Ch 5.

Neoliberalism
By Lisa Martin
International Relations Theories:
Discipline and Diversity
Learning outcomes
After this lecture you should be able to:
Know the defining features of neoliberalism and how
it developed from the 1980s
Understand the core philosophical assumptions on
which neoliberal arguments are built
Debate key questions about international
organizations through a neoliberal prism, particularly
the principal-agent problematic
Make sense of the application of neoliberal insights to
specific cases, such as the MF
Neoliberalism: Points of Departure
Neoliberalism developed in response to the
dilemma of how to explain patterns of cooperation
in an anarchic world. n order for states to
cooperate, they must overcome a range of
collective-action problems
No external enforcement mechanism exists in the
international system, therefore any agreements
must be self-enforcing. This means states must
avoid the temptation to cheat
#ationality
The neoliberal perspective relies on an assumption of
rationality
States calculate the costs and benefits of different
courses of action and choose the one which gives
them the highest payoff
Note that the assumption of rationality does not tell us
anything about the content of actors' preferences
Question to consider
Do assumptions such as rationality have to be
true, or merely useful in generating
hypotheses?
Context: The Emergence of
Neoliberalism
Neoliberalism evolved from transnationalism
but adopted key assumptions from structural
realism.
t bought into key structural realist ideas:
1. that states were dominant actors
2. that domestic politics did not explain
variations in state behaviour
Areas of interest for neoliberalism
n the 1990s, neoliberal theory became
deeper and richer.
The question of state compliance to
international rules and regimes was
subjected to greater empirical scrutiny.
So was the relationship between the
purpose and form of the O
(international organization).
nternational Organizations
Os play a crucial role in assuring
that states uphold the agreements
they sign up to.
Given that institutions do not have
the power to compel actors to
follow the rules, they rely on non-
coercive instruments
The Function of Os
1) They provide a flow of reliable information as to
whether an agreement is being complied with
2) Os have dispute-resolution capacity
3) They structure bargaining according to an agreed set
of rules, norms and decision-making procedures
4) Os can avoid the problem of encouraging moral
hazard by imposing conditions on their assistance
Moral hazards can emerge if states suffering short-term
problems are not required to reform their behaviour in
ways that address the underlying causes of their problems
Case Study: The MF
O Can the MF be autonomous from the
principal agents which control and fund it?
O MF staff have considerable agency when
state preferences diverge, and in conditions
when a crisis threatens the international
financial system
O Unlike other approaches, neoliberalism is well
equipped to explain variation in MF
autonomy over time
Summary
O At its core, the neoliberal study of Os identifies the
problems they seek to address
O These problems involve overcoming obstacles to
bargaining, monitoring compliance with
commitments, and enforcing agreements
O n the course of this analysis of institutions, neoliberal
theory engages with important theoretical debates
about institutional design, the relationship between
power and rules, and the relative autonomy of
institutions (as agents) from the leading member-
states (or principals)