International Political Economy (IPE)

7/17/2019 International Political Economy (IPE)

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International PoliticalEconomy (IPE): Classical Theo

ries

What is IPE

• Mercantilism

• Economic Liberalism

• Marxism



What is IPE

InternationalPolitical Economy



IPE

If economics is about the pursuit ofwealth and politics about the pursuitof power, the two interact in complicated and puzzling ways (Polanyi 1957 !ilpin 19"7 #$$1%& It is this compl

e' interplay in the international conte't between politics and economics,between states and marets, which i

s the core of IPE&



IPE

• )here is a comple' relationship between politicsand economics, between states and marets, that I* has to be able to grasp& )hat relationship is the s

ub+ect of IPE&

• e need di-erent theoretical ways of approachingthe connection between politics and economics&

• .rom the possible theories to choose from

(/aporaso 1990% we hae selected three theories which most scholars see as the main theories of IPE2mercantilism, economic liberalism, and 3ar'ism&



Classical Theories

Mercantilism

Economic Liberalism

Marxism

Others



Mercantilism

/lassical mercantilism

4eo 3ercantilismEast sian 3ercantilism



3ercantilism

Economics is a tool of politics, a basisfor political power& )hat is a de6ning

feature of mercantilist thining&

3ercantilists see the internationaleconomy as an arena of conict between opposing national interests, rather than an area of cooperation and m

utual gain&



3ercantilism

Economic rialry between states can tae twodi-erent forms (!ilpin 19"72 0#%&

)he 6rst is called defensie or 8benign8mercantilism2 states loo after their national economic interests because that is an important ingredient in their national security

)he other form is aggressie or 8maleolent8mercantilism& ere states attempt to e'ploit theinternational economy through e'pansionary policies



• 3ercantilists maintain that theeconomy should be subordinated to the primary goal of increasing state p

ower2 politics must hae primacy oer economics&

•

:ut the content of the concretepolicies recommended to sere thatgoal has changed oer time&



• 3ercantilism posits the economy assubordinate to the polity and, particularly, the goernment&

• Economic actiity is seen in the larger

conte't of increasing state power&• )he organization that is responsible for

defending and adancing the national interest, namely the state, rules oer priate economic interests&

• ealth and power are complementary, notcompeting goals&



Economic Liberalism

• ;iberal economics has been called <adoctrine and a set of principles for organi

zing and managing economic growth, and indiidual welfare8 (!ilpin 19"72 #7%&

• It is based on the notion that if left to

itself the maret economy will operatespontaneously according to its own mechanisms or 8laws8&



Economic Liberalism

• =aid *icardo argued that freetrade>>i&e& commercial actiities thatare carried on independently of national borders>>will bring bene6ts to allparticipants because free trade mae

s specialization possible and ?)hus

• @pecialization increases eAciencyand thus productiity&



Economic Liberalism

• Paul @amuelson summarized theargument as follows2 8hether or not one

of two regions is absolutely more eAcientin the production of eery good than is theother, if each specializes in the product inwhich it has a comparatie adantage (gr

eatest relatie eAciency%, trade will be mutually pro6table to both regions8 (@amuelson 19B72 B51%



• Economic liberals thus re+ect the mercantilist

iew that the state is the central actor and focus when it comes to economic a-airs&

• )he central actor is the indiidual as a

consumer and a producer&

• )he maretplace is the open arena whereindiiduals come together to e'change goodsand serices&

• Indiiduals are rational in pursuing their owneconomic interests, and when they apply thatrationality in the maretplace, all participantsgain&



Economic Liberalism

• ccording to Ceynes the maret economy is agreat bene6t to man, but it also entails

potential eils of 8ris, uncertainty and ignorance8&

D )hat situation could be remedied throughimproed political management of the maret&

D Ceynes thus argued in faor of a maret whichwas 8wisely managed8 by the state (Ceynes19B02 0#1%&



•

Economic liberals argue that the mareteconomy is an autonomous sphere of society which operates according to its own economic laws&

•

D Economic e'change is a positie>sum gameand the maret will tend to ma'imize bene6ts f or the rational, self>seeing indiiduals, the households, and the companies that participate inmaret e'change&

• D )he economy is a sphere of cooperation formutual bene6t among states as well as amongindiiduals&



Economic Liberalism

.orms of ;iberalism aries by time andplace

;iberalism, which can be diided into2% nglo merican indiidualistic> competitie form, and :% European social maret form&



Marxism

• .or 3ar'ists, the capitalist economy is based ontwo antagonistic social classes2

