Foreign Policy: International Institutions: Can Interdependence Work?

Foreign Policy
Spring 1998

International Institutions: Can Interdependence Work?

By Robert O. Keohane

Should NATO expand? How can the United Nations Security Council assure UN inspectors access to sites where Iraq might be conducting banned weapons activity? Under what conditions should China be admitted to the World Trade Organization? These questions help illustrate the growing importance of international institutions for maintaining world order. But although international institutions are increasingly important, they are not always successful. In recent years, we have gained insight into what makes some institutions more capable than others—how such institutions best promote cooperation among states and what mechanics of bargaining they use. However, our knowledge is incomplete, and as the world moves toward new forms of global regulation and governance, the increasing power and scope of international institutions has raised new questions about how these institutions themselves are governed.

Until the late 1960s, American students of international relations equated international institutions with formal international organizations, especially the United Nations. Yet most observers recognized long before that the UN did not play a central role in world politics. Analysts and policymakers in Europe, North America, and much of Asia concluded that international institutions were marginal to a game of world politics still driven by the traditional exercise of state power. In reality, however, even the most powerful states were relying increasingly on international institutions—not so much on the UN as other organizations and regimes that set rules and standards to govern specific sets of activities.

The exchange rate and oil crises of the early 1970s helped bring perceptions in line with reality. Suddenly, both top policymakers and academic observers in the United States realized that global issues required systematic policy coordination and that such coordination required institutions. Confronted with complex interdependence and the efforts of states to manage it, political scientists began to redefine the study of international institutions, broadening it to encompass what they called "international regimes"—structures of rules and norms that could be more or less informal.

In the 1980’s, research on international regimes moved from attempts to describe the phenomena of interdependence and international regimes to closer analysis of the conditions under which countries cooperate. How does cooperation occur among sovereign states and how do international institutions affect it? Indeed, why should international institutions exist at all in a world dominated by sovereign states? This question seemed unanswerable if institutions were seen as opposed to, or above, the state but not if they were viewed as devices to help states accomplish their objectives. The new school of thought argued that, rather than imposing themselves on states, international institutions should respond to the demand by states for cooperative ways to fulfill their own purposes. By reducing uncertainty and the costs of making and enforcing agreements, international institutions help states achieve collective gains.

This new institutionalism was not without its critics, who focused their attacks on three perceived shortcomings. First, they claimed that international institutions were fundamentally insignificant since states wield the only real power in world politics. The second counterargument focused on "anarchy": the absence of a world government or effective international legal system to which victims of injustice can appeal. The third objection to theories of cooperation was less radical but more enduring. Theorists of cooperation had recognized that cooperation is not harmonious: it emerges out of discord and takes place through tough bargaining. Nevertheless, they claimed that the potential joint gains from such cooperation explained the dramatic increases in the number and scope of cooperative multilateral institutions. Critics pointed out, however, that bargaining problems themselves could produce obstacles to achieving joint gains.

The general problem of bargaining raises specific issues about how institutions affect international negotiations. The most fundamental question scholars wish to answer concerns effectiveness: What structures, processes, and practices make international institutions more or less capable of affecting policies—and outcomes—in desired ways? The end of the Cold War also shattered a whole set of beliefs about world politics and made scholars increasingly aware of the importance of ideas, norms, and information. Some years earlier, such a reorientation might have faced fierce criticism from adherents of game theory and other economics-based approaches, which had traditionally focused on material interests. However, since the mid-1980s, bargaining theory has shown more and more that the beliefs of actors are crucially important for outcomes.

Even as scholars pursue these areas of inquiry, they are in danger of overlooking a major normative issue: the "democratic deficit" that exists in many of the world’s most important international institutions. As illustrated most recently by the far-reaching interventions of the IMF in East Asia, the globalization of the world economy and the expanding role of international institutions are creating a powerful form of global regulation. But these international institutions are managed by technocrats and supervised by high government officials. That is, they are run by élites. Only in the most attenuated sense is democratic control exercised over major international organizations. Scholars must now explore how to devise international institutions that are not only competent and effective but also accountable, at least ultimately, to democratic publics.

One promising approach would be to seek to invigorate transnational society in the form of networks among individuals and nongovernmental organizations. The growth of such networks—of scientists, professionals in various fields, and human rights and environmental activists—has been aided greatly by the fax machine and the Internet and by institutional arrangements that incorporate these networks into decision making. As a result, the future accountability of international institutions to their publics may rest only partly on delegation through formal democratic institutions. Its other pillar may be voluntary pluralism under conditions of maximum transparency. Official actions, negotiated among state representatives in international organizations, will be subjected to scrutiny by transnational networks.

As we continue to think about the normative implications of globalization, we should focus simultaneously on the maintenance of robust democratic institutions at home, the establishment of formal structures of international delegation, and the role of transnational networks. To be effective in the twenty-first century, modern democracy requires international institutions. And to be consistent with democratic values, these institutions must be accountable to domestic civil society. Combining global governance with effective democratic accountability will be a major challenge for scholars and policymakers alike in the years ahead.