1. 1 Understanding Global Politics Lecture 6: Neo-liberalism

2. 2 Revival of liberalism Dominance of realism and decline of liberalism after World War II; Dominance of realism and decline of liberalism after World War II; Revival of liberalism in the 1970s against a backdrop of increasing international interdependence; Revival of liberalism in the 1970s against a backdrop of increasing international interdependence; Liberals’ efforts to refute many of realism’s pessimistic view of world politics; Liberals’ efforts to refute many of realism’s pessimistic view of world politics; Varieties of liberalism: commercial liberalism, democratic liberalism, regulatory liberalism and liberal institutionalism (neo-liberal institutionalism). Varieties of liberalism: commercial liberalism, democratic liberalism, regulatory liberalism and liberal institutionalism (neo-liberal institutionalism).

3. 3 Core assumptions States are key actors but not the only important actors; States are key actors but not the only important actors; Importance of absolute gains and desire of states to maximise absolute gains through co-operation; Importance of absolute gains and desire of states to maximise absolute gains through co-operation; Non-compliance and cheating as major barriers to co-operation; Non-compliance and cheating as major barriers to co-operation; Importance of institutions in overcoming these barriers and influencing state behaviour. Importance of institutions in overcoming these barriers and influencing state behaviour.

4. 4 A big puzzle for neoliberals Serious international economic and political problems in the 1970s and 1980s; Serious international economic and political problems in the 1970s and 1980s; The puzzle—why did the post-World War II institutions for economic co-operation not collapse? The puzzle—why did the post-World War II institutions for economic co-operation not collapse? The answer—co-operation states achieved through international institutions (organisations, treaties and agreements, formal and informal rules and practices that states accept as binding). The answer—co-operation states achieved through international institutions (organisations, treaties and agreements, formal and informal rules and practices that states accept as binding).

5. 5 The prisoner’s dilemma The story of two prisoners (Brown and Smith), each being held and interrogated separately for an alleged crime; The story of two prisoners (Brown and Smith), each being held and interrogated separately for an alleged crime; Interrogators tell each prisoner that if one of them confesses and other does not, the one who confesses will go free and the one who holds out will get a long prison term; Interrogators tell each prisoner that if one of them confesses and other does not, the one who confesses will go free and the one who holds out will get a long prison term; Two scenarios—if both hold out, both will get short prison terms based on lack of evidence; if both confess, both will get somewhat longer prison terms; Two scenarios—if both hold out, both will get short prison terms based on lack of evidence; if both confess, both will get somewhat longer prison terms; The dilemma—both confess and each will get a longer sentence than if they co-operate and hold out. The dilemma—both confess and each will get a longer sentence than if they co-operate and hold out.

6. 6 How to achieve co-operation? The game is repeated or there are interactions between the two prisoners so that they reciprocate each other’s co-operation; The game is repeated or there are interactions between the two prisoners so that they reciprocate each other’s co-operation; The environment is changed by allowing communication—the possibility of joint gains provides incentives to co-operate by remaining silent; The environment is changed by allowing communication—the possibility of joint gains provides incentives to co-operate by remaining silent; Mechanisms exist to reduce cheating and punish confessors. Mechanisms exist to reduce cheating and punish confessors.

7. 7 States as rational prisoners The self-serving behaviour of states leads to bad outcomes for all states; The self-serving behaviour of states leads to bad outcomes for all states; States are more willing to co-operate if their co-operative behaviour is reciprocated; States are more willing to co-operate if their co-operative behaviour is reciprocated; States are more willing to co-operate if adequate information exists to reduce the costs of co-operation; States are more willing to co-operate if adequate information exists to reduce the costs of co-operation; States have strong incentives to co- operate if their compliance with international rules/norms/principles is rewarded. States have strong incentives to co- operate if their compliance with international rules/norms/principles is rewarded.

8. 8 Institutions and interactions Institutions provide a guaranteed framework for interactions over time and cross many issue areas (state realise that they will interact with the same actors in the future); Institutions provide a guaranteed framework for interactions over time and cross many issue areas (state realise that they will interact with the same actors in the future); Continuous interactions help states to reciprocate each others’ co- operation and to identify the issue areas in which they have mutual interests (e.g., trade, the environment) over the long term. Continuous interactions help states to reciprocate each others’ co- operation and to identify the issue areas in which they have mutual interests (e.g., trade, the environment) over the long term.

9. 9 Institutions and information Institutions help states to know each others’ expectations and intentions, provide focal point for co-ordination and facilitate negotiations; Institutions help states to know each others’ expectations and intentions, provide focal point for co-ordination and facilitate negotiations; Institutions provide information that reduces the costs for achieving agreements among large numbers of states. Institutions provide information that reduces the costs for achieving agreements among large numbers of states.

10. 10 Institutions and compliance Institutions provide mechanisms for reducing cheating and encouraging compliance with international rules/norms/principles by monitoring state behaviour and punishing defectors; Institutions provide mechanisms for reducing cheating and encouraging compliance with international rules/norms/principles by monitoring state behaviour and punishing defectors; An important example—the WTO and international trade co-operation. An important example—the WTO and international trade co-operation.