Review: Neorealism and Neoliberalism

Author(s): Joseph S. Nye, Jr.

Source: World Politics, Vol. 40, No. 2 (Jan., 1988), pp. 235-251
Published by: Cambridge University Press
Stable URL: http://www.jstor.org/stable/2010363
Accessed: 18/10/2010 15:52

Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless
you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you
may use content in the JSTOR archive only for your personal, non-commercial use.

Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at
http://www.jstor.org/action/showPublisher?publisherCode=cup.

Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed
page of such transmission.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact support@jstor.org.

Cambridge University Press is collaborating with JSTOR to digitize, preserve and extend access to World
Politics.

http://www.jstor.org
 ReviewArticles
NEOREALISM AND
NEOLIBERALISM
By JOSEPH S. NYE, JR.*

Robert 0. Keohane, ed., Neorealismand Its Critics.New York: Columbia Uni-

versityPress, i986. 378 pp.
Richard Rosecrance,The Rise oftheTradingState.New York: Basic Books, i986.
268 pp.

INTERNATIONAL relationstheoryis constrained

by the factthat
historyprovidesa poor substitutefora laboratory.In world politics,a
relativelysmall numberof statesplaymajor roles,along withmanyother
entitiesthatseek to influenceevents.Even if one focuseson statebehav-
ior, one is confrontedby few independenteventsand by multiplecauses
of behaviorat different levelsof analysis.Furthermore,strategicinterac-
tion is inherentlyindeterminate,and statesoftenhave incentivesto de-
ceive observers.To use an analogy fromanothersocial science,multiple
causalitymakes some aspectsof internationalrelationsmore like macro-
economicsthan like microeconomics,and strategicindeterminacymeans
thatthe relevantanalogy in microeconomicswould be the troubledarea
of oligopolytheory.
Moreover,mosttheoristsof internationalrelationssufferfrombeing in
the middle of events,ratherthan viewingthem froma distance.Thus it
is not surprisingthat internationalrelations theory has always been
stronglyaffectedby currentpoliticalconcerns.This is true even for the
Realists with theirparsimoniouseffortsto stateeternaltruths.Thucyd-
ides,the foundingfatherof Realism,presenteda structuralaccountof the
originsof thePeloponnesianWar in partbecause ofthelessonshe wished
to teach his fellow citizens.' When Hans J.Morgenthauwrote his post-
war classic,PoliticsAmongNations,he was clearlyintenton instructing
his fellow citizensabout the importanceof avoiding the idealistand iso-

*
I am gratefulto RobertBeschel,Sean Lynn-Jones,
AndrewMoravcsik,and David Welch
forcomments.
' Donald Kagan, The Outbreakof thePeloponnesianWar (Ithaca, NY: Cornell University
Press, i969).
236 WORLD POLITICS

lationistfantasiesof the interwarperiod. Even the neorealiststructural

theoriesof KennethWaltz can bestbe read as exhortationsto policymak-
ers and fellowcitizensabout how theyought to respondto the structure
of power ratherthan as accurate accountsof how the two superpowers
behave.

THE CHANGING CONTEXT OF THEORY

In the early 1970s,many theorists,reflectingcurrentconcerns,over-

reactedto the traditionaltheoriesof Realism. There was widespread re-
pugnance to the Vietnam War, and detenteseemed to reduce the impor-
tance of the nuclear competition.At the same time,internationaltrade
grew more rapidlythan world product.Transnationalcorporationsnot
only developed patternsof internationalproduction,but in some in-
stancesplayed dramaticpoliticalrolesas well. All thisoccurredagainsta
backdrop of decliningU.S. economicpredominance fromone-thirdto
less thanone-quarterof world product.PresidentNixon and Secretaryof
State Kissingerspoke of the developmentof a five-powerworld,and fu-
turologistssuch as Herman Kahn predictedthe imminentarrival of a
multipolarinternationalsystem.2
On top of all this came the oil crisisof 1973. Some veryweak states
extractedenormous resourcesfromthe strong.Even Hans Morgenthau
describedwhat he called an unprecedenteddivorceof militaryand eco-
nomic power based on the controlof raw materials.3The vulnerabilityof
the Western societiesat a period of high commodityprices encouraged
many of the less developed countriesto believe that a greatertransfor-
mation of power had occurredthan was actuallythe case. A number of
theoristsreflectedthese concerns.Among the modernistwritersof the
1970s, a representative view was that

theforcesnowascendantappeartobe leaningtowarda globalsocietywith-

outa dominantstructure and conflict-apolyarchyin which
ofcooperation
nation-states,
subnationalgroups,and transnationalspecialinterests
and
communities wouldall be vyingforthesupportand loyaltyofindividuals,
and conflicts
would have to be resolvedprimarilyon thebasisof ad hoc
bargainingin a shifting
contextofpowerrelationships.4

2Herman Kahn and B. Bruce-Briggs,Thingsto Come (New York: Macmillan,1972).

