Neo-liberalism beats Neo-realism

According to some scholars, realism remains the most powerful theory to explain and understand how the international system operates. Critically discuss this position from a Neo-Liberal perspective.

The power of Neo-Realism – Origins and Premises

The notion of Realism as the most powerful theory to explain and understand how the international system operates is among other reasons because, at least in the Anglo-American world, it represents the oldest and most dominant paradigm in IR theory. According to Realism’s self-understanding, its intellectual lineage can be traced back via the German idea of Realpolitik to the writings of Hobbes, Machiavelli and even Thucydides. These first writings drew on the ‘domestic analogy’ of human behaviour in the state of nature as a state of war of all against all that is then transported to international relations as an arena whereby only the most naturally competitive and power-maximising states survive. Under classical realism only short-term alliances and the balance of power can bring temporal respite. While many of realism’s core assumptions and propositions have been repeatedly (and often convincingly) criticized, its continuing dominance is reflected in the fact that most other IR theories define and situate themselves in opposition to the realist paradigm.

Then, in the 1970s, Kenneth Waltz, originally a mathematician, developed Neorealism as an attempt to render traditional Realism more ‘scientific’. It attempted to do so by setting out a deductive theory of international politics. Under Neo-Realism, the anarchic structure of the international system (and not human nature) was given ultimate causality for state behaviour. Furthermore, it was claimed that since systemic anarchy is a historical constant (as no world-encompassing empire had ever existed in recorded history), the theory had a transhistorical and ‘timeless’ explanatory validity. Neorealism reconnected self-reflexively with the then current developments in the theories of social sciences (structuralism) and while it excelled in conceptual rigour, parsimony and logic, it came under attack from a wide variety of paradigms during the 1980’s and 1990’s. One of these paradigms was Neo-Liberalism.

Neo-realism attacks Neo-liberalism particularly when it comes to its belief in institutionalism because, according to Mearsheimer, this belief falls into a logical trap. It is Mearsheimer’s belief that states will invariably behave in aggressive ways for they inhabit a competitive world and institutions represent arenas and facades of power politics, not forums. According to him, Neo-realism remains more viable as the key factors that prevent cooperation - relative gains and concerns about cheating (Mearsheimer 1994; Grieco 1990: 28) – are very hardly mitigated by the socialization process within international institutions.

Neo-liberalism therefore is seen as struggling because when it comes to security issues, the potential free-riding of one state will come at a much higher price to those actors that complied with agreed norms and rules than to those who did not. Neo-liberalism is seen to deny the importance of: relative gains and that even if cheating is resolved relative gains will still be an issue as gains by one state would necessarily threaten the others.

International Relations, as an academic discipline, was established just after the end of World War I. Its forefathers aimed at investigating ways to prevent a repetition of such a catastrophic war and wars in general. At that point in time Liberals believed that traditional power politics was largely responsible for the war and because of that, they tried to promote international cooperation through international organizations like the League of Nations, through trade and economic interaction and democracy. The outbreak of World War II obviously severely discredited this approach, yet its basic assumptions live on in a whole range of ‘liberal’ international theories today and they are widely seen as the most important alternative to Realism.

In similar fashion to realism, in the 1970s, liberal thought in international relations became more prominent again under a variety of names: interdependence, transnationalism, pluralism, regime theory, liberal institutionalism and neo-institutionalism. New developments such as the European Union and later the end of the Cold War allowed a shift away from security issues towards economic issues and international organizations.

Some strands of this new liberalism in International Relations have, in the meantime, moved very close to Neo-realism while others developed into globalization theories and a range of positions in between the two.

According to Neo-liberals there are many cases in which institutions do matter. They can: provide information; reduce transaction costs; make commitments credible; establish focal points for coordination, and in general facilitate the operation of reciprocity (Keoane & Martin 1994). What Keohane & Martin defend is that, contrary to Neo-realist belief, states can functionally make use of the existence and good function of institutions to improve the quality of information and optimize potential gains from cooperation. They also make more than, as Mersheimer criticizes, simply preventing cheating. Institutions have the ability to work as moderators and control to a certain extent “fears of unequal gains from cooperation” (Keohane & Martin 1994).

