Neoliberalism, i.e. Neo-institutionalism – Sterlink-Folker
Neoliberalism argues that international institutions facilitate international coop- eration. It acknowledges that
cooperation can be difficult to achieve in anarchic conditions, but it argues that institutions allow states to
overcome a variety of col- lective action impediments. How institutions do so, and how they might be rede-
signed to more efficiently obtain cooperative outcomes, is the primary focus of neoliberal analysis.
- How did neoliberalism emerge?
- What are the barriers to international cooperation?
- How does neoliberalism study international institutions? Th
Introduction
The central concern of neoliberalism involves how to achieve cooperation among states and other actors in the
international system. International cooperation occurs when states ‘adjust their behavior to the actual or
anticipated preferences of others’ so that ‘the policies actually followed by one government are regarded by its
partners as facilitating realization of their own objectives, (Keohane 1984: 51). To most observers, the
desirability of achieving beneficial collective outcomes in IR would seem obvious. Yet the ability to do so in an
anarchic international system has been relatively difficult historically. In fact, neoliberalism concurs with
structural (or neo-) realism that international cooperation can be difficult to obtain in an anarchic international
environment that fosters fear and uncertainty (see Chapter 4).
Yet in stark contrast to structural realism, neoliberalism argues that particular historical developments in the
twentieth century have made international cooperation relatively easier to achieve now than was the case
historically. These developments ensured the growth of international institutions, in both a formal and informal
sense, which play a fundamental role in the daily activity of contemporary global politics.
- Formal institutions are multilateral organizations with physical locations, buildings, staffs, budgets, and
other resources at their disposal (see also Chapter 5). States voluntarily create intergovernmental
institutions such as the United Nations (UN) or the International Monetary Fund (IMF) in order to
obtain particular collective interests.
- States have also created informal institutional arrangements, or international regimes, which consist of
‘sets of implicit or explicit principles, norms, rules, and decision-making procedures around which
actors’ expectations converge in a given area of international relations’ (Krasner 1983: 2). The concept
of international regimes was developed to capture, describe, and analyze the totality of cooperative
efforts, assumptions, and behaviors in a given international issue area.
Neoliberalism focuses on:
- Neoliberalism is a variant of liberal IR theory that focuses on the role international institutions play in
obtaining international collective outcomes, and for this reason it is often called ‘neolib- eral
institutionalism’.
- In order to examine international cooperation, neoliberalism subscribes to a state-centric perspective
which, like structural realism, considers states to be unitary, rational, utility-maximizing actors who
dominate global affairs.
o That is, states are treated as unified entities with particular, specifiable goals, rather than
composites of many different domestic actors and competing interests. States are also assumed
to make decisions based on a set of self-interested priorities and according to a strategic cost-
to-benefit analysis of possible choices, reactions, and outcomes.
In making these assumptions, neoliberalism not only mirrors structural realism but is
also heavily indebted to the study of rationality and utility-maximization in
economics.
1
, However, unlike realism, neoliberalism is a variant of IR liberalism, and it is premised on basic liberal
assumptions about the possibility of cumulative progress in human affairs.
- Liberalism assumes that collective benefits may be obtained through the greater application of human
reasoning. Increased interaction and informational exchange among self-interested individuals and
actors are also important.
- Neoliberalism has relatively greater faith in the ability of human beings to obtain progressively better
collective outcomes that promote freedom, peace, prosperity, and justice on a global scale.
- Neoliberalism acknowledges that impediments to collective action can be difficult to overcome in an
anarchic environment.
o But neoliberalism argues that the structure or design of international institutions plays an
important role in determining the extent to which collective goals can be realized.
Policy-makers and other relevant actors can create and reshape institutional
structures in order to more effectively obtain collective interests.
--> In other words, it is possible for human beings to design international
institutions that substantially mitigate the negative impact of anarchy on
international collective actions
How did neoliberalism emerge?
- Transnational relations’ better characterized the increasingly extensive cross-national interaction
occurring between states. This interaction was seen as a challenge to the authority and autonomy of
national governments, which were no longer able to control outcomes or obtain interests by pursuing
unilateral policies.
- Neoliberalism argued that an anarchic environment of self-interested, egocentric actors did not
necessarily impose debilitating realist constraints on cooperation.
- Differences between structural realism and neoliberalism that have kept them on parallel but clearly
separate theoretical tracks. One of the central differences involves how they define and analyze the
concept of anarchy (Grieco 1990).
o Structural realists see anarchy as an all-encompassing, unchanging condition or environment to
which humans beings are subject. The inability to control outcomes and ensure survival
generates the paranoia, fear, and drive for power that are basic to a realist analysis.
o Alternatively neoliberals see anarchy as a vacuum that is gradually being filled with human-
created processes and institutions (Sterling-Folker 2001). These have begun to counteract the
inability to control outcomes and ensure survival, which means that the paranoia, fear, and
drive for power induced by anarchy have been mitigated overtime as well.
--> The result is that the two perspectives read the Westphalian historical record very
differently.
Structural realists point to the ongoing warfare and military/trade
competition between states as confirmation for the unchanging quality of
anarchy.
Neoliberal scholars concede that much of IR prior to the twentieth century
seems to conform to realist expectations. But they highlight two historical
developments in the twentieth century that have made realism an
increasingly inaccurate description of contemporary global politics.
o The first historical development was increasing interdependence in
a variety of global issue areas due to modern technological and
industrial advances. Interdependence involves a relationship of
mutual dependence in which actions and interests are entwined.
This relationship may produce unintended, undesirable, and
reciprocal consequences, but participating actors also obtain
important interests and benefits through their interconnection. It is
therefore costly to one’s own interests to threaten or end the
relationship. The concept of interdependence as a potentially
pacifying process in an anarchic environment has a long pedigree in
liberal IR thought. In neoliberal analysis, it sets the stage for the
historical development of common interests which can only be
obtained if states successfully cooperate with one another.
2
