Anarchy and the limits of cooperation: a realist critique of the

newest liberal institutionalism by Joseph M. Grieco

Introduction to realism
Realism has dominated international relations theory at least since World War 11. 1 For
realists, international anarchy fosters competition and conflict among states and inhibits their
willingness to cooperate even when they share common interests. Realist theory also argues
that international institutions are unable to mitigate anarchy's constraining effects on inter-
state cooperation. Realism, then, presents a pessimistic analysis of the prospects for
international cooperation and of the capabilities of international institutions.

International tensions and conflicts during the 1970s undermined liberal institutionalism and
reconfirmed realism in large measure.

Introduction to liberal institutionalism

Newest liberal institutionalism accepts a couple of core realist propositions: The realist
argument that anarchy impedes the achievement of international co- operation. However, the
core liberal arguments-that realism overemphasizes conflict and underestimates the
capacities of international institutions to promote cooperation remain firmly intact

The new liberal institutionalists basically argue that even if the realists are correct in believing
that anarchy constrains the willingness of states to cooperate, states nevertheless can work
together and can do so especially with the assistance of international institutions.

Essay’s thesis
This essay's principal argument is that, in fact, neoliberal institutionalism misconstrues the
realist analysis of international anarchy and therefore it misunderstands the realist analysis of
the impact of anarchy on the preferences and actions of states.

Gains and compliance

Neoliberalism argues that states seek to maximize their individual absolute gains and are
indifferent to the gains achieved by others. Realists understand that states seek absolute
gains and worry about compliance.

Character of state
Realists find that states are positional, not atomistic, in character, and therefore realists
argue that, in addition to concerns about cheating, states in cooperative arrangements also
worry that their partners might gain more from cooperation than they do.

Realism, then, finds that there are at least two major barriers to international cooperation:
state concerns about cheating and state concerns about relative achievements of gains.

Realisms emphasis on conflict and competition notwithstanding, offers a more complete

understanding of the problem of international cooperation than does its latest liberal
challenger. If that is true, then realism is still the most powerful theory of international politics.

Realism encompasses five propositions:

1. States are the major actors in world affairs.
2. The international environment severely penalizes states if they fail to protect their vital
interests or if they pursue objectives beyond their means; hence, states are "sensitive
to costs" and behave as unitary rational agents
3. International anarchy is the principal force shaping the motives and actions of states

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 4. States in anarchy are preoccupied with power and security, are predisposed towards
conflict and competition, and often fail to cooperate even in the face of common
interests.
5. international institutions affect the prospects for cooperation only marginally.

Liberal institutionalists attacked realist view for: the centrality of the estates, for that states
are unitary or rational agents, states were becoming less concerned about power and
security, states are fundamentally disinclined to cooperate.

The new liberal institutionalism

In contrast to earlier presentations of liberal institutionalism, the newest liberalism accepts
realist arguments that states are the major actors in world affairs and are unitary-rational
agents.

Prisoner’s Dilemma
Neoliberals first observe that states in anarchy often face mixed interests and, in particular,
situations which can be depicted by Prisoner's Dilemma. In the game, each state prefers
mutual cooperation to mutual noncooperation (CC>DD), but also successful cheating to
mutual cooperation (DC>CC) and mutual defection to victimization by another's cheating
(DD>CD); overall, then, DC>CC>DD>CD.

Conditional cooperation is more attractive to states if the costs of verifying one another's
compliance, and of sanctioning cheaters, are low compared to the benefits of joint action.

Neoliberals find that one way states manage verification and sanctioning problems is to
restrict the number of partners in a cooperative arrangement. In particular, neoliberals argue
that institutions reduce verification costs, create iterativeness, and make it easier to punish
cheaters.

Realism and the failure of the new liberal institutionalism

Neoliberals assume that states have only one goal in mixed-interest interactions: to achieve
the greatest possible individual gain. Neoliberal institutionalists assume that states define
their interests in strictly individualistic terms

Rationality: Rationality means that states possess "consistent, ordered preferences, and . . .
calculate costs and benefits of alternative courses of action in order to maximize their utility
in view of these preference.

Utility: A utility function specified by the new theory for one state would not be "linked" to the
utility functions of other Hence, if a state enjoys utility, U, in direct proportion to its payoff, V,
then the neoliberal institutionalist specification of that state's utility function would be U=V.50.
Overall, "rational egoist" states care only about their own gains.

Views of cheating: Realist theory rejects neoliberalism's exclusive focus on cheating.

Differences in the realist and neoliberal understanding of the problem of cooperation result
from a fundamental divergence in their interpretations of the basic meaning of international
anarchy.

Anarchy according to neoliberal institutionalism is: the lack of common government in

world politics. Because of anarchy: individuals or states believe that no agency is avail-able
to "enforce rules," or to "enact or enforce rules of behavior," or to "force them to cooperate
with each other”. For neoliberals, the outcome a state most fears in mixed interest situations
is to be cheated.

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 Anarchy according to realists: the absence pf common inter-state government. In anarchy,
there is no overarching authority to prevent others from using violence, or the threat of
violence, to destroy or enslave them. Realism argues that individual well- being is not the key
interest of states; instead, it finds that survival is their core interest. Realists find that the
major goal of states in any relationship is not to attain the highest possible individual gain or
payoff. Instead, the fundamental goal of states in any relationship is to prevent others from
achieving advances in their relative capabilities.

State positionality: State positionality may constrain the willingness of states to cooperate.

Relative gains problem: a state will decline to join, will leave, or will sharply limit its
commitment to a cooperative arrangement if it believes that partners are achieving, or are
likely to achieve, relatively greater gains. States are uncertain about one another's future
intentions; thus, they pay close attention to how cooperation might affect relative capabilities
in the future.

State utility function:

States individual payoff= V
Partners payoff = W
K = states coefficient of sensitivity to gaps in payoffs. The level of k will be greater if a state's
partner is a long-term adversary rather than a longtime ally.

One function that depicts this realist understanding of state utility is U = V - k (W - V), with k
representing the state's coefficient of sensitivity to gaps in payoffs either to its advantage or
disadvantage. This realist specification of state utility can be contrasted with that inferred
from neoliberal theory, namely, U = V.

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