Twenty Years of Institutional Liberalism

Corresponding author: 

Robert Keohane, Robertson Hall, Princeton, NJ08544, USA 

Email: [e-mail] 

Article 

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International Relations 26(2) 

mutually beneficial cooperation – within and among states. The social purpose of 

Institutional Liberalism is to promote beneficial effects on human security, human wel­

fare and human liberty as a result of a more peaceful, prosperous and free world. 

Institutional Liberalism justifies the use of power in constructing institutions on the basis 

of this conception of social purpose. 

Institutional Liberalism is very different from what E. H. Carr, in 

The Twenty Years’ 

Crisis

, described as ‘liberalism’. Carr had in mind nineteenth-century liberalism, which 

was based on abstract rational principles taken out of context and therefore believed, in 

Carr’s words, that ‘public opinion can be relied on to judge rightly on any question 

rationally presented to it’. This form of liberalism, according to Carr, believed in a har­

mony of interests based on a ‘synthesis of morality and reason’. And it separated power 

from economics. Carr’s critique of this harmony-of-interest form of liberalism was con­

vincing. Contemporary Institutional Liberals, such as myself, have learned from Carr 

and appropriated his insights.

2 

In his famous article, Ruggie described what he called the ‘embedded liberalism com­

promise’ that emerged as a result of the Depression and World War II. Like nineteenth-

century liberalism, embedded liberalism seeks to foster pluralism in economics and 

politics and promotes international cooperation. But for Ruggie embedded liberalism is 

‘multilateral in character … and predicated upon domestic interventionism’.

3

 Like 

Institutional Liberalism it recognizes the dependence of economics on politics and does 

not believe in a harmony of interests. 

Embedded liberalism has taken some hard blows in the last 30 years. Ruggie wrote 

just as Ronald Reagan and Margaret Thatcher were beginning to implement their very 

different visions of a smaller role in capitalism for state power, and views on the compat­

ibility of flourishing private capitalism and domestic interventionism have changed over 

the last 30 years. The ‘Washington Consensus’ and the TRIPS agreements constitute a 

move away from embedding liberal multilateral arrangements deeply in domestic inter­

vention. But the specific economic arrangements of contemporary liberalism are not my 

subject here. Institutional Liberalism does not depend on the international economic 

arrangements being embedded in domestic interventionism. It is a more general doctrine 

that provides a justification not for the welfare state but for international institutions as 

foundations of social progress. 

The roots of Institutional Liberalism lay less in specific views of capitalism and the state 

than in pluralist conceptions of power and interests that are well expressed in the works of 

James Madison. Madison was a republican: the people should govern. He did not believe 

that people are good and easily ruled, but rather that power needs to be checked for fear of 

the consequences of unchecked power. So domestically, the people should govern, but they 

need to establish institutions to control themselves, guarding against bad leaders and 

moments of passion. My views on democracy represent an ethnically, racially and gender-

egalitarian adaptation of Madison’s arguments. The people, broadly conceived, should 

rule, but they have to rule through institutions. At some moments, when publics are attuned 

to political events and leadership is responsive, government ‘by the people’ is very progres­

sive and effective. An American naturally thinks in this respect of the first years of the Civil 

War in the North, when attitudes toward both slavery and racism changed dramatically 

along with policy; and the New Deal. But when the people are not engaged, or when they 

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Keohane 

127 

are misled by demagoguery, democracy may merely be, as Churchill is said to have com­

mented, the worst form of government except for all the others. 

One of the most important contemporary liberal theorists of international relations, 

Michael W. Doyle, sees liberalism as resembling ‘a family portrait of principles and insti­

tutions’, focused on the essential principle of freedom of the individual and associated 

with negative freedom (freedom from arbitrary authority), positive freedom (social rights 

essential for promoting the capacity for freedom), and democratic participation or repre­

sentation. Institutions are essential for exercising these rights.

4 

Internationally, Institutional Liberals believe that power should be used in the inter­

ests of liberal values but with caution and restraint. Institutions serve a crucial social 

purpose because they are essential for sustained cooperation that enhances the interests 

of most, if not of all, people. In world politics, a sophisticated liberalism is, as I have 

written, ‘an antidote to fatalism and a source of hope’.

5

 Unlike Realism, it strives for, and 

believes in, improvement of the human condition and provides a rationale for building 

cooperative institutions that can facilitate better lives for human beings.