Complex Interdependence and Neoliberal Institutionalism

1. Complex Interdependence and Neoliberal Institutionalism

2. Complex Interdependence • The earliest example of interdependence comes from Norman Angell’s classic, The Great Illusion. • Example of the leaky boat and the rower and baler. • Interdependence means mutual dependence: peoples and governments are affected by what happens elsewhere.

3. Complex Interdependence • In the 1970s, there was a greater emphasis on interdependence specifically concentrating on the variable of ‘economics’. • Previously, ‘economics’ was peripheral to all IR theories whose major concentration was either politics, war, military strategy or law. • What brought ‘economics’ into significance in the 1970s?

4. Complex Interdependence • First, the example of the European Community which was pursuing the goals of economic development and developing a highly qualified labour force. • Second, the examples of Japan and the New Industrialising Countries (NICs) as developing economic powerhouses. • Third, the oil shocks of 1973 after the Yom Kippur War between Israel and Syria, Egypt.

5. Complex Interdependence • Theoretical foundations of the European Community example: David Mitrany (1966) and the functionalist theory of integration. • Cooperation should be arranged by technical experts, not politicians. • Experts would devise solutions to common problems in various functional areas including transport, communication, finance etc.

6. Complex Interdependence • Ernst Haas developed a neo-functionalist theory of international integration inspired by the intensifying cooperation between countries of Western Europe in the 1950s. • Technical matters cannot be separated from politics. • Integration requires that self-interested political elites intensify their cooperation. • Cooperation leads to the notion of ‘spillover’, i.e., increased cooperation in one area leads to increased cooperation in other areas.

7. Complex Interdependence • Major theorists: Robert Keohane and Joseph S. Nye Jr. and their book Power and Interdependence. • Three main characteristics of complex interdependence: 1. Multiple channels connect societies: interstate relations (normal channels of communications assumed by realists); transgovernmental relations (informal ties among nongovernmental elites) and transnational relations (between multinational banks or corporations).

8. Complex Interdependence 2. The agenda of interstate relationships consists of multiple issues that are not arranged in a clear or consistent hierarchy. • This absence of hierarchy among issues means that military security does not consistently dominate the agenda. • No distinction, therefore, between high politics and low politics.

9. Complex Interdependence 3. Military force is not used by governments towards other governments within the region when complex interdependence prevails. • Military force could be irrelevant to resolving disagreements on economic issues among members of an alliance. • However, military force could be important for the same alliance’s political and military relations with a rival bloc.

10. Neoliberal Institutionalism • Robert Keohane in later years moved away from interdependence and transnational relations and concerned himself with the extent of cooperation possible under conditions of anarchy. • NLIs agree that world politics is not a homogenous state of war and that cooperation varies among issues and over time. • The central idea is again ‘cooperation’.

11. Neoliberal Institutionalism • A way to facilitate cooperation between states is to establish international regimes. • Regimes can be defined 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.” • In the post-War era, international regimes have been extensive.

12. Neoliberal Institutionalism • International trade regime (centered on GATT and now WTO), international monetary regime (IMF), the environmental regime (Kyoto Protocol). • What other international regimes can you think of?

13. Neoliberal Institutionalism • According to Keohane, international regimes can increase probability of cooperation by: • Providing information about the behavior of others by monitoring the behavior of members and reporting on compliance. • Regimes clearly define what constitutes a defection and often clearly prescribe punishments for defection. • This reduces the fear that the state is being exploited by other members of the regime and minimizes the chance for misunderstanding. Prescribing sanctions reduces the incentive to covertly defect.

14. Neoliberal Institutionalism B. Reducing transaction costs. • By institutionalizing cooperation, regimes can reduce the cost of future agreements. By reducing the cost of reaching an agreement, regimes increase the likelihood of future cooperation. For example, each round of GATT resolved many procedural problems that did not have to be revisited in subsequent rounds, making cooperation easier and more likely.

15. Neoliberal Institutionalism C. Generating the expectation of cooperation among members. • By creating the belief that interaction will continue for the foreseeable future, regimes increase the importance of reputation and allow for the employment of complex strategies.

16. Criticisms • Interdependence or Dependence? Marxist critique on capitalism. • Prioritises the empirical evidence only from the developed countries of the world particularly Europe. • Will the same institutional features of cooperation be generated if complex interdependence develops in South Asia, Central Asia, Africa or Latin America? • Has war become totally irrelevant or obsolete? Prevalence of international anarchy means that possibility of war remains in IR.