3 Hans J.Morgenthau,"The New Diplomacyof Movement,"Encounter43 (August I974),
52-57,at 56.
4Seyom Brown,New Forcesin WorldPolitics(Washington:BrookingsInstitution,I974),
I86.
 NEOREALISM AND NEOLIBERALISM 237

By the late 1970s the mood began to change both in the United States
and in the United Nations. East-West concerns started to supplant
North-Southissues at the top of foreignpolicyagendas. The experience
of the Carter administrationreflectsthe changes in American opinion:
while campaigningin 1976, JimmyCarterpromisedto reducethedefense
budget, but by i980 his positionwas closer to thatof his rival, Reagan,
than to his own previousposition.The electionof Ronald Reagan to the
American presidencyaccentuatedthesetrends.American policyfocused
on East-West confrontation and scaled down North-Southissuesand the
role of multilateralinstitutions.The defense budget increased in real
termsforfivestraightyears,and the United Statesbecame more willing
to use militaryforce,albeitagainstextremelyweak statessuch as Grenada
and Libya. Arms controlwas downgradedand the modernizationof nu-
clear forceswas seen as restoringan "edge" foradditionalutilityof mili-
tary force.This shiftingagenda of world politics saw a resurgenceof
Realistanalysis,forhistoryseemed to have vindicatedthe Realist model.
While some analystsin the 1970s tended to overstatethe obsolescence
of the nation-state,the decline of force,and the irrelevanceof security
concerns,some in the early i980S unduly neglectedthe role of transna-
tional actors and economic interdependence.Contraryto the tone of
much politicalrhetoricand some politicalanalyses,theworld of the i980s
is not a returnto the world of the 1950s. Justas the decline of American
power was exaggeratedin the 1970s, so was the restorationof American
power in the i98os. Looking carefullyat militaryand economic indices
of power resources,one notesthattherehas been a fargreaterchange in
psychologyand mood than in these indicatorsof power resources.The
diffusionof power,as measuredby sharesin world tradeor world prod-
uct,continues.Economic interdependence,as measured by vulnerability
to supplyshocks,has eased in a period of slack commoditymarkets,but
thiscould changeifmarketstightenagain and growthofeconomictrans-
actionscontinues.Sensitivityto exchange-ratefluctuationshas remained
high. The costsof thegreatpowers' use of forceseem higherthan in the
195oS measured, for instance,by the ease with which the U.S. over-
threwgovernmentsin CentralAmerica and Iran thenas contrastedwith
the i98os. Moreover,despiterhetoric,relationsbetweenthe superpowers
do not show a returnto the Cold War period. Not only are alliances
looser,but transactionsare higher,and relationsbetweenthe superpow-
ers reflecta fairdegree of "learning"in the nucleararea.5
5 JosephS. Nye, Jr.,"Nuclear Learning and U.S.-Soviet SecurityRegimes,"International

Organization41 (Summer 1987), 371-402.

238 WORLD POLITICS

REALISM AND LIBERALISM

In a sense,the contrastbetweenthe 1970S and the i980s is merelythe

latestinstanceof a recurringdialecticbetween the two main strandsin
what has been called the classicaltraditionof internationalrelationsthe-
ory.Realism has been the dominantstrand;6the second is the Liberal or
Grotian traditionthat tends to stressthe impact of domesticand inter-
national society,interdependence,and internationalinstitutions.In their
simplestforms,Liberal theorieshave been easily discredited.The prop-
ositionthatthe gains fromcommercialtransactionswould overcomethe
problemsinherentin the securitydilemma and make war too expensive
were belied in 1914. Hopes thata systemof internationallaw and organ-
ization could provide collectivesecurity,which would replace the need
forself-helpinherentin thesecuritydilemma,were disappointedby 1939.
Nonetheless,the sharpdisagreementbetweenRealism and Liberal theo-
ries is overstated.In fact,the two approachescan be complementary.So-
phisticatedversionsof Liberal theoryaddressthe mannerin which inter-
actionsamong statesand thedevelopmentof internationalnormsinteract
with domestic politicsof the statesin an internationalsystemso as to
transformthe way in which statesdefinetheirinterests.Transnational
and interstateinteractionsand normslead to new definitionsof interests,
as well as to new coalitionpossibilitiesfordifferent
interestswithinstates.
How statesdefinetheirinterests,and how theirinterestschange, has
always been a weak area in Realist theory.One of the most thought-
provokingquestions in internationalrelationsis how stateslearn. How
do national interestsbecome defined, and how do those definitions
change? Can cooperationbe learned?Realisttheoriesmaintainthatstates
learn by respondingto structuralchangesin theirenvironment;to put it
in game-theoryterms,theyadjust theirbehaviorto changes in the payoff
matrix.When mutual interestsor a long shadow of the futuresuggest
thatrewardsforcooperationare great,statesmay adopt new strategiesin
pursuitof theirinterests.In thatcase, Realistsadmit thatcooperationcan
be learned. Although this is sometimesa satisfactory and parsimonious
explanationof changingstatebehavior,it is oftenincompletebecause it
says littleabout how intereststhemselvesare formulatedor redefined.It
does not show why the same situationmay be perceivedin totallydiffer-
ent ways by successivegovernmentsor differentleaders. A Bismarck,a
Kaiser, and a Hitler can formulatedifferent answersto similargeopolit-
ical situations.Nor does Realist theorynote how groups withinsocieties

