We live in an international system where there is no global govt. as we have federal govt. of canada, us, uk etc. We live in an anarchic international system because all that matters is state interests (we live in an intl. system of states) In the anarchic intl. system, we live in a system that power and national power matters (as long as you have more power than your neighbour; not about absolute power, about relative power) We live in an international system with zero sum (my gain is your loss) The only way we have stability is with a hegemonic power. Realists understand that the anarchic international system is prone to conflict (power transition theory) Neoliberal institutionalises: also understand that there is no such thing as world govt. and as long as we live in a world of states we can never have world govt. They also understand that we can have an interdependent international system.