Introduction to IR - Lecture 1
January 10 th
Office Hours: Wednesday 2:00-3:00 by appointment. SS# 3034
• IPE: International political economy
• Islands of cooperation: institutions
• Summary and looking forward
The economy clearly matters – but how? When? What actors does it affect?
How does the economy affect international relations?
• The interaction between economics and politics (polity and market)
What is the role of the economy in IR?
• It depends on whom you ask
o A source of power (we need butter to buy guns)
o A source of welfare (we like butter)
• Prosperity as means vs. prosperity as a goal
• Why do we want/need a strong economy?
• Example: Chinese economic growth
o Should we be worried?
o Do they want a strong economy to ensure the welfare of their population or
in order to take over the world?
o Should we cooperate or consider them a threat?
Guns vs. Butter
• A common metaphor for the national production possibility frontier
• “Guns will make us powerful; butter will only make us fat.” – Herman Goering
• “We can do without butter, but, despite all our love of peace, not without arms. One
cannot shoot with butter, but with guns.” - Joseph Goebbels
• “Bomb them with butter”
Guns vs. Butter PPF
• PPF; production possibility frontierWar Economy
• The trade off between guns and butter is most noticeable in times of war
• Total war – sustainable over time?
• Effects on morale
• Effects on gender relations
• Positive effects of wartime economy?
• How we can use the economy as an instrument of war; bomb them with butter
• An intense, coercive disturbance of the economy of an adversary aimed at
diminishing its power
• Economic warfare can be waged separately from military warfare (sanctions) or in
conjunction with an ongoing war (strategic bombing, siege, blockade etc.)
• Submarine warfare in WWI and WWII; oil embargo on Japan;
• International law separates between goods that are part of the war effort and those
that are for civilian use. Dual use?
• Mixed record; smart sanctions; specific sanctions to not harm the general
population; success is questionable
• Economic measures can be a carrot as well (encouraging incentives); MFN, WTO
membership, foreign aid etc.
How to Calculate the Cost of War?
• Direct costs; tanks, planes, bombs, personnel, damaged infrastructure
• This is not sufficient, we must look further
• Indirect costs; higher oil prices, borrowing money, healthcare for veterans etc.
• Opportunity costs
• For the US: total economic impact for the war 2002-2008 $1.3 trillion (compared
with $804 billion in direct war costs)
• A $1 in indirect costs for every $1 in directs costs
• Per family of four: $20,900 ($57 a week)
How to Understand the Role of the Economy in IR?
• Our view of the role of the economy depends on how we answer the following
• 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?