What Institutions Do

Let me join Tim Lee in arguing that Justin Logan misses the point by asking "Can Tim think of a historical example where an international institution successfully constrained the action of a state in contravention of its vital interests and outside the bounds of power considerations? That is, where it was some sort of moral opprobrium or institutional respect that deterred a state from acting, rather than concern it would be defeated?"

The point is that the existence of institutions alters incentives and attitudes, shapes conceptions of interests, and therefore facilitates cooperation. In the international arena, cooperation is usually the best policy. This is especially the case when you're talking about market-based economies regulated by the rule of law, and especially especially when you've also got democracy and accountable leaders added into the mix. But for all the familiar game-theory reasons, just because cooperation produces better outcomes for both parties than does conflict doesn't mean that it's going to emerge. It's precisely in order to permit cooperation that people form organizations of all sorts -- business partnerships, neighborhood improvement councils, trade associations, governments, and, yes, multilateral institutions. That's the whole point.