Survival is the driving force, thus, states must develop their offensive capabilities to increase their power. As a reflection of this selfishness, and to ensure their own survival, states seek to develop their offensive capabilities, or their military power, so that they can take over the territories of other states to increase their relative power. This means that their power is relative, that is, in relation to the other states (Fozouni, 2008).
In the international system, the principal actors are the sovereign states, where the independent influence of international organizations, sub-states or trans-state actors is dismissed. Nationalism is important, while the importance of sub-national groupings or transnational ideological of cultural groupings are diminished.
This theory has several key assumptions. Neorealism is based primarily on the assumption that mankind is selfish and competitive. It is not benevolent, rather it is self-centered. Its fundamental assumption is that the international system is chaotic and anarchic. Since the state is the primary actor, there is no higher governing authority to which they bow to. States must muddle through in their relations with each other, with no higher authority that can impose or dictate on any one of them. That is, there is no such thing as a world government. Furthermore, it assumes that sovereign states are the primary actors and not international institutions, non-government organizations, or multinational corporations. According to this theory, every state is a rational actor who will always watch out for its own interest and ensure its security. In the pursuit of its own security, every state will do everything to build up its resources, so that more resources will mean more power for the state. Their level of power will determine their relations with other states, and this level of power is in turn determined by its military and economic capabilities. Also, states are inherently aggressive, always seeking to expand its territories. This territorial aggression is only tempered by other states. However, this build-up will trigger an increase in the opposing state's security, which will result in relative gains only (Thies, 2004).
In terms of the European Union, this means that the Community itself, is merely a gathering of sovereign states - an international rather than supranational organization. Thus, the decision-making in terms of economic, monetary, political, and security matters is still in the sovereign states. Ultimate authority and power will remain with the member states. Thus, the Community is merely a reflection of the desires of the member states to cede or delegate authority, which they can easily recall or revoke. The primary reason that the Community appears to be integrated is because the member states feel that this will serve their interests best. Neorealists view the Community of the future as a loose integration of the member states who have agreed to surrender or pool their sovereignty.
As a response to neorealism, the neoliberalism was born. Some label this as Thatcherism (United Kingdom), Reaganomics (United States of America), Economic Rationalism (Australia), Rogernomics (New Zealand) or Manmohanomics (India). Neoliberalism describes a movement away from the state control. In its pure form, this theory centers on