The next sections will hopefully establish the commonalities and differences between the main premises of Neo-Realism and Neo-Liberalism and criticize the premise that Neo-realism is the most explanatory paradigm through a Neo-liberal perspective.

The shared premises of Neo-liberalism and Neo-realism

Neo-Liberals fundamentally pose the question if realism is actually realistic. Keeping what is seen as the most insightful premises and dropping those believed to lack accuracy and explanatory power for the analysis of international relations by IR theory. This meant that although states remains as the main actors and they are still seen as behaving in an essentially rational way, and although the understanding of interest as power is still important, interest is seen in a much more fluid manner. It is at this point that the notion of complex interdependence arises.

Neo-Realism is state-centric, it also puts on the international system the central responsibility for the inherent anarchical tendency of states and it does so in an approach that it deems as being rational and as complying with the scientific method (Chernoff 2002). As the main proponent of Neo-Realism, Kenneth Waltz introduced a paradigm of International Relations that distinguished the ‘high politics’ of power and security from the dispensable economic and moral calculations of other approaches. The latter are overruled as secondary for Realist theorists that see themselves as truly focusing their conceptualizations only to study and understand what belongs to the essence of international relations. As so, while at the national level the affairs of economics, politics and moral values can be important to the understanding of the internal workings of the state unit the same is not verified at an international level analysis. In the international arena the political relations of power take precedence due to the essentially anarchical nature of the system.

Neo-Liberalism accepts states as indeed the correct dominant and most useful unit of analysis for international relations but goes a step beyond to embrace the influence and the importance of non-state actors in the current setting. It also accepts the pressures of the anarchical system in propelling states to rationally compete with each other in terms of power, this acceptance however does not deny the possibility for mitigating this competition and of actually channelling it into new forms of institutional innovation and cooperation that goes beyond instinctive self-help.

In this sense, Keohane’s Neo-Liberalism adopts what Carporaso (1993) terms a socio-communicative approach in that it updates the systemic “stiffness” of Waltz and focuses on the previously mentioned consequences of the practical rules and norms that multilateral institutions have brought attributing some significance to aspects of communication, language and persuasion.

Updating Neo-realism – How Neo-liberalism makes Neo-realism more real

“Realism is better at telling us why we are in trouble than telling us how to get out of it”
(Keohane 1986: 198)
The Neoliberal alternative of International Relations theory emerged in the 1980s through the writings of Keohane. In Keohane’s neo-institutionalism, there is a valorisation of the economic sphere which does not happen in Neo-realism. This valorisation in turn created the necessary conditions, among others, for the creation of the International Political Economy. Keohane basically fuses politics and economics in order to go beyond the limiting security obsession of Neo-realists. The division that neo-realism does between high and low politics must in this sense be rejected as the economy is seen as having a fundamental role in international relations. Also, Neo-liberalism connects the domestic with the international sphere, saying that it is not possible to speak of national interest and international politics without mentioning domestic politics.

Although the debate over the effects of interdependence on relations between states is still in the open between liberals and realists, Neo-liberals tend to criticize Neo-realism on the grounds that it lack explanatory power in terms of the effects of interdependence on international relations. The case is that interdependence can mitigate attrition between states as long as there is the likelihood for stable trade benefits in the future. (Copeland 1996:7) This leaves only two options for states: either they close down on themselves totally or they internationalise themselves through international institutions. Interdependence represents in this case a form of mutual dependence which is not accounted for in Neo-realist premises. This is the case because the impact of interdependence in the international system is one that opens up for the possibility of harmony and cooperation between states. This comes about as somewhat of a necessity as the political units (in this case the state) will not be able to produce everything they need by themselves. Interdependence brings about benefits and costs which are however not symmetrically distributed among the participants, meaning that more powerful counters tend to try and transfer the costs to the weakest states This asymmetric interdependence maintains the neo-realist notion of sovereignty as states still impose themselves on one another and remain the supreme authority within their territories but does challenge the notion of states as autonomous units which invariably act towards one another in a rationale of self-help (Katzenstein 1976:8).