6 K. in International
J.Holsti, TheDividingDiscipline:Hegemonyand Diversity Theory(Bos-
ton: Allen & Unwin, 1985).
 NEOREALISM AND NEOLIBERALISM 239

can use partnersin transnationalcoalitionsor transnationalnorms and

institutionsto advance or retardthe learningof new interestsby their
own governments.
Realist theoryis betterat explaininginteractionsthan interests.A the-
oryof interestsdefinedsolelyin termsofpower is an impoverishedtheory
of interests.Here Liberalismcan help.The more sophisticatedvariantsof
Liberal theoryprovidea usefulsupplementto Realism bydirectingatten-
tion to the ways in which domesticand internationalfactorsinteractto
change states'definitionsof theirinterests.To say thatstatesact in their
self-interestis merelytautological(or "change" is reduced to merelya
change means) unlesswe have a reasonableaccountof how such inter-
in
ests are perceivedand redefined.Both Realism and Liberalism can con-
tributeto such an account.
The major developmentsin the Liberal traditionof internationalre-
lationstheoryin the post-1945 period occurredin studiesof regional in-
tegration.These studies did not explicitlyreferto classical Liberalism;
theywere generallycalled "neofunctionalist."Nevertheless,their focus
was clearlyon issues emphasized in the Liberal tradition.Karl Deutsch
concentratedon the developmentof pluralisticsecuritycommunities-
groups of statesthatdeveloped reliableexpectationsof peacefulrelations
and therebyovercamethesecuritydilemma thatRealistssee as character-
izing internationalpolitics.ErnstHaas focusedon the unitingof Europe
and the transformation of the Franco-German hostilityinto a postwar
economic and politicalcommunity.Subsequent scholarsextended these
perspectiveson economic,social,and politicalinterdependenceand inte-
grationto otherregions.7What thesestudieshad in common was a focus
on the ways in which increasedtransactionsand contactschanged atti-
tudesand transnationalcoalitionopportunities, and thewaysin which in-
stitutionshelped to fostersuch interaction.In short,theyemphasized the
politicalprocessesof learningand of redefiningnational interests,as en-
couraged by institutionalframeworksand regimes.
In a sense,the developmentof regionalintegrationtheoryoutstripped
the developmentof regional communities.Predicted changes material-
ized more slowlythanhad been expected,whichmay accountforthe de-
clining academic interestin the subject during the 1970s. The transfor-
mation of WesternEurope into a pluralisticsecuritycommunityis real,
however,and many of the insightsfromintegrationtheorywere trans-
ferredin theearly 1970s to thegrowingand broaderdimensionsof inter-

7Karl Deutsch et al., PoliticalCommunity and theNorthAtlanticAiea (Princeton:Princeton

UniversityPress, 1957); ErnstHaas, The UnitingofEurope (Stanford,CA: StanfordUniver-
sityPress, 1958); JosephS. Nye, Jr.,Peace in Parts(Boston:Little,Brown,1971).
240 WORLD POLITICS

national economic interdependence.Studies in transnationalrelations

and interdependencebroadenedconceptionsof how nationalinterestsare
learned and changed. Some studies explicitlyaddressed the conditions
under which assumptionsof Realismwere sufficient, or needed to be sup-
plemented by a more complex model of change.8Rather than focusing
primarilyon formaland universalisticorganizationssuch as the United
Nations, theydevoted much attentionto the role of internationalinsti-
tutions.The conceptof regimewas borrowedfrominternationallaw and
broadened to incorporatethe whole range of norms,rules, and proce-
dures thatconstrainstates'behaviorand around which the actors'expec-
tationsconvergewithina given issue.9A rich set of studies applied the
conceptof regimesto a broad rangeof behaviorin internationalpolitical
economy.But in theclimateof theearlyi98os, it seemed thatthe Liberal
legacywas relevantonlyto the peripheralliteratureon politicaleconomy
and had littleto contributeto the centraltheoryof the field. Kenneth
Waltz's Theoryof InternationalPolitics,published in 1979, was a well-
timedand elegantrestatement of Realismthatexplicitlycast doubt on the
relevanceof the writingson interdependence.Io
The two books reviewed here provide a good opportunityto look at
the latestturnsin the classic dialecticbetween Realism and Liberalism.
Richard Rosecrance'sThe RiseoftheTradingStateis clearlyin the Liberal
tradition.Rosecrance argues that an open trading systemoffersstates
ways to transformtheirpositionsthrougheconomic growthratherthan
through militaryconquest. All states can benefitfrom the enhanced
growth."The basic thrustof trade todayis entirelydifferentfromwhat
it was in the 1830s, the i88os, and the 1930S" (p. 227). What is different
in the worldsince 1945 "is thata peacefultradingis enjoyingmuch
greaterefficacythanever before.. . ." The main thesisof thisbook is that
a new "trading world of internationalrelationsoffersthe possibilityof
escaping ... a vicious cycle and findingnew patternsof cooperation
among nationalstates"(p. ix).
Robert 0. Keohane, in Neorealismand Its Critics,featuresfour core
chaptersof Waltz's influentialbook and fourcriticismsof thatwork. In
addition,he includes Waltz's firstpublishedreplyto his critics.It is rare
to have such clear intellectualdialogue in a singlevolume,and the whole
issue is nicelyframedby the editor'sintroductory essay.

8 Robert 0. Keohane and JosephS. Nye, Jr.,Power and Interdependence

(Boston: Little,
Brown, 1977).
9 StephenKrasner,ed.,International
Regimes(Ithaca,NY: CornellUniversityPress,1983).
XoWaltz, TheoryofInternational
Politics(Reading,MA: Addison-Wesley,1979).
 NEOREALISM AND NEOLIBERALISM 241

