During the 90’s it seemed that the old realpolitik-based theories of international relations were wrong. The Cold War ended without a war between superpowers, the world became globalised fast, and the European Union was formed. History wasn’t over quite yet but it seemed that the beginning of the end was here. Since then the mood has completely changed. Trade was supposed to save states from wars as the costs of violence is high in an interconnected world and the security threats in this new world was supposed to be non-state actors like crime syndicates and terrorists. The expansion of NATO and the EU would create a peaceful and prosperous Europe, but I doubt Vilnius feels safe and Athens feels prosperous. Trade conflicts have started popping up across the rich world and states have fought states, even annexing foreign territory. In this week’s blog post I will explain the basics of neoliberal theory in international relations and why it fails to explain reality.
Neoliberalism was founded by Robert Keohane and Joseph Nye in the 80’s, and it’s core neoliberalism is the theory that states are more concerned with absolute gains than relative gains. If states want absolute gains then working together makes sense, states should strike trade deals, build common infrastructure, build broad alliance structures, and cooperate on preventing climate change. After all, any gain is good and if how well the other party fares doesn’t matter then working together is always good. Neoliberals also hold that states which are interdependent have powerful incentives not to go to war with each other as both sides have a lot to lose. And in a time where the EU was formed and the first Gulf War was won those ideas made a lot of sense.
The primary problem with neoliberalism is that states have proven time and again that they are more concerned with relative gains than absolute gains, or losses as the case may be. Take the Sino-American trade war for example, the United States clearly suffer economically from the trade war but it still initiated it as it thought that China would suffer more. Furthermore, states have bitterly learned that being interdependent can be a problem, a lesson especially clear in Europe. When the American sub-prime mortgage market sent the world economy into the Great Recession the effects were felt from Wall Street to Reykjavik and Manila. When the German car industry struggles workers across Central Europe can be laid off due to being integrated into the German supply chain. No amount of trade can stop wars, as the world found out in 1914, and states are awful at cooperating as the United Nations proves.
If you want a better guide to international relations look to the past. International relations are organised by a single principle, brilliantly put by Thucydides: “the strong do what they can, and the weak suffer what they must”.
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Written by Karl Johansson, Founder of Ipoleco
Cover Photo by Suzy Hazelwood from Pexels
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