International Political Economy and Its Methods PDF

INTERNATIONAL 2 POLITICAL ECONOMY AND ITS METHODS This chapter takes a step back from the three usual Locating the Field 23 approaches to IPE (economic nationalist, liberal, critical) t...

INTERNATIONAL 2 POLITICAL ECONOMY AND ITS METHODS This chapter takes a step back from the three usual Locating the Field 23 approaches to IPE (economic nationalist, liberal, critical) to consider how IPE fits with other fields of study, what Methodological Issues 28 kinds of methods can be used in IPE and where the field  rends in Contemporary T is going in theoretical terms. We also outline the GPE Theory 34 approach we have taken in writing the book. Approach of this Book 38 Locating the Field Further Reading 41 IPE emerged as a subject of study in universities in the mid-1970s. From its tentative beginnings as one course within a degree programme, IPE has developed into a distinct subfield of international relations (IR). In some universities it has outgrown political science departments to take on a larger interdisciplinary flavour (see Box 2.1). Similar to its ‘parent’ disciplines, IPE remains a field in which different theoretical traditions present the student with competing descriptions of ‘reality’ and conflicting explana- tory frameworks. Over time, the focus of the field has shifted over a range of topics (Denemark and O’Brien, 1997; Cohen, 2014). Some issues, such as the impact of TNCs, international finance and international trade, have remained central to the core issues covered in IPE courses. The centrality given to issues such as ‘Third World’ development or North–South conflict has varied considerably since the 1970s. Meanwhile, issues such as East–West relations, energy and the impact of producer cartels have vanished to be replaced by a focus on environmental con- cerns, gender and postcolonialism. In terms of a broad overview of the international political economy, analysis has shifted from a concern with managing interdependence to a desire to shape globalization. Box 2.1 IPE or GPE? The terms ‘international political economy’ and ‘global political economy’ are often used interchangeably. In this text we use them in specific ways. Since the term ‘international political economy’ is the most common way to refer to the academic field of study that examines the interaction of economic and political phenomena across state borders, we will use ‘IPE’ when discussing the field of study. We will also use ‘international political economy’ when discussing the history of economic and political activity across state borders up until the last quarter of the 20th century. When using the term ‘global political economy’ (GPE), we are referring to the environment from the last quarter of the 20th century until today. This is an era where states, corporations and citizens struggle to order their environment in a world characterized by intensified globalization. 24 THEORETICAL PERSPECTIVES To situate the study of IPE among other subjects, it is useful to make some preliminary com- ments about the organization of knowledge in the social sciences. Although Western knowledge and universities are separated into distinct subjects, fields and departments, this was not always the case. Before 1900, intellectuals often worked in a number of different fields that would not fit into today’s compartments. Thus, in the late 1700s, Adam Smith, who is often seen as the founder of liberal economics, was a professor of moral philosophy rather than an economist. As knowledge has grown, so fields have become more specialized. Those interested in the culture of other societies drift into anthropology departments, those interested in the operations of society into sociology, people concerned with the study of power and politics into political science departments and those focused on the economy into economics departments. Each field has developed its own theoretical and methodological approaches to answering a particular set of questions. The same subject can be examined in different disciplines from a variety of perspectives. The specialization of knowledge in the social sciences corresponded with the solidification of nation-states in Western Europe. Social sciences disciplines increasingly became national disci- plines. People would study French society or the US economy in isolation from other societies or economies. In some respects this made sense. Nation-states were becoming more developed and their regulatory activity was having an increasingly significant impact on the people within the hardening borders. However, this methodological nationalism meant that the connections between societies and their relationship to the outside world were neglected. IPE tries to bridge some of these historic divides. It crosses the boundaries between the study of politics and economics, as well as the national and the international. Depending on the approach, it will also draw on other fields such as geography or history. We’ll briefly examine some of the neighbouring fields to develop our understanding of global political economy’s place. Economics The word ‘economics’ comes from the Greek oikonomia, which in its original use meant the management of the household. Over the centuries, study of the economy has varied greatly. Today the discipline is dominated by a particular approach to the economy known as ‘neoclassical economics’. The central problem for neoclassical economists is how to allocate scarce resources. Human desires are seen as unlimited, while the resources to fulfil them are finite. The problem then becomes how to allocate those resources most efficiently. The solution to this problem is to be found in the efficient operation of markets. Markets are places where informed individuals can make mutually advantageous exchanges. Consumers are important in this approach. Well-­ informed individuals acting in their own economic self-interest will send signals about what should be produced. Left alone, the sum of these individual choices will result in the most effi- cient allocation of resources. Neoclassical economists seek to fashion their subject into a science and separate it from the study of politics and philosophy. Whereas political decisions might be influenced by emotions, economic decisions are based on rationality. Politics and politicians are often seen to block the operation of the free market and prevent it from operating efficiently. In an attempt to make the discipline of economics more scientific, many modern economics departments have turned increasingly to using mathematical models to analyse the economy and advance arguments in favour of particular policy options. Neoclassical economics tends to view governments and government intervention in the economy as inefficient. Governments are needed to provide some basic public goods, such as police forces, armies and institutions which ensure that a free market is able to function. However, they should be confined to as small a role as practically possible.  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 25 Although neoclassical economics dominates many economics departments, there are other approaches to the field (Stilwell, 2002). Keynesian economics sees government as being crucial to a well-functioning economy. Keynesians believe that government should provide a wider range of public goods (such as healthcare) and that government spending is needed to move economies out of recession or depression. Their view is that when businesses fail to invest for economic growth, governments must step in. Institutional economics is another variant; it argues that markets are not ‘natural’ but are the result of a series of institutions such as the legal structure, the financial system and social values.These economists argue that the discipline should focus on the real world rather than abstract models of a free market that does not actually exist. Both Keynesian and institutional economics have a much more expansive and positive view about the role of government. There are other approaches to economics such as Marxist, feminist and eco- logical perspectives, but these tend not to be taught in economics departments because they challenge many of the rationality assumptions of traditional economics. While neoclassical economics purports to be based on how a free market really works, some have suggested that the study of economics actually changes how people think and behave. Neoclassical economists and their students may behave the way their models predict people should behave. One study comparing economics students with those in maths, law, science and business found that economics students trained in the use of mathematical models were far more likely to resolve a conflict between profit maximization and worker welfare in favour of profit maximization than their colleagues in other departments (Rubinstein, 2006). A series of other studies have suggested that the field’s focus on self-interest prompts its students to be less charitable, have fewer concerns for fairness and be more accepting of greed than other students (Grant, 2013). The possibility that theories help shape reality rather than only explain it will be consid- ered when we look at constructivist approaches. The field of economics brings many useful ideas and concepts to the study of GPE. Key theories explaining macroeconomics, comparative advantage, supply and demand and the operation of mar- kets can explain particular events and have informed the actions of decision makers. In terms of the perspectives outlined in this book, liberal theory draws heavily on the field of economics.  