Neoliberal Institutionalism

Neoliberal institutionalism centres on the work of Robert Keohane, although others involved would include writers such as Oran Young. Perhaps a good way to start is to look at its intellectual origins. It is a product of the development of thought about international law going back at least to Grotius, and the line of international thought which went, through Kant, to the Idealists at the time of the creation of the League of Nations. The perceived failure of much of this thinking to produce a decline in international violence in the inter-war period led to the resurgence of realist thought in Carr and, after the Second World War, in Morgenthau and others. Thus, despite the emergence of the UN after the Second World War, institutionalist thought declined.

What led to its re-emergence in new forms was the growth of international interdependence and regional integration (particularly the EC) in the 1950s and 1960s. One strand of this thought was the functionalism of David Mitrany and Ernst Haas. However, the evolution of functionalism and its substantial modification combined with the developments within realism, particularly through game-theoretical constructs (see the previous chapter), to produce a new set of ideas about international institutions and their role and power.

Initially, however, the new institutionalist thinking was not rationalised in this manner. One could take as an early form the 'International Organization model' outlined in Keohane and Nye's Power and Interdependence (Keohane and Nye, 1977). Keohane and Nye defined 'International Organization' as another type of structure in the world system:

One can think of governments as linked not merely by formal relations between foreign offices but also by intergovernmental and transgovernmental ties at many levels—from heads of state on down. These ties between governments may be reinforced by norms prescribing behavior in particular situations, and in some cases by formal institutions. We use the term international organization to refer to these multilevel linkages, norms, and institutions.

(Keohane and Nye, 1977:54)

Keohane and Nye emphasised that this type of structure becomes an independent factor in explaining outcomes in international politics. They argued that the networks of organisation will be 'difficult either to eradicate or drastically to rearrange' (Keohane and Nye, 1977:55).

Their other major emphasis was on the concept of 'organizationally dependent capabilities'. These capabilities, such as 'voting power, ability to form coalitions, and control of elite networks' (1977:55), increasingly influence outcomes. They cite the one-state-one-vote system in UNGA, and the influence of UNCTAD on the international trade regime, as evidence of these capabilities.

Although the terminology is slightly different, the usage and intention of Keohane and Nye is very similar to later work. However, they remain slightly less confident about the ability of institutions to survive sustained hostility from major powers. While accepting that institutions are difficult to destroy or change radically once set up, especially under conditions of what they term complex interdependence, they do state that powerful states can destroy them if they object particularly strongly, once the treatment of an issue gets 'above a certain level of conflict' (1977:58). This contrasts, for example, with Young who, writing much later, places significantly greater emphasis on the durability of international institutions. 'Existing regimes or institutional arrangements often prove highly resistant even to assaults spearheaded by one or more of the great powers', he suggests (Young, 1989b:64).

Institutionalist thought received a great impetus in the early 1980s through the growth in the literature on international regimes. Of particular note was the special issue of International Organization in 1982 on the subject, later published as a book (Krasner, 1983a). Stephen Krasner himself significantly developed the line of thought by elaborating some of the ways in which international institutional arrangements affect outcomes by influencing state behaviour. He suggested that these ways include the following: affecting states' calculations of how to maximise their self-interest; altering states' (perceptions about their) interests; being themselves a source of authority to which states can appeal; and altering states' capabilities (Krasner, 1983c:358).

Indeed, institutionalism and regime analysis could, in some lights, be seen as almost synonymous. Both emphasise the impact of arrangements within which formally sovereign states are enmeshed, and which are held to influence their behaviour. The definition of regimes given by Krasner—which is by now almost universally cited—is remarkably closely related to Young's or Keohane's definition of an institution. Krasner defines regimes as:

sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors' expectations converge in a given area of international relations.

Young defines institutions as 'social practices consisting of easily recognized roles coupled with clusters of rules or conventions governing relations between occupants of these roles' (Young, 1989b:32). Keohane gives an alternative: 'persistent sets of rules (formal and informal) that prescribe behavioral roles, constrain activity, and shape expectations' (Keohane, 1989a:3). Young intends the usage of institutions to be much broader than that of regimes. He regards regimes as a subset of institutions, dividing international institutions into international orders and international regimes. Orders are broader sets of aggregate arrangements. Thus there is an international economic order, within which there are regimes for trade, monetary relations, etc. (Young, 1989b:13).

Furthermore, the most prominent critique of regime analysis came in markedly realist terms. Strange's (1983) objection to regime analysis was essentially that regimes, or institutional arrangements, are ultimately epiphenomenal in determining outcomes. She states explicitly that her argument is 'realist in the sense of continuing to look to the state and to national governments as the final determinants of outcomes' (Strange, 1983:338).

