Summary lecture 2, Global Political Economy

3 theoretical perspectives

1. Economic nationalism: conflict, zero sum game

• The roots: classical realismà the international system is an anarchy (perpetual state of war). Thought behind economic nationalismà the state is the principal actor in politics/viewed the state of nature as continual fear and danger of violent death (the solution is an institutional sovereign to enforce the rules)
• More recent thoughtà Kenneth waltz, structure of the international system by first examining the distribution of power to understand peace (unipolarà one state has the power to defeat all others, bipolar à leading to balance of power, which may be conducive to peace, according to other) and multipolar.
• Assumptions: the international system is anarchic (each state must look after its own interests) one state is another stat’s loss (zero sum game)
• Key actors: the state is a rational, unitary actor and the main actor in international and domestic affairs. Economic policy must be aimed at increasing state power)
• Key dynamics: GPE; Struggle for power and wealth. Intl. economic and political relations. Each state must ensure that its citizens benefit from intl. change (global economy)à free trade (reflects interest of the most powerful states.
• Conflict and cooperation: anarchy means conflict, therefore free markets and exchange can be potentially harmful. Therefore state control of key economic activities and help key industries. à example, Brexit (state protection of domestic industries against foreign competition and exporting more than importing for long periods of time. Also prevent cultural imperialism) another example (mercantilism. Global wealth is limited, therefore each economy must secure its economic interest

2. Liberalism: cooperation, interdependence, positive sum game

• the roots: enlightenment/industrial revolutions à individuals are rational and able to comprehend natural and social laws, therefore they can improve their condition and create a just society through cooperation and exchange. Lockeàpeople are good-natured and governed by reason; the role of government is limited to protecting property; the state of nature is a sate of peach. Montesquieuà war is a product of society, a law of nations should guide state conduct. Kantà collective action of self interested nations can overcome anarchy. Adam smithà opposed mercantilism, protectionism and restriction of economic activity, feeing up commerce an markets generates economic welfare for all. Ricardoà theory of competitive advantage, all nations can benefits from trade. Even is a state has not absolute advantage in producing any good, it should specialize in products for which it had a relative cost advantage. Neoliberal institutionalism: cooperation, because of complex interdependence (states connect through multiple channels, for example informal interactions, states care about issues other than security or states are interconnected through treaties and international institutions do not fight one another because of repeated interaction). Main difference between neoliberalism and liberalismà both predict that states will cooperate but neo says continuous interaction and liberalism says human establish as reform)
• Main assumptions: the fee market at the core of economic life (state intervention is bad). Letting diverse individuals pursue their own interestàprosperity. Exchange and economic integration (positive sum gameà everyone benefit)
• Key actors: individuals, self interested and rational. The firm is a source of economic wealth (transnational corporation benefit both countries and host countries. State control distorts market and leads to economic failure
• Key dynamics: IPE, search for wealth, free markets create growth and firms spread wealth and prosperity around the globe. Keynesà government intervention is needed to solve problems such as depressions and recessions. Hayekà government intervention can never be the solution to market imperfections
• Conflict and cooperation: cooperation and exchange are beneficial to all. Nationalism is perceived as conflict and liberalism is peace. International organizations promote liberal ideas and ensure peace

3. Critical perspective, mostly Marxism

• Roots: response to liberalism
• Key assumptions: when profit fall, capitalist start competing with one another, which drives down workers wages (competition is bad for the workers ‘wages), capitalism leads to uneven development across countries, which leads to conflict. Capitalism leads to overproductions or under consumptions, which leads to fluctuations in the business cycle and shakes social stability.
• Key actors: class (capitalist, workers and embrace collectivism) firms and TNCs are an instrument of exploitation and oppression of the working class. (TNCs are one of the key features of imperialism. The state is a representative of class interest.
• Key dynamics: dominance and exploitation within and across societies, capitalists exploit workers and deny them fair pay. Market relations and exchange are exploitative, international economic relations are inherently unstable. Dependency theory: poor countries are poor because they were exploited from rich countries.
• Conflict and cooperation: international economic relation àzero-sum game. Capitalism is inherently conflictual because of the drive for profit. Capitalists and workers have competing interests. Through imperialism dominant states oppress weak ones. Lenin’s theory of imperialismà capatalists expand abroad because of underconsumption domestically. Finance and industrial capital form a monopoly that helps gain profits through overseas lending.

Globalization and the three IPE Theoretical perspective:
[note: enkele afbeeldingen bij deze samenvatting zijn door de WorldSupporter redactie verwijderd wegens vermoedelijke inbreuk op het auteursrecht]

What caused the 1997 crisis: