Jan 7 2013
POL208Y- Intro to international political economy
Studies the interaction b/w economics and politics
The role of economy in IR- it depends on whom u asks: we can think of the economy as a
source of power or independent of the question of power and look at it in terms of
Do we treat eh market as a means or as an end?
Creating a dichotomy b/w guns and butter for example. We can either use our resources
to buy guns for security or buy butter for increase of welfare.
A common metaphor for the national production possibility frontier
“guns will make us powerful; butter will make us fat.” Hermann Goering
Guns vs. Butter
Production possibility frontier:
Look at pp- which country produces more guns and more butter
The frontier is when a country is most efficient
Wars cost money- it’s when we see the relation b/w guns and butter
Ex- WW2 --Daily life necessities we limited and in short supply. So the implications on
the market were directly felt.
Total war- sustainable over time? NO, because it has problematic effect on moral and
economy diminishes and it also effects gender relations. When men went to war,
someone needed to work in production. There was great social change driven by war
The possibility of using economics as a weapons to fight in war
The intense, coercive disturbance of the economy of an adversary aimed at diminishing
Economic warfare can be waged separately from military warfare (sanctions) or in
conjunction with an ongoing war (strategic bombing, siege, blockade)
Submarine warfare in WW1 & WW2; oil embargo on japan
International law; separates b/w goods that are part of the war effort and those which are
for civilian use. Duel use.
Mixed record; smart sanctions
Economic measures can be used are carrots as well: MFN, WTO memberships, foreign
How to calculate the cost of war
1.2% -Canada uses on guns and the rest on butter when it’s not in war.
Direct cost: tanks, planes, bombs, personal, damaged infrastructure
Indirect cost: higher oil prices, borrowing money, healthcare for veterans, etc.
Opportunity costs For the U.S: total economic impact for the war 2002-2009 $1.6 trillion ( compared with
804 billion in direct war costs)
A dollar in indirect costs for every dollar in direct costs
Per family of 4: $21 333 ($51)
The peace dividend- if guns are b