Within Keohane's later work, institutionalist ideas were developed largely through some of the internal inconsistencies felt to be present within neorealism. In particular, he followed through game-theoretic logic, borrowing in particular from the work of Axelrod (1984), to argue that, even under what might initially be realist conditions (a state of international anarchy), it is theoretically easy to envisage how long-lasting cooperation could emerge, and that this cooperation could produce institutions which became important in their own right as influencers of outcomes. This is where the break with realism lies. Realism could accept that cooperation could occur between self-interested actors, but not that this cooperation could change the basic framework within which those actors interacted. Institutionalist thought suggests that, in many cases, the institutions come to be determiners of outcomes alongside the preferences of states (Keohane, 1984).

Arguably the most succinct and formalised account of institutionalist thought comes in Keohane's essay 'Neoliberal Institutionalism: a Perspective on World Politics' (1989a). There, Keohane gives the following account of the new institutionalist thought. Institutionalists accept the basic premise of realists that international relations is fundamentally a condition of anarchy in the sense that states lack a common government. However, in contrast to realists, institutionalists argue that world politics is also fundamentally institutionalised.

He makes explicit a significantly different assumption, which leads liberal institutionalists to emphasise institutions. Realists assume that states are relative gains maximisers; they have to be because they are always in danger of invasion, in the medium-term even from current allies. Therefore, for realists, 'the fundamental goal of states in any relationship is to prevent others from achieving advances in their relative capabilities' (Grieco, 1988:498, quoted in Keohane, 1989a:10). Therefore a centrally different assumption made by liberal institutionalist such as Keohane is that states are absolute gains maximisers. This is acknowledged in the game-theoretic literature to make cooperation more likely.2 Keohane accepts that the principal concern with relative gains accurately describes some relationships (he cites those of the US—the Soviet Union, Iran-Iraq, and India-Pakistan), but argues that, in most instances, states' margins of survival are not small. Thus, theoretically, it is unlikely that states will worry about relative gains when they do not expect to be threatened by force, and empirically, he asserts that the relative gains assumption does not hold for many relationships, such as US policy towards (Western) Europe or Japan, or within the European Community (Keohane, 1989a:10).

To assert that world politics is fundamentally institutionalised means that 'much behavior is recognized by participants as reflecting established rules, norms, and conventions, and its meaning is interpreted in light of these understandings' (Keohane, 1989a:1). Thus, without suggesting that states are highly constrained by international institutions, he argues that:

state actions depend to a considerable degree on prevailing institutional arrangements, which affect

• the flow of information and opportunities to negotiate;

• the ability of governments to monitor others' compliance and to implement their own commitments—hence their ability to make credible commitments in the first place; and

• prevailing expectations about the solidity of international agreements.

He also later gives two other reasons why institutional arrangements are important. First, they affect the incentives facing states. In some situations, they make it possible to do things which otherwise would be impossible (he cites the UN Secretary-General's mediation between Iran and Iraq). In others, they affect the costs associated with various courses of action, such as in arms control treaties. Second, they may also affect 'the understandings that leaders of states have of the roles they should play and their assumptions about others' motivations and perceived self-interests' (1989a:6). This effect is deeper than many others; it turns the role of institutions from being purely regulative into being constitutive of state interests.

Keohane suggests that two key conditions must hold, for the institutionalist perspective he develops to be relevant. First, 'the actors must have some mutual interests'; second, 'variations in the degree of institutionalization exert substantial effects on state behavior' (1989a:23). He suggests that there is ample evidence to show that these conditions hold in general in contemporary world politics.

He then gives an account of three different types of international institution, splitting them up into 'formal intergovernmental or crossnational nongovernmental organizations', 'international regimes', and 'conventions' (1989a:3-4). He suggests that looking at variations between these types of international institution can help identify where institutionalisation of an issue-area is most important. However, it is not simply that the more institutionalised (i.e. the more organisations are involved) an issue is, the greater the importance of the institutions (1989a:6-7).

There remain definitional ambiguities related to institutionalist thought. There is a tension between the theoretical definitions, such as those outlined by Oran Young (1989b), which emphasise that institutions are not the same as organisations, and the practical usage which frequently operates as if institutions are roughly synonymous with organisations. Young's definition, cited earlier, is obviously significantly wider in its implications than simply involving the analysis of organisations, 'material entities possessing physical locations (or seats), offices, personnel, equipment and budgets' (1989b:32). However, much usage simply conflates the two, presumably because it is simpler to examine the latter than the former. Certainly, in the less theoretically oriented literature— for example, that mentioned above which deals with UNCED— institutions are treated as completely synonymous with organisations (e.g. regarding the Commission on Sustainable Development).

