Neo-realism, like classical realism, is a theory which argues that all states seek power, that they seek to increase their power and decrease the power of their enemies, and their whole essence is aimed at amassing power (Newmann). They see other states with power as rivals and as threatening to them. Because people are greedy, insecure and aggressive, durable peace is based on a balance of power, with the big power players in the international specter roughly equal in resources, so neither starts a war because no one usually starts a war unless they believe they can win.
Neo-realism sees the cause of power struggles as a function of the nature of the international system (Newmann). Because there is no such thing as a world government, states are out there fending for themselves, and so when threatened, must attack first or defend themselves by whatever means they can. In the last 50 years, the conduct of international politics clearly shows that it is states that are the heart of international relations.
The introduction of the computer and the internet has had an enormous effect on world trade, with instant communications, and the ability to conduct trade deals from just about anywhere in the world with wireless technology (Bobbitt 698-700). Regulation by law, which was characteristic of the state, is losing its effectiveness with the growth in value of intellectual capital. Trade balance, which was always crucial to the nation state, is no longer possible with communications technology of today whereby goods are often transmitted ôby computerö e.g. printed books, for instance, are not shipped, but their copyright licenses may be sold to another country. Cloth may be woven in one country, cut and sewn in another, to a design from another, and bear the label from yet another, before it is sold at the other side of the world.
With floating exchange rates, a state does not set the value of its currency to some st...