Liberalism and neoliberalism Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Assumptions Positive view of human nature Great faith in human reason and rationality Conviction that international relations can be cooperative rather than conflictive Belief in modernization and progress Zhongqi Pan/Gustaaf Geeraerts

(Utopianism/Idealism) Pedigree of the Liberal Paradigm Classical Liberalism Locke – Bentham – Kant LIBERALISM (1920s) (Utopianism/Idealism) Neoliberalism (1970s) Neoliberal Institutionalism (1980s-90s) Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Classical liberalism John Locke (1632-1704) Rule of law (constitutional state) Rechtsstaat vs Machtstaat Jeremy Bentham (1748-1832) Constitutional states have a rational interest to adhere to international law Immanuel Kant (1724-1804) Republics will establish perpetual peace Zhongqi Pan/Gustaaf Geeraerts

Major Strands of Neoliberal Theory Variant Level of Analysis Departure from Realism Institutional liberalism System. Anarchy is a source of distrust between states. Outcomes in the international system are generated by three main systemic variables: distribution of power among states, level of interdependence and level of institutionalization Anarchy does not necessarily lead to conflict and can be mitigated through institutions. Sustainable cooperation is possible. Interdependence Liberalism and Complex Interdependence Theory Sub-state, governmental, transnational, and transgovernmental levels also important. Attention for individuals, firms, NGOs, and organizations within governments as actors, and their interactions across national borders. States are not the only important actors. Actors have diverse interests in international politics. Much of IR has little to do with military security. Democratic Peace Theory/Liberal internationalism State. Focuses on what kind of government the state has. States are not all essentially the same. Liberal (democratic) states can solve disputes without war. Zhongqi Pan/Gustaaf Geeraerts

Democratic Peace Theory (aka Republican liberalism) Three conditions for peace among liberal democracies: Michael Doyle (1983, 1986) Democratic norms of peaceful resolution of conflict Peaceful relations between democratic states based on a common moral foundation Economic cooperation between democracies: ties of interdependence Zhongqi Pan/Gustaaf Geeraerts

Interdependence liberalism and complex interdependence theory Richard Rosecrance (1986), The Rise of the Trading State: trading state Higher levels of transnationlism  higher level of interdependence David Mitrany (1943), A Working Peace System: functional integration theory Ernst Haas (1958), The Uniting of Europe: neo-functional integration theory Spill-over Robert Keohane and Joseph Nye (1977), Power and Interdependence: complex interdependence vs. realism Zhongqi Pan/Gustaaf Geeraerts

Realism vs. complex interdependence (Keohane & Nye) States dominant and unitary actors Force usable and effective Military security dominates the agenda Transnational actors increasingly important. States not unitary actors Military force less useful. Economic and institutional instruments more useful Military security less important. Welfare issues matter more and more Zhongqi Pan/Gustaaf Geeraerts

Institutional liberalism Picks up on earlier liberal thought about the cooperation promoting effects of international institutions Less optimistic than their idealist predecessors International institutions can make cooperation easier but they are no guarantee for a qualitative transformation of international relations Aims at systematic analysis of the conditions under which institutions can promote effective international cooperation Zhongqi Pan/Gustaaf Geeraerts

Institutional liberalism: assumptions Powerful states are not easily restrained However international institutions are more than ‘scraps of paper’ (realists) International institutions are more than mere instruments in the hands of strong states They are of independent importance and they can promote cooperation between states Institutional liberalism: assumptions Zhongqi Pan/Gustaaf Geeraerts

What is an international institution? An international organization such as NATO or the EU A set of rules that govern state action in particular areas, such as aviation or shipping. These sets of rules are called ‘regimes’ Often the two are combined: the trade regime, for example, is shaped mainly by the WTO Zhongqi Pan/Gustaaf Geeraerts

International institutions There may also be regimes without formal organizations (e.g. UNCLOS) Institutions can be universal, with global membership (e.g. UN), or they can be regional (e.g. EU or ASEAN) There are also institutions of a a more fundamental type, such as state sovereignty or balance of power These are not the focus of institutional liberals; they figure centre stage in the International Society tradition International institutions Zhongqi Pan/Gustaaf Geeraerts

Social scientific (behaviouristic) approach Institutional liberals claim that international institutions help promote international cooperation In order to evaluate that claim they try to measure the extent of institutionalization among states and its effect on the level of cooperation among them Strong focus on operationalization of central concepts Social scientific (behaviouristic) approach Zhongqi Pan/Gustaaf Geeraerts