olitical science P The use of power and politics is the subject of political science. However, there is a wide variety in what is actually studied and how it is studied in the various subfields. For example, political theory examines key political and philosophical texts about how societies should be governed. Comparative politics considers how different countries are governed and tries to learn general lessons from the varying political institutions or cultures. German, US or British politics examine the political systems of those countries. For example, US politics can examine the operation of the US Congress, the presidency, voting patterns and the influence of lobbying and pressure groups on public policy. Public administration studies the state bureaucracy and the implementa- tion of particular policies. Despite these varieties in the field, many political science studies share a number of common characteristics. First, they are concerned with power or the ability of one set of actors to have their preferences implemented. This is a different world from that of the economists, who see decision-making as being the result of well-informed, equal and free individuals expressing their rational preferences. In the world of politics, decision-making is influenced by argument, ideol- ogy, institutional features and the threat of violence. Second, many political studies focus on institutions, most notably the state or the machinery of government.Whereas neoclassical econo- mists are obsessed with the operation of the market, political scientists often cannot tear their vision away from the operation of the state. 26 THEORETICAL PERSPECTIVES As a result of this perspective, political science brings a number of elements to the study of GPE: the focus on power, the state and the welfare of particular communities (as opposed to all communities). Political economy If economics has become increasingly abstract and detached from the economy as it actually oper- ates, and political science tends to ignore the economy by focusing on political institutions, then the answer must be to integrate these two fields into the study of political economy. Unfortunately, the term ‘political economy’ has meant a number of different things to different people over time. Prior to the rise of neoclassical economics, political economy referred to the work of scholars such as Adam Smith, David Ricardo and Karl Marx. However, the neoclassical turn stripped the political from the economic. Some scholars who did not share this desire continued to examine how politics structured the economy and how the economy influenced politics. For this strand of thinking, politics and economics are inseparable. However, The Oxford Handbook of Political Economy takes a different approach to the subject matter. Rather than view the field as the interrelationships between economics and politics, it defines the subject matter as consisting of ‘the methodology of economics applied to the analysis of political behaviour and institutions’ (Weingast and Wittman, 2006, p. 3). In this approach, the unit of analysis is the individual and that individual follows rational decision-making behaviour to maxi- mize their goals. Game theory or mathematical models are used to inform the analysis, while sta- tistical tools or experiments are used to demonstrate the validity of particular propositions. So, within the mainstream, political economy can mean an attempt to integrate politics and economics along the line of institutional economics, or it can mean the application of neoclassical economics assumptions and methods into the study of politics. Outside these understandings, another version of political economy survived the shift to neoclassical economics. A Marxist political economy tradition flourished but was ignored by many Western academics. Indeed, the association of political economy with Marxism was one of the reasons for the continued neglect of political economy in university economics departments. Some of these Marxist studies, such as Baran and Sweezy’s Monopoly Capital (1966), provided important insights into the dynamics of political economy. International relations The field of IR is often located in political science departments. Its origins as a distinct area of study date back to the aftermath of the First World War. European leaders and publics were shocked at the length and devastating loss of life of that conflict. As part of their attempts to pre- vent the outbreak of another disastrous war, efforts were made to increase understanding about the causes of war and the operations of the international system. The field of IR was given this task and, as a result, it has tended to focus on issues of war and peace, the foreign policy of various states and the operation of international organizations. Whereas many of the other fields have stressed the importance of developments internal to the state, IR concentrates on interactions between states. The focus is on how the international system operates rather than the internal workings of particular states. There is some examination of the making of foreign policy, but the emphasis is on its interaction with the foreign policy of other states. The dominant IR theoretical approach has been realism. This theory stresses the lack of any overreaching power in the international system (anarchy) and the continuous competition for power between states. More liberal approaches have focused on the possibilities of states to cooper- ate, the role of international organizations and law to foster cooperation, and the significance of regional integration, free trade and democracy to foster peaceful relations between states.  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 27 In the 1970s, as US power seemed to be decreasing and economic issues were becoming more significant, some scholars turned their attention to international economic issues.The early 1970s witnessed a major change in the international monetary system, as fixed rates were aban- doned, the price of energy rapidly escalated during the oil crisis and inflation and unemployment plagued Western countries. Efforts to include ‘economic’ issues alongside the traditional security concerns of IR were the beginning of the study of international political economy. Over the past 20 years, the field of IR has moved in many different directions. IPE or GPE has carved out a place in the study of IR. While realist and liberal approaches are still important, other theoretical orientations have proliferated. Feminist approaches stressing the role of gender, Marxist approaches emphasizing class, constructivist and poststructural approaches emphasizing the role of language and culture and postcolonial approaches focusing on the legacy of imperial- ism have broadened the subject matter and methods of the field. IPE studies can, and do, draw on a range of fields other than economics, political science and IR. Some authors, such as ourselves, may have a historical bent and draw on the work of historians to explain today’s developments. For example, Chapter 3 draws on the work of Janet Abu-Lughod and her analysis of early world economies in the 1400s. Geography is increasingly relevant for GPE as insights from geographers about the importance of space and scale are absorbed. For example, geographic approaches can be used to explain the factors that determine the geographic location of foreign direct investment and production (Dicken, 2007) or how workers use local advantages to frustrate the ambitions of global companies (Herod, 2001). Sociological studies can assist in our understanding of particular groups in the global economy, such as studies on trans- national classes or globalizing elites (Sklair, 2001) that highlight how particular groups benefit from and drive economic globalization (Box 2.2). As the GPE has become more institutionalized, legal studies are of increasing significance. Legal analysis of the WTO helps scholars understand the powers and limitations of that organization’s dispute settlement mechanism (Jackson, 2006). Box 2.2 What is globalization? The term ‘globalization’ is used widely, but people often mean different things when they use the term. For example, some people use the term to imply internationalization – an increase in the volume of economic flows across borders – while others use it to indicate liberalization – the removal of restrictions to cross-border flows, such as the elimination of trade or investment barriers. Both internationalization and liberalization are often used in the context of economic activity. The term ‘globalization’ can also be used in the realm of knowledge or ideational dissemination. For example, some analysts focus on universalization – particular ideas or principles being accepted by all people – while others emphasize Westernization – the increasing prevalence of ideas and practices originating in Europe or the US. These terms are most often used when discussing the spread of principles, such as human rights, or culture, such as the expansion of the US film industry. The term ‘deterritorialization’ highlights the changing nature of geography and the creation of new relationships between different groups of people. Following Scholte (2000a), we understand globalization to mean a process of relative deterritorialization. Territory is not disappearing, but it is becoming less important to human affairs. Deterritorialization involves the shrinking of time and space, as well as the creation of new sets of social relations and new centres of authority. We can see that time and space have become less significant obstacles to human interaction as technologies make it easier and quicker to travel across large distances or communicate with people worldwide. The lowering of time and distance barriers allows people to become involved in the lives of other people around the world much more easily. However, this compression is extremely uneven. Some areas of the globe are left behind as advanced areas exploit technology and upgrade communication and transport infrastructure. Globalization is not occurring at the same rate and same pace in all countries or regions. 