PED_IR_Chapter Two.pdf

An-Najah National University Faculty of Law and Political Science Department of Public Law Course name and number Political Economy and Development (11102513) Program Major: Law, Minor: International Relations...

An-Najah National University Faculty of Law and Political Science Department of Public Law Course name and number Political Economy and Development (11102513) Program Major: Law, Minor: International Relations Instructor Jawad N. Salman Teaching Professor of Law  Chapter Two: Three Ideologies of Political Economy Chapter Two: Three Ideologies of Political Economy Liberalism Nationalism Marxism Chapter Two: Three Ideologies of Political Economy What is the significance of the market for economic growth and the distribution of wealth among groups and societies? What ought to be the role of markets in the organization of domestic and international society? What is the effect of the market system on issues of war or peace? The liberal perspective Some argues that there is no such thing as a liberal theory of political economy because liberalism separates economics and politics from one another. Liberal economic theory is committed to free markets and minimal state intervention. Liberal political theory is committed to individual equality and liberty. Economic liberalism assumes that a market arises spontaneously in order to satisfy human needs and that, once it is in operation, it functions in accordance with its own internal logic. The liberal perspective The rationale for a market system is that it increases economic efficiency, maximizes economic growth, and thereby improves human welfare. Although liberals believe that economic activity also enhances the power and security of the state, they argue that the primary objective of economic activity is to benefit individual consumers. Liberalism also assumes that a market exists in which individuals have complete information and are thus enabled to select the most beneficial course of action. The nationalist perspective Economic activities are and should be subordinate to the goal of state building and the interests of the state. The Marxist perspective Marxism characterizes capitalism as the private ownership of the means of production and the existence of wage labor. according to Marx, three laws are controlling the production in the liberalism: 1. the law of disproportionality. 2. the law of the concentration (or accumulation) of capital. 3. the falling rate of profit. A critique of the perspectives All theories, not based on any empirical test. Market economies and foreign policy Political antagonists may be major trading partners, as was the case with Great Britain and Germany in the First World War. Whether trade aggravates or moderates conflicts is dependent upon the political circumstances. The significance of welfare capitalism Marxist Law Welfare State Law of Disproportionality Demand management through fiscal and monetary policy Law of Accumulation - Income redistribution through progressive income tax and transfer payments - Support for trade unions - Regional and small business policies Law of the Falling Rate of Profit Government support of education and research to increase the efficiency of all factors of production Conclusion *** THREE MAIN POINTS *** The first is that the global or territorial distribution of economic activities, especially of industry and technology, is a central concern of modern statecraft; behind the technical discussions of trade, foreign investment, and monetary affairs are conflicting national ambitions and the fundamental question of "who is to produce what and where." Conclusion The second point is that the international division of labor is a product of both national policies and relative efficiency; although states can and do ignore the market as they seek to influence the location of economic activities, this entails economic costs; the price mechanism operates to transform national efficiencies and international economic relations over the long run. Conclusion And third, due to these changes and the uneven growth of national economies, the inherent stability of the international market or capitalist system is highly problematic; it is the nature of the dynamics of this system that it erodes the political foundations upon which it must ultimately rest and thereby raises the crucial question of finding a new political leadership to ensure the survival of a liberal international economic order.