Key Points

• The market is used by liberal institutionalists as an analogy for the anarchic international system.

• In a market/international setting, public goods get underproduced and public bads get over­produced.

• Liberal institutionalists draw on the Prisoners' Dilemma game to account for the structural impediments to regime formation.

• A hegemon, 'the shadow of the future' and an information-rich environment promote collabo­ration and an escape route from Prisoners' Dilemmas.

• Realists argue that liberal institutionalists ignore the importance of power when examining regimes.

• Realists draw on the 'Battle of the Sexes' to illu­minate the nature of co-ordination and its link to power in an anarchic setting.

Conclusion

Although liberal institutionalists and realists acknowledge that regimes are an important feature of the international system, and draw on similar tools of analysis, they reach very different conclu­sions about the circumstances in which regimes emerge. For liberal institutionalists. the need for regimes arises because there is always a danger in the anarchic international system that competitive strategies will trump co-operative strategies. Their analysis, therefore, focuses on ways of deterring competitive strategies that are otherwise seen to be the rational response within an anarchically struc­tured system. By contrast, and paradoxically, given conventional assessments, realists link the emergence of regimes to situations where there is a 'mutual desire to co-operate, but where anarchy generates a problem of co-ordination. Again, in contrast to liberal institutionalists, realists assume that there is no incentive to defect once co­ordination has taken place.

The two approaches also adhere to divergent conceptions of power. For liberal institutionalists, power may be used by a hegemon to pressure other states to collaborate and conform to a regime. But it is also acknowledged that states can establish and maintain regimes in the absence of hegemonic power. Collaborative strategies are pursued and maintained because of the 'shadow of the future'— a mutual recognition that if any state defects from a regime, it will result in mass defection on a 'tit for tat' basis and states moving from an optimum to a suboptimum outcome. There seems little doubt that 'lead' states do establish regimes in the expec­tation that other states will follow. For example, in 1987, 22 states signed the Montreal Protocol agree­ing to reduce CFC gases—which erode the ozone layer—by 50 per cent by 1998. But in 1990, the timetable was accelerated and the signatories expanded to 81, all agreeing to eliminate all CFCs by 2000.

For realists, on the other hand, power is seen to play a crucial role, not as a threat to discipline states caught defecting from a collaborative agreement, but in the bargaining process—to determine the shape of a regime around which all states will co­ordinate their actions. For realists, the conflict over economic regimes reveals most clearly the import­ance of the role played by power in the establish­ment of regimes. It is the rich and powerful states in the North that have primarily determined the shape of these economic regimes. Third World states have had no alternative but to accept the regimes because of the need to engage in trade. By contrast, there have been massive violations of the human rights regimes that have emerged since the end of the Second World War. These dead-letter regimes have failed to become full-blown regimes, according to realists, because there is no co­ordination involved. States can unilaterally violate human rights regimes without paying the auto­matic penalty incurred in co-ordination situations.

Stein (1983) who introduced the distinction between collaborative and co-ordination games into the regime literature never assumed, however, that they represented mutually incompatible approaches to regime formation. It could be argued, therefore, that the debate between the liberal insti­tutionalists and the realists can be resolved by empirical investigation. Do decision-makers who are responsible for establishing regimes see them­selves in a 'Prisoners' Dilemma' or a 'Battle of the Sexes'? Liberal institutionalists insist that the for­mer represents the characteristic situation, whereas realists focus on the latter. Although it is not possi­ble to foreclose on this question, it is possible that the two types of games can be viewed in sequential terms. States may escape from the Prisoners' Dilemma by agreeing to collaborate, only to find that they then enter a Battle of the Sexes when the details come to be worked out.

Box 12.6. Key Concepts

Anarchy: a system operating in the absence of any central government.

Anomie: the condition describing a system operating in the absence of norms or rules.

'Battle of the Sexes': a scenario in game theory illus­trating the need for a co-ordination strategy.

Collaboration: a form of co-operation requiring par­ties not to defect from a mutually desirable strategy in favour of an individually preferable strategy.

Co-operation: is required in any situation where par­ties must act together in order to achieve a mutually acceptable outcome.

Co-ordination: a form of co-operation requiring par­ties to pursue a common strategy in order to avoid the mutually undesirable outcome arising from the pur­suit of divergent strategies.

Game theory: a branch of mathematics which explores strategic interaction.

Hegemony: a system regulated by a dominant leader.

Microeconomics: the branch of economics studying the behaviour of the firm in a market setting.

Market failure: results from the inability of the market to produce goods which require collaborative strate­gies.

'Prisoners' dilemma': a scenario in game theory illus­trating the need for a collaboration strategy.

Public goods: goods which can only be produced by a collective decision, and cannot, therefore, be pro­duced in the market-place.

Public bads: the negative consequences which can arise when actors fail to collaborate .

Rationality: reflected in the ability of individuals to rank order their preferences and choose the best avail­able preference.

Reciprocity: reflects a 'tit for tat' strategy, only co­operating if others do likewise.

Regimes: sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors' expectations converge in a given area of inter­national relations.

'Shadow of the future': a metaphor indicating that decision makers are conscious of the future when mak­ing decisions.

Strategic interaction: occurs when an outcome is the product of decisions arrived at independently.