Ch 5. Neoliberalism By Lisa Martin

1. Ch 5. NeoliberalismBy Lisa Martin

2. 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 IMF

3. Neoliberalism: Points of Departure Neoliberalism developed in response to the dilemma of how to explain patterns of cooperation in an anarchic world. In 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

4. Rationality 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

5. Context: The Emergence of Neoliberalism Neoliberalism evolved from transnationalism but adopted key assumptions from structural realism. It bought into key structural realist ideas: 1. that states were dominant actors 2. that domestic politics did not explain variations in state behaviour

6. Areas of interest for neoliberalism In 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 IO (international organization).

7. International Organizations IOs 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

8. The Function of IOs They provide a flow of reliable information as to whether an agreement is being complied with IOs have dispute-resolution capacity They structure bargaining according to an agreed set of rules, norms and decision-making procedures IOs 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

9. Case Study: The IMF Can the IMF be autonomous from the principal agents which control and fund it? IMF staff have considerable agency when state preferences diverge, and in conditions when a crisis threatens the international financial system Unlike other approaches, neoliberalism is well equipped to explain variation in IMF autonomy over time

10. Summary At its core, the neoliberal study of IOs identifies the problems they seek to address These problems involve overcoming obstacles to bargaining, monitoring compliance with commitments, and enforcing agreements In 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)