28 THEORETICAL PERSPECTIVES More recently, insights from cultural studies and the humanities, which emphasize the con- structed nature of our reality and the important role of discourse in shaping that reality, have been developed. In summary, GPE, as presented in this text, crosses the fields of economics, political science, political economy and IR and draws on work in geography, history, sociology, law and cultural studies. Now that we have provided you with its location in the social sciences, let us turn our attention to the methods by which we can study IPE. Methodological Issues Interested observers of GPE who have first familiarized themselves with some of the basic approaches to the field must then decide how they will study the events and processes that inter- est them. They must decide what method is most suitable for their investigation. However, the question of method is complicated by three issues: 1. Different methods demand different skills and training. 2. Methods themselves embody particular theoretical assumptions and may be more value laden than they initially appear. 3. Adherents of particular methods may dismiss the arguments of people using different meth- ods because they do not accept their research as valid (due to faulty methods). Here, we briefly examine four methods: case studies, rational choice, institutionalism and constructivism.  ase studies and large n studies C One of the most common approaches to studying IPE is to use case studies. A case study is a detailed investigation of a particular event or issue. The event is studied to determine why a par- ticular thing happened the way it did. A detailed analysis is designed to reveal causal factors that can either be applied to similar situations or serve as a starting point for theory building. There are a number of different types of case studies and each has its particular use (Odell, 2001). Descriptive case studies describe a particular event, but do not provide analysis or engage in theoretical debates.They are useful as evidence for other types of studies.They can provide the raw material or data for other scholars and students. Other cases are chosen because they may help evaluate the plausibility of a particular theory. A ‘least likely case study’ is one where a par- ticular theory is unlikely to seem applicable. If the theory actually holds in that unlikely case, the theory is considerably bolstered. Alternatively, a ‘most likely case study’ examines a case that is very likely to support a theory. If it can be shown that the theory does not hold in such a sup- portive case, great doubt is shed on whether the theory will apply in any other case. Comparative case studies are undertaken in the hope that different cases will shed light on when particular theories hold and when they do not. Comparing and contrasting cases can often shed more light than a single case. ‘Large n studies’ is a name given to statistical investigations that use a database to find com- mon features or causes across a large number of cases. For example, there might be a hypothesis that free trade makes countries wealthy. One could investigate a particular case to see if the proposition held true in that instance, but scholars (and public officials) are likely to be interested in whether or not it holds true as a general rule across a wide variety of cases. Can it be shown that, under most circumstances, free trade brings wealth and thus should be a policy that most countries should follow? Rather than do a case study of every country in the world, it makes more sense to examine the data from a large number of countries. Countries could be evaluated  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 29 according to the degree to which they engage in free trade, and their wealth per capita could then be compared. The study would then show whether there was any relationship between the wealth of a country and its openness to trade. If a relationship was found, then there could be a debate about whether free trade created the wealth, or wealthy countries prefer free trade, or whether some other factor generated both wealth and free trade. Case studies and multi-country statistical studies have their advantages and disadvantages (Odell, 2001).The advantages of case studies are that they are useful for generating theories, con- cepts, typologies and hypotheses. They provide rich empirical material for investigation. They help us understand how particular things happen. In areas where no statistical data is available, the case study is often the only possible method of studying a phenomenon. The biggest disadvan- tage to the case study is that one can never be certain how representative the case is. Does it represent a general trend or is it the exception to the rule? Does it have any applicability to other cases or is it unique? Large n studies help us determine whether a particular proposition is gener- ally applicable or limited to a small number of cases.  ational choice R The rational choice approach to understanding politics was pioneered in the study of US politics, especially the operation of its legislature. The method then spread to the analysis of comparative politics, IR and IPE. It explains outcomes as the result of the choices of individual actors – either an individual person or a group considered to be acting as an individual, such as a state. Within this framework, actors are assumed to be utility maximizers: that is, they attempt to maximize their gains and minimize their losses. Individuals try to improve their situation by calculating costs and benefits before choosing the best path of action. Rational choice theories have generated significant insights into political behaviour, espe- cially concerning how the aggregation of individual choices can lead to surprising outcomes (Geddes, 2003, pp. 193–7). One insight is that systems of majority rule do not always result in implementing the policy preferences of a majority of citizens. Although a political system may be a relatively fair and competitive democracy, majority preferences may be ignored. Smaller, wealthier interest groups are more likely to have the resources and motivation to influence public policy than poorer unorganized sectors of the population. In addition, if the benefits of a public policy are highly concentrated but the costs are spread widely throughout the population, those reaping the benefit are highly motivated to lobby, while the many individuals paying a very small cost are unlikely to put much effort into opposing the policy. This type of logic is often used to explain trade protectionism, where an industry can reap profits from tariff protection, but indi- vidual citizens pay such a low cost that they do not mobilize to defend their interests. Rational choice theories have also highlighted the problem of collective action in the areas of public goods and common pool resources. Public goods have two characteristics: 1. They can be enjoyed by more than one person without any reduction in the good. 2. People cannot be excluded from their consumption. Clean air and water are examples of public goods. The problem with such goods is that it may not be rational for any individual to do the work required to provide a public good because it will be consumed by others with only a small benefit returning to the initiator.Thus, a corporate polluter may gain economic benefits from dirty production, but any individual will be reluctant to bear the cost of cleaning up the mess. Common pool resources refer to environments, such as oceans or air, which are shared by a large group of people but not owned by anyone. Here, the incentives are for each person to make maximum use of the resource to everyone’s detriment. This phenomenon can be seen in the overgrazing of common sheep pastures and the overfishing 30 THEORETICAL PERSPECTIVES of ocean stocks. Rational choice theory shows how what is rational for the individual