•

ne class, the bourgeoisie, owns the means ofproduction the other class, the proletariat, owns only its labor power which it must sell to the bourgeoisie&

•

:ut lab or puts in more wor than it gets bac inpay there is a surplus alue appropriated bythe bourgeoisie& )hat is capitalist pro6t and it isderied from labor e'ploitation&



3ar'ism

• /apitalism means progress for 3ar',in two ways2

• .irst, capitalism destroys preiousrelations of production,

• @econd, and most important for3ar', capitalism paes the way for asocialist reolution &



3ar'ism

• Economic production is the basis for allother>human actiities, including politics&

• )he economic basis consists,

• n the one hand, of the forces of productioni&e& the technical leel of economic actiity ,

• n the other hand, it consists of the relations

of production2 i&e& the system of or socialownership which determines the actual control oer the productie forces



3ar'ism

• .irst, states are not autonomousthey are drien by ruling class interests and capitalist states are primarilydrien by the interests of their respectie bourgeoisies&

• @econd, as an economic system,capitalism is e'pansie2 there is a neer>ending search for new marets a

nd more pro6t&



• 3ar' argued that the process ofcapitalist e'pansion must always beuneFual or uneen, between countries, industries, and 6rms&

• @uch disparities and conicts will

always deelop under capitalist conditions, argued ;enin& )hat is the 8law of uneen deelopment&8



)he di-erence between 3ar'ist andrealist analysis should be brought to

attention& :oth iews agree on the perennial competition and conict between states&



• 3ar'ists argue that conict betweenstates aries substantially across history& /onict between capitalist states>>and ultimately between capitalist ruling classes>>is of course connected t

o the capitalist historical era&



4ew 3ar'ism

• 3ore recent 3ar'ist analysis has concededthis point& )he state has some autonomy fro

m the ruling classes, but it is a relativeautonomy: the basic function of the capitalist stateremains the safeguarding of the capitalist sy stem. Yet within this general framework, the

state should not be reduced to a simple toolof others (Carnoy 19!: ch.!". Current #ar$is t thinking has developed this view further.



3ar'ism

• /o' begins with the concept ofhistorical structures, de6ned as 8a particular con6guration of forces8 (/o'199B2 97%& )hese historical structuresare made up of three categories of fo

rces that interact2 material capabilities, ideas, and institutions&



4ew 3ar'ism

/o'8s analytical framewor

social forces

.orms of state @tate order



• @ocial forces8 are a shorthand for theprocess of capitalist production& n analysis of this aspect will inform us about the present state of deelopment of the capitalist economy on a glo

bal scale&



4ew 3ar'ism

• orld orders8 refers to the currentorganization of international relationsincluding relations between ma+or states and groups of states, the status of international law, and international i

nstitutions&



4ew 3ar'ism

• /o' theorizes a comple' interplaybetween politics and economics, speci6ed as the interaction between social forces, forms of state, and world orders&



4eo 3ar'isim

nother recent neo>3ar'ist analysiscomes from Immanuel allerstein (19

7G 1979 19"0%& is starting point is the concept of 8world system8& orld systems need not physically include th

e whole world they are uni6ed areascharacterized by particular economicand political structures&



4eo 3ar'ism

allerstein Idea2

/ore

@emi PeripheryPeriphery



4eo 3ar'ism

• In human history, there hae been two basicarieties of world systems2 world>empires andworld>economies&

• In world>empires, such as the *oman empire,political and economic control is concentrated ina uni6ed centre&

• orld>economies, in contrast, are tied togethereconomically in a single diision of labour, but politically, authority is decentralized, residing in multiple polities, in a system of states&



)he capitalist world >economy wasestablished in 8the long 1Bth century8(1G5$>1BG$%& It was based on an international diision of labour that coered Europe 6rst, but soon e'panded t

o the estern hemisphere and later to other parts of the world as well&



4eo 3ar'ism ?allerstein

basic mechanism of the capitalistworld>economy is uneFual e'change&Economic surplus is transferred fromthe periphery to the core& @urplus isappropriated from low>wage, low>pro

6t producers in the periphery to high>wage, high>pro6t producers in the core&



• )here are some similarities betweenallerstein8s world systems analysis of capitalism and altz8s neorealist analysis of the international system&

• :oth focus on the system rather than on thesingle units or countries what happens to countries ery much depends on their position in the sy

stem&

• :oth see the system as a hierarchy with strongstates in the top and wea states in the bottom&

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International Political Economy (IPE)