Neoliberalism is an economic, social, and political worldview that holds that both free trade and the pursuit of corporate interests can combine to yield optimal market outcomes.
From an economic standpoint, Neoliberalism stresses the use of trade relations to ease tensions and open dialogue between countries. Neoliberalism posits that trade helps states define interests in ways that make war less appealing. A nation's economy should thus be expanded through trade rather than conquest.
Japan provides an ideal test case for Neoliberalism. At the start of the 19th century, Japan sought to strengthen its position relative to the West. It thus forced its Asian neighbors to trade, then implemented a policy of protectionism after the Depression. As described above, such protectionism creates barriers along political lines. This yields economic opportunity linked to expansionism, with an incentive to act aggressively. The opening of the trading system begets peace, as occurred concurrently in the General Agreements on Tariffs and Trade. Post World War Two, Japan transformed its position into one of free trade. It soon became a leading economy and democracy, an unmilitaristic approach to world politics, and the expansion of commerce soon followed.
The social dimension of Neoliberalism holds that the more people have contact between nations, the more they understand one another and the less they war. This opening of cultural expression and the discovery of shared values and beliefs make people inherently more peaceful towards one another.
The political dimension of Neoliberalism relies on international institutions. These institutions encourage dialogue, allow for coordination, and thus avoid security and prisoners dilemmas. They provide a framework that shapes the expectations of neighboring countries, as well as offering a sense of continuity; a lasting, international regulatory body. They also provide reciprocity; in terms of trade, each single transaction matters less because things will balance out in the long term. Finally, they provide communication which serves as a means to remedy conflict. Transparency exists to a much greater degree, and bargaining is allowed to solved conflicts and disputes. This makes the international process much more flexible and facilitates cooperation. It creates islands of peace, where international organizations achieve a sense of community and ware becomes more improbable.