leads to poor outcomes for the group or society. An offshoot of rational choice is game theory. Whereas rational choice looks at the strategic behaviour of individuals, game theory examines the decision-making of actors who are heavily influenced by the possible behaviour of other parties. These actors calculate their own interest in the light of what they believe others will do. It concerns the strategic interaction of a number of actors. Theorists have constructed a number of scenarios or games such as the prisoner’s dilemma, chicken, and stag hunt. The rules of the games differ, forcing players to behave in particular ways. For example, the prisoner’s dilemma discourages players from cooperating, which leads to a poor overall outcome (see Box 2.3). In contrast, in the stag hunt, players who can manage to cooperate will be rewarded with such large benefits that there is a great incentive to maintain cooperation. Box 2.3 Prisoner’s dilemma A simple prisoner’s dilemma illustrates how some environments can lead rational actors to make decisions that lead to poor outcomes. Imagine the police arrive at the scene of a robbery and discover a dead body. They arrest two suspects (person A and person B) who have stolen articles in their possession. At the police station, the suspects are put into separate rooms and interrogated. The prisoners are given the following options: 1. If both suspects keep silent, each will be convicted of robbery and given a one-year sentence. 2. If one person confesses and identifies the other as the killer, the informer will be freed and the killer will go to prison for life. 3. If both confess and identify the other as the killer, they will both be sentenced to 10 years for manslaughter. Both prisoners are assured that the other prisoner will not know of their decision until the trial. What is the most likely outcome of this scenario? The game is shown in the table below. Prisoner A stays silent Prisoner A informs on B Prisoner A – freedom for informing Prisoner B stays silent Robbery conviction – 1 year each Prisoner B – life for murder Prisoner A – life for murder Prisoner A – 10 years for manslaughter Prisoner B informs on A Prisoner B – freedom for informing Prisoner B – 10 years for manslaughter The best joint strategy for both prisoners is to stay silent and get a relatively light sentence of one year. However, each prisoner knows that if the other informs and they stay silent, they will stay in prison for the rest of their life. They also know that the other player has a large incentive to inform because they could earn their freedom. Thus, the best individual strategy is to inform on the other. Prisoner A knows that if B stays silent and A informs, A will win freedom. On the other hand, if B chooses to inform, A also needs to have informed or A will go to prison for life. Prisoner A’s best option, no matter what B does, arises when A informs. Both A and B follow a similar logic of informing and end up with a prison sentence of 10 years, which is far longer than the one year if they had both stayed silent. The dilemma is that if each player responds to their individual incentives, they end up being much worse off than if they had adopted a coordinated strategy (staying silent). When the rules of the game are changed, the outcome can also change. For example, if both prisoner A and B were members of the mafia, they would have a large incentive to stay silent, fearing reprisals from other members of the criminal organization. This would lead them to a better outcome of staying silent and spending one year in jail rather than 10.  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 31 How can these abstract games contribute to understanding GPE (Carlson, 2000)? The pris- oner’s dilemma can help explain why countries keep protectionist measures in place even though free trade would benefit them more. A country (country A) may be concerned that if it opens up its domestic market to foreign producers, other countries may keep trade barriers, resulting in an economic loss for country A. While all countries may be better off under free trade, any individual country can gain from keeping trade barriers. So, if country A keeps its trade barriers, it will gain if other countries reduce their barriers because it can export to them. On the other hand, if other countries do not reduce their barriers and country A keeps its bar- riers, country A protects its own market. The problem of one country seeking the benefits of free trade but not liberalizing its own trade is one of free riding. It wants the benefits of the system but will not itself participate in bearing any costs. Since the same logic applies to all countries, there is very little incentive for countries to reduce their trade barriers even though everyone would be better off if they did. The prisoner’s dilemma does not mean free trade is impossible. Games can change over time as the rules are changed. For example, there is a tendency for actors to change their behaviour if they play the same game a number of times. They learn the costs of cooperation and non-­ cooperation. Alternatively, the game can be changed if the rules are altered. The players might create an institution such as the WTO, which reduces the ability of countries to cheat or free ride and takes away the cost of cooperating. The WTO encourages all countries to adopt free trade and provides information to its members about who does not abide by the rules. This gives member states increased confidence that other countries will not free ride. It changes the calcula- tions that each state makes so that cooperation seems like a much more rewarding policy. Institutionalism As a methodology, institutionalism focuses on the importance of formal and informal institutions in producing political outcomes. It shares an affinity with institutional economics mentioned in Chapter 1, because both focus on the rules and institutions that shape human behaviour. At the core of institutionalism is an emphasis on the importance of rules.While rational choice methods highlight individuals pursuing self-interest, institutionalists focus on the broader rules of the game. The global economy is conceived not as the result of the actions of diverse individuals but as the outcome of the interaction of simple and complex institutions that shape individual deci- sions (Spruyt, 2000). In IPE, institutionalism is most familiar in the writings of liberal scholars who emphasize the powerfully constraining and beneficial impact of institutions. One area where institutionalism has been prominent is in discussion about the varieties of capitalism (Hall and Soskice, 2001).What accounts for different forms of capitalism and will these grow or shrink over time? Do different parts of the world exhibit distinct forms of capitalism that will evolve along divergent paths or are countries bound to converge around a particular superior form of capitalism? Institutionalists have pointed to distinct forms of political and socioeconomic arrangements to explain continuing variation between countries. Some have stressed the role that finance has played in different systems.An Anglo-American market where firms raise money on the stock market has been contrasted with a German model where banks have more direct relationships with corporations, or a Japanese model that links manufacturing and finance in large conglomerates. Neocorporatist work contrasts models where labour was included in government decision-making to models where labour was excluded or suppressed. Countries have also been examined with regard to the nature of their welfare regimes (Esping-­Andersen, 1990). As the varieties of capitalism literature illustrate, many institutionalists come from a compara- tive politics background. They tend towards using case studies and stressing the differences between political economies and the distinctive role that institutions play in shaping behaviour. 