Lecture 12.docx

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31 Mar 2012
Lecture 12
-I.P.E. -> International Political Economy
-Islands of Cooperation
-Summary and looking forward
International Political Economy
The economy clearly matters, but how? Is the economy stupid? How does the economy
affect IR? Political economy is the interaction between economics and politics. Political
science studies the interaction and the area between polity and market. Economists
study politics using economic tools (game theory). The role of the economy in IR
depends on who you ask. It is a source of power (we need butter to buy guns) and a
source of welfare (we like butter). Prosperity as means vs. Prosperity as a goal. A good,
powerful economy could be used to just provide welfare or to be used as a mean towards
a larger goal.
Guns vs. Butter
Relation between welfare and security. It is a common metaphor for the national
production possibility frontier. Many politicians prefer guns over butter. Each country
has to choose how much butter to produce and how many guns to buy.
War Economy
Desviacion de gasto en rubros tradicionales para su uso en guerra y armas. Economies
are usually restructured during war. The butter-guns trade-off is most noticeable in
times of war. Are total wars sustainable over time? A percentage of our budget has to be
directed towards butter, always. Too much spending in guns brings effects on morale.
War economies brings effects on gender relations. Men were out fighting, someone had
to fill in the production lines and women were allowed to get out of the house and start
working. Were there positive effects on wartime economy? Maybe the beginning closure
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of the gender gap. Technological innovation. Sometimes buying one unit of guns can
also produce some butter.
Lecture 12
Economic Warfare
Focuses on how we can use the economy as an instrument of war. An intensive, coercive
disturbance of the economy of an adversary aimed at diminishing its power. Target the
economy of an adversary as an instrument of war. Economic warfare can be waged
separately from military warfare (sanctions) or in conjunction with an ongoing war
(strategic bombing, siege, blockade, etc). During WWII Germany imposed a blockade on
Britain and it caused many shortages (uboat blockade). One of the events that brought
the U.S. to war was the sinking of the Lusitania. Submarine warfare in WWI and WWII,
oil embargoes. International law acknowledges the importance of economic warfare and
it separates between good economic warfare and bad economic warfare. If a submarine
bombards a vessel with guns, it is legal, if it•fs filled with baby formula, it is not.
Difference between civilian and military uses. Oil is tricky because it has double uses.
Intl sanctions moved to smart sanctions (target specific things to not damage the
population: Syria•fs sanctions trying to hurt only the regime). Economic measures can be
used as carrots (encourage other countries to follow other policies by using economic
incentives: trade, concessions, foreign aid, etc). They are instruments that countries use
as part of their diplomacy to achieve their goals. In real life, guns and butter are very
hard to separate.
How to calculate the cost of war?
Direct cost: tanks, planes, bombs, personnel, damaged infrastructure, planning,
Indirect costs: rise of oil prices, borrowing, healthcare for veterans, etc.
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