Cyclic or dynamic - Neorealism versus Neoliberalism
Contemporary theory of International Relations is a continuous scholarly battleground for various schools of thought. This paper will scrutinize two prevailing theories of neorealism and neoliberalism, namely Kenneth Waltz’s concept of political structures juxtaposed with Robert O. Keohane’s neoliberal institutionalism. To arrive at a critical conclusion that explains which of the two constructs stand a better chance of successfully explaining the most fundamental workings of the international system of states, a four-part sequence is proposed in this paper. Firstly, this paper will explain how both authors define their assumed principles and how those assumptions are summarised in relation to the international system. Secondly it will demonstrate where the author’s ideas intersect and/or divert from the other. Thirdly, it will examine if it is feasible to classify the ideas as distinct theories or if it is perhaps more accurate to see Keohane’s work as an alteration to neorealist theory. Finally, by equating the logical consequences of the findings in the preceding sections, this paper will conclude with a restrictive formulation of the more convincing idea within the confines of the two texts.
Waltz commences his 1979 chapter on political structures in “Theory of International Politics ” by stressing the need for a system theory of international politics, which is set apart from economic, social and other international realms. He adapts the idea of structure predominately used by economists and anthropologists. Waltz is particularly interested in the creation and interaction of the units within the system and amongst each other, as well as the forces and outcomes that the units entail. By setting aside “the characteristics of units, their behaviour, and their interactions” and focusing purely on their position within the structure instead, Waltz argues that an abstract theory of the system will more precisely explain how the structure of political systems affects the agencies, its units, thereby minimising confusion between system and unit level causalities.
As Waltz continues his deductive approach to political systems he constitutes structure and interacting units. Waltz defines three basic postulations of units within a structure, firstly their ordering principle (i.e. hierarchically or anarchically), secondly their formal differentiation through specific functions (i.e. President versus parliament) and thirdly shifts of relative capabilities (i.e. military power, size, wealth). Furthermore, he identifies that the notion of differentiation is of no relevance in anarchic systems; hence their functions are undifferentiated.
While applying the above principles to the international system, Waltz describes the international system as “decentralised and anarchic” in its formal composition. Given that structural concepts and anarchy are in semantic opposition, Waltz seeks reasoning by applying a comparison with the structurally similar, though not identical, microeconomic theory. The self-interested profit maximisation motive of individual economic units (persons and firms) results in the creation of market structure (unintentional from the unit perspective), which in return constrains the actions of the units. Waltz assumes that the units in the international system are motivated by self-help (adopted from microeconomics) and survival (as an universal precondition of all states). He refines his argument to say that “the structure selects” units in the international system which successfully follow the rationale that if in an anarchic system then survival is secured by self-help, therefore securing a position in competition with other units. It comes as little surprise, given Waltz’s preceding reasoning, that he considers the nature of the international system as “state-centric”. Asa last step, Waltz dissects the units into functionally like units (common survival through self-help motive), being at the same time distinct in their characteristics and means. It is this unequal distribution of capabilities that determines the position of the unit in the structure. Waltz concludes, that the relative power of a unit is estimated by comparing its standing in the order of the structure and that only changes in a unit’s capabilities will reorder the international system.
Keohane reacts to Waltz’s concept twenty years later, with the notion that anarchy and a state’s power might still play a major role in world politics, but that the international system has moved ahead and has become increasingly institutionalised. He advocates that to grasp the effects of “cooperation and discord" amongst states, a theory of international politics should also incorporate this additional aspect of institutionalism. Keohane labels the new concept “neoliberal institutionalism” - a model which includes inquiry into the forces of institutions on states as well as on the grounds of institutional alteration in the international system. Keohane also takes a statecentric approach through considering both “material forces” along with “subjective selfunderstanding” of peoples. He recognises that two interdependent conditions of the actors (states) are to be present in the international system: one is mutual interest (profit through cooperation) and the second is institutional variations (dynamic and elastic levels of institutionalisation). 
Keohane characterises institutions as continuous with linked sets of rules, which recommend behaviour roles, restrict activity and influence expectations. He describes three forms of institutions - formal intergovernmental or cross-national nongovernmental organizations, International regimes and conventions15- though he also raises awareness about the difficulty in distinguishing between them in reality, as they are often not only a combination of each other, but may also overlap.
