Summary lecture, Global political economy

international political economy (IPE):

emerged in 1970s (subfield of international relations)à deals with competing explanations of events issues and processes. Uses liberalism, economic nationalism and Marxism.

Examples, climate change, economic development

Goal: critically analyze current events;

Definitions:

1. An academic field of study of the economic and political phenomena across state borders
2. An interdisciplinary social science field of study that investigates, analyses and proposes changes in the processes of economic flows (trade, capital, labour, etc.) and political governance that cross over and/or transcend national boundaries.
3. Interdisciplinary academic field, intersection of economics and political science, but also international relations, sociology, history etc. à interplay between national and international issues, causes of different phenomena to propose political alternatives and offers competing theoretical perspectives.

Global political economy (GPE):

The economics and political environment since the 1970s and international political economy is everything until the 1970s (more the history) and more interaction.

IPEà economics (choice under scarcity, comperative advantage, supply and demand, the operation of the markets), international relations (causes of war, foreign policy of states, international organizations) and political science (states and the use of power, the machinery of government

Neo-clasical economics:

Central problem: allocation of scare resources (unlimited human desires, limited resources)

Solution: free markets allow for mutually advantageous exchange

Individuals: rational, free, equal, fully informed and utility-maximizing

Government: should provide defense and the rule of law, but government intervention is inefficient

Keynesian economics:

Government intervention is crucial to:

• A well-functioning economy, especially in time of depresseion
• To provision of a wide rage of good

Institutional economics:

• Highlight the role of formal and informal institutions
• Markets are the result of institutions
• Economics is embedded in and cannot be separated from the political

Political science:

Central question:

• Use of power and politics
• Ability of actors to enforce their interest
• Hoe societies should be governed
• Differences of governance models across countries
• Operation of the state/machinery of government

Decision making is based on:

Argument, ideology, institutional and threat of violence

International relations:

• Security and the causes of war
• Interactions between/among states
• Rather that than the politics of a particular state

Dominant approaches:

• Realism: the international system lacks and overarching power and states continuously compete for power
• Liberalism: possibilities for cooperation among states (for example free trade)

Methodologies in GPE:

• Case studies: small number (why did an event happen the way it did, detailed investigation t to understand the causal factorsà apply insights to similar situations and is a starting point for theory-building. But you can never be sure if the chosen cases are representative) large amount/statical analysis (large datasets examination. If a positive correlation is found à causally improves prosperity or whether there is third factor)
• Rational choice: explains outcomes as the result of actors choices (actors are utility-maximizers and they calculate the costs and benefits before choosing an action) it also explains collective action problems (under-provision of public goods; overuse of common pool resources)à not rational for each individual for each individual to bear the costs for clean up, but it is rational to use as much resources as possible). Also sub-optimal outcomes, such as trade protectionism)
• Game theory: Strategic behaviour in expectation of what opponent will do Prisoners dilemma: Some environment can lead rational actors to make decisions that lead to poor outcomes. If there is a repeated interaction, than countries will learn about the costs and benefits of cooperation, than countries will change their rules. They could also create institutions that reduces the ability to cheat.
• Institutionalism: mostly used among liberal scholars; focus on rules, institutions which shape individual decision) à country classification (varieties of capitalism) and nature of well-fare regimes
• Constructivism: norms and values not only shape states interests but they are identities and therefore interests themselves. Identities explain sates interactions. Key question: what are the actors’ beliefs and preferences, how have they been created and how might they change and how do dominant ideas come about