interested in institutions which can arrange jointly profitable arrangements and compromises.

Neoliberalism is a response to Neorealism; while not denying the anarchic
Anarchy , has more than one colloquial definition. In the United States, the term "anarchy" typically is meant to refer to a society which lacks publicly recognized government or violently enforced political authority...

 nature of the international system, neoliberals argue that its importance and effect has been exaggerated. The neoliberal argument is focused on the neorealists' underestimation of "the varieties of cooperative behavior possible within... a decentralized system." Both theories, however, consider the state and its interests as the central subject of analysis; Neoliberalism may have a wider conception of what those interests are.

Neoliberalism argues that even in an anarchic system of autonomous rational states, cooperation can emerge through the building of norms, regimes and institutions.

In terms of the scope of international relations theory
International relations theory
International relations theory is the study of international relations from a theoretical perspective; it attempts to provide a conceptual framework upon which international relations can be analyzed. Ole Holsti describes international relations theories act as a pair of coloured sunglasses,...

 and foreign interventionism, the debate between Neoliberalism and Neorealism is an intra paradigm one, as both theories are positivist and focus mainly on the state system as the primary unit of analysis.


Robert Keohane
Robert Keohane
Robert O. Keohane is an American academic, who, following the publication of his influential book After Hegemony , became widely associated with the theory of neoliberal institutionalism in international relations...

 and Joseph Nye
Joseph Nye
Joseph Samuel Nye, Jr. is the co-founder, along with Robert Keohane, of the international relations theory neoliberalism, developed in their 1977 book Power and Interdependence. Together with Keohane, he developed the concepts of asymmetrical and complex interdependence...

 are considered the founders of the neoliberal school of thought; Keohane's book After Hegemony
After Hegemony
After Hegemony is a book by Robert Keohane. It is a leading text in the neo-liberal school of international relations scholarship....

is a classic of the genre. Another major influence is the hegemonic stability theory
Hegemonic stability theory
Hegemonic Stability Theory is a theory of international relations. Rooted in research from the fields of political science, economics, and history, HST indicates that the international system is more likely to remain stable when a single nation-state is the dominant world power, or hegemon...

 of Stephen Krasner, Charles P. Kindleberger
Charles P. Kindleberger
Charles Poor "Charlie" Kindleberger was a historical economist and author of over 30 books. His 1978 book Manias, Panics, and Crashes, about speculative stock market bubbles, was reprinted in 2000 after the dot-com bubble. He is well known for hegemonic stability theory.-Life:Kindleberger was born...

, and others.

Keohane and Nye

Robert O. Keohane and Joseph S. Nye, in response to neorealism, develop an opposing theory they dub "Complex interdependence
Complex interdependence
Complex interdependence in international relations is the idea put forth by Robert Keohane and Joseph Nye that states and their fortunes are inextricably tied together. The concept of economic interdependence was popularized through the work of Richard N. Cooper...

." Robert Keohane and Joseph Nye explain, “…complex interdependence sometime comes closer to reality than does realism.” In explaining this, Keohane and Nye cover the three assumptions in realist thought: First, states are coherent units and are the dominant actors in international relations; second, force is a usable and effective instrument of policy; and finally, the assumption that there is a hierarchy
A hierarchy is an arrangement of items in which the items are represented as being "above," "below," or "at the same level as" one another...

 in international politics.

The heart of Keohane and Nye’s argument is that in international politics there are, in fact, multiple channels that connect societies exceeding the conventional Westphalian system of states. This manifests itself in many forms ranging from informal governmental ties to multinational corporations and organizations. Here they define their terminology; interstate relations are those channels assumed by realists; transgovernmental relations occur when one relaxes the realist assumption that states act coherently as units; transnational applies when one removes the assumption that states are the only units. It is through these channels that political exchange occurs, not through the limited interstate channel as championed by realists.

Secondly, Keohane and Nye argue that there is not, in fact, a hierarchy among issues, meaning that not only is the martial arm of foreign policy not the supreme tool by which to carry out a state's agenda, but that there are a multitude of different agendas that come to the forefront. The line between domestic and foreign policy becomes blurred in this case, as realistically there is no clear agenda in interstate relations.