NEOREALIST THEORY

As Keohane pointsout, thesignificanceof Waltz's work is not in elab-

oratinga new line of theory,but in thesystematization of Realism,which
RobertW. Cox (one of the critics)has termed"neorealism."While Hans
J.Morgenthaumay be the mostinfluentialof thepostwarRealists,his as-
pirationsto create a science of internationalpoliticswere marred by in-
consistencyin his use of theconceptsof power and balance. Moreover,by
basing internationalpoliticson human nature'sdriveforpower,Morgen-
thau explained too littlebyexplainingtoo much. Human naturedoes not
adequately account forvariation.
Waltz providesa more eleganttheoreticalbasis forRealism. He avoids
referencesto humans pursuingpower as an end; pursuitof power as a
means is sufficient forhis theory.Balance-of-powerbehaviorby statesis
predictedfromthestructureof theinternationalsystem.A systemis a set
of interactingunitshavingbehavioralregularitiesand identityover time.
Its structuredefinestheorderingof itsparts.Structureinvolvesan order-
ing principle,specificationof thefunctionsof different parts,and the dis-
tributionof capabilities.In internationalpolitics,theorderingprincipleis
anarchy,interpretedas the absence of a highergovernmentabove states.
The specificationof differentiationdropsout because statesperformsim-
ilar functions.Thus, the distributionof capabilities(multipolarity,bipo-
larity) predicts variationsin states' balance-of-powerbehavior. Waltz
providesnot merelya systemictheoryto predictthebehaviorof the units
(states),but a parsimoniousstructural systemictheory.
In a sense,Waltz did forthe classical Realistswhat theynever did for
themselves.His structuraltheoryprovidesa simple deductive basis for
what was hithertoa heterogeneousset of views about the importanceof
power politics.In the eyes of the critics,however,Waltz's virtuesand
faultsare two sides of the same coin. Parsimonyhas been purchased at
too high a price. Robert Cox and Richard K. Ashley complain that
Waltz's neorealism has sacrificedthe interpretiverichnessof classical
Realism as a criticaltheoryin order to transformit into a positivistic
problem-solvingtheory.Although that may be true,neitheressay pro-
vides a compellingalternative,and Waltz in his replyis quite happy to
let theirremarksroll offhis back.
Keohane and JohnG. Ruggie launch more tellingcriticisms.Keohane
points out that Waltz's spare structuraldefinitionof systemignoresin-
ternationaleconomic processesand institutionsthatcan also have strong
effectson states'behavior.Ruggie arguesthatWaltz has notonlyignored
changes in the densityof interactionsin systems,but has been too quick
242 WORLD POLITICS

in assuming thatthe differentiation in unitscan be dropped as a charac-

teristicof the structureof the internationalsystem.In the short term,
statesmay be the dominantunitsand play a similarfunctionalrole, but
over long periodsotherunitsmay grow in importance,and rolesmay al-
ter. Ruggie pointsto the evolutionof the conceptof territoriality at the
end of thefeudalera to illustratesuch generativechanges,and argues that
Waltz's theoryis too staticto explain such changes.
Waltz repliesthat"a structuraltheoryof internationalpoliticscan fix
ranges of outcomesand identifygeneraltendencies.... We cannot hope
to predictspecificoutcomes"(p. 344). He would not denythe importance
of change at the unitlevel. "Realist theoryby itselfcan handle some, but
not all, of the problemsthatconcernus.... Yet some successfulpredic-
tionscan be made withoutpayingattentionto states"(p. 331). Structural
analyses "tell us a small numberof big and importantthings"(p. 329). If
we add more variables,theoreticalacuitygives way to richand dense de-
scription.Many unit-levelfactors,such as densityof interactions,demo-
graphictrends,resourceconstraints, nationalideologies,and politicalsys-
tems, can affect systemicoutcomes. Indeed, in the case of nuclear
weapons, "a unit-levelchange has much diminisheda structuraleffect"
(p. 327). But it is a mistaketo mingle structuraland unit levels. Justas
"economistsget along quite well with separate theoriesof marketsand
firms"(p. 340), we shall have to get along withseparatetheoriesof inter-
national politicsand of states.
Waltz has a valid pointabout the selectivityof theoryand the costsof
mixingunitand structuralcharacteristics. But his replyto his criticsis not
entirelysatisfactory. First, as Keohane points out in his Introduction,
many economistsare unhappy about the disjunction between the as-
sumptionsof microeconomicsand what is known about the behavior of
firms.Moreover,oligopolytheorytendsto be indeterminate,and efforts
to establisha rational-expectations micro-basisformacroeconomicshave
been problematic.In thewordsofone economist,thedanger fora clinical
professionis that"the models become more real than more explicitlyde-
scriptivereality.""
Second, Waltz accuses Ruggie of reductionism theexplanationofthe
whole by explainingthe behaviorof the parts.That is neithergood nor
bad per se. In a parsimonioussystemicexplanation,the behavior of the
partsis handled by assumptionsof rationalityand the constrainingcon-
ditionsproduced by the structureof the system."Socialization and com-
" Francis M. Bator,The StateofMacroeconomics
(KennedySchool Discussion Paper 1520,
Cambridge,MA: I986), i9.
 NEOREALISM AND NEOLIBERALISM 243

