International Relations. A self-Study Guide to Theory

tural realism. For the purpose of this book, learning more about this “modifi-
cation” will be a promising undertaking, as it will provide an important in-
sight into theory building in the social sciences in general. 

---

145 
Therefore, we will devote the first learning step to those elements of neo-
realist theory that challenged neoinstitutionalist criticism in the 1970s and 
1980s. Please note that the term “neoinstitutionalist theory” will be used 
throughout the text to refer to the interest-based neoinstitutionalism devel-
oped by Keohane and Nye. 
Step 1: 
Neoinstitutionalist theory as “modified structural realism” 
1.1.
Power, structure and rationality: concepts and assumptions 
There is agreement with neorealism that the fundamental issues of power, in-
terests and rationality are at the core of a theory of international politics, as 
well as agreement that a system level theory must be able to explain outcomes 
in international politics adequately (Keohane 1986b: 182). However, in terms 
of theory construction, a range of critical points exist related to the concepts 
and assumptions at the core of neorealist theory: the concept of power, the 
concept of structure and the rationality assumption. 
As we learned in the previous unit, in neorealist theory, state interests are 
“given” and patterns of outcomes in international politics are determined by 
the overall distribution of power among states. The distribution of power is 
claimed to be a “systemic” feature and the neorealist explanation of interna-
tional politics therefore a structural realist one. In neorealist theory, “power” 
in a very general way refers to resources that can be used to induce other ac-
tors to do what they would not otherwise do (in accordance with the interests 
of the state exercising its power). Each international system has one structure 
and therefore one context of state action, which is defined by the general dis-
tribution of power in the system. 
For Keohane, the neorealist conceptualization of power and structure cre-
ates problems for the explanation of outcomes in international politics, as 
well as for predictions. The neorealist concept of power is overaggregated 
and state interests therefore underspecified (Keohane 1986b: 191). The con-
cept of power has to be modified, especially with regard to the relationship of 
power to the context of action. Keohane suggests a disaggregation of power 
resources by issue-areas (Keohane 1986b: 190). What does this mean for a 
theory of international politics? 
Issue areas in international politics include, for example, security, wel-
fare, freedom and environmental politics. To split international politics into 

---

146 
issue areas means to renounce the neorealist concept of international politics 
as one separate domain (dominated by security concerns). In neoinstitutional-
ist theory, different issue areas constitute different contexts of action. In fact, 
modifying the system means thinking of its structure in terms of several 
structures according to different issue areas. It has been suggested that such 
a disaggregation will enhance the ability to explain and to predict with the 
structural realist model of explanation (Keohane 1986b: 190).
Thus, the concept of structure as developed by Waltz will remain a valua-
ble starting point. The question posed by Keohane is: how much should the 
concept of structure in a system’s level theory include? He is convinced that 
the concept requires greater complexity. The problem can only be solved by 
modifying the concept of structure to include the explanatory factors that are 
not found in Waltz’s concept of structure: further “elements” of the interna-
tional system. Neoinstitutionalist theory highlights the factors that Waltz 
downgrades or ignores: international (economic) interdependence and the 
role of international institutions. For systematic and didactical reasons we 
will return to this key issue at a later stage (Step 2). 
With regard to the concept of power, the emphasis similarly is on power 
resources as an explanation of outcomes in neoinstitutionalist theory. How-
ever, the assumption that power is fungible across different issue areas of 
world politics is rejected. Moreover, Keohane not only introduces a dis-
aggregated power model that differentiates between issues areas, but he also 
calls attention to links between issue areas that need to be understood sys-
tematically (Keohane 1986b: 189). 
Such a modification avoids the direct deduction of national interests from 
the (one) system’s structure simply on the basis of the rationality assumption. 
For Keohane, such a direct prediction of outcomes from assumed interests 
and an overall distribution of power would fail (Keohane 1986b: 190). State 
interests cannot be derived solely on the basis of rational calculation of the 
“external” positions of states. The implication of neoinstitutionalist critique is 
that the neorealist assumption of states seeking (at most) to maximize power 
is wrong: States do not always seek to maximize power. They will not do it, 
for example, when they are not “in danger”. Modifying the neorealist as-
sumption of states seeking to maximize power enables us to consider other, 
competing goals of states in international politics.
The assumptions of neoinstitutionalist theory as a modified structural re-
alism are therefore: (Overview in Keohane 1986b: 194): 

---

147