Degree of institutionalization Are they only in a few crucial economic areas, such as trade and investment, or are they in many other economic areas, as well as in security and socio-political areas? Scope: the number of issue areas in which there are institutions Commonality: level of sharing of expectations about appropriate behaviour Specificity: the degree to which these expectations are specified in rules Autonomy: the extent to which the institution can alter its own rules Depth Degree of institutionalization Zhongqi Pan/Gustaaf Geeraerts

How do institutions promote cooperation? They reduce lack of trust between states Provide flow of information and opportunities to negotiate Enhance the ability of governments to monitor other’s compliance and to implement their own commitments – hence their ability to make credible commitments Strengthen expectation about the sustainability of international agreements Institutions How do institutions promote cooperation? Zhongqi Pan/Gustaaf Geeraerts

Neorealist critique of liberalism Kenneth Waltz Robert Keohane’s reaction: neoliberal institutionalism (aka weak liberalism) Neorealist critique of liberalism Zhongqi Pan/Gustaaf Geeraerts

Neoliberal institutionalism (weak liberalism) Main puzzle: cooperation under anarchy (i.e. absence of government) While the realists think cooperation is difficult because of anarchy and self-help, the neoliberals believe cooperation is possible and can be sustainable. Neoliberals see the major problems working against the prospects for international cooperation differently. The main problem is cheating because of the absence of a central authority or government. This aspect of liberal theory has been elaborated by Keohane in his so-called neoliberal institutionalism. Keohane (1984), Beyond Hegemony Neoliberal institutionalism (weak liberalism) Zhongqi Pan/Gustaaf Geeraerts

Neoliberal institutionalism (aka weak liberalism) Anarchy is a source of distrust between states States are the most important actors States are unitary actors States are rational and self-interested actors The power of states is an important factor: strong powers are less easily constrained However, institutions are an independent force and can stimulate cooperation between states Zhongqi Pan/Gustaaf Geeraerts

The Prisoner’s Dilemma (General case) Actor 1 C Cooperate D Defect Actor 2 3, 3 (P) 1, 4 4, 1 2, 2 (N) Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Suboptimal outcome Pareto Frontier: where all possible gains from exchange between parties are achieved, and it is impossible to make one party better off without the orher worse off. State “A” State “B” Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions How do states overcome cheating problems? The liberal answer is international institutions. Three strategies: Iteration Linkage Side-payments Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions: Iteration Iteration: repeated interaction between states Lengthens the “shadow of the future” Introduces “reputation costs”, which discourages defection Allows explicit strategies of conditional reciprocity Allows issue decomposition Cheating Concerns and Their Solutions: Iteration Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions: Linkage Linkage: linking cooperation in one area to other issues. Changes the cost-benefit calculation by increasing the costs of defection. If two players have cooperation in many issues, not just one issue, they will think before they defect. Cheating Concerns and Their Solutions: Linkage Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions: Side-payments This strategy is similar to issue-linkage. They are two sides of the same coin. Changes the cost-benefit calculation by increasing the benefits of cooperation Side-payments: offering additional inducements if your opponent cooperates. Cheating Concerns and Their Solutions: Side-payments Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions These “solutions” to the cheating problem can occur in the absence of international institutions. But without international institutions, cooperation continues to be plagued by two types of “costs”. Transaction costs Information costs Cheating Concerns and Their Solutions Zhongqi Pan/Gustaaf Geeraerts

Cheating Concerns and Their Solutions International institutions make cooperation more likely Reduce transaction costs by creating a set of procedures for negotiations Reduce information costs by providing forums for discussion and dissemination of information Decrease uncertainty Coordinate enforcement efforts Facilitate issue-linkage Cheating Concerns and Their Solutions Zhongqi Pan/Gustaaf Geeraerts

Neoliberal institutionalism (weak liberalism) vs neorealism Absolute vs. relative gains Zhongqi Pan/Gustaaf Geeraerts

Absolute vs. Relative Gains Liberals believe that states are mainly concerned with absolute gains. States are motivated by the search for opportunities to cooperate that will produce absolute gains for all parties to the cooperative exchange. Thus, the major problem is cheating. Neorealists disagree: neoliberal institutionalists overlook the problem of security under anarchy That is why concerns about relative gains are dominant Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Cheating (Uncertainty of intentions, incredibility of commitments, the fear and reality of free-riding. The prospects for cheating increase as the number of players increases) Conflict over the relative distribution of benefits and its effects on the relative power/security position) Neorealism Cheating (idem) Neoliberal institutionalism Zhongqi Pan/Gustaaf Geeraerts