He stresses the importance of understanding conventions as a priori to the formation of formal international organizations and regimes, as they are responsible in the development of increasing institutionalisation in the international system.
With the above framing of the two theoretical blueprints, it is now possible to compare their assumptions as well as to contrast their diverse characteristics.
It is apparent that both authors are looking at the international system from a decentralised and anarchic viewpoint. Keohane advocates that a structural understanding “as defined by neorealist” is applicable to neoliberal institutionalism. Here Waltz notes , that transnational phenomena, such as neoliberal institutionalism, have drawn on existing theories yet have not “developed a distinct theory”, because the “central role” of states is not contested by “non-state actors”. It is questionable if such statement can hold, when Waltz himself uses the analogy of microeconomics to arrive at a “system theory” of the international system.
The divergent, definitive role of state-centrism in each theory is where both authors can be distinguished. Waltz argues that, “states are the units whose interactions form the structure” and “set the terms of the intercourse”, while Keohane adds the importance of “formal and informal rules” of international institutions. Waltz dismisses this claim as the “difficulty political scientists” encounter in distinguishing between structures and processes. Waltz underlines his argument with what he sees as an “increase of the activities of states” while “remaking the rules by which other actors operate”. Waltz nevertheless finds it of interest to engage in the study of transnational movements, though not on the systemic level. It is Keohane who shows insight, by noting that, “substantial mutual gains can be realized through [the] cooperation” of states, and that examination of the role of institutions helps to broaden the understanding of world politics, in addition to the mere existence of anarchy. This opens another gulf between their ideas: Waltz is abstracting to arrive at a picture of relative power only, while Keohane is not in agreement with this stance since the presence of absolute gain through planning and negotiation (i.e. trade amongst great powers, relationship of EU member states) suggests that relative power provides insufficient explanatory power on those issues.
Before concluding whether institutions are mere puppets of the big powers, or if they in fact shape the international system through “complex interdependence”, it is necessary, to examine the extent to which these two theories are actually distinct. Keohane wishes to pose more than an alternative to the structural neorealist thought, which he considers “to narrow and confining”, and instead “claims to subsume” it. Keohane’s theory is structurally similar to Waltz’s work, just as Waltz’s work is structurally similar to microeconomic theory. Even though the theories are building on like logic, they do arrive at quite different core arguments of relative power contrasted with increasing institutionalism and can therefore be regarded as theoretical distinct but epistemologically related.
As mentioned in the introduction, to arrive at a conclusion of which is the more convincing theory, it is important to be aware of the limits the texts pose. In the absence of additional references or empirical data to test the two competing theories, it is only possible to argue on normative grounds. Hence Keohane's consideration of the possibility of “cumulative progress in human affairs” is more convincing than Waltz’s (who regards states primarily in terms of quantity and does not consider their qualities). This being said, using microeconomic theory (as both authors do - either directly or indirectly) is problematic due to microeconomics’ reliance upon constructed facts of perpetual growth and the greedy nature of man. States and international systems are human made constructs and theorising about them will more often result in self-fulfilling realities. These pseudo facts significantly limit the ability of both works to meet the demands of the dynamic and ever changing realities of the international system.
 Kenneth Waltz, Theory of International Politics (New York: Random House, 1979), page 79-101
 Robert O. Keohane, ,Neoliberal Institutionalism: A perspective on World Politics’, in International Institutions and State Power (Boulder: Westview Press, 1989), page 1-20
 Waltz, page 79
 Waltz, page 79-80
 Waltz, page 79
 Waltz, page 100-101
 Waltz, page 97
 Waltz, page 88
 Waltz, page 89-93
 Waltz, page 93
 Waltz, page 96-99
 Keohane, page 1
 Keohane, page 2
 Keohane, page 2-3
 Keohane, page 3-4
 Keohane, page 5
 Keohane, page 4-5
 Keohane, page 8
 Waltz, page 95
 Waltz, page 94-95
 Keohane, page 2
 Waltz, page 94
 Waltz, page 95-97
 Keohane, page 10-11
 Keohane, page 10
 Waltz, page 92
 Keohane, page 9
 Keohane, page 15