Two distinct lines of thought come from each of these uses of the term 'institutions'. The latter produces a simple methodology where it is simply necessary to examine on a case-by-case basis the direct and indirect effects of international organisations on influencing outcomes in particular cases. Thus it would be possible to examine the roles of UNEP and WMO in the politics of global warming, something which Chapter 2 was designed to enable us to do.

However, the earlier definition of the term leads us down a more theoretical enquiry into the nature of IR itself. If institutions in the sense which Oran Young uses are prevalent, then we get a picture of international relations which is considerably more rule-governed, and not dissimilar to the image given by Hedley Bull,3 than a realist world of self-interested status or utility maximisers.4 We are then led to analyse the outcomes in terms of the evolution of norms, and the effect of those norms.5

This case is more difficult to evaluate, since it amounts to an ontological claim rather than to a simple hypothesis which can be examined. It provides a set of alternative assumptions to those used by realists about the nature of international relations and the underlying motivations behind actors' behaviour. However, by looking at the more limited case, we may get some insight into the deeper picture. If it can be demonstrated that institutions as organisations influence outcomes, state behaviour and state motivations, then it becomes easier to claim that state behaviour itself is based less straightforwardly on autonomous assessments of self-interest. In effect, the door is opened for a claim that norms play a much greater role in state behaviour than realists would accept.6

There are, then, two questions provoked by institutionalist thought which are of particular interest with respect to global warming. The first is: why do institutions become prevalent? Clearly, answering this question relies on some assumptions about state behaviour. As Young points out, we can use three main sorts of these assumptions. Hardened realists assume states are status maximisers, in which case institutional arrangements will play a negligible role in international affairs, except in the sense—pointed out by Cox (1986:219)—that institutions serve to further the interests of the already powerful. An assumption which gives a greater role for institutions can be that states are self-interested utility maximisers, an assumption Young associates with Keohane, Krasner and Stein, and which leads to the game-theoretic analyses outlined in the previous chapter. Alternatively, states can be treated as 'occupants of more or less well-defined roles whose actions are heavily constrained by the requirements of the roles they occupy' (Young, 1989b:211). Young suggests that this view is best understood in Rawlsian terms. This viewpoint is, however, also identifiable in the 'reflective' school outlined by Keohane in his 'International Institutions: Two Approaches',7 associated by him with Hayward Alker, Richard Ashley, Frederic Kratochwil andJohn Ruggie (Keohane, 1989b:161). Young suggests that 'there is no need to make a definitive choice among the behavioral models' (1989b:213), but his institutionalism surely leads him to be unconvinced of the value of the first assumption. However, it seems plausible that either utility maximising or role playing behaviour could lead to a prevalent role for institutions in the generation of outcomes. Indeed, if the utility maximisation is expressed as a form of rule utilitarianism, there is a significant overlap between the two types of behaviour.8

The second question which institutionalism provokes is: what are the mechanisms by which international institutions influence outcomes and state behaviour? The lists provided by Krasner (1983c) and Keohane (1989), cited above, remain a useful point of departure. Another list is given by Haas, Keohane and Levy in their volume specifically on international institutions and environmental problems (1993). They suggest that institutions function by 'increasing governmental concern, enhancing the contractual environment, and increasing national political and administrative capacity' (Levy, Keohane and Haas, 1993:424).

Collectively, these lists suggest two main forms of institutional effect. First, institutional arrangements affect states' incentives—the ways in which states try to maximise pre-defined utility functions. This could be by making certain courses of action possible, by providing negotiating forums or mediators, through altering the information available to a state, by making it possible to make agreements because state X feels more confident that state Y will comply as a result of the institutional arrangement, or by being a source of authority to which states can appeal. Second, they affect the constitution of those utility functions. The dissemination of information is a major factor in this, as is the socialisation involved in the way in which institutions are held to lead to a state having a sense of its role within a system.

Two other mechanisms mentioned by other writers are worth highlighting here. Oran Young adds another important aspect. He emphasises how state decision-making is normally bureaucratised, channelled into standard operating procedures (SOPs). Subsequently, one of the sources of influence which international institutions have is being written into those SOPs (Young, 1989b:79). Compliance with many international agreements may then simply become routinised.

Keohane and Nye (1974) give another source of influence. International organisations help the generation of transgovernmental coalitions, or groups of officials within government departments or agencies, who come to 'jointly use resources to influence governmental decisions' (1974:220). The existence of international organisations legitimates regular contact between these officials, since states (or, more precisely, higher-level officials) have already committed themselves to the principles of joint cooperation through the creation of the organisation.

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