32 THEORETICAL PERSPECTIVES Constructivism Constructivism begins from the premise that there is an intimate and reciprocal connection between human subjects and the social world (Palan, 2000).Whereas rational choice analysis takes values and beliefs for granted, constructivists see beliefs and values as things that have to be explained and are crucial in shaping and determining ‘reality’. Whereas institutionalists focus on rules as the driving forces in constraining and shaping behaviour in a context where identity is essentially fixed, con- structivism posits that norms and values go beyond shaping actors’ interests – in themselves, they constitute identities and hence interests. From this perspective, the global political economy is a set of material conditions and practices, a set of normative statements about the world and an academic discipline. It is not reducible to one of these but is always constructed as the interaction of these three ‘structures’. This is also true for any ‘issue’ in IPE. For example, to understand development, we have to look at development in relation to material privation, the values attached to economic growth and prosperity (as well as negative values attributed to poverty), and the ways in which development is studied and analysed. A constructivist approach to IPE encourages analysts to look in different places for explanations other than rational choice or institutionalism. They call into question the preferences that are assumed in rational choice approaches (Abdelal, 2009). Constructivists ask:What are actors’ prefer- ences, how have they been created and how might they change? They direct attention to the role of ideas, norms, identities and social understanding in guiding behaviour. How is it that at one point in time the pressing economic issue is thought to be inflation, while at other times it is unemployment? Why do some people and institutions preach the value of the market as a decision maker and others stress political institutions? What is the impact of the dominance of one idea over another and how do such things come about? Box 2.4 Profile: John Ruggie (1944—) — constructivist practitioner John Ruggie emigrated to Canada from Austria in the 1950s. He studied politics and history at McMaster University in southern Ontario before earning a Political Science PhD at the University of California, Berkeley. He subsequently taught at the universities of California, Columbia and Harvard. He also worked with the United Nations (UN) at very senior levels. Ruggie wrote a series of important articles on a variety of topics in IR and IPE from the 1980s to the 1990s. In 1982, his article on international regimes and embedded liberalism argued that the international arrangements in trade and money were limited by the domestic normative preferences of key states (Ruggie, 1982). The US and the UK both wanted full domestic employment so they created international rules that would support such strategies. The international system reflected the social desires or social purpose of the actors that created these rules. The international liberal system was embedded in a series of national deals and priorities that prevented the system from moving in a purely liberal direction. In contrast to approaches that predicted the nature of international order from the power capabilities of various states, Ruggie argued that one must go further to determine what the identities of particular states were. In his view, a US-centred hegemony would look very different from a Russian-centred or British-­centred hegemony. In examining international regimes, agreements and organizations, Ruggie also argued that analysts need to examine actors’ understandings of institutions, as well as the institutions themselves. Behaviour needs to be interpreted. For example, the norm of an international trade agreement might be that countries do not raise tariffs on manufactured goods. In one particular year, several countries might raise tariffs on cars. Evaluating the health of this agreement through an examination of actors’ behaviour would lead to the conclusion that the agreement is broken or very weak. However, actors themselves may have a different understanding of each other’s behaviour and view the agreement  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 33 in a more positive light. It may be that in that particular year a recession forced governments into temporary protectionist measures and this was understood by all concerned as a temporary reaction. An interpretive or constructivist account would discern that the regime was still intact, while a rationalist approach would consider the regime to have been weakened. A thread running through Ruggie’s work is his concern with social constructivism in the field of international organization and IPE (1998). In his view, ideas about appropriate behaviour, the rules governing behaviour and the institutions that embody particular ideas and norms all play a significant part in shaping the global political economy. In the late 1990s, Ruggie took on a policy role working for the UN as assistant secretary-­general for strategic planning, where he helped establish and oversee the UN Global Compact and worked on the UN General Assembly’s proposal and ratification of the Millennium Development Goals (MDGs). This policy role fits well with Ruggie’s scholarly work, which stresses the idea of social construction. The Global Compact is a set of principles for businesses in the fields of environmental and human rights. The MDGs set out targets for improving development indicators such as education and health. Both initiatives are meant to highlight key priorities in the hope that this will shift the behaviour of key actors. In the case of the Global Compact, the hope is that peer pressure and information will encourage business to behave ethically. For the MDGs, the goal is to encourage states to direct more resources and aid towards meeting the basic needs of citizens. Ruggie’s work advanced understanding about the intersubjective nature of regimes and opened the door for constructivism as an approach to understanding global order. In the policy field, his work has advanced projects that attempt to shift the norms and practices of actors in the fields of global business ethics and development. Methodological debates There are two complicated and divisive issues surrounding debates about method. The first has to do with the dominance of particular methods and the second has to do with the relationship between method and theory. Some scholars fear that a narrow set of methods is beginning to dominate IPE and marginalize other methods, scholars and research. Rational choice and the use of statistical methods have become extremely popular in many US universities and leading jour- nals. Scholars using case study and constructivist methods can feel that their work is taken less seriously because they use different standards of evidence. A second issue is that while some scholars view methods as value neutral, others believe that methods are infused with particular theoretical and value assumptions. Adherents of the different theoretical perspectives can, in principle, use any methodology, but it has tended to be the case that economic nationalists and liberals favour rational choice or institutionalism, while critical theorists favour variants of constructivism. Many rational choice studies share the basic assump- tions of neoclassical economists about rational utility maximizing actors and therefore seem closely aligned with liberal assumptions. Constructivist approaches stress the shifting nature of social reality so they tend to be less conservative than approaches that take existing meaning as given, such as rational choice perspectives. Constructivist approaches are more likely to be used by analysts seeking to critique or change the existing system. Methods like rational choice and constructivism do indeed contain theoretical assumptions. Some may even argue that they are theories rather than methods. However, our perspective is that they are better viewed as methods that can be used with a variety of theories. For example, although rational choice methods draw on many liberal assumptions, they can be used by people of a very different theoretical bent. During the 1980s, a branch of Marxism – analytical Marxism – used rational choice methodology (Elster, 1985). In a similar way, although constructivism points one to look at how reality is made through people’s ideas and understandings, one could take a realist, liberal or Marxist view of what values influence a particular construction. 34 THEORETICAL PERSPECTIVES Concerns about the dominance of particular methods or the value-laden assumptions inher- ent in various methods mean that what might otherwise be a dry discussion about how to con- duct research can often be a much more lively and animated debate about the nature of knowledge and political orientations. Trends in Contemporary GPE Theory Given the theories laid out in Chapter 1 and our discussion about IPE in the social sciences and methodological issues above, are there any patterns in how the field is developing? We observe three trends that we term ‘consolidation’, ‘integration’ and ‘expansion’: Consolidation: undertaken by scholars who view the subject matter as being the politics of international economic relations. The task here is to build on a presumed consensus con- cerning the key questions to be investigated and methods for pursuing that investigation. Integration: the attempt to combine IPE with other broad political economy traditions such as those in comparative political economy or classical political economy. This group is not as certain as the first group that there is a consensus on key questions and methodologies. Expansion: the expansion of subject matter in terms of geographic scope (to developing countries), new subjects such as consumption and new theoretical approaches such as post- structuralism. This trend drifts even further from the consensus articulated by the first group.  