petitionare two aspectsof a processby which the varietyof behaviorand

outcomes is reduced." Systemstheoriesexplain why differentunits be-
have similarly;unit theoriesexplain why differentunits behave differ-
entlydespitesimilarplacementin a system.But Waltz's own assignment
of characteristicsto the systemicand unit levels seems odd. It is easy to
understandwhy characteristics of a particularleader or politicalculture
or domesticregimefitat theunitlevel. In his words,"a theoryabout for-
eign policyis a theoryat the nationallevel."12 But why are demographic
trends,transnationalflows,and militarytechnologythat affectall (or
many)statesassignedto theunitlevel? It is particularlyodd to see nuclear
technologydescribedas a unit characteristicthathas had "system-wide"
pacificeffects(p. 327). Waltz has no way ofknowingwhetherthevaunted
stabilityof thebipolarsystemis caused bya structuralor a unit-levelchar-
acteristic.Moreover,by assigningeverythingexcept the distributionof
capabilitiesto the unit level, that categorybecomes a dumping ground
hinderingtheorybuildingat anythingbut the structurallevel. The result
may be theoreticalparsimony,but parsimonyis not the only way by
which one judges good theory.Good theoryalso requiresa good explan-
atory fit.
A thirdproblemwithWaltz's replyto his criticsrelatesto his handling
of falsepredictions.Waltz correctlystatesthata few falsepredictionsdo
not falsifya theory.He admits thathe will oftenneed to supplementhis
sparse neorealisttheorywith foreignpolicyexplanationsin order to ac-
countforanomalous cases. But sometimeshis handlingof anomalies runs
theriskof beingretrogressive in Lakatos's terms i.e.,itexplainsless and
directsresearchersaway fromnew information.'3In response to Keo-
hane's evidence thatCanada, a weak state,has oftenprevailed over the
United States,Waltz introducesa power-activationhypothesis:"I suspect
thatAmerican officialshardlycared about the outcomesor even noticed
what theymightbe" (p. 333). But aside fromthe danger of tautology,
such a replyignorestheevidencethatthe cases Keohane citeswere at the
presidentiallevel, and that some, such as oil trade in 1974, were highly
visibleand politicized.
Some anomalies are forgivenforany theorythathas a broad explana-
torypower and thatpointsto thediscoveryofnew empiricalinformation.
But Waltz's theorydoes not scorewell on thosecriteria:it describesa sys-
tem as stable if it remainsanarchicand thereis no consequentialchange
12Waltz (fn. i0), 77, 72.
13 Imre Lakatos, "Falsification
and the Methodologyof ScientificResearchProgrammes,"
in Imre Lakatos and Alan Musgrave,eds.,Criticismand theGrowthofKnowledge(Cambridge:
CambridgeUniversityPress,1970).
244 WORLD POLITICS

in the numberof politicalunits.By thisdefinition,the multipolarsystem

was stablefor300 yearsuntilWorld War II reduced it to the currentbi-
polar system,which has been stablebecause no thirdstatehas been able
to develop capabilitiescomparable to those of the United States and the
Soviet Union.'4 But thisportrayalof historyby the theoryleaves an enor-
mous numberof importantchangesunaccountedfor,and lends credence
to the charge thatit is too static.There are so few strandsin the web of
Waltz's theoreticalnetthateven verybig fishslip throughit.The change
froma flexiblealliance systemto two rigidalliances before1914 is not a
shiftfrommultipolarity to bipolarityforWaltz. Only the strengthof sin-
in
gle units counts measuringbipolarityunder his definitions.Thus, his
theorytellsus littleabout the onsetof World War I. Instead,it disclaims
any intentto predictparticularwars. Neitheris it clear thatWaltz's the-
ory tells us about what causes stabilityin the currentworld. There has
been onlyone bipolarsystemas definedin Waltz's theory.Thus he has to
testhis conclusionsabout stabilityagainstevidencedrawn froma sample
of one. Waltz cannot determinewhich behavior is caused by structure
and which by nuclear weapons (assignedby him to the unitlevel).
Moreover,Waltz's theoryleads him to conclusionsthat seem to bury
ratherthan uncover new informationabout the behavior of states.For
example,he arguesthat"in a bipolarworld,militaryinterdependencede-
clines even more sharplythan economic interdependence.Russia and
America depend militarilymainlyon themselves."'5But it is an odd def-
initionof militaryinterdependencethatblurs the change fromthe 1930s
to a world in which the U.S. and U.S.S.R. can each destroythe otherin
thirtyminutes.Even if Waltz means his statementto referonly to the
formationofalliances,he has a hard timeexplainingtheenormousefforts
which bothsides devoteto their"unnecessary"alliance structures.Waltz
may be rightthat "a fivepercentgrowthrate sustained for threeyears
increasesthe American gross national productby an amount exceeding
one-halfof West Germany'sGNP, and all of Great Britain's,"but that
alleged evidence forlow militaryinterdependenceleaves the anomaly of
actual U.S. behavior unexplained. In extollingthe virtuesof economic
growthas a path to power,Waltz sounds a bit like Rosecrance; but, un-
like the latter,he uses a restricteddefinitionof interdependenceto argue
thateconomic interdependenceis decliningin the modernworld.'6Once
4 Waltz (fn. io), I62.
5 Ibid., i68.
.6 Waltz ignoredthe criticismofnarrowdefinitions
ofinterdependence in termsofvulner-
abilityalone that was publishedin Powerand Interdependence
(fn. 8). Had he considereda
more complex treatmentof interdependence, he mighthave come to differentconclusions
about itsdecline.
 NEOREALISM AND NEOLIBERALISM 245

again, Waltz's theoreticallens focusesso tightlyon bipolaritythatit tends

to generateanomalies and to directattentionaway fromthe discoveryof
new information.
It is not truethatWaltz's theoryis completelystatic,forchangesin the
structurepredictchanges in unit behavior.But change at the structural
level seems to have occurredonlyonce in threehundredyearsforWaltz.
That leaves an awful lot of the stuffof internationalpolitics to be ex-
plained at the unit level. Waltz would admit as much,but he is then left
witha theorythatis so spare thatnothingseems to move. The chargethat
Waltz has explainedless about more of what concernedtraditionalReal-
istsseems justified.It is ironicthatRobertGilpin appears in the Keohane
volume in a cameo role as the authorof a briefreplyto Ashley'sscatter-
gun criticismofneorealism.Gilpin's own work representsan updatingof
Thucydides' classical Realist theoryof hegemonictransition,which has
disappeared in Waltz's nearlystaticneorealistworld. Like Thucydides,
Gilpin focuseson theways in which unevengrowthleads to cyclesof ris-
ing and declininghegemonicstatesand theonsetofgreatsystemicwars.'7
Whatever its own problems,Gilpin's versionof Realism is dynamicand
focused on explaining the major changes in world politics that slip
throughthe coarse net of Waltz's neorealisttheory.Gilpin achieves this,
however,by eschewinga purelystructuraltheoryand reachingdeep into
the unit level of analysis.