Finally, the use of military force is not exercised when complex interdependence prevails. The idea is developed that between countries in which a complex interdependence exists, the role of the military in resolving disputes is negated. However, Keohane and Nye go on to state that the role of the military is in fact important in that "alliance’s political and military relations with a rival bloc."


Richard Ned Lebow states that the failure of neorealism lies in its “institutionalist” ontology, whereas the neorealist thinker Kenneth Waltz
Kenneth Waltz
Kenneth Neal Waltz is a member of the faculty at the University of California, Berkeley and Columbia University and one of the most prominent scholars of international relations alive today...

 states, “the creators [of the system] become the creatures of the market that their activity gave rise to.” This critical failure, according to Lebow, is due to the realists’ inability “to escape from the predicament of anarchy.” Or rather, the assumption that states do not adapt and will respond similarly to similar constraints and opportunities.


Norman Angell
Norman Angell
Sir Ralph Norman Angell was an English lecturer, journalist, author, and Member of Parliament for the Labour Party.Angell was one of the principal founders of the Union of Democratic Control...

, a classical London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...

 liberal, had held: "We cannot ensure the stability of the present system by the political or military preponderance of our nation or alliance by imposing its will on a rival."

Keohane and Lisa L. Martin expound upon these ideas in the mid 1990s as a response to John J. Mearsheimer
John Mearsheimer
John J. Mearsheimer is an American professor of Political Science at the University of Chicago. He is an international relations theorist. Known for his book on offensive realism, The Tragedy of Great Power Politics, more recently Mearsheimer has attracted attention for co-authoring and publishing...

’s “The False Promise of International Institutions,” where Mearsheimer purports that, “institutions cannot get states to stop behaving as short-term power maximizers.” In fact Mearsheimer’s article is a direct response to the liberal-institutionalist movement created in response to neo-realism. The central point in Keohane and Martin’s idea is that neo-realism insists that, “institutions have only marginal effects…[which] leaves [neo-realism] without a plausible account of the investments that states have made in such international institutions as the EU, NATO, GATT
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

, and regional trading organizations.” This idea is in keeping with the notion of complex interdependence
Complex interdependence
Complex interdependence in international relations is the idea put forth by Robert Keohane and Joseph Nye that states and their fortunes are inextricably tied together. The concept of economic interdependence was popularized through the work of Richard N. Cooper...

. Moreover, Keohane and Martin argue that the fact that international institutions are created in response to state interests, that the real empirical question is “knowing how to distinguish the effects of underlying conditions from those of the institutions themselves.”

Mearsheimer, however, is concerned with ‘inner-directed’ institutions, which he states, “seek to cause peace by influencing the behavior of the member states.” In doing so he dismisses Keohane and Martin’s NATO argument in favor of the example of the European Community (EC) and the International Energy Agency
International Energy Agency
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...

. According to Mearsheimer, the NATO argument is an alliance and is interested in “an outside state, or coalition of states, which the alliance aims to deter, coerce, or defeat in war.” Mearsheimer reasons that since NATO is an alliance it has special concerns. He concedes this point to Keohane and Martin.

Mearsheimer attacks Martin’s research on the EC, particularly her argument on Argentine sanctions by Britain during the Falklands war
Falklands War
The Falklands War , also called the Falklands Conflict or Falklands Crisis, was fought in 1982 between Argentina and the United Kingdom over the disputed Falkland Islands and South Georgia and the South Sandwich Islands...

, which were affected by Britain’s linking of issues in context of the EC. Mearsheimer purports that the United States was not a member of the EC and yet the US and Britain managed to cooperate on sanctions, effectively creating an ad hoc alliance which effected change in its member states.

See also

  • Liberal international relations theory
    Liberal international relations theory
    Unlike realism where the state is seen as a unitary actor, liberalism allows for plurality in state actors. Thus, preferences will vary from state to state, depending on factors such as culture, economic system or government type...

  • Institutionalism in international relations
    Institutionalism in international relations
    Institutionalism in international relations comprises a group of differing theories on international relations . Functionalist and neofunctionalist approaches, regime theory, and state cartel theory have in common their focus on the structures of the international system, but they substantially...

  • Neorealism
  • Foreign interventionism