onsolidation C One trend in the field is the attempt to consolidate a politics of international economic relations approach to IPE. In this approach, the boundaries and subject matter of the field are relatively clearly identified.The suitable theoretical approaches and methodologies are generally agreed on. Interventions seeking to contribute to theoretical reflection in this tradition emphasize similar methodologies rather than challenge the methodological and epistemological convictions of scholars in the field. A plea for greater engagement with behavioural economics (Elms, 2008) is a case in point. The task facing scholars and students is to build on each other’s work by solving a number of agreed-upon problems. A good general statement of this position has been provided by two US specialists outlining the field of IPE in 2003. Frieden and Martin (2003) argue that the subject matter of IPE is the politics of international economics. The issue areas of trade, monetary policy and international institutions have been the central focus of the field, but other areas such as international invest- ment are ripe for investigation. Theoretically, the key challenge is specifying the relationship between domestic and international levels of analysis. To what degree and how does domestic politics influence state decisions at the international level? How does interaction between states impact on the domestic politics of international economic issues? This textbook has not adopted a consolidating approach to IPE. A consolidated approach is in evidence in texts such as Grieco and Ikenberry’s (2003) State Power and World Markets.They focus on the relationship between states and markets and ask a bounded set of questions such as: What accounts for openness and stability in the world economy? How do states shape the ­economic environment to promote national interests? How are states challenged by the inter­ national market? How do states manage openness? A significant element of this consolidated approach is that, while it claims to reflect ‘the principal focuses of North American scholarship … it is not reflective of much European scholarship’ (Frieden and Martin, 2003, p. 118). Indeed, the consolidation consensus reflects the views of a rather small number of prominent US specialists. Many of these specialists work at elite US universities and  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 35 publish their work in journals such as International Organization.This ‘US’ approach to IPE is con- trasted with the work of a variety of other scholars (in both the US and other countries) working on very different agendas with different methodologies (Murphy and Nelson, 2001). Contributors to a special issue of the journal Review of International Political Economy (RIPE, 2009), which focused on the ‘American School of IPE’, supported the thesis that consolidation around a narrow set of questions and restricted methodology characterizes the dominant scholarship in the US. The consolidation of IPE has both rewards and costs. The acceptance of a narrow range of questions for investigation and agreement on a shared method allows researchers to make progress on a number of specific issues.The problem is that a narrow vision robs IPE of its critical edge. The field becomes a tool for problem-solving and ignores many crucial questions such as how the world should be transformed, what the good life would look like and how we might get there. This text has cast a wide net to catch a larger number of issues and perspectives than the consolidation approach.This may have come at the cost of some precision and focus, but two other trends in IPE suggest that it is a price worth paying. Integration Rather than consolidating the politics of international economics, a different approach has been to try to integrate IPE with other variants of political economy. One effort has been focused on bringing comparative and international political economy together, while another effort has been made to connect IPE with classical political economy. If it is perhaps an overstatement to claim that IPE developed in the shadow of comparative political economy, IPE research has, nevertheless, been heavily influenced by comparative political economy perspectives, even if this has not been explicitly acknowledged. In many ways, IPE is a heterodox discipline willing to borrow liberally from other fields. The interchange between IPE and comparative political economy has to date largely been taken for granted. In other words, to a large extent this development has gone unnoticed. If the main focus of IPE is on global struc- tures, comparative political economy places emphasis on national diversity and varieties of capi- talism. However, the IPE literature has given attention to the salience of domestic structures and the changing nature of capitalism. Concern with the impact of globalization and recognition of the differential impact of glo- balizing processes orient students of IPE to the importance of institutions and policy regimes in explaining outcomes. And globalization has impacted on studies of comparative political econ- omy as analysts have become increasingly aware of the ways in which global processes affect competition and regulation in national political economies. Thus, IPE researchers and compara- tive politics specialists have increasingly been engaged in the study of similar issues (Graz, 2001). For example, the debate on the future of the state has engaged comparative political economy specialists (Weiss, 1998, 2003) and IPE scholars (Cerny, 2000). There are two reasons why linkages between IPE and comparative political economy are likely to become more explicit in the near future. First, increased attention to regionalism and regional processes by students of IPE (Boas et al., 2005; Soderbaum and Shaw, 2003) brings to the fore the importance of regional and domestic structures. The complexity of the new region- alism necessitates comparative analysis as well as a focus on systemic structures. Second, renewed emphasis on the public–private interface directs attention to developments at national, regional and global levels. Thus systemic-level IPE is unable to analyse issues relating to accountability, authority and governance in the absence of a detailed assessment of national structures. IPE developed as a distinct subfield in the context of IR. As such, debates in IPE have tended to reflect wider debates in IR, and the growth of IPE has influenced further research in IR. A tradition of classical political economy, which can be traced back to the writings of liberal 36 THEORETICAL PERSPECTIVES theorists such as Smith and Ricardo, and a radical tradition dating from Marx remained open to IPE theorists and, while not part of the mainstream, has influenced scholarship in IPE. IPE shares with classical political economy a commitment to integrating politics and economics. While all perspectives in IPE make some claim to descend from classical political economy, there have been calls for a return to classical political economy. As the editors of New Political Economy declared: ‘What is needed is a new political economy which combines the breadth of vision of the classical political economy of the 19th century with the analytical advances of 20th-century social science’ (Gamble et al., 1996, p. 5).This insistence on a return to classical political economy has been heeded by Watson (2005), who seeks foundations for IPE in the works of Adam Smith, Thorstein Veblen and Karl Polyani. There are two reasons for recent interest in classical political economy. First, some of the key questions in contemporary economic governance are the same as those preoccupying the classical economists. At the centre of contemporary concerns are the twin issues of relative national wealth and continuing inequality.The failure of both mainstream economic theory and traditional IPE to provide satisfactory answers to these questions has revived interest in classical political economy. Second, global capitalism as a system is under the microscope in a way it has not been since the middle of the 20th century. It has become increasingly difficult to merely assume capi- talism to be a standard and neutral feature in analyses of political economy.Thus, institutional and cultural variables are now to the forefront. Expansion A third trend has been the attempt to expand the subject matter of IPE. One strategy has been to take the adjective ‘global’ seriously and pursue a subject of global political economy. A second approach has been to expand by developing new issues of enquiry. Promising new issues include race and consumption in the global political economy. Nicola Phillips (2005, p. 1) has claimed that: ‘Despite its pretensions to “global” scope and rel- evance, the study of International Political Economy (IPE) remains entrenched in a highly specific and narrow set of theoretical, conceptual and empirical foundations.’ She argues that this restrictive IPE arose from a concern with the economies of the advanced industrial countries and resulted in two kinds of limitation. First, IPE’s empirical scope was too narrow (we will return to this theme below but in a different manner from Phillips) since it focused on the problems and c­ oncerns of these ‘core’ countries. Second, by privileging and universalizing the historical experiences of Western Europe, Japan and the US, IPE scholars were transferring concepts of bounded utility to the rest of the world. The concerns raised by Phillips (2005) were shared by her co-­authors in a volume dedicated to globalizing IPE. These sentiments have also been echoed by Taylor (2005), who contends that the neglect of the developing world by IPE theory and analysis impoverishes IPE. He argues that IPE will only become fully global if it incorporates knowledge about the varied developing societies into its central concerns. Both Phillips and Taylor acknowledge that, despite claims to the contrary, IPE has for the most part been limited in its concerns. In an age of globalization, a discipline that strives to pro- vide explanations for global processes can no longer be based on a narrow empirical and con- ceptual focus. The globalizing IPE project outlined by Phillips specifically rejects an approach that simply involves giving greater attention to other regions of the world. She contends that such a project should include not only an empirical broadening to widen the focus outside the ‘core’ parts of the world and their experiences, but also, crucially, a serious reflection (then) on the theoretical impli- cations of this broadening and the ways in which we might act on them in order to ‘global- ize’ the study of IPE. (Phillips, 2005, p. 7)  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 37 This project remains at an early stage and the ways in which this challenge will be developed remain unclear. Nevertheless, there are two reasons that suggest increased attention will be given to this aim in the near future. First, it has become increasingly obvious that globalizing processes are unequal and therefore affect different countries, regions and peoples in diverse ways. The failure of IPE to provide adequate explanations for global diversity starkly exposes not only its empirical but also its conceptual limitations. From the understanding of the state and sovereignty at the centre of much IPE analysis to the conceptualization of market activity, the simple imposition of concepts developed in the advanced industrial countries is likely to prove unproductive. Moreover, the recognition in the discipline of IR that it has characterized much of the world as ‘the people without history’, to use Eric Wolfe’s felicitous phrase, and has therefore neglected them has led to recent scholarship engaging with this marginalization of the developing world (Gruffydd Jones, 2005; Lavelle, 2005). Second, the developing world (or, more broadly, the non-­core societies) is currently perceived to be the source of most instability and violence in the world. The traditional security paradigm and newer approaches to security, such as human security perspectives, both locate threat and danger, whether from religious extremism, collapsed states, refugee flows or environmental collapse, as stemming from the non-Western world. Thus, IPE’s focus is likely to be concerned with (in)stability in the devel- oping world. IPE scholarship emerged in IR at a time when traditional realist and liberal theories struggled to explain interdependence. IPE has expanded the IR agenda both theoretically and empirically and yet, as we have shown above, IPE remains constrained and limited. One of the many ways in which IPE remains bounded is in its narrow agenda. Initially, this focused principally on trade and financial issues. Recently, there has been some change, in that, conceptually, IPE analysts have incorporated the role of corporate actors and civic groups, have shown awareness of social orders and have been sensitive to the interrelationship between domestic and international structures. Empirically, IPE has embraced an expanded agenda that includes gender, the role of transnational issues and transnational actors. However, IPE remains relatively silent concerning issues relating to culture, race or leisure. Unlike gender, which has been integrated into studies of the political, race remains undertheor­ ized in IR and IPE (Box 2.5). Studies of the leisure industry, whether sport or fashion, are neglected in IPE. In this respect, critical scholarship is no different from conventional approaches. A survey of the two leading British journals of IPE – New Political Economy and the Review of International Political Economy – from 2000 to 2008 finds one article on culture (Drache and Froese, 2006), one on the leisure industry (Milanovic, 2005) and none on race. Box 2.5 American, British and other forms of IPE Some have suggested that the study of IPE is divided between UK and US approaches (Cohen, 2007). The US approach is said to draw heavily on liberal economic theory and use rationalist and quantitative methods, while the British are more likely to use qualitative methods (case studies and so on) and be more open to critical theories. As a broad generalization, there is some accuracy in this statement, but it hides more than it reveals. Although many of the most prestigious US universities tend to have a quantitative bent and scholars take a generally liberal approach, constructivism is also widely employed in US IPE. The US system is diverse, so labels of a ‘US’ approach are misleading. Conversely, liberal assumptions and quantitative methods have made inroads in some academic departments in the UK and continental Europe. Moreover, the world of IPE goes far beyond the US and the UK, making the geographic focus of the labels parochial or not very global. 38 THEORETICAL PERSPECTIVES There are three reasons why these non-traditional issues are likely to become more important for IPE in the near future: 1. The attention to globalizing processes has ensured that lawyers, economists, sociologists, anthropologists and other social scientists have been theorizing the global and have not been as restricted in their choice of subjects as IPE analysts. For example, a legal scholar has explored the racialized nature of the global economy (Gott, 2000) and an economist has written about fashion and style in the world economy (D. Brown, 2005). An expanded IPE that gives attention to culture, race and leisure is likely to result from conversations between IPE, development studies and comparative political economy. 2. Material change in the global political economy is directly related to the three issues under discussion. Processes of global inequality are not only gendered, they are also inherently racialized, leisure consumption accounts for billions of dollars in production and exchange, and cultural issues pervade discussions in national polities. 3. Advances of poststructuralist approaches into IPE highlight the degree to which language, culture and identity contribute to the creation and functioning of a global political economy (de Goede, 2006). Three of the issues discussed above – globalizing IPE, IPE and classical political economy, and comparative political economy and IPE – reflect scholarly discontent with IR and IPE. The final topic discussed – the silence and marginalization of subjects such as culture, race and leisure – is only starting to spark similar theoretical reflection. Nevertheless, we identify these topics as important for the future development of IPE. We argue that theoretical debates in IPE are essen- tially the product of two forces. On one hand, they reflect the engagement of IPE scholars with real-world changes. In this respect, current debates are a reflection of the experience of globaliza- tion. On the other hand, developments in IPE theory are an outcome of theoretical debates among scholars concerning the precision and adequacy of theories and concepts. On both counts we see room for growth in the scope of IPE. While one branch of IPE (the consolidation approach) is narrowing the field, other trends are opening up the field to new subject matter.This raises the question about the appropriate bound- ary for GPE. If the subject is continually widening, will it expand to encompass all the social sciences? Will this result in it trying to say so much that nothing of importance is uttered? Poststructuralist approaches in particular run this risk. Our own view is that GPE does have a core – it revolves around issues of power and inequal- ity in a global economy. Given the complex, multifaceted and protracted nature of the problems facing the world’s population, each of the trends outlined above has something to contribute to our understanding. Approach of this Book We have seen that IPE is often conceived as a debate between three contending schools of thought. We have also seen that different scholars pursue particular research agendas and that methodological issues can loom large in designing and reporting research findings. Scholars (and practitioners) of IPE tend to base their analysis on sets of assumptions common to a specific para- digm. As argued above, all IPE analyses are written from a particular theoretical perspective. Theoretical assumptions guide choices about which theories and events should be highlighted and which will not make it into the study. Our purpose in this book is to provide readers with the theoretical tools and empirical knowledge needed to develop their own understanding of how the global political economy works. This is a challenging task, as this chapter has already  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 39 demonstrated. We do it on the basis of a framework of analysis indebted to the insights of the three IPE perspectives, but not fully ascribing to the assumptions and propositions of any one of these perspectives.We will return to the three main approaches when they are helpful