THE REVIVAL OF LIBERAL THEORIES

Partlyin reactionto the inadequacies of neorealism,a numberof the-

oristshave begun to resurrectLiberal theory.While admittingthediver-
sityof Liberal theories,theyargue thatthecore of Liberalismis a concern
for liberty.That philosophicalperspectiveis oftencorrelatedwith such
featuresas an interestin limitedgovernment,institutionalrestraints,and
open contacts (including trade) across borders.'8 Michael Doyle has
pointed out differenthistoricalstrandsof Liberal thoughtin Schum-
peter'seconomictheoriesof pacifism,Machiavelli'srepublicantheoriesof
imperialism,and Kant's liberalinternationalconfederationbased on re-
publican governmentsand transnationalcontacts.'9RobertKeohane has
7 RobertGilpin,Warand Changein WorldPolitics(New York and Cambridge:Cambridge
UniversityPress,i98i).
i8 StanleyHoffmann, "Liberalismand InternationalAffairs,"inJanusand Minerva(Boul-
der,GO: WestviewPress,1987). Hoffmannpointsout a terminological manyReal-
difficulty:
istsare liberalin theirdomesticpoliticalpreferences.
19Michael Doyle, "Liberalismand World Politics,"AmericanPoliticalScienceReview 8o
(December I 986), 115 I -69.
246 WORLD POLITICS

identifiedthreemajorcausalstrandsofclassicalLiberaltheory:(i) com-
mercialLiberalism,whichassertsthepacificeffects of trade;(2) demo-
craticLiberalism,whichassertsthepacificeffects of republican govern-
ment(at theunitlevelofanalysis);and (3) regulatory Liberalism,which
assertstheimportance ofrulesand institutionsin affectingrelationsbe-
tween countries.20One mightadd a fourth:sociologicalLiberalism,
whichassertsthetransformative effectoftransnational contactsand co-
alitionson nationalattitudes
and definitionsof interests.Manyof these
Liberalcausaltheorieswerecentraltotheneofunctionalist theoriesofre-
gionalintegrationdevelopedin the1950S and i960s.
By and large,Rosecrance'sThe Rise ofthe TradingState fitsmainlyin
thecategoryof commercial Liberalism.His argumentrestsmoreupon
effects
thebeneficial of tradethanon theotherthreepotentialcompo-
view (p. 218) that"if nuclear
nentsof a neoliberaltheory.Rosecrance's
warcanbe ruledout,economicprocesses willprogressivelyacttoreshape
world"
the international bears a strongfamilyresemblance to Richard
Cobden's(1846) beliefthat"ifwe can keeptheworldfromactualwar,
and I trustTrade will do that,a greatimpulsewill fromthistimebe given
to social reforms."21
Rosecrancedoes not share all of the illusionsof the classical freetrade
Liberals. He is fullyaware thathigh levelsof tradeand othertransactions
did not preventthe outbreakof World War I, and thattrade was often
associated with conflictin earliereras. But he argues thatthe world was
differentthen:"the nineteenthand earlytwentiethcenturyrepresentthe
apex of themilitarypoliticalsystem"(p. 88). In Rosecrance'sview, "it was
not untilafter1945 thatlarge-scaleterritorialexpansion began to evolve
as too costly-too dangerous and too uncertainas a general strategyof
nationaladvancement."As thatlessondawned, "one would have reached
'the Japaneseperiod' in world politics. . ." (p. 20).
Even if Rosecranceprovesto be correctin his projections,it is unclear
to what extentthe causation is due to factorsstressedby Liberal or by
Realist theories.Perhaps what happened after1945 is thatnuclear tech-
nology transformeda balance-of-powersysteminto a balance of terror
thatencouragesprudenceabout any territorial expansionthatcould raise
nuclear risks.In thissituation,Japanhas founda more successfulpath to
become the second-most-powerful economyin the world than it did in
the 1930s. But it has done so while shelteredunder the American nuclear

20Robert0. Keohane, "Economic Limitsof ModernPolitics:InternationalLiberalismRe-

considered,"unpub., i986.
21Cobden, quoted in KennethWaltz,Man, theState,and War(New York: Columbia Uni-
versityPress, 1959), 104.
 NEOREALISM AND NEOLIBERALISM 247