Keohane’s primary critique rests with the notion that realism is “weak in accounting for sources of change” (Keohane 1986:159). Although he accepts the basic realist notion that the “internal attributes of states are given by assumption rather than treated as variables”. The difficulties of realism seem to rest, according to Keohane, with the “difficulty to state what are the conditions under which coalitions change”; its lack of clarity on rationality and interests; an ambiguity in the motivation and the interests of states’ will to maximize their power when they are actually safe.

Neo-Liberal Institutionalism’s argument is that actors in the international system should actually be understood as having the potential to discuss and interact in a forum rather than invariably competing in a “chess-board”. While in this forum, actors constantly recreate themselves, adapt and alter the rules of the game in contrast to the strict relative-gains rules of the Realist game of chess.

How you understand the reasons for states to behave in a cooperative way also has an important role in defining what your understanding of the nature of international relations is. A structural explanation of cooperation will be markedly different from a functional one. In a structural explanation moves towards absolute gains will be seen as the independent variable while in a functional analysis cooperation comes as the product of rational-actor behaviour that minimizes information costs and curbs inefficiency. These two different starting points are the different starting points that divide the Neo-liberal spectrum in that those closest to Neo-realism will adopt a structural explanation while those rejecting the systemic attribution of anarchy are more likely to belong to the functionalist niche of Neo-Liberalism.

The misconception over the notion of Realism as remaining the most powerful theory to explain and understand how the international system operates is also one of the reasons why author’s such as Carporaso (1993) came to realise that notions like multilateralism, that Realism struggles to come to terms with, have been underrepresented in the academic world of International Relations. Neo-liberalism excels in putting interdependence into evidence as the central phenomena that brought about a diffusion of power in international relations (Simmons & Elkins 2004) and created a more suitable environment for multilateralism, the emergence of international institutions and cooperation by means of a socialization process of states by means of evolving norms, rules and communication.

Realists have struggled with explaining how their organizing principle of anarchy is frequently caused by uncertainty about the expected patterns of state behaviour and can therefore be mitigated through state cooperation and particularly economic integration. In practical terms, the practice of foreign policy is messier than the realist premise that self-help is, because of the anarchical system, invariable in delineating the rational actor model. The case is in fact more often than not that a state in the international system administer packages that mix moves seeking to advance relative but also absolute gains when constructing their foreign policy vis-à-vis other states.


To conclude, the Neo-liberal paradigm improves on the Neo-realist one in that it privileges issues of time and trust as relevant factors in determining the success of norms and socialization at the international level and cooperation. Under this rational, actors are less likely to free-ride or defect if they know they will lose out in the long run. It is in this context that the role of ideas and discourse comes about. One may agree with the notion that Realism “tells us a small number of big important things” (Waltz 1979:329) but that the things realism tells us are indeed too small and need to be revised even if its parsimony and scope are to be praised

Although the years of the Cold War might have to a certain extent justified and empowered Neo-realist reasoning and provided a “haven” for a theory that was an expert in explaining the rationale behind a clear bipolar struggle for political influence, post-Cold War events and the new agendas of economics, environment and complex peacebuilding have, if no altered, at least seriously challenged strictly realpolitik analysis of international relations.

Neo-Liberalism can undoubtedly be seen as a theoretical alternative to Realism, the strength of looking at international relations through the lenses of such approaches is that you are better equipped to understand and analyse the dynamic processes of socializing occurring between states and other international actors.


Anonymous said...

Excellent summary of the liberal-realist institutionalism debate.

bhawna sharma said...

i like the summery very much,great work'

BHAWNA said...

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Anonymous said...

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Anonymous said...

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IR429 said...

Very detailed and get concise summary of the key areas of debate. Thank you

Tom Christoffel said...

Hello Daniel -
Google’s Blog Search sent me to this your project because of the keywords cooperation and necessity.

This geopolitical overview should be useful to subscribers of Regional Community Development News, so I will include a

link to it in the February 8 issue. Regional cooperation between local governments looks like international geopolitics at a smaller scale. I think international analysis perspectives can be useful in understanding issues relating to "regional cooperation" across internal borders.

The newsletter will be found at

http://regional-communities.blogspot.com/ Please visit, check the tools and consider a link. Tom

Anonymous said...

great job!!! very well done.