for under- standing particular developments. For example, liberal theories help us understand some of the elements of British policy in the 19th century and the thinking behind multilateral trade institu- tions in the 20th century. This text takes an eclectic approach to the theory and method surrounding IPE (Box 2.6). We draw on a number of different theories and methods to address a wide range of IPE topics. Strange (1991) argued that an eclectic IPE approach should have three elements: openness to many disciplines, openness to conceptual synthesis, and recognition of the key role of firms. Writing 20 years later, Sil and Katzenstein (2010) have suggested that an eclectic approach to world politics plays down metaphysical divides in favour of policy and practice, takes on wide complicated problems, and offers complex causal stories that draw on a range of explanatory theories, models and narratives from competing research traditions. Both of these approaches Box 2.6 Approach of this book This text pays particular attention to: 1. historical change 2. structure–agency dynamics 3. integration of cognitive structures 4. political–economic interaction 5. dynamic institutionalism 6. salience and variety of domestic structures. share the inclination to draw on multiple disciplines and theoretical traditions to address a wide range of issues. Our text also integrates key concepts and theoretical insights from different approaches into an overarching, multidimensional approach. The framework of analysis outlined below and developed in the rest of the book is intended to allow students to organize and simplify in a systematic manner the theoretical approaches and empirical evidence necessary to explain con- temporary developments in the global political economy. It allows them to investigate a wide range of issues and draw on a variety of theoretical approaches. The framework is an organizing device and not itself a theory. First, our approach is historicist in that it is sensitive to historical change.The nature of political economy, its major institutions and ideas about how it operates change over time (Cox and Sinclair, 1996, pp. 49–59).This book places historical development at the centre of its explanatory framework, and recognizes history as the context or framework within which meaning is located and an ideological concept that is evident in various perspectives on political economy. Theories about how the world works arise in particular historical contexts and need to be linked to those contexts.Theories can be more or less helpful depending on when they are created and how they are used. A historical sensitivity is also important to understanding the path-dependent nature of the evolution of the global political economy. Some states and groups of people have become locked into particular development patterns because of events that took place many years ago. For example, many developing countries export low-value commodities because their economies were oriented to this task during the age of imperialism. 40 THEORETICAL PERSPECTIVES The role of historical practices in development raises a second point, which is the relationship between structure and agency. Put simply, this is the question of whether overarching structures such as the organization of production or the institution of patriarchy determine the action of agents (states, firms, people) or whether agents engage in free choice and construct their own environments (Wendt, 1987). We view the relationship as dynamic and do not privilege either systemic or unit-level variables. There are dangers in reifying structures on one hand and in reducing complex events to individual action on the other. In rejecting structural determinism and methodological individualism, we seek to understand the ways in which structures constrain action and agency impacts on structural constraints. The existence of a structure of patriarchy does not, for example, determine that all males will exploit women. Third, we recognize the salience of ideas or cognitive structures as significant elements in the global political economy and examine the role of ideas in structuring outcomes (Finnemore and Sikkink, 1998). Norms, values, ideologies and ideas are constitutive elements of the global political economy. This means that they help to make the world the way it is rather than only reflecting how we think about the world.While ideas are linked to material developments and interests, they are not derived solely from the material structures of the global economy. On the contrary, ideas shape, mould, facilitate and constrain the activities of economic agents. For example, if it is believed that inflation is the economic problem most destructive of stability, harmony and progress, this becomes an economic ‘fact’ and redistributivist policies are subsumed to the dictates of the fight against inflation. Fighting inflation ceases to be perceived as a policy choice and instead is taken to be a central and natural feature of economic governance. Another example would be the ideas supporting patriarchy. It might be assumed that women are naturally docile and dextrous, thus making them the ideal choice for particular types of employment.The importance of ideas, intel- lectual schemes and ideologies will therefore be investigated rather than taken as given. Certain claims to the contrary notwithstanding, political economy is not value free and arguments over economic theories cannot be dismissed as rhetoric. Fourth, we stress the inseparability of economics and politics, and therefore reject the separation of the economic from the political at the core of liberal and mercantilist approaches. Whereas liberalism separates the economic from the political and mercantilism subsumes the economic to the political, we insist that the economic constitutes the political and the politi- cal constitutes the economic. One of the ways this becomes apparent in the text is that we link events in the field of economic development with the deployment of organized violence and the ramifications of warfare. Fifth, we view institutions as constantly undergoing change. Perspectives that take the institu- tional context as a given are deficient. Recently, economics and political science literatures have recognized the importance of social institutions in structuring market behaviour. We begin from the recognition that formal and informal institutions play significant roles in structuring outcomes in the international system. We therefore investigate the impact of institutions and emphasize the contribution of formal organizations to the evolution of the global economy.Two of the significant institutions we examine in the text are the changing nature of the state and the organization of international or world order. For example, the states discussed in Chapter 3 have mercantilist and imperialist characteristics, while the Industrial Revolution sees the emergence of a liberal British state. Following the Second World War, many Third World countries were characterized by devel- opmental states and Western countries adopted some form of the Keynesian state. Finally, our view of the global political economy is sensitive to the relationship between changes in domestic social orders and structures of international order and global political econ- omy (Cox, 1986; Skidmore, 1997). Social and class conflict in key states can bolster or undermine the principles and institutions on which a particular world order rests. A leading explanation for the success of European expansionist activity in the 16th and 17th centuries was the greater  INTERNATIONAL POLITICAL ECONOMY AND ITS METHODS 41 relative autonomy that merchants enjoyed in Europe compared with empires in other parts of the world. Another example is the role mobilized populations played in thwarting the attempts to build a stable liberal international system between 1918 and 1939. Changes in citizen expectations about government behaviour made it impossible to impose the economic medicine that liberal theory demanded. Keeping the main approaches and our own blend of important characteristics in mind, we now turn our attention in Chapter 3 to the evolution of the global political economy beginning in the early 1400s.  Further Reading A good overview of the contribution that economics makes to IPE is provided by Andrew Walter and Gautam Sen’s Analysing the Global Political Economy (2008). John Ruggie’s key articles are found in Constructing the World Polity: Essays on International Institutionalization (1998). An application of constructivism is Rawi Abdelal, Mark Blyth and Craig Parsons, Constructing the International Economy (2010). A useful overview on the debates surrounding IPE including the US versus British approaches is Nicola Phillips and Catherine Weaver (eds) International Political Economy: Debating the Past, Present and Future (2011). Jacqueline Best and Matthew Paterson provide an overview of cultural approaches in Cultural Political Economy (2010). For a survey of IPE in different regions of the world, see Benjamin Cohen’s An Advanced Introduction to International Political Economy (2014). Other contributions can be found in the pages of the journal Review of International Political Economy.