umbrella and spendingonly one percentof its GNP on defense.Rose-

crance admits thathegemonicstabilitytheorymay have some relevance,
but he argues thatit does not explain "why therehas not alreadybeen a
marked decline in internationaleconomic cooperation... well afterthe
onsetof decline in Americaneconomicand militarypower" (p. 57). The
answermay lie in thesuccessofeconomicregimes(whichRosecrancedis-
cusses only briefly);or in the exaggerationof the decline of American
power; or in Waltz's theoryof the stabilityof bipolarity;or in the paral-
ysisof the territorialconquest systemcaused by nuclear risk.22Causation
remainsunclear in Rosecrance'saccount.
Because Rosecranceis cautious,thereare reallytwo versionsof his ar-
gument a strongformand a weak form.The strongformis close to
classic commericalliberalism."Since 1945, the world has been poised be-
tween ... [a] territorialsystem. .. composed of statesthatview power in
termsof land mass ... and [a] tradingsystem... based on stateswhich
recognize that self-sufficiency is an illusion," Rosecrance writes(p. i6).
"A major crossroadsis now approaching.... In the past the military-po-
liticalworld was efficient. It was cheaperto seize anotherstate'sterritory
by forcethan to develop the sophisticatedeconomic and tradingappara-
tus needed to derivebenefitfromcommercialexchange with it" (p. i6o).
"The currentequipoise . .. can scarcelybe maintained,"Rosecrance ar-
gues (p. i65). "The worstaspectsof theWestphaliansystemwith its em-
phasis on territoriality, sovereignty,and a spurious independence, are
likely to be mitigated in the yearsahead" (p. 21 1). "The increasingdecon-
solidationof traditionalstatesand the decline of national loyaltyas they
seek to serve such purposes graduallyunderminesthe military-political
system"(p. 214).
But this strongliberal theoryis eroded by the more cautious formof
the argument.Dualism is profferedas "the minimumpossibleapproach
to an internationaltheory"(p. 6o).23 Which strategywill be dominant
cannotbe predictedat present.One can commendRosecranceforhis cau-
tious judgmentswhen faced with a confusingreality,but such caution

22
For alternativeexplanations,see RobertO. Keohane,AfterHegemony(Princeton:Prince-
ton UniversityPress, 1984), and Bruce Russett,"The MysteriousCase of Vanishing He-
gemony: or Is Mark Twain Really Dead?" InternationalOrganization39 (Spring 1985),
207-31.
23 Rosecrancemistakesthe argumentin Powerand Interdependence as being similarto his
own. Keohane and I did not establish"dualisticcategories:power and interdependence...
universe,but interdependenceis a character-
power is the preeminentgoal of a state-centric
isticthatonly applies when statesas entitieshave lost control"(p. 62). On the contrary,we
argued the need to see asymmetricalinterdependence as a sourceof power.Rosecranceseems
to confusetheideal typeofcomplexinterdependence developedin chapter2 ofour workwith
our largerargumentabout interdependence.
248 WORLD POLITICS

does not enhance theoreticaldevelopment.One wishes Rosecrance had

gone furtherin specifyingthe relationshipbetweenthe Liberal and Real-
istcomponentsof thedualistictheoryhe suggestsin theweak formof his
argument.Perhaps ifhe had gone beyondcommercialliberalismand ex-
plored more deeply the effectsof transnationalcontactson domesticpo-
litical coalitions,or looked more carefullyat the effectsof regimes on
learning(even in thesecurityarea wherehe discountsregimes),he might
have begun to suggestsuch connections.Since he did not,we are leftwith
a suggestivework, but one that hardly provides the neoliberal theory
needed to accompanyWaltz's neorealism.

DIRECTIONS FOR FUTURE RESEARCH

What do these works suggestfor futureresearchprogramsin inter-

national relations?Taken on itsown terms,Waltz's theoryis too staticto
provide a richagenda of researchquestions.But it may be more fruitful
when coupled withthe rational-actorapproach thathas receivedincreas-
ing attentionin recentyears.24Neithergame theorynor expected utility
are reallytheoriesof internationalpoliticsbecause theyneed to import
theoreticalassumptionsabout context.25 Here Waltz's structuraltheory
if
can be helpful,but only handled withcare.
Rational-choicetheoriescan be parsimoniousand powerful,but as re-
searchstrategies,theyrun risksthatare reinforcedbythesparsestructure
of neorealism.How preferencesare formulatedand how learningoccurs
may be more importantthan the actual choice,yet both rationalchoice
and neorealismare weak in thisdimensionand tend to turnattentionin
other directions.Moreover,while thereis no a priorireason why game
theorycannotbe applied to transnationalactorsas well as to unitarystate
actors,such analyses are rare. The benefitof marryingrational choice
withneorealistapproachesis a double parsimony.The dangeris thateach
already has a negativeheuristicthatdirectsattentionaway fromprefer-
ence formationand transnationalinteractions.Theorists who would
make the marriagemustbe alertto such costsand open to the insightsto
be gained fromothervariantsof Realistas well as Liberal theory.
Rosecrance'swork suggestsa numberof interestingavenues forthose
who wish to develop neoliberaltheory.Many of thequestionshe raisesin

24 See Bruno Bueno de Mesquita,The WarTrap (New Haven: Yale University Press,i98i),
underAnarchy,Kenneth
and the special issue of WorldPolitics38 (OctoberI985), Cooperation
A. Oye, ed. (also publishedunderthattitleby PrincetonUniversityPress,i986).
25 Note theassertion byDuncan Snidal,"The Game Theoryof InternationalPolitics,"ibid.,
25-57.
 NEOREALISM AND NEOLIBERALISM 249