Absolute vs. Relative Gains What type of gains matter? Probably both. It depends on the issue and the stakes involved. Security or economy? Relative gains with respect to threatening enemies or to unthreatening allies? Concerns for relative and absolute gains are variables, not constants. Absolute vs. Relative Gains Zhongqi Pan/Gustaaf Geeraerts

Absolute vs. relative gains Neoliberals stress absolute gains Neoliberal utility function: U1 = V1 Gain state 1 Realists stress relative gains Realist utility function U1 = V1 – k(V2 – V1) Gain state 1 Sensitivity to relative gains k > 0 K small in case of security community, ally K big in case of conflict of interest, enemy Gain state 2 Zhongqi Pan/Gustaaf Geeraerts

Anarchy States are rational and self-interested actors Distribution of power Interdependence Common interests Yes No Absolute gains Relative gains Institutions Neorealism Cooperation Zero-sum games Positive-sum-gains (‘win-win’)

Zhongqi Pan/Gustaaf Geeraerts Where do international institutions come from? Supply: the neorealists see institutions as the creation of powerful states. Demand: the neoliberal institutionalists see institutions as arising out of the “functional” needs of overcoming suboptimal outcomes. Institution Debate Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Suboptimal outcome Pareto Frontier: where all possible gains from exchange between parties are achieved, and it is impossible to make one party better off without the other worse off. State “A” State “B” Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Do international institutions matter? Cooperation emerges from common interests not institutions. Institutions are merely instruments of states Neorealism: Not really Institutions facilitate cooperation. They also shape future behavior by changing the cost-benefit calculations. Neoliberal institutionalism: Yes. Institution Debate Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts When do institutions change? Neorealists: when the underlying distribution of power changes. (institutions=dependent variable) Neoliberal institutionalists: institutions are “sticky”, they may persist even when the distribution of power changes. (institutions=independent variable) Institution Debate Zhongqi Pan/Gustaaf Geeraerts

The counter-attack of strong liberalism Weak liberalism gives in too much to neorealism The hard core of liberalism in danger of being lost Need for a revival of strong liberalism The counter-attack of strong liberalism Zhongqi Pan/Gustaaf Geeraerts

Strong liberalism and anarchy Anarchy only means the absence of a central authority It does not imply the total absence of governance International politics is not necessarily a raw anarchy Important elements of legitimate and effective authority are often and increasingly present The EU is the most telling example Also the security community between OECD countries Relationships between Europe, US and Japan Strong liberalism and anarchy Zhongqi Pan/Gustaaf Geeraerts

Strong liberalism: war & peace Peace is more than absence of war Destructive power (WMD) Modern war is no longer useable as a political instrument War has become obsolescent Balance of power among heavily armed powers (MAD) – precarious form of peace Security communities (OECD, EU) among consolidated democracies – more solid form of peace Different forms of peace are possible Strong liberalism: war & peace Zhongqi Pan/Gustaaf Geeraerts

Liberal intergovernmentalism Andrew Moravcsik Zhongqi Pan/Gustaaf Geeraerts

Strong positive liberal theory Andrew Moravcsik Need for a more scientific (strong) liberal theory Non-ideological Non-utopian Liberalism thinks too much in terms of a linear progression Modernizationinterdependence cooperation Globalization and End of Cold War seen as moving the world in a more liberal direction (“end of history”) Strong positive liberal theory Zhongqi Pan/Gustaaf Geeraerts

Moravcsik’s liberal intergovernmentalism Domestic component: state preferences (reflecting the preferences of different combinations of groups and individuals in domestic society) International ‘systemic’ component: state preferences constrained by other states (each state seeks to realize its preferences under the constraints imposed by the preferences of other states) The core element in the theory is the set of preferences pursued by states To the extent that these are influenced by liberal factors peace and cooperation may prevail. To the extend that they are not, conflict may prevail Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Domestic level State A Domestic level State B Preferences State A Preferences State B and/or Moravcsik’s two level model Zhongqi Pan/Gustaaf Geeraerts

Liberal intergovernmentalism Moravcsik (1998), The Choice for Europe Offers a rationalist framework of international cooperation, which is more in line with strong liberalism Set of assumptions allowing to disaggregate successive rounds of international bargaining into elements that can be analyzed separately Each element is then explained by more focused middle-range theories These separate explanations are then aggregated into a multi-causal explanation of major multilateral agreements Liberal intergovernmentalism Zhongqi Pan/Gustaaf Geeraerts

