POL208 – January 7
Political Economy – interaction between politics and economics
What is the role of economy in IR?
- A source of power
- A source of welfare (better standard of living)
How we look at it depends on whether we see the economy as a means or as an ends (prosperity as a
means, or prosperity as a goal)
The Guns and Butter Metaphor for the national production possibility frontier (PPF)
Guns=security VS. Butter=welfare
- During wartime tradeoffs between guns and butter is most noticeable
- Can’t have guns absolutely without butter, it is not sustainable
- We cannot survive without butter
- Some economists suggest it is not guns vs. butter – not always a zero-sum game
- An intense, coercive disturbance of the economy of an adversary aimed at diminishing its power
- Economic warfare van be waged separately from military warfare or in conjunction with an
ongoing war (strategic bombing, siege, blockade) ie. Oil embargo Japan
- Some economic warfare is legal and some is not
- Separates between goods that are part of the war effort an those which are for civilian
use...what about dual use? Smart Sanctions
- Targeted specific sanctions, minimizing effects on regular population
WTO membership and foreign aid can be used as a bargaining chip to compel countries to cooperate
How to Calculate the Cost of War?
Direct – tanks, personnelle, planes
Indirect – higher oil prices, borrowing money
Opportunity Costs – total economic impact vs. direct war costs
The Peace Dividend
- If guns are bad for the economy, peace and lower levels of conflict should lower the demand for
guns and hence generate more butter...there is however have certain comfort levels with the
minimum percentage of GDP going towards defense
How to Understand the Role of the Economy in IR?
- Our view on the role of the economy depends on how we answer these questions
What is power? What is the main purpose of power? Is the economy then an instrument for
gaining power or is power an instrument for an improved economy?
Who are the main actors? Is cooperation sustainable?
What is the desired balance between guns and butter?
- Increased efficiency increased gro