Chapter 5 Revision Guide

Neoliberalism concerns itself with the study of how to achieve co-operation among states and other actors. Neoliberals accept that co-operation may be difficult to achieve but argue that it has been facilitated by growth of international institutions and international regimes.
Neoliberalism is premised on liberal assumptions about the possibility of cumulative progress in human affairs and thus views anarchy, in contrast to structural realists, as a vacuum which is gradually filled with human-created processes. This does not make neoliberals ‘idealists’, however. They recognize the difficulties involved in overcoming the anarchic environment in international politics.
Neoliberals predominantly characterize obstacles to international cooperation in their analyses of: free-riding, game theory, and the game of Prisoner’s Dilemma for example, which are used to clarify the difficulties in rational decision-making processes involved in co-operation.
Key early influence on neoliberalism was pluralism-literature, which argued that a variety of non-state actors were breaking down the barriers between domestic, and thus had to be considered for a more accurate understanding of international affairs.
However, neoliberalism adopts a state-centric perspective, which, like structural realism, considers states to be unitary, rational, utility-maximising actors. It is heavily indebted to the study of rationality and utility-maximization in economics.
As such key neoliberal texts, such as Keohane and Nye’s Power and Interdependence, sought to challenge realist pessimism, but adopted the realists’ assumption of self-interested egocentric actors.
Neo-neo debates between neorealists (Grieco, Krasner) and neoliberals (Keohane) took place in the 1980s and 1990s. Here, neoliberals highlight two key historical developments in 20th century that have made realism increasingly inaccurate as a description of world politics:
1) increasing interdependence between actors
2) hegemonic stability provided by the US.
There have been many critics of the analytical convergence of structural realism and neoliberalism on the basis of the theories’ reliance on: state-centrism; unitary actor assumptions; the rational actor assumption; delineated understandings of ontology and epistemology.
It should not be forgotten, however, that there are differences between (neo)realist and (neo)liberal approaches, for example, on their understanding of the meaning of anarchy.
Prevalent in this regard is interdependence, a core tenet of neoliberalism. Interdependence involves a relationship of mutual dependence in which actions and interests are entwined.
Interdependence is linked to increasing global technological and industrial advances. Both are viewed as key mediums of exchange and thus facilitators in shaping common interests among a variety of actors. Consequently, interdependence has been regarded as a pacifying dynamic in world politics by (neo)liberalists
Institutions are crucial here, because they can facilitate iteration, and hence co-operation. Neoliberals thus have a vested interest in developing the rational design of institutions.
Nonetheless, there are three major challenges to the design of institutions that neoliberals recognize: 1) bargaining (how it is facilitated), 2) defection (how it is mitigated), and 3) autonomy (do institutions have autonomy from states).
Case study. The WTO serves as a forum of free trade organizations and agreements, for states to negotiate free trade agreements and settle trade disputes. It rests on the presumption that it is normatively valuable and – along the stag hunt analogy - rationally beneficial to participate in the global activity of capitalist free trade.
Case study continued. WTO’s institutional design developed in 1995, out of the collective experience with GATT.
Case study continued. WTO is a formal inter-governmental organization with a full Secretariat and an extensive institutional structure to cover all aspects of trade. Despite collective will, WTO has faced heavy critiques: decentralized, undemocratic institution that represents corporate interests; North-South divisions. Nonetheless, it demonstrates the importance of institutional design to collective goals in an otherwise anarchic environment.
Conclusion. International co-operation is now an embedded, enduring feature of global politics. Neoliberalism’s goal is to understand how international institutions foster, maintain and deepen this co-operation.
Neoliberals are aware of the problems with co-operation and with institutions, but maintain that it is important to study how these problems might be mitigated. Neoliberalism is characterized by a normative assumption that growth of institutions has been a positive development, particularly in global capitalist affairs, which some other IR scholars challenge.