Liberal intergovernmentalism Nests 3 complementary middle-range theories in his encompassing rationalist framework A liberal theory of national preference formation National chiefs of government aggregate the interests of their domestic constituencies, as well as their own interests, and articulate national preferences toward international cooperation An intergovernmental theory of bargaining In the international system, each state seeks to realize its preferences under the constraints imposed by the preferences of other states A new theory of institutional choice stressing the importance of credible commitments Liberal intergovernmentalism Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Neorealism? Two-fold departure from neorealism National preferences are domestically generated and not derived from a state’s security concerns in the international system Bargaining power is determined by the relative intensity of preferences (national economic interest) and not by military or other material capabilities Zhongqi Pan/Gustaaf Geeraerts

Neoliberal institutionalism? Two-fold departure from neoliberal institutionalism Weak liberalism gives in too much to neorealism Rejects the methodological assumption of the state as a unitary, rational actor Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Major liberal ideas Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts Stability and Peace Politics is not seen as zero-sum. Holds that reason and ethics can overcome international anarchy to create a more orderly and cooperative world. Emphasizes establishing stable democracies as a way to reduce conflict (liberal internationalism). Emphasizes free trade because it helps prevent disputes from escalating into war. Zhongqi Pan/Gustaaf Geeraerts

Stability and Peace Five drivers for a mote peaceful world: Collective security Pluralistic security community Democratic peace Complex interdependence International institutions and regimes Zhongqi Pan/Gustaaf Geeraerts

Importance of non-state factors IGOs, NGOs, and International Law Intergovernmental organizations (IGOs) are international agencies or bodies established by states that deal with areas of common interests. Nongovernmental Organizations (NGOs) are private associations of individuals or groups. International law is law that regulates interactions between states. Importance of non-state factors Zhongqi Pan/Gustaaf Geeraerts

Importance of non-state factors Roles of IGOs In international system, IGOs contribute to habits of cooperation; via IGOs, states become socialized in regular interactions. For states, IGOs enlarge the possibilities for foreign-policy making and add to the constraints under which states operate. IGOs also affect individuals by providing opportunities for leadership. Importance of non-state factors Zhongqi Pan/Gustaaf Geeraerts

Importance of non-state factors Roles of NGOs They advocate specific policies and offer alternative channels of political participation. They mobilize mass publics. They distribute critical assistance in disaster relief and to refugees. They are the principal monitors of human rights norms and environmental regulations and provide warnings of violations. Importance of non-state factors Zhongqi Pan/Gustaaf Geeraerts

Importance of non-state factors Roles of international law It sets expectations, provides order, protects the status quo, and legitimates the use of force by a government to maintain order. It provides a mechanism for settling disputes and protecting states. It serves ethical and moral functions. Importance of non-state factors Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts PARADIGM IN BRIEF The Liberal Paradigm Key actors States, IGOs, NGOs, MNCs View of the individual Basically good; capable of cooperation View of the state Not an autonomous actor; not always a rational actor; having many interests international system Interdependence; international society; anarchy but possible to mitigate; change is probable and a desirable process Core concerns Economic prosperity; cooperation and absolute gains; international stability and peace Zhongqi Pan/Gustaaf Geeraerts

Zhongqi Pan/Gustaaf Geeraerts PARADIGM IN BRIEF The Liberal Paradigm Major approaches Collective security; pluralistic security community; democratization; complex interdependence; int’l institutions Policy prescriptions Develop regimes and promote democracy and int’l institutions to coordinate cooperation and secure int’l stability Central concepts Int’l institution; int’l regime; economic interdependence; cooperation Major theorists Wilson, Keohane, Nye, Ikenberry Zhongqi Pan/Gustaaf Geeraerts

In Sum: Contributions and Limitations of Liberalism It presents a fresh explanation for contemporary international politics. It focuses on the issue of international cooperation and develops an alternative theory to realism. It also provides very useful guidelines for decision makers. Limitations Its subject of study is too narrow and concentrates mainly on what realism fails to explain, i.e. coordinative cooperation. It is too optimistic toward the role of international institutions and regimes. It fails to take conflictual aspects of state interests, nationalism and security concerns of states into consideration. Zhongqi Pan/Gustaaf Geeraerts