the area of commercialLiberalism suggestboth historicaland contem-

porary research about the interconnectionbetween power and non-
power incentiveswith which statesare confronted.But the indetermi-
nacy of his work also suggeststhe limitsof commercialliberalismalone.
Much more attentionneeds to be paid to the effectsof norms and insti-
tutions,both in the economicand in the securityarea. More can be done
with the ways in which transnationalcontactsand coalitionsaffectatti-
tudes, learning,and formulationof preferences.A carefulrereadingof
neofunctionalist integrationtheorycan suggestnumeroushypotheses.Fi-
nally,neoliberaltheoryshould not neglectthe unit level of analysis.Mi-
chael Doyle's work on the possible causal relationshipbetween demo-
craticgovernmentsand foreignpolicychoicesis highlysuggestive.26
Above all, it is importantto pay more attentionto the ways in which
Liberalismand Realism relateto each other.One way is to be less restric-
tive in the basic assumptionof anarchy.Alker attacksthe metaphor of
"anarchy"and argues forHedley Bull's conceptof an "anarchic society,"
which admits the absence of any formalgovernmentabove states,but
does not defineanarchyas the absence of communication,cooperation,
and governance.27 In Power and Interdependence, Robert Keohane and I
suggested that systemictheory could be enriched without(or before)re-
treatingto the particularismsof the unit level of analysisby adding the
conceptof systemicprocess.
Systemshave two dimensions:structureand process.We used theterm
"structure"in the neorealistsense to referprincipallyto the distribution
of capabilitiesamong units. "Process" refersto the ways in which the
unitsrelateto each other.In themetaphorof a poker game, the structure
refersto the players'cards and chips,while the processrefersboth to the
formalrules and the informalcustomsor conventionsthat affectinter-
actions among the players.Variationsin the abilityof the playersto cal-
culate odds, inferthe strengthof opponents' hands, or bluffare at the
unit,or actor,level.28
Factors such as the intensityof internationalinterdependenceand the
degree of institutionalization of internationalrulesdo not varyfromone
state to anotheron the basis of theirinternalcharacteristics. Therefore,
theyshould notbe termedunit-levelfactorsaccordingto Waltz's own def-
26 Doyle, "Kant, Liberal Legacies, and Foreign Affairs,"Philosophy and Public AffairsI2
(Summer I983), 205-35.
27 Hayward R. Alker,Jr."The Presumptionof Anarchyin World Politics,"unpub., i986.
See also Hedley Bull, TheAnarchicalSociety(London: Macmillan,I 977).
28 See Robert0. Keohane and JosephS. Nye, Jr.,"Power and InterdependenceRevisited,"
InternationalOrganization4I (Autumn I987), 725-53, fora fullerdiscussionof the concepts
thatare introducedhere.
250 WORLD POLITICS
inition.Making the unit level a grab bag forall unexplained variance is
an impedimentto thedevelopmentoftheory.Not onlydoes it complicate
the task of analysisby confusingunit-levelfactorsreferringto domestic
politicaland economic arrangementswith factorsat the level of the in-
ternationalsystem;it also leads neorealistanalyststo forgothe opportu-
nityto theorize at a systemiclevel about nonstructuraldeterminantsof
statebehavior.
At the systemiclevel, in addition to the distributionof power, states
experienceconstraintsand opportunitiesbecause of changes in levels of
world economic activity,technologicalinnovation,shiftsin patternsof
transnationalinteractions, and alterationsin internationalnormsand in-
stitutions.These systemicprocessesaffectingstate choices can be cate-
gorized as non-powerincentivesand theabilityto communicateand co-
operate. Nonstructuralincentivesalter calculationsof national interest
withoutnecessarilyaffectingthedistributionof power among actors.For
instance,the destructiveness of nuclearweaponry,which Waltz assigned
to the unit level, is betterportrayedas a featureof systemicprocess that
produces incentivesnot to engage in warfareregardlessof whetherthe
structureis bipolar or multipolar.Similarly,reduced costsof communi-
cationsand transportation mayincreasethebenefitsoftransnationalbusi-
ness and encourage statepoliciesof greatereconomic openness,without
any changes in the structureof power.
The abilityto communicateand cooperatecan provide opportunities
fortheredefinition ofinterestsand forthepursuitofstrategiesthatwould
not be feasiblein a world where the only informationavailable to states
was about otherstates'preferencesand the power resourcesat theirdis-
posal. Justas allowing playersin Prisoners'Dilemma games to commu-
nicatewith one anotheraltersthe natureof thegame, so a systemicproc-
ess that increasesthe capabilityof statesto communicateand to reach
mutuallybeneficialagreementscan add to the repertoireof statestrate-
gies and thusalterpoliticaloutcomes.
These two aspects of systemicprocess-non-power incentivesand
variationsin thecapacityto communicateand cooperate-have tradition-
ally been emphasized by Liberal theory.Liberal theoristsoftenstressthe
ways in which trade and economic incentivesmay alterstates'behavior.
Similarly,Liberal theoristsoftenstressthe effectsof increased transna-
tional(and transgovernmental) contactson attitudesand abilitiesto com-
municate. Institutionsand norms have always played a role in Liberal
theory.
This is not to say thatLiberal theoryhas addressed all processesat the
systemiclevel. For example, most Realists have been concerned about
 NEOREALISM AND NEOLIBERALISM 251

technologicalchanges even when theydo not alter the distributionof

power. And thereis much in Liberal theoryabout the effectof domestic
politicsthatdoes not belong at the systemiclevel. However, the addition
of the process level to the conceptof structurein defininginternational
systemsprovidesan opportunityto develop a "neoliberal" systemicthe-
ory that moves toward a synthesisratherthan a radical disjunctionbe-
tween Realism and Liberalism.Neorealismwould be mostappropriateat
the structurallevel of systemictheory;neoliberalismwould more often
be fruitfulat the processlevel.
The time has come to transcendthe classical dialecticbetween Realist
and Liberal theoriesof internationalpolitics.Each has somethingto con-
tributeto a researchprogramthatincreasesour understandingof inter-
national behavior.Perhaps work in the i990S will be able to synthesize
ratherthanrepeatthedialecticofthe1970S and thei980s.