Realism's persistent challenger is liberal institutionalism — the claim that states do, in fact, cooperate persistently, and that the institutions they build to facilitate cooperation (treaties, international organizations, regulatory bodies, regimes) take on lives of their own. The European Union, the World Trade Organization, the UN system, NATO, the international human rights regime — none of these are perfect, and all have failed conspicuously somewhere, but they are not nothing, and the realist tradition has trouble explaining why they exist, why states pour resources into them, or why they keep building more of them rather than fewer.
The institutionalist argument, sharpened by Robert Keohane and Joseph Nye in the 1970s (their Power and Interdependence the field's hinge text), runs roughly like this: anarchy raises the cost of every transaction between states, because trust has to be re-established each time and defectors cannot be easily punished. Institutions reduce those costs by providing standing forums, shared rules, monitoring, and reputational stakes — a state that cheats once finds the next deal harder to strike, and the shadow of the future, the prospect of repeated dealings, makes cooperation rational even among self-interested rivals. Once an institution exists, it creates path dependencies — bureaucracies, settled expectations, coalitions of beneficiaries — that make it surprisingly hard to dismantle even when its founders sour on it. The post-1945 American-led order is the canonical case: a dense web of institutions (Bretton Woods, NATO, the GATT/WTO, the UN, OECD, IMF) that locked in cooperation, lowered transaction costs, and produced — for the participants — seventy-five years of unprecedented peace and prosperity, the longest stretch without great-power war in the modern record. Crucially, institutionalism does not deny anarchy; it accepts the realist premise and argues that states, precisely because they are rational and self-interested, will construct rules to escape the worst of it. The challenge it faces is that institutions are themselves built and broken by power: they reflected American primacy at their founding, the votes and vetoes were weighted toward the victors of 1945, and a determined hegemon — or a determined revisionist — can erode them faster than they were assembled.
The contemporary stress test — Trump's first-term assault on the institutional order and his second-term withdrawals, China's parallel construction of alternatives like the AIIB and Belt and Road, Russia's open repudiation of the rules — is exactly the case institutionalism is theoretically supposed to handle. Whether the institutions hold under stress, or prove to be fair-weather machinery that dissolves once the hegemon loses interest, is an empirical question being answered in real time, with consequences that will outlast the current decade.