International Political Economy Theory of IR

International Political Economy (IPE) Theory of IR

• IPE examines the complex interplay between politics and economics globally, focusing on how states and markets interact.
• Economics is the pursuit of wealth, while politics is the pursuit of power and state-building. IPE bridges these two aspects.

Core IR and IPE Issues

• Core IR issues involve politics and power, war and peace, power dynamics, security, and national interests.
• IPE issues center on wealth, power, and the distribution of resources, including wealth and poverty disparities in the global system. IPE broadens the focus to include wealth and poverty, and who benefits from global economics.

Main Theories of IPE

• Key IPE theories include mercantilism, economic liberalism, and Marxism.

Mercantilism

• Worldview: (16th - mid 18th centuries). The economic activity of states and trading activities are subordinate to the strong state. Global trade is a zero-sum game (one state's gain is another state's loss). Economics is a tool of politics, a basis for political power.
• Theory: A country's power depends on its wealth, used to build strong navies and acquire vital trade goods.
• Figures: Niccolò Machiavelli, Jean Bodin, Antonio Serra, Alexander Hamilton, Friedrich List.
• Types:
  • Defensive/Benign: States prioritize national economic and security interests.
  • Offensive/Malevolent: States actively exploit other economies to gain more power.

Neo-Mercantilism

• Policies to protect national economic interests in the face of globalization and free trade.
• Reserve or alternative sources for strategic resources.
• Restrictions on imports and subsidies for exports.
• Defensive stance against globalization and multinational corporations.
• Focus on exporting high-value goods.

Economic Liberalism

• Worldview: (Mid 19th - 20th centuries). A doctrine that organizes and manages economic growth with individual welfare in mind, independent of strict state control. It's based on French and British traditions and focuses on individual actors, progress, free exchange, and the economy's role in global cooperation and prosperity.
• Core principles:
  • Positive-Sum Game: All participating nations can gain from trade.
  • Laissez-faire: Minimal government interference in the market.
  • Cooperation and Interdependence: Nations benefit from collaboration.
  • Comparative Advantage: Specialization and trade based on differing efficiency levels.
• Key Figures: Adam Smith, John Stuart Mill, and David Ricardo.
• Types:
  • Classical: Adam Smith's laissez-faire approach of free markets and minimal government intervention.
  • Neo-Classical/Neo-Conservatism: Blends market principles with some government control and intervention. (e.g., Keynesian economics, managing inflation and unemployment). After 1990: focus on New Financial Architecture, and after 2008: significant intervention in markets.

Marxism (for IPE)

• Core Ideas: Developed by Karl Marx (1818-1883) in contrast to liberalism, it examines economic structures as a primary driver of international relations.
• Critique: Marxism views the global economy as a site of human exploitation and class inequality.
• Capitalist System: Marx argued the system is built on two main opposing classes, bourgeoisie (owners of production) and the proletariat (labor).
• Class Struggle: The struggle over resources between these classes is central.
• Determinism: Marxist theory focuses on how the economic system (mode of production) shapes social structures and international relations. A key component of Marxist theory.
• Surplus Value: The idea that capitalists profit from the exploitation of labor by extracting more value than they pay for the worker's labor.

Marxist Framework for IPE

• States' interests aren't independent but driven by ruling class interests.
• Capitalism causes states to continuously search for new markets and more profit (colonialism, imperialism)
• Competition among capitalist states, including wars, should be understood in the context of economic struggle.

Types of Marxism

• Classical Marxism: Analyzing national economies. Marx and Engels - focused on national economies.
• Leninism: Focusing on international aspects of capitalism (international economies).
• Neo-Marxism: (World-System Theory) Focuses on the global hierarchy of core, semi-periphery, and periphery economies. Robert Cox and Immanuel Wallerstein.

IR Frameworks (within Marxism)

• Robert Cox: historical structures shape and constrain possibilities, and this can be applied to political actions.
• Immanuel Wallerstein: Focuses on the world-system theory – Core, Semi-Periphery, Periphery economies, characterized by the interaction of these three sets of economies.

Core, Semi-periphery, Periphery Economies

• Core: Developed, complex economies (mass markets, advanced agriculture).
• Semi-periphery: Intermediate economies between core and periphery.
• Periphery: Developing economies – primary goods producers; usually suffer exploitation from core states.