This approach, knows as liberal institutionalism or neo-liberalism, operates largely within the realist framework, but argues that international institutions are much more important in helping to achieve cooperation and stability than ‘structural realists’ realize (see Ch.7). According to Keohane and Martin (1995:42), ‘institutions can provide information, reduce transaction costs, make commitments more credible, and establish focal point for coordination and, in general, facilitate the operation of reciprocity’. Supporters of these ideas point to the importance of European economic and political institutions in overcoming the traditional hostility of European states.
As such, it is suggested that in a world constrained by state power and divergent interests, international institutions operating on the basis of reciprocity will at least be a component of any lasting peace. In other words, international institutions themselves are unlikely to eradicate war from the international system, but they can play a part in helping to achieve greater cooperation between states.